<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1995
------------------------------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------------------------------
Commission File Number 1-3053
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Champion International Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
New York 13-1427390
- -------------------------------------------- -----------------------------------
State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization
</TABLE>
One Champion Plaza, Stamford, Connecticut 06921
------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
203-358-7000
------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 1995
- ---------------------------------- ------------------------------------
Common stock, $.50 par value 96,511,602
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (unaudited)
(in thousands, except per share)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
----------------------- -----------------------
September 30, September 30,
----------------------- -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $5,231,120 $3,852,818 $1,840,664 $1,384,740
Cost of products sold 3,885,513 3,527,095 1,297,543 1,222,911
Selling, general and administrative expenses 300,627 223,719 105,795 80,806
---------- ---------- ---------- ----------
Income From Operations 1,044,980 102,004 437,326 81,023
Interest and debt expense 172,239 175,601 57,711 60,173
Other (income) expense - net (Note 2) (35,288) (19,392) (4,035) (11,004)
---------- ---------- ---------- ----------
Income (Loss) Before Income Taxes 908,029 (54,205) 383,650 31,854
Income Taxes (Benefit) 353,688 (15,238) 148,067 8,737
---------- ---------- ---------- ----------
Net Income (Loss) $ 554,341 $ (38,967) $ 235,583 $ 23,117
========== ========== ========== ==========
Dividends on Preference Stock 13,258 20,813 --- 6,938
========== ========== ========== ==========
Net Income (Loss) Applicable to Common Stock $ 541,083 $ (59,780) $ 235,583 $ 16,179
========== ========== ========== ==========
Average Number of Common Shares Outstanding 94,213 92,990 95,568 93,046
========== ========== ========== ==========
Earnings (Loss) Per Common Share (Exhibit 11):
Primary $ 5.74 $ (.64) $ 2.47 $ .18
========== ========== ========== ==========
Fully Diluted $ 5.43 $ (.64) $ 2.44 $ .18
========== ========== ========== ==========
Cash dividends declared $ .15 $ .15 $ .05 $ .05
========== ========== ========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of this statement.
-2-
<PAGE>
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(unaudited)
------------- ------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 343,108 $ 90,948
Receivables - net 697,387 562,085
Inventories 419,544 441,430
Prepaid expenses 32,236 23,286
Deferred income taxes 62,125 61,032
----------- -----------
Total Current Assets 1,554,400 1,178,781
----------- -----------
Timber and timberlands, at cost - less cost of
timber harvested 1,955,612 1,846,823
----------- -----------
Property, plant and equipment, at cost 8,761,641 8,579,254
Less - Accumulated Depreciation (3,263,684) (2,976,640)
----------- -----------
5,497,957 5,602,614
----------- -----------
Other assets and deferred charges 375,611 335,410
----------- -----------
Total Assets $ 9,383,580 $ 8,963,628
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Current installments of long-term debt $ 252,802 $ 308,922
Short-term bank borrowings 110,996 90,184
Accounts payable and accrued liabilities 677,727 592,033
Income taxes 120,617 43,273
----------- -----------
Total Current Liabilities 1,162,142 1,034,412
----------- -----------
Long-term debt 2,776,559 2,889,252
----------- -----------
Other liabilities 683,270 670,761
----------- -----------
Deferred income taxes 1,165,406 1,039,927
----------- -----------
Minority interest in subsidiaries 100,774 68,531
Preference stock, $1.00 par value, $92.50 cumulative
convertible series; 300,000 shares issued and
outstanding (redeemable for $300,000) (Note 3) --- 300,000
----------- -----------
Shareholders' Equity:
Capital Shares:
Preference stock, no series, 8,231,431 shares
authorized but unissued --- ---
Common (110,202,474 and 96,786,039 shares
issued at September 30, 1995 and
December 31, 1994, respectively) 55,101 48,393
Capital Surplus 1,653,347 1,175,008
Retained Earnings 2,405,336 1,878,476
----------- -----------
4,113,784 3,101,877
Treasury shares, at cost (Note 3) (596,838) (100,308)
Cumulative translation adjustment (21,517) (40,824)
----------- -----------
Total Shareholders' Equity 3,495,429 2,960,745
----------- -----------
Total Liabilities and Shareholders' Equity $ 9,383,580 $ 8,963,628
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of this statement.
-3-
<PAGE>
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOWS (unaudited)
(in thousands of dollars)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------
September 30,
-----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net Income (Loss) $ 554,341 $ (38,967)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation expense 292,267 279,969
Cost of timber harvested 59,234 56,895
Net gain on sale of assets (45,863) (2,013)
(Increase) decrease in receivables (132,363) (40,948)
(Increase) decrease in inventories (6,012) 35,881
(Increase) decrease in prepaid expenses (13,606) (8,129)
Increase (decrease) in accounts payable and
accrued liabilities 78,777 (7,478)
Increase (decrease) in income taxes 75,509 17,121
Increase (decrease) in other liabilities (234) 8,079
Increase (decrease) in deferred income taxes 120,133 (44,019)
All other - net 65,024 50,796
----------- -----------
Net cash provided by operating activities 1,047,207 307,187
----------- -----------
Cash flows from investing activities:
Expenditures for property, plant and equipment (239,723) (133,946)
Timber and timberlands expenditures (184,119) (75,797)
Purchase of investments --- (28,859)
Proceeds from redemption of investments --- 30,216
Proceeds from sales of property, plant and equipment
and timber and timberlands 172,613 32,387
All other - net (11,328) (2,030)
----------- -----------
Net cash used in investing activities (262,557) (178,029)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 495,635 399,702
Payments of current installments of long-term debt
and long-term debt (541,848) (475,555)
Cash dividends paid (27,289) (34,760)
Payments to acquire treasury stock (496,530) (75)
All other - net 37,542 10,162
----------- -----------
Net cash used in financing activities (532,490) (100,526)
----------- -----------
Increase in cash and cash equivalents 252,160 28,632
Cash and Cash Equivalents:
Beginning of period 90,948 55,653
----------- -----------
End of period $ 343,108 $ 84,285
=========== ===========
Supplemental cash flow disclosures:
Cash paid during the period for:
Interest (net of capitalized amounts) $ 162,673 $ 161,445
Income taxes (net of refunds) 146,655 (3,016)
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of this statement.
-4-
<PAGE>
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
September 30, 1995
Note 1.
The unaudited information furnished in this report reflects all adjustments
which are, in the opinion of management, necessary to present fairly a
statement of the results for the interim periods reported. All such adjustments
made were of a normal recurring nature.
Note 2.
Other (income) expense - net for the nine months ended September 30, 1995
includes gains of $89 million from the sales of certain operations in Canada
and charges of $68 million primarily for the writedown of certain U.S. paper
and wood products assets.
Note 3.
On June 22, 1995 the company purchased all 7,894,737 shares of Common Stock
that were issued on that date upon conversion of the $92.50 Convertible
Preference Stock, and on June 30, 1995 the company purchased an additional
2,000,000 shares of Common Stock. In addition, on June 27, 1995 the company
called all $149,893,000 of its 6 1/2% Convertible Subordinated Debentures due
April 15, 2011 for redemption on August 8, 1995. Virtually all of the
Debentures were converted into an aggregate of 4,309,070 shares of common stock
during the third quarter. As a result of all of these transactions, the sum of
the earnings per share for the first, second and third quarters of 1995 does
not equal the earnings per share for the first nine months of 1995.
If the conversion of the 6 1/2% Convertible Subordinated Debentures had
occurred on the first day of each 1995 period presented, primary earnings per
share for the three months and nine months ended September 30, 1995 would have
been $2.44 and $5.57, respectively.
-5-
<PAGE>
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------------------------------------------------------------------------
Results of Operations.
----------------------
Results of Operations
- ---------------------
Overall Quarterly Results
The company reported net income in the third quarter of 1995 of $236 million or
$2.44 per share, fully diluted, compared to last year's third quarter net income
of $23 million or 18 cents per share and last quarter's net income of $188
million or $1.79 per share.
Significant Income Statement Line Item Changes
Net sales of $1.84 billion improved from $1.39 billion a year ago and $1.76
billion last quarter. Gross profit on sales was $543 million, compared to $162
million last year and $445 million last quarter. Operating income of $437
million increased from $81 million a year ago and $347 million last quarter. The
significant improvements in net sales, gross profit and operating income from
last year were due principally to higher prices for all of the company's major
pulp and paper grades; overall, product shipments declined from last year. The
improvements from last quarter were due primarily to higher prices for
newsprint, uncoated free sheet and coated publication papers and market pulp;
overall, product shipments declined from last quarter. Results for the second
and third quarters of 1995 reflected strong demand attributable to favorable
economic conditions in the United States and Europe and, on the supply side, few
capacity increases in the industry.
Compared to the year-ago quarter, the substantial increase in paper segment
operating income more than offset the decline in operating income in the wood
products segment. Operating income in both segments improved from last quarter.
General corporate expense was $20 million, compared to $16 million last year and
$25 million last quarter. The increase from last year was primarily the result
of higher compensation costs. The decline from last quarter was due primarily to
the impact of a lower stock price on the value of stock appreciation rights.
The income tax provision for the third quarter of 1995 reflected an effective
tax rate approximately even with last quarter, but significantly higher than
last year as the result of an increase in 1995 in the proportion of income
derived from North American operations and a corresponding decrease from
Brazilian operations.
Year-To-Date Results
For the first nine months, the company reported net income of $554 million or
$5.43 per share, fully diluted, compared to a year-ago loss of $39 million or 64
cents per share.
Paper Segment
For the company's paper segment, third quarter operating income was $423
million. This compared to income of $36 million a year ago and $344 million last
quarter. Total paper, packaging and pulp shipments were 1,526,000 tons in the
third quarter, declining from 1,544,000 tons a year ago and 1,527,000 tons last
quarter.
-6-
<PAGE>
Operating income for the domestic printing and writing papers business improved
considerably from the break-even results a year ago and from last quarter's
earnings principally due to higher prices for most coated and uncoated free
sheet grades. The average price for domestic uncoated free sheet papers, the
principal product of the printing and writing papers business, was $1,044 per
ton in the third quarter of this year, compared to $613 per ton last year and
$984 per ton last quarter. The average price for coated free sheet papers also
increased from both prior quarters. Shipments of all grades of 526,000 tons
declined slightly compared to a year ago and last quarter, due in part to the
curtailment in the third quarter of the No. 2 paper machine at the Hamilton,
Ohio, mill resulting from market conditions. By the end of 1995, the company
expects to retrofit the No. 2 machine to manufacture uncoated color premium
papers, and permanently shut down the mill's No. 4 paper machine which currently
produces those grades. The annual capacities of the No. 2 and No. 4 machines are
27,400 tons and 21,500 tons, respectively. Early in the fourth quarter, demand
for uncoated and coated free sheet papers began to weaken and order backlogs
declined.
Operating income at the Brazilian subsidiary, Champion Papel e Celulose Ltda.,
improved substantially from the year-ago quarter and moderately from last
quarter, primarily due to higher prices for domestic and export uncoated free
sheet papers. The average price for uncoated free sheet papers was $1,126 per
ton this quarter, compared to $629 per ton last year and $1,047 per ton last
quarter. Uncoated free sheet papers shipments of 95,000 short tons were
approximately even with last year and last quarter. Domestic and export prices
for uncoated free sheet papers declined slightly early in the fourth quarter.
Maintenance outages have been scheduled in the fourth quarter at the Brazilian
subsidiary.
Earnings for the publication papers business improved significantly from the
small loss a year ago and from last quarter's operating income. Prices for all
publication grades were higher than last year and last quarter, more than
offsetting increased purchased pulp and wood costs. The average price for coated
groundwood papers was $1,101 per ton this quarter, compared to $702 per ton last
year and $1,003 per ton last quarter. Prices for coated free sheet and uncoated
groundwood papers also increased from last year and last quarter. Shipments of
all grades of 320,000 tons were approximately even with last year and, due to
routine maintenance outages at two of the four publication papers mills, down
slightly from last quarter. While a price increase for most coated groundwood
grades was effective October 1, demand for coated free sheet papers began to
weaken and order backlogs declined early in the fourth quarter.
Operating income for the company's U.S. and Canadian market pulp operations
represented a considerable improvement from a year ago and a moderate
improvement from last quarter. Prices for all pulp grades were significantly
higher than last year and somewhat higher than last quarter. For example, the
average price for Canadian softwood pulp was $732 per ton in the third quarter
of this year, compared to $454 per ton last year and $683 per ton last quarter.
Prices for northern hardwood and southern pulps also increased from last year
and last quarter. Shipments of all grades were 220,000 tons, compared to 226,000
tons last year and 208,000 tons last quarter. While a price increase for
softwood pulp was effective October 1, weakening demand for coated and uncoated
free sheet papers has resulted in weakening demand and shorter order backlogs
for pulp early in the fourth quarter. Maintenance outages are scheduled in the
fourth quarter at the two Canadian pulp mills.
Earnings for the newsprint business represented a substantial improvement from
the loss of a year ago and from last quarter's operating income principally due
to higher prices. Average newsprint prices (including freight) of $655 per ton
in the third quarter of 1995 compared to $418 per ton last year and $602 per ton
last quarter. Shipments of 242,000 short tons of newsprint, specialty and
directory grades were approximately even with last year and last quarter.
-7-
<PAGE>
Earnings for the packaging business exceeded those of a year ago primarily due
to higher prices for kraft paper and linerboard. However, earnings declined
slightly from last quarter principally due to a decrease in prices for both
products. Shipments of 125,000 tons were down slightly from last year and
approximately even with last quarter. Early in the fourth quarter, prices for
kraft paper and linerboard declined somewhat. Maintenance outages are scheduled
in the fourth quarter at the company's kraft paper and linerboard mill.
Wood Products Segment
The company's wood products segment, which includes the wood-related operations
of Weldwood of Canada Limited, reported third quarter income from operations of
$34 million, compared to $61 million a year ago and $28 million last quarter.
The decline from last year was due primarily to a decrease of 21% in the price
of lumber overall. Operating income improved from last quarter, despite a five
percent decrease in domestic lumber prices, due to an increase of three percent
in the price of Canadian lumber as well as lower operating costs at Weldwood.
Total wood products shipments declined from both prior periods principally due
to the sale and the closure of certain facilities.
Foreign Operations
The company's major foreign operations, which are discussed above under their
respective business segment headings, are in Canada and Brazil. Net sales to
unaffiliated customers by the company's foreign subsidiaries for the third
quarter of 1995 were (U.S.) $246 million, accounting for 13.4% of consolidated
net sales of the company. Income from operations of the foreign subsidiaries for
this year's third quarter was (U.S.) $112 million, accounting for 25.6% of
consolidated income from operations of the company. Net income (after minority
interest) of the foreign subsidiaries for the third quarter of 1995 was (U.S.)
$63 million, accounting for 26.7% of consolidated net income of the company.
Labor Contracts
A new three-year labor contract, retroactive to June 1, 1994, is in effect at
Weldwood's Hinton, Alberta, pulp mill.
Negotiations are under way for a new labor contract at the Courtland, Alabama,
paper mill. The existing labor contract expires in December.
Financial Condition
- -------------------
The company's current ratio was 1.3 to 1 at September 30, 1995, as compared to
1.2 to 1 at June 30, 1995 and 1.1 to 1 at year-end 1994. Total debt to total
capitalization was 40% at September 30, 1995, as compared to 45% at June 30,
1995 and 43% at year-end 1994.
Significant Balance Sheet Line Item Changes
Receivables at September 30, 1995 increased by $135 million from December 31,
1994 primarily due to substantial price increases for all of the company's
principal pulp and paper grades. Inventories decreased by $22 million from year-
end 1994 primarily due to the sale and the closure of certain wood products
facilities. The increases in timber and timberlands and in property, plant and
equipment before accumulated depreciation of $109 million and $287 million,
respectively, reflected capital expenditures and
-8-
<PAGE>
asset purchases and sales. Accounts payable and accrued liabilities increased by
$86 million primarily due to the timing of payments. Deferred income taxes and
income taxes payable increased by $125 million and $77 million, respectively,
due to the significant increase in pre-tax income from last year. For a
discussion of changes in long-term debt (including current installments) and
cash and cash equivalents, see below.
Cash Flows Statement - General
Reflecting strong earnings and the sale of certain assets, in the first nine
months of 1995 the company's net cash provided by operating activities and asset
sales exceeded the requirements of its investing activities (principally capital
expenditures). The approximate excess was used to pay dividends, to pay a
portion of the company's long-term debt (including current installments), to
increase cash and cash equivalents, and to purchase shares of the company's
common stock. In the first nine months, long-term debt (including current
installments) declined by $169 million; the substantial portion of this
reduction was effected through the conversion of virtually all $149,893,000 of
the company's 6 1/2% Convertible Subordinated Debentures into an aggregate of
4,309,070 shares of common stock during the third quarter rather than through
the use of cash. Cash and cash equivalents increased by $252 million in the
first nine months of 1995 to a total of $343 million, $239 million of which was
held by Weldwood. In the first nine months, the company purchased 9,964,737
shares of common stock for $497 million.
In the first nine months of 1994, the company's net cash provided by operating
activities exceeded the requirements of its investing activities (principally
capital expenditures). The approximate excess was used to pay dividends as well
as a portion of the company's long-term debt and to increase cash and cash
equivalents. In the first nine months of 1994, long-term debt declined by $69
million and cash and cash equivalents increased by $29 million.
Cash Flows Statement - Operating Activities
For the first nine months, net cash provided by operating activities of $1,047
million increased from $307 million a year ago. The increase was due primarily
to significantly higher earnings and higher deferred income taxes.
Cash Flows Statement - Investing Activities
For the first nine months, net cash used in investing activities of $263 million
increased from $178 million a year ago. The increase was due primarily to an
increase in capital expenditures, which more than offset higher net proceeds
from asset sales.
Cash Flows Statement - Financing Activities
Net cash used in financing activities of $532 million increased from $101
million a year ago due primarily to the purchase of shares of common stock by
the company this year. On June 22, 1995, the company purchased 7,894,737 shares
of common stock that were issued on that date upon conversion of the $92.50
Cumulative Convertible Preference Stock, and on June 30, 1995, the company
purchased 2,000,000 shares of common stock. On August 17, 1995, the Board of
Directors of the company authorized the purchase of up to an additional
5,000,000 shares of common stock from time to time on the open market and
through privately negotiated transactions; pursuant to this authorization, the
company purchased 70,000 shares of common stock during the third quarter.
-9-
<PAGE>
At September 30, 1995, the company had $215 million of U.S. commercial paper and
other short-term obligations outstanding, all of which are classified as long-
term debt, down from $454 million at June 30, 1995 and $382 million at year-end
1994. In addition, at September 30, 1995, the company had $76 million of notes
outstanding under its U.S. bank lines of credit, down from $237 million at June
30, 1995 and up from $65 million at year-end 1994. Domestically, at September
30, 1995, $215 million of the company's unused bank lines of credit of $1,124
million supported the classification of commercial paper and other short-term
obligations as long-term debt.
On September 1, 1995, the company borrowed $150 million through the issuance of
7.10% Notes due September 1, 2005 and borrowed an additional $150 million
through the issuance of 7.75% Debentures due September 1, 2025. The net proceeds
of these issues were used to pay a portion of the company's commercial paper and
short-term notes at maturity.
On September 19, 1995, the company borrowed $10 million through the issuance of
long-term tax-exempt bonds. The net proceeds are being applied to the payment of
a portion of the costs of construction of solid waste and sewage treatment
facilities at the Canton, North Carolina, mill. On September 27, 1995, the
company borrowed $50 million through the issuance of long-term tax-exempt bonds.
The net proceeds are being applied to the payment of a portion of the costs of
construction of a recycling facility at the company's Courtland, Alabama, mill.
The annual principal payment requirements under the terms of all long-term
agreements for the period from October 1 through December 31, 1995 are $200
million and for the years 1996 through 1999 are $78 million, $136 million, $377
million and $573 million, respectively.
The Environment
- ---------------
Federal Executive Order
As reported in the company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, in October 1993, President Clinton issued an executive
order requiring a minimum post-consumer recycled content for uncoated printing
and writing papers purchased by federal agencies. In response to this order as
well as similar state and local government regulations and customer
requirements, and in order to satisfy the projected need for additional pulp, on
September 21, 1995 the Board of Directors authorized the construction of a
recycling facility at the company's Courtland, Alabama, printing and writing
papers mill. The project is anticipated to cost approximately $128,000,000.
Environmental Legal Proceedings
There is incorporated by reference herein the information under Item 1. Legal
-------------
Proceedings in Part II of this report.
- -----------
-10-
<PAGE>
PART II. OTHER INFORMATION
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
Item 1. Legal Proceedings.
- ----------------------------
As reported in the company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, in February 1994, the company received a notice of
violation from the Texas Natural Resources Conservation Commission ("TNRCC")
alleging unauthorized air emissions from the company's Sheldon, Texas, mill. The
notice of violation alleged several violations, all but two of which have been
resolved without penalty. In October 1995, the company received a letter from
the Enforcement Division of the TNRCC stating that it has recommended to the
TNRCC Litigation Support Division that the two remaining violations be settled
for a penalty of $470,400. The letter notes that the company may receive a
credit against the recommended penalty if the company undertakes an
environmental project in Texas. The company currently is considering whether to
accept the proposed settlement and is discussing with the TNRCC possible
environmental projects and the amount of the credit.
Item 6. Exhibits and Reports on Form 8-K.
(a) See exhibit index following the signature page.
(b) The company filed a Current Report on Form 8-K dated July 10, 1995
reporting the issuance of a press release announcing certain unaudited
consolidated financial results of the company for the three months and six
months ended June 30, 1995, with the consolidated statement of income for
the three months and six months ended June 30, 1995 and June 30, 1994 and
consolidated balance sheet as of June 30, 1995 and December 31, 1994 as
exhibits thereto.
The company filed a Current Report on Form 8-K dated August 29, 1995
reporting the sale of $150 million aggregate principal amount of the
company's 7.10% Notes due September 1, 2005 and $150 million aggregate
principal amount of the company's 7.75% Debentures due September 1, 2025,
pursuant to the company's registration statement (No. 33-51217).
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the undersigned on behalf of the registrant as duly
authorized officers thereof and in their capacities as the chief accounting
officers of the registrant.
Champion International Corporation
----------------------------------
(Registrant)
Date: November 13, 1995 John M. Nimons
- ------------------------------------- ----------------------------------
(Signature)
John M. Nimons
Vice President and Controller
Date: November 13, 1995 Kenwood C. Nichols
- ------------------------------------- ----------------------------------
(Signature)
Kenwood C. Nichols
Vice Chairman
-12-
<PAGE>
EXHIBIT INDEX
Each exhibit is listed according to the number assigned to it in the Exhibit
Table of Item 601 of Regulation S-K.
11 - Calculation of Primary Earnings Per Common Share and Fully Diluted Earnings
Per Common Share (unaudited).
27 - Financial Data Schedule (unaudited).
<PAGE>
EXHIBIT 11
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
Calculation of Primary Earnings (Loss) Per Common Share and
Fully Diluted Earnings (Loss) Per Common Share (unaudited)
(in thousands, except per share)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
-------------------- --------------------
September 30, September 30,
-------------------- --------------------
1995 1994 1995 1994
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Primary earnings (loss) per common share:
Net Income (Loss) $554,341 $(38,967) $235,583 $ 23,117
Dividends on Preference Shares 13,258 20,813 --- 6,938
--------- -------- -------- --------
Net Income (Loss) Applicable to Common Stock $541,083 $(59,780) $235,583 $ 16,179
======== ======== ======== ========
Average number of common shares outstanding 94,213 92,990 95,568 93,046
======== ======== ======== ========
Per share $ 5.74 $ (.64) $ 2.47 $ .18
======== ======== ======== ========
Fully diluted earnings (loss) per common share:
Net Income (Loss) Applicable to Common Stock $541,083 $(59,780) $235,583 $ 16,179
Add income effect, assuming conversion of
dilutive convertible securities 15,106 --- --- ---
--------- -------- -------- --------
Net income (loss) on a fully diluted basis $556,189 $(59,780) $235,583 $ 16,179
======== ======== ======== ========
Average number of common shares outstanding 94,213 92,990 95,568 93,046
Add common share effect, assuming conversion
of dilutive convertible securities 8,229 --- 1,057 ---
--------- -------- -------- --------
Average number of common shares outstanding
on a fully diluted basis 102,442 92,990 96,625 93,046
======== ======== ======== ========
Per share $ 5.43 $ (.64) $ 2.44 $ .18
======== ======== ======== ========
</TABLE>
NOTES:
(1) The computation of fully diluted earnings per common share assumes that the
average number of common shares outstanding during the period is increased
by the conversion of securities having a dilutive effect, and that net
income applicable to common stock is increased by dividends and after-tax
interest on such securities.
(2) Earnings per share was calculated for each three month and nine month period
on a stand-alone basis. On June 22, 1995 the company purchased all 7,894,737
shares of Common Stock that were issued on that date upon conversion of the
$92.50 Convertible Preference Stock, and on June 30, 1995 the company
purchased an additional 2,000,000 shares of Common Stock. In addition, on
June 27, 1995 the company called all $149,893,000 of its 6 1/2% Convertible
Subordinated Debentures due April 15, 2011 for redemption on August 8, 1995.
Virtually all of the Debentures were converted into an aggregate of
4,309,070 shares of common stock during the third quarter. As a result of
all of these transactions, the sum of the earnings per share for the first,
second and third quarters of 1995 does not equal the earnings per share for
the first nine months of 1995.
If the conversion of the 6 1/2% Convertible Subordinated Debentures had
occurred on the first day of each 1995 period presented, primary earnings
per share for the three months and nine months ended September 30, 1995
would have been $2.44 and $5.57, respectively.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
AND THE CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 343,108
<SECURITIES> 0
<RECEIVABLES> 717,054
<ALLOWANCES> 16,344
<INVENTORY> 419,544
<CURRENT-ASSETS> 1,554,400
<PP&E> 10,717,253<F1>
<DEPRECIATION> 3,263,684
<TOTAL-ASSETS> 9,383,580
<CURRENT-LIABILITIES> 1,162,142
<BONDS> 2,776,559
<COMMON> 55,101
0
0
<OTHER-SE> 3,440,328
<TOTAL-LIABILITY-AND-EQUITY> 9,383,580
<SALES> 5,231,120
<TOTAL-REVENUES> 5,231,120
<CGS> 3,885,513
<TOTAL-COSTS> 3,885,513
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 172,239
<INCOME-PRETAX> 908,029
<INCOME-TAX> 353,688
<INCOME-CONTINUING> 554,341
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 554,341
<EPS-PRIMARY> 5.74
<EPS-DILUTED> 5.43
<FN>
<F1>Includes timber and timberlands.
<FN>
</TABLE>
