<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission File Number 1-3053
CHAMPION INTERNATIONAL CORPORATION
NONQUALIFIED SUPPLEMENTAL SAVINGS PLAN
MANAGEMENT INCENTIVE DEFERRAL PLAN
THE EXECUTIVE RETIREMENT PLAN FOR
EMPLOYEES OF WELDWOOD OF CANADA
LIMITED
(Full title of the plans)
Champion International Corporation
One Champion Plaza
Stamford, Connecticut 06921
(Name of issuer of securities held pursuant to the plans and address of its
principal executive office)
================================================================================
<PAGE>
FINANCIAL STATEMENTS AND EXHIBIT
- --------------------------------
(a) Financial Statements and Supplemental Schedules
-----------------------------------------------
Champion International Corporation Management Incentive Deferral Plan:
Report of Independent Public Accountants
Statements of Net Assets Available for Benefits
As of January 1, 1998 and December 31, 1998
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
Statements of Accumulated Plan Benefits
As of January 1, 1998 and December 31, 1998
Statement of Changes in Accumulated Plan Benefits
For the Year Ended December 31, 1998
Notes to Financial Statements
Supplemental Schedules: All Supplemental Schedules have been omitted
since the information is not applicable or is not required.
Champion International Corporation Nonqualified Supplemental Savings Plan:
Report of Independent Public Accountants
Statements of Net Assets Available for Benefits
As of December 31, 1998 and 1997
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1998, 1997 and 1996
Statements of Accumulated Plan Benefits
As of December 31, 1998 and 1997
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1998, 1997 and 1996
Notes to Financial Statements
Supplemental Schedules: All Supplemental Schedules have been omitted
since the information is not applicable or is not required.
The Executive Retirement Plan for Employees of Weldwood of Canada Limited:
Report of Independent Public Accountants
Statements of Net Assets Available for Benefits
As of January 1, 1998 and December 31, 1998
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
Statements of Accumulated Plan Benefits
As of January 1, 1998 and December 31, 1998
Statement of Changes in Accumulated Plan Benefits
For the Year Ended December 31, 1998
Notes to Financial Statements
Supplemental Schedules: All Supplemental Schedules have been omitted
since the information is not applicable or is not required.
(b) Exhibit
-------
Exhibit 23 - Consent of Independent Public Accountants
-2-
<PAGE>
SIGNATURES
The Plans. Pursuant to the requirements of the Securities Exchange Act of
1934, the Pension and Employee Benefits Committee, the administrator of the
registrant's plans described herein, has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CHAMPION INTERNATIONAL CORPORATION
NONQUALIFIED SUPPLEMENTAL SAVINGS PLAN
MANAGEMENT INCENTIVE DEFERRAL PLAN
By /s/ WILLIAM C. FOSTER
----------------------------------------
(William C. Foster)
Senior Associate Counsel - Employee
Relations/Human Resources
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Compensation Committee of the Board of Directors of Weldwood of Canada Limited,
the administrator of the Weldwood of Canada Limited plan described herein, has
duly caused this Annual Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE EXECUTIVE RETIREMENT PLAN FOR
EMPLOYEES OF WELDWOOD OF CANADA
LIMITED
By /s/ KENWOOD C. NICHOLS
-----------------------------------------
(Kenwood C. Nichols)
Chairman, Compensation Committee
March 26, 1999
-3-
<PAGE>
CHAMPION INTERNATIONAL CORPORATION
MANAGEMENT INCENTIVE DEFERRAL PLAN
FINANCIAL STATEMENTS
AS OF
DECEMBER 31, 1998
TOGETHER WITH
AUDITORS' REPORT
<PAGE>
Champion International Corporation
Management Incentive Deferral Plan
Table of Contents
<TABLE>
Page(s)
------------
<S> <C>
Report of Independent Public Accountants 1
Statements of Net Assets Available for Benefits as of January 1, 1998
and December 31, 1998 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1998 3
Statements of Accumulated Plan Benefits as of January 1, 1998
and December 31, 1998 4
Statement of Changes in Accumulated Plan Benefits for the
Year Ended December 31, 1998 5
Notes to Financial Statements 6-7
</TABLE>
<PAGE>
Report of Independent Public Accountants
----------------------------------------
To the Board of Directors and the
Pension and Employee Benefits Committee of
Champion International Corporation:
We have audited the accompanying statements of net assets available for
benefits and of accumulated plan benefits of the CHAMPION INTERNATIONAL
CORPORATION MANAGEMENT INCENTIVE DEFERRAL PLAN as of January 1, 1998 (the
inception date) and December 31, 1998, and the related statements of changes in
net assets available for benefits and changes in accumulated plan benefits for
year ended December 31, 1998. These financial statements are the responsibility
of the Plan Administrator. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 the
Plan Administrator, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial status of the Plan as of January
1, 1998 and December 31, 1998, and the changes in its financial status for the
year ended December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
February 6, 1999
-1-
<PAGE>
Champion International Corporation
Management Incentive Deferral Plan
Statements of Net Assets Available for Benefits
As of January 1, 1998 and December 31, 1998
<TABLE>
1998
---------------------------------------
January 1 December 31
---------------- -----------------
<S> <C> <C>
ASSETS:
Receivable from Champion International Corporation (Note 1) $ - $1,493,155
----------------- -------------------
Net assets available for benefits $ - $1,493,155
================= ===================
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
-2-
<PAGE>
Champion International Corporation
Management Incentive Deferral Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
<TABLE>
<S> <C>
Compensation deferrals (Note 1):
Participant $1,325,254
Company-
Phantom investment earnings deferral 188,825
------------------
Total deferrals 1,514,079
Benefits paid (Note 1) (20,924)
------------------
Net increase in net assets available for benefits 1,493,155
Net assets available for benefits,
beginning of year -
------------------
Net assets available for benefits,
end of year $ 1,493,155
==================
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
-3-
<PAGE>
Champion International Corporation
Management Incentive Deferral Plan
Statements of Accumulated Plan Benefits
As of January 1, 1998 and December 31, 1998
<TABLE>
<CAPTION>
1998
-----------------------------------
January 1 December 31
--------------- --------------
<S> <C> <C>
Present value of accumulated plan benefits
Vested benefits:
Vested benefits of participants currently
receiving payments $ - -
Other vested benefits - 1,493,155
--------------- --------------
- 1,493,155
Nonvested benefits - -
--------------- ---------------
Total $ - $ 1,493,155
=============== ===============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
-4-
<PAGE>
Champion International Corporation
Management Incentive Deferral Plan
Statement of Changes in Accumulated Plan Benefits
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
<S> <C>
Present value of accumulated plan benefits,
beginning of year $ -
---------------
Increase (decrease) during the year attributable to:
Benefits accumulated through (Note 1):
Participant compensation deferrals 1,325,254
Phantom investment earnings deferral 188,825
---------------
1,514,079
Benefits paid (20,924)
---------------
Net increase in accumulated plan benefits 1,493,155
---------------
Present value of accumulated plan benefits,
end of year $ 1,493,155
===============
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
-5-
<PAGE>
Champion International Corporation
Management Incentive Deferral Plan
Notes to Financial Statements
December 31, 1998
(1) Plan Description-
----------------
The following description of the Champion International Corporation
Management Incentive Deferral Plan (The Plan) provides only summary
information. Reference should be made to the Plan document for a more
complete description of the Plan's provisions.
The Plan, which became effective on January 1, 1998, is an unfunded
deferred compensation arrangement established for the purpose of providing
supplemental retirement savings primarily for a select group of management
or highly compensated employees of Champion International Corporation (the
Company). As an unfunded Plan, no assets of the Company have been
segregated to pay the amounts due to participants under the Plan. The Plan
is administered by the Company through the Pension and Employee Benefits
Committee (PEBC). Certain expenses of the Plan are paid by the Company and
are not included in the accompanying statements. William M. Mercer, Inc.
(Mercer) was appointed to perform certain administrative and record keeping
functions of the Plan.
Among other things, the Plan provides that eligible participants may elect
to defer all or part of their Management Incentive Award earned for a
calendar year. A participant who elects to defer all or part of their
Management Incentive Award into the Plan is required to make pretax
contributions to the Champion International Corporation Salaried Savings
Plan (Plan #077) in an amount equal to the maximum before-tax contribution
permitted under the Savings Plan and section 401(k)(3) and 415 of the
Internal Revenue Code of 1986, as amended. Each participant must elect to
have the amount deferred treated as if it was invested in one or more of
the pretax investment options offered by Plan #077. At December 31, 1998
and for the year then ended, participant-directed investment options for
Plan #077 consisted of the Stable Value Fund (i.e., pool of investment
contracts issued by a diversified list of insurance companies), the S&P 500
Index Fund (i.e., commingled fund of the common stocks of large companies
in a variety of industries), the Small Company Fund (i.e., commingled fund
of the common stocks of small U.S. companies in a variety of industries),
the International Equities Index Fund (i.e., commingled fund of the common
stock of medium to large companies based in economically developed
countries outside of the U.S.) and the Company Stock Fund. Although the
Plan itself has no investment assets, participant deferred compensation
accounts are credited with earnings or losses, based upon the participant
investment elections and the actual earnings and losses of Plan #077
investments, for the period.
-6-
<PAGE>
Participants are immediately vested in their account balances (i.e.
compensation deferrals as adjusted for the earnings and losses previously
discussed). All vested amounts are distributable to participants from the
assets of the Company upon retirement, death, disability or other
termination of employment in a single lump sum cash payment or in up to ten
annual cash installments.
(2) Significant Accounting Policies-
-------------------------------
(a) Basis of Accounting--The Plan uses the accrual basis of
-------------------
accounting.
(b) Payment of Benefits--Benefits are recorded when paid.
-------------------
(c) Present Value of Accumulated Plan Benefits--Accumulated plan
------------------------------------------
benefits represent the future benefit payments due to participants
under the provisions of the Plan. The present value of accumulated
plan benefits is equal to the total of the fair market value of
the participants' deferred compensation account balances (i.e.,
compensation deferred plus (minus) phantom investment earnings
(losses) less benefits paid). (Note 1)
(d) 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
financial statements. Actual results could differ from those
estimates.
(3) Priorities Upon Termination of the Plan-
---------------------------------------
As previously discussed, participants are immediately vested in their
account balances. As an unfunded Plan, no assets of the Company have been
segregated to pay amounts due to participants under the Plan. The Plan is
not eligible for Pension Benefit Guaranty Corporation coverage.
(4) Tax Status-
----------
The Plan is an "employee benefit plan" under Section 3 (3) of the
Employee Retirement Income Security Act of 1974 (ERISA), as amended, but is
exempt from many of the provisions of ERISA. The Plan is not a qualified
plan under Section 401 (a) of the Internal Revenue Code of 1986, as
amended. The Plan is subject to federal income taxes; however, the unfunded
nature of the Plan precludes the occurrence of a taxable event arising from
the Plan's operation. Amounts deferred, and earnings credited thereto, are
not considered taxable income to participants until distributed.
-7-
<PAGE>
CHAMPION INTERNATIONAL CORPORATION
NONQUALIFIED SUPPLEMENTAL SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF
DECEMBER 31, 1998 AND 1997
TOGETHER WITH
AUDITORS' REPORT
<PAGE>
Champion International Corporation
Nonqualified Supplemental Savings Plan
Table of Contents
<TABLE>
<CAPTION>
Page(s)
---------------
<S> <C>
Report of Independent Public Accountants 1
Statements of Net Assets Available for Benefits
As of December 31, 1998 and 1997 2
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1998, 1997 and 1996 3
Statements of Accumulated Plan Benefits
As of December 31, 1998 and 1997 4
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1998, 1997 and 1996 5
Notes to Financial Statements 6-8
</TABLE>
<PAGE>
Report of Independent Public Accountants
----------------------------------------
To the Board of Directors and the
Pension and Employee Benefits Committee of
Champion International Corporation:
We have audited the accompanying statements of net assets available for
benefits and of accumulated plan benefits of the CHAMPION INTERNATIONAL
CORPORATION NONQUALIFIED SUPPLEMENTAL SAVINGS PLAN as of December 31, 1998 and
1997, and the related statements of changes in net assets available for benefits
and changes in accumulated plan benefits for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Plan Administrator. 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 the
Plan Administrator, 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 status of the Plan as of
December 31, 1998 and 1997, and the changes in its financial status for each of
the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
February 6, 1999
1
<PAGE>
Champion International Corporation
Nonqualified Supplemental Savings Plan
Statements of Net Assets Available for Benefits
As of December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------------- ------------------
<S> <C> <C>
ASSETS:
Receivable from Champion International Corporation (Note 1) $12,268,631 $10,691,260
----------------- ------------------
Net Assets Available for Benefits $12,268,631 $10,691,260
================= ==================
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
2
<PAGE>
Champion International Corporation
Nonqualified Supplemental Savings Plan
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ----------
<S> <C> <C> <C>
Compensation deferrals (Note 1):
Participant $ 1,113,449 $ 3,126,845 $3,469,979
------------ ------------ ----------
Company-
Matching deferral 245,801 319,387 1,226,408
Phantom investment earnings deferral 1,115,781 1,213,322 482,325
------------ ------------ ----------
1,361,582 1,532,709 1,708,733
------------ ------------ ----------
Total deferrals 2,475,031 4,659,554 5,178,712
------------ ------------ ----------
Benefits paid (Note 1):
Participant deferral (727,969) (493,664) (1,237,136)
Company deferral (169,691) (185,836) (610,492)
------------ ------------ ----------
Total benefits paid (897,660) (679,500) (1,847,628)
------------ ------------ ----------
Net increase 1,577,371 3,980,054 3,331,084
------------ ------------ ----------
Net assets available for benefits, beginning of year $10,691,260 $6,711,206 $3,380,122
------------ ------------ ----------
Net assets available for benefits,
end of year $12,268,631 $10,691,260 $6,711,206
============ ============ ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
3
<PAGE>
Champion International Corporation
Nonqualified Supplemental Savings Plan
Statements of Accumulated Plan Benefits
As of December 31, 1998 and 1997
<TABLE>
1998 1997
------------ ------------
<S> <C> <C>
Present value of accumulated plan benefits
Vested benefits:
Vested benefits of participants currently
receiving payments $ 1,918,241 $ 1,700,613
Other vested benefits 10,349,128 8,988,537
------------ ------------
12,267,369 10,689,150
Nonvested benefits 1,262 2,110
------------ -----------
Total present value of accumulated plan benefits $12,268,631 $10,691,260
============ ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
4
<PAGE>
Champion International Corporation
Nonqualified Supplemental Savings Plan
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Present value of accumulated plan benefits, beginning of
year $10,691,260 $6,711,206 $ 3,380,122
Increase (decrease) during the year attributable to:
Benefits accumulated through (Note 1)-
Participant compensation deferrals 1,113,449 1,349,320 3,469,979
Company matching deferral 245,801 319,387 1,226,408
Phantom investment earnings deferral 1,115,781 1,213,322 482,325
--------------- --------------- ---------------
2,475,031 2,882,029 5,178,712
Plan amendment (Note 1) - 1,777,525 -
Benefits paid (897,660) (679,500) (1,847,628)
--------------- --------------- ---------------
Net increase 1,577,371 3,980,054 3,331,084
--------------- --------------- ---------------
Present value of accumulated plan benefits, end of year $12,268,631 $10,691,260 $6,711,206
=============== =============== ===============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
5
<PAGE>
Champion International Corporation
Nonqualified Supplemental Savings Plan
Notes to Financial Statements
December 31, 1998
(1) Plan Description-
----------------
The following description of the Champion International Corporation
Nonqualified Supplemental Savings Plan (the Plan) provides only summary
information. Reference should be made to the Plan document for a more
complete description of the Plan's provisions.
The Plan, which became effective on August 1, 1994, is an unfunded
deferred compensation arrangement established for the purpose of
providing supplemental retirement savings primarily for a select group of
management or highly compensated employees of Champion International
Corporation (the Company). As an unfunded Plan, no assets of the Company
have been segregated to pay the amounts due to participants under the
Plan. The Plan is administered by the Company through the Pension and
Employee Benefits Committee (PEBC). Certain expenses of the Plan are paid
by the Company and are not included in the accompanying statements.
Effective April 1, 1995, William M. Mercer, Inc. (Mercer) was appointed
to perform certain administrative and record keeping functions of the
Plan.
Among other things, the Plan provides that eligible participants may
elect to defer a percentage of their compensation (as defined in the
Plan) that is in excess of the Internal Revenue Code Section 401 (a) (17)
limitation. The Company will match participant deferrals in an amount
equal to fifty percent of the first six percent of the participant's
compensation deferred. In addition, each participant must elect to have
the amounts deferred treated as if they were invested in one or more of
the investment options offered by the Champion International Corporation
Salaried Savings Plan #077 (Plan #077). At December 31, 1998 and for the
year then ended, participant-directed investment options for Plan #077
consisted of the Stable Value Fund (i.e., pool of investment contracts
issued by a diversified list of insurance companies), the S&P 500 Index
Fund (i.e., commingled fund of the common stocks of large companies in a
variety of industries), the Small Company Fund (i.e., commingled fund of
the common stocks of small U.S. companies in a variety of industries),
the International Equities Index Fund (i.e., commingled fund of the
common stock of medium to large companies based in economically developed
countries outside of the U.S.), and the Company Stock Fund. The Company
matching deferral component of the participants' deferral compensation
accounts is credited with earnings or losses as if the matching deferral
had been invested in the Company Stock Fund of Plan #077. Although the
Plan itself has no investment assets, participant deferred compensation
accounts are credited with earnings or losses, based upon the participant
investment elections and the actual earnings and losses of Plan #077
investments, for the period.
6
<PAGE>
Effective March 1, 1996, the Plan was amended to permit deferral of all
or any part of a participant's Management Incentive Award, provided
certain conditions were met. Effective January 1, 1998, the Plan was
amended and restated and the ability to defer all or any part of a
participant's Management Incentive Award under the Plan was terminated.
Participants are immediately vested in the participant deferral, as
adjusted for the earnings and losses previously discussed. Participants
vest in the Company matching deferral, as adjusted for any earnings or
losses, based upon years of service. A participant is 100% percent vested
after five years of credited service. All vested amounts are
distributable to participants from the assets of the Company upon
retirement, death, disability or other termination of employment in a
single lump sum cash payment or in up to ten annual cash installments.
(2) Significant Accounting Policies-
-------------------------------
(a) Basis of Accounting--The Plan uses the accrual basis of
-------------------
accounting.
(b) Payment of Benefits--Benefits are recorded when paid.
-------------------
(c) Present Value of Accumulated Plan Benefits--Accumulated plan
------------------------------------------
benefits represent the future benefit payments due to participants
under the provisions of the Plan. The present value of accumulated
plan benefits is equal to the total of the fair market value of the
participants' deferred compensation account balances (i.e.,
compensation deferred plus Company matching deferral plus (minus)
phantom investment earnings (losses) less benefits paid). (Note 1)
(d) 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
financial statements. Actual results could differ from those
estimates.
7
<PAGE>
(3) Priorities Upon Termination of the Plan-
---------------------------------------
Upon termination of the Plan, participants become fully vested in their
individual deferred compensation accounts. As an unfunded Plan, no assets
of the Company have been segregated to pay amounts due to participants
under the Plan. The Plan is not eligible for Pension Benefit Guaranty
Corporation coverage.
(4) Tax Status-
----------
The Plan is an "employee benefit plan" under Section 3 (3) of the
Employee Retirement Income Security Act of 1974 (ERISA), as amended, but
is exempt from many of the provisions of ERISA. The Plan is not a
qualified plan under Section 401 (a) of the Internal Revenue Code of
1986, as amended. The Plan is subject to federal income taxes; however,
the unfunded nature of the Plan precludes the occurrence of a taxable
event arising from the Plan's operation. Amounts deferred, and earnings
credited thereto, are not considered taxable income to participants until
distributed.
8
<PAGE>
EXECUTIVE RETIREMENT PLAN
FOR EMPLOYEES OF WELDWOOD OF CANADA LIMITED
FINANCIAL STATEMENTS
AS OF
DECEMBER 31, 1998
TOGETHER WITH
AUDITORS' REPORT
<PAGE>
Executive Retirement Plan
For Employees of Weldwood of Canada Limited
Table of Contents
<TABLE>
<CAPTION>
Page(s)
------------
<S> <C>
Report of Independent Public Accountants 1
Statements of Net Assets Available for Benefits
As of January 1, 1998 and December 31, 1998 2
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998 3
Statements of Accumulated Plan Benefits
As of January 1, 1998 and December 31, 1998 4
Statement of Changes in Accumulated Plan Benefits
For the Year Ended December 31, 1998 5
Notes to Financial Statements 6-8
</TABLE>
<PAGE>
Report of Independent Public Accountants
-----------------------------------------
To the Compensation Committee of the
Board of Directors of
Weldwood of Canada, Limited:
We have audited the accompanying statements of net assets available for
benefits and of accumulated plan benefits of the Executive Retirement Plan ("the
Plan") for Employees of Weldwood of Canada Limited (a Canadian corporation and
wholly owned subsidiary of Champion International Corporation) as of January 1,
1998 (the inception date) and December 31, 1998, and the related statements of
changes in net assets available for benefits and changes in accumulated plan
benefits for year ended December 31, 1998. These financial statements are the
responsibility of the Plan Administrator. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 the
Plan Administrator, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial status of the Plan as of January
1, 1998 and December 31, 1998, and the changes in its financial status for the
year ended December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
February 6, 1999
-1-
<PAGE>
Executive Retirement Plan
For Employees of Weldwood of Canada Limited
Statements of Net Assets Available for Benefits
As of January 1, 1998 and December 31, 1998
<TABLE>
<CAPTION>
January 1, 1998 December 31, 1998
------------------------------- ------------------------------
Cdn. $ US $ Cdn. $ US $
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Receivable from Weldwood of Canada Limited $ - $ - $ 212,577 $ 138,919
Cumulative translation adjustment (Note 2) - - - 3,955
------------- ---------------- ------------- ------------
Net assets available for benefits $ - $ - $ 212,577 $ 142,874
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
-2-
<PAGE>
Executive Retirement Plan
For Employees of Weldwood of Canada Limited
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Cdn. $ US $
------------ ------------
<S> <C> <C>
Amounts credited to notional retirement accounts (Note 1):
Amount I $ 85,326 $ 57,348
Amount II 130,390 87,635
Phantom investment earnings (loss) (757) (508)
------------- -----------
Total 214,959 144,475
------------- -----------
Benefits paid (Note 1):
Amount I and related earnings (2,382) (1,601)
Amount II and related earnings - -
------------- -----------
Total (2,382) (1,601)
------------- -----------
Net increase in net assets available for benefits 212,577 142,874
------------- -----------
Net assets available for benefits,
Beginning of year - -
------------- -----------
Net assets available for benefits,
End of year $ 212,577 $ 142,874
============= ============
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
-3-
<PAGE>
Executive Retirement Plan
For Employees of Weldwood of Canada Limited
Statements of Accumulated Plan Benefits
As of January 1, 1998 and December 31, 1998
<TABLE>
<CAPTION>
January 1, 1998 December 31, 1998
Cnd. $ US $ Cnd. $ US $
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Present value of accumulated plan benefits:
Vested benefits-
Vested benefits of participants $ - $ - $ - $ -
currently receiving payments
Other vested benefits - - 210,086 137,291
-------------- --------------- -------------- ------------
Total vested benefits - - 210,086 137,291
-------------- --------------- -------------- ------------
Nonvested benefits - - 2,491 1,628
-------------- --------------- -------------- ------------
Cumulative translation adjustment (Note 2) - - - 3,955
-------------- --------------- -------------- ------------
Total present value of accumulated plan benefits $ - $ - $ 212,577 $ 142,874
============== =============== ============== ============
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
-4-
<PAGE>
Executive Retirement Plan
For Employees of Weldwood of Canada Limited
Statement of Changes in Accumulated Plan Benefits
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Cnd. $ US $
------------ ------------
<S> <C> <C>
Present value of accumulated plan benefits,
Beginning of year $ - $ -
Increase (decrease) during the year attributable to:
Amounts credited to notional accounts (Note 1)-
Amount I 85,326 57,348
Amount II 130,390 87,635
Phantom investment earnings (757) (508)
------------ ------------
Total 214,959 144,475
Benefits paid (2,382) (1,601)
------------ ------------
Net increase in accumulated plan benefits 212,577 142,874
------------ ------------
Present value of accumulated plan benefits,
End of year $ 212,577 $ 142,874
============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
-5-
<PAGE>
Executive Retirement Plan
For Employees of Weldwood of Canada Limited
Notes to Financial Statements
December 31, 1998
(1) Plan Description-
----------------
The following description of the Executive Retirement Plan for Employees
of Weldwood of Canada Limited (the Plan) provides only summary
information. Reference should be made to the Plan document for a more
complete description of the Plan's provisions.
The Plan, which became effective on January 1, 1998, is an unfunded
retirement plan established for the purpose of providing supplemental
retirement income for certain designated employees of Weldwood of Canada
Limited (the Company). The Company is a Canadian corporation and a wholly
owned subsidiary of Champion International Corporation. As an unfunded
plan, no assets of the Company have been segregated to pay the amounts
due to participants under the Plan. The Plan is administered by the
Company through the Compensation Committee of the Board of Directors of
the Company (the Committee). Expenses of the Plan are paid by the Company
and are not included in the accompanying financial statements.
Among other things, the Plan provides that the Company will credit each
participant's notional retirement account in an amount equal to 3.1915%
of the participant's compensation, as defined, (Amount I) plus 6.3830% of
the participant's compensation, as defined, less the lesser of 6% of
$75,000 or the RRSP deduction limit (Amount II) in each calendar year. As
a condition of the Plan, each participant must have contributed to a
Registered Retirement Savings Plan (RRSP) an amount equal to the lesser
of: a) 6% of the Participant's compensation for such calendar year not in
excess of $75,000 or b) the participant's "RRSP Deduction Limit" for the
calendar year, as defined in subsection 146(1) of the Income Tax Act
(Canada). The portion of the participant's notional retirement account
credited with Amount II (and any earnings there on) will be treated as if
it was invested in one or more of the investment options offered by the
Champion International Corporation Salaried Savings Plan #077 (Plan #077)
as directed by the participant. At December 31, 1998 and for the year
then ended, investment options for Plan #077 consisted of the Stable
Value Fund (i.e., pool of investment contracts issued by a diversified
list of insurance companies), the S&P 500 Index Fund (i.e., commingled
fund of the common stocks of large companies in a variety of industries),
the Small Company Fund (i.e., commingled fund of the common stocks of
small U.S. companies in a variety of industries), the International
Equities Index Fund (i.e., commingled fund of the common stock of medium
to large companies based in economically developed countries outside of
-6-
<PAGE>
the U.S.) and the Champion International Corporation Stock Fund. The
portion of the participants' notional retirement account credited with
Amount I, and any earnings thereon, will be treated as if it had been
invested in the Champion International Corporation Stock Fund of Plan
#077. Although the Plan itself has no investment assets, participant
notional retirement accounts are credited with earnings or losses, based
upon the participant investment elections and the actual earnings and
losses of Plan #077 investments, for the period.
Participants are immediately vested in Amount II, as adjusted for the
earnings and losses previously discussed. Participants vest in Amount I,
as adjusted for any earnings or losses, based upon years of service. A
participant is 100% percent vested after five years of credited service.
All vested amounts are distributable to participants from the assets of
the Company upon retirement, death, disability or other termination of
employment in a single lump sum cash payment or in up to ten annual cash
installments. All benefits are payable in Canadian currency.
(2) Significant Accounting Policies-
-------------------------------
(a) Basis of Accounting--The Plan uses the accrual basis of
-------------------
accounting.
(b) Payment of Benefits--Benefits are recorded when paid.
-------------------
(c) Present Value of Accumulated Plan Benefits--Accumulated plan
------------------------------------------
benefits represent the future benefit payments due to participants
under the provisions of the Plan. The present value of accumulated
plan benefits is equal to the total of the fair market value of the
participants' notional retirement account balances (i.e., Amounts I
and II plus (minus) phantom investment earnings (losses) less
benefits paid). (Note 1)
(d) Foreign Currency Translation--The Plan's net assets and
----------------------------
accumulated plan benefits are translated into U.S. dollars using year
end exchange rates. The changes in net assets and accumulated plan
benefits are translated into U.S. dollars using the average exchange
rate for the year. The resulting translation gains or losses are
included in the cumulative translation adjustment included in the
Statement of Net Assets available for Plan Benefits and the Statement
of Accumulated Plan Benefits.
(e) 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
financial statements. Actual results could differ from those
estimates.
-7-
<PAGE>
(3) Priorities Upon Termination of the Plan-
---------------------------------------
The Company may amend or terminate the Plan at anytime. No amendment or
termination of the Plan shall reduce a participant's benefit under the
Plan that has been accrued up to the date of termination or amendment. As
an unfunded Plan, no assets of the Company have been segregated to pay
amounts due to participants under the Plan.
(4) Tax Status-
----------
The unfunded nature of the Plan, along with the advance income tax
ruling discussed below, precludes the occurrence of a taxable event (i.e.
to the Plan) from arising.
The Plan received an advance income tax ruling, dated February 19, 1998,
from Revenue Canada which states, among other things that:
(a) the Plan does not constitute a "salary deferral arrangement" within the
meaning of subsection 248(1) of the Income Tax Act (Canada) ("the Act");
(b) benefits paid to a participant or beneficiary under the Plan are
included in taxable income to the participant or beneficiary when
received, while amounts credited to a participant's notional
account will not result in benefits conferred under section 5 or 6
of the Act;
(c) amounts paid under the Plan are deductible by the Company in the
year paid and
(d) the maintenance of notional accounts by the Plan will not be
deemed an "investment contract" as defined under paragraph 12 (11)
of the Act.
-8-
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our reports dated February 6, 1999 on the Champion International
Corporation Nonqualified Supplemental Savings Plan, the Champion International
Corporation Management Incentive Deferral Plan and The Executive Retirement Plan
for Employees of Weldwood of Canada Limited included in this Form 11-K into the
Company's previously filed Registration Statement on Form S-8 (Registration No.
333-34069).
/S/ ARTHUR ANDERSEN LLP
Stamford, CT
March 26, 1999
G/Stein6/Form11K-1998
