-----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, CWc607xCdSmSmRmwMu+WSfXmwFGxcvH2Jo7bK6wpCWNflJsHTXmqcJOiNzBMZVcZ itRgtdCJuEmfV1iC5WTptQ== 0000950130-97-002360.txt : 19970515 0000950130-97-002360.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950130-97-002360 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHAMPION INTERNATIONAL CORP CENTRAL INDEX KEY: 0000019150 STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621] IRS NUMBER: 131427390 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03053 FILM NUMBER: 97604209 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 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ---- . EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 ------------------------------------------ OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ---- SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------------------------------ Commission File Number 1-3053 ------------------------------------------ Champion International Corporation ---------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New York 13-1427390 ------------------------------------------ -------------------------- State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) One Champion Plaza, Stamford, Connecticut 06921 ------------------------------------------------------- (Address of principal executive offices) (Zip Code) 203-358-7000 ------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at April 30, 1997 ---------------------------------- -------------------------------------- Common stock, $.50 par value 95,638,774 PART I. FINANCIAL INFORMATION ------------------------------ Item 1. Financial Statements. ------------------------------ CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (unaudited) (in thousands, except per share)
Three Months Ended March 31, ------------------------------------ 1997 1996 ----------------- ----------------- Net Sales $1,366,720 $1,533,182 Costs and Expenses Cost of products sold 1,281,103 1,260,453 Selling, general and administrative expenses 93,864 97,015 Interest and debt expenses 60,799 54,959 Other (income) expense - net (Note 2) (9,502) (11,168) ----------------- ----------------- Total costs and expenses 1,426,264 1,401,259 Income (Loss) Before Income Taxes (59,544) 131,923 Income Taxes (Benefit) (22,461) 48,274 ----------------- ----------------- Net Income (Loss) $ (37,083) $ 83,649 ================= ================= Average Number of Common Shares Outstanding 95,590 95,505 ================= ================= Earnings (Loss) Per Common Share (Exhibit 11) $ (.39) $ .88 ================= ================= Cash dividends declared $ .05 $ .05 ================= =================
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement. -2- CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in thousands of dollars)
March 31, December 31, 1997 1996 ASSETS: (unaudited) ----------------- ----------------- Current Assets: Cash and cash equivalents $ 112,032 $ 174,638 Short-term investments 20,914 --- Receivables - net 565,320 579,393 Inventories 458,056 458,043 Prepaid expenses 29,125 29,926 Deferred income taxes 74,400 73,732 ----------------- ----------------- Total Current Assets 1,259,847 1,315,732 ----------------- ----------------- Timber and timberlands, at cost - less cost of timber harvested 2,354,038 2,364,858 ----------------- ----------------- Property, plant and equipment, at cost 9,360,528 9,297,557 Less - Accumulated depreciation 3,738,275 3,644,088 ----------------- ----------------- 5,622,253 5,653,469 ----------------- ----------------- Other assets and deferred charges 504,489 485,933 ----------------- ----------------- Total Assets $9,740,627 $9,819,992 ================= ================= LIABILITIES AND SHAREHOLDERS' EQUITY: Current Liabilities: Current installments of long-term debt $ 60,735 $ 80,900 Short-term bank borrowings 98,385 126,910 Accounts payable and accrued liabilities 648,992 713,132 Income taxes 8,359 23,098 ----------------- ----------------- Total Current Liabilities 816,471 944,040 ----------------- ----------------- Long-term debt 3,218,185 3,085,424 ----------------- ----------------- Other liabilities 659,925 664,643 ----------------- ----------------- Deferred income taxes 1,329,169 1,363,910 ----------------- ----------------- Minority interest in subsidiaries 5,327 6,307 ----------------- ----------------- Shareholders' Equity: Capital Shares: Common (110,395,585 and 110,323,099 shares issued at March 31, 1997 and December 31, 1996, respectively) 55,198 55,162 Capital Surplus 1,654,948 1,651,454 Retained Earnings 2,698,329 2,740,196 ----------------- ----------------- 4,408,475 4,446,812 Treasury shares, at cost (657,855) (657,864) Cumulative translation adjustment (39,070) (33,280) ----------------- ----------------- Total Shareholders' Equity 3,711,550 3,755,668 ----------------- ----------------- Total Liabilities and Shareholders' Equity $9,740,627 $9,819,992 ================= =================
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement. -3- CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED CASH FLOWS (unaudited) (in thousands of dollars)
Three Months Ended March 31, ------------------------------------ 1997 1996 ----------------- ----------------- Cash flows from operating activities: Net income (1oss) $(37,083) $ 83,649 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 104,760 100,061 Cost of timber harvested 22,686 22,661 Net gain on sale of assets (2,692) (2,960) (Increase) decrease in: Receivables 13,464 82,848 Inventories (819) (60,136) Prepaid expenses 736 (2,679) Increase (decrease) in: Accounts payable and accrued liabilities (58,987) (62,539) Income taxes (14,640) (91,370) Other liabilities (6,103) (14,303) Deferred income taxes (33,394) 13,675 All other - net 12,372 17,335 ----------------- ----------------- Net cash provided by operating activities 300 86,242 ----------------- ----------------- Cash flows from investing activities: Expenditures for property, plant and equipment (67,114) (73,417) Timber and timberlands expenditures (25,293) (30,326) Purchase of Lake Superior Land Company (Note 2) --- (71,775) Purchase of investments (20,914) --- Proceeds from redemption of investments --- 9,218 Proceeds from sales of property, plant and equipment and timber and timberlands 3,425 8,139 All other - net 3,612 (13,292) ----------------- ----------------- Net cash used in investing activities (106,284) (171,453) ----------------- ----------------- Cash flows from financing activities: Proceeds from issuance of long-term debt 77,525 342,039 Payments of current installments of long-term debt and long-term debt (29,980) (313,287) Cash dividends paid (4,780) (4,797) Payments to acquire treasury stock --- (7,815) All other - net 613 1,619 ----------------- ----------------- Net cash provided by financing activities 43,378 17,759 ----------------- ----------------- Decrease in cash and cash equivalents (62,606) (67,452) Cash and Cash Equivalents: Beginning of period 174,638 317,069 ----------------- ----------------- End of period $112,032 $249,617 ================= ================= Supplemental cash flow disclosures: Cash paid during the period for: Interest (net of capitalized amounts) $ 56,048 $ 44,844 Income taxes (net of refunds) 18,279 122,776
The accompanying Notes to Consolidated Financial Statements are an integral part of this statement. -4- CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) March 31, 1997 Note 1. The unaudited information furnished in this report reflects all adjustments which are, in the opinion of management, necessary to present fairly a statement of the results for the interim periods reported. All such adjustments made were of a normal recurring nature. Note 2. During the first quarter of 1996, the company acquired Lake Superior Land Company for $76 million, before netting $4 million of cash owned by Lake Superior Land Company, as well as an outstanding $44 million mortgage loan. The acquisition was accounted for as a purchase. Liabilities recorded in connection with the acquisition, including purchase accounting adjustments, were the $44 million mortgage loan, $68 million of deferred taxes payable and $13 million of other liabilities. Note 3. Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("EPS"), which establishes standards for computing and presenting EPS, is effective for reporting periods ending after December 15, 1997. Had EPS been determined in accordance with this standard, the company's basic and diluted EPS for the three months ended March 31, 1997 and 1996 would have been the same as those currently reported for primary and fully diluted earnings per share, respectively. -5- CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES Item 2. Management's Discussion and Analysis of Financial Condition and ------------------------------------------------------------------------ Results of Operations. ---------------------- Results of Operations --------------------- Overall Quarterly Results The company reported a net loss of $37 million or $.39 per share, fully diluted, compared to last year's first quarter net income of $84 million or $.88 per share and last quarter's net income of $10 million or $.11 per share. The decline from last year and last quarter was primarily due to lower operating income in the paper segment, as discussed below. Significant Income Statement Line Item Changes For The Three Months Ended March 31, 1997 Net sales of $1.37 billion declined from $1.53 billion a year ago and $1.43 billion last quarter. Gross profit was $86 million, compared to $273 million last year and $128 million last quarter. A pre-tax loss of $60 million represented a decline from pre-tax income of $132 million a year ago and $5 million last quarter. The declines in net sales, gross profit and pre-tax income from last year were mainly due to sharply lower prices for all of the company's major pulp and paper grades, which more than offset higher pulp and paper shipments, higher prices for lumber in the U.S. and Canada and higher plywood prices in Canada. The declines from last quarter were principally due to lower prices for uncoated free sheet and coated groundwood papers and pulp, as well as lower West Coast timber sales. The aggregate cost of products sold increased from last year but declined from last quarter. The increase from last year was mainly due to higher pulp and paper shipments, which more than offset lower purchased pulp costs. The decline from last quarter was primarily due to lower sales volumes for the company's paper merchant business, Nationwide Papers, lower maintenance outage expense and lower timber sales. Selling, general and administrative expenses were approximately even with last year but significantly higher than last quarter due to higher benefits expense and the impact of stock price fluctuations on the value of stock appreciation rights. The income tax benefit in the first quarter of 1997 reflected an effective tax rate approximately even with last year but higher than last quarter. The increase from last quarter was mainly due to the impact on the fourth quarter rate of adjustments to the 1996 Brazilian income tax provision. Paper Segment For the company's paper segment, the first quarter operating loss was $30 million. This compared to income of $167 million a year ago and $21 million last quarter. Total paper, packaging and pulp shipments were 1,539,000 tons in the first quarter, compared to 1,386,000 tons a year ago and 1,545,000 tons last quarter. The operating loss for the domestic free sheet business represented a decline from the operating income of a year ago and the smaller operating loss last quarter. The decline from the year-ago quarter was principally due to lower prices for coated and uncoated free sheet papers, which more than offset higher shipments and lower manufacturing costs. The decline from last quarter was mainly due to lower prices for uncoated free sheet papers. The average price for domestic uncoated free sheet papers, the principal product of the free sheet business, was $619 per ton in the first quarter of this year, compared to $793 per ton in the first quarter of 1996 and $671 per ton last quarter. The -6- average price for coated free sheet papers declined significantly from a year ago and slightly from last quarter. Shipments of all grades for the free sheet business were 554,000 tons, compared to 519,000 tons last year and 556,000 tons last quarter. A price increase for most grades of uncoated free sheet papers was implemented early in the second quarter. Operating income at the Brazilian subsidiary, Champion Papel e Celulose Ltda. ("Celulose"), declined significantly from last year and moderately from last quarter primarily due to lower export and domestic prices for uncoated free sheet papers, which more than offset lower manufacturing costs. The overall average price for uncoated free sheet papers was $743 per ton this quarter, compared to $961 per ton in the year-ago quarter and $795 per ton last quarter. Uncoated free sheet papers shipments of 97,000 tons were approximately even with last year and last quarter. An operating loss for the groundwood business represented a considerable decline from the operating income of last year and last quarter. The decline from last year was due to significantly lower prices for coated and uncoated groundwood papers and newsprint, which more than offset higher shipments and lower purchased pulp costs. The decline from last quarter was mainly due to lower prices for coated groundwood papers. The average price for coated groundwood papers was $772 per ton this quarter, compared to $1,152 per ton last year and $810 per ton last quarter. The average price for newsprint was $460 per ton this quarter, compared to $681 per ton last year and $460 per ton last quarter. Shipments of all groundwood and newsprint grades were 444,000 tons, compared to 385,000 tons last year and 446,000 tons last quarter. A domestic price increase for newsprint was implemented late in the first quarter and, early in the second quarter, a discount reduction for coated groundwood papers was also implemented. An operating loss for the specialty business represented a decline from the operating income of last year and last quarter. The decline from last year was principally due to lower prices for coated and uncoated groundwood papers and linerboard, which more than offset lower purchased pulp costs. The decline from last quarter was mainly due to lower prices for coated groundwood papers and linerboard and a decrease in the LIFO inventory reserve last quarter. Prices for coated and uncoated groundwood papers, linerboard and kraft papers declined from last year and last quarter. Prices for coated premium free sheet papers declined from last year but improved slightly from last quarter. Shipments of all grades were 220,000 tons, compared to 211,000 tons last year and 225,000 tons last quarter. Maintenance outages are scheduled at the company's Hamilton, Ohio, and Roanoke Rapids, North Carolina, mills in the second quarter. The operating loss for the company's U.S. and Canadian market pulp operations represented a decline from the operating income of last year and last quarter. The decline from the year-ago quarter was primarily due to significantly lower prices for all grades, which more than offset increased shipments and lower wood chip costs in Canada. The decline from last quarter was principally due to lower prices for northern hardwood and Canadian softwood pulps. The average price for Canadian softwood pulp was (U.S.) $403 per ton in the first quarter of this year, compared to $500 per ton last year and $423 per ton last quarter. Prices for northern hardwood pulp also decreased from last year and last quarter. Shipments of all pulp grades of 224,000 tons increased from 174,000 tons last year and 220,000 tons last quarter. Price increases for all softwood pulp grades were implemented May 1. Maintenance outages are scheduled at all of the company's northern hardwood and Canadian softwood market pulp mills in the second quarter. Wood Products Segment The company's wood products segment, which includes the wood-related operations of Weldwood of Canada, Limited ("Weldwood") and Celulose, reported first quarter income from operations of $31 million, compared to $19 million a year ago and $36 million last quarter. The improvement from last year was mainly due to higher lumber prices in the U.S. and Canada, higher plywood prices in Canada and higher timber sales, which more than offset increased wood costs. The decline from last quarter was primarily due to lower West Coast timber sales and increased wood costs, which more than offset higher lumber shipments. -7- The average price for plywood overall was up slightly from both prior quarters. The average price for lumber overall was 38% higher than last year and approximately even with last quarter. Wood products shipments were down significantly from last year but up from last quarter. The decrease in shipments from last year was primarily due to the sale and closure of various wood products facilities, while the increase from last quarter was due to seasonal factors. Foreign Operations The company's major foreign operations, which are discussed above under their respective business segment headings, are in Canada and Brazil. Net sales to unaffiliated customers by the company's foreign subsidiaries for the first quarter of 1997 were (U.S.) $217 million, accounting for 16% of consolidated net sales of the company. Pre-tax income and net income of the foreign subsidiaries for the first quarter of 1997 was (U.S.) $28 million and (U.S.) $23 million, respectively, which were more than offset by the pre-tax loss and net loss of the company's domestic operations. Labor Contracts At Weldwood, the labor agreement covering the joint venture pulp mill at Quesnel, British Columbia, has run past its expiration date. This facility presently is operating under the terms of its expired contract while efforts to negotiate a new labor agreement continue. The labor agreement at the Hinton, Alberta, pulp mill and wood products plant expires on May 31, 1997 and the labor agreements at several of Weldwood's wood products plants expire on June 30, 1997. Financial Condition ------------------- The company's current ratio was 1.5 to 1 at March 31, 1997, compared to 1.4 to 1 at year-end 1996. Total debt to total capitalization was 40% at March 31, 1997, compared to 39% at year-end 1996. Significant Balance Sheet Line Item Changes Short-term investments increased by $21 million mainly due to the investment of excess cash by the company's Brazilian subsidiary. Net property, plant and equipment decreased by $31 million primarily due to depreciation expense exceeding capital additions in the first quarter. Short-term borrowings, and accounts payable and accrued liabilities, decreased by $29 million and $64 million, respectively, principally due to the timing of payments. Income taxes payable decreased by $15 million, as $18 million in net payments were made in the first quarter of 1997 for U.S. and foreign income taxes. The deferred income tax liability and shareholders' equity decreased $35 million and $44 million, respectively, mainly due to the company's first quarter net loss. For a discussion of changes in long-term debt (including current installments) and cash and cash equivalents, see below. Cash Flows Statement - General 1997 ---- In the first three months of 1997, the company's net cash provided by operating activities and asset sales was not sufficient to meet the requirements of its investing activities (principally capital expenditures and the purchase of investments) and its financing activities (principally debt payments and cash dividends). The difference was financed through borrowings and the use of cash and cash equivalents. In the first three months, net borrowings generated cash proceeds of $48 million; long-term debt (including current installments) increased by $113 million. Cash and cash equivalents decreased by $63 million in the first three months to a total of $112 million, $67 million of which was held by the company's Canadian and Brazilian subsidiaries. -8- 1996 ---- In the first three months of 1996, the company's net cash provided by operating activities and asset sales was not sufficient to meet the requirements of its investing activities (principally capital expenditures and the acquisition of Lake Superior Land Company) and its financing activities (principally debt payments, cash dividends, and the purchase of shares of the company's common stock). The difference was financed through borrowings and the use of cash and cash equivalents. Net borrowings generated cash proceeds of $29 million; long-term debt (including current installments) increased by $83 million. Cash and cash equivalents decreased by $67 million. Cash Flows Statement - Operating Activities For the first three months, net cash provided by operating activities of $300,000 declined from $86 million a year ago. The decrease was primarily due to a net loss this year and a smaller decrease in receivables, partially offset by lower income tax payments and a smaller increase in inventories. Cash Flows Statement - Investing Activities For the first three months, net cash used in investing activities of $106 million declined from $171 million a year ago. The decrease was mainly due to the acquisition of Lake Superior Land Company for $76 million (as well as an outstanding $44 million mortgage loan) last year. Cash Flows Statement - Financing Activities Net cash provided by financing activities of $43 million increased from $18 million a year ago. The change was principally due to higher net borrowings this year, which in turn reflected the decrease in net cash provided by operating activities, as discussed above. At March 31, 1997, the company had $102 million U.S. commercial paper and other short-term obligations outstanding, all of which is classified as long-term debt, up from $7 million at year-end 1996. At March 31, 1997, the company had $15 million of notes outstanding under its U.S. bank lines of credit. At December 31, 1996, no notes were outstanding under these lines of credit. Domestically, at March 31, 1997, $102 million of the company's unused bank lines of credit of $1,235 million supported the classification of commercial paper and other short-term obligations as long-term debt. At March 31, 1997, Weldwood had unused bank lines of credit of (U.S.) $130 million. The annual principal payment requirements under the terms of all long-term agreements for the period from April 1 through December 31, 1997 are $84 million and for the years 1998 through 2001 are $439 million, $372 million, $206 million and $206 million, respectively. -9- PART II. OTHER INFORMATION CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES Item 6. Exhibits and Reports on Form 8-K. ------------------------------------------ (a) See exhibit index following the signature page. (b) No reports on Form 8-K were filed during the quarter for which this report is filed. -10- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the undersigned on behalf of the registrant as duly authorized officers thereof and in their capacities as the chief accounting officers of the registrant. Champion International Corporation ------------------------------------------- (Registrant) Date: May 13, 1997 John M. Nimons - --------------------------------- ------------------------------------------- (Signature) John M. Nimons Vice President and Controller Date: May 13, 1997 Kenwood C. Nichols - --------------------------------- ------------------------------------------- (Signature) Kenwood C. Nichols Vice Chairman and Executive Officer -11- EXHIBIT INDEX Each exhibit is listed according to the number assigned to it in the Exhibit Table of Item 601 of Regulation S-K. 10.1 -Form of Restricted Stock Unit Grant Letter dated February 18, 1997. 10.2 -Champion International Corporation 1997 Incentive Compensation Plan. 10.3 -Champion International Corporation 1997 Performance Share Plan. 10.4 -Compensation Plan for Non-Employee Directors. 10.5 -Amendment to Champion International Corporation Retirement Plan for Outside Directors. 11 -Calculation of Primary Earnings Per Common Share and Fully Diluted Earnings per Common Share (unaudited). 27 -Financial Data Schedule (unaudited). -12- EX-10.1 2 FORM OF RESTRICTED STOCK UNIT GRANT LETTER EXHIBIT 10.1 Champion International Corporation One Champion Plaza Stamford, CT 06921 PERSONAL AND STRICTLY CONFIDENTIAL February 18, 1997 [Employee Name] One Champion Plaza Stamford, CT 06921 Re: Grant of Right to Receive Shares of Champion Common Stock --------------------------------------------------------- Dear ______________: The Compensation and Stock Option Committee (the "Committee") of the Board of Directors of Champion International Corporation ("Champion" or the "Company") has approved the grant to you (the "Grant") of the right to receive an aggregate of _________ shares of Champion Common Stock ("Common Stock"). The Grant is subject to the terms and conditions described below. Terms and Conditions of Grant - ----------------------------- The Grant entitles you to receive from the Company, on each Vesting Date (as defined below), a percentage of the aggregate number of shares of Common Stock subject to the Grant; provided, that you have remained continually employed by the Company or one of its subsidiaries until the applicable Vesting Date; and further, provided, as discussed below, that the issuance of any shares of Common Stock otherwise issuable to you on a particular Vesting Date may be deferred pursuant to a timely election made by you or pursuant to the determination of the Committee in its sole and absolute discretion. With respect to 30% of the shares of Common Stock subject to the Grant, the Vesting Date shall be August 15, 1998; with respect to an additional 30% of the shares of Common Stock subject to the Grant, the Vesting Date shall be August 15, 2000; and with respect to the final 40% of the shares of Common Stock subject to the Grant, the Vesting Date shall be August 15, 2002. 1 On each Vesting Date, the Company will issue to you the applicable number of shares of Common Stock described above, subject to tax withholding requirements as discussed below, provided you have remained continually employed by the Company or one of its subsidiaries until such Vesting Date, subject to the following. (1) You shall have the right to defer the issuance of shares of Common Stock in respect of the Grant until your termination of employment with the Company and its subsidiaries. Such right may be exercised by filing with the Company a timely election in accordance with applicable federal income tax law. (2) If you do not make the deferral election contemplated by clause (1) of this paragraph, the Committee shall have the right to defer issuing to you shares of Common Stock (or any portion thereof) in respect of the Grant until such date as the Committee may determine, but not later than your termination of employment with the Company and its subsidiaries. Such right to defer may be exercised by the Committee in its sole and absolute discretion for any reason, including without limitation because such issuance on the applicable Vesting Date might result in the disallowance of deductions by the Company for federal income tax purposes. The Committee will notify you of any such determination, of the number of shares the issuance of which is being deferred and of the deferral date. If the issuance of any shares of Common Stock otherwise issuable to you is deferred, whether pursuant to your timely election or the determination of the Committee, you will be credited with "dividend equivalents" on such shares during the deferral period. Such dividend equivalents will be equal to the value of cash dividends and other distributions in respect of the Common Stock, and will be converted into additional shares which will be issued to you on the deferral date. No dividend equivalents will be credited for any period prior to the applicable Vesting Date. If your employment with the Company and its subsidiaries terminates for any reason, other than because of your death or your "Total Disability" as such term is defined in the Company's Long Term Disability Benefits Plan For Salaried Employees #506, all previously-unissued shares subject to the Grant (other than any shares deferred in accordance with the two immediately preceding paragraphs (the "Deferred Shares") ) will be forfeited immediately. In the event of your death or Total Disability while employed by the Company or one of its subsidiaries at any time prior to August 15, 2002, you or your beneficiary or beneficiaries or your estate, as the case may be, shall be entitled to receive from the Company as soon as practicable thereafter any Deferred Shares plus a number of shares of Common Stock determined as follows: the number of shares that would have been issued to you (without regard to possible deferrals) if you were employed by the Company or one of its subsidiaries on the next succeeding Vesting Date (i.e., August 15, 1998, August 15, 2000 or August 15, 2002) multiplied by a fraction, the numerator of which is equal to the number of days that you were employed by the Company or one of 2 its subsidiaries from and including the next preceding Vesting Date (or from August 15, 1996, if no Vesting Date has occurred) to and including the date of your death or Total Disability, and the denominator of which is 730. In such event, all other previously-unissued shares subject to the Grant will be forfeited immediately. The Grant constitutes an unfunded obligation of the Company for incentive and deferred compensation. Nothing contained hereunder shall confer on you any rights that are greater than those of a general creditor of the Company or any right to remain in the employ of the Company or any of its subsidiaries. In the event of any stock dividend, split-up, spin-off, rights offering, combination or exchange of shares, recapitalization, merger, consolidation, acquisition or disposition of property or stock, separation, reorganization, liquidation, or the like, the number and class of shares subject to the Grant (including Deferred Shares) may be equitably adjusted, and any other appropriate changes may be made, by the Committee, whose determinations shall be conclusive. You will have no rights as a shareholder of the Company, including without limitation voting and dividend rights, in respect of the shares of Common Stock subject to the Grant unless and until shares of Common Stock have been issued to you. Any compensation income earned or received by you in connection with the Grant will not constitute "compensation" for purposes of any contract between you and the Company, the Company's savings plans or any other employee benefit plans now or hereafter in effect, including without limitation plans providing pension and retirement benefits, life insurance and survivor benefits, and disability benefits. Neither the Grant nor any rights with respect thereto shall be assignable or subject to any encumbrance, pledge or charge of any nature. Special Circumstances: Discretionary Acceleration, and Mandatory Acceleration - ------------------------------------------------------------------------------- Upon Termination Following a Change in Control - ---------------------------------------------- Anything herein to the contrary notwithstanding, the Committee shall have the authority to make a determination that a special situation relating to you or the Company, including without limitation a change in control (as defined in Exhibit A hereto) or potential change in control of the Company, exists. Upon such a determination, the Committee, in its sole and absolute discretion, may accelerate, to such date as shall be specified by the Committee, the vesting and the issuance to you of all or a portion of the previously-unissued shares (including Deferred Shares) subject to the Grant. 3 Anything herein to the contrary notwithstanding, in the event of your termination (as defined in Exhibit A hereto) within three years after a change in control (as defined in Exhibit A hereto) of the Company, the Company shall issue to you as soon as practicable thereafter all of the previously-unissued shares (including Deferred Shares) subject to the Grant or, if the Common Stock of the Company is no longer publicly traded, their equivalent value. Federal Income Tax and FICA Tax Considerations - ---------------------------------------------- Federal income tax: Under present law, you will not be subject to federal income tax at the time of the Grant. If the issuance of any shares otherwise issuable to you is deferred, whether pursuant to your timely election or the determination of the Committee, you will not be subject to federal income tax at the time of the deferral, nor will you be subject to federal income tax at the time that dividend equivalents are credited on Deferred Shares. In each year that shares of Common Stock in fact are issued to you in respect of the Grant, the fair market value of the shares of Common Stock at the time of issuance will be taxable as ordinary income and the Company will be required to withhold the appropriate amount. In order to satisfy federal and all other income tax withholding requirements, the Company will withhold shares of Common Stock otherwise issuable to you. FICA tax: Under present law, the Company will be required to withhold FICA tax (the Medicare portion and, if your wages at that time have not exceeded the applicable wage base, the Social Security portion) on each Vesting Date with respect to the shares of Common Stock that vest on such date based upon their fair market value at that time. FICA tax withholding on each Vesting Date is required whether shares are issued to you on that date or their issuance is deferred. If shares are issued to you on such Vesting Date, the Company will withhold shares otherwise issuable to you in order to satisfy FICA tax withholding requirements. If the issuance of shares is deferred, the Company will withhold the appropriate amount from your wages. This general discussion is not a complete description of the federal income tax and FICA tax consequences of the Grant. For more detailed information, and for information concerning any state, local and foreign tax consequences, the Company recommends that you consult your tax adviser. 4 SEC Considerations - ------------------ This section is relevant to you only if you are an officer of the Company elected by the Board of Directors. Neither the Grant nor the issuance to you of shares of Common Stock pursuant to the Grant will constitute a matchable "purchase" of Company securities for purposes of the short-swing profit restrictions under Section 16(b) of the Securities Exchange Act of 1934, as amended. Therefore, you may disregard the Grant and the receipt of shares of Common Stock in contemplating sales of Common Stock. Similarly, the withholding of shares of Common Stock to satisfy tax liabilities will not constitute a matchable "sale", and may be disregarded in contemplating purchases of Common Stock. However, the sale of shares of Common Stock issued in respect of the Grant will constitute a sale for Section 16(b) purposes and will be matchable against any non-exempt purchase of Common Stock within six months before or after the sale. You must file a year-end Form 5 with the Securities and Exchange Commission and the New York Stock Exchange reporting the Grant and the withholding of shares to satisfy tax withholding requirements upon the issuance of shares to you. The Corporate Secretary will arrange for such Form 5 reporting. You must file a monthly Form 4 reporting any sale of shares issued pursuant to the Grant. If you are a director of the Company, you also must comply with SEC Rule 144 in connection with any sale of shares. Among other things, Rule 144 requires the filing of a Form 144 with the Securities and Exchange Commission and the New York Stock Exchange. Please contact the Corporate Secretary prior to any such sale. Sign and Return - --------------- Please confirm your receipt of this letter and your acknowledgment of the Grant by countersigning and retaining the original letter, and by countersigning the duplicable original of this letter and returning it in the enclosed envelope. 5 Attached hereto is your beneficiary designation currently on file with the Company that applies to the Grant. If you have any questions regarding the Grant or if you would like to designate a different beneficiary for purposes of the Grant, please call Michele Kenaga (ext. 6915) or Larry Fox (ext. 7305). CHAMPION INTERNATIONAL CORPORATION By: ______________________________________ Chairman and Chief Executive Officer __________________________________________ [Employee] 6 EXHIBIT A TO LETTER AGREEMENT DATED FEBRUARY 18, 1997 ----------------------------------------------------- For the purpose of the section captioned "Special Circumstances: Discretionary Acceleration, and Mandatory Acceleration Upon Termination Following a Change in Control" in the letter agreement dated February 18, 1997 (the "Letter Agreement"), the terms "change in control" and "termination" shall have the meanings set forth below. Definition of Change in Control ------------------------------- A change in control shall mean the occurrence of any one of the following: (i) any "person" (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") ), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company's then outstanding securities; (ii) during any period within two (2) consecutive years there shall cease to be a majority of the Board of Directors of the Company comprised as follows: individuals who at the beginning of such period constitute the Board of Directors and any new director(s) whose election by the Board of Directors or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved; or (iii) the shareholders of the Company approve (A) a plan of complete liquidation of the Company or (B) the sale or other disposition of all or substantially all of the Company's assets. Definition of Termination ------------------------- A termination shall mean the occurrence of any one of the following: (i) the termination by the Company (or, if applicable, one or more of its subsidiaries) of your employment with the Company and its subsidiaries; or A-1 (ii) any (A) failure to elect or re-elect or appoint or re-appoint you to an office and position at least equal to the office and position you held immediately prior to such failure, or your removal from such office or position; (B) material change of your functions, duties or responsibilities without your express written consent as a result of which change your position shall be or become of less dignity, responsibility, importance or scope than the position you held at the time of such material change; (C) reduction in your monthly base salary below the highest monthly base salary paid from and after the date of the Letter Agreement; or (D) breach of the Letter Agreement by the Company; provided that in any such event you elect to terminate your employment with the Company and its subsidiaries upon not less than sixty days' advance written notice given within a reasonable period of time, not to exceed four calendar months, after the event giving rise to the election. A-2 EX-10.2 3 CHAMPION INTERNATIONAL CORP. 1997 INCENTIVE EXHIBIT 10.2 CHAMPION INTERNATIONAL CORPORATION ---------------------------------- 1997 INCENTIVE COMPENSATION PLAN -------------------------------- 1. Purposes. --------- The purposes of the Plan are to attract and retain in the employ of the Company and its subsidiaries and affiliates outstanding management employees and to provide incentives and rewards for such employees to contribute meaningfully to the success of the Company. 2. Definitions. ------------ For purposes of the Plan, the following terms shall be defined as set forth below: (a) "Award" means a commitment to pay incentive compensation to a Grantee under the Plan. (b) "Award Agreement" means any written agreement, contract or other instrument or document evidencing an Award. (c) "Board" means the Board of Directors of the Company. (d) "Committee" means the Compensation and Stock Option Committee of the Board. (e) "Company" means Champion International Corporation, a corporation organized under the laws of the State of New York, or any successor corporation. (f) "Deferred Shares" means shares of Stock issuable in connection with an Award that have been deferred pursuant to Section 5(b) hereof. (g) "Effective Date" means March 20, 1997, the date that the Plan was adopted by the Board. (h)"Grantee" means a person who has been granted an Award under the Plan. (i) "Performance Goals" means performance goals or criteria relating to (1) the performance of the Company, including, without limitation, goals or criteria with 1 respect to financial performance, operating performance and Stock performance; (2) the performance of any subsidiary, affiliate, division or unit of the Company or any group of employees of the Company or any subsidiary, affiliate, division or unit thereof; (3) the performance of any Grantee; (4) any other performance measures selected by the Committee; and (5) any combination of the foregoing. (j) "Plan" means this Champion International Corporation 1997 Incentive Compensation Plan, as amended from time to time. (k) "Plan Year" means a calendar year. (l) "Stock" means shares of the common stock, par value $.50 per share, of the Company. 3. Administration. --------------- The Plan shall be administered by the Committee. The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or in its judgment advisable in the administration of the Plan, including, without limitation, the authority to grant Awards; to determine the persons or categories of persons to whom and the time or times at which Awards shall be granted; to determine the form of Awards; to determine the terms, conditions, restrictions and Performance Goals relating to Awards; to determine whether, to what extent, and under what circumstances an Award may be paid, cancelled, forfeited, exchanged or surrendered; to make adjustments in the terms and conditions (including Performance Goals) applicable to Awards; to construe and interpret the Plan and the Awards; to prescribe, amend and rescind rules and regulations relating to the Plan; and to make all other determinations deemed necessary or in its judgment advisable for the administration of the Plan. All determinations made by the Committee in respect of the Plan shall be final and binding on all Grantees and their beneficiaries. 4. Eligibility ----------- Awards may be granted from time to time to such employees or categories of employees of the Company and its subsidiaries and affiliates as shall be selected by the Committee in its discretion. 5. Awards. ------- (a) Grants; Performance Goals. The grant of an Award may be made at any time prior to or simultaneously with the payment in respect of the Award. Awards 2 may be granted with respect to a Plan Year or any other shorter or longer period that the Committee determines to be appropriate. Payment pursuant to each Award will be contingent on the attainment of one or more Performance Goals in respect of a performance period; or the continued employment of a Grantee with the Company and its subsidiaries and affiliates; or any other criteria selected by the Committee; or any combination of the foregoing. Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of the particular criteria or a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company, a subsidiary, affiliate, division or unit of the Company, or any group of employees of any of the foregoing, or may be applied to the performance of the Company relative to a market index, a group of other companies or combination thereof, all as determined by the Committee. With respect to any Award, the Performance Goals may include a threshold level of performance below which no payments will be made, levels of performance at which specified payments will be made, and a maximum level of performance above which no additional payments will be made. The Committee shall have the authority to make equitable adjustments to the Performance Goals in its discretion, including, without limitation, in recognition of unusual or non-recurring events affecting the Company or any subsidiary, affiliate, division or unit thereof, including, without limitation, any such events affecting the financial statements of the Company or any subsidiary or affiliate thereof. (b) Payments; Deferrals. Payments to be made by the Company in respect of an Award may be made in such form as the Committee shall determine at the date of grant or thereafter, including, without limitation, cash, Stock or other property, and may be made in a single payment or transfer, in installments or on a deferred basis. In this regard (1) the Committee may permit a Grantee to defer the payment of cash, the delivery of property or the issuance of shares of Stock in respect of any Award, subject to the Grantee exercising a valid deferral election with the Company in accordance with procedures established by the Committee from time to time; and (2) the Committee shall have the right to defer the payment of cash, the delivery of property or issuance of shares of Stock in respect of any Award until such date as the Committee shall determine (but not later than the Grantee's termination of employment with the Company and its subsidiaries and affiliates for any reason). Such right to defer may be exercised by the Committee in its discretion for any reason, including as appropriate in its judgment to preserve the tax deductibility of payments hereunder. With respect to any mandatory deferral made pursuant to clause (2) of this paragraph, the Committee shall notify the Grantee of any such determination and of the respective deferral date. If the issuance of any shares of Stock otherwise issuable pursuant to an Award is deferred, whether pursuant to an election by a Grantee or the determination of the Committee, the Committee may provide that such Deferred Shares be credited with dividend equivalents during the deferral period. Any such dividend equivalents will 3 be equal to the value of cash dividends and other distributions in respect of the Stock, and will be paid in cash, or will be converted into additional shares of Stock the value of which will be paid in Stock, cash or other property, to the Grantee on such date or dates as determined by the Committee. If the payments of cash or other property otherwise payable or deliverable pursuant to an Award is deferred, whether pursuant to an election by the Grantee or the determination of the Committee, the Committee may provide that the Grantee be credited with amounts in respect of such deferred Award on such basis as the Committee deems appropriate, including, without limitation, as if the value of such deferred Award had been invested in shares of Stock or in one or more of the forms of investment available under the Company's Nonqualified Supplemental Savings Plan or any successor thereto. The Committee in its discretion may provide for elections or statements of preference by Grantees with regard to the basis on which amounts may be credited in respect of deferred Awards. The value of any such credited amounts will be paid to the Grantee on such date or dates as determined by the Committee. (c) Adjustments. In the event of any stock dividend, split-up, spin-off, rights offering, combination or exchange of shares, recapitalization, merger, consolidation, acquisition or disposition of property or stock, separation, reorganization, liquidation, or the like, the number and class of any shares of Stock or any Deferred Shares, the amount of any cash and the amount and kind of any other property subject to any Award may be equitably adjusted, and any other appropriate changes may be made, by the Committee, whose determinations shall be conclusive. (d) Termination of Award. If the employment of a Grantee terminates for any reason while an Award is outstanding, or if any applicable Performance Goal is not attained, the Award shall immediately terminate and be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that any conditions relating to payment in respect to an Award will be waived. (e) Post-Termination Award. If the employment of an employee of the Company or a subsidiary or affiliate thereof terminates for any reason during a performance period, the Committee may in its discretion grant an Award to such employee or, in the event of his or her death, the beneficiary of such employee on such basis as the Committee determines. (f) Acceleration of Payment. Anything herein to the contrary notwithstanding, the Committee shall have authority to make a determination that a special situation exists relating to either (1) a Grantee or (2) the Company, including, without limitation, a change in control or potential change in control of the Company. Upon such a determination, the Committee in its discretion may waive any conditions relating to payment in respect of any or all outstanding Awards (including amounts 4 deferred in accordance with Section 5(b) hereof) granted to such Grantee, in the case of clause (1) above, or to any or all Grantees, in the case of clause (2) above. In the event of such a waiver, payment in respect of the applicable Award or Awards (including amounts deferred in accordance with Section 5(b) hereof) shall be made promptly by the Company. 6. General Provisions. ------------------- (a) Nontransferability. Unless otherwise provided in an Award Agreement, Awards shall not be transferable by a Grantee, except by will or the laws of descent and distribution and except for the designation of a beneficiary. (b) No Right to Continued Employment. Nothing in the Plan or in any Award or any Award Agreement shall confer upon any Grantee the right to continue in the employ of the Company or any subsidiary or affiliate thereof. (c) Taxes. The Company or any subsidiary or affiliate thereof is authorized to withhold from any Award, any payment in respect of any Award, including from a payment in the form of Stock, or any other payments to a Grantee, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee in its judgment may deem advisable to enable the Company and Grantees to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Grantee's tax obligations. (d) Amendment and Termination. The Plan shall take effect on the Effective Date. The Board may at any time and from time to time alter, amend, suspend or terminate the Plan in whole or in part. Notwithstanding the foregoing, no amendment shall affect adversely any of the rights of any Grantee, without such Grantee's consent, under any Award theretofore granted under the Plan. (e) No Rights to Awards; No Shareholder Rights. No employee of the Company or any subsidiary or affiliate thereof shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Grantees. Except as provided specifically herein, a Grantee or the beneficiary of a Grantee shall have no rights as a shareholder with respect to any Stock covered by an Award until the date of the issuance of a stock certificate for or other evidence of ownership of such Stock. (f) Unfunded Status of Awards. The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Grantee pursuant to an Award, nothing contained in the 5 Plan or any Award shall give any such Grantee any rights that are greater than those of a general creditor of the Company. (g) Shares to be Used. Shares of Stock to be used in payment of Awards may be authorized but unissued shares, treasury shares or shares acquired for use under the Plan. Such shares of Stock are hereby reserved for this purpose. (h) Governing Law. The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of New York without giving effect to the conflict of laws principles thereof. (i) Beneficiary. Upon death of a Grantee, all of his or her rights under the Plan shall inure to his or her designated beneficiary or, if no beneficiary has been designated, to his or her estate, subject to Section 5(d) hereof. 6 EX-10.3 4 CHAMPION INTERNATIONAL CORP. 1997 PERFORMANCE EXHIBIT 10.3 CHAMPION INTERNATIONAL CORPORATION ---------------------------------- 1997 PERFORMANCE SHARE PLAN ---------------------------- 1. Purposes. --------- The purposes of the Plan are to attract and retain in the employ of the Company and its subsidiaries and affiliates outstanding management employees and to provide incentives and rewards for such employees to contribute meaningfully to the success of the Company. 2. Definitions. ------------ For purposes of the Plan, the following terms shall be defined as set forth below: (a) "Award" means a commitment to make a payment under the Plan in the form of Stock or in the form of cash or other property which is valued by reference to Stock. (b) "Award Agreement" means any written agreement, contract or other instrument or document evidencing an Award. (c) "Board" means the Board of Directors of the Company. (d) "Change in Control" means (1) any "person" (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") ), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company's then-outstanding securities; (2) during any period within two (2) consecutive years there shall cease to be a majority of the Board comprised as follows: individuals who at the beginning of such period constitute the Board and any new director(s) whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of 1 the period or whose election or nomination for election was previously so approved; (3) the shareholders of the Company approve (A) a plan of complete liquidation of the Company or (B) the sale or other disposition of all or substantially all of the Company's assets; or (4) any other similar or dissimilar event determined by the Committee in its discretion to constitute a Change in Control. (e) "Committee" means the Compensation and Stock Option Committee of the Board. (f) "Company" means Champion International Corporation, a corporation organized under the laws of the State of New York, or any successor corporation. (g) "Deferred Shares" means shares of Stock issuable in connection with an Award that have been deferred pursuant to Section 5(b) hereof. (h) "Effective Date" means March 20, 1997, the date that the Plan was adopted by the Board. (i) "Grantee" means a person who has been granted an Award under the Plan. (j) "Performance Cycle" means a period of performance determined by the Committee . (k) "Performance Goals" means performance goals or criteria relating to (1) the performance of the Company, including, without limitation, goals or criteria with respect to financial performance, operating performance and Stock performance; (2) the performance of any subsidiary, affiliate, division or unit of the Company or any group of employees of the Company or any subsidiary, affiliate, division or unit thereof; (3) the performance of any Grantee; (4) any other performance measures selected by the Committee; and (5) any combination of the foregoing. (l) "Plan" means this Champion International Corporation 1997 Performance Share Plan, as amended from time to time. (m) "Stock" means shares of the common stock, par value $.50 per share, of the Company. 3. Administration. --------------- The Plan shall be administered by the Committee. The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or in its judgment advisable in the administration of the Plan, including, without limitation, 2 the authority to grant Awards; to determine the persons or categories of persons to whom and the time or times at which Awards shall be granted; to determine the form of Awards; to determine the terms, conditions, restrictions and Performance Goals relating to Awards; to determine whether, to what extent, and under what circumstances an Award may be paid, cancelled, forfeited, exchanged or surrendered; to make adjustments in the terms and conditions (including Performance Goals) applicable to Awards; to construe and interpret the Plan and the Awards; to prescribe, amend and rescind rules and regulations relating to the Plan; and to make all other determinations deemed necessary or in its judgment advisable for the administration of the Plan. All determinations made by the Committee in respect of the Plan shall be final and binding on all Grantees and their beneficiaries. 4. Eligibility ----------- Awards may be granted from time to time to such employees or categories of employees of the Company and its subsidiaries and affiliates as shall be selected by the Committee in its discretion. 5. Awards. ------- (a) Grants; Performance Goals. The grant of an Award may be made at any time. Payment pursuant to each Award will be contingent on the attainment of one or more Performance Goals in respect of a Performance Cycle; or the continued employment of a Grantee with the Company and its subsidiaries and affiliates; or any other criteria selected by the Committee; or any combination of the foregoing. Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of the particular criteria or a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company, a subsidiary, affiliate, division or unit of the Company, or any group of employees of any of the foregoing, or may be applied to the performance of the Company relative to a market index, a group of other companies or combination thereof, all as determined by the Committee. With respect to any Award, the Performance Goals may include a threshold level of performance below which no payments will be made, levels of performance at which specified payments will be made, and a maximum level of performance above which no additional payments will be made. The Committee shall have the authority to make equitable adjustments to the Performance Goals in its discretion, including, without limitation, in recognition of unusual or non-recurring events affecting the Company or any subsidiary, affiliate, division or unit thereof, including, without limitation, any such events affecting the financial statements of the Company or any subsidiary or affiliate thereof. (b) Payments; Deferrals. Payments to be made by the Company in respect of an Award may be made in such form as the Committee shall determine at the date of 3 grant or thereafter, including, without limitation, cash, Stock or other property, and may be made in a single payment or transfer, in installments or on a deferred basis. In this regard (1) the Committee may permit a Grantee to defer the payment of cash, the delivery of property or the issuance of shares of Stock in respect of any Award, subject to the Grantee exercising a valid deferral election with the Company in accordance with procedures established by the Committee from time to time; and (2) the Committee shall have the right to defer the payment of cash, the delivery of property or issuance of shares of Stock in respect of any Award until such date as the Committee shall determine (but not later than the Grantee's termination of employment with the Company and its subsidiaries and affiliates for any reason). Such right to defer may be exercised by the Committee in its discretion for any reason, including as appropriate in its judgment to preserve the tax deductibility of payments hereunder. With respect to any mandatory deferral made pursuant to clause (2) of this paragraph, the Committee shall notify the Grantee of any such determination and of the respective deferral date. If the issuance of any shares of Stock otherwise issuable pursuant to an Award is deferred, whether pursuant to an election by a Grantee or the determination of the Committee, the Committee may provide that such Deferred Shares be credited with dividend equivalents during the deferral period. Any such dividend equivalents will be equal to the value of cash dividends and other distributions in respect of the Stock, and will be paid in cash, or will be converted into additional shares of Stock the value of which will be paid in Stock, cash or other property, to the Grantee on such date or dates as determined by the Committee. If the payments of cash or other property otherwise payable or deliverable pursuant to an Award is deferred, whether pursuant to an election by the Grantee or the determination of the Committee, the Committee may provide that the Grantee be credited with amounts in respect of such deferred Award on such basis as the Committee deems appropriate, including, without limitation, as if the value of such deferred Award had been invested in shares of Stock or in one or more of the forms of investment available under the Company's Nonqualified Supplemental Savings Plan or any successor thereto. The Committee in its discretion may provide for elections or statements of preference by Grantees with regard to the basis on which amounts may be credited in respect of deferred Awards. The value of any such credited amounts will be paid to the Grantee on such date or dates as determined by the Committee. (c) Adjustments. In the event of any stock dividend, split-up, spin-off, rights offering, combination or exchange of shares, recapitalization, merger, consolidation, acquisition or disposition of property or stock, separation, reorganization, liquidation, or the like, the number and class of any shares of Stock or any Deferred Shares, the amount of any cash and the amount and kind of any other property subject to any 4 Award may be equitably adjusted, and any other appropriate changes may be made, by the Committee, whose determinations shall be conclusive. (d) Termination of Award. If the employment of a Grantee terminates for any reason while an Award is outstanding, or if any applicable Performance Goal is not attained, the Award shall immediately terminate and be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that any conditions relating to payment in respect to an Award will be waived. 6. Special Circumstances. ---------------------- (a) Discretionary Acceleration of Payment. Anything herein to the contrary notwithstanding, the Committee shall have authority to make a determination that a special situation exists relating to either (1) a Grantee or (2) the Company, including, without limitation, a Change in Control or potential Change in Control of the Company. Upon such a determination, the Committee in its discretion may waive any conditions relating to payment in respect of any or all outstanding Awards (including amounts deferred in accordance with Section 5(b) hereof) granted to such Grantee, in the case of clause (1) above, or to any or all Grantees, in the case of clause (2) above. In the event of such a waiver, payment in respect of the applicable Award or Awards (including amounts deferred in accordance with Section 5(b) hereof) shall be made promptly by the Company. (b) Mandatory Acceleration of Payment Following a Change in Control. Anything herein to the contrary notwithstanding, the Committee, by rule or regulation or in any Award Agreement or otherwise, may provide that in the event of (1) a Change in Control or (2) the actual or constructive termination of a Grantee within a specified period after a Change in Control, all conditions relating to payment in respect of any or all outstanding Awards (including amounts deferred in accordance with Section 5(b) hereof) granted to any or all Grantees, in the case of clause (1) above, or to such actually or constructively terminated Grantee, in the case of clause (2) above, shall be waived. In the event of such a waiver, payment in respect of the applicable Award or Awards (including amounts deferred in accordance with Section 5(b) hereof) shall be made promptly by the Company. 7. General Provisions. ------------------- (a) Nontransferability. Unless otherwise provided in an Award Agreement, Awards shall not be transferable by a Grantee, except by will or the laws of descent and distribution and except for the designation of a beneficiary. 5 (b) No Right to Continued Employment. Nothing in the Plan or in any Award or any Award Agreement shall confer upon any Grantee the right to continue in the employ of the Company or any subsidiary or affiliate thereof. (c) Taxes. The Company or any subsidiary or affiliate thereof is authorized to withhold from any Award, any payment in respect of any Award, including from a payment in the form of Stock, or any other payments to a Grantee, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee in its judgment may deem advisable to enable the Company and Grantees to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Grantee's tax obligations. (d) Amendment and Termination. The Plan shall take effect on the Effective Date. The Board may at any time and from time to time alter, amend, suspend or terminate the Plan in whole or in part. Notwithstanding the foregoing, no amendment shall affect adversely any of the rights of any Grantee, without such Grantee's consent, under any Award theretofore granted under the Plan. (e) No Rights to Awards; No Shareholder Rights. No employee of the Company or any subsidiary or affiliate thereof shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Grantees. Except as provided specifically herein, a Grantee or the beneficiary of a Grantee shall have no rights as a shareholder with respect to any Stock covered by an Award until the date of the issuance of a stock certificate for or other evidence of ownership of such Stock. (f) Unfunded Status of Awards. The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Grantee pursuant to an Award, nothing contained in the Plan or any Award shall give any such Grantee any rights that are greater than those of a general creditor of the Company. (g) Shares to be Used. Shares of Stock to be used in payment of Awards may be authorized but unissued shares, treasury shares or shares acquired for use under the Plan. Such shares of Stock are hereby reserved for this purpose. (h) Governing Law. The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of New York without giving effect to the conflict of laws principles thereof. 6 (i) Beneficiary. Upon death of a Grantee, all of his or her rights under the Plan shall inure to his or her designated beneficiary or, if no beneficiary has been designated, to his or her estate, subject to Section 5(d) hereof. (j) Regulations and Other Approvals. The obligation of the Company to issue or deliver Stock in payment of any Award shall be subject to all applicable laws, rules and regulations, including, without limitation, all applicable federal and state securities laws, and the rules of securities exchanges on which the Stock is listed and the obtaining of all such approvals by governmental agencies and securities exchanges as may be deemed necessary or appropriate by the Committee. The Company shall make reasonable efforts at its own cost to satisfy all of the laws, rules and regulations and to obtain all of the approvals referred to in this Section 7(j). 7 EX-10.4 5 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS EXHIBIT 10.4 COMPENSATION PLAN FOR NON-EMPLOYEE ---------------------------------- DIRECTORS OF CHAMPION INTERNATIONAL CORPORATION ----------------------------------------------- (Effective January 1, 1997) 1. Eligibility. ------------ Each member of the Board of Directors (the "Board") of Champion International Corporation (the "Company") who is not an employee of the Company or any of its subsidiaries (a "Director") shall participate in the Compensation Plan For Non-Employee Directors of Champion International Corporation (the "Plan"). 2. Retainers and Fees. ------------------- Each Director shall be entitled to a $22,500 annual retainer for serving as a Director, $1,500 for attendance at each meeting of the Board and $1,000 for attendance at each meeting of any Committee of the Board. In addition, each Director serving as Chairman of any Committee of the Board shall be entitled to a $5,000 annual retainer for such service. 3. Quarterly Cash Payment or Elective Deferral of Retainers and Fees. ------------------------------------------------------------------ At each Director's election, the retainers and fees specified in Section 2 hereof (the "Retainers and Fees") shall be paid quarterly in cash or credited quarterly in the form of units equivalent to shares of the Company's Common Stock that are settled in cash after he or she ceases to be a Director (the "Elective Share Units"). All Retainers and Fees will be paid quarterly in cash during any calendar year to each Director who shall have filed with the Secretary of the Company, prior to the commencement of such year, a written election to be paid in cash during such year. Each such election shall apply only to Retainers and Fees earned during such calendar year, and not to Retainers and Fees earned during any calendar year thereafter. Unless a Director shall have filed an election to be paid in cash in accordance with this paragraph prior to the commencement of a calendar year, all Retainers and Fees earned by such Director during such calendar year will be credited quarterly in the form of Elective Share Units. Notwithstanding the foregoing, all Retainers and Fees earned by a Director during a partial calendar year in which he or she shall first have been elected a Director shall be paid quarterly in cash. 1 4. Non-Elective Share Units. ------------------------- In addition to the Retainers and Fees, each Director shall be credited quarterly with units equivalent to shares of the Company's Common Stock that are settled in cash after he or she ceases to be a Director, such units to have a value at the time of each quarterly crediting of $5,625 (the "Non-Elective Share Units"). 5. Method of Crediting Share Units, including Dividend Equivalents. ---------------------------------------------------------------- At the end of each calendar quarter, each Director shall be credited with a number of Elective Share Units (if any) and Non-Elective Share Units (collectively, the "Share Units") equal to the number of shares of the Company's Common Stock that could be purchased at fair market value with the dollar value of all Share Units earned by such Director during such quarter. For this purpose, fair market value means the closing sale price of the Company's Common Stock for New York Stock Exchange Composite Transactions on the last day of such quarter or, if such last day is not a trading day, then on the next succeeding trading day. At the end of each calendar quarter, each Director also shall be credited with Share Units, computed in the manner specified in the immediately preceding paragraph, based upon the sum of all cash dividends and other distributions declared during such quarter on a number of shares of Common Stock equal to the number of Share Units credited to such Director immediately prior to the end of such quarter. Such Director shall continue to be so credited quarterly (before and, if and to the extent relevant, after the date on which he or she shall have ceased to be a Director) until payment in respect of all Share Units credited to such Director shall be made. 6. Payment in Respect of Share Units. ---------------------------------- All Share Units credited to each Director shall be settled in cash following the date on which he or she shall cease for any reason to be a Director (the "Retirement Date"). Each Director may determine the time or times of such cash settlement by filing with the Secretary of the Company, prior to the commencement of the calendar year in which his or her Retirement Date occurs, a written election to be paid in a lump sum or in installments as provided in the two immediately succeeding paragraphs. Any such election shall be irrevocable from and after the commencement of the calendar year in which such Director's Retirement Date occurs. Lump Sum Payment. A Director may elect to receive, in respect of all Share Units credited to him or her, a lump sum cash payment as of any June 1 following his or her Retirement Date, but not later than the June 1 of the ninth calendar year following such Retirement Date. Such payment shall be in an amount per Share Unit equal to the average closing sale price of the Company's Common Stock for New 2 York Stock Exchange Composite Transactions during the two calendar months preceding the June 1 as of which payment is to be made (the "Two Month Average Stock Price"). Such payment shall be made on such June 1 or as soon thereafter as practicable. Installment Payments. A Director may elect that the number of Share Units credited to him or her on such Director's Retirement Date be paid in substantially equal annual cash installments over a period of two to ten years. The initial annual installment shall be paid on the June 1 immediately following his or her Retirement Date or as soon thereafter as practicable, and each subsequent annual installment shall be paid on the June 1 of each succeeding year selected by the Director or as soon thereafter as practicable. Each annual installment shall be made in respect of the Share Units comprising such annual installment plus the Share Units credited to such Director pursuant to dividend equivalents since the immediately preceding annual installment. Each annual installment shall be in an amount per Share Unit equal to the Two Month Average Stock Price preceding the applicable June 1 payment date. Payment if No Election is Filed. If a Director shall fail to file a written election as provided above in this Section 6, he or she shall receive, in respect of all Share Units credited to such Director, a lump sum cash payment as of the June 1 immediately following his or her Retirement Date. Such payment shall be in an amount per Share Unit equal to the Two Month Average Stock Price preceding such June 1. Such payment shall be made on such June 1 or as soon thereafter as practicable. 7. Miscellaneous. -------------- Adjustments of Share Units. In the event of any stock dividend, stock split or other recapitalization, merger, consolidation, acquisition, disposition, reorganization, liquidation, or the like, the Share Units credited to each Director shall be equitably adjusted. Service For a Portion of a Calendar Quarter. Retainers (whether in the form of cash or Elective Share Units) and Non-Elective Share Units shall be paid or credited, as the case may be, quarterly in full with respect to each Director who serves on the Board for any portion of such quarter. Payment to a Director's Beneficiary. Upon the death of a Director, payment shall be made or shall continue to be made in accordance with the provisions of the Plan to the beneficiary or beneficiaries designated in writing by the Director or, in the absence of such a designation, to the estate of such Director. 3 Unfunded Obligation. No funds, shares or other property shall be segregated or earmarked for any Director, beneficiary or other person, and no Director, beneficiary or other person shall have any right, title or interest in any fund or specific sum of money, in any asset or in any shares which may (but need not) be acquired or reserved by the Company in connection with its obligations hereunder, the sole right of the Director (or his or her beneficiary or estate) being to receive payments, as set forth herein, as a general creditor of the Company with an unsecured claim against the Company's general assets. Non-Assignability. The right of a Director to receive any amount hereunder shall not be assignable or transferable, except by will or the laws of descent and distribution and except for the designation of a beneficiary or beneficiaries. Amendment or Termination. The Board may at any time amend or terminate the Plan, provided that no amendment or termination shall impair the rights of a Director with respect to Share Units credited to such Director. 4 EX-10.5 6 AMENDMENT TO CHAMPION INTERNATIONAL CORP. EXHIBIT 10.5 AMENDMENT OF THE RETIREMENT PLAN FOR OUTSIDE DIRECTORS OF CHAMPION INTERNATIONAL CORPORATION (Adopted by the Board of Directors on March 20, 1997) ----------------------------------------------------- The Retirement Plan For Outside Directors of Champion International Corporation, as adopted by the Board of Directors on August 20, 1992, is amended by adding Section 13 thereto, as follows, effective January 1, 1997. 13. Cessation of Accrual of Retirement Benefits for Service after January 1, ------------------------------------------------------------------------ 1997 - ---- (a) Directors Who Retired Prior to January 1, 1997. Each Eligible Director who retired from the Board prior to January 1, 1997 and was entitled to benefits under the Plan shall continue to receive benefits in accordance with the terms of the Plan. (b) Directors Elected After January 1, 1997. Individuals elected to the Board for the first time after January 1, 1997 will not be entitled to any benefits under the Plan. (c) Directors in Office on January 1, 1997. With regard to individuals serving as non-employee members of the Board on January 1, 1997 (the "Incumbent Directors"), the Years of Service provided for in the third sentence of Section 3 hereof shall not include any period after January 1, 1997. In addition, each Incumbent Director will have the right to waive the payment of his or her accrued benefit under the Plan for service until January 1, 1997. Upon such waiver, such Incumbent Director will receive a one-time credit to a deferred account in an amount representing the present value of his or her accrued benefit under the Plan for service until January 1, 1997, whether or not such Incumbent Director has satisfied the conditions set forth in Section 2 hereof. At such Incumbent Director's election, the deferred account will be valued as if it were invested on January 1, 1997 (i) in shares of the Company's Common Stock ("Champion Share Units"), based upon the average closing sale price of the Common Stock between November 1, 1996 and December 31, 1996; (ii) in one or more of the phantom funds available for investment under the Company's Nonqualified Supplemental Savings Plan ("Phantom Savings Plan Funds"); or (iii) in a combination of the foregoing. Amounts deemed to be invested in Phantom Savings Plan Funds may, at the election of the Incumbent Director, be transferred among such Funds from time to 1 time in accordance with the terms of the Nonqualified Supplemental Savings Plan. However, amounts deemed to be invested in Phantom Savings Plan Funds may not be converted into Champion Share Units and vice-versa. Champion Share Units will accrue dividend equivalents, which will be deemed to be invested in additional Champion Share Units, based upon the cash dividends and other distributions declared on a number of shares of Common Stock equal to the number of Champion Share Units in such Incumbent Director's deferred account. The value of such Incumbent Director's deferred account will be paid in cash after he or she ceases for any reason to be a member of the Board. The portion of the deferred account deemed to be invested in Champion Share Units, if any, will be paid at the same time, in a lump sum or in installments, and will be valued in the same manner as all other Champion Share Units credited to such Incumbent Director pursuant to the Compensation Plan For Non-Employee Directors adopted by the Board on February 20, 1997. The portion of the deferred account deemed to be invested in Phantom Savings Plan Funds, if any, will be paid at the same time, in a lump sum or in installments, as the Champion Share Units credited to such Incumbent Director under the Plan, if any, and under the Compensation Plan For Non-Employee Directors adopted by the Board on February 20, 1997. 2 EX-11 7 CALCULATION OF PRIMARY EARNINGS EXHIBIT 11 CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES Calculation of Primary Earnings (Loss) Per Common Share and Fully Diluted Earnings (Loss) Per Common Share (unaudited) (in thousands, except per share)
Three Months Ended March 31, ------------------------------------ 1997 1996 ----------------- ----------------- Primary earnings (loss) per common share: Net Income (Loss) Applicable to Common Stock $(37,083) $ 83,649 ================ ================ Average number of common shares outstanding 95,590 95,505 ================ ================ Per share ($0.39) $0.88 ================ ================ Fully diluted earnings (loss) per common share: (1) Net Income (Loss) Applicable to Common Stock $(37,083) $ 83,649 Add income effect, assuming conversion of dilutive convertible securities --- --- ----------------- ----------------- Net income (loss) on a fully diluted basis $(37,083) $ 83,649 ================ ================ Average number of common shares outstanding 95,590 95,505 Add common share effect, assuming conversion of dilutive convertible securities --- --- ----------------- ----------------- Average number of common shares outstanding on a fully diluted basis 95,590 95,505 ================ ================ Per share $ (.39) $ .88 ================ ================
- ---------- NOTE: (1) The computation of fully diluted earnings per common share assumes that the average number of common shares outstanding during the period is increased by the conversion of securities having a dilutive effect, and that net income applicable to common stock is increased by dividends and after-tax interest on such securities. EX-27 8 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 112,032 20,914 583,716 18,396 458,056 1,259,847 11,714,566 3,738,275 9,740,627 816,471 3,218,185 0 0 55,198 3,656,352 9,740,627 1,366,720 1,366,720 1,281,103 1,281,103 0 0 60,799 (59,544) (22,461) (37,083) 0 0 0 (37,083) (.39) (.39) Includes timber and timberlands.
-----END PRIVACY-ENHANCED MESSAGE-----