<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
NONQUALIFIED SUPPLEMENTAL SAVINGS PLAN
MANAGEMENT INCENTIVE DEFERRAL PLAN
THE EXECUTIVE RETIREMENT PLAN FOR
EMPLOYEES OF WELDWOOD OF CANADA LIMITED
WELDWOOD OF CANADA LIMITED
EMPLOYEE PHANTOM SHARE PLAN
(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 December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999 and 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, 1999 and 1998
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999, 1998 and 1997
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999, 1998 and 1997
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 December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999 and 1998
Notes to Financial Statements
Supplemental Schedules: All Supplemental Schedules have been omitted since
the information is not applicable or is not required.
1
<PAGE>
Weldwood of Canada Limited Employee Phantom Share Plan:
Report of Independent Public Accountants
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999 and 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 plans 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
WELDWOOD OF CANADA LIMITED
EMPLOYEE PHANTOM SHARE PLAN
By /s/ Kenwood C. Nichols
----------------------------------------
(Kenwood C. Nichols)
Chairman, Compensation Committee
March 27, 2000
3
<PAGE>
Champion International Corporation
Management Incentive Deferral Plan
Financial Statements
As of December 31, 1999 and 1998
Together with Auditors' Report
<PAGE>
Champion International Corporation
Management Incentive Deferral 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, 1999 and 1998 2
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998 3
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998 4
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999 and 1998 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
MANAGEMENT INCENTIVE DEFERRAL PLAN (THE PLAN) as of December 31, 1999 and 1998,
and the related statements of changes in net assets available for benefits and
changes in accumulated plan benefits for the years then ended. 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 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 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, 1999
and 1998, and the changes in its financial status for the years then ended in
conformity with accounting principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
February 17, 2000
1
<PAGE>
Champion International Corporation
Management Incentive Deferral Plan
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---------- ----------
ASSETS
- ------
<S> <C> <C>
Receivable from Champion International Corporation (Note 1) $7,791,111 $1,493,155
---------- ----------
Net assets available for benefits $7,791,111 $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
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>
Compensation deferrals (Note 1):
Participant-
Restricted $1,568,560 $ -
Unrestricted 561,933 1,325,254
---------- ----------
2,130,493 1,325,254
---------- ----------
Company-
Additional deferral 156,856 -
Phantom investment earnings deferral 1,662,678 188,825
---------- ----------
1,819,534 188,825
---------- ----------
Total deferrals 3,950,027 1,514,079
Benefits paid (Note 1) (98,031) (20,924)
---------- ----------
Net increase in net assets available for benefits before transfer of
bonus deferral liability from NQSS Plan 3,851,996 1,493,155
Transfer of bonus deferral liability from NQSS Plan (Note 1) 2,445,960 -
Net assets available for benefits, beginning of year 1,493,155 -
---------- ----------
Net assets available for benefits, end of year $7,791,111 $1,493,155
========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
3
<PAGE>
Champion International Corporation
Management Incentive Deferral Plan
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Present value of accumulated plan benefits:
Vested benefits -
Vested benefits of participants currently receiving payments $ 337,091 $ -
Other vested benefits 7,454,020 1,493,155
--------- ---------
7,791,111 1,493,155
Nonvested benefits - -
---------- ----------
Total present value of accumulated plan benefits $7,791,111 $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
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Present value of accumulated plan benefits, beginning of year $1,493,155 $ -
----------- -----------
Increase (decrease) during the year attributable to:
Benefits accumulated through (Note 1):
Participant compensation deferrals 2,130,493 1,325,254
Additional Company deferral 156,856 -
Phantom investment earnings deferral 1,662,678 188,825
----------- -----------
3,950,027 1,514,079
Benefits paid (98,031) (20,924)
----------- -----------
Net increase in accumulated plan benefits before transfer of
bonus deferral liability from NQSS Plan 3,851,996 1,493,155
----------- -----------
Transfer of bonus deferral liability from NQSS Plan (Note 1) 2,445,960 -
----------- -----------
Present value of accumulated plan benefits, end of year $7,791,111 $1,493,155
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
5
<PAGE>
Champion International Corporation
Management Incentive Deferral Plan
Notes to Financial Statements
December 31, 1999 and 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. ADP Administrative
Solutions Group (formerly known as William M. Mercer, Inc.) was appointed
to perform certain administrative and record keeping functions of the Plan.
Effective July 1, 1999, JP Morgan/American Century Retirement Plan Services
(JPM/AC) was appointed to perform the 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 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 into the Plan treated as if it was invested in one or more
of the pretax investment options offered by Plan #077. Prior to July 1,
1999, 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 and
medium-sized U.S. companies in a variety of industries), the International
Equities Index Fund (i.e., commingled fund of the common stock of
established companies based in Europe, Australia and the Far East) and the
Champion International Corporation Stock Fund. Effective July 1, 1999,
investment options for Plan #077 were changed to consist of the Stable
Value Fund (i.e., pool of investment grade bonds, including investment
contracts issued by a diversified list of insurance companies), the Equity
Income Fund (i.e., mutual fund of income-producing equity securities
seeking to exceed the yield of the S&P 500 Composite Index securities), the
Equity Index Fund (i.e., commingled index fund of the common stock of the
S&P 500 established companies), the Large Company Fund (i.e., commingled
fund of common stock of U.S. large companies in a variety of industries
seeking to outperform the S&P 500 Index), the Select Fund (i.e., mutual
fund of common stock of large, established companies with accelerated
earnings and revenue trends), the Ultra Fund (i.e., a mutual fund of common
stock of
6
<PAGE>
medium to large companies with accelerating earnings and revenue trends),
the EAFE Equities Index Fund (i.e., commingled fund of the common stock of
established companies based in Europe, Australia and the Far East), the
International Growth Fund (i.e., mutual fund of the common stock of foreign
companies with accelerating earnings and revenues, the majority of which
are in developed markets), the Extended Equity Market Fund (i.e.,
commingled fund of the common stock of small and medium-sized U.S.
companies in a variety of industries), the Select Small Company Fund (i.e.,
commingled fund of the common stock of small U.S. companies in a variety of
industries which seeks to outperform the Russell 2000 Index), and the
Champion International Corporation Stock Fund (i.e. generally fully
invested in the common stock of Champion International Corporation).
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.
For 1998 Incentive Awards, approved and payable in 1999, the Committee
authorized an additional Company deferral equal to 10% of the amount the
participant irrevocably deferred into the Company Stock Fund. The
additional Company deferrals (and earnings thereon) will be treated as if
it had been invested in the Champion International Corporation Stock Fund.
Such amounts (i.e. the participant deferral and related additional Company
deferral) are restricted to the Company Stock Fund until the participant
terminates employment.
Effective July 1, 1999, the portion of the participants' Nonqualified
Supplemental Savings (NQSS) Plan account balances related to deferred
Management Incentive Awards (i.e. $2,445,960) was transferred to the Plan.
Participants are immediately vested in their account balances (i.e.
compensation and additional Company 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).
(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-
---------------------------------------
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 thereon, are not
considered taxable income to participants until distributed.
(5) Events Occurring Subsequent to December 31, 1999-
------------------------------------------------
On February 17, 2000 UPM-Kymmene Corporation and Champion International
Corporation announced that their boards of directors had approved a
definitive merger agreement that would create a premier global paper and
forest products company. Under the terms of the agreement, UPM-Kymmene will
exchange 1.99 ordinary shares of UPM-Kymmene for each outstanding share of
Champion common stock. Champion's shareholders may elect to receive either
UPM-Kymmene ADRs or ordinary shares. The merger is conditioned upon, among
other things, the approvals of the shareholders of both companies and
regulatory approvals in various jurisdictions
8
<PAGE>
Champion International Corporation
Nonqualified Supplemental Savings Plan
Financial Statements
As of December 31, 1999 and 1998
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, 1999 and 1998 2
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998 3
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998 4
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999 and 1998 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 SAVING PLAN (THE PLAN) as of December 31, 1999 and
1998, 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, 1999. 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 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 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, 1999
and 1998, and the changes in its financial status for each of the three years in
the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
February 17, 2000
1
<PAGE>
Champion International Corporation
Nonqualified Supplemental Savings Plan
Statements of Net Assets for Benefits
As of December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
--------- ----------
<S> <C> <C>
ASSETS
- ------
Receivable from Champion International Corporation (Note 1) $12,394,311 $12,268,631
------------- -------------
Net assets available for benefits $12,394,311 $12,268,631
============= =============
</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, 1999, 1998 and 1997
----------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Compensation deferrals (Note 1):
Participant $ 1,279,580 $ 1,113,449 $ 3,126,845
-------------- -------------- --------------
Company-
Matching deferral 291,676 245,801 319,387
Phantom investment earnings deferral 2,273,262 1,115,781 1,213,322
-------------- -------------- --------------
2,564,938 1,361,582 1,532,709
-------------- -------------- --------------
Total deferrals 3,844,518 2,475,031 4,659,554
-------------- -------------- --------------
Benefits paid (Note 1):
Participant deferral and earnings thereon (961,039) (727,969) (493,664)
Company deferral and earnings thereon (311,839) (169,691) (185,836)
-------------- -------------- --------------
Total benefits paid (1,272,878) (897,660) (679,500)
-------------- -------------- --------------
Net increase before transfer of bonus deferral
liability to MID Plan 2,571,640 1,577,371 3,980,054
-------------- -------------- --------------
Transfer of bonus deferral liability to MID Plan
(Note 1) (2,445,960) - -
--------------- -------------- --------------
Net assets available for benefits, beginning of year $12,268,631 $10,691,260 $ 6,711,206
--------------- -------------- --------------
Net assets available for benefits, end of year $12,394,311 $12,268,631 $10,691,260
=============== ============== ==============
</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, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
--------------- --------------
<S> <C> <C>
Present value of accumulated plan benefits:
Vested benefits -
Vested benefits of participants currently receiving payments $ 1,075,742 $ 1,918,241
Other vested benefits 11,316,611 10,349,128
--------------- --------------
12,392,353 12,267,369
Nonvested benefits 1,958 1,262
---------------- --------------
Total present value of accumulated plan benefits $12,394,311 $12,268,631
================ ==============
</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, 1999, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ -------------
<S> <C> <C> <C>
Present value of accumulated plan benefits, beginning
of year $12,268,631 $10,691,260 $ 6,711,206
------------ ------------ ------------
Increase (decrease) during the year attributable to:
Benefits accumulated through (Note 1)-
Participant compensation deferrals 1,279,580 1,113,449 1,349,320
Company matching deferral 291,676 245,801 319,387
Phantom investment earnings deferral 2,273,262 1,115,781 1,213,322
------------- ------------ ------------
3,844,518 2,475,031 2,882,029
Plan amendment (Note 1) - - 1,777,525
Benefits paid (1,272,878) (897,660) (679,500)
------------- ------------ ------------
Net increase before transfer of bonus deferral
liability to MID Plan 2,571,640 1,577,371 3,980,054
------------- ------------ ------------
Transfer of bonus deferral liability to MID Plan (2,445,960) - -
(Note 1)
-------------- ------------ ------------
Present value of accumulated plan benefits, end of year $12,394,311 $12,268,631 $10,691,260
============== ============ ============
</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, 1999 and 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,
ADP Administrative Solutions Group (formerly known as William M. Mercer,
Inc.) was appointed to perform certain administrative and record keeping
functions of the Plan. Effective July 1, 1999, JP Morgan/American Century
Retirement Plan Services was appointed to perform the 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 Savings Plan #077
(Plan #077). For the period prior to July 1, 1999, 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 and medium-sized U.S. companies in a variety
of industries), the International Equities Index Fund (i.e., commingled
fund of the common stock of established companies based in Europe,
Australia and the Far East) and the Champion International Corporation
Stock Fund. Effective July 1, 1999, investment options for Plan #077 were
changed to consist of the Stable Value Fund (i.e., pool of investments
grade bonds, including investment contracts issued by a diversified list of
insurance companies), the Equity Income Fund (i.e., mutual fund of income-
producing equity securities seeking to exceed the yield of the S&P 500
Composite Index securities), the Equity Index Fund (i.e., commingled index
fund of the common stock of the S&P 500 established companies), the Large
Company Fund (i.e., commingled fund of common stock of U.S. large companies
in a variety of industries seeking to outperform the S&P 500 Index), the
Select Fund (i.e., mutual fund of common stock of large, established
companies with accelerated earnings and revenue trends), the Ultra Fund
(i.e., a mutual fund of common stock of medium to large companies with
accelerating earnings and revenue trends), the EAFE Equities
6
<PAGE>
Index Fund (i.e., commingled fund of the common stock of established
companies based in Europe, Australia and the Far East), the International
Growth Fund (i.e., mutual fund of the common stock of foreign companies
with accelerating earnings and revenues, the majority of which are in
developed markets), the Extended Equity Market Fund (i.e., commingled fund
of the common stock of small and medium-sized U.S. companies in a variety
of industries), the Select Small Company Fund (i.e., commingled fund of the
common stock of small U.S. companies in a variety of industries which seek
to outperform the Russell 2000 Index), and the Champion International
Corporation Stock Fund (i.e., generally fully invested in the common stock
of Champion International Corporation). 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.
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, 1999, 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. Effective July 1,
1999, the portion of the participants' account balances related to deferred
Management Incentive Awards (i.e. $2,445,960) was transferred to the
Management Incentive Deferral (MID) Plan.
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 thereon, are not
considered taxable income to participants until distributed.
(5) Events Occurring Subsequent to December 31, 1999-
------------------------------------------------
On February 17, 2000 UPM-Kymmene Corporation and Champion International
Corporation announced that their boards of directors had approved a
definitive merger agreement that would create a premier global paper and
forest products company. Under the terms of the agreement, UPM-Kymmene will
exchange 1.99 ordinary shares of UPM-Kymmene for each outstanding share of
Champion common stock. Champion's shareholders may elect to receive either
UPM-Kymmene ADRs or ordinary shares. The merger is conditioned upon, among
other things, the approvals of the shareholders of both companies and
regulatory approvals in various jurisdictions.
8
<PAGE>
Executive Retirement Plan
For Employees Of Weldwood Of Canada Limited
Financial Statements
As of December 31, 1999 and 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 December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998 3
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998 4
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999 and 1998 5
Notes to Financial Statements 6-9
</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 December 31, 1999 and
1998, and the related statements of changes in net assets available for benefits
and changes in accumulated plan benefits for the years then ended. 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 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 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, 1999
and 1998, and the changes in its financial status for the years then ended, in
conformity with accounting principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
February 17, 2000
1
<PAGE>
Executive Retirement Plan
For Employees of Weldwood of Canada Limited
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
-------------------------- --------------------------
Cdn. $ US $ Cdn. $ US $
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ASSETS:
Receivable from Weldwood of Canada
Limited (Note 1) $667,596 $462,243 $212,577 $138,919
Cumulative translation adjustment
(Note 2) - (12,322) - 3,955
-------- -------- -------- --------
Net assets available for benefits $667,596 $449,921 $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
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
--------------------------- ----------------------------
Cdn. $ US $ Cdn. $ US $
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Amounts credited to notional retirement
accounts (Note 1):
Amount I $105,025 $ 70,871 $ 85,326 $ 57,348
Amount II 165,051 111,376 130,390 87,635
Phantom investment earnings (loss) 184,943 124,800 (757) (508)
-------- -------- -------- --------
Total 455,019 307,047 214,959 144,475
-------- -------- -------- --------
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 455,019 307,047 212,577 142,874
-------- -------- -------- --------
Net assets available for benefits,
beginning of year 212,577 142,874 - -
-------- -------- -------- --------
Net assets available for benefits, end
of year $667,596 $449,921 $212,577 $142,874
======== ======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
3
<PAGE>
Executive Retirement Plan
For Employees of Weldwood of Canada Limited
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 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 660,060 457,025 210,086 137,291
-------- -------- -------- --------
Total vested benefits 660,060 457,025 210,086 137,291
-------- -------- -------- --------
Nonvested benefits 7,536 5,218 2,491 1,628
-------- -------- -------- --------
Cumulative translation adjustment
(Note 2) - (12,322) - 3,955
-------- -------- -------- --------
Total present value of accumulated plan
benefits $667,596 $449,921 $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
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
--------------------------- ----------------------------
Cnd. $ US $ Cnd. $ US $
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Present value of accumulated plan
benefits, beginning of year $212,577 $142,874 $ - $ -
-------- -------- -------- --------
Increase (decrease) during the year
attributable to:
Amounts credited to notional
accounts (Note 1)-
Amount I 105,025 70,871 85,326 57,348
Amount II 165,051 111,376 130,390 87,635
Phantom investment earnings
(losses) 184,943 124,800 (757) (508)
-------- -------- -------- --------
Total 455,019 307,047 214,959 144,475
Benefits paid - - (2,382) (1,601)
-------- -------- -------- --------
Net increase in accumulated plan
benefits 455,019 307,047 212,577 142,874
-------- -------- -------- --------
Present value of accumulated plan
benefits, end of year $667,596 $449,921 $212,577 $142,874
======== ======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
5
<PAGE>
Executive Retirement Plan
For Employees of Weldwood of Canada Limited
Notes to Financial Statements
December 31, 1999 and 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. Effective July 1, 1999,
JP Morgan/American Century Retirement Plan Services was appointed to
perform certain administrative and record keeping functions of the Plan.
Among other things, the Plan, as amended through February 11, 2000,
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 amount contributed to the Group
Registered Retirement Savings Plan (RRSP) pursuant to the provisions of the
Plan (Amount II) in each calendar year. As a condition of the Plan, each
participant must have contributed to an 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 thereon) will be treated as if it
was invested in one or more of the investment options offered by the
Champion International Corporation Savings Plan #077 (Plan #077) as
directed by the participant. Prior to July 1, 1999, 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 and medium-sized U.S. companies in a variety
of industries), the International Equities Index Fund (i.e., commingled
fund of the common stock of established companies based in Europe,
Australia and the Far East) and the Champion International Corporation
Stock Fund. Effective July 1, 1999, investment options for Plan #077 were
changed to consist of the Stable Value Fund (i.e., pool of investment grade
bonds, including investment contracts issued by a diversified list of
insurance companies), the Equity Income Fund (i.e., mutual fund of income-
producing equity securities seeking to exceed the yield of the S&P
6
<PAGE>
500 Composite Index securities), the Equity Index Fund (i.e., commingled
index fund of the common stock of the S&P 500 established companies), the
Large Company Fund (i.e., commingled fund of common stock of U.S. large
companies in a variety of industries seeking to outperform the S&P 500
Index), the Select Fund (i.e., mutual fund of common stock of large,
established companies with accelerated earnings and revenue trends), the
Ultra Fund (i.e., a mutual fund of common stock of medium to large
companies with accelerating earnings and revenue trends), the EAFE Equities
Index Fund (i.e., commingled fund of the common stock of established
companies based in Europe, Australia and the Far East), the International
Growth Fund (i.e., mutual fund of the common stock of foreign companies
with accelerating earnings and revenues, the majority of which are in
developed markets), the Extended Equity Market Fund (i.e., commingled fund
of the common stock of small and medium-sized U.S. companies in a variety
of industries), the Select Small Company Fund (i.e., commingled fund of the
common stock of small U.S. companies in a variety of industries which seeks
to outperform the Russell 2000 Index), and the Champion International
Corporation Stock Fund (i.e., generally fully invested in the common stock
of Champion International Corporation). 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 net assets of the Plan and the
----------------------------
accumulated plan benefits are translated into U.S. dollars using
yearend exchange rates. The changes in net assets and accumulated plan
benefits are translated using the average exchange rate for the year.
The resulting translation gains or losses are included in
7
<PAGE>
the cumulative translation adjustment included in the Statement of Net
Assets available for 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.
(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,
("the Ruling") 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.
The Plan has been amended since receiving the Ruling. However, the Plan
Administrator believes that the Plan is designed and is being operated in
compliance with the applicable requirements of Revenue Canada.
8
<PAGE>
(5) Events Occurring Subsequent to December 31, 1999-
------------------------------------------------
On February 17, 2000 UPM-Kymmene Corporation and Champion International
Corporation announced that their boards of directors had approved a
definitive merger agreement that would create a premier global paper and
forest products company. Under the terms of the agreement, UPM-Kymmene will
exchange 1.99 ordinary shares of UPM-Kymmene for each outstanding share of
Champion common stock. Champion's shareholders may elect to receive either
UPM-Kymmene ADRs or ordinary shares. The merger is conditioned upon, among
other things, the approvals of the shareholders of both companies and
regulatory approvals in various jurisdictions.
9
<PAGE>
Weldwood of Canada Limited
Employee Phantom Share Plan
Financial Statements
As of December 31, 1999 and 1998
Together With Auditors' Report
1
<PAGE>
Weldwood of Canada Limited
Employee Phantom Share 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, 1999 and 1998 2
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998 3
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998 4
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999 and 1998 5
Notes to Financial Statements 6-7
</TABLE>
1
<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 WELDWOOD OF CANADA LIMITED (a Canadian
corporation and wholly owned subsidiary of Champion International Corporation)
EMPLOYEE PHANTOM SHARE PLAN (THE PLAN) as of December 31, 1999 and 1998, and the
related statements of changes in net assets available for benefits and changes
in accumulated plan benefits for the years then ended. 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 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 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, 1999
and 1998, and the changes in its financial status for the years then ended, in
conformity with accounting principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
February 17, 2000
1
<PAGE>
Weldwood of Canada Limited
Employee Phantom Share Plan
Statements of Net Assets Available for Benefits
As of December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
------------------------ -----------------------
Cdn. $ US $ Cdn. $ US $
------- ------- ------ ------
ASSETS:
<S> <C> <C> <C> <C>
Receivable from Weldwood of Canada
Limited (Note 1) $754,559 $522,457 $101,651 $66,429
Cumulative translation adjustment
(Note 2) - (13,555) - 1,891
-------- -------- -------- -------
Net assets available for benefits $754,559 $508,902 $101,651 $68,320
======== ======== ======== =======
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
2
<PAGE>
Weldwood of Canada Limited
Employee Phantom Share Plan
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
-------------------------------- ----------------------------------
Cdn. $ US $ Cdn. $ US $
------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
Amounts allocated to participant
accounts (Note 1):
Participant deferral $329,621 $222,428 $114,264 $ 76,797
-------- -------- -------- --------
Company-
Additional deferral 32,962 22,243 11,426 7,680
Phantom investment earnings (loss) 290,325 195,911 (24,039) (16,157)
-------- -------- -------- --------
323,287 218,154 (12,613) (8,477)
-------- -------- -------- --------
-------- -------- -------- --------
Total deferrals 652,908 440,582 101,651 68,320
-------- -------- -------- --------
Benefits paid (Note 1) - - - -
-------- -------- -------- --------
Total payments - - - -
-------- -------- -------- --------
Net increase in net assets available for
benefits 652,908 440,582 101,651 68,320
-------- -------- -------- --------
Net assets available for benefits,
beginning of year 101,651 68,320 - -
-------- -------- -------- --------
Net assets available for benefits,
End of year $754,559 $508,902 $101,651 $ 68,320
======== ======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
3
<PAGE>
Weldwood of Canada Limited
Employee Phantom Share Plan
Statements of Accumulated Plan Benefits
As of December 31, 1999 and 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 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 754,559 522,457 101,651 66,429
-------- -------- -------- --------
Total vested benefits 754,559 522,457 101,651 66,429
-------- -------- -------- --------
Nonvested benefits - - - -
-------- -------- -------- --------
Cumulative translation adjustment
(Note 2) - (13,555) - 1,891
-------- -------- -------- ---------
Total present value of accumulated plan
benefits $754,559 $508,902 $101,651 $ 68,320
======== ======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
4
<PAGE>
Weldwood of Canada Limited
Employee Phantom Share Plan
Statements of Changes in Accumulated Plan Benefits
For the Years Ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
----------------------------- -------------------------------
Cnd. $ US $ Cnd. $ US $
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Present value of accumulated plan
benefits, beginning of year $101,651 $ 68,320 $ - $ -
-------- -------- ---------- ----------
Increase (decrease) during the year
attributable to:
Amounts allocated to participant
accounts (Note 1)-
Participant deferral 329,621 222,428 114,264 76,797
Additional deferrals 32,962 22,243 11,426 7,680
Phantom investment earnings (losses) 290,325 195,911 (24,039) (16,157)
-------- -------- -------- ---------
Total 652,908 440,582 101,651 68,320
Benefits paid - - - -
-------- -------- ---------- ----------
Net increase in accumulated plan benefits 652,908 440,582 101,651 68,320
-------- -------- ---------- ----------
Present value of accumulated plan
benefits, end of year $754,559 $508,902 $101,651 $ 68,320
======== ======== ========= =========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
5
<PAGE>
Weldwood of Canada Limited
Employee Phantom Share Plan
Notes to Financial Statements
December 31, 1999 and 1998
- -------------------------------------------------------------------------------
(1) Plan Description-
----------------
The following description of the Weldwood of Canada Limited Phantom Share
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
retirement plan established for the purpose of encouraging eligible
employees of Weldwood of Canada Limited (the Company) to contribute to the
growth and profitability of the Company through an equity-based
compensation plan. 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. Effective July 1, 1999,
JP Morgan/American Century Retirement Plan Services was appointed to
perform certain administrative and record keeping functions of the Plan.
Among other things, the Plan provides that the Company will allocate to
each participant's account an amount equal to a percentage of such
participant's incentive compensation, as designated by the participant,
plus an additional allocation equal to 10% of the participant's designated
deferral. The participant's account (and any earnings thereon) is treated
as if it was invested in the Champion International Corporation Stock Fund
of the Champion International Corporation Savings Plan #007 (Plan #007).
Although the Plan itself has no investment assets, participant accounts are
credited with earnings or losses, based upon the actual earnings and losses
of the Champion International Corporation Stock Fund for the period.
Participants are immediately vested in their entire account balance, 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, or other termination of employment in a single lump
sum cash payment or in two 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.
-------------------
6
<PAGE>
(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'
account balances (i.e., participant and additional allocation plus
(minus) phantom investment earnings (losses) less benefits paid).
(Note 1)
(d) Foreign Currency Translation--The net assets of the Plan and the
----------------------------
accumulated plan benefits are translated into U.S. dollars using
yearend exchange rates. The changes in net assets and accumulated plan
benefits are translated 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 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.
(3) Priorities Upon Termination of the Plan-
---------------------------------------
The Company, by action of the Committee, may amend or terminate the Plan in
whole or in part 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 Plan is established pursuant to the provisions of subsection 6801(d) of
the regulations to the Income Tax Act (Canada). The Plan is subject to
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 thereon, are not considered taxable income
to participants until distributed.
(5) Events Occurring Subsequent to December 31, 1999-
------------------------------------------------
On February 17, 2000 UPM-Kymmene Corporation and Champion International
Corporation announced that their boards of directors had approved a
definitive merger agreement that would create a premier global paper and
forest products company. Under the terms of the agreement, UPM-Kymmene will
exchange 1.99 ordinary shares of UPM-Kymmene for each outstanding share of
Champion common stock. Champion's shareholders may elect to receive either
UPM-Kymmene ADRs or ordinary shares. The merger is conditioned upon, among
other things, the approvals of the shareholders of both companies and
regulatory approvals in various jurisdictions.
7
<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 17, 2000 on the Champion International
Corporation Nonqualified Supplemental Savings Plan, the Champion International
Corporation Management Incentive Deferral Plan, The Executive Retirement Plan
for Employees of Weldwood of Canada Limited and the Weldwood of Canada Limited
Employee Phantom Share Plan 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, Connecticut
March 27, 2000
