CHAMPION INTERNATIONAL CORP, 10-K405, 1996-03-29

CHAMPION INTERNATIONAL CORP
10-K405, 1996-03-29
PAPER MILLS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1995 Commission file no. 1-3053

CHAMPION INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)

New York 13-1427390
(State of incorporation) (I.R.S. Employer Identification No.)

One Champion Plaza
Stamford, Connecticut 06921
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (203) 358-7000

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
------------------- -----------------------

Common Stock, $.50 par value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of voting stock held by non-affiliates of the
registrant as of February 29, 1996 was approximately $3,814,000,000.

As of February 29, 1996, 95,470,948 shares of common stock of the registrant
were outstanding.

Portions of the registrant's Annual Report to Shareholders for the fiscal
year ended December 31, 1995 are incorporated by reference in Parts I, II and IV
hereof. Portions of the registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders scheduled to be held on May 16, 1996 are incorporated by
reference in Part III hereof.

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PART I

Item 1. Business

General

Champion International Corporation was incorporated under the laws of the
State of New York on April 28, 1937. References to the "Company" include
Champion International Corporation and its subsidiaries at December 31, 1995,
unless the context otherwise requires.

The Company is one of the leading domestic manufacturers of paper for
business communications, commercial printing, publications and newspapers. In
addition, the Company has significant market pulp, plywood and lumber
manufacturing operations and owns or controls approximately 5,300,000 acres of
timberlands in the United States. The Company's Canadian and Brazilian
subsidiaries also own or control significant timber resources supporting their
operations.

The Company's business segments are paper and wood products. See Note 14 of
"Notes to Financial Statements" on pages 52 and 53 of the Company's Annual
Report to Shareholders for the fiscal year ended December 31, 1995 (the
"Company's 1995 Annual Report"), which Note is incorporated by reference herein,
for information concerning the Company's business segments and operations in
different geographic areas for 1993, 1994 and 1995.

Paper

See the "Paper Net Sales" table on page 32 of the Company's 1995 Annual
Report, which table is incorporated by reference herein, for information
concerning the net sales to unaffiliated customers of the various products of
the paper business for 1993, 1994 and 1995.

Printing and Writing Papers

The printing and writing papers business manufactures and sells printing and
writing papers, bleached paperboard and pulp. The principal domestic
manufacturing properties of this operation consist of integrated pulp and paper
mills at Courtland, Alabama; Canton, North Carolina; and Pensacola, Florida; and
a paper mill at Hamilton, Ohio. As of December 31, 1995, these mills had an
annual capacity of approximately 1,944,000 tons of pulp and 2,113,000 tons of
printing and writing papers and bleached paperboard.

Most of the pulp produced by the printing and writing papers business is used
in its own paper mills; approximately 6%, produced at the Pensacola and
Courtland mills, was sold in the open market in 1995. A portion of the fiber
requirements of this business also is supplied by other Company pulp mills, and
approximately 4% of its fiber requirements in 1995 were purchased from third-
party suppliers.

Uncoated papers produced by the printing and writing papers business are used
for computer forms, copier paper and envelope papers. Coated papers are used in
catalogs, magazines, brochures, labels and annual reports.

In 1995, 63% of this operation's bleached paperboard production was used by
the Company's DairyPak unit, which converts polyethylene-coated paperboard into
milk and juice cartons and ovenable packaging. The balance either was sold to
independent purchasers, primarily for conversion to cups, or was exported.

The Company leases substantial portions of the Courtland mill under 14 long-
term net leases which expire between 2007 and 2029. Each of these leases
provides for rental payments over its term sufficient to pay interest on and to
retire the industrial development or pollution control revenue bonds issued in
connection with the financing of the property subject to such lease. The
Company is required to purchase, or has the option to purchase, the property
subject to each such lease for a nominal sum at the time the related bonds are
retired.

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The Company leases a printing facility at the Athens, Georgia DairyPak plant
until 2015. The lease provides for rental payments over its term sufficient to
pay interest on and to retire the industrial development revenue bonds issued to
finance the acquisition of that facility. The Company has the option to
purchase the facility for a nominal sum at the time the bonds are retired.

The domestic printing and writing papers business and the publication papers
business jointly maintain 16 sales offices in various parts of the United
States, as well as an order services office in Hamilton, Ohio, for the sale of
their products to direct purchasers and through paper merchants. Certain of
these sales offices are shared with the newsprint and kraft operations.

Champion Papel e Celulose Ltda., a 99.78%-owned subsidiary ("Champion
Papel"), is a major integrated manufacturer of pulp and printing and writing
papers in Brazil with net sales to unaffiliated customers of $404,083,000 in
1995. As of December 31, 1995, its mill had an annual capacity of approximately
338,000 tons of pulp and 381,000 tons of paper. In addition to being a leading
supplier of printing and writing papers in Brazil, Champion Papel exports a
substantial portion of its paper production.

Publication Papers

The publication papers business manufactures and sells coated and uncoated
publication papers and pulp. The manufacturing properties of this operation
consist of integrated pulp and paper mills at Bucksport, Maine; Deferiet, New
York; Quinnesec, Michigan; and Sartell, Minnesota. As of December 31, 1995,
these mills had an annual capacity of approximately 874,000 tons of pulp and
1,292,000 tons of publication papers.

A significant portion of the fiber requirements of the publication papers
business is supplied by its own mills. In addition, a portion of its fiber
requirements is supplied by other Company pulp mills, and approximately 29% of
its fiber requirements in 1995 were purchased from third-party suppliers.

The Company manufactures pulp for sale in the open market at the Quinnesec
mill. In 1995, approximately 53% of the pulp production of this mill, or
215,000 tons, was sold in the open market through the Company's headquarters in
Stamford, Connecticut, as well as a sales office in Appleton, Wisconsin. The
balance was used in the production of paper at the Quinnesec mill and at the
Company's printing and writing papers mills.

The Company's publication papers are used primarily for consumer magazines,
direct mail catalogs, directories, textbooks and coupons. Sales are made to
direct purchasers and through paper merchants and brokers from the 16 sales
offices jointly maintained by the publication papers operation and the printing
and writing papers operation, and from the Hamilton, Ohio order services office.

The Company leases the building which houses one of the paper machines at the
Sartell mill until 2008. Thereafter, the Company has options to renew the lease
for five terms of five years each. The Company also has the option to purchase
the building at its then-current market value at the end of the initial term in
2008 or at the end of each five-year renewal term.

Newsprint

The newsprint business manufactures and sells newsprint, directory paper,
groundwood specialties and pulp. The manufacturing properties of this operation
consist of integrated pulp and paper mills at Lufkin and Sheldon, Texas. As of
December 31, 1995, these mills had an annual capacity of approximately 1,126,000
tons of pulp (which includes 165,000 tons of recycled pulp) and 971,000 tons of
newsprint, directory paper and groundwood specialties.

Most of the newsprint operation's pulp production is used in its own paper
mills; approximately 4%, produced at the Sheldon mill, was sold in the open
market in 1995.

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A portion of the newsprint produced by the Company is sold in the Southwest,
Southeast and Midwest, and the balance is exported. In general, sales are made
directly to publishers and printers through five sales offices, three of which
are shared with the printing and writing papers and publication papers
operations, and one order services office.

Pulp

For information concerning market pulp produced at the Pensacola and
Courtland mills, see the section captioned "Printing and Writing Papers" above;
for information concerning market pulp produced at the Quinnesec mill, see the
section captioned "Publication Papers" above; and for information concerning
market pulp produced at the Sheldon mill, see the section captioned "Newsprint"
above.

Weldwood of Canada Limited, a Canadian subsidiary in which the Company has
approximately 84% ownership ("Weldwood"), manufactures bleached softwood kraft
pulp at its mill in Hinton, Alberta, Canada. As of December 31, 1995, this mill
had an annual capacity of approximately 452,000 tons. In 1995, approximately
29% of the mill's pulp production was used in the Company's own publication
papers and printing and writing papers mills. The balance was sold in the open
market through the Company's headquarters in Stamford, Connecticut, a Company
sales office in Appleton, Wisconsin and a Weldwood sales office in Bad Homburg,
Germany.

Cariboo Pulp & Paper Company, a joint venture owned equally by Weldwood and
Daishowa-Marubeni International Limited, operates a bleached softwood kraft pulp
mill in Quesnel, British Columbia, Canada. As of December 31, 1995, this mill
had an annual capacity of approximately 353,000 tons. In 1995, approximately
23% of Weldwood's 50% share of the mill's pulp production was used in the
Company's own publication papers and printing and writing papers mills. The
balance of Weldwood's share was sold in the open market through the Company's
headquarters in Stamford, Connecticut, a Company sales office in Appleton,
Wisconsin and a Weldwood sales office in Bad Homburg, Germany.

While certain of the Company's mills purchase pulp in the open market, the
Company and Weldwood overall are net sellers of pulp. In 1995, the Company and
Weldwood in the aggregate produced approximately 861,000 tons of pulp for sale
to unaffiliated purchasers, while the Company used approximately 291,000 tons of
pulp purchased from third-party suppliers, resulting in net market pulp of
approximately 570,000 tons.

Kraft

The Company produces pulp, unbleached linerboard and kraft paper for
multiwall and grocery bags at its mill in Roanoke Rapids, North Carolina. As of
December 31, 1995, this mill had an annual capacity to produce approximately
499,000 tons of pulp, 376,000 tons of linerboard and 130,000 tons of kraft
paper. All of this mill's pulp production is used at the mill. In addition,
approximately 6% of its fiber requirements in 1995 were purchased from third-
party suppliers. The linerboard and kraft paper produced at the Roanoke Rapids
mill are sold to converters through three sales offices, two of which are shared
with the printing and writing papers and publication papers operations, and one
order services office.

Paper Distribution Operation

Nationwide Papers, a unit of the Company, is a distributor of paper and paper
products. Its marketing operations are carried out through 30 wholesale
warehouse facilities in 19 states. In addition, Nationwide Papers operates a
facility which converts rolls of bleached paperboard into sheets for sale
primarily to textile, apparel and furniture producers. In 1995, approximately
74% of its sales were attributable to merchandise purchased from numerous
manufacturers other than the Company. However, Nationwide Papers is not
dependent on any single supplier for such merchandise.

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Wood Products

The Company is a major producer of plywood and lumber. The Company's wood
products business is conducted through its domestic wood products operations and
through the wood products operations of Weldwood.

The principal wood products manufacturing facilities operated by the Company
and by Weldwood are summarized under Item 2 of this Report. As of December 31,
1995, the Company had approximate annual capacities of 859 million square feet
(3/8" basis) of softwood plywood and 339 million board feet of softwood lumber.
As of December 31, 1995, Weldwood had approximate annual capacities of 345
million square feet (3/8" basis) of softwood plywood and 790 million board feet
of softwood lumber.

On January 5, 1996, Weldwood announced that it has agreed to sell its
Longlac, Ontario hardwood plywood and waferboard plants and related timber
supply rights to Kruger Inc. The two plants have annual capacities of 80
million square feet (3/8" basis) of hardwood plywood and 160 million square feet
(3/8" basis) of waferboard, respectively, which are not included in the capacity
information set forth in this section. The sale, which is subject to provincial
government and other regulatory approvals, is expected to close in April 1996.

The Company sells lumber and plywood through four sales offices to
wholesalers, dealers, industrial users and retailers. Weldwood sells wood
products within Canada through a 50%-owned building materials distribution
company which serves all major markets in that country. In addition, Weldwood
exports substantial portions of its products directly. In 1995, Weldwood had
net sales to unaffiliated customers of (U.S.) $655,595,000, of which (U.S.)
$422,534,000 was attributable to the wood products portion of its business.

See the "Wood Products Net Sales" table on page 34 of the Company's 1995
Annual Report, which table is incorporated by reference herein, for information
concerning the net sales to unaffiliated customers of the various products of
the wood products business for 1993, 1994 and 1995.

Timber Properties

The Company owns 4,772,567 acres and controls 533,055 acres of timberlands in
the United States. The Company's owned and controlled timberlands contain in
the aggregate approximately 19,404,000 cunits (one cunit equals one hundred
cubic feet of solid wood) of merchantable sawtimber and approximately 38,091,000
cunits of pulpwood. In 1995, the Company harvested approximately 31% of its
domestic fiber requirements from its owned and controlled timberlands. A
portion of the fiber harvested by the Company is sold in the domestic open
market and in the export market.

Broken down by region, the Company's domestic timber acreage and volume are
as follows: In the State of Washington, the Company owns 296,954 acres and
controls 476 acres of timberlands. These timberlands contain in the aggregate
approximately 8,349,000 cunits of merchantable sawtimber and approximately
508,000 cunits of pulpwood. In the South, primarily in Texas, North Carolina,
South Carolina, Alabama, Georgia, Florida, Tennessee and Virginia, the Company
owns 2,596,651 acres and controls 525,176 acres of timberlands containing in the
aggregate approximately 5,438,000 cunits of merchantable sawtimber and
approximately 21,305,000 cunits of pulpwood. The Company owns 1,878,962 acres
and controls 7,403 acres of timberlands in the North, primarily in Maine,
Michigan, New Hampshire, New York, Vermont and Wisconsin. These timberlands
contain in the aggregate approximately 5,617,000 cunits of merchantable
sawtimber and approximately 16,278,000 cunits of pulpwood.

In January 1996, the Company purchased Lake Superior Land Company, which owns
290,172 acres of timberlands and real estate in Michigan and Wisconsin. This
acreage and the related volumes of merchantable sawtimber and pulpwood are
included in the information set forth in this section.

The Company's domestic log and pulpwood requirements are procured from its
owned and controlled lands, as described above, as well as from open market
purchases, short-term timber purchase contracts with independent timber owners
and agencies of the United States and various state governments, and supply
agreements with other

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companies. In the opinion of management, these sources will provide an adequate
supply of logs and pulpwood to meet the Company's principal raw materials
requirements for the foreseeable future. It is expected that the proportion of
fiber derived from the Company's owned and controlled lands will decline until
approximately 1997 but will increase thereafter as more of the Company's
plantations, primarily in the South, reach maturity.

Supplementing the Company's domestic timberlands are its several seed
orchards and nursery operations. These facilities will enable the Company to
produce most of the trees which it plans to plant in the United States in the
future, including the approximately 69 million trees planned for planting in
1996.

Weldwood obtains raw materials for its wood products manufacturing operations
primarily from sustained-yield, long-term licenses which grant cutting rights on
government-owned timberlands and from long-term agreements with other companies
based on their harvesting licenses. Weldwood has rights to harvest
approximately 573,000 cunits of merchantable sawtimber from long-term licenses
annually and, during the balance of the current terms of such licenses, has
rights to harvest an aggregate of approximately 7,389,000 cunits. Weldwood
believes that these sources will provide a substantial portion of the raw
materials required by its wood products manufacturing operations for the
foreseeable future, with the balance to be obtained from other third-party
suppliers. The timber volume information set forth in this paragraph does not
include the timber supply rights which Weldwood has agreed to sell, as discussed
above in the section captioned "Wood Products".

In addition, in Alberta, Canada, Weldwood has cutting rights through June 15,
2008 with respect to approximately 2,461,000 acres of timberlands pursuant to an
agreement with the Provincial Government of Alberta. This agreement is
renewable at Weldwood's option for successive 20-year periods as long as the
Hinton, Alberta pulp mill remains in operation. Weldwood has the right to
harvest approximately 671,000 cunits of pulpwood annually under this agreement.

Cariboo Pulp & Paper Company holds certain rights to harvest up to 533,000
cunits of pulpwood annually from approximately 3,900,000 acres of government-
owned timberlands in British Columbia pursuant to a long-term license. Weldwood
believes that this source of pulpwood, as well as supplies of wood chips from
sawmills and plywood plants in the area, will satisfy the raw materials
requirements of Cariboo's pulp mill for the foreseeable future. Babine Forest
Products Company, a joint venture in which Weldwood has an indirect 58%
interest, operates a sawmill in British Columbia and is beneficially entitled to
harvest approximately 230,000 cunits of merchantable sawtimber annually pursuant
to long-term licenses. Houston Forest Products Company, a joint venture in
which Weldwood and Eurocan Pulp and Paper Company are equal participants,
operates a sawmill in British Columbia and is beneficially entitled to cut
approximately 229,000 cunits of merchantable sawtimber annually pursuant to a
long-term license.

Champion Papel owns or controls 969,406 acres of timberlands and savannah in
Brazil. The controlled acreage includes rights to approximately 642,000 acres
of savannah in the State of Amapa. Champion Papel expects to plant eucalyptus
trees on approximately 35% of such land in Amapa and leave the remaining 65%
undisturbed.

Certain of the Company's land holdings have a value substantially in excess
of that of land primarily used for fiber supply purposes. The Company has sold
or contributed to its wholly owned real estate subsidiaries, net of land
repurchased by the Company, an aggregate of approximately 282,000 acres of such
land. These subsidiaries have sold approximately 184,100 acres, of which
approximately 8,500 acres were sold during 1995, for residential, recreational,
commercial or industrial purposes. The balance is being held for similar sale
or long-term appreciation. A substantial portion of the land held by the
Company's real estate subsidiaries is located in Texas and Florida.

Mineral, Oil and Gas Resources

The Company owns or controls various mineral, oil and gas rights with respect
to approximately half of the timberlands owned or controlled by the Company in
the United States. The Company has conducted a general review of its domestic
mineral, oil and gas rights and presently is not aware of any significant
reserves or deposits except as discussed below.

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The Company has oil and gas interests in fields located in Florida, Alabama,
Texas, Louisiana and Mississippi. Drilling operations are conducted by others
pursuant to leases and other agreements with the Company. The Company estimates
that proved reserves attributable to the Company's interests in such fields
aggregated approximately 800,000 barrels of oil and 2,600,000 Mcf (thousand
cubic feet) of natural gas as of December 31, 1995. The Company's share of
production from such fields was approximately 448,000 barrels of oil, 1,644,000
Mcf of natural gas and 2,625,000 gallons of gas products in 1995.

Proved oil and gas reserves attributable to the Company's non-operating
royalty interests and/or operating interests in the oil and gas fields described
above are based primarily upon estimates furnished by the operators of those
fields. The Company's share of production from such fields during each calendar
year is based on monthly production information received from the operators,
showing the application of such interests of the Company to actual production
volumes for such month.

The Company owns the surface rights and full or partial mineral rights to
considerable timberlands in Texas which overlay lignite deposits. The Company
estimates that it owns approximately 350 million tons of lignite reserves in
Texas, of which 80% is estimated to be recoverable. These lignite reserves
presently are not being mined due to current market conditions.

Capital Program

The Company presently anticipates that capital spending will be approximately
$660 million in 1996, a significant portion of which will be devoted to
incremental improvements, routine capital replacements and environmental
compliance.

During 1996, the Company expects to begin construction of a paper recycling
facility at its Courtland, Alabama printing and writing papers mill. The
project is expected to replace approximately 110,000 tons of virgin pulp with
recycled pulp annually, all of which will be used in the manufacture of printing
and writing papers at the Company's mills. The project is expected to be
completed in 1997 at a cost of approximately $127 million.

Weldwood, in 1995, began construction of a lumber mill and the modernization
of the plywood plant in Quesnel, British Columbia. The new lumber mill will
replace the existing lumber mill and will have an annual capacity of
approximately 108 million board feet of lumber, an increase of approximately 13%
over the capacity of the existing lumber mill. The modernization of the plywood
plant, which will reduce production costs and permit the manufacture of
additional products, will decrease capacity by approximately one-third. The
lumber mill and plywood plant project is expected to be completed in 1997 at a
cost of approximately (U.S.) $77 million, of which (U.S.) $2 million had been
expended as of December 31, 1995.

The Company plans to establish eucalyptus plantations and a chipping
operation in the State of Amapa, Brazil in the next few years. In addition, the
Company has under consideration the possible construction of a pulp and paper
mill at Tres Lagoas, State of Mato Grosso do Sul, Brazil in the next few years.
Approximately $100 million was expended in 1995 in connection with these
projects. Approximately $35 million of the anticipated capital spending in 1996
will be devoted to these projects.

In addition to the anticipated capital spending described above and as
discussed in the section captioned "Timber Properties" above, in January 1996,
the Company acquired Lake Superior Land Company, subject to a mortgage loan of
$44 million, for $76 million. Lake Superior's timberlands will supply fiber to
the Company's pulp and publication papers mills in Quinnesec, Michigan and
Sartell, Minnesota.

Competition

See the first paragraph of Note 14 of "Notes to Financial Statements" on page
52 of the Company's 1995 Annual Report, which paragraph is incorporated by
reference herein, for information concerning competitive conditions.

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Foreign Operations

For information concerning sales and income of the Company's foreign
subsidiaries, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations", incorporated by reference in Item 7 of this Report
from the Company's 1995 Annual Report.

See the second paragraph of Note 14 of "Notes to Financial Statements" on
page 52 of the Company's 1995 Annual Report, which paragraph is incorporated by
reference herein, for information concerning the risks associated with the
Company's foreign operations.

Employees

The Company had 24,129 employees at December 31, 1995. Of these, 18,152 were
domestic employees, 54% of whom were covered by contracts with labor unions.
Overall, 63% of the Company's employees were covered by contracts with labor
unions.

Union contracts covering domestic operations will expire as follows: 1996 -
the Pensacola, Florida printing and writing papers mill; 1997 - the Florida,
Maine and Georgia wood products operations; 1998 - the Deferiet, New York
publication papers mill and the Canton, North Carolina and Hamilton, Ohio
printing and writing papers mills; 1999 - the Roanoke Rapids, North Carolina
kraft mill and the Lufkin and Sheldon, Texas newsprint mills; 2000 - the
Bucksport, Maine and Sartell, Minnesota publication papers mills; 2002 - the
Courtland, Alabama printing and writing papers mill.

The Quinnesec, Michigan publication papers mill is a non-union facility.

At Weldwood, union contracts covering the Hinton, Alberta pulp mill, the
joint venture pulp mill at Quesnel, British Columbia, and all of Weldwood's wood
products facilities except the Longlac, Ontario plants, will expire in 1997.
The union contract covering the waferboard plant and the specialty hardwood
plywood plant in Longlac, which are expected to be sold soon, will expire in
1996.

The union contract which covers the paper industry in Brazil, including
Champion Papel, is renegotiated each year.

The Environment

For information regarding environmental capital expenditures, hazardous
substance cleanup, environmental legal proceedings and other environmental
matters affecting the Company, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations", incorporated by reference in
Item 7 of this Report from the Company's 1995 Annual Report.

Energy Requirements

The Company believes that it will be able to meet its energy needs for the
foreseeable future. Wood wastes and pulping liquors, which are by-products from
the manufacture of wood products and pulp, provide a reliable and relatively
low-cost source of energy for the Company's primary manufacturing facilities.
The Company's domestic wood products manufacturing facilities and domestic pulp,
paper and kraft mills satisfy approximately half of their energy requirements
from such wood wastes and pulping liquors.

The Company's foreseeable needs for purchased energy have been anticipated,
and the Company believes that it has arranged for adequate sources of supply.

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Item 2. Properties

In 1995, the Company's domestic and foreign manufacturing facilities operated
at approximately full capacity.

Reference is made to Item 1 of this Report for information concerning the
general character, adequacy and capacity of the principal plants, timber
properties and other materially important physical properties of the Company.
The following lists show the location, nature and ownership of the Company's
principal plants. None of these plants is subject to a mortgage and, except as
indicated, all are owned in fee.

Paper

Printing and Writing Papers

(a) Integrated pulp and printing and writing papers mills:

(i) Courtland, Alabama/1/;
(ii) Canton, North Carolina;
(iii) Pensacola, Florida; and
(iv) Mogi Guacu, Brazil.

(b) The Company operates a printing and writing papers mill in Hamilton,
Ohio.

(c) The Company operates a plant in Waynesville, North Carolina which
applies polyethylene coating to bleached paperboard and which also converts roll
stock into cut-size paper.

(d) The Company operates five plants which convert polyethylene-coated
paperboard into milk and juice cartons and one plant which converts
polyethylene-coated paperboard into ovenable packaging. All of these plants are
located in the United States/2/.

Publication Papers

(e) Integrated pulp and publication papers mills:

(i) Bucksport, Maine;
(ii) Deferiet, New York;
(iii) Quinnesec, Michigan; and
(iv) Sartell, Minnesota/3/.

Newsprint

(f) Integrated pulp and newsprint mills:

(i) Lufkin, Texas; and
(ii) Sheldon, Texas.

_________________________
/1/For Courtland, Alabama mill lease information, see Item 1 - "Paper" of this
Report.
/2/For lease information regarding one of these plants, located in Athens,
Georgia, see Item 1 - "Paper" of this Report.
/3/For Sartell, Minnesota mill lease information, see Item 1 - "Paper" of this
Report.

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Pulp

(g) The Company's printing and writing papers mills in Pensacola, Florida
and Courtland, Alabama, publication papers mill in Quinnesec, Michigan and
newsprint mill in Sheldon, Texas also produce market pulp.

(h) Weldwood operates a pulp mill in Hinton, Alberta, Canada and owns 50% of
a joint venture which operates a pulp mill in Quesnel, British Columbia, Canada.

Kraft

(i) The Company operates an integrated pulp, unbleached linerboard and
kraft paper mill in Roanoke Rapids, North Carolina.

Wood Products

(a) The Company operates three softwood plywood plants in the United States.

(b) Weldwood operates two softwood plywood plants in Canada. One of these
plants is located on leased land.

(c) Weldwood operates one hardwood plywood plant, in Canada, which Weldwood
has agreed to sell as discussed above in the section captioned "Wood Products".

(d) The Company operates five softwood lumber mills in the United States.

(e) Weldwood operates three softwood lumber mills in Canada. One of these
mills is located on leased land.

(f) Each of Babine Forest Products Company and Houston Forest Products
Company, joint ventures in which Weldwood has an interest, operates a mill for
the production of softwood lumber in Canada. One of these mills is located on
leased land.

(g) Weldwood operates one waferboard plant, in Canada, which Weldwood has
agreed to sell as discussed above in the section captioned "Wood Products".

Item 3. Legal Proceedings

On November 9, 1992, an action was brought against the Company in the Circuit
Court for Baldwin County, Alabama, on behalf of a class consisting of all
persons who own land along Perdido Bay in Florida and Alabama. The action
originally sought $500 million in compensatory and punitive damages for personal
injury, intentional infliction of emotional distress and diminution in property
value allegedly resulting from the purported discharge of hazardous substances,
including dioxin, from the Company's Pensacola, Florida mill into Eleven Mile
Creek, which flows into Perdido Bay. However, in February 1994, the plaintiffs
reduced their demand to not more than $50,000 for each class member, and in June
1994, the personal injury claims were dismissed. It is anticipated that the
class, which was certified by the court in June 1994, will consist of
approximately 2,000 members. The Company and the plaintiffs have entered into
an agreement dated March 13, 1996 to settle the action, pursuant to which the
Company would pay $5 million to the plaintiffs. The settlement is subject to
court approval.

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

9
<PAGE>

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.

The Company also is involved in other legal and administrative proceedings
and claims of various types. While any litigation contains an element of
uncertainty, management, based upon the opinion of the Company's General
Counsel, presently believes that the outcome of each such proceeding or claim
which is pending or known to be threatened (including the actions described
above), or all of them combined, will not have a material adverse effect on the
Company.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Executive Officers of the Registrant/1/

John A. Ball (age 67) is a Senior Vice President of the Company, a position
which he has held since March 1983. He has responsibility for corporate and
marketing communications, governmental affairs, public affairs and facilities
services.

L. Scott Barnard (age 53) is an Executive Vice President of the Company, a
position which he has held since August 1992. He has responsibility for sales
and marketing for the printing and writing papers and publication papers
businesses. From February 1989 to August 1992, he was Vice President-Sales and
Marketing for the printing and writing papers and publication papers businesses.

William H. Burchfield (age 60) is an Executive Vice President of the Company,
a position which he has held since November 1982. He has responsibility for the
domestic printing and writing papers business.

Mark V. Childers (age 43) is Senior Vice President-Organizational Development
and Human Resources of the Company, a position which he has held since August
1992. From June 1991 to August 1992, he was Vice President-Organizational
Development Project of the Company. From August 1988 to June 1991, he was
Manager-Organizational Development at the Lufkin, Texas mill.

Richard J. Diforio, Jr. (age 60) is a Senior Vice President of the Company, a
position which he has held since November 1992. He has responsibility for
environmental, health and safety affairs. From September 1990 to November 1992,
he was Vice President-Environment, Health and Safety of the Company.

Joe K. Donald (age 53) is an Executive Vice President of the Company, a
position which he has held since August 1989. He has responsibility for the
publication papers business.

Mark A. Fuller, Jr. (age 63) is an Executive Vice President of the Company, a
position which he has held since August 1980. He has responsibility for the
Company's overall marketing program as well as for Nationwide Papers, Champion
Export, pulp sales, and sales of wood chemicals and by-products.

Marvin H. Ginsky (age 65) is Senior Vice President and General Counsel of the
Company. He was elected a Senior Vice President in May 1981. He has been the
General Counsel since 1973.

L.C. Heist (age 64) is President and Chief Operating Officer and a director
of the Company, positions which he has held since December 1987.
_______________________________
/1/The term of office for each executive officer expires at the Annual Meeting
of the Board of Directors of the Company scheduled to be held on May 16, 1996.

10
<PAGE>

Frank Kneisel (age 58) is Senior Vice President-Finance of the Company, a
position which he has held since January 1995. From November 1975 to December
1994, he was Treasurer of the Company. From May 1981 to December 1994, he was a
Vice President.

Burton G. MacArthur, Jr. (age 49) is an Executive Vice President of the
Company, a position which he has held since January 1990. He has responsibility
for the newsprint and kraft business.

Kenwood C. Nichols (age 56) is Vice Chairman and a director of the Company,
positions which he has held since August 1989. He has been the principal
accounting officer of the Company since July 1983. He also has responsibility
for internal audit, corporate analysis, tax affairs, management information
services, mineral resources, corporate security and the Company's real estate
subsidiaries.

Richard E. Olson (age 58) is an Executive Vice President of the Company, a
position which he has held since December 1987. He has responsibility for
engineering, technology, manufacturing support and major projects.

Richard L. Porterfield (age 49) is an Executive Vice President of the
Company, a position which he has held since August 1992. He heads the forest
products unit, which consists of domestic timberlands operations and the
domestic wood products business. From January 1990 to August 1992, he was
Senior Vice President- Organizational Development and Human Resources of the
Company.

Andrew C. Sigler (age 64) is Chairman of the Board of Directors and Chief
Executive Officer of the Company. He was elected Chairman of the Board
effective January 1, 1979. He has served as Chief Executive Officer since 1974
and has been a director since 1973.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Company had 20,902 record holders of its Common Stock as of February 29,
1996.

The Company's Common Stock is traded on the New York Stock Exchange.

Restrictions on the ability of the Company to pay cash dividends are included
in several of the Company's debt instruments and the Company's Restated
Certificate of Incorporation. At December 31, 1995, the most restrictive of
these limitations required the Company to maintain tangible net worth (as
defined below) of at least $2.53 billion. As a result of this requirement, such
amount is unavailable for the payment of dividends. Approximately $1.1 billion
of tangible net worth at December 31, 1995 was free of such restrictions.
Tangible net worth is defined as shareholders' equity minus goodwill,
unamortized debt discount and other like intangibles, all determined on a
consolidated basis for the Company.

For information concerning the high and low sales prices of the Company's
Common Stock for each quarterly period during the last two years and the amount
of dividends paid on the Company's Common Stock in each quarterly period during
the last two years, see the section on the inside back cover of the Company's
1995 Annual Report captioned "Common Stock Prices and Dividends Paid". Said
section is incorporated by reference herein.

Item 6. Selected Financial Data

There is incorporated by reference herein the table on pages 64 and 65 of the
Company's 1995 Annual Report captioned "Eleven-Year Selected Financial Data".

11
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

There is incorporated by reference herein the section on pages 57 to 63 of
the Company's 1995 Annual Report captioned "Management's Discussion and Analysis
of Financial Condition and Results of Operations".

There is incorporated by reference herein the first paragraph of the section
captioned "Legal Proceedings" in Part I of this Report, which updates certain
information set forth in "Management's Discussion and Analysis of Financial
Condition and Results of Operations".

Item 8. Financial Statements and Supplementary Data

There is incorporated by reference herein the sections of the Company's 1995
Annual Report captioned "Consolidated Income", "Consolidated Retained Earnings",
"Consolidated Balance Sheet", "Consolidated Cash Flows", "Notes to Financial
Statements" and "Report of Independent Public Accountants", which sections are
on pages 37, 38, 39, 40, 41 to 55 and 56, respectively, of the Company's 1995
Annual Report.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

Not applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant

See the section captioned "Executive Officers of the Registrant" under Part I
of this Report for information concerning the Company's executive officers.

For information concerning the directors of the Company, see the sections
therein captioned "The Board of Directors -The Nominees", "Information on the
Nominees and Directors", and "Committees" in the Company's definitive Proxy
Statement for the Annual Meeting of Shareholders scheduled to be held on May 16,
1996. Said sections are incorporated by reference herein.

Item 11. Executive Compensation

There is incorporated by reference herein from the Company's definitive Proxy
Statement for the Annual Meeting of Shareholders scheduled to be held on May 16,
1996 the sections therein captioned "The Board of Directors-Directors'
Compensation"; and "Executive Compensation-Summary Compensation Table",
"Option/SAR Grant Table", "Option/SAR Exercise and Year-End Values Table",
"Pension Plan Table", and "Employment and Severance Agreements".

Item 12. Security Ownership of Certain Beneficial Owners and Management

Item 13. Certain Relationships and Related Transactions

There is incorporated by reference herein from the Company's definitive Proxy
Statement for the Annual

12
<PAGE>

Meeting of Shareholders scheduled to be held on May 16, 1996 the section therein
captioned "Transactions".

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) Financial Statements. The following Consolidated Financial Statements
of Champion International Corporation and Subsidiaries, Notes to Financial
Statements and Report of Independent Public Accountants are incorporated by
reference herein from the Company's 1995 Annual Report:

<TABLE>
<CAPTION>
Caption in Company's
Description 1995 Annual Report (page number)
----------- --------------------------------
<S> <C>
Consolidated Statements of Income for each of the
three years in the period ended December 31, 1995............................ Consolidated Income (page 37)

Consolidated Statements of Retained Earnings for each of
the three years in the period ended December 31, 1995............. Consolidated Retained Earnings (page 38)

Consolidated Balance Sheets at December 31, 1995 and 1994............. Consolidated Balance Sheet (page 39)

Consolidated Statements of Cash Flows for each of
the three years in the period ended December 31, 1995.................... Consolidated Cash Flows (page 40)

Notes to Financial Statements............................... Notes to Financial Statements (pages 41 to 55)

Report of Independent Public Accountants with
respect to the financial statements listed above.........Report of Independent Public Accountants (page 56)
</TABLE>

(b) Financial Statement Schedules. All Financial Statement Schedules
have been omitted since the information is not applicable, is not required or is
included in the Consolidated Financial Statements or Notes to Financial
Statements listed under section (a) of this Item 14.

(c) Exhibits. Each Exhibit is listed according to the number assigned to
it in the Exhibit Table of Item 601 of Regulation S-K. The Exhibit numbers
preceded by an asterisk (*) indicate Exhibits physically filed with this Annual
Report on Form 10-K. All other Exhibit numbers indicate Exhibits filed by
incorporation by reference herein. Exhibit numbers 10.1 through 10.35, which
are preceded by a plus sign (+), are management contracts or compensatory plans
or arrangements.

Exhibit Number Description
- -------------- -----------

3.1 Restated Certificate of Incorporation of the Company, filed in
the State of New York on October 20, 1986 (filed by incorporation
by reference to Exhibit 3.1 to the Company's Form 10-K for the
fiscal year ended December 31, 1986, Commission File No. 1-3053).

3.2 Certificate of Amendment of Restated Certificate of Incorporation
of the Company, filed in the State of New York on July 18, 1988
(filed by incorporation by reference to Exhibit 4.1 to the
Company's Form 10-Q for the quarter ended June 30, 1988,
Commission File No. 1-3053).

3.3 Certificate of Amendment of Restated Certificate of Incorporation
of the Company, filed in the State of New York on December 6,
1989 (filed by incorporation by reference to Exhibit 4.1 to the
Company's Form 8-K dated December 14, 1989, Commission File No.
1-3053).

13
<PAGE>

3.4 Certificate of Amendment of Restated Certificate of Incorporation
of the Company, filed in the State of New York on December 21,
1989 (filed by incorporation by reference to Exhibit 3.4 to the
Company's Form 10-K for the fiscal year ended December 31, 1989,
Commission File No. 1-3053).

3.5 By-Laws of the Company (filed by incorporation by reference to
Exhibit 3(ii).1 to the Company's Form 10-Q for the quarter ended
March 31, 1993, Commission File No. 1-3053).

4 Letter agreement dated March 29, 1991 of the Company to furnish
to the Commission upon request copies of certain instruments with
respect to long-term debt (filed by incorporation by reference to
Exhibit 4 to the Company's Form 10-K for the fiscal year ended
December 31, 1990, Commission File No. 1-3053).

+10.1 Champion International Corporation 1986 Management Incentive
Program, consisting of the 1986 Stock Option Plan and the 1986
Contingent Compensation Plan (filed by incorporation by reference
to Exhibit 19.1 to the Company's Form 10-Q for the quarter ended
June 30, 1986, Commission File No. 1-3053).

+10.2 Amendment to Champion International Corporation 1986 Management
Incentive Program (filed by incorporation by reference to Exhibit
10.1 to the Company's Form 10-Q for the quarter ended March 31,
1993, Commission File No. 1-3053).

+10.3 Champion International Corporation Supplemental Retirement Income
Plan (filed by incorporation by reference to Exhibit 10.7 to the
Company's Form 10-K for the fiscal year ended December 31, 1989,
Commission File No. 1-3053).

+10.4 Amendment dated as of January 1, 1994 to Champion International
Corporation Supplemental Retirement Income Plan (filed by
incorporation by reference to Exhibit 10.6 to the Company's Form
10-K for the fiscal year ended December 31, 1994, Commission File
No. 1-3053).

+10.5 Champion International Corporation Nonqualified Supplemental
Savings Plan (filed by incorporation by reference to Exhibit 10.2
to the Company's Form 10-Q for the quarter ended September 30,
1994, Commission File No. 1-3053).

+10.6 Supplemental Retirement and Death Payments Agreement dated as of
August 1, 1964, as amended by letter agreement dated January 9,
1965, between the Company and Mr. Sigler (filed by incorporation
by reference to Exhibit 10.8 to the Company's Form 10-K for the
fiscal year ended December 31, 1990, Commission File No. 1-3053).

+10.7 Restated Agreement between the Company and Mr. Sigler, as amended
as of February 19, 1987, providing certain employment, severance
and retirement arrangements (filed by incorporation by reference
to Exhibit 19.1 to the Company's Form 10-Q for the quarter ended
June 30, 1987, Commission File No. 1-3053).

+10.8 Agreement Relating to Legal Expenses dated February 19, 1987
between the Company and Mr. Sigler providing reimbursement of
certain legal expenses following a change in control of the
Company (filed by incorporation by reference to Exhibit 19.2 to
the Company's Form 10-Q for the quarter ended June 30, 1987,
Commission File No. 1-3053).

+10.9 Amendment dated as of April 21, 1988 to Restated Agreement
between the Company and Mr. Sigler, as amended as of February 19,
1987 (filed by incorporation by reference to

14
<PAGE>

Exhibit 19.1 to the Company's Form 10-Q for the quarter ended
June 30, 1988, Commission File No. 1-3053).

+10.10 Amendment dated as of August 18, 1988 to Restated Agreement
between the Company and Mr. Sigler, as amended as of February 19,
1987 (filed by incorporation by reference to Exhibit 10.10 to the
Company's Form 10-K for the fiscal year ended December 31, 1988,
Commission File No. 1-3053).

+10.11 Amendment dated as of August 18, 1988 to Agreement Relating to
Legal Expenses dated February 19, 1987 between the Company and
Mr. Sigler (filed by incorporation by reference to Exhibit 10.11
to the Company's Form 10-K for the fiscal year ended December 31,
1988, Commission File No. 1-3053).

+10.12 Amendment dated as of September 19, 1991 to Restated Agreement
between the Company and Mr. Sigler, as amended as of February 19,
1987 (filed by incorporation by reference to Exhibit 10.12 to the
Company's Form 10-K for the fiscal year ended December 31, 1991,
Commission File No. 1-3053).

+10.13 Amendment dated as of November 17, 1994 to Restated Agreement
between the Company and Mr. Sigler, as amended as of February 19,
1987 (filed by incorporation by reference to Exhibit 10.15 to the
Company's Form 10-K for the fiscal year ended December 31, 1994,
Commission File No. 1-3053).

+10.14 Agreement dated November 17, 1994 between the Company and Mr.
Sigler relating to post-employment consulting services (filed by
incorporation by reference to Exhibit 10.16 to the Company's Form
10-K for the fiscal year ended December 31, 1994, Commission File
No. 1-3053).

+10.15 Agreement dated as of August 18, 1988 between the Company and Mr.
Heist providing certain employment, severance and retirement
arrangements (filed by incorporation by reference to Exhibit
10.17 to the Company's Form 10-K for the fiscal year ended
December 31, 1988, Commission File No. 1-3053).

+10.16 Agreement Relating to Legal Expenses dated August 18, 1988
between the Company and Mr. Heist providing reimbursement of
certain legal expenses following a change in control of the
Company (filed by incorporation by reference to Exhibit 10.18 to
the Company's Form 10-K for the fiscal year ended December 31,
1988, Commission File No. 1-3053).

+10.17 Amendment dated as of September 19, 1991 to Agreement dated as of
August 18, 1988 between the Company and Mr. Heist (filed by
incorporation by reference to Exhibit 10.15 to the Company's Form
10-K for the fiscal year ended December 31, 1991, Commission File
No. 1-3053).

+10.18 Agreement dated as of October 18, 1990 between the Company and
Mr. Nichols providing certain employment, severance and
retirement arrangements (filed by incorporation by reference to
Exhibit 10.16 to the Company's Form 10-K for the fiscal year
ended December 31, 1990, Commission File No. 1-3053).

+10.19 Agreement Relating to Legal Expenses dated October 18, 1990
between the Company and Mr. Nichols providing reimbursement of
certain legal expenses following a change in control of the
Company (filed by incorporation by reference to Exhibit 10.17 to
the Company's Form 10-K for the fiscal year ended December 31,
1990, Commission File No. 1-3053).

15
<PAGE>

+10.20 Amendment dated as of September 19, 1991 to Agreement dated as of
October 18, 1990 between the Company and Mr. Nichols (filed by
incorporation by reference to Exhibit 10.18 to the Company's Form
10-K for the fiscal year ended December 31, 1991, Commission File
No. 1-3053).

+10.21 Agreement dated as of February 19, 1987 between the Company and
Mr. Burchfield providing certain severance arrangements (filed by
incorporation by reference to Exhibit 10.15 to the Company's Form
10-K for the fiscal year ended December 31, 1987, Commission File
No. 1-3053).

+10.22 Agreement Relating to Legal Expenses dated February 19, 1987
between the Company and Mr. Burchfield providing reimbursement of
certain legal expenses following a change in control of the
Company (filed by incorporation by reference to Exhibit 10.16 to
the Company's Form 10-K for the fiscal year ended December 31,
1987, Commission File No. 1-3053).

+10.23 Amendment dated as of April 21, 1988 to Agreement dated as of
February 19, 1987 between the Company and Mr. Burchfield (filed
by incorporation by reference to Exhibit 19.5 to the Company's
Form 10-Q for the quarter ended June 30, 1988, Commission File
No. 1-3053).

+10.24 Amendment dated as of September 19, 1991 to Agreement dated as of
February 19, 1987 between the Company and Mr. Burchfield (filed
by incorporation by reference to Exhibit 10.22 to the Company's
Form 10-K for the fiscal year ended December 31, 1991, Commission
File No. 1-3053).

+10.25 Agreement dated as of August 18, 1988 between the Company and Mr.
Olson providing certain severance arrangements (filed by
incorporation by reference to Exhibit 10.23 to the Company's Form
10-K for the fiscal year ended December 31, 1990, Commission File
No. 1-3053).

+10.26 Agreement Relating to Legal Expenses dated August 18, 1988
between the Company and Mr. Olson providing reimbursement of
certain legal expenses following a change in control of the
Company (filed by incorporation by reference to Exhibit 10.24 to
the Company's Form 10-K for the fiscal year ended December 31,
1990, Commission File No. 1-3053).

+10.27 Amendment dated as of September 19, 1991 to Agreement dated as of
August 18, 1988 between the Company and Mr. Olson (filed by
incorporation by reference to Exhibit 10.28 to the Company's Form
10-K for the fiscal year ended December 31, 1991, Commission File
No. 1-3053).

+10.28 Trust Agreement dated as of February 19, 1987 between the Company
and Fleet National Bank of Connecticut securing certain payments
under the contracts listed as Exhibit Numbers 10.7 through 10.27,
among others, following a change in control of the Company (filed
by incorporation by reference to Exhibit 19.11 to the Company's
Form 10-Q for the quarter ended June 30, 1987, Commission File
No. 1-3053).

+10.29 Amendment dated as of August 18, 1988 to Trust Agreement dated as
of February 19, 1987 between the Company and Fleet National Bank
of Connecticut (filed by incorporation by reference to Exhibit
10.29 to the Company's Form 10-K for the fiscal year ended
December 31, 1988, Commission File No. 1-3053).

+10.30 Champion International Corporation Executive Life Insurance Plan
(filed by incorpor-

16
<PAGE>

ation by reference to Exhibit 10.27 to the Company's Form 10-K
for the fiscal year ended December 31, 1990, Commission File No.
1-3053).

+10.31 Amendment dated as of January 1, 1994 to Champion International
Corporation Executive Life Insurance Plan (filed by incorporation
by reference to Exhibit 10.33 to the Company's Form 10-K for the
fiscal year ended December 31, 1994, Commission File No. 1-3053).

+10.32 Extract from the minutes of the meeting of the Board of Directors
of the Company held on October 18, 1979 relating to the $50,000
of group term life insurance provided by the Company for non-
employee directors (filed by incorporation by reference to
Exhibit 10.28 to the Company's Form 10-K for the fiscal year
ended December 31, 1990, Commission File No. 1-3053).

+10.33 Resolutions of the Board of Directors of the Company adopted on
September 19, 1991 relating to the compensation of directors
(filed by incorporation by reference to Exhibit 19 to the
Company's Form 10-Q for the quarter ended September 30, 1991,
Commission File No. 1-3053).

+10.34 Resolutions of the Board of Directors of the Company adopted on
August 18, 1994 relating to the compensation of directors (filed
by incorporation by reference to Exhibit 10.1 to the Company's
Form 10-Q for the quarter ended September 30, 1994, Commission
File No. 1-3053).

+10.35 Retirement Plan for Outside Directors (filed by incorporation by
reference to Exhibit 19 to the Company's Form 10-Q for the
quarter ended September 30, 1992, Commission File No. 1-3053).

*11 Schedule showing calculation of primary earnings per common share
and fully diluted earnings per common share.

*13 Portions of the Company's 1995 Annual Report which are
specifically incorporated by reference herein.

*21 List of significant subsidiaries of the Company.

*23.1 Opinion and Consent of the Senior Vice President and General
Counsel of the Company.

*23.2 Consent of Arthur Andersen LLP.

*24 Power of Attorney relating to the execution and filing of this
Annual Report on Form 10-K and all amendments hereto.

*27 Financial Data Schedule.

17
<PAGE>

(d) Reports on Form 8-K. The Company filed a Current Report on Form 8-K
dated October 9, 1995 reporting the issuance of a press release announcing
certain unaudited consolidated financial results of the Company for the three
months and nine months ended September 30, 1995, with the consolidated statement
of income for the three months and nine months ended September 30, 1995 and
September 30, 1994 and consolidated balance sheet as of September 30, 1995 and
December 31, 1994 as exhibits thereto. The Company filed a Current Report on
Form 8-K dated November 7, 1995 reporting the sale of $200,000,000 principal
amount of the Company's 7.35% Debentures due November 1, 2025, pursuant to the
Company's shelf registration statement (No. 33-51217).

18
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 29th day of March,
1996.

CHAMPION INTERNATIONAL CORPORATION
(Registrant)

By /s/ Lawrence A. Fox
-------------------------------
(Lawrence A. Fox)
Vice President and Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Andrew C. Sigler* Chairman of the Board, March 29, 1996
- --------------------------------------- Chief Executive Officer
(Andrew C. Sigler) and Director (Principal
Executive Officer)

Kenwood C. Nichols* Vice Chairman and March 29, 1996
- --------------------------------------- Director (Principal
(Kenwood C. Nichols) Accounting Officer)

Frank Kneisel* Senior Vice President- March 29, 1996
- --------------------------------------- Finance (Principal
(Frank Kneisel) Financial Officer)

Lawrence A. Bossidy* March 29, 1996
- --------------------------------------- Director
(Lawrence A. Bossidy)

Robert A. Charpie*
- --------------------------------------- Director March 29, 1996
(Robert A. Charpie)

Alice F. Emerson*
- --------------------------------------- Director March 29, 1996
(Alice F. Emerson)

Allan E. Gotlieb*
- --------------------------------------- Director March 29, 1996
(Allan E. Gotlieb)

L.C. Heist*
- --------------------------------------- Director March 29, 1996
(L.C. Heist)
</TABLE>

19
<PAGE>

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Sybil C. Mobley*
- --------------------------------------- Director March 29, 1996
(Sybil C. Mobley)

Lawrence G. Rawl*
- --------------------------------------- Director March 29, 1996
(Lawrence G. Rawl)

Walter V. Shipley*
- --------------------------------------- Director March 29, 1996
(Walter V. Shipley)

Richard E. Walton*
- --------------------------------------- Director March 29, 1996
(Richard E. Walton)

John L. Weinberg*
- --------------------------------------- Director March 29, 1996
(John L. Weinberg)

*By /s/ Lawrence A. Fox March 29, 1996
------------------------------------
(Lawrence A. Fox)
</TABLE>

A power of attorney authorizing Lawrence A. Fox, Marvin H. Ginsky and Andrew
C. Sigler and each of them to sign this Report and all amendments hereto as
attorneys-in-fact for officers and directors of the registrant is filed as
Exhibit 24 hereto.

20
<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. The Exhibit numbers preceded by an
asterisk (*) indicate Exhibits physically filed with this Annual Report on Form
10-K. All other Exhibit numbers indicate Exhibits filed by incorporation by
reference herein. Exhibit numbers 10.1 through 10.35, which are preceded by a
plus sign (+), are management contracts or compensatory plans or arrangements.

Exhibit Number Description
- -------------- -----------

3.5 By-Laws of the Company (filed by incorporation by reference to
Exhibit 3(ii).1 to the Company's Form 10-Q for the quarter ended
March 31, 1993, Commission File No. 1-3053).

Exhibit Number Description
- -------------- -----------

Commission File No. 1-3053).

+10.9 Amendment dated as of April 21, 1988 to Restated Agreement
between the Company and Mr. Sigler, as amended as of February 19,
1987 (filed by incorporation by reference to Exhibit 19.1 to the
Company's Form 10-Q for the quarter ended June 30, 1988,
Commission File No. 1-3053).

Exhibit Number Description
- -------------- -----------

+10.30 Champion International Corporation Executive Life Insurance Plan
(filed by incorporation by reference to Exhibit 10.27 to the
Company's Form 10-K for the fiscal year ended December 31, 1990,
Commission File No. 1-3053).

Exhibit Number Description
- -------------- -----------

+10.35 Retirement Plan for Outside Directors (filed by incorporation by
reference to Exhibit 19 to the Company's Form 10-Q for the
quarter ended September 30, 1992, Commission File No. 1-3053).

*11 Schedule showing calculation of primary earnings per common share
and fully diluted earnings per common share.

*13 Portions of the Company's 1995 Annual Report which are
specifically incorporated by reference herein.

*21 List of significant subsidiaries of the Company.

*23.1 Opinion and Consent of the Senior Vice President and General
Counsel of the Company.

*23.2 Consent of Arthur Andersen LLP.

*24 Power of Attorney relating to the execution and filing of this
Annual Report on Form 10-K and all amendments hereto.

*27 Financial Data Schedule.

<PAGE>

EXHIBIT 11

CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES

CALCULATION OF PRIMARY EARNINGS (LOSS) PER COMMON SHARE AND FULLY DILUTED
EARNINGS (LOSS) PER COMMON SHARE

<TABLE>
<CAPTION>
Years Ended December 31
-------------------------------------------------
1995 1994 1993
------------ ------------ ------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Primary earnings (loss) per common share (1, 3):
Net income (loss) $ 771,835 $ 63,305 $ (156,243)
Dividends on preference shares 13,258 27,750 27,750
------------ ------------ ------------

Net income (loss) applicable to common stock $ 758,577 $ 35,555 $ (183,993)
============ ============ ============

Average number of common shares outstanding 94,725 93,061 92,788
============ ============ ============

Per share $ 8.01 $ .38 $ (1.98)
============ ============ ============

Fully diluted earnings (loss) per common share (2, 3):
Net income (loss) applicable to common stock $ 758,577 $ 35,555 $ (183,993)
Add income effect, assuming conversion of
dilutive convertible securities 15,106 --- ---
------------ ------------ ------------

Net income (loss) on a fully diluted basis $ 773,683 $ 35,555 $ (183,993)
============ ============ ============

Average number of common shares outstanding 94,725 93,061 92,788

Add common share effect, assuming conversion
of dilutive convertible securities 6,171 --- ---
------------ ------------ ------------

Average number of common shares outstanding
on a fully diluted basis 100,896 93,061 92,788
============ ============ ============

Per share $ 7.67 $ .38 $ (1.98)
============ ============ ============

</TABLE>
- --------------------------------------------
Notes:
(1) Common stock equivalents have not been included in the above
calculation since their effect is insignificant.
(2) The computation of fully diluted earnings per share assumes that the
average number of common shares outstanding during the year 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.
(3) Earnings per share was calculated for each three month and twelve
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 Preference Stock. 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. The
company purchased an additional 3,186,000 shares of common stock at
various times during 1995. As a result of all of these transactions,
the sum of the earnings per share for the four quarters of 1995 does
not equal the earnings per share for the twelve months ended December
31, 1995.

<PAGE>

EXHIBIT 13

Paper
- --------------------------------------------------------------------------------

Years Ended December 31

Net Sales (in millions of dollars) 1995 % 1994 % 1993 %
- ------------------------------------ ------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Product Category:

Printing and writing papers......... $2,925 48 $2,042 48 $1,830 48
Publication papers.................. 1,251 21 867 21 801 21
Newsprint........................... 581 10 352 8 342 9
Bleached kraft market pulp.......... 555 9 369 9 289 7
Paperboard and kraft paper.......... 339 6 235 5 192 5
Milk cartons........................ 235 4 248 6 267 7
Industrial products................. 79 1 74 2 69 2
Miscellaneous products.............. 42 1 30 1 28 1
------ --- ------ --- ------ ---

$6,007 100 $4,217 100 $3,818 100
====== === ====== === ====== ===
</TABLE>

1
<PAGE>

Wood Products
- --------------------------------------------------------------------------------

Years Ended December 31

<TABLE>
<CAPTION>
Net Sales (in millions of dollars) 1995 % 1994 % 1993 %
- -------------------------------------- ------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Product Category:

Lumber................................ $ 334 35 $ 481 44 $ 480 38
Softwood plywood and waferboard....... 284 29 264 24 333 27
Logs and stumpage..................... 247 26 253 23 272 22
Sidings and industrial plywood........ 49 5 47 4 85 7
Hardwood plywood...................... 33 3 32 3 32 2
Miscellaneous products................ 18 2 24 2 49 4
------ --- ------ --- ------ ---

$ 965 100 $1,101 100 $1,251 100
====== === ====== === ====== ===
</TABLE>

2
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Consolidated Income (in thousands, except per share amounts)

<TABLE>
<CAPTION>
Years Ended December 31 1995 1994 1993
- ----------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Net Sales...................................... $6,972,038 $5,318,192 $5,068,833

Cost of products sold.......................... 5,156,423 4,752,926 4,709,757
Selling, general and administrative
expenses...................................... 386,125 299,266 292,684
---------- ---------- ----------
Income from Operations......................... 1,429,490 266,000 66,392

Interest and debt expense (Notes 3 and 6)...... 226,016 235,086 224,658
Other (income) expense - net (Note 11)......... (33,089) (57,342) 7,410
---------- ---------- ----------
Income (Loss) before Income Taxes,
Extraordinary Item and Cumulative Effect of
Accounting Changes............................ 1,236,563 88,256 (165,676)

Income Taxes (Benefit) (Note 12)............... 464,728 24,951 (31,222)
---------- ---------- ----------
Income (Loss) before Extraordinary Item and
Cumulative Effect of Accounting Changes....... 771,835 63,305 (134,454)

Extraordinary Item - Loss on Early Retirement
of Debt, Net of Taxes......................... --- --- (14,266)

Cumulative Effect of Accounting Changes,
Net of Taxes (Notes 1 and 13)................. --- --- (7,523)
---------- ---------- ----------
Net Income (Loss).............................. $ 771,835 $ 63,305 $ (156,243)
========== ========== ==========
Dividends on Preference Stock (Note 8)......... 13,258 27,750 27,750
---------- ---------- ----------
Net Income (Loss) Applicable to Common Stock... $ 758,577 $ 35,555 $ (183,993)
========== ========== ==========

Average Number of Common Shares Outstanding.... 94,725 93,061 92,788
========== ========== ==========
Primary Earnings (Loss) Per Common Share:
Income (Loss) before Extraordinary Item and
Cumulative Effect of Accounting Changes....... $ 8.01 $ .38 $ (1.75)
Extraordinary Item - Loss on Early
Retirement of Debt............................ --- --- (.15)
Cumulative Effect of Accounting Changes........ --- --- (.08)
---------- ---------- ----------
Net Income (Loss).............................. $ 8.01 $ .38 $ (1.98)
========== ========== ==========
Fully Diluted Earnings (Loss) Per Common
Share:
Income (Loss) before Extraordinary Item and
Cumulative Effect of Accounting Changes....... $ 7.67 $ .38 $ (1.75)
Extraordinary Item - Loss on Early
Retirement of Debt............................ --- --- (.15)
Cumulative Effect of Accounting Changes........ --- --- (.08)
---------- ---------- ----------
Net Income (Loss).............................. $ 7.67 $ .38 $ (1.98)
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

3
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Consolidated Retained Earnings (in thousands, except per share amounts)

<TABLE>
<CAPTION>
Years Ended December 31 1995 1994 1993
- ----------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Beginning Balance.............................. $1,878,476 $1,861,535 $2,064,120

Net Income (Loss).............................. 771,835 63,305 (156,243)

Cash Dividends Declared:
$92.50 Convertible Preference Stock - $44.19
per share in 1995, $92.50 per share in
1994 and 1993................................. (13,258) (27,750) (27,750)
Common Stock - $.20 per share in 1995, 1994
and 1993...................................... (19,020) (18,614) (18,592)
---------- ---------- ----------

Ending Balance................................. $2,618,033 $1,878,476 $1,861,535
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

4
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Consolidated Balance Sheet (in thousands of dollars)

Assets December 31 1995 1994
- ------------------------------------------------------ ---------- ----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents............................. $ 317,069 $ 90,948
Short-term investments................................ 98,275 ---
Receivables........................................... 641,291 562,085
Inventories (Note 2).................................. 484,001 441,430
Prepaid expenses...................................... 24,841 23,286
Deferred income taxes (Note 12)....................... 75,329 61,032
Total Current Assets................................ ---------- ----------
1,640,806 1,178,781
---------- ----------
Timber and Timberlands, at cost - less cost of timber
harvested........................................... 2,007,685 1,846,823
---------- ----------

Property, Plant and Equipment, at cost
(Notes 3, 6 and 7).................................. 8,850,519 8,579,254
Less - Accumulated depreciation....................... 3,335,945 2,976,640
---------- ----------
5,514,574 5,602,614
---------- ----------

Other Assets and Deferred Charges..................... 380,237 335,410
---------- ----------

$9,543,302 $8,963,628
========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

5
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Consolidated Balance Sheet (in thousands of dollars)

<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity December 31 1995 1994
- ------------------------------------------------------ ---------- ----------
<S> <C> <C>
Current Liabilities:
Current installments of long-term debt (Note 6)........ $ 77,760 $ 308,922
Short-term bank borrowings (Note 6).................... 150,067 90,184
Accounts payable and accrued liabilities (Note 5)...... 726,206 592,033
Income taxes (Note 12)................................. 125,840 43,273
---------- ----------
Total Current Liabilities............................ 1,079,873 1,034,412
---------- ----------
Long-Term Debt (Note 6)................................ 2,828,509 2,889,252
---------- ----------
Other Liabilities (Notes 13 and 16).................... 664,010 670,761
---------- ----------
Deferred Income Taxes (Note 12)........................ 1,218,978 1,039,927
---------- ----------
Minority Interest in Subsidiaries...................... 105,241 68,531
---------- ----------
Commitments and Contingent Liabilities
(Notes 7, 16 and 17)................................. --- ---
---------- ----------

Preference Stock, $1.00 par value, $92.50 Cumulative
Convertible Series; 300,000 shares issued and
outstanding at December 31, 1994 (Note 8)............ --- 300,000
---------- ----------
Shareholders' Equity:
Capital Shares (Notes 8 and 9):
Preference Stock, 8,531,431 and 8,231,431 shares
authorized but unissued............................ --- ---
Common stock, $.50 par value: 250,000,000 authorized
shares; 110,230,379 and 96,786,039 issued shares... 55,115 48,393
Capital surplus...................................... 1,653,456 1,175,008
Retained Earnings (Note 6)............................. 2,618,033 1,878,476
---------- ----------
4,326,604 3,101,877

Treasury shares, at cost (Note 8)...................... (650,049) (100,308)
Cumulative translation adjustment...................... (29,864) (40,824)
---------- ----------
3,646,691 2,960,745
---------- ----------

$9,543,302 $8,963,628
========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

6
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Consolidated Cash Flows (in thousands of dollars)

<TABLE>
<CAPTION>
Years Ended December 31 1995 1994 1993
- --------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income (Loss)............................ $ 771,835 $ 63,305 $ (156,243)

Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Extraordinary item.......................... --- --- 14,266
Cumulative effect of accounting
changes.................................... --- --- 7,523
Depreciation expense........................ 392,534 379,386 360,240
Cost of timber harvested.................... 78,903 79,311 83,194
Gain on sale of assets...................... (46,536) (10,651) (9,973)
(Increase) in receivables................... (77,715) (70,938) (28,235)
(Increase) decrease in inventories.......... (72,598) 21,755 (13,529)
(Increase) in prepaid expenses.............. (6,409) (989) (2,789)
Increase (decrease) in accounts
payable and accrued liabilities............ 118,289 4,975 (61,296)
Increase (decrease) in income taxes
payable.................................... 81,431 38,707 (3,032)
Increase (decrease) in other
liabilities................................ (20,658) (7,250) 21,164
Increase (decrease) in deferred
income taxes............................... 159,005 (26,746) (26,843)
All other - net............................. 84,639 62,486 16,348
Net cash provided by operating ----------- ----------- -----------
activities.................................. 1,462,720 533,351 200,795
----------- ----------- -----------
Cash flows from investing activities:
Expenditures for property, plant
and equipment.............................. (367,632) (225,042) (475,633)
Timber and timberlands
expenditures.............................. (256,584) (103,830) (130,147)
Purchase of investments..................... (98,275) (28,902) (123,978)
Proceeds from sales and redemptions
of investments............................. --- 61,893 230,561
Proceeds from sales of property,
plant and equipment and timber
and timberlands............................ 181,207 38,723 304,773
All other - net............................. (19,625) (4,796) (17,448)
----------- ----------- -----------
Net cash used in investing activities........ (560,909) (261,954) (211,872)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term
debt....................................... 826,116 424,857 1,382,715
Payments of current installments of
long-term debt and long-term
debt....................................... (951,300) (621,769) (1,307,909)
Cash dividends paid......................... (32,144) (46,351) (46,334)
Payments to acquire treasury stock.......... (549,741) (75) (32)
All other - net............................. 31,379 7,236 1,612
----------- ----------- -----------
Net cash provided by (used in)
financing activities......................... (675,690) (236,102) 30,052
----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents................................. 226,121 35,295 18,975

Cash and cash equivalents:
Beginning of period......................... 90,948 55,653 36,678
----------- ----------- -----------
End of period............................... $ 317,069 $ 90,948 $ 55,653
=========== =========== ===========
Supplemental cash flow disclosures:
Nonmonetary transactions
(Notes 6 and 8)
Cash paid during the year for:
Interest (net of capitalized
amounts).................................. $ 227,317 $ 236,481 $ 225,764
Income taxes (net of refunds)
(Note 12)................................. 208,600 1,051 11,867
</TABLE>

The accompanying notes are an integral part of this statement.

7
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 1. Summary of Significant Accounting Policies

A. Consolidation

The consolidated financial statements include the accounts of the company and
all of its domestic and foreign subsidiaries. Affiliates which are 20% to 50%
owned are reflected using the equity method of accounting, with the related
investments included in Other Assets and Deferred Charges. All significant
intercompany transactions have been eliminated.

Certain amounts have been reclassified to conform to the current year's
presentation.

B. Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and the disclosure of
contingent assets and liabilities, at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

C. Cash and Cash Equivalents

Cash and cash equivalents includes all highly liquid investments with original
maturities of three months or less. Short-term investments are investments
which mature within twelve months but which do not meet the criteria of cash
equivalents.

D. Inventories

Inventories are generally stated at the lower of average cost or market (market
approximates net realizable value), except for certain inventories of the paper
segment which are stated on the last-in, first-out (LIFO) method. (Note 2).

E. Capitalization and Amortization of Certain Costs

Pre-operating expenses and start-up costs incurred in connection with the
construction of major properties are deferred until such properties become
operational. These expenses and costs are then amortized over a five-year
period. No start-up costs were deferred during 1995 and 1994.

F. Fixed Assets

Property, Plant and Equipment, which includes capitalized leases, is stated at
cost. Timber and Timberlands, which includes original costs, road construction
costs, and reforestation costs, such as site preparation and planting costs, is
stated at unamortized cost. Property taxes, surveying, fire control and other
forest management expenses are charged to expense as incurred. When fixed
assets are sold or retired, cost and accumulated depreciation are eliminated
from the accounts and gains or losses are recorded in income.

For financial reporting purposes, plant and equipment are depreciated using the
straight-line method over the estimated service lives of the individual assets.

8
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Machinery and equipment lives range from 3 to 35 years, buildings from 10 to 40
years and land improvements from 5 to 24 years. Leasehold improvements are
amortized over the shorter of the lives of the leases or estimated service
lives. Cost of timber harvested is based on the estimated quantity of timber
available during the growth cycle and is credited directly to the asset accounts
(Notes 3, 6 and 7).

G. Revenue Recognition

The company recognizes revenues as products are shipped.

H. Earnings Per Common Share

Primary earnings per common share are computed by dividing net income, after
deducting dividends on preference shares, by the average number of common shares
and dilutive common share equivalents outstanding during the year. The
computation of fully diluted earnings per common share assumes that the average
number of common shares and dilutive common share equivalents outstanding 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.

I. Foreign Currency Translation

The assets and liabilities of the company's Canadian subsidiary are translated
into U.S. dollars using year-end exchange rates. The resulting translation
gains or losses are included with the cumulative translation adjustment in the
Shareholders' Equity section of the balance sheet.

Due to the high inflation rate in Brazil, the company's Brazilian subsidiary
uses the U.S. dollar as its functional currency. Except for certain items
translated at historical exchange rates, assets and liabilities are translated
using year-end exchange rates. Gains or losses from balance sheet translation
are included in net income.

Gains or losses resulting from foreign currency transactions are included in net
income.

J. Derivative Financial Instruments

The company occasionally enters into interest rate swap agreements to hedge the
impact of changes in interest rates on the company's outstanding variable rate
debt. In addition, the company occasionally enters into foreign exchange
contracts to mitigate the risks associated with its exposure to fluctuations in
foreign currency exchange rates. The swap agreements and foreign exchange
contracts are held for purposes other than trading. At December 31, 1995, the
company had no interest rate swap agreements or foreign exchange contracts in
effect.

9
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

K. Accounting Changes

During the fourth quarter of 1993, the company adopted, retroactive to January
1, 1993, Statement of Financial Accounting Standards ("SFAS") No. 112,
"Employers' Accounting for Postemployment Benefits" (Note 13).

In March 1995, the Financial Accounting Standards Board ("FASB") issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed of". In October 1995, the FASB issued SFAS No. 123,
"Accounting for Stock-Based Compensation." Adoption of both statements is
required in 1996. The company does not expect that the adoption of these
statements will have a significant effect on its financial condition or its
results of operations.

10
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 2. Inventories

<TABLE>
<CAPTION>
December 31 (in thousands of dollars) 1995 1994
- -------------------------------------------------- -------- --------
<S> <C> <C>
Paper, pulp and packaging products................ $237,005 $150,249
Wood products..................................... 23,796 44,509
Logs.............................................. 41,445 69,491
Pulpwood.......................................... 22,764 19,369
Raw materials, parts and supplies................. 158,991 157,812
-------- --------

$484,001 $441,430
======== ========
</TABLE>

At December 31, 1995 and 1994, inventories stated using the last-in, first-out
(LIFO) method, representing approximately 23% and 12% of total inventories, were
$111,073,000 and $54,601,000, respectively. If the lower of average cost or
market method (which approximates current cost) had been utilized for
inventories carried at LIFO, inventory balances would have been increased by
$73,286,000 and $64,920,000 at December 31, 1995 and 1994, respectively.

11
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 3. Property, Plant and Equipment

<TABLE>
<CAPTION>
December 31 (in thousands of dollars) 1995 1994
- ------------------------------------- ----------- -----------
<S> <C> <C>
Land and land improvements........... $ 321,002 $ 310,393
Buildings and leasehold improvements 908,627 905,205
Machinery and equipment.............. 7,406,084 7,176,025
Construction in progress............. 214,806 187,631
----------- -----------

8,850,519 8,579,254

Accumulated depreciation............. (3,335,945) (2,976,640)
----------- -----------

$ 5,514,574 $ 5,602,614
=========== ===========
</TABLE>

Interest capitalized into construction in progress during 1995, 1994 and 1993
was $9,587,000, $7,926,000 and $33,784,000, respectively.

Depreciation expense includes the following components:

<TABLE>
<CAPTION>
Years Ended December 31 (in thousands of dollars) 1995 1994 1993
- -------------------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Land improvements................................. $ 13,431 $ 15,295 $ 14,041
Buildings and leasehold improvements.............. 28,040 26,773 26,270
Machinery and equipment........................... 351,063 337,318 319,929
-------- -------- --------

$392,534 $379,386 $360,240
======== ======== ========
</TABLE>

12
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 4. Lines of Credit

At December 31, 1995, the company had unused U.S. lines of credit of $1.16
billion ($58 million of which supported short-term borrowings classified as
long-term debt as discussed in Note 6) and unused foreign lines of credit of
approximately $187 million. At December 31, 1995, interest rates on the U.S.
and foreign lines were no higher than the prime rate or its equivalent.
Commitment fees of .15% are required on the $1.2 billion U.S. lines of credit,
which are available to November 15, 1999 on a revolving basis, at which time
amounts owed, if any, become payable. Commitment fees of no more than .17% are
required on the $192 million foreign lines of credit. Commitments under the
credit agreements cannot be withdrawn provided the company continues to meet
required conditions.

13
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 5. Accounts Payable and Accrued Liabilities

<TABLE>
<CAPTION>
December 31 (in thousands of dollars) 1995 1994
- ----------------------------------------------------- -------- --------
<S> <C> <C>
Accounts payable..................................... $306,372 $259,158
-------- --------

Dividends payable.................................... 4,802 4,668
-------- --------
Accrued liabilities:
Payrolls and commissions........................... 163,449 117,364
Employee benefits.................................. 63,042 59,212
Interest........................................... 45,563 47,496
Taxes, other than income taxes..................... 40,382 30,376
Other.............................................. 102,596 73,759
-------- --------

Total accrued liabilities..................... 415,032 328,207
-------- --------

$726,206 $592,033
======== ========

</TABLE>

14
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 6. Indebtedness

<TABLE>
<CAPTION>
December 31 (in thousands of dollars) 1995 1994
- ----------------------------------------------------- ---------- ----------
<S> <C> <C>
Secured debt, 9.9% average rate, payable
through 2007 (a).................................... $ 2,730 $ 2,812
Unsecured fixed rate debt, 8.1% average rate, payable
through 2028 (b).................................... 2,011,630 2,013,568
Unsecured variable rate debt, 6.2% average rate,
payable through 2020 (c)............................ 600,513 937,516
Lease obligations, 6.8% average rate, payable
through 2029........................................ 285,636 236,598
Other contractual obligations, 5.9% average rate,
payable through 1998................................ 5,760 7,680
---------- ----------

Total Debt..................................... 2,906,269 3,198,174

Less: Current installments of long-term debt........ 77,760 308,922
---------- ----------

Long-term debt (d)................................... $2,828,509 $2,889,252
========== ==========

Short-term bank borrowings (e)....................... $ 150,067 $ 90,184
========== ==========

</TABLE>

(a) Such debt is secured by assets with a net book value at December 31, 1995
of approximately $12 million.

(b) Unsecured fixed rate debt at December 31, 1994 included $150 million of the
company's 6 1/2% Convertible Subordinated Debentures due April 15, 2011. On
June 27, 1995, the company called the Debentures for redemption on August
8, 1995. Virtually all of the Debentures were converted into common stock
by the redemption date, and the remaining Debentures were redeemed for cash
on the redemption date.

(c) Unsecured variable rate debt includes borrowings payable in less than one
year. The company has the ability to refinance these borrowings under the
credit agreements discussed in Note 4. At December 31, 1995, $43 million of
U.S. commercial paper and $15 million of U.S. short-term obligations have
been classified as long-term debt since the company intends to renew or
refinance these obligations through 1996 and into future periods.

(d) The annual principal payment requirements under the terms of all long-term
debt agreements for the years 1996 through 2000 are $78 million, $178
million, $377 million, $380 million and $203 million, respectively.

(e) Weighted average interest rates on outstanding balances, excluding book
cash overdrafts, for 1995 and 1994 were 8.2% and 6.3%, respectively. Book
cash overdrafts totalled $84 million and $81 million, respectively, at
December 31, 1995 and 1994.

The indentures and agreements relating to long-term debt arrangements, as well
as the company's Certificate of Incorporation, contain restrictions on the
payment of cash dividends. Under the most restrictive of these provisions,
approximately $1.1 billion of consolidated retained earnings at December 31,
1995 is free of such restrictions.

15
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 7. Commitments

<TABLE>
<CAPTION>
Future Minimum Lease Payments
-----------------------------

Capitalized Non-Cancelable
Period (in thousands of dollars) Leases Operating Leases
- -------------------------------------------------------- ----------- ----------------
<S> <C> <C>
1996.................................................... $ 19,501 $ 24,014
1997.................................................... 19,501 22,083
1998.................................................... 19,501 21,123
1999.................................................... 19,501 23,590
2000.................................................... 19,501 22,606
Thereafter.............................................. 690,279 221,813
-------- --------

Total payments.......................................... 787,784 335,229
-------- --------

Less: Sublease rental income........................... 69,680
--------

Net operating lease payments............................ $265,549
========

Less: Amount representing interest..................... 497,994
--------

Present value of capitalized lease payments
(all long-term)....................................... $289,790
========
</TABLE>

The following schedule shows the composition of total rental expense for all
operating leases:

Years Ended December 31 (in thousands of dollars) 1995 1994 1993
- --------------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
Minimum rentals.................................... $24,542 $25,120 $25,204
Less: Sublease rental income...................... 251 619 573
------- ------- -------

$24,291 $24,501 $24,631
======= ======= =======
</TABLE>

16
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 8. Capital Shares

Unissued Preference Stock
- -------------------------

At December 31, 1995 and 1994, 7,031,431 and 6,731,431 preference shares,
respectively, for which no series has been designated were authorized and
unissued. At December 31, 1995 and 1994, 1,500,000 additional authorized and
unissued shares were designated and reserved for the issuance of the company's
Preference Stock, Participating Cumulative Series or Participating Cumulative
Series B, $1.00 par value.

Redeemable Preference Stock
- ---------------------------

On December 6, 1989, the company issued 300,000 shares of Preference Stock,
$92.50 Cumulative Convertible Series, $1.00 par value ("$92.50 Preference
Stock"). On June 22, 1995, all of the $92.50 Preference Stock was converted
into 7,894,737 shares of common stock, which then were purchased by the company
on that date. In preference to shares of common stock, each share was entitled
to cumulative cash dividends of $92.50 per year and $1,000 upon liquidation.
Each share was convertible into approximately 26.3 shares of common stock and
had approximately 26.3 votes on all matters submitted to shareholders.

17
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Common Stock
- ------------

Changes in common shares during the three years ended December 31, 1995 are as
follows:

(In shares and thousands of dollars)

<TABLE>
<CAPTION>
Treasury Shares
Issued Shares (at cost)
---------------------------------- -----------------------

Par Capital
Shares Value Surplus Shares Amount
----------- ------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>

Balance at January 1, 1993.... 96,157,112 $48,079 $1,158,150 (3,277,545) $(100,201)

Exercise of stock options..... 182,950 91 4,751 --- ---
Compensation plans............ 23,078 12 639 (63,810) (32)
Other......................... 4,615 2 15 --- ---
----------- ------- ---------- ----------- ---------

Balance at December 31, 1993.. 96,367,755 48,184 1,163,555 (3,341,355) (100,233)

Exercise of stock options..... 396,300 198 10,881 --- ---
Compensation plans............ 18,824 10 573 (150,925) (75)
Other......................... 3,160 1 (1) --- ---
----------- -------- ---------- ----------- ---------

Balance at December 31, 1994.. 96,786,039 48,393 1,175,008 (3,492,280) (100,308)

Conversions................... 12,205,192 6,102 441,731 --- ---
Exercise of stock options..... 1,224,750 613 36,379 --- ---
Compensation plans............ 11,805 6 339 --- ---
Repurchase of stock........... --- --- --- (11,080,731) (549,741)
Other......................... 2,593 1 (1) --- ---
----------- ------- ---------- ----------- ---------

Balance at December 31, 1995.. 110,230,379 $55,115 $1,653,456 (14,573,011) $(650,049)
=========== ======= ========== =========== =========
</TABLE>

At December 31, 1995, common shares of the company were reserved for issue as
follows:

Stock options granted or available for grant................. 5,626,600
Compensation plans........................................... 2,734,846
---------
8,361,446
=========

18
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 9. Stock Options

The company has granted to officers and key employees options to purchase common
shares at the market price of the shares on the date of grant. All options
granted to officers and certain options granted to key employees are accompanied
by stock appreciation rights. The options expire ten years or ten years and 31
days from the date of grant and generally become exercisable subsequent to a
period of 12 calendar months from date of grant.

Transactions under the plans are summarized below:
<TABLE>
<CAPTION>

Options Option Price
---------- -----------------
<S> <C> <C>
Balance at January 1, 1993................ 3,784,500 $18.88 to $38.25
Granted.............................. 598,200 31.00
Exercised............................ (266,300) 22.13 to 31.50
Surrendered or canceled.............. (103,400) 24.00 to 38.25
----------

Balance at December 31, 1993.............. 4,013,000 18.88 to 38.25
Granted.............................. 582,400 30.13
Exercised............................ (565,000) 18.88 to 38.25
Surrendered or canceled.............. (65,600) 24.13 to 38.25
----------

Balance at December 31, 1994.............. 3,964,800 22.13 to 38.25
Granted.............................. 605,100 39.13
Exercised............................ (2,272,100) 22.13 to 38.25
Surrendered or canceled.............. (18,650) 22.13 to 39.13
----------

Balance at December 31, 1995.............. 2,279,150 $24.13 to $39.13
========== =================
Options exercisable at December 31, 1995.. 1,683,650
</TABLE>

At December 31, 1995, the stock options had an aggregate option price of
$73,893,931.

19
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 10. Fair Value of Financial Instruments

1995 1994
------------------------- -------------------------
December 31 Carrying Fair Carrying Fair
(in thousands of dollars) Amount Value Amount Value
- --------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>

Assets (Liabilities):
Short-term investments..... $ 98,275 $ 98,275 $ --- $ ---
Long-term debt, excluding
lease obligations........ (2,620,633) (2,808,965) (2,961,576) (2,968,399)
$92.50 Preference Stock.... --- --- (300,000) (345,000)
</TABLE>

The fair value of the company's short-term investments is based on quoted market
prices at the reporting date for those or similar investments. The fair value
of the company's long-term debt, which includes current installments, is
estimated using discounted cash flow analyses, based on the company's
incremental borrowing rates for similar types of borrowings. The fair value of
the company's $92.50 Preference Stock was estimated to be the amount at which
(together with accrued dividends) the company had the right, except in certain
circumstances, to redeem the shares. On June 22, 1995, all of the $92.50
Preference Stock was converted into common stock, which then was purchased by
the company on that date.

The carrying amounts reported in the balance sheet for cash and cash
equivalents, receivables, short-term bank borrowings, and accounts payable and
accrued liabilities approximate fair values due to the short maturity of those
instruments.

20
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 11. Other (Income) Expense -- Net

Years Ended December 31
(in thousands of dollars) 1995 1994 1993
- ------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Interest income...................... $ (37,999) $ (31,107) $ (30,135)
Foreign currency losses -- net....... 5,902 10,725 24,717
Minority interest in income of
subsidiaries........................ 34,285 18,243 7,288
Equity in net income of affiliates... (337) (337) (463)
Royalty, rental and commission
income.............................. (11,302) (13,031) (8,276)
Net gain on disposal of fixed assets,
timberlands and investments (a)..... (46,536) (14,151) (9,973)
Miscellaneous -- net (b)............. 22,898 (27,684) 24,252
--------- --------- ---------
$ (33,089) $ (57,342) $ 7,410
========= ========= =========
</TABLE>

(a) 1995 included a gain of $89 million from the sale of certain operations in
Canada and charges of $68 million primarily for the writedown of certain
U.S. paper and wood products assets.

1994 included a gain of $16 million from the sale of the company's interest
in a Swedish linerboard mill.

(b) 1994 included income of $19 million from the recognition of a refund due on
countervailing duties on lumber exports from Canada into the United States
in prior years. The refund was received in 1995.

21
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 12. Income Taxes

The provision for income taxes includes the following components:

Years Ended December 31 (in thousands of dollars) 1995 1994 1993
- ------------------------------------------------- ---------- --------- ---------
<C> <C> <C>
Provision for income taxes currently
payable (receivable):
Federal........................................ $ 128,805 $ (2,920) $ (15,206)
State and local................................ 10,700 2,100 1,680
Foreign........................................ 166,218 52,517 9,147
---------- --------- ---------

305,723 51,697 (4,379)
---------- --------- ---------
Provision for deferred income taxes:
Federal........................................ 120,075 (36,274) (34,005)
State and local................................ 31,508 (4,667) (8,821)
Foreign........................................ 7,422 14,195 15,983
---------- --------- ---------
159,005 (26,746) (26,843)
---------- --------- ---------
$ 464,728 $ 24,951 $ (31,222)
========== ========= =========
</TABLE>

Domestic and foreign income (loss) before income taxes, extraordinary item and
cumulative effect of accounting changes are as follows:
<TABLE>
<CAPTION>

Years Ended December 31 (in thousands of dollars) 1995 1994 1993
- ------------------------------------------------- ---------- --------- ---------
<S> <C> <C> <C>
Domestic......................................... $ 785,202 $(110,544) $(250,755)
Foreign.......................................... 451,361 198,800 85,079
---------- --------- ---------
Total income before income taxes, extraordinary
item and cumulative effect of accounting $1,236,563 $ 88,256 $(165,676)
changes........................................ ========== ========= =========

</TABLE>

22
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Principal reasons for the variation between the statutory rate and the effective
federal income tax rate are as follows:

Years Ended December 31 1995 1994 1993
- -------------------------------------------------- ------ ------ ------
<S> <C> <C> <C>
Statutory rate -- provision (benefit)............. 35.0% 35.0% (35.0)%
Rate difference -- foreign subsidiaries........... 1.7 (3.9) (1.0)
Foreign dividends................................. 0.3 8.2 1.3
State and local taxes, net of federal tax effect.. 2.2 (1.9) (2.8)
Adjustment to prior years' income taxes........... --- (5.6) 4.4
Statutory rate change adjustments................. (0.5) --- 14.1
All other -- net.................................. (1.1) (3.5) 0.2
------ ------ ------
Effective income tax rate.........................
37.6% 28.3% (18.8)%
====== ====== ======

</TABLE>

Deferred tax liabilities (assets) are composed of the following:
<TABLE>
<CAPTION>
Years Ended December 31 (in thousands of dollars) 1995 1994
- -------------------------------------------------- ---------- ----------
<S> <C> <C>
Depreciation and cost of timber harvested......... $1,687,471 $1,677,529
Capitalization of interest and deferral of
pre-operating and start-up costs (net).......... 37,450 44,940
Other............................................. 51,593 45,544
---------- ----------
Gross Liabilities.......................... 1,776,514 1,768,013
---------- ----------
Loss and other carryforwards...................... (211,742) (404,668)
Accrued liabilities and reserves.................. (201,744) (174,116)
Postretirement benefits other than pensions....... (151,284) (151,175)
Other............................................. (88,902) (93,166)
---------- ----------
Gross Assets............................... (653,672) (823,125)
---------- ----------
Valuation allowance............................... 20,807 34,007
---------- ----------
$1,143,649 $ 978,895
========== ==========
</TABLE>

23
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

As of December 31, 1995, the company had available, for U.S. income tax return
purposes, general business credit carryforwards of $15,600,000, which expire
from 1999 through 2009, and alternative minimum tax credit carryforwards of
$194,600,000, which do not expire.

It is the company's intention to reinvest undistributed earnings of certain of
its foreign subsidiaries and thereby indefinitely postpone their remittance.
Accordingly, no provision has been made for income taxes on undistributed
earnings of $1,066,700,000 at December 31, 1995. Computation of the potential
deferred tax liability associated with these undistributed earnings is not
practicable.

The valuation allowance primarily relates to general business credit
carryforwards. The decrease in the valuation allowance of $13,200,000 for 1995
and $8,284,000 for 1994 is primarily due to the resolution of issues with
respect to the utilization of such carryforwards.

24
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 13. Pension and Other Benefit Plans

The company and its subsidiaries have a number of noncontributory pension plans
covering substantially all employees. The plans covering salaried employees
provide pension benefits that generally are based on the employee's compensation
during the 60 months before retirement. Plans covering hourly employees
generally provide benefits of stated amounts for each year of service. The
company bases domestic pension contributions on funding standards established by
the Employee Retirement Income Security Act of 1974.

The net periodic pension cost of these plans in 1995, 1994 and 1993 included the
following:

(in thousands of dollars) 1995 1994 1993
- ------------------------------------------- --------- ---------- ----------
<S> <C> <C> <C>

Service cost--benefits earned during the period............. $ 23,855 $ 25,301 $ 25,256
Interest cost on projected benefit obligation............... 102,739 95,461 98,667
Actual return on plan assets................................ (253,431) (4,883) (208,714)
Net amortization and deferral............................... 130,438 (128,456) 90,806
--------- ---------- ---------
Net periodic pension cost (income).......................... $ 3,601 $ (12,577) $ 6,015
========= ========== =========
- ------------------------------------------------------------------------------------------------------------------------------------

Assumptions used in determining 1995, 1994 and
1993 net periodic pension cost were:

Expected long-term rate of return on assets................. 10.0% 10.0% 10.0%
Discount rate............................................... 8.0% 7.3% 8.3%
Long-term rate of increase in compensation levels 5.0% 4.3% 5.3%
- -----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

25
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

The accrued pension cost at December 31, 1995 and 1994 for defined benefit plans
is shown below. The measurement dates used to determine the funded status were
September 30, 1995 and 1994. Benefit obligations for 1995 and 1994 were
determined using an assumed discount rate of 7.5% and 8.0%, respectively, and an
assumed average long-term rate of increase in compensation levels of 4.5% and
5.0%, respectively. Plan assets consist primarily of listed stocks and bonds.

Assets Exceed Accumulated Benefit Obligation 1995 1994
- -------------------------------------------- ----------- -----------

(in thousands of dollars)
- -------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation.................... $1,280,840 $1,158,733
========== ==========

Accumulated benefit obligation............... $1,326,902 $1,195,890
========== ==========

Projected benefit obligation................. $1,421,803 $1,295,767

Plan assets at fair value........................ 1,459,631 1,290,416
---------- ----------

Plan assets in excess of (less than) the
projected benefit obligation................... 37,828 (5,351)

Unrecognized net (gain) loss..................... (40,886) 8,425

Prior service cost not yet recognized in net
periodic pension cost.......................... 35,356 28,361

Unrecognized net transitional (asset)............ (6,553) (16,929)
----------- ----------

Pension asset.................................... $ 25,745 $ 14,506
=========== ===========
</TABLE>

The company sponsors several defined contribution plans that provide all
domestic salaried employees and certain domestic hourly employees of the company
an opportunity to accumulate funds for their retirement. The company matches
the contributions of participating employees on the basis of the percentages
specified in the respective plans. Company matching contributions to the plans,
which are invested in shares of the company's common stock, were approximately
$12 million in 1995, and $10 million in each of 1994 and 1993.

26
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Other Retiree Benefits
- ----------------------

The company provides certain health care and life insurance benefits to eligible
retired employees. Employees are generally eligible for benefits upon
retirement following a specified number of years of service. These benefit
plans are unfunded.

Summary information on the company's plans providing postretirement benefits
other than pensions is as follows:

December 31 (in thousands of dollars) 1995 1994
- ---------------------------------------------- -------- --------
<S> <C> <C>

Accumulated postretirement benefit obligation:
Retirees.................................... $277,500 $270,100
Fully eligible, active plan participants.... 21,400 29,300
Other active plan participants.............. 63,800 53,600
-------- --------
Accumulated postretirement benefit obligation 362,700 353,000
Unrecognized prior service benefit............ 26,400 28,400
Unrecognized net (loss)....................... (10,300) (1,700)
-------- --------
Accrued postretirement benefit obligation..... $378,800 $379,700
======== ========
</TABLE>

Net periodic postretirement benefit cost for 1995, 1994 and 1993 includes the
following components:

(in thousands of dollars) 1995 1994 1993
- --------------------------------------------- -------- --------- --------
<S> <C> <C> <C>

Service cost................................. $ 3,500 $ 4,300 $ 4,800
Interest cost on accumulated postretirement
benefit obligation......................... 27,900 29,100 32,700
Net amortization and deferral................ (2,000) (900) ---
------- ------- --------
Net periodic postretirement benefit cost..... $ 29,400 $32,500 $ 37,500
======= ======= ========
</TABLE>

The accumulated postretirement benefit obligation at December 31, 1995 and 1994
was determined using an assumed discount rate of 7.75% and 8.25%, respectively.
The assumed health care cost trend rate used for measurement purposes was 8.6%
for 1996, declining ratably to an ultimate rate of 5% over a period of six
years.

If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefit obligation as of December 31, 1995 would be
increased by approximately 9%. The effect of this change on the aggregate of
service and interest cost for 1995 would be an increase of approximately 11%.

27
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Postemployment Benefits
- -----------------------

In the fourth quarter of 1993, the company adopted, retroactive to January 1,
1993, SFAS No. 112. The standard requires an accrual method of accounting for
postemployment benefits. Prior to adoption, the company was on a cash basis of
accounting for certain of these postemployment benefits. The cumulative effect
of adopting SFAS No. 112 as of January 1, 1993 resulted in an after-tax charge
of $7.5 million ($.08 per share) to 1993 earnings after reduction of
approximately $4.7 million for income taxes. The effect of adoption on 1993
results, after recording the cumulative effect, was not material.

28
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 14. Business Segments

The company's business segments are paper and wood products. The markets in
which the company sells its products are highly competitive. The company faces
numerous competitors within the forest products industry in each of its major
markets and also competes with suppliers of milk and juice cartons and kraft
paper substitutes made from plastics. Competition in all markets is based
primarily on price. The company is one of the largest domestic producers and
suppliers of printing and writing papers, publication papers, newsprint, lumber,
plywood, milk and juice cartons, and hardwood market pulp. Weldwood of Canada
Limited, a Canadian subsidiary in which the company has approximately 84%
ownership, is one of the largest producers of lumber, plywood and softwood
market pulp in Canada. Champion Papel e Celulose Ltda., a 99% owned Brazilian
subsidiary, is one of the largest producers and suppliers of printing and
writing papers in Brazil.

The company believes that the risks associated with its foreign operations are
somewhat greater than those associated with its domestic operations. Weldwood
exports substantial portions of its products and, as a result, is affected
significantly by currency fluctuations. Champion Papel is subject to Brazil's
continuing inflation and currency fluctuations, which have moderated
substantially as the result of various governmental actions in the last two
years. Tight monetary and fiscal policies, including high interest rates,
imposed in recent years in an attempt to control Brazil's high inflation rate,
remain in effect.

29
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Information about the company's operations in different businesses for the three
years ended December 31, 1995 is as follows:
<TABLE>
<CAPTION>

Timber,
Timberlands
and Wood Corporate Consolidated
(in thousands of dollars) Paper Products and Other Total
- --------------------------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>

Net Sales to
Unaffiliated Customers:

1995..................... $6,007,158 $ 964,880 $ --- $6,972,038
1994..................... 4,216,795 1,101,397 --- 5,318,192
1993..................... 3,817,579 1,251,254 --- 5,068,833

Income from Operations:

1995..................... $1,364,786 $ 137,329 $(72,625) $1,429,490
1994..................... 70,887 242,285 (47,172) 266,000
1993..................... (133,774) 247,989 (47,823) 66,392

Identifiable Assets:

1995..................... $6,432,726 $2,673,000 $437,576 $9,543,302
1994..................... 6,244,111 2,303,941 415,576 8,963,628
1993..................... 6,436,935 2,275,249 430,585 9,142,769

Capital Expenditures:

1995..................... $ 313,541 $ 299,437 $ 11,238 $ 624,216
1994..................... 188,220 133,504 7,148 328,872
1993..................... 406,407 193,785 5,588 605,780

Depreciation Expense and
Cost of Timber Harvested:

1995..................... $ 404,251 $ 54,408 $ 12,778 $ 471,437
1994..................... 387,628 57,346 13,723 458,697
1993..................... 358,294 72,513 12,627 443,434
</TABLE>

The company's timber and timberlands assets and related capital expenditures
support both business segments but were not allocated to the paper segment
because identification of the specific timber and timberlands assets associated
with either segment is impossible. The timber that has been harvested has been
included at cost in the results of the business segments.

30
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Information about the company's operations in different geographic areas for the
three years ended December 31, 1995 is as follows:

Corporate Consolidated
(in thousands of dollars) U.S. Canada Brazil and Other Total
- --------------------------- ----------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>

Net Sales to
Unaffiliated Customers:

1995..................... $5,912,360 $655,595 $404,083 $ --- $6,972,038
1994..................... 4,370,317 694,104 253,771 --- 5,318,192
1993..................... 4,185,388 610,947 272,498 --- 5,068,833

Income from Operations:

1995..................... $1,132,706 $205,895 $163,514 $(72,625) $1,429,490
1994..................... 125,145 133,930 54,097 (47,172) 266,000
1993..................... (18,063) 53,674 78,604 (47,823) 66,392

Identifiable Assets:

1995..................... $7,418,524 $920,183 $767,019 $437,576 $9,543,302
1994..................... 7,254,363 747,225 546,464 415,576 8,963,628
1993..................... 7,454,454 744,631 513,099 430,585 9,142,769

Capital Expenditures:

1995..................... $ 434,252 $ 15,956 $162,769 $ 11,239 $ 624,216
1994..................... 258,899 14,029 48,796 7,148 328,872
1993..................... 486,074 65,035 49,083 5,588 605,780

Depreciation Expense and
Cost of Timber Harvested:

1995..................... $ 401,226 $ 29,789 $ 27,644 $ 12,778 $ 471,437
1994..................... 387,483 32,338 25,153 13,723 458,697
1993..................... 376,456 32,513 21,838 12,627 443,434

</TABLE>

As of December 31, 1995, net assets located outside of the United States
included in the consolidated financial statements were approximately $1.123
billion. Of this amount, $279 million of cash and cash equivalents is held by
the company's Canadian and Brazilian subsidiaries.

31
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 15. Quarterly Results of Operations (Unaudited)

(in millions of dollars, except per share amounts)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------

March 31 June 30 September 30 December 31
- ------------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Net Sales 1995 $1,634.0 $1,756.4 $1,840.7 $1,740.9
1994 1,226.1 1,242.0 1,384.7 1,465.4

Gross Profit 1995 $ 357.1 $ 445.4 $ 543.1 $ 470.0
1994 83.4 80.5 161.8 239.6

Income Taxes
(Benefit) (a) 1995 $ 89.2 $ 116.4 $ 148.1 $ 111.0
1994 (9.0) (15.0) 8.8 40.2

Net Income (Loss) (b) 1995 $ 131.2 $ 187.5 $ 235.6 $ 217.5
1994 (31.0) (31.1) 23.1 102.3

Primary Earnings
(Loss) Per Common
Share (c) 1995 $ 1.33 $ 1.93 $ 2.47 $ 2.26
1994 (.41) (.41) .18 1.02

Fully Diluted
Earnings (Loss) Per
Common Share (c) 1995 $ 1.26 $ 1.79 $ 2.44 $ 2.26
1994 (.41) (.41) .18 1.02

</TABLE>

(a) Income taxes (benefit) for the three month period ended December 31, 1994
included a benefit of $7 million to reflect one-time adjustments to the
company's deferred tax liability.

(b) Other (income) expense - net for the three month periods ended March 31 and
June 30, 1995 included gains of $50 million and $39 million, respectively,
from the sales of certain operations in Canada and charges of $36 million
and $32 million, respectively, primarily for the writedown of certain U.S.
paper and wood products assets. Other (income) expense - net for the three
month period ended December 31, 1994 included a gain of $16 million from the
sale of certain assets and income of $19 million from the recognition of a
refund due on countervailing duties on lumber exports from Canada into the
United States in prior years.

(c) Earnings per share was calculated for each three month and twelve 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 Preference Stock. 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. The company purchased an additional
3,186,000 shares of common stock at various times during 1995. As a result
of all of these transactions, the sum of the earnings per share for the four
quarters of 1995 does not equal the earnings per share for the twelve months
ended December 31, 1995.

32
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 16. Environmental Liabilities

The company has been designated as a potentially responsible party by the U.S.
Environmental Protection Agency (the "EPA") under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, and by certain
states under applicable state laws, with respect to the cleanup of hazardous
substances at a number of sites. In the case of many of these sites, other
potentially responsible parties also have been so designated. In addition, the
company and, in certain instances, other responsible parties have entered into
agreements with the EPA and certain states regarding the cleanup of hazardous
substances at various other locations. Also, the company is involved in the
remediation of certain other sites which are not the subject of investigation by
federal or state agencies.

Although the company's probable liabilities have been accrued for currently,
hazardous substance cleanup expenditures generally are paid over an extended
period of time, in some cases possibly more than 30 years. Annual cleanup
expenditures during the period from 1993 through 1995 were approximately $7
million, $4 million and $5 million, respectively.

33
<PAGE>

Champion International Corporation and Subsidiaries
- --------------------------------------------------------------------------------

Notes to Financial Statements

Note 17. Legal Proceedings

The company is a defendant in a class action seeking damages allegedly resulting
from the purported discharge of hazardous substances, including dioxin, from the
company's Pensacola, Florida, mill into Eleven Mile Creek, which flows into
Perdido Bay. The plaintiffs seek not more than $50,000 for each class member.
It is anticipated that the class, which was certified in June 1994, will consist
of approximately 2,000 members. The company is vigorously defending this
action.

The company also is involved in other legal and administrative proceedings and
claims of various types. While any litigation contains an element of
uncertainty, management, based upon the opinion of the company's General
Counsel, presently believes that the outcome of each such proceeding or claim
which is pending or known to be threatened (including the action described
above), or all of them combined, will not have a material adverse effect on the
company.

34
<PAGE>

Report of Independent Public Accountants
- --------------------------------------------------------------------------------

To the Shareholders and Board of Directors
of Champion International Corporation:

We have audited the accompanying consolidated balance sheet of Champion
International Corporation (a New York corporation) and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements of income,
retained earnings and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Champion International
Corporation and subsidiaries as of December 31, 1995 and 1994, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1995 in conformity with generally accepted accounting
principles.

As explained in Notes 1 and 13 of Notes to Financial Statements, the company
changed its method of accounting for postemployment benefits, effective January
1, 1993.

Arthur Andersen LLP

New York, N.Y.
January 16, 1996

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Champion International Corporation and Subsidiaries
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Management's Discussion and Analysis of Financial Condition and Results of
Operations

Results of Operations

Overall Annual Results

Results for 1995 improved significantly from both 1994 and 1993. In 1995, net
income was $772 million or $7.67 per share, fully diluted. This compared with
net income of $63 million or 38 cents per share in 1994 and a loss of $156
million or $1.98 per share in 1993. The improvement from 1994 and 1993
reflected substantially higher operating income in the paper segment, primarily
due to higher prices, and, to a lesser extent, increased production, which more
than offset lower operating income in the wood products segment.

Significant Income Statement Line Item Changes

Net sales for 1995 of $7 billion improved from $5.3 billion in 1994 and $5.1
billion in 1993. Gross profit on sales was $1.8 billion, compared to $565
million in 1994 and $359 million in 1993. Operating income of $1.4 billion
improved from $266 million in 1994 and $66 million in 1993. The significant
improvements from the two prior years in net sales, gross profit and operating
income principally were due to higher prices for all of the company's major pulp
and paper grades. Overall pulp and paper shipments for 1995 were approximately
the same as in 1994 and higher than in 1993. Overall, prices and shipments of
wood products declined from both prior years. The aggregate cost of products
sold increased somewhat from both prior years mainly due to higher costs for
fiber and chemicals.

Compared to 1994 and 1993, the substantial increase in paper segment operating
income more than offset the decline in operating income in the wood products
segment and the increase in general corporate expense. General corporate
expense was $73 million, compared to $47 million in 1994 and $48 million in
1993. The increase from the two prior years was primarily the result of higher
compensation costs and the impact of a higher stock price on the value of stock
appreciation rights.

Other (income) expense - net for 1995 included an $89 million gain from the sale
by the company's Canadian subsidiary, Weldwood of Canada Limited, of its coastal
British Columbia timberlands and wood products facilities. Other (income)
expense - net for 1995 also included charges of $68 million principally for the
writedown of certain United States paper and wood products assets. Other
(income) expense - net declined from 1994, mainly as the result of the 1994 sale
of the company's interest in a Swedish linerboard mill, the recognition in 1994
of a refund due on countervailing duties on lumber exports from Canada into the
United States in prior years, and lower expense for minority interest in
subsidiaries in 1994. Other (income) expense - net increased from 1993,
primarily due to lower foreign currency translation expenses recorded by the
company's Brazilian subsidiary, Champion Papel e Celulose Ltda., in 1995 as the
result of reduced inflation in Brazil, as well as the 1995 asset sales referred
to above.

The effective income tax rate was higher than in 1994 and 1993, principally due
to one-time adjustments to the company's deferred tax liability in each of those
years. The adjustments impacted earnings favorably in 1994 and adversely in
1993.

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The decline from both prior years in dividends on Preference Stock reflected the
conversion of all outstanding shares of the company's $92.50 Cumulative
Convertible Preference on June 22, 1995.

Quarterly Results

Fully diluted earnings per share of $2.26 for the fourth quarter of 1995
compared to $1.02 for the fourth quarter of 1994 and $2.44 for the third quarter
of 1995. The improvement from the year-ago quarter was primarily due to
significantly higher prices for all of the company's major pulp and paper
grades. The decline from the prior quarter was mainly the result of lower
shipments and somewhat lower prices for uncoated and coated free sheet papers
and hardwood market pulp. Fourth quarter 1995 earnings were favorably impacted
by a lower effective income tax rate and lower general corporate expense
compared to the prior quarter.

Paper Segment

For the company's paper segment, operating income of $1.365 billion in 1995
improved substantially from $71 million in 1994 and a loss of $134 million in
1993. Total paper, packaging and pulp shipments were 6 million tons in each of
1995 and 1994 and 5.7 million tons in 1993. Fourth quarter 1995 operating
income of $367 million compared with $423 million in the third quarter of 1995
and $113 million in the fourth quarter of 1994.

In general, the paper business tends to follow overall economic trends. The
improvement in paper segment earnings, which began in the second half of 1994,
reflected increased demand attributable to strengthening economies in much of
the world. In addition, on the supply side, there were relatively few capacity
increases in the industry during the year, although domestic pulp and paper
manufacturers increased production from existing facilities and there were pulp
capacity additions in Indonesia. This favorable demand/supply relationship
resulted in strong markets and substantial price increases for all of the
company's principal pulp and paper grades in the second half of 1994 and for the
first nine months of 1995. In the fourth quarter of 1995 and in early 1996,
order backlogs for several grades, including uncoated and coated free sheet
papers and market pulp, declined, resulting in lower prices and an increase in
inventory levels.

Operating income for the domestic printing and writing papers business improved
substantially from the losses in 1994 and 1993. The average price for domestic
uncoated free sheet papers, the principal product of the printing and writing
papers business, was $976 per ton in 1995, compared to $617 per ton in 1994 and
$613 per ton in 1993. The average price for coated free sheet papers also
improved from both prior years. Shipments of all printing and writing grades of
2,082,000 tons increased slightly from 1994 and significantly from 1993. Fourth
quarter 1995 earnings were significantly higher than the fourth quarter of 1994,
but declined from the third quarter of 1995. The decline from the prior quarter
was mainly due to lower shipments and somewhat lower prices for uncoated and
coated free sheet papers. Prices continued to weaken early in 1996. The
decline in shipments resulted in an increase in inventory levels of uncoated and
coated free sheet papers in late 1995 and early 1996.

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Operating income at the company's Brazilian subsidiary improved substantially
from the two prior years, primarily due to higher domestic and export prices for
uncoated free sheet papers. The average price for uncoated free sheet papers
was $1,028 per ton in 1995, compared to $615 per ton in 1994 and $577 per ton in
1993. Uncoated free sheet papers shipments of 381,000 tons were slightly higher
than 1994 and 1993. Approximately 11% of the company's 1995 consolidated
operating income, before general corporate expense, was attributable to the
Brazilian subsidiary. Fourth quarter operating income improved significantly
from the fourth quarter of 1994, but declined from the third quarter of 1995.
The decline from the prior quarter was mainly due to higher costs associated
with a scheduled maintenance outage, as well as lower prices for uncoated free
sheet papers. Domestic and export prices continued to decline early in 1996.

Earnings for the publication papers business improved considerably from 1994 and
1993. Prices for all publication grades were higher than in the two prior
years, more than offsetting increased purchased pulp and wood costs. The
average price for coated groundwood papers was $1,043 per ton in 1995, compared
to $717 per ton in 1994 and $738 per ton in 1993. Prices for coated free sheet
and uncoated groundwood papers also were higher than in the two prior years.
Shipments of all publication grades of 1,280,000 tons increased slightly from
1994 and moderately from 1993. Fourth quarter 1995 results improved
significantly from the fourth quarter of 1994 due to higher prices for all
publication grades. Results also improved somewhat from the third quarter of
1995, as higher prices for coated and uncoated groundwood grades more than
offset lower prices for coated free sheet papers. Order backlogs for most
publication grades declined substantially in late 1995 and continued to decline
early in 1996.

Operating income for the U.S. and Canadian market pulp operations represented a
considerable improvement from the earnings level in 1994 and the loss in 1993.
Prices for all pulp grades were significantly higher than in both prior years.
For example, the average price for Canadian softwood pulp was $693 per ton in
1995, compared to $410 per ton in 1994 and $298 per ton in 1993. Prices for
U.S. hardwood and softwood pulps also increased from 1994 and 1993. Shipments
of all pulp grades were 798,000 tons, compared to 860,000 tons in 1994 and
877,000 tons in 1993. Operating income in the fourth quarter of 1995 improved
considerably from the fourth quarter of 1994, but declined significantly from
the third quarter of 1995. While a price increase for softwood pulp was
effective October 1, weakening demand for pulp, reflecting shorter order
backlogs for certain grades of paper and additional pulp capacity in Indonesia,
resulted in a decline in shipments and prices for all pulp grades late in the
fourth quarter and into early 1996. The decline in shipments caused an increase
in inventory levels of pulp in late 1995 and early 1996. Since the company is a
net seller of pulp, overall profits are adversely affected by lower pulp prices;
however, the company's publication papers mills and the printing and writing
papers mills in Hamilton, Ohio, and Canton, North Carolina, purchase pulp from
outside suppliers and benefit from lower pulp prices.

Earnings for the newsprint business represented a substantial improvement from
the losses in 1994 and 1993, principally due to higher prices. Average
newsprint prices (including freight) of $618 per ton in 1995 compared to $409
per ton in 1994 and $396 per ton in 1993. Shipments of 964,000 tons of
newsprint, specialty and directory grades also increased from the two prior
years. Earnings for the fourth quarter of 1995 represented a significant
improvement from the loss in the year-ago quarter and were somewhat above the
operating income in the third quarter of 1995 due to higher prices.

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Earnings for the packaging business substantially exceeded those in 1994 and
1993, primarily due to higher prices for kraft paper and linerboard. Shipments
of 504,000 tons were approximately the same as in the two prior years. Fourth
quarter 1995 results improved from the fourth quarter of 1994 due to higher
prices, but were slightly lower than the third quarter of 1995 as demand and
prices for kraft paper and linerboard declined in late 1995 and into early 1996.

Wood Products Segment

For the company's wood products segment, which includes the wood-related
operations of Weldwood of Canada Limited, income from operations of $137 million
in 1995 declined considerably from $242 million in 1994 and $248 million in
1993. Fourth quarter 1995 operating income of $27 million compared with $61
million in the fourth quarter of 1994 and $34 million in the third quarter of
1995.

Lower prices for lumber, reflecting a decrease in housing starts in the United
States and Canada, primarily were responsible for the decline in earnings in the
wood products segment. The average price for lumber overall was down 21% from
1994 and 12% from 1993. The average price for plywood overall was
approximately the same as in 1994 and somewhat higher than in 1993. Timber
stumpage prices were slightly higher than in 1994 but considerably lower than in
1993.

Shipments of lumber were substantially lower than in 1994 and 1993, due to the
sale and closure of various domestic and Canadian lumber mills during the last
three years. Shipments of plywood were substantially lower than in 1993, due to
the sale of two domestic plywood plants in the fourth quarter of 1993. Timber
stumpage volumes increased from both prior years.

Shipments of lumber and plywood declined somewhat in the fourth quarter of 1995,
mainly due to seasonal factors, while prices overall were substantially
unchanged.

Foreign Operations

The company's major foreign operations, which are discussed under their
respective business segment headings, are in Canada and Brazil. Net sales to
unaffiliated customers by the company's foreign subsidiaries for 1995 were
(U.S.) $1.1 billion, accounting for 15.2% of consolidated net sales of the
company. Income from operations of the foreign subsidiaries for 1995 was (U.S.)
$369 million, accounting for 25.8% of consolidated income from operations of the
company. Net income (after minority interest) of the foreign subsidiaries for
1995 was (U.S.) $278 million, accounting for 36% of consolidated net income of
the company; approximately $56 million of such $278 million was attributable to
the sale of Weldwood's coastal British Columbia timberlands and wood products
operations, as discussed above.

Labor Contracts

The company has labor agreements, which expire between 1996 and 2002, at ten of
its eleven domestic paper mills. The only such mill whose labor agreement
expires in 1996 is the Pensacola, Florida, printing and writing papers mill.
The Quinnesec, Michigan, publication papers mill is a non-union facility.

The labor agreement that covers the paper industry in Brazil, including the
company's Brazilian subsidiary, is renegotiated each year.

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At Weldwood, labor agreements covering the Hinton, Alberta, pulp mill and the
joint venture pulp mill in Quesnel, British Columbia, as well as all of
Weldwood's wood products facilities except the Longlac, Ontario, plants, will
expire in 1997. The labor agreement covering the Longlac plants, which are
expected to be sold shortly, will expire in 1996.

Financial Condition

General

The company's current ratio was 1.5 to 1 at year-end 1995, as compared to 1.1 to
1 at year-end 1994 and 1.4 to 1 at year-end 1993. Total debt to total
capitalization was 38% at year-end 1995, compared to 43% at year-end 1994 and
44% at year-end 1993.

Significant Balance Sheet Line Item Changes

Receivables increased by $79 million from December 31, 1994 primarily due to
substantial price increases for all of the company's principal pulp and paper
grades. Inventories increased by $43 million mainly due to the decline in order
backlogs for uncoated and coated free sheet papers and market pulp late in the
year. The increases in timber and timberlands and in property, plant and
equipment (before accumulated depreciation) of $161 million and $271 million,
respectively, reflected capital investments net of asset sales. Accounts
payable and accrued liabilities increased by $134 million primarily due to the
timing of payments and higher costs. The deferred income tax liability (net of
the deferred income tax asset) and income taxes payable increased by $165
million and $83 million, respectively, due to the significant improvement in
pre-tax income from 1994. Minority interest in subsidiaries increased by $37
million, principally reflecting the interest of the minority shareholders of
Weldwood in its 1995 earnings. For a discussion of changes in long-term debt
(including current installments) and cash and cash equivalents, as well as of
transactions involving company securities that resulted in changes in preference
stock, capital shares and treasury shares, see below.

Cash Flows Statement - General

Reflecting record earnings and, to a lesser extent, the sale of certain assets,
in 1995 the company's net cash provided by operating activities and asset sales
substantially exceeded the requirements of its investing activities (principally
capital expenditures). The excess was used primarily 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 1995, long-term debt (including current installments) declined
by $292 million; a 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
$226 million in 1995 to a total of $317 million, $279 million of which was held
by the company's Canadian and Brazilian subsidiaries. In 1995, the company
purchased 11.1 million shares of common stock for $550 million.

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In 1994, the company's net cash provided by operating activities and asset sales
exceeded the requirements of its investing activities (principally capital
expenditures). The excess was used primarily to pay dividends as well as a
portion of the company's long-term debt (including current installments) and to
increase cash and cash equivalents. In 1994, long-term debt (including current
installments) declined by $206 million, and cash and cash equivalents increased
by $35 million.

In 1993, 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 its financing activities (principally
debt payments and cash dividends). The difference was financed through
borrowings. In 1993, net borrowings generated cash proceeds of $75 million,
while cash and cash equivalents increased by $19 million.

Cash Flows Statement - Operating Activities

Net cash provided by operating activities of $1.463 billion improved from $533
million in 1994 and $201 million in 1993. The increase primarily was due to
significantly higher earnings and, to a lesser extent, higher deferred income
taxes.

Cash Flows Statement - Investing Activities

Net cash used in investing activities of $561 million increased from $262
million in 1994 and $212 million in 1993. The increase from 1994 mainly was due
to an increase in capital expenditures and investments in marketable securities,
which more than offset higher net proceeds from asset sales. The increase from
1993 principally was due to lower net proceeds from the sale of assets and
marketable securities.

In 1995, Weldwood received net proceeds of approximately (U.S.) $175 million
from the sale of its coastal British Columbia timberlands and wood operations.
In 1994, the company received net proceeds of $39 million from sales of
timberlands and fixed assets. In addition, the company received net proceeds of
$33 million from sales of investments, including $25 million from the sale of
its interest in a Swedish linerboard mill. In 1993, the company received net
proceeds of $305 million from sales of timberlands and fixed assets principally
located in Montana.

Cash Flows Statement - Financing Activities

Net cash used in financing activities of $676 million compared with $236 million
in 1994 and net cash provided by financing activities of $30 million in 1993.
The increase from the two prior years in cash used in financing activities
mainly was attributable to the purchase of shares of common stock in 1995 and to
the reduction of debt in 1995 compared to the increase in debt in 1993. 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 1,186,000
shares of common stock in 1995, primarily during the fourth quarter.

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At December 31, 1995, the company had $58 million of U.S. commercial paper and
other short-term obligations outstanding, all of which are classified as long-
term debt, down from $382 million at year-end 1994 and $559 million at year-end
1993. In addition, at December 31, 1995, the company had $40 million of notes
outstanding under its U.S. bank lines of credit, down from $65 million at year-
end 1994 and $224 million at year-end 1993. Domestically, at December 31, 1995,
$58 million of the company's unused bank lines of credit of $1.16 billion
supported the classification of commercial paper and other short-term
obligations as long-term debt. At December 31, 1995, Weldwood had unused bank
lines of credit of approximately $187 million.

During 1995, the company (i) issued $150 million of notes due in 2005 and $350
million of debentures due in 2025, (ii) borrowed $50 million through a bank term
loan due in 1997 and (iii) borrowed $88,650,000 through the issuance of long-
term tax-exempt bonds.

The annual principal payment requirements under the terms of all long-term debt
agreements for the years 1996 through 2000 are $78 million, $178 million, $377
million, $380 million and $203 million, respectively.

Capital Expenditures

Capital spending in 1995 was $518 million, compared to $268 million in 1994 and
$491 million in 1993. The company presently anticipates that capital spending
will be approximately $660 million in 1996, all of which is expected to be
financed through internally generated funds.

During 1996 and 1997, the company will invest $124 million to construct a
recycling facility at the printing and writing papers mill in Courtland,
Alabama, and Weldwood will invest (U.S.) $75 million to construct a lumber mill
and modernize its existing plywood plant at Quesnel, British Columbia.
Approximately $126 million and $73 million of the anticipated capital spending
in 1996 and in 1997, respectively, will be devoted to these projects.

In addition to the anticipated capital spending described above, in January
1996, the company acquired Lake Superior Land Company for $76 million. Lake
Superior has an outstanding mortgage loan of $44 million. It owns approximately
290,000 acres of timberlands and real estate in Michigan and Wisconsin, which
principally will be used to provide fiber to the company's pulp and paper mills
in Quinnesec, Michigan, and Sartell, Minnesota.

The company plans to establish eucalyptus plantations and a chipping operation
in the State of Amapa, Brazil, in the next few years. In addition, the company
has under consideration the possible construction of a pulp and paper mill at
Tres Lagoas, State of Mato Grosso do Sul, Brazil, in the next few years.
Approximately $100 million of the capital spending in 1995 was for the
acquisition of rights to land and the planting of trees in connection with these
projects. Approximately $35 million of the anticipated capital spending in 1996
will be devoted to these projects.

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The Environment

Environmental Capital Expenditures

The company is subject to various federal, state and local laws and regulations
relating to the discharge of materials into the environment and to the disposal
of solid wastes. These laws and regulations require the company to obtain
permits and licenses from appropriate governmental authorities with respect to
its properties and to operate its properties in compliance with such permits and
licenses.

In order to meet the standards established by the various federal, state and
local environmental laws and regulations to which the company is subject, the
company is required to invest substantial amounts in pollution abatement
facilities. During the period from 1991 through 1995, the company spent
approximately $298 million in its domestic operations to purchase and install
systems to control the discharge of pollutants into air and water and to dispose
of solid wastes. In addition, from 1990 through 1994, the company spent
approximately $280 million on the environmental improvement and modernization
project at the Canton, North Carolina, mill. In 1995, capital expenditures
incurred for environmental purposes were $72 million. In view of changing
environmental laws and regulations and their interpretation, as well as the
uncertainties and variables inherent in business planning, it is not possible
for the company to predict with certainty the amount of capital expenditures to
be incurred for environmental purposes in the future. However, the company
estimates that capital expenditures for air and water pollution control systems
and solid waste disposal systems in the United States will be approximately $48
million in 1996 and $114 million in 1997. In carrying forward its environmental
program, the company will commit additional amounts for environmental purposes
in years subsequent to 1997. Preliminary estimates indicate that for the period
from 1998 through 2000 capital expenditures for air and water pollution control
facilities and solid waste disposal facilities in the United States will
aggregate approximately $83 million. The environmental capital expenditures
described in this paragraph are included in the respective past and estimated
1996 capital spending amounts set forth above under "Capital Expenditures."

Although some pollution abatement and solid waste disposal facilities produce
improvements in operating efficiency, most increase product costs without
enhancing capacity or operating efficiency. However, since other paper and
forest products companies also are subject to environmental laws and
regulations, the company does not believe that compliance with such laws and
regulations will have a material adverse effect on its competitive position.

Proposed EPA Air and Water Regulations

In December 1993, the United States Environmental Protection Agency (the "EPA")
proposed regulations pursuant to the federal Clean Air Act Amendments of 1990
(the "Clean Air Act") and the federal Water Pollution Control Act (the "Clean
Water Act"). Additional Clean Air Act regulations are expected to be proposed in
1996. It is anticipated that certain of these regulations will become final in
1996, and the balance will become final thereafter. Compliance with the
regulations is expected to be required within three years after each becomes
final.

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As previously reported, trace amounts of dioxin were found in the pulp, sludge
and effluent at some bleached kraft mills in the United States and Canada,
including certain of the company's mills. The proposed regulations under the
Clean Water Act are based upon the use of oxygen delignification and chlorine
dioxide substitution to reduce the potential for the formation of dioxin in the
pulp bleaching process. This technology will be in place at all of the company's
fully bleached kraft mills by the end of 1997. The company presently anticipates
that it will incur capital expenditures to meet the expected requirements of the
final Clean Water Act regulations, additional to those set forth above under
"Capital Expenditures" and "Environmental Capital Expenditures," of
approximately $20 million from 1996 through 1999.

Assuming that the Clean Air Act regulations expected to be proposed in 1996 use
a range of standards currently anticipated by the company and that all of the
regulations pursuant to the Clean Air Act are adopted in the form anticipated by
the company, the company presently expects that it will incur capital
expenditures to meet the requirements of the Clean Air Act and state air toxics
regulations, additional to those set forth above under "Environmental Capital
Expenditures," of approximately $315 million over the period of approximately
1997 through 2004.

Great Lakes Initiative

The company may incur capital expenditures, additional to those set forth above
under "Capital Expenditures" and "Environmental Capital Expenditures," in order
to meet the requirements of the Great Lakes Water Quality Agreement of 1978 and
the Great Lakes Critical Programs Act of 1990. Pursuant thereto, in March 1995,
the EPA issued guidance to the states regarding water quality standards for the
waters of the Great Lakes and their tributaries. The company is awaiting the
issuance of implementing regulations by the environmental agencies of the
affected states in order to determine the extent of any additional costs and the
period over which they will be incurred. As a result, the company is not yet in
a position to provide a meaningful estimate of any such costs.

Hazardous Substance Cleanup

The company has been designated as a potentially responsible party by the EPA
under the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, and by certain states under applicable state laws, with respect to the
cleanup of hazardous substances at a number of sites. In the case of many of
these sites, other potentially responsible parties also have been so designated.
In addition, the company and, in certain instances, other responsible parties
have entered into agreements with the EPA and certain states regarding the
cleanup of hazardous substances at various other locations. Also, the company
is involved in the remediation of certain other sites which are not the subject
of investigation by federal or state agencies. The cost of all such cleanups is
not capitalized and, accordingly, is not included in the capital expenditure
information set forth above under "Capital Expenditures" and "Environmental
Capital Expenditures."

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The company cannot predict with certainty the total cost of such cleanups, the
company's share of the total cost of multiparty cleanups or the extent to which
contribution will be available from other parties, or the amount of time
necessary to accomplish such cleanups. However, based upon, among other things,
its previous experience with respect to the cleanup of hazardous substances as
well as the regular detailed review of known hazardous waste sites by the
company, the company has developed an estimate of its probable cleanup
liabilities. This estimate includes remediation and legal costs with respect to
properties presently or formerly owned or operated by the company or its
predecessors as well as properties, such as municipal or county landfills, owned
and operated by third parties to which the company or its contractor sent waste
material. The company has accrued $73 million at December 31, 1995, on a non-
discounted basis, which represents its current estimate of the probable cleanup
liabilities at all known sites. This accrual does not reflect any possible
insurance recoveries, which are not expected to be significant, but does reflect
a reasonable estimate of cost-sharing at multiparty sites.

Environmental Legal Proceedings

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 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.

While any litigation contains an element of uncertainty, management, based upon
the opinion of the company's General Counsel, presently believes that the
outcome of these actions will not have a material adverse effect on the company.

Other

The industry in which the company operates is capital intensive. Due to
inflation, the company's property, plant and equipment and timber and
timberlands could not be replaced for the historical cost value at which they
are reflected in the company's financial statements. On a current cost basis,
depreciation expense and cost of timber harvested would be greater than reported
on a historical cost basis.

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Champion International Corporation and Subsidiaries
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Eleven-Year Selected Financial Data
(in millions, except per share amounts and ratio data)

<TABLE>
<CAPTION>
1995 1994 1993 1992
- -------------------------------------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Earnings:
Net sales.................................................... $6,972 $5,318 $5,069 $4,926
Depreciation expense and cost of timber harvested............ 471 459 443 411
Gross profit................................................. 1,816 565 359 362
Income from operations....................................... 1,429 266 66 73
Interest and debt expense.................................... 226 235 224 206
Other (income) expense -- net................................ (33) (57) 7 (143)
Income (loss) before income taxes, extraordinary item and
cumulative effect of accounting changes..................... 1,237 88 (165) 10
Income taxes (benefit)....................................... 465 25 (31) (4)
Income (loss) before extraordinary item and cumulative effect
of accounting changes....................................... 772 63 (134) 14
Extraordinary item, net of taxes............................. --- --- (14) ---
Cumulative effect of accounting changes, net of taxes........ --- --- (8) (454)
Net income (loss)............................................ 772 63 (156) (440)

Per Common Share: *
Primary earnings (loss)...................................... $ 8.01 $ .38 $(1.98) $(5.05)
Fully diluted earnings (loss)................................ 7.67 .38 (1.98) (5.05)
Cash dividends declared...................................... .20 .20 .20 .20
Cash dividends paid.......................................... .20 .20 .20 .20
Shareholders' equity......................................... 38.12 31.25 31.23 33.53

Financial Position:
Current assets............................................... $1,641 $1,179 $1,114 $1,142
Timber and timberlands -- net................................ 2,008 1,847 1,839 2,012
Property, plant and equipment -- net......................... 5,514 5,603 5,802 5,763
Other assets and deferred charges............................ 380 335 388 464
------ ------ ------ ------
Total assets................................................ $9,543 $8,964 $9,143 $9,381
====== ====== ====== ======

Current liabilities.......................................... $1,080 $1,034 $ 772 $ 786
Long-term debt and other liabilities......................... 3,492 3,560 3,990 3,928
Deferred income taxes........................................ 1,219 1,040 1,077 1,159
Minority interest in subsidiaries............................ 105 69 54 49
$92.50 convertible preference stock.......................... --- 300 300 300
Shareholders' equity......................................... 3,647 2,961 2,950 3,159
------ ------ ------ ------
Total liabilities and shareholders' equity.................. $9,543 $8,964 $9,143 $9,381
====== ====== ====== ======

Other Statistics:
Expenditures for property, plant and equipment............... $ 368 $ 225 $ 476 $ 623
Timber and timberlands expenditures.......................... 257 $ 104 $ 130 $ 95
U.S. timber acreage owned or controlled...................... 5.3 5.1 5.1 6.0
Common shares outstanding at year-end........................ 96 93 93 93
Dividends declared on preference shares...................... $ 13 $ 28 $ 28 $ 28
Dividends declared on common shares.......................... $ 19 $ 19 $ 19 $ 19
Current ratio................................................ 1.5 1.1 1.4 1.5
Ratio of total debt to total capitalization.................. .38:1 .43:1 .44:1 .42:1
Return on average shareholders' equity and $92.50 convertible
preference stock before extraordinary item and cumulative
effect of accounting changes................................ 22.6% 2.0% (4.0)% 0.4%
</TABLE>

* Primary and fully diluted earnings (loss) per share for 1993 include the
cumulative effect of an accounting change of $(.08) and extraordinary item for
early retirement of debt of $(.15).

Primary and fully diluted earnings (loss) per share for 1992 include the
cumulative effect of accounting changes of $(4.90).

46
<PAGE>

<TABLE>
<CAPTION>
1991 1990 1989 1988 1987 1986 1985
- -------------------------------------------------------------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net sales.................................................... $4,786 $5,090 $5,163 $5,129 $4,615 $4,388 $5,770
Depreciation expense and cost of timber harvested............ 342 323 279 260 252 270 263
Gross profit................................................. 454 800 1,048 1,141 872 798 903
Income from operations....................................... 179 491 769 861 598 438 364
Interest and debt expense.................................... 211 156 136 161 177 170 171
Other (income) expense -- net................................ (110) (85) (93) (30) (198) (45) (52)
Income (loss) before income taxes, extraordinary item and
cumulative effect of accounting changes..................... 78 420 726 730 619 313 245
Income taxes (benefit)....................................... 38 197 294 274 237 112 82
Income (loss) before extraordinary item and cumulative effect
of accounting changes....................................... 40 223 432 456 382 201 163
Extraordinary item, net of taxes............................. --- --- --- --- --- --- ---
Cumulative effect of accounting changes, net of taxes........ --- --- --- --- --- --- ---
Net income (loss)............................................ 40 223 432 456 382 201 163

Per Common Share: *
Primary earnings (loss)...................................... $ .14 $ 2.11 $ 4.56 $ 4.80 $ 4.03 $ 2.08 $ 1.59
Fully diluted earnings (loss)................................ .14 2.08 4.43 4.65 3.92 2.05 1.59
Cash dividends declared...................................... .20 1.10 1.10 .95 .72 .52 .46
Cash dividends paid.......................................... .425 1.10 1.075 .90 .65 .52 .43
Shareholders' equity......................................... 39.02 39.10 38.12 35.06 30.82 27.52 26.08

Financial Position:
Current assets............................................... $1,162 $1,104 $1,074 $ 986 $ 896 $ 811 $1,041
Timber and timberlands -- net................................ 1,666 1,645 1,613 1,581 1,554 1,555 1,569
Property, plant and equipment -- net......................... 5,386 5,117 4,404 3,702 3,340 3,309 3,143
Other assets and deferred charges............................ 442 485 440 431 389 432 345
------ ------ ------ ------ ------ ------ ------
Total assets................................................ $8,656 $8,351 $7,531 $6,700 $6,179 $6,107 $6,098
====== ====== ====== ====== ====== ====== ======

Current liabilities.......................................... $ 794 $ 801 $ 804 $ 699 $ 657 $ 734 $1,118
Long-term debt and other liabilities......................... 3,162 2,864 2,175 2,133 2,120 2,462 2,057
Deferred income taxes........................................ 678 651 605 474 415 281 290
Minority interest in subsidiaries............................ 51 56 58 49 51 38 34
$92.50 convertible preference stock.......................... 300 300 300 --- --- --- ---
Shareholders' equity......................................... 3,671 3,679 3,589 3,345 2,936 2,592 2,599
------ ------ ------ ------ ------ ------ ------
Total liabilities and shareholders' equity.................. $8,656 $8,351 $7,531 $6,700 $6,179 $6,107 $6,098
====== ====== ====== ====== ====== ====== ======

Other Statistics:
Expenditures for property, plant and equipment............... $ 604 $ 959 $ 916 $ 585 $ 340 $ 446 $ 443
Timber and timberlands expenditures.......................... $ 58 $ 88 $ 78 $ 88 $ 62 $ 53 $ 43
U.S. timber acreage owned or controlled...................... 6.2 6.4 6.4 6.4 6.5 6.5 6.5
Common shares outstanding at year-end........................ 93 93 93 95 95 94 93
Dividends declared on preference shares...................... $ 28 $ 28 $ 2 $ --- $ --- $ 6 $ 15
Dividends declared on common shares.......................... $ 19 $ 102 $ 104 $ 91 $ 69 $ 49 $ 43
Current ratio................................................ 1.5 1.4 1.3 1.4 1.4 1.1 .9
Ratio of total debt to total capitalization.................. .40:1 .38:1 .32:1 .34:1 .36:1 .44:1 .42:1
Return on average shareholders' equity and $92.50 convertible
preference stock before extraordinary item and cumulative
effect of accounting changes................................ 1.0% 5.6% 12.2% 14.5% 13.8% 7.8% 6.4%
</TABLE>

47
<PAGE>

Common Stock
Prices and
Dividends Paid Quarterly sales prices for the company's common stock as
reported on the New York Stock Exchange composite tape, and
quarterly dividends paid, in 1995 and 1994 were:

<TABLE>
<CAPTION>
- --------------------------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
1995
- ----
<S> <C> <C> <C> <C>
High $43 1/4 $54 1/2 $60 1/4 $55
Low 36 1/8 40 52 1/8 39 1/2
Dividends Paid .05 .05 .05 .05
- --------------------------------------------------------------

<CAPTION>
1994
- ----
<S> <C> <C> <C> <C>
High $36 $34 1/2 $40 $40
Low 28 3/4 28 32 5/8 32 3/4
Dividends Paid .05 .05 .05 .05

</TABLE>

<PAGE>

EXHIBIT 21

LIST OF SIGNIFICANT SUBSIDIARIES
--------------------------------

Subsidiary Jurisdiction of Incorporation
- ---------- -----------------------------

Champion Papel e Celulose Ltda............................................Brazil
Weldwood of Canada Limited......................................British Columbia

_________________________________

All subsidiaries of the Company other than those listed above, considered in
the aggregate as a single subsidiary, do not constitute a significant subsidiary
as of December 31, 1995.

<PAGE>

EXHIBIT 23.1

CHAMPION INTERNATIONAL CORPORATION
One Champion Plaza
Stamford, CT 06921

March 29, 1996

Champion International Corporation
One Champion Plaza
Stamford, CT 06921

Dear Sirs:

As Senior Vice President and General Counsel of Champion International
Corporation (the "Company"), I advise you as follows in connection with legal
and administrative claims and proceedings which are pending or known to be
threatened against the Company.

I call your attention to the fact that, as Senior Vice President and
General Counsel of the Company, I have general supervision of the Company's
legal affairs. In such capacity, I have reviewed litigation and claims
threatened or asserted involving the Company and have consulted with outside
legal counsel with respect thereto where I have deemed it appropriate.

On November 9, 1992, an action was brought against the Company in the
Circuit Court for Baldwin County, Alabama, on behalf of a class consisting of
all persons who own land along Perdido Bay in Florida and Alabama. The action
originally sought $500 million in compensatory and punitive damages for personal
injury, intentional infliction of emotional distress and diminution in property
value allegedly resulting from the purported discharge of hazardous substances,
including dioxin, from the Company's Pensacola, Florida mill into Eleven Mile
Creek, which flows into Perdido Bay. However, in February 1994, the plaintiffs
reduced their demand to not more than $50,000 for each class member and in June
1994, the personal injury claims were dismissed. It is anticipated that the
class, which was certified by the court in June 1994, will consist of
approximately 2,000 members. The Company and the plaintiffs have entered into
an agreement dated March 13, 1996 to settle the action, pursuant to which the
Company would pay $5 million to the plaintiffs. The settlement is subject to
court approval.

March 29, 1996
Page 2

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.

While any litigation contains an element of uncertainty, subject to the
foregoing, it is my opinion that the outcome of each such proceeding or claim
which is now pending or known to be threatened, or all of them combined,
including the actions described above, will not have a material adverse effect
on the Company.

I hereby consent to the reference to this opinion in the Company's Annual
Report to Shareholders for the fiscal year ended December 31, 1995, and in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995
(the "Form 10-K"), and to the filing of this opinion as an exhibit to the Form
10-K.

Very truly yours,

/s/ Marvin H. Ginsky
Senior Vice President
and General Counsel

MHG/col

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of
our report dated January 16, 1996 incorporated by reference in this Form 10-K
into the Company's previously filed Registration Statements on Form S-3
(Registration No. 33-62819) and on Form S-8 (Registration No. 33-63126).

Arthur Andersen LLP

New York, N.Y.
March 29, 1996

<PAGE>

EXHIBIT 24

POWER OF ATTORNEY
-----------------

Each of the undersigned Directors and Officers of CHAMPION INTERNATIONAL
CORPORATION (the "Company") hereby constitutes and appoints LAWRENCE A. FOX,
MARVIN H. GINSKY and ANDREW C. SIGLER his or her true and lawful attorneys-in-
fact and agents, each of them with full power to act without the others, for him
or her and in his or her name, place and stead, in any and all capacities, to
sign the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 and any and all amendments and other documents relating thereto, and to
file such Annual Report on Form 10-K and such amendments with all exhibits
thereto, and any and all other information and documents in connection
therewith, with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended, hereby granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the
29th day of March, 1996.

/s/ANDREW C. SIGLER /s/KENWOOD C. NICHOLS
- ---------------------------------------- ----------------------------------
Andrew C. Sigler Kenwood C. Nichols
Chairman of the Board, Chief Vice Chairman and Director
Executive Officer, and Director (Principal Accounting Officer)
(Principal Executive Officer)

/s/FRANK KNEISEL
----------------------------------
Frank Kneisel
Senior Vice President - Finance
(Principal Financial Officer)
<PAGE>

/s/LAWRENCE A. BOSSIDY /s/SYBIL C. MOBLEY
- ---------------------------------------- ----------------------------------
Lawrence A. Bossidy, Director Sybil C. Mobley, Director

/s/ROBERT A. CHARPIE /s/LAWRENCE G. RAWL
- ---------------------------------------- ----------------------------------
Robert A. Charpie, Director Lawrence G. Rawl, Director

/s/ALICE F. EMERSON /s/WALTER V. SHIPLEY
- ----------------------------------------- ----------------------------------
Alice F. Emerson, Director Walter V. Shipley, Director

/s/ALLAN E. GOTLIEB /s/RICHARD E. WALTON
- ----------------------------------------- ----------------------------------
Allan E. Gotlieb, Director Richard E. Walton, Director

/s/L. C. HEIST /s/JOHN L. WEINBERG
- ----------------------------------------- ----------------------------------
L. C. Heist, Director John L. Weinberg, Director

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
AND THE CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 317,069
<SECURITIES> 98,275
<RECEIVABLES> 657,816
<ALLOWANCES> 16,525
<INVENTORY> 484,001
<CURRENT-ASSETS> 1,640,806
<PP&E> 10,858,204<F1>
<DEPRECIATION> 3,335,945
<TOTAL-ASSETS> 9,543,302
<CURRENT-LIABILITIES> 1,079,873
<BONDS> 2,828,509
0
0
<COMMON> 55,115
<OTHER-SE> 3,591,576
<TOTAL-LIABILITY-AND-EQUITY> 9,543,302
<SALES> 6,972,038
<TOTAL-REVENUES> 6,972,038
<CGS> 5,156,423
<TOTAL-COSTS> 5,156,423
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 226,016
<INCOME-PRETAX> 1,236,563
<INCOME-TAX> 464,728
<INCOME-CONTINUING> 771,835
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 771,835
<EPS-PRIMARY> 8.01
<EPS-DILUTED> 7.67
<FN>
<F1>Includes timber and timberlands.
</FN>

</TABLE>