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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
October 8, 1997
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Date of Report
(Date of earliest event reported)
CHAMPION INTERNATIONAL CORPORATION
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(Exact name of registrant as specified in its charter)
NEW YORK
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(State or other jurisdiction of incorporation)
1-3053 13-1427390
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(Commission File Number) (IRS Employer Identification No.)
One Champion Plaza, Stamford, Connecticut 06921
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(Address of principal executive offices) (Zip Code)
(203) 358-7000
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(Registrant's telephone number, including area code)
Page 1 of 3 pages
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Item 5. Other Events.
On October 8, 1997, the Registrant issued a press release announcing its
plan to maximize shareholder value.
Item 7. Financial Statements and Exhibits.
(c) Exhibits. The following Exhibit is filed as part of this Report:
Exhibit Number Description
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99 The Registrant's press release dated October 8, 1997
Page 2 of 3 Pages
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SIGNATURE
Pursuant to the requirements 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.
CHAMPION INTERNATIONAL CORPORATION
By: /s/ LAWRENCE A. FOX
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LAWRENCE A. FOX
VICE PRESIDENT AND SECRETARY
Dated: October 9, 1997
Page 3 of 3 pages
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EXHIBIT 99
CHAMPION INTERNATIONAL CORPORATION
CHAMPION INTERNATIONAL CORPORATION ANNOUNCES PLAN TO
MAXIMIZE SHAREHOLDER VALUE
WILL FOCUS ON STRATEGIC BUSINESSES, DIVEST NON-STRATEGIC PRODUCT SEGMENTS AND
FACILITIES; TARGETS $400 MILLION PROFIT IMPROVEMENT WITHIN NEXT THREE YEARS
Stamford, CT, October 8, 1997 Champion International Corporation (NYSE:CHA)
today announced a three-pronged strategy to maximize total shareholder return by
focusing on strategic businesses, increasing profitability, and improving
financial discipline.
The company will divest several non-strategic product segments with 1996 net
sales of $1.4 billion, including newsprint, the recycling business, groundwood
specialty papers, both coated and uncoated, premium papers, specialty uncoated
papers, liquid packaging and bleached board, as well as 325,000 acres of
timberlands. The profit improvement program, which began earlier this year, is
targeted to increase annual pre-tax profit by $400 million within the next three
years. This includes a reduction of approximately 11% in the company's
worldwide workforce in the businesses remaining after divestitures.
Champion will incur a charge, primarily non-cash, of $553 million after-tax, or
$5.77 per share. Most of the charge will be booked in the fourth quarter of
1997.
In making the announcement, Champion's chairman and chief executive officer,
Richard E. Olson, stated, "With maximizing total shareholder return as our
governing objective, we will increase the profit potential of our on-going
businesses and manage our company with greater financial discipline. This will
mean an improved focus on the customers for our core products, profitable
growth, and a stronger company that will deliver greater value for our
shareholders and a more secure future for our employees."
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Page 2/Champion Announces Plan to Maximize Shareholder Value
Focus on Strategic Businesses
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Champion has identified the businesses that offer the best opportunities for
economic profit, value creation and total shareholder return. The company plans
to:
o grow by acquisition in coated papers, softwood timberlands, paper
distribution and unbleached paperboard;
o grow by expansion in softwood lumber;
o maintain its position in Northern softwood and hardwood pulps;
o leverage its timberlands and Brazilian operations;
o reposition its uncoated freesheet business; and
o deliver increased value to customers through superior products and services.
DIVEST NON-STRATEGIC SEGMENTS AND FACILITIES
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In order to focus on strategic businesses, Champion plans to divest:
o the newsprint business, which includes mills in Lufkin and Sheldon, Texas;
o the paper recycling business, which is based in Houston, Texas;
o the Deferiet, New York mill, which manufactures coated and uncoated
groundwood specialty papers;
o the Hamilton, Ohio mill, which manufactures premium papers;
o specialty uncoated papers, liquid packaging and bleached board, which include
the Canton, North Carolina pulp and paper mill, the Waynesville, North
Carolina extruding facility, and six DairyPak plants; and
o 325,000 acres of timberlands in the States of New York, Vermont and New
Hampshire.
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Page 3/Champion Announces Plan to Maximize Shareholder Value
"These are good, productive assets that will attract strategic buyers who can
achieve synergies by integrating them into their existing operations," said
Olson. The businesses
to be sold employed 6,255 people at year-end 1996, or 26% of Champion's total
workforce.
Proceeds from asset sales will be used initially to pay down debt, thereby
reducing interest expense and increasing balance sheet flexibility.
PROFIT IMPROVEMENT PROGRAM
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Champion has begun a program targeted to improve the annual pre-tax profit of
its on-going operations by $400 million within the next three years. This will
be achieved primarily through cost reduction, productivity increases and changes
in product mix.
As part of cost reduction, Champion has set a goal of reducing employment in its
on-going businesses by 11%, or approximately 2,000 positions, by the end of
1999. The company is targeting a 9% employment reduction in on-going
manufacturing operations and a 30% decrease in corporate staff and other
functions. These targeted reductions, combined with divestitures, will reduce
Champion's worldwide employment level by 34% from the year-end 1996 level of
24,400 people.
IMPROVED FINANCIAL DISCIPLINE
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Olson emphasized that management is committed to financial discipline in all
aspects of Champion's operations.
o Capital spending for on-going businesses will be targeted at annual
depreciation, depletion and amortization levels. By year-end 1999, the
company expects to be at that rate.
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Page 4/Champion Announces Plan to Maximize Shareholder Value
o The company does not foresee building any new pulp mills or paper machines in
North America. Champion will continue to evaluate opportunities in Brazil.
o Champion will make acquisitions in strategic businesses only when they can
earn an economic profit.
o The company will seek strategic alliances and joint ventures to improve its
competitive position, and to minimize investment.
o Divestiture proceeds will be used initially to reduce debt. Subsequently,
Champion will use free cash flow and its improved balance sheet flexibility
to consider acquisitions, share repurchases and dividend increases as a means
to build shareholder value.
Champion International Corporation is an integrated forest products company with
significant operations in the United States, Brazil and Canada. Champion
currently has responsibility for the sustainable management of over ten million
acres of forestlands supporting its manufacturing facilities.
* * * *
Forward-looking statements in this release are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties that could cause actual results and company
plans and objectives to differ materially from those expressed in the forward-
looking statements. Such risks and uncertainties are discussed in the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission.
# # # # #
97CH10GD10/08
For more information contact: Gael Doar - Media - 203/358-7900
Frank Kneisel - Investor Relations - 203/358-7402
