<PAGE>
 
<TABLE> 
<CAPTION> 
                                           SECURITIES AND EXCHANGE COMMISSION
                                                 Washington, D.C. 20549

                                                        FORM 10-Q

<S>                           <C> 
        (Mark One)

        [X]                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934

             For the quarterly period ended                           September 30, 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 incorporation                      (I.R.S. Employer Identification No.)
        or organization

                                     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 October 31, 1997
        --------------------------------------                    ------------------------------------------------
            Common stock, $.50 par value                                            96,128,737
</TABLE> 
<PAGE>
 
                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

               CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENT OF INCOME (unaudited)

                        (in thousands, except per share)

<TABLE>
<CAPTION>
                                                                    Nine Months Ended                   Three Months Ended
                                                                       September 30,                       September 30,
                                                             ----------------------------------   ----------------------------------
                                                                  1997               1996              1997               1996
                                                             ---------------   ----------------   ---------------   ----------------


<S>                                                            <C>                <C>                <C>                <C>        
Net Sales                                                      $ 4,252,585        $ 4,448,247        $ 1,478,405        $ 1,470,481

Costs and Expenses
   Cost of products sold                                         3,860,715          3,829,869          1,298,026          1,283,000
   Selling, general and administrative expenses                    303,537            285,596            104,921             97,308
   Interest and debt expenses                                      180,360            162,394             58,799             54,217
   Other (income) expense - net                                    (37,077)           (29,416)           (13,587)            (9,560)
                                                               -----------        -----------        -----------        -----------
Total costs and expenses                                         4,307,535          4,248,443          1,448,159          1,424,965

Income (Loss) Before Income Taxes                                  (54,950)           199,804             30,246             45,516

Income Taxes (Benefit)                                             (26,675)            68,602             10,080             13,515
                                                               -----------        -----------        -----------        -----------

Net Income (Loss)                                              $   (28,275)       $   131,202        $    20,166        $    32,001
                                                               ===========        ===========        ===========        ===========


Average Number of Common Shares Outstanding                         95,718             95,515             95,903             95,529
                                                               ===========        ===========        ===========        ===========

Earnings (Loss) Per Common Share (Exhibit 11)                  $      (.30)       $      1.37        $       .21        $       .33
                                                               ===========        ===========        ===========        ===========

Cash dividends declared                                        $       .15        $       .15        $       .05        $       .05
                                                               ===========        ===========        ===========        ===========
</TABLE>












The accompanying Notes to Consolidated Financial Statements are an integral part
of this statement.

                                       -2-
<PAGE>
 
               CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                            (in thousands of dollars)

<TABLE>
<CAPTION>
                                                                                     September 30,      December 31,
                                                                                         1997               1996
         ASSETS:                                                                      (unaudited)
                                                                                    ----------------   ---------------
<S>                                                                                 <C>                <C>      
         Current Assets:
           Cash and cash equivalents                                                      $ 114,787         $ 174,638
           Short-term investments                                                             1,200               ---
           Receivables - net                                                                599,138           579,393
           Inventories                                                                      414,441           458,043
           Prepaid expenses                                                                  31,605            29,926
           Deferred income taxes                                                             76,031            73,732
                                                                                    ----------------   ---------------
              Total Current Assets                                                        1,237,202         1,315,732
                                                                                    ----------------   ---------------

         Timber and timberlands, at cost - less cost of timber harvested                  2,332,838         2,364,858
                                                                                    ----------------   ---------------
         Property, plant and equipment, at cost                                           9,492,622         9,297,557
           Less - Accumulated depreciation                                                3,910,737         3,644,088
                                                                                    ----------------   ---------------
                                                                                          5,581,885         5,653,469
                                                                                    ----------------   ---------------

         Other assets and deferred charges                                                  502,913           485,933
                                                                                    ----------------   ---------------
                   Total Assets                                                         $ 9,654,838       $ 9,819,992
                                                                                    ================   ===============

         LIABILITIES AND SHAREHOLDERS' EQUITY:
         Current Liabilities:

           Current installments of long-term debt                                          $ 77,657          $ 80,900
           Short-term borrowings                                                             80,291           126,910
           Accounts payable and accrued liabilities                                         693,185           713,132
           Income taxes                                                                       7,033            23,098
                                                                                    ----------------   ---------------
              Total Current Liabilities                                                     858,166           944,040
                                                                                    ----------------   ---------------

         Long-term debt                                                                   3,078,343         3,085,424
                                                                                    ----------------   ---------------
         Other liabilities                                                                  682,887           664,643
                                                                                    ----------------   ---------------
         Deferred income taxes                                                            1,290,723         1,363,910
                                                                                    ----------------   ---------------
         Minority interest in subsidiaries                                                    4,497             6,307
                                                                                    ----------------   ---------------

         Shareholders' Equity:
           Capital Shares:

                Common (110,790,046 and 110,323,099 shares issued at
                     September 30, 1997 and December 31, 1996, respectively)                 55,395            55,162
                Capital Surplus                                                           1,682,691         1,651,454
           Retained Earnings                                                              2,697,547         2,740,196
                                                                                    ----------------   ---------------
                                                                                          4,435,633         4,446,812
                                                                                    ----------------   ---------------
           Treasury shares, at cost                                                        (657,855)         (657,864)
           Cumulative translation adjustment                                                (37,556)          (33,280)
                                                                                    ----------------   ---------------
              Total Shareholders' Equity                                                  3,740,222         3,755,668
                                                                                    ----------------   ---------------
                   Total Liabilities and Shareholders' Equity                           $ 9,654,838       $ 9,819,992
                                                                                    ================   ===============
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
                              of this statement.

                                       -3-
<PAGE>
 
               CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED CASH FLOWS (unaudited)

                            (in thousands of dollars)

<TABLE>
<CAPTION>
                                                                                            Nine Months Ended
                                                                                              September 30,
                                                                                    ----------------------------------
                                                                                         1997               1996
                                                                                    ----------------   ---------------
<S>                                                                                 <C>                <C>      
         Cash flows from operating activities:
         Net income (loss)                                                                $ (28,275)        $ 131,202
         Adjustments to reconcile net income to net cash
                provided by operating activities:

                Depreciation expense                                                        317,993           302,818
                Cost of timber harvested                                                     67,913            68,069
                Net gain on sale of assets                                                  (19,039)          (16,547)
                (Increase) decrease in:
                      Receivables                                                           (20,200)           83,826
                      Inventories                                                            43,200           (10,934)
                      Prepaid expenses                                                       (1,728)           (9,849)
                Increase (decrease) in:
                      Accounts payable and accrued liabilities                              (21,110)          (69,947)
                      Income taxes                                                          (15,991)         (117,270)
                      Other liabilities                                                      24,739           (41,889)
                      Deferred income taxes                                                 (59,744)           17,422
                All other - net                                                              41,515             8,750
                                                                                    ----------------   ---------------
         Net cash provided by operating activities                                          329,273           345,651
                                                                                    ----------------   ---------------
         Cash flows from investing activities:
                Expenditures for property, plant and equipment                             (237,394)         (308,872)
                Timber and timberlands expenditures                                         (86,404)          (91,607)
                Purchase of Lake Superior Land Company (Note 2)                                 ---           (71,990)
                Purchase of investments                                                     (22,114)              ---
                Proceeds from redemption of investments                                      20,914            94,604
                Proceeds from sales of property, plant and equipment
                    and timber and timberlands                                               38,970            33,406
                All other - net                                                             (11,093)            8,138
                                                                                    ----------------   ---------------
         Net cash used in investing activities                                             (297,121)         (336,321)
                                                                                    ----------------   ---------------
         Cash flows from financing activities:
                Proceeds from issuance of long-term debt                                    113,512           812,135
                Payments of long-term and short-term debt                                  (204,327)         (646,315)
                Purchase of Weldwood minority interest (Note 3)                                 ---          (189,533)
                Cash dividends paid                                                         (14,351)          (14,371)
                All other - net                                                              13,163            (4,409)
                                                                                    ----------------   ---------------
         Net cash used in financing activities                                              (92,003)          (42,493)
                                                                                    ----------------   ---------------
         Decrease in cash and cash equivalents                                              (59,851)          (33,163)
         Cash and Cash Equivalents:
         Beginning of period                                                                174,638           317,069
                                                                                    ----------------   ---------------
         End of period                                                                    $ 114,787         $ 283,906
                                                                                    ================   ===============
         Supplemental cash flow disclosures: 
               Cash paid during the period for:
                    Interest (net of capitalized amounts)                                 $ 177,122         $ 152,590
                    Income taxes (net of refunds)                                            40,487           171,832
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
                               of this statement.


                                       -4-
<PAGE>
 
               CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

                               September 30, 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.

        On July 3, 1996, Weldwood of Canada Limited acquired all of its
        publicly-held shares for approximately (U.S.) $190 million and became a
        wholly-owned subsidiary of the company.

        Note 4.

        In March 1997, the company adopted a performance share plan under which
        share units were awarded to senior executives and other key managers.
        These units entitle the executives, upon earn-out, to receive shares of
        common stock. The earn-out of shares is dependent on the company's stock
        price appreciation plus dividend yield (i.e., total shareholder return
        or "TSR") increasing, at any time within three years from the date of
        grant, to a value equivalent to approximately 15% per annum compounded
        for three years. If the TSR goal is achieved, the amount of the payout
        will depend on the company's TSR, during the performance period,
        relative to an industry peer group. If the TSR goal is not achieved,
        there will be no payout.

        Based on the current dividend rate, the shares would be earned if the
        common stock price reaches approximately $67 per share. The number of
        shares that could be earned ranges from 340,000 shares to 720,000
        shares.

                                       -5-
<PAGE>
 
               CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

        Note 5.

        The company occasionally enters into foreign exchange contracts to
        mitigate the risks associated with its exposure to fluctuations in
        foreign currency exchange rates. The foreign exchange contracts are held
        for purposes other than trading. At September 30, 1997, the company had
        foreign exchange contracts covering approximately $95 million of
        short-term investments and accounts receivable. The fair value of these
        contracts approximated carrying value.

        Note 6.

        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 and nine months ended
        September 30, 1997 and 1996 would have been the same as those reported
        herein.

        Note 7.

        On October 7, 1997, the company approved a plan to maximize total
        shareholder return by focusing on strategic businesses, increasing
        profitability and improving financial discipline. As part of this plan,
        the company will divest several non-strategic product segments with net
        sales for the first nine months of 1997 of $970 million. The profit-
        improvement program includes a targeted reduction of approximately 11%
        in the company's worldwide workforce in the businesses remaining after
        the divestitures.

        The company will incur a pre-tax charge of $894 million ($553 million
        after-tax), or $5.77 per share. Most of the charge will be recorded in
        the fourth quarter of 1997.

                                       -6-
<PAGE>
 
               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 net income in the third quarter of 1997 of $20
        million or $.21 per share, compared to last year's third quarter net
        income of $32 million or $.33 per share and last quarter's net loss of
        $11 million or $.12 per share. As discussed below, the decline from last
        year was primarily due to lower operating income in the company's wood
        products segment, higher selling, general and administrative expenses
        and higher interest expense, which more than offset higher earnings for
        the paper segment. The improvement from last quarter was mainly due to
        significantly higher earnings in the paper segment.

        Significant Income Statement Line Item Changes for the Three Months 
        Ended September 30, 1997

        Net sales of $1.48 billion increased from $1.47 billion last year and
        $1.41 billion last quarter. Gross profit was $180 million, compared to
        $187 million last year and $126 million last quarter. Pre-tax income of
        $30 million declined from $46 million a year ago but improved from a
        pre-tax loss of $26 million last quarter. The decline in gross profit
        from last year was principally due to lower results for the company's
        Canadian wood products operations, resulting from lower lumber and
        plywood prices and lower lumber shipments, higher purchased wood costs
        and the start-up of a new wood products facility. The decline in pre-tax
        income from last year was primarily due to the lower gross profit as
        well as higher selling, general and administrative expenses and higher
        interest expense. The improvements in net sales, gross profit and
        pre-tax income from last quarter were mainly due to higher prices for
        most of the company's key pulp and paper grades, increased paper
        shipments and lower pulp and paper manufacturing costs, which more than
        offset lower results for the company's Canadian wood products
        operations.

        The aggregate cost of products sold increased from last year and last
        quarter principally due to higher paper shipments. Selling, general and
        administrative expenses increased from last year and were approximately
        even with last quarter. The increase from last year was principally due
        to the impact of stock price fluctuations on the value of stock
        appreciation rights and of other stock-based compensation, including the
        performance share units described in Note 4 to the consolidated
        financial statements. Future stock price volatility would impact the
        expense associated with the company's stock-based compensation plans.

        Interest and debt expense increased from last year but decreased from
        last quarter. The variances from both prior periods were primarily due
        to changes in the amount of the company's long-term debt. Other (income)
        expense - net improved from last year and was approximately even with
        last quarter. The improvement from last year was due in part to the sale
        of a warehouse facility this year.

                                       -7-
<PAGE>
 
        The effective tax rate for the third quarter of 1997 was higher than
        last year but significantly lower than the rate associated with the tax
        benefit last quarter. The variances from both last year and last quarter
        were principally due to the mix of earnings from the company's
        operations in North America and Brazil. The Brazilian tax rate is lower
        than that applicable to North American earnings.

        Year-to-Date Results

        For the first nine months, the company reported a net loss of $28
        million or $.30 per share, compared to net income of $131 million or
        $1.37 per share a year ago.

        Paper Segment

        For the company's paper segment, third quarter operating income was $72
        million. This compared to income of $58 million a year ago and $3
        million last quarter. Total paper, packaging and pulp shipments were
        1,599,000 tons in the third quarter, compared to 1,538,000 tons a year
        ago and 1,560,000 tons last quarter.

        The operating income for the domestic free sheet business represented a
        significant improvement from the operating income of last year and
        slight operating loss of last quarter. The improvement from last year
        was mainly due to lower manufacturing costs and to higher prices for
        coated free sheet papers. The improvement from last quarter was
        principally due to higher prices for coated and uncoated free sheet
        papers and higher overall shipments. The average price for domestic
        uncoated free sheet papers, the principal product of the free sheet
        business, was $674 per ton in the third quarter of this year, compared
        to $687 per ton in the third quarter of 1996 and $626 per ton last
        quarter. The average price for coated free sheet papers was $879 per ton
        this quarter, compared to $859 per ton a year ago and $833 per ton last
        quarter. Shipments of all grades for the free sheet business were
        572,000 tons, compared to 579,000 tons last year and 562,000 tons last
        quarter. Maintenance outages are scheduled at the company's Courtland,
        Alabama and Pensacola, Florida mills in the fourth quarter. A price
        increase for many grades of uncoated free sheet papers was implemented
        early in the fourth quarter.

        Operating income at the Brazilian subsidiary, Champion Papel e Celulose
        Ltda. ("Celulose"), declined slightly from both last year and last
        quarter. The decline from last year was primarily due to lower domestic
        prices for uncoated free sheet papers. The decline from last quarter was
        mainly due to lower domestic prices for uncoated free sheet papers and a
        scheduled maintenance outage in the third quarter. The overall average
        price for uncoated free sheet papers was $715 per ton this quarter,
        compared to $788 per ton last year and $714 per ton last quarter.
        Uncoated free sheet papers shipments of 98,000 tons were approximately
        even with last year and last quarter.

        Operating income for the groundwood business declined from last year but
        improved significantly from last quarter. The decline from last year was
        principally due to lower prices for coated and uncoated groundwood
        papers and newsprint, which more than offset higher overall shipments
        and lower manufacturing costs. The improvement from last quarter was
        primarily due to higher prices for coated groundwood papers and

                                       -8-
<PAGE>
 
        newsprint as well as higher shipments. The average price for coated
        groundwood papers was $870 per ton this quarter, compared to $910 per
        ton last year and $799 per ton last quarter. The average price for
        newsprint of $503 per ton this quarter declined from $529 per ton last
        year but improved from $490 per ton last quarter. Shipments of all
        groundwood and newsprint grades of 458,000 tons compared to 414,000 tons
        last year and 443,000 tons last quarter. A maintenance outage is
        scheduled at the company's Sheldon, Texas newsprint mill in the fourth
        quarter.

        Results for the specialty business declined slightly from last year but
        improved somewhat from last quarter. This business incurred a modest
        operating loss in each of the three quarters. The decline from last year
        was mainly due to lower prices for most grades and higher purchased pulp
        costs, which more than offset higher overall shipments. The improvement
        from last quarter was principally due to higher prices for most grades,
        higher overall shipments and lower manufacturing costs. Prices for
        coated and uncoated groundwood papers and linerboard declined from last
        year but improved from last quarter. Prices for coated premium free
        sheet papers improved from both last year and last quarter. Prices for
        kraft papers declined from last year and were approximately even with
        last quarter. Shipments of all grades were 228,000 tons, compared to
        214,000 tons last year and 218,000 tons last quarter. A maintenance
        outage is scheduled at the company's Roanoke Rapids, North Carolina mill
        in the fourth quarter. A price increase for kraft papers was implemented
        early in the fourth quarter.

        The operating profit for the company's U.S. and Canadian market pulp
        operations represented a significant improvement from the operating
        profit of a year ago and the slight operating loss last quarter. The
        improvement from last year and last quarter was primarily due to higher
        prices for all grades and lower manufacturing costs. The average price
        for Canadian softwood pulp was (U.S.) $440 per ton in the third quarter
        of this year, compared to $423 per ton last year and $398 last quarter.
        The average price for northern hardwood pulp was $435 per ton this
        quarter, compared to $395 per ton last year and $398 per ton last
        quarter. Shipments of all pulp grades of 243,000 tons increased from
        234,000 tons last year and 240,000 tons last quarter.

        Wood Products Segment

        The company's wood products segment, which includes the wood-related
        operations of the company's Canadian subsidiary, Weldwood of Canada
        Limited ("Weldwood") and Celulose, reported third quarter income from
        operations of $25 million, down from $42 million a year ago and $37
        million last quarter. The decline from both prior periods was mainly due
        to lower results for Weldwood, including lower prices for lumber and
        plywood, lower lumber shipments, higher purchased wood costs and the
        start-up of a new wood products facility.

        For U.S. and Canadian operations overall, the average price for plywood
        was up 3.1% from last year but down 1.2% from last quarter. The average
        price for lumber was 6.3% lower than last year and 6.7% lower than last
        quarter. Lumber shipments declined from both last year and last quarter.
        Plywood shipments increased slightly from last year and were somewhat
        higher than last quarter. U.S. and Canadian lumber prices continued to
        decline early in the fourth quarter.

                                       -9-
<PAGE>
 
        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 nine months of 1997 were (U.S.) $626 million,
        accounting for 15% of consolidated net sales of the company. Pre-tax
        income and net income of the foreign subsidiaries for the first nine
        months of 1997 were (U.S.) $90 million and (U.S.) $75 million,
        respectively, which were more than offset by the pre-tax loss and net
        loss of the company's domestic operations.

        Labor Contracts

        New three-year labor contracts are in effect at most of Weldwood's wood
        products plants. Efforts to reach new labor agreements continue at the
        Hinton, Alberta, pulp mill and wood products plant, and the joint
        venture pulp mill at Quesnel, British Columbia, which are presently
        operating under the terms of their expired contracts.

        Financial Condition

        The company's current ratio was 1.4 to 1 at September 30, 1997, compared
        to 1.5 to 1 at June 30, 1997 and 1.4 to 1 at year-end 1996. Total debt
        to total capitalization was 39% at September 30, 1997, compared to 40%
        at June 30, 1997 and 39% at year-end 1996.

        Significant Balance Sheet Line Item Changes for the Nine Months 
        Ended September 30, 1997

        Inventories declined by $44 million principally due to a decrease in log
        inventories resulting from seasonal factors, as well as increased pulp
        and paper shipments. Net property, plant and equipment decreased by $72
        million primarily due to depreciation expense exceeding capital
        additions in the first nine months of 1997. Short-term borrowings, and
        accounts payable and accrued liabilities, decreased by $47 million and
        $20 million, respectively, mainly due to the timing of payments. Income
        taxes payable decreased by $16 million, as $40 million in net payments
        were made in the first nine months of 1997 for U.S. and foreign income
        taxes. The deferred income tax liability and retained earnings decreased
        by $73 million and $43 million, respectively, primarily due to the
        company's net loss for the first nine months of 1997. 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 nine 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 its financing activities (principally debt payments
        and cash dividends). The difference was financed through the use of

                                      -10-
<PAGE>
 
        cash and cash equivalents. Cash and cash equivalents decreased by $60
        million in the first nine months to a total of $115 million, $94 million
        of which was held by the company's Canadian and Brazilian subsidiaries.
        In the first nine months, net long-term and short-term debt payments in
        the aggregate were $91 million; long-term and short-term debt (including
        current installments) in the aggregate decreased by $57 million.

        1996

        In the first nine 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 by Weldwood of all of its publicly-held shares). The difference
        was financed through borrowings and the use of cash and cash
        equivalents. Net borrowings generated cash proceeds of $166 million;
        long-term debt (including current installments) increased by $205
        million, including a $44 million mortgage loan of Lake Superior Land
        Company which was outstanding at the time of its acquisition. Cash and
        cash equivalents decreased by $33 million.

        Cash Flows Statement - Operating Activities

        For the first nine months, net cash provided by operating activities of
        $329 million declined from $346 million a year ago. The decrease was
        principally due to a net loss this year and an increase in receivables,
        partially offset by lower income tax payments, a smaller decrease in
        accounts payable and accrued liabilities, a significant decrease in
        inventories and an increase in other liabilities.

        Cash Flows Statement - Investing Activities

        For the first nine months, net cash used in investing activities of $297
        million declined from $336 million a year ago. The decrease was
        primarily due to lower capital expenditures this year and the
        acquisition of Lake Superior Land Company for $76 million (as well as an
        outstanding $44 million mortgage loan) last year, partially offset by
        lower proceeds from the redemption of investments this year.

        Cash Flows Statement - Financing Activities

        For the first nine months, net cash used in financing activities of $92
        million increased from $42 million a year ago. The change was mainly due
        to net debt payments this year, partially offset by the purchase of the
        Weldwood shares last year.

        At September 30, 1997, the company had $424 million of U.S. commercial
        paper, current maturities of long-term debt and other short-term
        obligations outstanding, all of which is classified as long-term debt,
        up from $399 million at June 30, 1997 and $7 million at year-end 1996.
        At September 30, 1997, June 30, 1997 and December 31, 1996, no notes
        were outstanding under the company's U.S. bank lines of credit.
        Domestically, at September 30, 1997, $424 million of the company's
        unused bank lines of credit of $1,190 million supported the
        classification of commercial paper, current maturities of long-term debt
        and other short-term obligations as long-term debt.

                                      -11-
<PAGE>
 
        At September 30, 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 October 1 through
        December 31, 1997 are $7 million and for the years 1998 through 2001 are
        $485 million, $255 million, $205 million and $205 million, respectively.

        Capital Expenditures

        The company currently anticipates that capital spending will be
        approximately $425 million in 1997, a decrease of $75 million from the
        estimate included in the company's 1996 Annual Report to Shareholders.

        New Strategic Direction

        On October 7, 1997, the company approved a plan to maximize total
        shareholder return by focusing on strategic businesses, increasing
        profitability and improving financial discipline. As part of this plan,
        the company will divest several non-strategic product segments with net
        sales for the first nine months of 1997 of $970 million. These product
        segments include newsprint, the recycling business, coated and uncoated
        groundwood specialty papers, premium papers, specialty uncoated papers
        and liquid packaging and bleached board. Also to be divested are 325,000
        acres of timberlands. The proceeds from these divestitures will
        initially be used for debt repayment.

        The plan also includes a profit-improvement program that is targeted to
        increase the annual pre-tax profit of the company's on-going operations
        by $400 million by the end of 1999 through cost reduction, productivity
        increases and changes in product mix. As part of cost reduction, the
        company has set a goal of reducing its worldwide workforce in the
        businesses remaining after the divestitures by 11% by the end of 1999.

        The company will incur a pre-tax charge of $894 million ($553 million
        after-tax), or $5.77 per share. Most of the charge will be recorded in
        the fourth quarter of 1997. The charge includes (i) approximately $700
        million of expected non-cash expenses, primarily for asset impairment
        and other asset write-offs, and (ii) approximately $200 million for
        expected one-time cash costs, which include severance and other
        expenses.

        The Environment

        In late 1996, the North Carolina Department of Environment, Health and
        Natural Resources renewed the NPDES wastewater discharge permit for the
        company's Canton, North Carolina mill which included a revised variance
        from the North Carolina water quality standard for color in the Pigeon
        River. In early 1997, the State of Tennessee filed an administrative
        appeal of the permit, principally on the grounds that the color variance
        fails to satisfy Tennessee's water quality standard for the portion of
        the Pigeon River in Tennessee. The permit is effective pending a final
        decision on the appeal. A hearing date on the appeal has been set for
        June 1998. The company, the states of North Carolina and Tennessee and
        the U.S. Environmental Protection Agency have been negotiating in an
        attempt to settle the dispute.

                                      -12-
<PAGE>
 
        The company has announced that it will evaluate relocating the point of
        discharge for its Pensacola, Florida mill's effluent due to potential
        limitations on the assimilative capacity of the existing receiving body
        of water. The results of the study are expected to be submitted to the
        Florida Department of Environmental Protection by May 1998, and a
        decision on a possible new point of discharge will then be made.

        Forward-Looking Statements

        Certain statements in this report that are neither reported financial
        results nor other historical information are forward-looking statements.
        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 are discussed in the company's Annual Report on Form 10-K.

                                      -13-
<PAGE>
 
                           PART II. OTHER INFORMATION

               CHAMPION INTERNATIONAL CORPORATION AND SUBSIDIARIES

         Item 1.  Legal Proceedings.

        There is incorporated by reference herein the information under
        Management's Discussion and Analysis of Financial Condition and Results
        of Operations - The Environment in Part I of this report.

        Item 6.  Exhibits and Reports on Form 8-K.

                (a) See exhibit index following the signature page.

                (b) The company filed a Current Report on Form 8-K dated
                    October 8, 1997 reporting the issuance of a press release
                    announcing the company's plan to maximize shareholder
                    value.

                                      -14-
<PAGE>
 
                                   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.

<TABLE>
<S>                                                                     <C>
                                                                                   Champion International Corporation
                                                                        --------------------------------------------------------
                                                                                              (Registrant)





      Date:           November 11, 1997                                                    /s/ John M. Nimons
     ----------------------------------------------------------         --------------------------------------------------------
                                                                                              (Signature)

                                                                        John M. Nimons
                                                                        Vice President and Controller





      Date:           November 11, 1997                                                  /s/ Kenwood C. Nichols
     ----------------------------------------------------------         --------------------------------------------------------
                                                                                              (Signature)

                                                                         Kenwood C. Nichols
                                                                         Vice Chairman and Executive Officer
</TABLE>

                                      -15-
<PAGE>
 
                                  EXHIBIT INDEX

      Each exhibit is listed according to the number assigned to it in the
Exhibit Table of Item 601 of Regulation S-K.


    11 -  Calculation of Primary Earnings Per Common Share and Fully
          Diluted Earnings per Common Share (unaudited).

    27 -  Financial Data Schedule (unaudited).

                                      -16-