Filed by Champion International Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Champion International Corporation
Commission File No.: 001-03053
CHAMPION INTERNATIONAL CORPORATION REPORTS STRONG
FIRST QUARTER EARNINGS
Stamford, CT, April 10, 2000 - Champion International Corporation
(NYSE:CHA) today reported first quarter net income of $98 million or $1.01
per diluted share. The company had net income of $3 million or $.03 per
share, excluding a special item, in the first quarter of 1999 and net
income of $79 million or $.82 per diluted share, before an extraordinary
item, in the fourth quarter of 1999. First quarter 1999 results excluded
earnings of $.40 per share reflecting the impact of the devaluation of the
Brazilian currency on U.S.-denominated investments held by the company's
Brazilian operation.
"We are extremely pleased with the results of the first quarter," said
Richard E. Olson, Champion's chairman and chief executive officer. He said,
"Record production at a number of our uncoated and coated paper mills and
wood products facilities, combined with the continued focus by our
employees on reducing costs and improving product mix and customer
segmentation, contributed to the quarter's strong earnings. In addition, we
benefited from increased demand and higher prices for many of our products.
Given the positive global economic outlook and the low announced industry
capacity growth for this year, we are optimistic about the company's
earnings potential for the balance of 2000."
The company's pulp and paper operations in North and South America reported
operating income of $142 million compared to $28 million in the first
quarter of 1999 and $130 million in the fourth quarter of last year. The
improvement from the year-ago quarter was due primarily to improved prices
for pulp and most of the company's major paper grades.
The improvement from the last quarter was due mainly to higher prices for
pulp and coated freesheet papers and improved product mix in the uncoated
freesheet business.
The company's wood products segment reported income from operations of $57
million compared to $42 million in the first quarter of 1999 and $53
million in the fourth quarter of 1999. The improvement from the first
quarter of 1999 was due primarily to increased shipments and higher prices
for Canadian lumber and plywood and higher West Coast timber sales. The
improvement from the fourth quarter of 1999 was due mainly to higher U.S.
and Canadian plywood shipments and prices.
In February of this year, Champion announced an agreement to merge with the
Finnish forest products company UPM-Kymmene. In commenting on the merger,
Olson said, "I am convinced that our two companies have a tremendous
opportunity to create the premier global forest products company."
*****
Forward-looking statements in this release are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are not guarantees of future performance
and are subject to risks and uncertainties that could cause actual results
and company plans and objectives to differ materially from those expressed in
the forward-looking statements. Such risks and uncertainties include, but
are not limited to, changes in the United States and international
economies; changes in worldwide demand for the company's products; changes
in worldwide production and production capacity in the forest products
industry; competitive pricing pressures for the company's products; changes
in raw material, energy, and other costs; and currency fluctuations.
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(in millions, except per share)
Three Months Ended
-----------------------------------------------
March 31, December 31, March 31,
2000 1999 1999
------------- ------------- ------------
Net Sales (Note 1) $ 1,368 $ 1,348 $ 1,275
============= ============= ============
Income Before Income Taxes:
Pulp and Paper:
North America $ 87 $ 77 $ (10)
Brazil 49 50 32
Distribution 6 3 6
------------- ------------- ------------
Total Pulp and Paper 142 130 28
Wood Products 57 53 42
General corporate expense (6) (14) (9)
Interest and debt expense (50) (58) (63)
Other income (expense) - net (Note 2) 6 4 43
------------- ------------- ------------
Income Before Income Taxes and 149 115 41
Extraordinary Item
Income Taxes (Benefit) 51 36 (1)
------------- ------------- ------------
Income Before Extraordinary Item 98 79 42
Extraordinary Item - Loss on Early Retirement
of Debt, Net of Taxes - (2) -
------------- ------------- ------------
Net Income $ 98 $ 77 $ 42
============= ============= ============
Average number of common shares outstanding 96.5 96.1 95.6
============= ============= ============
Basic Earnings Per Common Share:
Income Before Extraordinary Item $ 1.01 $ .83 $ .44
Extraordinary Item - (.03) -
------------- ------------- ------------
Net Income $ 1.01 $ .80 $ .44
============= ============= ============
Diluted Earnings Per Common Share:
Income Before Extraordinary Item $ 1.01 $ .82 $ .43
Extraordinary Item - (.03) -
------------- ------------- ------------
Net Income $ 1.01 $ .79 $ .43
============= ============= ============
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(in millions of dollars)
Three Months Ended
----------------------------------------------
March 31, December 31, March 31,
2000 1999 1999
------------- ------------- ------------
Note 1:
Net Sales by Business Segment:
Pulp and Paper:
North America $ 692 $ 694 $ 711
Brazil 116 117 86
Distribution 233 220 200
------------- ------------- ------------
Total Pulp and Paper 1,041 1,031 997
Wood Products 327 317 278
------------- ------------- ------------
Total $ 1,368 $ 1,348 $ 1,275
============= ============= ============
Note 2: Other income (expense) - net for the three months ended
March 31, 1999 included a net foreign currency transaction
gain of $38.6 million for the company's Brazilian operations.
CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions of dollars)
March 31, December 31,
2000 1999
(unaudited)
-----------------------------
ASSETS:
Cash and temporary cash investments $ 287 $ 418
Receivables - net 551 540
Inventories 473 421
Prepaid expenses 22 24
Deferred income taxes 78 79
------------- -------------
Total Current Assets 1,411 1,482
Timber and timberlands - net 2,288 2,273
Property, plant and equipment - net 3,873 3,876
Other assets and deferred charges 841 687
------------- -------------
Total Assets $ 8,413 $ 8,318
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable and accrued liabilities $ 645 $ 691
Current installments of long-term debt 128 127
Short-term borrowings 111 72
Income taxes 16 33
------------- -------------
Total Current Liabilities 900 923
Long-term debt 2,526 2,526
Other liabilities 827 813
Deferred income taxes 973 961
Shareholders' Equity 3,187 3,095
------------- -------------
Total Liabilities and Shareholders' Equity $ 8,413 $ 8,318
============= =============
For more information contact: Gael Doar - Media - (203) 358-7900
Tom Hart - Investor Relations (203) 358-7291
Web site - http://www.championpaper.com