<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, 1996
-------------------------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-3053
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Champion International Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 13-1427390
- ------------------------------------------- ------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
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, 1996
- ---------------------------------- --------------------------------
Common stock, $.50 par value 95,547,009
<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,
------------------------------- --------------------------------
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net Sales $4,448,247 $5,231,120 $1,470,481 $1,840,664
Costs and Expenses:
Cost of products sold 3,829,869 3,885,513 1,283,000 1,297,543
Selling, general and administrative expenses 285,596 300,627 97,308 105,795
Interest and debt expenses 162,394 172,239 54,217 57,711
Other (income) expense - net (Note 2) (29,416) (35,288) (9,560) (4,035)
---------- ---------- ---------- ----------
Total costs and expenses 4,248,443 4,323,091 1,424,965 1,457,014
Income Before Income Taxes 199,804 908,029 45,516 383,650
Income Taxes 68,602 353,688 13,515 148,067
---------- ---------- ---------- ----------
Net Income $ 131,202 $ 554,341 $ 32,001 $ 235,583
========== ========== ========== ==========
Dividends on Preference Stock --- 13,258 --- ---
========== ========== ========== ==========
Net Income Applicable to Common Stock $ 131,202 $ 541,083 $ 32,001 $ 235,583
========== ========== ========== ==========
Average Number of Common Shares Outstanding 95,515 94,213 95,529 95,568
========== ========== ========== ==========
Earnings Per Common Share (Exhibit 11):
Primary $ 1.37 $ 5.74 $ .33 $ 2.47
========== ========== ========== ==========
Fully Diluted $ 1.37 $ 5.43 $ .33 $ 2.44
========== ========== ========== ==========
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,
1996 1995
(unaudited)
------------- -------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 283,906 $ 317,069
Short-term investments 3,671 98,275
Receivables - net 558,503 641,291
Inventories 429,899 484,001
Prepaid expenses 33,266 24,841
Deferred income taxes 72,698 75,329
---------- ----------
Total Current Assets 1,381,943 1,640,806
---------- ----------
Timber and timberlands, at cost - less cost of
timber harvested 2,260,910 2,007,685
---------- ----------
Property, plant and equipment, at cost 9,163,213 8,850,519
Less - Accumulated Depreciation (3,569,709) (3,335,945)
---------- ----------
5,593,504 5,514,574
---------- ----------
Other assets and deferred charges 465,441 380,237
---------- ----------
Total Assets $9,701,798 $9,543,302
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Current installments of long-term debt $ 129,660 $ 77,760
Short-term bank borrowings 138,042 150,067
Accounts payable and accrued liabilities 671,103 726,206
Income taxes 8,374 125,840
---------- ----------
Total Current Liabilities 947,179 1,079,873
---------- ----------
Long-term debt 2,981,578 2,828,509
---------- ----------
Other liabilities 652,376 664,010
---------- ----------
Deferred income taxes 1,364,263 1,218,978
---------- ----------
Minority interest in subsidiaries (Note 3) 4,168 105,241
---------- ----------
Shareholders' Equity:
Capital Shares:
Common (110,312,191and 110,230,379
shares issued at September 30, 1996
and December 31, 1995, respectively) 55,156 55,115
Capital Surplus 1,649,880 1,653,456
Retained Earnings 2,734,883 2,618,033
---------- ----------
4,439,919 4,326,604
---------- ----------
Treasury shares, at cost (657,864) (650,049)
Cumulative translation adjustment (29,821) (29,864)
---------- ----------
Total Shareholders' Equity 3,752,234 3,646,691
---------- ----------
Total Liabilities and Shareholders' Equity $9,701,798 $9,543,302
========== ==========
</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,
----------------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 131,202 $ 554,341
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation expense 302,818 292,267
Cost of timber harvested 68,069 59,234
Net gain on sale of assets (16,547) (45,863)
(Increase) decrease in receivables 83,826 (132,363)
(Increase) decrease in inventories (10,934) (6,012)
(Increase) decrease in prepaid expenses (9,849) (13,606)
Increase (decrease) in accounts payable and
accrued liabilities (69,947) 78,777
Increase (decrease) in income taxes (117,270) 75,509
Increase (decrease) in other liabilities (41,889) (234)
Increase (decrease) in deferred income taxes 17,422 120,133
All other - net 8,750 65,024
---------- ----------
Net cash provided by operating activities 345,651 1,047,207
---------- ----------
Cash flows from investing activities:
Expenditures for property, plant and equipment (308,872) (239,723)
Timber and timberlands expenditures (91,607) (184,119)
Acquisition of timber subsidiary (Note 4) (71,990) ---
Proceeds from redemption of investments 94,604 ---
Proceeds from sales of property, plant and equipment
and timber and timberlands 33,406 172,613
All other - net 8,138 (11,328)
---------- ----------
Net cash used in investing activities (336,321) (262,557)
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 812,135 495,635
Payments of current installments of long-term debt
and long-term debt (646,315) (541,848)
Purchase of Weldwood minority interest (Note 3) (189,533) ---
Cash dividends paid (14,371) (27,289)
Payments to acquire treasury stock (7,815) (496,530)
All other - net 3,406 37,542
---------- ----------
Net cash used in financing activities (42,493) (532,490)
---------- ----------
Increase (decrease) in cash and cash equivalents (33,163) 252,160
Cash and Cash Equivalents:
Beginning of period 317,069 90,948
---------- ----------
End of period $ 283,906 $ 343,108
========== ==========
Supplemental cash flow disclosures:
Cash paid during the period for:
Interest (net of capitalized amounts) $ 152,590 $ 162,673
Income taxes (net of refunds) 171,832 146,655
</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, 1996
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 July 3, 1996, Weldwood of Canada Limited acquired all of its publicly-held
shares for approximately (U.S.) $190 million and became a wholly-owned
subsidiary of Champion.
Note 4.
During the first quarter of 1996, the company acquired Lake Superior Land
Company for $76 million, before netting $4 million of cash owned by Lake
Superior Land Company, as well as an outstanding $44 million mortgage loan. The
acquisition was accounted for as a purchase. Liabilities recorded in connection
with the acquisition, including purchase accounting adjustments, were the $44
million mortgage loan, $68 million of deferred taxes payable and $13 million of
other liabilities.
-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 1996 of $32 million or
$.33 per share, compared to last year's third quarter net income of $236 million
or $2.44 per share, fully diluted, and last quarter's net income of $16 million
or $.16 per share.
Significant Income Statement Line Item Changes For The Three Months Ended
September 30, 1996
Net sales of $1.47 billion declined from $1.84 billion a year ago and increased
slightly from $1.44 billion last quarter. Gross profit was $187 million,
compared to $543 million last year and $158 million last quarter. Pre-tax income
of $46 million declined from $384 million a year ago but improved from $22
million last quarter. The declines in net sales, gross profit and pre-tax income
from last year were due primarily to lower prices for all of the company's pulp
and paper grades and, to a lesser extent, lower shipments of all groundwood
papers and plywood. The improvements in net sales, gross profit and pre-tax
income from last quarter were due principally to higher prices for market pulp
and lumber, increased shipments of coated free sheet papers and higher west
coast timber stumpage sales. The aggregate cost of products sold decreased
slightly from last year due mainly to lower costs for wood fiber and pulp, and
was approximately even with last quarter. Selling, general and administrative
expenses were down from last year and up from last quarter due primarily to the
impact of stock price fluctuations on the value of stock appreciation rights.
Interest and debt expense decreased from last year and increased slightly from
last quarter. The decrease from last year was due principally to a lower average
interest rate on outstanding debt. The increase from last quarter was due mainly
to an increase in the amount of debt. Other (income) expense - net increased
from both last year and last quarter due primarily to increased land sales and
lower minority interest expense. The decrease in minority interest expense
resulted from the purchase by the company's Canadian subsidiary, Weldwood of
Canada Limited ("Weldwood"), of all of its publicly-held shares on July 3, 1996
for approximately (U.S.) $190 million. Weldwood is now a wholly-owned subsidiary
of the company.
The income tax provision for the third quarter of 1996 reflected an effective
tax rate lower than last year and approximately even with last quarter. The
decrease from last year was due primarily to a larger proportion of income
derived from the company's operations in Brazil, whose tax rate is lower than
that applicable to the company's North American operations. In addition, the tax
rate in Brazil was reduced effective January 1, 1996.
Year-to-Date Results
For the first nine months, the company reported net income of $131 million or
$1.37 per share, compared to net income of $554 million or $5.43 per share,
fully diluted, a year ago.
-6-
<PAGE>
Paper Segment
For the company's paper segment, third quarter operating income was $58 million.
This compared to income of $419 million a year ago and $44 million last quarter.
Total paper, packaging and pulp shipments were 1,540,000 tons in the third
quarter, compared to 1,532,000 tons a year ago and 1,521,000 tons last quarter.
A small operating loss for the domestic printing and writing papers business
represented a significant decline from the operating income of a year ago due
mainly to lower prices for uncoated and coated free sheet papers. Earnings
improved from last quarter's loss due primarily to the receipt of $7.5 million
of insurance proceeds for a previously recognized loss resulting from a weather-
related outage. The average price for domestic uncoated free sheet papers, the
principal product of the printing and writing papers business, was $705 per ton
in the third quarter of this year, compared to $1,044 per ton last year and $706
per ton last quarter. The average price for coated free sheet papers was $1,067
this quarter, compared to $1,255 a year ago and $1,149 last quarter. Although a
price increase for several grades of uncoated free sheet papers was partially
implemented effective October 1, prices weakened during the fourth quarter.
Shipments of all printing and writing grades were 532,000 tons, compared to
526,000 tons last year and 521,000 tons last quarter.
Operating income at the Brazilian subsidiary, Champion Papel e Celulose Ltda.,
declined significantly from the year-ago quarter and slightly from last quarter
due principally to lower prices for both domestic and export uncoated free sheet
papers. The overall average price for uncoated free sheet papers was $788 per
ton in the third quarter of this year, compared to $1,126 per ton last year and
$813 per ton last quarter. Uncoated free sheet papers shipments of 97,000 tons
were approximately even with last year and last quarter. For the first nine
months of 1996, approximately 38.9 % of the company's consolidated pre-tax
income was attributable to the Brazilian subsidiary. A price increase for export
uncoated free sheet papers was implemented early in the fourth quarter.
Earnings for the publication papers business declined from last year due mainly
to lower prices for all grades and lower shipments of coated and uncoated
groundwood papers. Earnings declined from last quarter due primarily to lower
prices for all grades, which more than offset higher shipments of coated free
sheet and groundwood papers. The average price for coated groundwood papers was
$894 per ton this quarter, compared to $1,101 per ton last year and $1,003 per
ton last quarter. Shipments of all publication grades of 318,000 tons decreased
from 326,000 tons last year and increased from 284,000 tons last quarter. Prices
for coated groundwood papers continued to decline early in the fourth quarter.
Operating income for the company's U.S. and Canadian market pulp operations
represented a substantial decline from last year due to lower prices for all
pulp grades. Earnings improved from last quarter's loss due to higher prices for
all pulp grades. The average price for Canadian softwood pulp was $423 per ton
in the third quarter of this year, compared to $732 per ton last year and $362
per ton last quarter. Average prices for northern hardwood and southern pulp
grades also decreased from last year and increased from last quarter. Shipments
of all pulp grades of 236,000 tons increased from 224,000 tons last year but
decreased from 266,000 tons last quarter. Although a price increase for all
grades was implemented effective October 1, prices for all grades weakened
during the fourth quarter. Maintenance outages are scheduled at all of the major
market pulp mills in the fourth quarter.
-7-
<PAGE>
Break-even results for the newsprint business represented a significant decline
from last year and a slight decline from last quarter due to lower prices and
shipments. Average newsprint prices (including freight) of $529 per ton in the
third quarter of 1996 compared to $655 per ton last year and $600 per ton last
quarter. Shipments of 227,000 short tons of newsprint, specialty and directory
grades declined from 236,000 tons last year and last quarter, due to weakening
demand. Prices for newsprint and several grades of groundwood specialty papers
continued to decline early in the fourth quarter.
Earnings for the packaging business represented a decline from last year but an
improvement from last quarter's break-even results. The decline from last year
was due primarily to lower prices for kraft paper and linerboard. The
improvement from last quarter, in which a scheduled maintenance outage occurred,
was due principally to increased shipments of kraft paper and linerboard.
Shipments of 130,000 tons improved from 125,000 tons last year and 116,000 tons
last quarter. A price increase for kraft paper was implemented effective
October 1.
Wood Products Segment
The company's wood products segment, which includes the wood-related operations
of Weldwood, reported third quarter income from operations of $42 million, up
from $34 million a year ago and $29 million last quarter. The improvement from
last year was due principally to a 39% increase in lumber prices and lower
purchased wood costs. The improvement from last quarter was due mainly to a 14%
increase in lumber prices as well as improved west coast timber stumpage sales.
Total wood products shipments declined from last year due to the closure of
various wood products facilities during 1995.
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 first nine
months of 1996 were (U.S.) $591 million, accounting for 13% of consolidated net
sales of the company. Pre-tax income of the foreign subsidiaries for the first
nine months of 1996 was (U.S.) $124.6 million, accounting for 62% of the
consolidated pre-tax income of the company. Net income (after minority interest)
of the foreign subsidiaries for the first nine months of 1996 was (U.S.) $85.2
million, accounting for 64.9% of consolidated net income of the company.
Financial Condition
The company's current ratio was 1.5 to 1 at September 30, 1996, June 30,1996 and
year-end 1995. Total debt to total capitalization was 39% at September 30, 1996
as compared to 38% at June 30, 1996 and year-end 1995.
Significant Balance Sheet Line Item Changes For The Nine Months Ended September
30, 1996
Short-term investments declined by $95 million from December 31, 1995 to
partially fund the income tax payments, the reduction in accounts payable and
accrued liabilities, and the purchase of the publicly-held shares of Weldwood
referred to below. Receivables decreased by $83 million due mainly to
substantial price decreases for all of the company's major pulp and paper
grades. Inventories decreased by $54 million, primarily as a result of
reclassifying $58 million of maintenance parts as other assets. Timber and
timberlands - net increased by $253 million due principally to the acquisition
of Lake
-8-
<PAGE>
Superior Land Company in the first quarter of 1996 and the revaluation of timber
assets in connection with the Weldwood share purchase. Other assets and deferred
charges increased by $85 million reflecting the reclassification of maintenance
parts from inventory, pension contributions and the acquisition of real estate
land as part of the purchase of Lake Superior Land Company. Accounts payable and
accrued liabilities decreased by $55 million due mainly to the timing of
payments. Income taxes payable decreased by $117 million due to payments made in
the first nine months of 1996 for U.S. and foreign income taxes. The deferred
income tax liability increased by $145 million, which included $69 million
recorded in connection with the Lake Superior Land Company acquisition and $49
million recorded in connection with the Weldwood share purchase. Minority
interest in subsidiaries decreased by $101 million due to the Weldwood share
purchase. For a discussion of changes in long-term debt (including current
installments) and cash and cash equivalents, see below.
Cash Flows Statement - General
In the first nine months of 1996, the company's net cash provided by operating
activities and asset sales was not sufficient to meet the requirements of its
investing activities (principally capital expenditures and the acquisition of
Lake Superior Land Company) and its financing activities (principally debt
payments, cash dividends, the purchase of shares of the company's common stock
and the Weldwood share purchase). The difference was financed through borrowings
and the use of cash and cash equivalents. In the first nine months, net
borrowings generated cash proceeds of $166 million; long-term debt (including
current installments) increased by $205 million, including a $44 million
mortgage loan of Lake Superior Land Company which was outstanding at the time of
its acquisition. Cash and cash equivalents decreased by $33 million in the first
nine months to a total of $284 million, $241 million of which was held by the
company's Canadian and Brazilian subsidiaries.
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. 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 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. In the first nine months, the company purchased 9,964,737 shares of
common stock for $497 million.
Cash Flows Statement - Operating Activities
For the first nine months, net cash provided by operating activities of $346
million declined from $1,047 million a year ago. The decrease was due primarily
to lower earnings, higher income tax payments, lower deferred income taxes,
accounts payable and accrued liabilities and other liabilities, which were
partially offset by a decrease in receivables.
Cash Flows Statement - Investing Activities
For the first nine months, net cash used in investing activities of $336 million
increased from $263 million a year ago. The increase was due principally to the
acquisition of Lake Superior Land Company for $76 million (as well as a $44
million mortgage loan which was outstanding at the time of its acquisition), and
a decline in net proceeds from asset sales attributable to the sale of certain
operations in Canada last year, which were partially offset by an increase in
proceeds from the redemption of investments this year.
-9-
<PAGE>
The company's Brazilian subsidiary is currently negotiating the possible
purchase of Amapa Florestal e Celulose (AMCEL), a Brazilian company that owns
approximately 430,000 acres of land and a chip mill in the State of Amapa,
Brazil. The company anticipates completing the purchase in the fourth quarter.
Cash Flows Statement - Financing Activities
Net cash used in financing activities of $42 million declined from $532 million
a year ago. The change mainly reflects the purchase of shares of common stock by
the company and the reduction in long-term debt (including current installments)
last year, partially offset by this year's Weldwood share purchase.
At September 30, 1996, the company had $40 million of U.S. commercial paper
outstanding, all of which is classified as long-term debt, down from $93 million
at June 30, 1996 and $58 million at year-end 1995. At September 30, 1996 and
June 30, 1996, no notes were outstanding under the company's U.S. bank lines of
credit, compared to $40 million of such notes outstanding at year-end 1995.
Domestically, at September 30, 1996, $40 million of the company's unused bank
lines of credit of $1,250 million supported the classification of commercial
paper as long-term debt. At September 30, 1996, Weldwood had unused bank lines
of credit of $190 million.
On September 18, 1996, the company borrowed $45,685,000 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 company's Pensacola, Florida mill. The annual principal
payments requirements under the terms of all long-term agreements for the period
from October 1 through December 31, 1996 are $12 million and for the years 1997
through 2000 are $195 million, $467 million, $269 million and $205 million,
respectively.
-10-
<PAGE>
PART II. OTHER INFORMATION
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K.
- ------------------------------------------
(a) See exhibit index following the signature page.
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
-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, 1996 John M. Nimons
- -------------------------------------- ----------------------------------
(Signature)
John M. Nimons
Vice President and Controller
Date: November 13, 1996 Kenwood C. Nichols
- --------------------------------------- ---------------------------------
(Signature)
Kenwood C. Nichols
Vice Chairman and Executive Officer
-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.
3.1 - By-Laws of the company.
10.1 - Amendment dated as of August 15, 1996 to (i) Restated Agreement
between the company and Mr. Sigler, as amended as of February 19,
1987, April 21, 1988, August 18, 1988, September 19, 1991 and
November 17, 1994, and (ii) Agreement dated November 17, 1994
between the company and Mr. Sigler.
10.2 - Amendment dated as of August 15, 1996 to Agreement dated August 18,
1988 between the company and Mr. Heist, as amended as of September
19, 1991.
11 - Calculation of Primary Earnings Per Common Share and Fully Diluted
Earnings per Common Share (unaudited).
27 - Financial Data Schedule (unaudited).
-13-
<PAGE>
EXHIBIT 3.1
BY-LAWS
Champion International Corporation
(As amended to and including August 15, 1996)
<TABLE>
<CAPTION>
<S> <C>
Index To By-Laws
Article I. Meetings of Shareholders 1
Section 1. Annual Meetings
Section 2. Special Meetings
Section 3. Place of Meetings
Section 4. Notice of Meetings
Section 5. Quorum
Section 6. Voting
Section 7. List of Shareholders
Section 8. Inspectors of Election
Section 9. Advance Notice of Shareholder Nominations of Directors
Section 10. Advance Notice of Shareholder Proposed Business at Annual Meeting
Article II. Board of Directors 4
Section 1. Number, Election and Term of Office
Section 2. Vacancies
Section 3. Duties and Powers; Committees
Section 4. Annual and Regular Meetings; Notices
Section 5. Special Meetings; Notice
Section 6. Chairman
Section 7. Quorum
Section 8. Manner of Acting
Section 9. Resignation
Section 10. Removal
Section 11. Compensation of Certain Directors
Section 12. Participation in Meeting by Telephone or Similar Equipment
Article III. Officers 6
Section 1. Number, Qualification, Election and Term of Office
Section 2. Resignation
Section 3. Removal
Section 4. Vacancies
Section 5. Chief Executive Officer
Section 6. Chairman of the Board
Section 7. Vice Chairmen
</TABLE>
<PAGE>
Section 8. President
Section 9. Vice Presidents
Section 10. Secretary
Section 11. Treasurer
Section 12. Other Officers
Section 13. Salaries
Section 14. Sureties and Bonds
<TABLE>
<CAPTION>
<S> <C>
Article IV. Shares of Stocks 8
Section 1. Certificates Representing Shares
Section 2. Lost or Destroyed Certificates
Section 3. Holders of Record
Section 4. Regulations
Section 5. Fixing of Record Date
Article V. Dividends 9
Article VI. Right to Inspect Books 9
Article VII. Execution of Instruments 9
Section 1. Execution of Instruments
Section 2. Proxies
Article VIII. Fiscal Year 10
Article IX. Corporate Seal 10
Article X. Offices 10
Section 1. Office of the Corporation
Section 2. Other Offices
Article XI. Amendments 10
Article XII. Interpretation 10
</TABLE>
By-Laws of
Champion
International
Corporation
(As amended to and
including August 15, 1996)
Article I. Meetings of
<PAGE>
Shareholders
Section 1. Annual Meetings:
The annual meeting of the shareholders of
the Corporation for the election of directors
and for the transaction of such other
business as may come before the meeting
shall be held on the third Thursday in May
of each year, if not a legal holiday, or, if a
legal holiday, then on the next succeeding
day not a legal holiday or in all events on
such other day, not a legal holiday, as may
be fixed by the Board of Directors.
Section 2. Special Meetings:
Special meetings of the shareholders or of
the holders of a particular class or series of
stock may be called at any time by the
Chairman of the Board or a Vice Chairman or the
President, and shall be called by the Chairman of the
Board or a Vice Chairman or the President or the
Secretary at the written request of a majority of the
Board of Directors.
Section 3. Place of Meetings:
All meetings of shareholders shall be held at
the principal office of the Corporation in the
City of Stamford, State of Connecticut, or at
such other places as the Board of Directors
may select, or as shall be specified in the
respective notices or waivers of notices of
such meetings.
Section 4. Notice of Meetings:
(a) Written notice of each meeting of
shareholders, whether annual or special,
stating the purpose for which the meeting is
called and the place, date and hour of the
meeting shall be served either personally or
by mail, not less than ten nor more than fifty
days before the meeting, upon each
shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be
directed to each such shareholder at his
address as it appears on the stock books of the
Corporation, unless he shall have previously
<PAGE>
filed with the Secretary of the Corporation a
written request that notices intended for him
be mailed to some other address.
(b) Notice of any meeting need not be given to
any shareholder who submits a signed waiver
of notice, in person or by proxy, before or after
the meeting, or who attends a meeting in
person or by proxy, without protesting prior to
the conclusion of the meeting the lack of
notice thereof.
Section 5. Quorum:
(a) At all meetings of shareholders of the
Corporation there shall be necessary and
sufficient to constitute a quorum for the
transaction of any business the presence in
person or by proxy of shareholders holding of
record shares having in the aggregate a
majority of the total number of votes of all
shares of the Corporation then issued and
outstanding and entitled to vote on such
business at such meeting.
(b) In the absence of a quorum at any annual
or special meeting of shareholders, the
shareholders present in person or by proxy
and entitled to vote thereat or, if no
shareholders entitled to vote are present
in person or by proxy, any officer
authorized to preside at or to act as
secretary of such meeting, may adjourn
the meeting to a time and place
determined by majority vote of the
shareholders present in person or by
proxy, or by such officer, as the case may
be. At any such adjourned meeting at
which a quorum is present any business
may be transacted which might have been
transacted at the meeting as originally
called if a quorum had been present.
Section 6. Voting:
(a) Whenever any corporate action, other
than the election of directors, is to be
<PAGE>
taken by vote of the shareholders, it shall
be authorized by the majority of the votes
cast at a meeting of shareholders by the
holders of shares entitled to vote thereon.
(b) At each meeting of shareholders each
holder of record of shares of stock of the
Corporation entitled to vote shall be
entitled to vote the shares of such stock
held by him and registered in his name on
the books of the Corporation at the time of
such meeting unless, pursuant to the
provisions of Section 5 of Article IV of
these by-laws, a date shall have been fixed
as a record date for the determination of
the shareholders entitled to vote.
(c) Each shareholder entitled to vote may
vote by proxy, provided, however, that the
instrument authorizing such proxy to act
shall have been executed in writing by the
shareholder himself, or by his attorney
thereunto duly authorized in writing. No
proxy shall be valid after the expiration of
eleven months from the date of its
execution unless the person executing it
shall have specified therein the length of
time it is to continue in force.
Section 7. List of Shareholders:
It shall be the duty of the Secretary to
prepare or have prepared before each
meeting of shareholders a complete list of
the shareholders entitled to vote thereat.
Such list shall be produced at such
meeting upon the request thereat or prior
thereto of any shareholder.
Section 8. Inspectors of
Election:
Unless the Board of Directors shall have
made such appointment prior to such
meeting, at each meeting of the
shareholders the chairman of the meeting
may, and at the request of any shareholder
<PAGE>
entitled to vote thereat shall, appoint one or
more persons, who need not be share-
holders, to act as inspectors of election at
such meeting. The inspectors so appointed,
before entering on the discharge of their
duties, shall take and subscribe an oath or
affirmation faithfully to execute the duties
of inspectors at such meeting with strict
impartiality and according to the best of
their ability.
Section 9. Advance Notice of
Shareholder Nominations of
Directors:
Only persons who are nominated in
accordance with the following procedures
shall be eligible for election as directors.
Nominations of persons for election to the
Board of Directors of the Corporation may
be made at a meeting of shareholders by or
at the direction of the Board of Directors, by
the Committee on Board Affairs or by any
person appointed by the Board of Directors
or by any shareholder of the Corporation
entitled to vote for the election of directors
at the meeting who complies with the notice
procedures set forth in this Section 9. Such
nominations by a shareholder shall be
made pursuant to timely notice in writing to
the Secretary of the Corporation. To be
timely, a shareholder's notice shall be
delivered to or mailed and received at the
principal executive offices of the
Corporation not less than 60 days nor more
than 90 days prior to the meeting;
provided, however, that in the event that
the meeting is not to be held on the date set
forth in Section 1 and less than 75 days'
notice of prior public disclosure of the date
of the meeting is given or made to
shareholders, notice by the shareholder to
be timely must be so received not later than
the close of business on the 15th day
following the day on which such notice of
the date of the meeting was mailed or such
<PAGE>
public disclosure was made. Such
shareholder's notice to the Secretary shall
set forth (a) as to each person whom the
shareholder proposes to nominate for
election or re-election as a director, (i) the
name, age, business address and residence
address of the person, (ii) the principal
occupation or employment of the person,
(iii) the class and number of shares of
capital stock of the Corporation which are
beneficially owned by the person and (iv)
any other information relating to the
person that is required to be disclosed in
solicitations for proxies for election of
directors pursuant to Rule 14a under the
Securities Exchange Act of 1934, as
amended; and (b) as to the shareholder
giving the notice (i) the name and record
address of the shareholder and (ii) the
class and number of shares of capital
stock of the Corporation which are
beneficially owned by the shareholder.
The Corporation may require any pro-
posed nominee to furnish such other
information as may reasonably be
required by the Corporation to determine
the eligibility of such proposed nominee to
serve as a director of the Corporation. No
person shall be eligible for election as a
director of the Corporation unless
nominated in accordance with the proce-
dures set forth herein.
The Chairman of the meeting shall, if the
facts warrant, determine and declare to
the meeting that a nomination was not
made in accordance with the foregoing
procedure and, if he should so determine,
he shall so declare to the meeting and the
defective nomination shall be disregarded.
Section 10. Advance Notice of
Shareholder Proposed Business
at Annual Meetings:
At an annual meeting of the shareholders,
<PAGE>
only such business shall be conducted as
shall have been properly brought before
the meeting. To be properly brought before
an annual meeting, business must be
specified in the notice of meeting (or any
supplement thereto) given by or at the
direction of the Board of Directors,
otherwise properly brought before the
meeting by or at the direction of the Board
of Directors, or otherwise properly brought
before the meeting by a shareholder. In
addition to any other applicable
requirements, for business to be properly
brought before an annual meeting by a
shareholder, the shareholder must have
given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or
mailed and received at the principal
executive offices of the Corporation not less
than 60 days prior to the meeting; provided,
however, that in the event that the meeting
is not to be held on the date set forth in
Section 1 and less than 75 days' notice or
prior public disclosure of the date of the
meeting is given or made to shareholders,
notice by the shareholder to be timely must
be so received not later than the close of
business on the 15th day following the day
on which such notice of the date of the
annual meeting was mailed or such public
disclosure was made. A shareholder's notice
to the Secretary shall set forth as to each
matter the shareholder proposes to bring
before the annual meeting (i) a brief
description of the business desired to be
brought before the annual meeting, (ii) the
name and record address of the shareholder
proposing such business, (iii) the class and
number of shares of the Corporation which
are beneficially owned by the shareholder,
and (iv) any material interest of the
shareholder in such business.
Notwithstanding anything in the by-laws to
<PAGE>
the contrary, no business shall be conducted
at the annual meeting except in accordance
with the procedures set forth in this Section
10, provided, however, that nothing in
this Section 10 shall be deemed to preclude
discussion by any shareholder of any
business properly brought before the annual
meeting in accordance with said procedure.
The Chairman of an annual meeting shall,
if the facts warrant, determine and declare
to the meeting that business was not
properly brought before the meeting in
accordance with the provisions of this
Section 10 and, if he should so determine, he
shall so declare to the meeting and any such
business not properly brought before the
meeting shall not be transacted.
Article II. Board of
Directors
Section 1. Number, Election
and Term of Office:
(a) The number of directors, exclusive of
directors who may be elected pursuant to
paragraph (b) of this Section 1, shall not
be less than nine nor more than twenty;
the exact number shall be fixed from time
to time by resolution of the Board of
Directors adopted by a majority of the
total number of directors which the
Corporation would have if there were no
vacancies.
Directors shall be divided into three
classes with the class expiring at
succeeding annual meetings of share-
holders. All classes shall be as nearly
equal in number as possible, and no class
shall include less than three directors.
At each annual meeting, directors to
replace those whose terms expire at such
annual meeting shall be elected, each such
director to hold office until the third
<PAGE>
succeeding annual meeting and until his
successor is elected and qualified, or until
his death, resignation or removal.
Terms of office of directors are further
subject to the provisions of paragraph (d)
of this Section 1.
Any newly created directorships, or any
decrease in directorships, shall be
apportioned among the three classes of
directors as to make all classes as nearly
equal in number as possible. When the
number of directors is increased by the
Board of Directors any newly created
directorships may be filled by a majority
vote of the directors then in office even
though less than a quorum. There shall be
no classification of the additional
directors until the next annual meeting of
shareholders. No decrease by the Board of
Directors of the number of directors shall
shorten the term of office of any
incumbent director.
(b) In the event that the Preference Stock
of the Corporation shall be entitled at any
annual meeting of shareholders to vote
separately as a single class to elect two
directors pursuant to the Certificate of
Incorporation, the number of directors to be
elected at such annual meeting shall be
increased by two, after any reduction and
reclassification of directors which may be
made prior to or effective at such annual
meeting by the Board of Directors pursuant
to paragraph (a) of this Section 1. The
directors to be so elected by said Preference
Stock shall not be classified. Each director
so elected by said Preference Stock shall
hold office until the annual meeting of
shareholders next succeeding his election
and until his successor, if any, is elected by
said Preference Stock and qualified, or until
his death, resignation or removal.
<PAGE>
(c) Except as otherwise provided herein, the
members of the Board of Directors of the
Corporation shall be elected by a plurality
of the votes cast at a meeting of share-
holders by the holders of shares entitled to
vote in the election.
(d) Except as the Board of Directors may
otherwise provide from time to time, no
person shall be eligible to serve as a
director after the annual meeting of share-
holders immediately following his
seventieth birthday.
Section 2. Vacancies:
Any vacancy in the Board of Directors,
occurring by reason of the death, resigna-
tion, disqualification, removal for cause or
inability to act of any director, shall be
filled by a majority vote of the remaining
directors though less than a quorum. Any
director elected by the Board of Directors to
fill such a vacancy shall hold office until
the annual meeting of shareholders next
succeeding his election and until his
successor is elected and qualified, or until
his death, resignation or removal.
Section 3. Duties and Powers;
Committees:
(a) The business of the Corporation shall be
managed under the direction of the Board of
Directors. The Board of Directors may
exercise all powers of the Corporation
except as herein, in the Certificate of
Incorporation or by statute expressly
conferred upon or reserved to the
shareholders.
(b) The Board of Directors may, by
resolution adopted by a majority of the
total number of directors which the
Corporation would have if there were no
vacancies, designate from its number the
<PAGE>
members of an Audit Committee, a Board
Affairs Committee, a Compensation and
Stock Option Committee, a Pension
Funding and Investment Committee and
one or more other committees, each of
which shall consist of three or more
directors, and each of which shall have
such authority and powers as may from
time to time be delegated to it by
resolution adopted in the same manner.
Section 4. Annual and Regular
Meetings; Notices:
(a) A regular annual meeting of the Board
of Directors shall be held as promptly as
practicable following the annual meeting
of the shareholders at the place of such
annual meeting of shareholders, or at
such other place or time as the Board of
Directors may determine.
(b) The Board of Directors from time to
time may provide by resolution for the
holding of other regular meetings of the
Board of Directors and may fix the time
and place thereof.
(c) Notice of any regular meeting of the
Board of Directors shall not be required to
be given; provided, however, that in case
the Board of Directors shall fix or change
the time or place of any regular meeting,
notice of such action shall be directed to
the residence or usual place of business of
each director who shall not have been
present at the meeting at which such
action was taken, unless such notice shall
be waived in the manner set forth in
paragraph (c) of Section 5 of this Article
II. Such notice may be given by first class
mail if mailed at least five days before the
day of the meeting or may be given by
courier, telex or telephone, facsimile or
any other method of telecommunication at
least 48 hours before the time of the
<PAGE>
meeting.
Section 5. Special Meetings;
Notice:
(a) Special meetings of the Board of
Directors shall be held whenever called by
the Chairman of the Board or by a Vice Chairman
or by the President or by any two or more directors
at such time and place as may be specified in
the respective notices or waivers of notice
thereof.
(b) Notice of such special meeting shall
specify the purpose of the meeting, and
shall be directed to each director at his
residence or usual place of business. Such
notice may be given by first class mail if
mailed at least five days before the day of
the meeting or may be given by courier,
telex or telephone, facsimile or any other
method of telecommunication at least 48
hours before the time of the meeting.
(c) Notice of any special meeting shall not
be required to be given to any director who
shall attend such meeting in person without
protesting, prior thereto or at its commence-
ment, the lack of notice to him, or to any
director who shall waive notice of such
meeting in writing or by telex, facsimile or
any other method of telecommunication
whether before or after the time of such
meeting. Notice of any adjourned meeting
need not be given.
Section 6. Chairman:
At all meetings of the Board of Directors the
Chairman of the Board or, in his absence,
one of the Vice Chairmen (determined on the
basis of seniority in such office) or, in
the absence of all of the Vice Chairmen,
the President or, in the absence of all of
them, a chairman chosen by the directors
present shall preside.
<PAGE>
Section 7. Quorum:
(a) At all meetings of the Board of Directors
the presence of a majority of the total
number of directors which the Corporation
would have if there were no vacancies shall
be necessary and sufficient to constitute a
quorum for the transaction of business.
(b) A majority of the directors present at the
time and place of any regular or special
meeting, although less than a quorum, may
adjourn the same from time to time without
further notice until a quorum shall be
present.
Section 8. Manner of Acting:
(a) At all meetings of the Board of
Directors each director present shall have
one vote.
(b) Except as otherwise provided herein,
the vote of a majority of the directors
present at the time of the vote, if a quorum
is present at such time, shall be the act of
the Board of Directors.
Section 9. Resignation:
Any director may resign at any time by
giving written notice to the Board, of
Directors, the Chairman of the
Board, a Vice Chairman, the
President or the Secretary of the
Corporation. Unless otherwise specified in
such written notice, such resignation shall
take effect upon receipt thereof by the
Board of Directors or by such officer, and
the acceptance of such resignation shall
not be necessary to make it effective.
Section 10. Removal:
Any director may be removed with or
without cause at any time by the vote of
the holders of the respective class or
classes of stock by which such director
was elected, given at a special meeting of
<PAGE>
the shareholders of such class or classes
called for the purpose.
Section 11. Compensation of
Certain Directors:
Directors who are not officers or
employees of the Corporation may receive
such compensation for their services, and
allowances for expenses, as the Board of
Directors may fix from time to time.
Section 12. Participation in
Meeting by Telephone or
Similar Equipment:
Any one or more members of the Board of
Directors or any committee thereof may
participate in a meeting of the Board of
Directors or such committee by means of a
conference telephone or similar
communications equipment allowing all
persons participating in the meeting to
hear each other at the same time.
Participation by such means shall
constitute presence in person at a meeting.
Article III. Officers
Section 1. Number, Qualification,
Election and Term of Office:
(a) The officers of the Corporation shall be
a Chairman of the Board of Directors and/or a
President (one of whom shall be designated
Chief Executive Officer), and one or more
Vice Presidents, a Secretary, a Treasurer
and such other officers as the Board of
Directors may from time to time determine.
The Chairman of the Board, each Vice Chairman
and the President shall each be and remain a
director of the Corporation during the term
of his office. Any two offices, except the
offices of President and Secretary, may be
held by the same person.
(b) Each officer of the Corporation shall be
elected by the Board of Directors and shall
hold office until the annual meeting of the
<PAGE>
Board of Directors next succeeding his
election and until his successor shall have
been elected and qualified or until his death,
resignation or removal.
Section 2. Resignation:
Any officer may resign at any time by
giving written notice of such resignation to
the Board of Directors, the Chairman of the
Board, a Vice Chairman, the President or the
Secretary of the Corporation. Unless otherwise
specified in such written notice, such
resignation shall take effect upon receipt
thereof by the Board of Directors or by such
officer, and the acceptance of such
resignation shall not be necessary to make
it effective.
Section 3. Removal:
Any officer may be removed, either for or
without cause, and a successor elected, by
the Board of Directors.
Section 4. Vacancies:
A vacancy in any office, occurring by
reason of death, resignation, inability to
act, disqualification, removal or any other
cause, may be filled for the unexpired
portion of the term by the Board of
Directors.
Section 5. Chief Executive
Officer:
The Chief Executive Officer shall serve as
general manager of the property, business
and affairs of the Corporation, its
subsidiaries, affiliates and divisions, and
shall report directly to the Board of
Directors, with all other officers and
personnel reporting directly or indirectly
to him.
Section 6. Chairman of the
Board:
The Chairman of the Board shall preside
<PAGE>
at meetings of the shareholders and at
meetings of the Board of Directors, and
shall have such other powers and shall
discharge such other duties as are
generally incident to the office of
Chairman of the Board or as may be
assigned to him from time to time by the
Board of Directors. If the Chairman of the
Board is not the Chief Executive Officer,
he shall have such additional powers and
duties as may be assigned to him from
time to time by the Chief Executive
Officer.
Section 7. Vice Chairmen:
The Vice Chairmen shall have such powers and
shall discharge such duties as are generally
incident to the office of Vice Chairman. In
the absence of the Chairman of the Board, one
of the Vice Chairmen (determined on the basis
of seniority in such office) shall preside at
meetings of the shareholders and at meetings
of the Board of Directors. Each Vice Chairman
shall have such additional powers and duties
as may be assigned to him from time to time by
the Board of Directors, the Chairman of the
Board or the Chief Executive Officer.
Section 8. President:
The President shall have such powers and
shall discharge such duties as are
generally incident to the office of
President or as may be assigned to him
from time to time by the Board of
Directors. In the absence of the Chairman
of the Board and all of the Vice Chairmen,
the President shall preside
at meetings of the shareholders and
at meetings of the Board of Directors. If
the President is not the Chief Executive
Officer, he shall have such additional
powers and duties as may be assigned to
him from time to time by the Chief
Executive Officer.
<PAGE>
Section 9. Vice Presidents:
The Vice Presidents shall have such
powers and shall discharge such duties as
are generally incident to the office of Vice
President. Each Vice President shall have
such other powers and discharge such
other duties as may be assigned to him
from time to time by the Board of
Directors, the Chairman of the Board,
a Vice Chairman or the President.
Section 10. Secretary:
The Secretary shall record the minutes of
the meetings of the shareholders and of the
Board of Directors in books to be kept for
that purpose, and shall perform like duties
for committees appointed by the Board of
Directors when required. He shall give, or
cause to be given, all notices required
pursuant to these by-laws. He shall have
custody of the corporate seal and shall have
authority to affix the same to all
instruments executed and delivered on
behalf of the Corporation, and he shall have
authority to attest the corporate seal when
so affixed. He shall have charge of the
shareholder records, which may be kept by
a transfer agent or agents under his
direction. The Secretary shall have such
other powers and discharge such other
duties as are generally incident to the office
of Secretary or as may be assigned to him
from time to time by the Board of Directors,
the Chairman of the Board, a Vice Chairman or
the President. If there shall be one or more
Assistant Secretaries, each shall, in the absence
of the Secretary, or at his request, have his
powers and discharge his duties.
Section 11. Treasurer:
The Treasurer shall have custody of all
funds and securities of the Corporation,
shall keep full and accurate accounts of
receipts and disbursements in books to be
kept for the purpose and shall deposit all
<PAGE>
money and other valuable effects in the
name and to the credit of the Corporation
in such depositories as may be designated
in a manner authorized by the Board of
Directors. He shall borrow, invest and
disburse funds on behalf of the Corporation
as may be authorized by the Board of
Directors and shall render periodic accounts
of his transactions as Treasurer. The
Treasurer shall have such other powers and
shall discharge such other duties as are
generally incident to the office of Treasurer
or as may be assigned to him from time to
time by the Board of Directors, the
Chairman of the Board, a Vice Chairman or
the President. If there shall be one or more
Assistant Treasurers, each shall, in the absence
of the Treasurer, or at his request, have his
powers and discharge his duties.
Section 12. Other Officers:
Each other officer shall have such powers
and discharge such duties as are prescribed
by law or as may be assigned to him from
time to time by the Board of Directors or
by the Chairman of the Board or a Vice
Chairman or the President of the Corporation.
Section 13. Salaries:
No officer shall be prevented from
receiving a salary or any other compen-
sation by reason of the fact that he is also
a director of the Corporation.
Section 14. Sureties and
Bonds:
In case the Board of Directors shall so
require, any officer or agent of the
Corporation shall execute to the Corpora-
tion a bond in such sum and with such
surety or sureties as the Board of
Directors may direct, conditioned upon the
faithful performance of his duties to the
Corporation, including responsibility for
negligence and for the accounting for all
<PAGE>
property, funds or securities of the
Corporation which may come into his
hands.
Article IV. Shares of
Stock
Section 1. Certificates
Representing Shares:
The shares of the Corporation shall be
represented by certificates or shall be
uncertificated shares. Certificates shall be
signed by the Chairman of the Board
or a Vice Chairman or the President
or a Vice President and the
Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer, and
may be sealed with the seal of the
Corporation or a facsimile thereof. The
signatures of the officers upon a
certificate may be facsimiles if the
certificate is countersigned by a transfer
agent or registered by a registrar acting
on behalf of the Corporation. In case any
officer who has signed or whose facsimile
signature has been placed upon a
certificate shall have ceased to be such
officer before such certificate is issued, it
may be issued by the Corporation with the
same effect as if he were such officer at the
date of issue.
Section 2. Lost or Destroyed
Certificates:
The holder of any shares of stock of the
Corporation represented by a certificate
shall immediately notify the Corporation
and its registrar and transfer agent of the
loss or destruction of such certificate. The
Corporation may issue a new certificate in
the place of any certificate theretofore
issued by it alleged to have been lost or
destroyed and the Board of Directors may
require the owner of the lost or destroyed
certificate, or his legal representatives, to
give the Corporation a bond in such sum as
<PAGE>
the Board of Directors, or any person
delegated by it, may direct and with such
surety or sureties as may be satisfactory to
the Board of Directors, or any person
delegated by it, to indemnify the
Corporation against any claim that may be
made against it and/or its transfer agent
and/or registrar on account of the alleged
loss or destruction of any such certificate. A
new certificate may be issued without
requiring any bond when, in the judgment
of the Board of Directors, it is proper to do
so.
Section 3. Holders of Record:
The Corporation shall be entitled to treat
the holder of record of any share or shares
of stock as the absolute owner thereof for all
purposes and, accordingly, shall not be
bound to recognize any legal, equitable or
other claim to, or interest in, such share or
shares on the part of any other person
whether or not it or they shall have express
or other notice thereof.
Section 4. Regulations:
The Board of Directors may make such
rules and regulations as it may deem
expedient, including the appointment of co-
transfer agents and co-registrars in or
outside of the State of New York,
concerning the issuance, transfer and
registration of shares of stock of the
Corporation either represented by certifi-
cates or uncertificated, and may require all
certificates representing any class of stock
to bear the signature or signatures
of a transfer agent and/or registrar
appointed for such class of stock.
Section 5. Fixing of Record
Date:
The Board of Directors may fix a day (i)
not more than fifty days nor less than ten
days prior to the day of holding any
<PAGE>
meeting of shareholders or (ii) not more
than fifty days prior to the last day on
which the consent or dissent of share-
holders may be expressed for any purpose
without a meeting, or the day fixed for the
payment of any dividend or the distribu-
tion of any subscription or other rights or
interests, or the day on which any other
action is to be taken, as a record date for
the determination of the shareholders who
are entitled to notice of and to vote at such
meeting or any adjournment thereof, or
whose consent or dissent is required or
may be expressed for any purpose, or who
are entitled to receive such dividends or
rights or interests or whose identity is to
be determined for the purposes of any
such other action.
Article V. Dividends
Dividends may be declared and paid out
of any funds available therefor as often,
in such amounts and at such time or times
as the Board of Directors may determine.
Article VI. Right to
Inspect Books
The Board of Directors is authorized from
time to time to determine whether and to
what extent, at what time and place, and
under what conditions and regulations,
the books and accounts of the Corporation
or any of them shall be open to the
inspection of any shareholder.
Article VII.
Execution of
Instruments
Section 1. Execution of
Instruments:
Any drafts, bills of exchange, acceptances,
bonds, endorsements, notes or other obliga-
tions or evidences of indebtedness of the
Corporation, and all deeds, mortgages,
indentures, bills of sale, conveyances,
<PAGE>
endorsements, assignments, transfers, stock
powers or other instruments of transfer,
contracts, agreements, dividend or other
orders, powers of attorney, waivers, con-
sents, returns, reports, certificates,
demands, notices or documents, and other
instruments of any nature may be signed,
executed, verified, acknowledged and
delivered by the Chairman of the Board,
a Vice Chairman or the President or
by such other officers, agents or
employees of the Corporation, or any of
them, as from time to time may be deter-
mined by the Board of Directors, provided,
however, that authority to sign, execute,
verify, acknowledge and deliver any con-
tracts of, or other documents and instru-
ments requiring execution by, the Corpora-
tion may be conferred by the Board of
Directors upon any person whether or not
such person be an officer of the Corporation;
and provided further, that such person may
delegate from time to time by instrument in
writing all or any part of such authority to
any other person if authorized so to do by
the Board of Directors.
Section 2. Proxies:
Proxies to vote with respect to shares of
stock of other corporations owned by or
standing in the name of the Corporation
and waivers of notice of meetings of the
shareholders of other corporations, the
stock of which is owned by or stands in the
name of the Corporation, may be executed
and delivered from time to time on behalf of
the Corporation by the Chairman of the
Board, a Vice Chairman, the President, the
Secretary or any other person or persons
thereunto authorized by the Board of Directors.
Article VIII. Fiscal
Year
The fiscal year of the Corporation shall
begin on the 1st day of January and end
<PAGE>
on the 31st day of December in each year.
Article IX. Corporate
Seal
The corporate seal shall be circular in
form and shall bear the name of the
Corporation, the words "Corporate Seal"
and words and figures denoting its
organization under the laws of the State
of New York, and the year thereof, and
otherwise shall be in such form as shall be
approved from time to time by the Board
of Directors.
Article X. Offices
Section 1. Office of the
Corporation:
The office of the Corporation (as defined
in Section 102 of the New York Business
Corporation Law) shall be in the Borough
of Manhattan, City and State of New
York.
Section 2. Other Offices:
The Corporation may establish and
maintain one or more offices outside of the
State of New York in such places as the
Board of Directors may from time to time
deem advisable.
Article XI.
Amendments
(a) All by-laws of the Corporation shall be
subject to amendment or repeal, and new
by-laws may be adopted, by the vote of the
shareholders at any annual or special
meeting, the notice or waiver of notice of
which shall have summarized or set forth
in full the proposed amendment.
(b) The Board of Directors shall have
power, by majority vote of the total
number of directors which the Corpora-
tion would have if there were no
vacancies, to adopt, amend and repeal from
<PAGE>
time to time by-laws of the Corporation;
provided, however, that the shareholders
may amend or repeal by-laws made by the
Board of Directors and may from time to
time limit or define the right of the Board of
Directors to amend or repeal any by-law or
by-laws adopted by the shareholders.
Without limiting the generality of the
foregoing, the provisions of paragraph (a) of
Section 1 of Article II and any other
provisions hereof relating to the
classification of directors may be repealed
by the majority vote of the total number of
directors which the Corporation would have
if there were no vacancies or may be
amended or supplemented, by such vote, in
any manner not resulting in a term of office
of directors longer than that provided in
said provisions.
Article XII.
Interpretation
These by-laws are subject and subordinate
to the provisions of applicable law,
including without limitation the Business
Corporation Law of the State of New York,
and the provisions of the Certificate of
Incorporation, as the same may be in effect
from time to time.
As used in these by-laws, the term
Certificate of Incorporation shall mean the
Restated Certificate of Incorporation of the
Corporation and any amendments thereto.
<PAGE>
EXHIBIT 10.1
THIS AGREEMENT between Champion International Corporation, a New York
corporation (the "Company"), and Andrew C. Sigler (the "Executive") is effective
as of August 15, 1996.
WHEREAS, the Company and the Executive entered into a Restated
Agreement as amended February 19, 1987 and as further amended as of April 21,
1988, August 18, 1988, September 19, 1991 and November 17, 1994 (the "Restated
Agreement"); and
WHEREAS, the Company and the Executive entered into a Letter Agreement
dated November 17, 1994 (the "Letter Agreement"); and
WHEREAS, the parties desire to amend the Restated Agreement and the
Letter Agreement in the manner set forth below;
NOW THEREFORE, it is hereby agreed by and between the parties as
follows:
1. The first sentence of subparagraph 9(b)(i) of the Restated
Agreement is hereby amended in its entirety to read:
"Effective August 15, 1996, the Executive is indefeasibly vested,
subject to subparagraph 9(b)(iv) and paragraph 10, in a monthly retirement
allowance, subject to any reduction required by subparagraph 9(b)(iii),
equal to one-twelfth (1/12) of ninety percent (90%) of the Executive's
Average Annual Compensation, as hereafter defined, less one-twelfth (1/12)
of fifty percent (50%) of the Executive's annual Social Security Benefits."
2. The last paragraph on page 1 of the Letter Agreement is hereby amended
in its entirety to read:
"In consideration for the performance of the duties of advisor
and consultant, you will be compensated at an annual rate of $50,000 for a
period of five years from the date of your retirement; you also will be
provided, for a period of ten years from the date of your retirement, with
suitable office accommodations, appropriate secretarial and chauffeur
services, all telephone, fax and other customary administrative support
services that you may require and the use of an airplane on the terms more
fully described in Exhibit "A" hereto. Each annual payment of $50,000 will
be made in a single lump sum on the anniversary of the date of your
retirement. You also will be entitled to reimbursement for all reasonable
expenses incurred in the performance of your duties as advisor and
consultant."
1
<PAGE>
3. A new Exhibit A is attached to and made a part of the Letter
Agreement in the form attached hereto.
4. The Restated Agreement and the Letter Agreement as amended by
this Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
5. The Company and the Executive understand and agree that all
references in the Restated Agreement and the Letter Agreement to the provisions
thereof that are amended hereby shall be deemed to be references to such
provisions as amended hereby.
6. Except as amended hereby, all of the terms and conditions set
forth in the Restated Agreement and the Letter Agreement shall continue in full
force and effect without change.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereto, and the Executive has executed this
Agreement, all as of August 15, 1996.
CHAMPION INTERNATIONAL CORPORATION
By /s/ Lawrence G. Rawl
-------------------------------------
Chairman of the Compensation and Stock
Option Committee
ATTEST:
/s/ Lawrence A. Fox
- ------------------------------
Vice President and Secretary
/s/ Andrew C. Sigler
--------------------------------
Andrew C. Sigler
2
<PAGE>
EXHIBIT A
----------
Description of Airplane
- -----------------------
The airplane which will be made available for Sigler's use is the King
Air C 90 B currently owned by Champion. In the event said airplane is damaged
to the extent that it cannot be repaired, or is sold or otherwise disposed of by
Champion, a substantially similar airplane will be made available by Champion
for Sigler's use.
Certain Reimbursements by Sigler
- --------------------------------
Sigler shall pay to Champion for his use of the airplane $500
multiplied by the number of inflight hours during which he uses the airplane.
Such payments shall be made by Sigler periodically upon receipt of invoices from
Champion. The hourly rate set forth above may be adjusted from time to time
based upon and in proportion to increases or decreases in Champion's direct
hourly cost of operating the airplane. The term "direct hourly cost" includes
costs of fuel, maintenance, insurance, parts, landing and parking fees, pilots'
travel expenses, and catering and miscellaneous expenses. No payments shall be
required from Sigler for time during which he uses the airplane in connection
with consulting assignments from Champion.
3
<PAGE>
EXHIBIT 10.2
THIS AGREEMENT between Champion International Corporation, a New York
corporation (the "Company"), and L. C. Heist (the "Executive") is effective as
of August 15, 1996.
WHEREAS, the Company and the Executive entered into an Agreement dated
August 18, 1988, as amended as of September 19, 1991 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement in the manner set
forth below;
NOW THEREFORE, it is hereby agreed by and between the parties as
follows:
1. The heading of subparagraph 9(b) of the Agreement is hereby
amended in its entirety to read "Retirement".
2. The first sentence of subparagraph 9(b)(i) of the Agreement is
hereby amended in its entirety to read :
"Effective August 15, 1996, the Executive is indefeasibly
vested, subject to subparagraph 9(b)(iv) and paragraph 10, in a
monthly retirement allowance, subject to any reduction required by
subparagraph 9(b)(iii), equal to one-twelfth (1/12) of seventy-seven
percent (77%) of the Executive's Average Annual Compensation, as
hereafter defined, less one-twelfth (1/12) of fifty percent (50%) of
the Executive's annual Social Security Benefits."
3. Subparagraph 9(b)(ii) of the Agreement is hereby amended by
deleting the portion thereof from and including the words "equal to three
percent (3%) of the Executive's Average Annual Compensation" through the end
thereof, and in their place including the following:
"equal to sixty percent (60%) of the monthly retirement allowance
that either (A) was payable to the Executive under subparagraph
9(b)(i) (prior to any reduction required by subparagraph 9(b)(iii))
immediately prior to the Executive's death or (B) would have been
payable to the Executive under subparagraph 9(b)(i) (prior to any
reduction required by subparagraph 9(b)(iii)) had the Executive
retired on the day before his death."
4. The Agreement as amended hereby shall be governed by and
construed in accordance with the laws of the State of New York.
5. The Company and the Executive understand and agree that all
references in the Agreement to the provisions thereof that are amended hereby
shall be deemed to be references to such provisions as amended hereby.
1
<PAGE>
6. Except as amended hereby, all of the terms and conditions set
forth in the Agreement shall continue in full force and effect without change.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and its seal to be affixed hereto, and the Executive has executed this
Agreement, all as of August 15, 1996.
CHAMPION INTERNATIONAL CORPORATION
By /s/ Lawrence G. Rawl
--------------------------------------
Chairman of the Compensation and Stock
Option Committee
ATTEST:
/s/ Lawrence A. Fox
- ------------------------------
Vice President and Secretary
/s/ L. C. Heist
--------------------------------
L. C. Heist
2
<PAGE>
EXHIBIT 11
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
Calculation of Primary Earnings Per Common Share and
Fully Diluted Earnings Per Common Share (unaudited)
(in thousands, except per share)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------- --------------------------
1996 1995 1996 1995
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Primary earnings per common share:
Net Income $ 131,202 $ 554,341 $ 32,001 $ 235,583
Dividends on Preference Shares --- 13,258 --- ---
--------- --------- --------- --------
Net Income Applicable to Common Stock $ 131,202 $ 541,083 $ 32,001 $ 235,583
========= ========= ========= =========
Average number of common shares outstanding 95,515 94,213 95,529 95,568
========= ========= ========= =========
Per share $ 1.37 $ 5.74 $ .33 $ 2.47
========= ========= ========= =========
Fully diluted earnings per common share:
Net Income Applicable to Common Stock $131,202 $541,083 $ 32,001 $ 235,583
Add income effect, assuming conversion of
dilutive convertible securities --- 15,106 --- ---
--------- --------- --------- --------
Net income on a fully diluted basis $131,202 $556,189 $ 32,001 $ 235,583
========= ========= ========= =========
Average number of common shares outstanding 95,515 94,213 95,529 95,568
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 95,515 102,442 95,529 96,625
========= ========= ========= =========
Per share $ 1.37 $ 5.43 $ .33 $ 2.44
========= ========= ========= =========
</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 Cumulative Convertible Preference Stock, and on
June 30, 1995, the company purchased an additional 2,000,000 shares of
Common Stock. As a result of this reduction in the number of shares
outstanding, 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.
<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,
1996 AND THE CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1996 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-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 283,906
<SECURITIES> 3,671
<RECEIVABLES> 576,989
<ALLOWANCES> 18,486
<INVENTORY> 429,899
<CURRENT-ASSETS> 1,381,943
<PP&E> 11,424,123<F1>
<DEPRECIATION> 3,569,709
<TOTAL-ASSETS> 9,701,798
<CURRENT-LIABILITIES> 947,179
<BONDS> 2,981,578
0
0
<COMMON> 55,156
<OTHER-SE> 3,697,078
<TOTAL-LIABILITY-AND-EQUITY> 9,701,798
<SALES> 4,448,247
<TOTAL-REVENUES> 4,448,247
<CGS> 3,829,869
<TOTAL-COSTS> 3,829,869
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 162,394
<INCOME-PRETAX> 199,804
<INCOME-TAX> 68,602
<INCOME-CONTINUING> 131,202
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 131,202
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
<FN>
<F1>Includes timber and timberlands.
</FN>
</TABLE>
