Champion International Corporation Announces Next Steps in Plan to Maximize Shareholder Value.

STAMFORD, Conn.--(BUSINESS WIRE)--Oct. 14, 1999--

New Steps To Include $285 Million Value Creation Program, Debt Ratio

Target of 35%, Increase in Dividend Rate, and Share Repurchase; $400

Million Profit Improvement Program To Be Completed One Year Ahead of

Schedule

Champion International Corporation (NYSE:CHA) today announced that the next steps it will take to maximize shareholder value include a program targeted to further increase the annual pre-tax earnings of the company at a rate of $285 million by the end of 2001, a total-debt-to-total-capitalization ratio target of 35% or less, an increase in the dividend paid on its common stock, and a share repurchase program.

The company also announced that the $400 million Profit Improvement Program that was announced in October of 1997 will be completed by year-end 1999, one year ahead of schedule. This program included the reduction of 2000 jobs in the company's worldwide workforce in ongoing operations. This goal was reached six months early and currently has been exceeded by eight percent.

In making the announcement, Champion's chairman and chief executive officer, Richard E. Olson, stated "Maximizing total shareholder return remains our governing objective. We are pleased to have accomplished our goal of increasing annual pre-tax profit by $400 million a year ahead of schedule, and are very proud of the efforts of everyone in the entire company who made this happen, but we know that we can, and must, do more."

Olson also said that the company will direct more of its increased profitability directly to the shareholders in the form of an increase in the dividend paid on its common stock and in a share repurchase program. "We appreciate the support of our shareholders as we carried out the plan we announced in October of 1997 and believe that the balance sheet and cash flow of the company are now strong enough to directly increase the financial return to our shareholders."

Additional $285 Million in Annual Pre-Tax Earnings Improvement Targeted Within Two Years

Champion has identified a number of value-creation initiatives that are targeted to further improve annual pre-tax earnings at the rate of $285 million by the end of 2001. These initiatives, called "Target 285," include $100 million in productivity improvements, $140 million from new top-line improvements, and $45 million from projects currently under way but not yet completed or fully optimized.

Productivity Improvements

Champion has identified $100 million in annual pre-tax profits from productivity improvements and from further reductions in costs at all levels of the company, including manufacturing costs and SG&A. The productivity improvements do not require capital spending beyond levels that have already been announced.

Top-Line Improvements

Champion has significantly increased its marketing capability as part of the effort to become more profitable. This capability is enabling the company to introduce a number of top-line initiatives that will improve operating margins and increase bottom-line profitability. In addition, the institutionalization of value based management practices throughout the company is well under way. These practices include lowering transaction costs, increasing the efficiency of many customer-related activities, and more closely aligning staff and support activities with specific business objectives. Improvements in order fulfillment and logistics have been identified that, when fully implemented, will also contribute significantly to higher margins and greater profitability.

Completion of Other Profit Improvement Initiatives

As part of the company's plan to increase profitability, several projects were begun in 1998 and 1999 which, when completed and fully optimized, are expected to add $45 million to annual pre-tax earnings. These include the completion of an energy project at the company's lightweight coated paper mill in Bucksport, Maine, and the construction of a new sawmill in Western Florida, both of which are under way. Full integration and optimization of the recently acquired Sunpine Forest Products forestry and wood products operations into Champion's Canadian subsidiary, Weldwood of Canada Limited, will also contncing at reasonable rates. A significant portion of the balance sheet improvement will be achieved in 1999.n December will be retired and will not be ref January.

Share Repurchase Program

Champion announced its initial plan to maximizd related timberlands in the State of Maine increased the company's participation in these two strategic bu divestiture program, which was also announced i-- Capital spending has been less than annual depreciation,

depletion, and amortization in each year and will again be so in

1999.

-- Champion's recent s have been increased in

anticipation of fplan."

Champion International Corporation is an integrated forest products company with significant operations in the United States, Canada, and Brazil. Champion is a major producer and distributor of coated and uncoated papers. The company's other products include market pulp, lumber and plywood, and selected paper for packaging. Champion has the responsibility for the sustainable management of approximately eleven million acres of forestlands supporting its manufacturing facilities.

Forward-looking statements in this release, including company plans and profit improvement and debt-ratio objectives, 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 are discussed in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission.