<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, 1999
Commission File Number 1-3053
CHAMPION INTERNATIONAL CORPORATION
SAVINGS PLAN #077
SAVINGS PLAN FOR HOURLY EMPLOYEES #158
(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 Schedules
----------------------------------
Champion International Corporation Savings Plan #077:
Report of Independent Public Accountants
Statement of Net Assets Available for Benefits as of December 31, 1999 and
1998
Statement of Changes in Net Assets Available for Benefits for the Years
Ended December 31, 1999 and 1998
Notes to Financial Statements - December 31, 1999 and 1998
Schedule I - Item 4(i) - Schedule of Investment Assets Both Acquired and
Disposed of Within the Plan Year - December 31, 1999
All Schedules not listed above are omitted since they are not applicable, not
required or the information is included in the Plan's Financial Statements
or Notes to Financial Statements listed above.
Champion International Corporation Savings Plan for Hourly Employees #158:
Report of Independent Public Accountants
Statement of Net Assets Available for Benefits as of December 31, 1999 and
1998
Statement of Changes in Net Assets Available for Benefits for the Years
Ended December 31, 1999 and 1998
Notes to Financial Statements - December 31, 1999 and 1998
Schedule I - Item 4(i) - Schedule of Investment Assets Both Acquired and
Disposed of Within the Plan Year - December 31, 1999
All Schedules not listed above are omitted since they are not applicable, not
required or the information is included in the Plan's Financial Statements
or Notes to Financial Statements listed above.
(b) Exhibit
-------
Exhibit 23 - Consent of Independent Public Accountants
1
<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
SAVINGS PLAN #077
SAVINGS PLAN FOR HOURLY EMPLOYEES #158
By /s/ William C. Foster
---------------------------------------
(William C. Foster)
Senior Associate Counsel - Employee
Relations/Human Resources
June 27, 2000
2
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Financial Statements
As of December 31, 1999 and 1998
Together With Auditors' Report
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Table of Contents
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page(s)
--------------
<S> <C>
Report of Independent Public Accountants 1
Statement of Net Assets Available for Benefits as of 2
December 31, 1999 and 1998
Statement of Changes in Net Assets Available for Benefits for the Years Ended 3
December 31, 1999 and 1998
Notes to Financial Statements - 4-13
December 31, 1999 and 1998
Schedule I - Item 4(i) - Schedule of Investment Assets Both Acquired and Disposed 14
of Within the Plan Year - December 31, 1999
</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
of CHAMPION INTERNATIONAL CORPORATION SAVINGS PLAN #077 as of December 31, 1999
and 1998, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 net assets available for benefits of the Plan as of
December 31, 1999 and 1998, and the changes in net assets available for benefits
for the years then ended in conformity with accounting principles generally
accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of investment
assets both acquired and disposed of within the plan year is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Cincinnati, Ohio
May 26, 2000 (except with respect to the matter discussed in Note 10,
as to which the date is June 19, 2000)
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
------
INVESTMENTS (Notes 1, 2, 3 and 4):
Master Trust-
Participant directed $730,659,254 $ -
Company directed 98,253,947 2,123,127
------------ ------------
828,913,201 2,123,127
Other-
Participant directed - 648,075,489
------------ ------------
Company directed--
Stable Value Fund - 8,499,528
Company common stock Fund - 89,093,137
Cash and cash equivalents - 2,017,454
------------ ------------
- 99,610,119
------------ ------------
Total investments 828,913,201 749,808,735
------------ ------------
RECEIVABLES:
Accrued dividend and interest income 232,189 181,322
Pending transactions 175,789 10,311
------------ ------------
Total receivables 407,978 191,633
------------ ------------
Total assets 829,321,179 750,000,368
------------ ------------
LIABILITIES
-----------
PAYABLES:
Accrued expenses - 59,613
Pending transactions 284,231 -
------------ ------------
Total payables 284,231 59,613
------------ ------------
Total liabilities 284,231 59,613
------------ ------------
Net assets available for benefits $829,036,948 $749,940,755
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
------------------ ------------------
<S> <C> <C>
ADDITIONS:
Additions to net assets attributed to-
Investment income (loss) (Notes 1, 2, 3 and 4)--
Master Trust $ 84,232,381 $ (243,419)
Net appreciation in fair value of investments 51,970,733 49,694,334
Interest 12,742,017 25,798,732
Dividends 230,843 474,235
----------------- ----------------
149,175,974 75,723,882
----------------- ----------------
Contributions (Note 1)--
Participant 31,137,194 31,730,341
Company 7,982,904 8,532,121
----------------- ----------------
39,120,098 40,262,462
----------------- ----------------
Transfers from other Plans--
Fort James Corporation (Note 9) - 1,426,059
Champion International Corporation Savings Plan for Hourly 247,160 425,877
Employees #158 (Note 7) ----------------- ----------------
247,160 1,851,936
----------------- ----------------
Total additions 188,543,232 117,838,280
----------------- ----------------
DEDUCTIONS:
Deductions from net assets attributed to-
Benefits paid to participants 90,428,002 75,984,011
----------------- ----------------
Transfer to other Plans (Note 8)--
Blue Ridge Paper Products Inc. 19,019,037 -
Newsprint System divestiture - 22,616,018
----------------- ----------------
19,019,037 22,616,018
----------------- ----------------
Total deductions 109,447,039 98,600,029
----------------- ----------------
Net increase 79,096,193 19,238,251
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of the year 749,940,755 730,702,504
----------------- ----------------
End of year $ 829,036,948 $ 749,940,755
================= ================
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
(1) Plan Description-
-----------------
The following description of the Champion International Corporation Savings
Plan #077 (the Plan) provides only general information. Reference should be
made to the Plan agreement for a more complete description of the Plan's
provisions.
The Plan, which became effective on January 1, 1978, is a contributory
savings plan available to salaried employees of Champion International
Corporation (the Company). Effective January 1, 1983, a 401(k) savings
option was available to participants allowing them to contribute before-tax
compensation in addition to the after-tax compensation allowed previously.
Participants may contribute up to a maximum of 22% (16% prior to January 1,
1999) of their compensation, subject to certain limitations. For the period
prior to July 1, 1999, qualified participant contributions were invested in
investment options consisting of the Company Stock Fund, the Stable Value
Fund, the S&P 500 Index Fund, the Extended Equity Market Fund K (the Small
Company Index Fund) or the EAFE Equity Index Fund K (the International
Equities Index Fund), at the participants' discretion. Effective July 1,
1999, investment options were expanded to include the EAFE Equity Index
Fund T, the Equity Index Fund T, the Large Company Fund, the Select Small
Company Fund, the Select Fund, the Ultra Fund, the Equity Income Fund, and
the International Growth Fund. Also, effective July 1, 1999, the S&P 500
Index Fund and the EAFE Equity Index Fund K investment options were
terminated. Earnings for the funds are based upon the performance of the
funds' underlying assets.
The Company matches one-half of the first 6% of the participants'
compensation which is contributed to the Plan. Company contributions are
invested in the Company Stock Fund. Participants ratably vest in the
Company contribution, as adjusted for earnings or losses, based upon years
of service. A participant is 100% vested after five years of credited
service with the Company. Once participants reach age 55, they are
permitted to transfer the Company match portion of their Company Stock Fund
to other available investment options.
Participants are permitted to borrow against their account balances and
their vested portions of the Company Stock Fund contributions. The terms
and conditions of these loans are established to be in compliance with
applicable laws and regulations. The interest rate charged to participants
in 1999 and 1998 was prime at origination plus 1%. Principal and interest
are paid ratably through monthly payroll deductions. Participant loans
totaled approximately $14,866,000 and $17,052,000 at December 31, 1999 and
1998, respectively.
Effective January 1, 1982, tax deductible employee contributions could be
directed into an individual retirement fund. After December 31, 1982,
employee contributions to this fund were no longer accepted. Earnings for
this fund have averaged 6.62% and 7.21% per annum for 1999 and 1998,
respectively. The balance in this fund, which is invested in the Stable
Value Fund, was approximately $7.9 million and $8.5 million at December 31,
1999 and 1998, respectively.
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
The Plan is administered by the Company through the Pension and Employee
Benefits Committee (PEBC) and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). Certain investment
management expenses are paid by the Plan while other administrative
expenses are paid by the Company and are not included in the accompanying
statements.
Through June 30, 1999, the Plan's trustee was State Street Bank and Trust
Company, and ADP Administrative Solutions Group (formerly known as William
M. Mercer, Inc.) performed certain administrative and participant record
keeping functions for the Plan. Effective July 1, 1999, the Plan's assets,
along with those of Champion International Corporation Savings Plan for
Hourly Employees #158 (Plan #158), were transferred into a Master Trust,
and Morgan Guarantee Trust Company of New York was appointed trustee. Also
effective July 1, 1999, JP Morgan/American Century Retirement Plan Services
was appointed to perform certain administrative and participant record
keeping functions.
(2) Significant Accounting Policies-
-------------------------------
(a) Investment Valuation and Income Recognition--At December 31, 1999, the
-------------------------------------------
Master Trust's Investments were valued by the trustee or its appointed
agents. Investments held in the Master Trust (as of December 31, 1999)
or by the Plan (as of December 31, 1998) were valued as follows: Cash
and cash equivalents are stated at cost which approximates market
value. The Company's common stock is valued at the closing market
price at year end. Investments in fixed income investment contracts
and synthetic investment contracts are valued at the contract ("book")
value, defined as the sum of contributions less withdrawals plus
credited interest. Commingled funds are stated at the market value of
the underlying assets. Mutual fund investments are valued at the net
asset value of shares held by the Master Trust at year end. Loans
receivable from participants are valued at cost which approximates
fair value. Realized and unrealized gains and losses are reflected
currently in the statements of changes in net assets available for
benefits.
(b) Basis of Accounting--The accrual basis of accounting was used to
-------------------
prepare the financial statements.
(c) Payment of Benefits--Benefits are recorded when paid.
-------------------
(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.
(e) Reclassifications--The Accounting Standards Executive Committee issued
-----------------
Statement of Position 99-3, "Accounting for and Reporting of Certain
Defined Contribution Plan Investments and Other Disclosure Matters"
(SOP 99-3), which eliminates the requirement for a defined
contribution plan to disclose participant-directed investment
programs. As required by SOP 99-3, the Plan adopted SOP 99-3 for the
1999 financial statements and reclassified certain amounts in the 1998
financial statements to eliminate the participant-directed fund
investment program disclosures.
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
(3) Investments-
-----------
At December 31, 1999, the Plan's investment consisted of an approximate 81%
interest in a Master Trust (see Note 1 for further discussion). The
following summarizes the amount and nature of the underlying assets which
comprise the Master Trust at December 31, 1999.
<TABLE>
<CAPTION>
Carrying Underlying Assets
----------------------------------------
Value at December
31, 1999
------------------
<S> <C> <C>
Company Stock Fund *
Common Stock, 2,680,151 shares $ 166,003,192 Champion International Corporation
Common Stock
UMB Scout Prime1 Fund 3,416,310 Cash equivalent mutual fund
Cash 292,979
------------------
169,712,481
Stable Value Fund Pool of investment contracts issued by
John Hancock, 8.30%, maturing 6/30/00 16,205,205 a diversified list of insurance
Metropolitan, 8.30%, maturing 7/1/00 10,199,025 companies; portfolio of investment
Monumental, 6.83%, maturing 6/30/01 28,789,389 grade fixed income securities,
New York Life, 6.84%, maturing 9/30/01 28,177,733 including but not limited to, U.S.
Principal Life, 6.83%, maturing 12/31/01 28,315,401 Treasuries, U.S. Government Agency
Principal Life, 6.79%, maturing 12/15/02 11,056,030 notes and mortgages, corporate
Transamerica 6.44%, maturing 6/15/03 25,102,573 securities, asset-backed securities,
CDC Synthetic GIC 130,743,309 Canadian Yankees and cash
State Street Bank Synthetic GIC 110,653,224 equivalents
STIF 5,830,837
------------------
395,072,726
Extended Equity Market Fund K 17,648,323 Common stocks of small U.S. companies
Commingled Fund, 651,782 units in a wide variety of industries
(managed by Barclays Global Investors,
N.A.)
EAFE Equity Index Fund T 9,556,829 Common stocks of primarily
Commingled Fund, 784,638 units established, medium to large companies
based in Europe, Australia and the Far
East (managed by Barclays Global
Investors, N.A.)
Equity Index Fund T 248,418,714 Common stock of S&P 500 established
Commingled Fund, 6,109,360 units companies (managed by Barclays Global
Investors N.A.)
</TABLE>
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Carrying Underlying Assets
----------------------------------------
Value at
December 31,
1999
-------------------
<S> <C> <C>
Large Company Fund 38,577,310 Common stock of U.S. large companies
Commingled Fund, 1,525,398 units in a variety of industries
Select Small Company Fund 16,894,673 Common stock of small U.S. companies
Mutual Fund, 1,063,227 units in a variety of industries which seeks
to outperform the Russell 2000 Index
Equity Income Fund 2,218,496 Income-producing equity securities
Mutual Fund, 396,160 units seeking to exceed the yield of the S&P
500 Composite Index Securities
Select Fund 35,133,597 Common stock of large, established
Mutual Fund, 665,409 units companies with accelerated earnings
and revenue trends
Ultra Fund 41,052,944 Common stock of medium to large
Mutual Fund, 893,426 units companies with accelerating earnings
and revenue trends
International Growth Fund 21,365,129 Common stock of foreign companies with
Mutual Fund, 1,427,196 units accelerating earnings and revenues
Participants Loans 25,260,981 Participant loans, interest rate at
prime +1% at origination, secured by
the participants' vested accrued
benefit
--------------
Total $1,020,912,203
==============
</TABLE>
* Participant and non-participant directed
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
The following presents investments that represent 5 percent or more of the
Plan's net assets at December 31, 1998.
<TABLE>
<CAPTION>
Carrying Value
at
December 31,
1998
-------------------
<S> <C>
Company Stock Fund *
Champion International Corporation Common Stock, 3,351,364 shares $ 106,232,634
Government STIF 2,398,615
-------------------
108,631,249
===================
S&P 500 Index Fund $ 238,505,454
Commingled Fund of Metropolitan Life Insurance Company, 845,485 shares ===================
Stable Value Fund and Individual Retirement Fund
Fixed Income Investment Contracts -
Metropolitan Life Insurance Company $ 18,763,092
8.30%, maturing 50% on 7/1/99 and 50% on 7/1/00
Providian Capital Management 19,973,857
6.83%, maturing 6/30/01
Principal Mutual Life Insurance Company 24,077,659
6.83%, maturing 12/31/01
John Hancock Mutual Life Insurance Company 25,952,042
8.30%, maturing 50% on 7/1/99 and 50% on 6/30/00
New York Life Insurance Company 23,945,974
6.84%, maturing on 9/30/01
Transamerica Occidental Life Insurance Company 20,041,425
interest rate equal to the CMT rate, reset quarterly, maturing 6/15/03
-------------------
132,754,049
-------------------
Synthetic Investment Contract -- Fair Value 214,574,799
Less: Excess of Separate Account over Contract Value (13,678,059)
-------------------
Synthetic Investment Contract -- Contract Value 200,896,740
-------------------
Government STIF 6,506,626
-------------------
$ 340,157,415
===================
</TABLE>
* Participant and non-participant directed
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
For the six months ended December 31, 1999, the Master Trust's income
consisted of the following:
<TABLE>
<CAPTION>
December 31,
1999
--------------
<S> <C>
Interest $ 13,844,136
Dividends 404,452
Net realized and unrealized appreciation in Market Value of
Investments:
Company Stock Fund 41,789,050
Mutual Funds 18,476,172
Commingled Stock Funds 30,257,826
--------------
90,523,048
--------------
Total Master Trust Income $ 104,771,636
==============
</TABLE>
During the six months ended June 30, 1999 and for the year ended December 31,
1998, the Plan's investments (including gains and losses on investments bought
and sold, as well as held during the year) appreciated (depreciated) in value
by $51,970,733 and $49,694,334, respectively as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------- --------------
<S> <C> <C>
Company Stock Fund $ 22,008,620 $ (10,034,302)
Common Stock Funds 29,962,113 59,728,636
------------- --------------
$ 51,970,733 $ 49,694,334
============= ==============
</TABLE>
Information about the net assets and significant components of changes in net
assets relating to the nonparticipant-directed investments is as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1999 1998
------------- -----------------
<S> <C> <C>
Net Assets:
Stable Value Fund $ - $ 8,499,528
Company Stock Fund
Champion International Corporation Common Stock - 89,093,137
Cash and Short-Term Investments - 2,017,454
Master Trust 98,253,947 2,123,127
------------ ---------------
98,253,947 93,233,718
------------ ---------------
$ 98,253,947 $ 101,733,246
============ ===============
</TABLE>
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
At December 31, 1998, nonparticipant-directed investments include the Company
match portion of all participant account balances which remain invested in the
Company Stock Fund. At December 31, 1999, nonparticipant-directed investments
include the Company match portion of participant account balances invested in
the Company Stock Fund for only those participants who have not reached age 55
(i.e., restricted to Company Stock Fund). See Note 1 for further discussion.
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------
1999 1998
------------------ ------------------
<S> <C> <C>
Changes in Net Assets:
Contributions $ 7,982,904 $ 8,532,121
Dividends/Interest 521,057 1,129,243
Net Appreciation/(Depreciation) 17,979,647 (10,441,062)
Masters Trust 21,082,570 (243,419)
Benefits Paid (15,330,661) (10,094,600)
Transfers to Participant-directed Investments (32,356,379) (1,123,318)
Transfer to (from) Other Plans:
Blue Ridge Paper Products Inc. (3,470,398) -
Newsprint System divestiture - (3,102,590)
Champion Savings Plan #158 111,961 95,611
----------------- ---------------
$ (3,479,299) $ (15,248,014)
================= ===============
</TABLE>
At December 31, 1999 the Master Trust's investments included approximately
$147.8 million and at December 31, 1998 the Plan's investments included
approximately $132.8 million of fixed income investment contracts with
various insurance companies, which have been reported at contract value. The
insurance companies credit the Trust's (or the Plan's) account, as
applicable, with contributions and earnings on the underlying investments and
charge the account for withdrawals and administrative expenses. In some
cases, limitations on the liquidity guarantees can be imposed in the event of
plan amendments, mergers, sales, plan termination, layoff or other employer-
initiated events. The fair value of these investment contracts was estimated
to be approximately $147.9 million and $137.4 million, at December 31, 1999
and 1998, respectively. The fair value of the investment contracts was
estimated by the asset manager for the Stable Value Fund using a discounted
cash flow analysis using a "duration-matched Swap rate" applied to each
projected payment. An assumed, average discount rate of 6.70% and 5.14% was
used in the discounted cash flow analysis at December 31, 1999 and 1998,
respectively.
Effective October 1, 1998, the Company entered into "synthetic" investment
contracts with CDC Capital Inc. (CDC) and State Street Bank and Trust Company
(SSB). Among other things, the contracts with CDC and SSB require that a
Separate Account, consisting of a portfolio of diversified investment grade
fixed income securities, be maintained on behalf of the Plan and Plan #158.
The fair market value of the portfolio of investments, at any point in time,
represents the market value of the Separate Account. At December 31, 1999,
the separate account had a fair market value of approximately $258.3 million.
At December 31, 1998, the Plan's interest in the Separate Account had a fair
market value of approximately $214.6 million. The book value of the
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
Synthetic Investment contracts, at any point in time, represents the amount
deposited into the Separate Account, plus interest credited, at rates
established by the contract holder minus any withdrawals and transfers out
of the fund. Under the CCD and SSB contracts, interest rates are reset
every quarter. Interest was credited at rates ranging from 7.00% to 7.40%
during 1999, compared to rates ranging from 7.15% to 7.225% during 1998.
The book value of the contracts are guaranteed by the contract holders
(subject to certain restrictions on amounts withdrawn as a result of
employer-initiated events) and totaled approximately $241.4 and $200.9
million at December 31, 1999 and 1998, respectively. The fair market value
of the Trust's interest in the Separate Account exceeded the book value of
the contract(s) by approximately $16.9 million at December 31, 1999. The
fair market value of the Plan's interest in the separate account exceeded
the book value of the contracts by $13.7 million at December 31, 1998, and
the difference is reflected in the preceding investment summary as "Excess
of Separate Account Over Contract Value". The average yield for the Stable
Value Fund during 1999 and 1998 was approximately 7.00% and 7.64%,
respectively.
Effective June 30, 1995, Champion International Corporation Stock Ownership
Plan #078 (Plan #078) was merged into the Plan and Plan #158, as
applicable. The net assets of Plan #078 were transferred to a Master Trust.
As of December 31, 1998, the Plan's investment approximated 35% of the
assets held in the Master Trust. Through June 30, 1999, assets of the
Master Trust consisted of shares of the Company's common stock, the
valuation of which is based on market prices, and cash in a Government
Short-Term Investment Fund (STIF). As discussed in Note 1, effective July
1, 1999, all of the Plan's investments (including those formerly attributed
to Plan #078) were transferred to a Master Trust.
(4) Priorities Upon Termination of the Plan-
---------------------------------------
Upon termination of the Plan, participants become fully vested in their
individual accounts.
(5) Forfeited Accounts-
------------------
At December 31, 1999 and 1998, forfeited nonvested accounts totaled
approximately $100,000 and $79,000, respectively. These accounts will be
used to reduce future Company contributions. During 1999 and 1998, Company
contributions were reduced by approximately $107,000 and $190,000,
respectively, as a result of forfeited nonvested accounts.
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
(6) Tax Exempt Status-
-----------------
The Plan, as amended and restated through July 1, 1994, has received a
favorable determination letter from the Internal Revenue Service, dated
December 17, 1998. A tax determination request has not been filed for the
most recent amendments. The plan administrator believes that the Plan was
designed and is being operated in compliance with the applicable
requirements of the Internal Revenue Code (IRC). Therefore, the plan
administrator believes that the Plan is a qualified plan under the IRC and
the related Master Trust is tax exempt as of December 31, 1999 and 1998 and
for the years then ended.
(7) Transfers Between Champion International Corporation Plans-
-----------------------------------------------------------
The Company transfers participant account balances and the related assets
between the Plan and Plan #158 for participants who have changed employment
(i.e., hourly or salaried) status.
(8) Restructuring and Divestiture Program-
-------------------------------------
On October 7, 1997, the Company approved a program to maximize total
shareholder return by focusing on strategic businesses, increasing
profitability and improving financial discipline. As part of this program,
the Company announced its intention to divest several non-strategic product
segments. These product segments include the newsprint, recycling, coated
and uncoated groundwood specialty papers, premium papers, specialty
uncoated papers, and liquid packaging and bleached board businesses. Also
to be divested are 325,000 acres of timberlands. Additionally, the Company
announced plans to reduce its worldwide workforce in the businesses
remaining after the divestitures by 11%, or approximately 2,000 positions,
by the end of 1999.
On June 1, 1998, the Company announced that the divestiture of its
newsprint mills in Sheldon and Lufkin, Texas along with three recycling
centers (i.e. collectively the Newsprint System) had been completed. In
accordance with an asset purchase agreement between Champion International
Corporation and Donohue Inc., dated as of March 21, 1998 (the Purchase
Agreement), Selected Employees, as defined in the Purchase Agreement were
fully vested in their account balances as of the closing date. Assets
totaling $22.6 million were transferred to the successor plan for the
Newsprint System during 1998.
On March 29, 1999, the Company announced an agreement to sell its mill in
North Carolina, an extruding and converting facility in Waynesville, North
Carolina and its DairyPak liquid packaging business to Blue Ridge Paper
Products Inc. Additionally, on May 13, 1999, the Company announced an
agreement to sell its groundwood mill in Deferiet, New York. In accordance
with the applicable purchase agreements, certain employees at these
locations were fully vested in their account balances. Assets totaling
$19.0 million were transferred to the successor plan for Blue Ridge Paper
Company during 1999.
<PAGE>
Champion International Corporation
Savings Plan #077
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
(9) Acquisition From Fort James Corporation-
---------------------------------------
In connection with an asset purchase agreement by and among Fort James
Operating Company (a division of Fort James Corporation, formerly James
River Corporation of Virginia), Diamond Occidental Forest, Inc., and
Champion International Corporation dated October 24, 1997, assets totaling
approximately $1.4 million were transferred from Fort James Corporation
Stock Plus Investment Plan to the Plan during 1998.
(10) Events Occurring Subsequent to December 31, 1999-
------------------------------------------------
On May 12, 2000, Champion International Corporation accepted an offer from
International Paper Company of $75 per share for all outstanding shares of
its common stock. The purchase agreement provided that Champion
shareholders would receive $75 per share, two-thirds in cash and one-third
in International Paper common stock. The International Paper offer expired
on June 16, 2000. International Paper is paying $50 in cash and .7073
shares of IP common stock for each Champion share tendered. The merger is
expected to be completed by June 20, 2000.
The Plan may experience participant withdrawals as a result of employment
terminations following the purchase by International Paper. As discussed in
Note 3, liquidity limitations may be imposed under the terms of the
investment contracts held in the Stable Value Fund.
<PAGE>
Champion International Corporation Schedule I
Saving Plan #077
FEIN: 13-1427390
Item 4(i) - Schedule of Investment Assets Both Acquired and Disposed of Within
the Plan Year December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Identity of Issuer/ Shares/ Costs of Proceeds of
Investment Description Par Value Acquisitions Dispositions
---------------------------------------------------------- -------------- ---------------- ----------------
<S> <C> <C> <C>
Barclays Global Investors, N.A.,
EAFE Equity Index Fund K 1,007,124 $ 13,293,969 $ 15,947,780
============= ================
Metropolitan Life Insurance Company,
S&P 500 Index Fund 829,131 $ 128,926,000 $ 260,755,065
============= ================
</TABLE>
<PAGE>
Champion International Corporation
Savings Plan For Hourly Employees #158
FEIN: 13-1427390
Financial Statements
As of December 31, 1999 and 1998
Together With Auditors' Report
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Table of Contents
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page(s)
------------
<S> <C>
Report of Independent Public Accountants 1
Statements of Net Assets Available for Benefits 2
as of December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Benefits 3
for the Years Ended December 31, 1999 and 1998
Notes to Financial Statements - 4-13
December 31, 1999 and 1998
Schedule I - Item 4(i) Schedule of Investment Assets Both Acquired and Disposed of Within 14
the Plan Year - December 31, 1999
</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
of CHAMPION INTERNATIONAL CORPORATION SAVINGS PLAN FOR HOURLY EMPLOYEES #158 as
of December 31, 1999 and 1998, and the related statements of changes in net
assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 net assets available for benefits of the Plan as of
December 31, 1999 and 1998, and the changes in net assets available for benefits
for the years then ended in conformity with accounting principles generally
accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of investment
assets both acquired and disposed of within the plan year is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Cincinnati, Ohio
May 26, 2000 (except with respect to the matter discussed in Note 10,
as to which the date is June 19, 2000)
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
------
INVESTMENTS (Notes 1, 2, 3 and 4):
Master Trust-
Participant directed $164,263,937 $ -
Company directed 27,735,065 3,971,054
------------ ------------
191,999,002 3,971,054
------------ ------------
Other-
Participant directed - 146,268,121
------------ ------------
Company directed--
Company common stock Fund - 18,989,125
Cash and cash equivalents - 359,885
------------ ------------
- 19,349,010
------------ ------------
Total investments 191,999,002 169,588,185
------------ ------------
RECEIVABLES:
Accrued dividend and interest income 67,774 39,386
Pending transactions 166,072 -
------------ ------------
Total receivables 233,846 39,386
------------ ------------
Total assets 192,232,848 169,627,571
------------ ------------
LIABILITIES
-----------
PAYABLES:
Pending transactions 189,277 10,359
------------ ------------
Net assets available for benefits $192,043,571 $169,617,212
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---------------- ------------------
<S> <C> <C>
ADDITIONS:
Additions to net assets attributed to-
Investment income (loss) (Notes 1, 2, 3 and 4)--
Master Trust $ 21,651,058 $ (444,301)
Net appreciation in fair value of investments 11,211,431 8,348,258
Interest 3,068,058 6,675,004
Dividends 54,875 103,218
----------------- -----------------
35,985,422 14,682,179
----------------- -----------------
Contributions (Note 1)--
Participant 22,343,854 25,434,127
Company 4,669,975 5,457,559
----------------- -----------------
27,013,829 30,891,686
----------------- -----------------
Transfers from other plans (Note 9)--
Fort James Company - 636,301
----------------- -----------------
Total additions 62,999,251 46,210,166
----------------- -----------------
DEDUCTIONS:
Deduction from net assets attributed to-
Benefits paid to participants 18,467,887 12,601,978
----------------- -----------------
Transfers to other plans--
Blue Ridge Paper Products Inc. (Note 8) 21,857,845 -
Newsprint System divestiture (Note 8) - 26,938,435
Champion International Corporation Savings Plan #077 (Note 7) 247,160 425,877
----------------- -----------------
22,105,005 27,364,312
----------------- -----------------
Total deductions 40,572,892 39,966,290
----------------- -----------------
Net increase 22,426,359 6,243,876
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 169,617,212 163,373,336
----------------- -----------------
End of year $ 192,043,571 $ 169,617,212
================= =================
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
(1) Plan Description-
----------------
The following description of the Champion International Corporation Savings
Plan for Hourly Employees #158 (the Plan) provides only general
information. Reference should be made to the Plan agreement for a more
complete description of the Plan's provisions.
The Plan, which became effective on January 1, 1989, is a contributory
savings plan available to hourly employees of Champion International
Corporation (the Company). The Plan includes a 401(k) savings option
allowing participants to contribute before-tax compensation as well as
after-tax compensation.
Participants may contribute up to a maximum of 22% (16% prior to January 1,
1999) of their compensation, subject to certain limitations. For the period
prior to July 1, 1999, qualified participant contributions were invested in
investment options consisting of the Company Stock Fund, the Stable Value
Fund, the S&P 500 Index Fund, the Extended Equity Market Fund K (the Small
Company Index Fund) or the EAFE Equity Index Fund K (the International
Equities Index Fund), at the participants' direction. Effective July 1,
1999, investment options were expanded to include the EAFE Equity Index
Fund T, the Equity Index Fund T, the Large Company Fund, the Select Small
Company Fund, the Select Fund, the Ultra Fund, the Equity Income Fund, and
the International Growth Fund. Also, effective July 1, 1999, the S&P 500
Index Fund and the EAFE Equity Index Fund K investment options were
terminated. Earnings for the funds are based upon the performance of the
funds' underlying assets.
The Company matches the participants' contributions to the Plan up to a
certain amount per year as specified in the applicable collective
bargaining arrangements. Company contributions are invested in the Company
Stock Fund. Participants ratably vest in the Company contribution, as
adjusted for any earnings or losses, based upon years of service. A
participant is 100% vested after five years of credited service with the
Company. Once participants reach age 55, they are permitted to transfer the
Company match portion of their Company Stock Fund to other available
investment options.
Participants are permitted to borrow against their account balances and
their vested portions of the Company Stock Fund contributions. The terms
and conditions of these loans are established to be in compliance with
applicable laws and regulations. The interest rate charged to participants
in 1999 and 1998 was prime at origination plus 1%. Principal and interest
are paid ratably through monthly payroll deductions. Participant loans
totaled approximately $10.4 million at December 31, 1999 and 1998.
The Plan is administered by the Company through the Pension and Employee
Benefits Committee (PEBC) and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). Certain investment
management expenses are paid by the Plan while other administrative
expenses are paid by the Company and are not included in the accompanying
financial statements.
Through June 30, 1999, the Plan's trustee was State Street Bank and Trust
Company, and ADP Administrative Solutions Group (formerly known as William
M. Mercer, Inc.) performed certain administrative and participant record
keeping functions for the Plan. Effective July 1, 1999, the Plan's
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
assets, along with those of Champion International Corporation Savings Plan
#077 (Plan #077), were transferred into a Master Trust, and Morgan
Guarantee Trust Company of New York was appointed trustee. Also effective
July 1, 1999, JP Morgan/American Century Retirement Plan Services was
appointed to perform certain administrative and participant record keeping
functions.
(2) Significant Accounting Policies-
-------------------------------
(a) Investment Valuation and Income Recognition--At December 31, 1999, the
-------------------------------------------
Master Trust's Investments were valued by the trustee or its appointed
agents. Investments held in the Master Trust (as of December 31, 1999)
or by the Plan (as of December 31, 1998) were valued as follows: Cash
and cash equivalents are stated at cost which approximates market
value. The Company's common stock is valued at the closing market
price at year end. Investments in fixed income investment contracts
and synthetic investment contracts are valued at the contract ("book")
value, defined as the sum of contributions less withdrawals plus
credited interest. Commingled funds are stated at the market value of
the underlying assets. Mutual fund investments are valued at the net
asset value of shares held by the Master Trust at year end. Loans
receivable from participants are valued at cost which approximates
fair value. Realized and unrealized gains and losses are reflected
currently in the statements of changes in net assets available for
benefits.
(b) Basis of Accounting--The accrual basis of accounting was used to
-------------------
prepare the financial statements.
(c) Payment of Benefits--Benefits are recorded when paid.
-------------------
(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.
(e) Reclassifications--The Accounting Standards Executive Committee issued
-----------------
Statement of Position 99-3, "Accounting for and Reporting of Certain
Defined Contribution Plan Investments and Other Disclosure Matters"
(SOP 99-3), which eliminates the requirement for a defined
contribution plan to disclose participant-directed investment
programs. As required by SOP 99-3, the Plan adopted SOP 99-3 for the
1999 financial statements and reclassified certain amounts in the 1998
financial statements to eliminate the participant-directed fund
investment program disclosures.
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
(3) Investments-
-----------
At December 31, 1999, the Plan's investment consisted of an approximate 19%
interest in a Master Trust (see Note 1 for further discussion). The
following summarizes the amount and nature of the investments held by the
Master Trust at December 31, 1999.
<TABLE>
<CAPTION>
Carrying Underlying Assets
----------------------------------------
Value at
December 31,
1999
-----------------
<S> <C> <C>
Company Stock Fund *
Common Stock, 2,680,151 shares $ 166,003,192 Champion International Corporation
Common Stock
UMB Scout Prime1 Fund 3,416,310 Cash equivalent mutual fund
Cash 292,979
----------------
169,712,481
Stable Value Fund Pool of investment contracts issued by
John Hancock, 8.30%, maturing 6/30/00 16,205,205 a diversified list of insurance
Metropolitan, 8.30%, maturing 7/1/00 10,199,025 companies; portfolio of investment
Monumental, 6.83%, maturing 6/30/01 28,789,389 grade fixed income securities,
New York Life, 6.84%, maturing 9/30/01 28,177,733 including but not limited to, U.S.
Principal Life, 6.83%, maturing 12/31/01 28,315,401 Treasuries, U.S. Government Agency
Principal Life, 6.79%, maturing 12/15/02 11,056,030 notes and mortgages, corporate
Transamerica 6.44%, maturing 6/15/03 25,102,573 securities, asset-backed securities,
CDC Synthetic GIC 130,743,309 Canadian Yankees and cash
State Street Bank Synthetic GIC 110,653,224 equivalents
STIF 5,830,837
----------------
395,072,726
Extended Equity Market Fund K 17,648,323 Common stocks of small U.S. companies
Commingled Fund, 651,782 units in a wide variety of industries
(managed by Barclays Global Investors,
N.A.)
EAFE Equity Index Fund T 9,556,829 Common stocks of primarily
Commingled Fund, 784,638 units established, medium to large companies
based in Europe, Australia and the Far
East (managed by Barclays Global
Investors, N.A.)
</TABLE>
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Carrying Underlying Assets
----------------------------------------
Value at
December 31,
1999
-----------------
<S> <C> <C>
Equity Index Fund T 248,418,714 Common stock of S&P 500 established
Commingled Fund, 6,109,360 units companies (managed by Barclays Global
Investors N.A.)
Large Company Fund 38,577,310 Common stock of US large companies in
Commingled Fund, 1,525,398 units a variety of industries
Select Small Company Fund 16,894,673 Common stock of small US companies in
Mutual Fund, 1,063,227 units a variety of industries which seeks to
outperform the Russell 2000 Index
Equity Income Fund 2,218,496 Income-producing equity securities
Mutual Fund, 396,160 units seeking to exceed the yield of the S&P
500 Composite Index Securities
Select Fund 35,133,597 Common stock of large, established
Mutual Fund, 665,409 units companies with accelerated earnings
and revenue trends
Ultra Fund 41,052,944 Common stock of medium to large
Mutual Fund, 893,426 units companies with accelerating earnings
and revenue trends
International Growth Fund 21,365,129 Common stock of foreign companies with
Mutual Fund, 1,427,196 units accelerating earnings and revenues
Participants Loans 25,260,981 Participant loans, interest rate at
prime +1% at origination, secured by
the participants' vested accrued
benefit
---------------
Total $ 1,020,912,203
===============
</TABLE>
* Participant and non-participant directed
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
The following presents investments that represent 5 percent or more of the
Plan's net assets at December 31, 1998.
<TABLE>
<CAPTION>
Carrying Value
at
December 31,
1998
----------------
<S> <C>
Company Stock Fund *
Champion International Corporation Common Stock, 548,950 shares $ 22,232,475
Government STIF 421,353
----------------
22,653,828
================
S&P 500 Index Fund $ 47,382,805
Commingled Fund of Metropolitan Life Insurance Company, 167,969 shares ================
Stable Value Fund
Fixed Income Investment Contracts -
Metropolitan Life Insurance Company $ 3,137,797
8.30%, 65% maturing on 12/15/99 and the remainder maturing on 12/12/00
Providian Capital Management 6,977,383
6.83%, maturing 6/30/01
Principal Mutual Life Insurance Company 2,429,855
6.83%, maturing 12/31/01
John Hancock Mutual Life Insurance Company 3,974,467
8.30%, 50% maturing on 7/1/99 and the remainder maturing on 6/30/00
New York Life Insurance Company 2,430,198
6.84%, maturing on 9/30/01
Transamerica Occidental Life Insurance Company 5,010,788
interest rate equal to the CMT Rate, reset quarterly, maturing 6/15/03
----------------
23,960,488
----------------
Synthetic Investment Contract - Fair Value 50,332,360
Less: Excess of Separate Account over Contract Value (4,396,168)
----------------
Synthetic Investment Contract - Contract Value 45,936,192
----------------
Government STIF 2,788,271
----------------
$ 72,684,951
================
Participant Loans $ 10,415,975
================
</TABLE>
* Participant and non-participant directed
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
For the six months ended December 31, 1999, the Master Trust's income
consisted of the following:
<TABLE>
<CAPTION>
December 31,
1999
------------------
<S> <C>
Interest $ 13,844,136
Dividends 404,452
Net realized and unrealized appreciation in Market Value of
Investments:
Company Stock Fund 41,789,050
Mutual Funds 18,476,172
Commingled Stock Funds 30,257,826
---------------
90,523,048
---------------
Total Master Trust Income $ 104,771,636
===============
</TABLE>
During the six months ended June 30, 1999 and for the year ended December 31,
1998, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated)
in value by $11,211,431 and $8,348,258, respectively as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------- -------------
<S> <C> <C>
Company Stock Fund $ 4,660,142 $ (3,171,342)
Common Stock Funds 6,551,289 11,519,600
----------- ------------
$11,211,431 $ 8,348,258
=========== ============
</TABLE>
Information about the net assets and significant components of changes in net
assets relating to the nonparticipant-directed investments is as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
Net Assets:
Company Stock Fund
Champion International Corporation Common Stock $ - $ 18,989,125
Cash and Short-Term Investments - 359,885
Master Trust 27,735,065 3,971,054
----------------- --------------
$ 27,735,065 $ 23,320,064
================= ==============
</TABLE>
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
At December 31, 1998, nonparticipant-directed investments include the Company
match portion of all participant account balances which remain invested in
the Company Stock Fund. At December 31, 1999, nonparticipant-directed
investments include the Company match portion of participant account balances
invested in the Company Stock Fund for only those participants who have not
reached age 55 (i.e., restricted to Company Stock Fund). See Note 1 for
further discussion.
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Changes in Net Assets:
Contributions $ 4,669,975 $ 5,457,559
Dividends/Interest 61,039 120,407
Net Appreciation/(Depreciation) 4,640,575 (3,492,988)
Masters Trust 6,955,983 (444,301)
Benefits Paid (3,407,468) (2,067,218)
Transfers to Participant-directed Investments (5,786,619) (212,968)
Transfer (to) from Other Plans:
Blue Ridge Paper Products Inc. (2,606,523) -
Newsprint System divestiture - (2,651,634)
Champion Savings Plan #077 (111,961) (95,611)
----------- -----------
$ 4,415,001 $(3,386,754)
=========== ===========
</TABLE>
At December 31, 1999 the Master Trust's investments included approximately
$147.8 million and at December 31, 1998 the Plan's investments included
approximately $24.0 million of fixed income investment contracts with various
insurance companies, which have been reported at contract value. The
insurance companies credit the Trust's or the Plan's account, as applicable,
with contributions and earnings on the underlying investments and charge the
account for withdrawals and administrative expenses. In some cases,
limitations on the liquidity guarantees can be imposed in the event of plan
amendments, mergers, sales, plan termination, layoff or other employer-
initiated events. The fair value of these investment contracts was estimated
to be approximately $147.9 million and $24.7 million, at December 31, 1999
and 1998, respectively. The fair value of the investment contracts was
estimated by the asset manager for the Stable Value Fund by performing a
discounted cash flow analysis using a "duration-matched Swap rate" applied to
each projected payment. An average, assumed discount rate of 6.70% and 5.14%
was used in the discounted cash flow analysis at December 31, 1999 and 1998,
respectively.
Effective October 1, 1998, the Company entered into "synthetic" investment
contracts with CDC Capital Inc. (CDC) and State Street Bank and Trust Company
(SSB). Among other things, the contracts with CDC and SSB require that a
Separate Account, consisting of a portfolio of diversified investment grade
fixed income securities, be maintained on behalf of the Plan and Plan #077.
The fair market value of the portfolio of investments, at any point in time,
represents the market value of the Separate Account. At December 31, 1999,
the separate account was held by the Master Trust and had a fair market value
of approximately $258.3 million. At December 31, 1998, the Plan's interest
in the Separate Account had a
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
fair market value of approximately $50.3 million. The book value of the
Synthetic Investment contracts, at any point in time, represents the amount
deposited into the Separate Account, plus interest credited, at rates
established by the contract holder minus any withdrawals and transfers out
of the fund. Under the CCD and SSB contracts, interest rates are reset every
quarter. Interest was credited at rates ranging from 7.00% to 7.40% during
1999 compared to rates ranging from 7.14% to 7.25% during 1998. The book
value of the contracts are guaranteed by the contract holders (subject to
certain restrictions on amounts withdrawn as a result of employer-initiated
events) and totaled approximately $241.4 million at December 31, 1999. The
Plan's interest in the book value of the contracts totaled approximately
$45.9 million at December 31, 1998. The fair market value of the Trust's
interest in the Separate Account exceeded the book value of the contract(s)
by approximately $16.9 million at December 31, 1999. The fair market value
of the Plan's interest in the separate account exceeded the book value of
the contracts by $4.4 million at December 31, 1998, and the difference is
reflected in the preceding investment summary as "Excess of Separate Account
Over Contract Value". The average yield for the Stable Value Fund during
1999 and 1998 was approximately 7.00% and 7.30%, respectively.
Effective June 30, 1995, Champion International Corporation Stock Ownership
Plan #078 (Plan #078) was merged into the Plan and Plan #077, as applicable.
The net assets of Plan #078 were transferred to a Master Trust. As of
December 31, 1998, the Plan's investment approximated 65% of the assets held
in the Master Trust. Through June 30, 1999, assets of the Master Trust
consisted of shares of the Company's common stock, the valuation of which is
based on market prices, and cash in a Government Short-Term Investment Fund
(STIF). As discussed in Note 1, effective July 1, 1999, all of the Plan's
investments (including those formerly attributed to Plan #078) were
transferred to a Master Trust.
(4) Priorities Upon Termination of the Plan-
---------------------------------------
Upon termination of the Plan, participants become fully vested in their
individual accounts.
(5) Forfeited Accounts-
------------------
At December 31, 1999 and 1998, forfeited nonvested accounts totaled
approximately $28,000 and $6,000, respectively. These accounts will be used
to reduce future Company contributions. During 1999 and 1998, Company
contributions were reduced by approximately $14,000 and $28,000,
respectively, as a result of forfeited nonvested accounts.
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
(6) Tax Exempt Status-
-----------------
The Plan, as amended and restated through July 1, 1994, has received a
favorable determination letter from the Internal Revenue Service, dated
January 11, 1999. A tax determination request has not been filed for the
most recent amendments. The plan administrator believes that the Plan was
designed and is being operated in compliance with the applicable
requirements of the Internal Revenue Code (IRC). Therefore, the plan
administrator believes that the Plan is a qualified plan under the IRC and
the related Master Trust is tax exempt as of December 31, 1999 and 1998 and
for the years then ended.
(7) Transfers Between Champion International Corporation Plans-
-----------------------------------------------------------
The Company transfers participant account balances and the related assets
between the Plan and Plan #077 for participants who have changed employment
(i.e., hourly or salaried) status.
(8) Restructuring and Divestiture Program-
-------------------------------------
On October 7, 1997, the Company approved a program to maximize total
shareholder return by focusing on strategic businesses, increasing
profitability and improving financial discipline. As part of this program,
the Company announced its intention to divest several non-strategic product
segments. These product segments include the newsprint, recycling, coated
and uncoated groundwood specialty papers, premium papers, specialty
uncoated papers, and liquid packaging and bleached board businesses. Also
to be divested are 325,000 acres of timberlands. Additionally, the Company
announced plans to reduce its worldwide workforce in the businesses
remaining after the divestitures by 11%, or approximately 2,000 positions,
by the end of 1999.
On June 1, 1998, the Company announced that the divestiture of its
newsprint mills in Sheldon and Lufkin, Texas along with three recycling
centers (i.e. collectively the Newsprint System) had been completed. In
accordance with an asset purchase agreement between Champion International
Corporation and Donohue Inc., dated as of March 21, 1998 (the Purchase
Agreement), Selected Employees, as defined in the Purchase Agreement were
fully vested in their account balances as of the closing date. Assets
totaling $26.9 million were transferred to the successor plan for the
Newsprint System during 1998.
On March 29, 1999, the Company announced an agreement to sell its mill in
North Carolina, an extruding and converting facility in Waynesville, North
Carolina and its DairyPak liquid packaging business to Blue Ridge Paper
Products Inc. Additionally, on May 13, 1999, the Company announced an
agreement to sell its groundwood mill in Deferiet, New York. In accordance
with the applicable purchase agreements, certain employees at these
locations were fully vested in their account balances. Assets totaling
$21.9 million were transferred to the successor plan for Blue Ridge Paper
Company during 1999.
<PAGE>
Champion International Corporation
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
(9) Acquisition From Fort James Corporation-
---------------------------------------
In connection with an asset purchase agreement by and among Fort James
Operating Company (a division of Fort James Corporation, formerly James
River Corporation of Virginia), Diamond Occidental Forest, Inc., and
Champion International Corporation dated October 24, 1997, assets totaling
approximately $0.6 million were transferred from Fort James Corporation
Stock Plus Investment Plan to the Plan during 1998.
(10) Events Occurring Subsequent to December 31, 1999-
------------------------------------------------
On May 12, 2000, Champion International Corporation accepted an offer from
International Paper Company of $75 per share for all outstanding shares of
its common stock. The purchase agreement provided that Champion
shareholders would receive $75 per share, two-thirds in cash and one-third
in International Paper common stock. The International Paper offer expired
on June 16, 2000. International Paper is paying $50 in cash and .7073
shares of IP common stock for each Champion share tendered. The merger is
expected to be completed by June 20, 2000.
The Plan may experience participant withdrawals as a result of employment
terminations following the purchase by International Paper. As discussed in
Note 3, liquidity limitations may be imposed under the terms of the
investment contracts held in the Stable Value Fund.
<PAGE>
Champion International Corporation Schedule I
Savings Plan for Hourly Employees #158
FEIN: 13-1427390
Item 4(i) - Schedule of Investment Assets Both Acquired and Disposed of Within
the Plan Year December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Identity of Issuer/ Shares/ Costs of Proceeds of
Investment Description Par Value Acquisitions Dispositions
----------------------------------------------------------- --------- ------------ ------------
<S> <C> <C> <C>
Barclays Global Investors, N.A.,
EAFE Equity Index Fund K 282,303 $ 3,793,817 $ 4,470,260
========== ===========
Metropolitan Life Insurance Company,
S&P 500 Index Fund 179,919 $ 38,918,693 $ 56,582,934
========== ===========
</TABLE>
