Chesapeake Corporation Announces Restructuring Plan And Quantifies Gain on Tissue Partnership.

Business Editors

RICHMOND, Va.--(BUSINESS WIRE)--Dec. 29, 1999

Chesapeake Corporation (NYSE:CSK) today announced a restructuring program to streamline internal processes, increase efficiency and reduce operating expenses.

The restructuring actions will result in a non-recurring, after-tax charge of approximately $21 million (approximately $1.19 per diluted share) in the fourth quarter of 1999. The restructuring program is expected to generate annualized pretax savings of about $11 million (approximately $.40 per diluted share).

During the fourth quarter of 1999, Chesapeake also will record an after-tax gain of approximately $195 million (approximately $11.00 per diluted share), related to the formation of the Georgia-Pacific Tissue partnership. Chesapeake continues to expect full year 1999 earnings per diluted share, excluding non-recurring gains and the impact of the fourth quarter restructuring program, to be in the range of $1.85 to $2.00.

Chesapeake Corporation's restructuring program is comprised of the following.

For its Chesapeake Display & Packaging subsidiary, headquartered in Winston-Salem, N.C.:

--The Mechanicsburg, Pa., assembly operation will be permanently closed. This location currently employs approximately 135 people.

--The French operations will incur an after-tax asset impairment charge of approximately $11 million.

--The Toronto, Canada, display manufacturing operation will reduce its workforce by 21 people.

For its Chesapeake Packaging Co. subsidiary, headquartered in Richmond, Va.:

--The Denver, Colo., corrugated container operation will reduce its salaried workforce by seven people.

For its Field Group subsidiary, headquartered in Amersham, United Kingdom:

--U.K.-based operations will reduce the workforces at several locations by a total of approximately 150 people.

At Chesapeake's corporate headquarters and shared services office in Richmond, Va.:

--There will be a salaried workforce reduction of 15 positions.

Chesapeake's restructuring program also includes:

--An after-tax charge of approximately $6 million (approximately $.34 per diluted share) for certain costs associated with the Shorewood unsolicited proposal.

Chesapeake Corporation's President and Chief Executive Officer Thomas H. Johnson said, "These actions are consistent with Chesapeake's goal of delivering value to our shareholders by constantly focusing on lowering internal costs and improving efficiencies."

Chesapeake Corporation, headquartered in Richmond, Va., is a global leader in specialty packaging and merchandizing services. Chesapeake is the largest North American producer of temporary and permanent point-of-purchase displays, the North American leader for litho-laminated packaging, the leading European folding carton, leaflet and label supplier, and a local leader in specific U.S. markets for customized, corrugated packaging. Chesapeake has over 40 locations in North America, Europe and Asia. Chesapeake's net sales in 1998 were $950.4 million. Chesapeake's website is http://www.cskcorp.com .

This news release, including comments by Thomas H. Johnson, contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The accuracy of such statements is subject to a number of risks, uncertainties, and assumptions that may cause Chesapeake's actual results to differ materially from those expressed in the forward-looking statements including, but not limited to: competitive products and pricing; production costs, particularly for raw materials such as corrugated box, folding carton and display materials; fluctuations in demand; governmental policies and regulations affecting the environment; interest rates; currency translation movements; Year 2000 compliance issues; the timely completion of the Company's acquisition of Boxmore International PLC and the formation of its Color Box joint venture; and other risks that are detailed from time to time in reports filed by the Company with the Securities and Exchange Commission.