-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JZZBQ0PPpFc2Szk95l1Y5L4caLOvG828+9bYEU5jv7Iyz1tOwW2fCfd3/8dDBSiF mNEiIkaYfH32wL2f2IErFg== /in/edgar/work/20000627/0000950130-00-003583/0000950130-00-003583.txt : 20000920 0000950130-00-003583.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950130-00-003583 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000627 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHAMPION INTERNATIONAL CORP CENTRAL INDEX KEY: 0000019150 STANDARD INDUSTRIAL CLASSIFICATION: [2621 ] IRS NUMBER: 131427390 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-03053 FILM NUMBER: 661575 BUSINESS ADDRESS: STREET 1: ONE CHAMPION PLAZA CITY: STAMFORD STATE: CT ZIP: 06921 BUSINESS PHONE: 2033587000 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES PLYWOOD CHAMPION PAPERS IN DATE OF NAME CHANGE: 19720821 11-K 1 0001.txt FORM 11-K ================================================================================ 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) ================================================================================ 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 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 Champion International Corporation Savings Plan #077 FEIN: 13-1427390 Financial Statements As of December 31, 1999 and 1998 Together With Auditors' Report Champion International Corporation Savings Plan #077 FEIN: 13-1427390 Table of Contents - --------------------------------------------------------------------------------
Page(s) -------------- 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
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) Champion International Corporation Savings Plan #077 FEIN: 13-1427390 Statements of Net Assets Available for Benefits As of December 31, 1999 and 1998 - --------------------------------------------------------------------------------
1999 1998 ------------ ------------ 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 ============ ============
The accompanying notes to financial statements are an integral part of these statements. 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 - --------------------------------------------------------------------------------
1999 1998 ------------------ ------------------ 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 ================= ================
The accompanying notes to financial statements are an integral part of these statements. 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. 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. 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.
Carrying Underlying Assets ---------------------------------------- Value at December 31, 1999 ------------------ 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.)
Champion International Corporation Savings Plan #077 FEIN: 13-1427390 Notes to Financial Statements December 31, 1999 and 1998 - --------------------------------------------------------------------------------
Carrying Underlying Assets ---------------------------------------- Value at December 31, 1999 ------------------- 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 ==============
* Participant and non-participant directed 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.
Carrying Value at December 31, 1998 ------------------- 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 ===================
* Participant and non-participant directed 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:
December 31, 1999 -------------- 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 ==============
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:
June 30, December 31, 1999 1998 ------------- -------------- Company Stock Fund $ 22,008,620 $ (10,034,302) Common Stock Funds 29,962,113 59,728,636 ------------- -------------- $ 51,970,733 $ 49,694,334 ============= ==============
Information about the net assets and significant components of changes in net assets relating to the nonparticipant-directed investments is as follows:
December 31, ----------------------------------- 1999 1998 ------------- ----------------- 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 ============ ===============
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.
Years Ended December 31, --------------------------------------- 1999 1998 ------------------ ------------------ 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) ================= ===============
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 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. 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. 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. 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 - --------------------------------------------------------------------------------
Identity of Issuer/ Shares/ Costs of Proceeds of Investment Description Par Value Acquisitions Dispositions - ---------------------------------------------------------- -------------- ---------------- ---------------- 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 ============= ================
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 Champion International Corporation Savings Plan for Hourly Employees #158 FEIN: 13-1427390 Table of Contents - --------------------------------------------------------------------------------
Page(s) ------------ 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
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) 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 - --------------------------------------------------------------------------------
1999 1998 ------------ ------------ 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 ============ ============
The accompanying notes to financial statements are an integral part of these statements. 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 - --------------------------------------------------------------------------------
1999 1998 ---------------- ------------------ 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 ================= =================
The accompanying notes to financial statements are an integral part of these statements. 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 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. 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.
Carrying Underlying Assets ---------------------------------------- Value at December 31, 1999 ----------------- 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.)
Champion International Corporation Savings Plan for Hourly Employees #158 FEIN: 13-1427390 Notes to Financial Statements December 31, 1999 and 1998 - --------------------------------------------------------------------------------
Carrying Underlying Assets ---------------------------------------- Value at December 31, 1999 ----------------- 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 ===============
* Participant and non-participant directed 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.
Carrying Value at December 31, 1998 ---------------- 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 ================
* Participant and non-participant directed 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:
December 31, 1999 ------------------ 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 ===============
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:
June 30, December 31, 1999 1998 ------------- ------------- Company Stock Fund $ 4,660,142 $ (3,171,342) Common Stock Funds 6,551,289 11,519,600 ----------- ------------ $11,211,431 $ 8,348,258 =========== ============
Information about the net assets and significant components of changes in net assets relating to the nonparticipant-directed investments is as follows:
December 31, ------------------------------------- 1999 1998 ---------------- --------------- 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 ================= ==============
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.
Years Ended December 31, ------------------------------ 1999 1998 ----------- ----------- 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) =========== ===========
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 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. 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. 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. 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 - --------------------------------------------------------------------------------
Identity of Issuer/ Shares/ Costs of Proceeds of Investment Description Par Value Acquisitions Dispositions - ----------------------------------------------------------- --------- ------------ ------------ 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 ========== ===========
EX-23 2 0002.txt CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our reports dated May 26, 2000, except with respect to the matters discussed in Note 10 to the financial statements as to which the date is June 19, 2000, on the Champion International Corporation Savings Plan #077 and the Champion International Corporation Savings Plan for Hourly Employees #158 included in this Form 11-K into the Company's previously filed Registration Statement on Form S-8 (Registration No. 333-34069) and into International Paper Company's previously filed Registration Statement on Form S-8 (Registration No. 333-37390). It should be noted that we have performed no audit procedures subsequent to May 26, 2000, the date of our reports, except with respect to Note 10 to the financial statements as to which the date is June 19, 2000. Furthermore, we have not audited any financial statements of Champion International Corporation Savings Plan # 077 or Champion International Corporation Savings Plan for Hourly Employees #158 as of any date or for any period subsequent to December 31, 1999. /s/ Arthur Andersen LLP Stamford, CT June 26, 2000 -----END PRIVACY-ENHANCED MESSAGE-----