FORM 11-K |
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[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
For the fiscal year ended November 30, 2006 |
OR |
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______ |
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Commission file number 1-3203 |
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HOURLY EMPLOYEES' STOCK PURCHASE PLAN |
(Full title of the plan) |
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CHESAPEAKE CORPORATION 1021 East Cary Street Richmond, Virginia 23219 |
(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) |
HOURLY EMPLOYEES' STOCK PURCHASE PLAN
Administration of the Plan:
The Plan is administered by the Hourly Employees' Stock Purchase Plan Committee (the "Committee") under the direction of the Board of Directors of Chesapeake Corporation (the "Corporation"). The present members of the Committee are as follows:
| | Name | | Address |
| | David Winter* (1) | | Richmond, Virginia 23219 |
| | J. P. Causey Jr. (2) | | Richmond, Virginia 23219 |
| | Joel K. Mostrom (3) | | Richmond, Virginia 23219 |
| | (1) | Mr. Winter is Director - Human Resources of the Corporation. |
| | (2) | Mr. Causey is Executive Vice President, Secretary & General Counsel of the Corporation. |
| | (3) | Mr. Mostrom is Senior Vice President & Chief Financial Officer of the Corporation. |
*Committee Chairman
Committee members are appointed by, and serve at the pleasure of, the Board of Directors of the Corporation. Committee members are employees of the Corporation and receive no additional compensation for serving on the Committee. The Plan provides that the Corporation will indemnify members of the Committee to the same extent and on the same terms as it indemnifies its officers and directors by reason of their being officers and directors.
Financial Statements and Exhibits:
| (a) | Report of Independent Registered Public Accounting Firm |
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| (b) | Financial statements: |
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| | | Hourly Employees' Stock Purchase Plan: |
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| | | Statements of Net Assets Available for Plan Benefits |
| | | Statements of Changes in Net Assets Available for Plan Benefits |
| | | Notes to Financial Statements |
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| (c) | Exhibits: |
| | | Exhibit 23.1 - Consent of PricewaterhouseCoopers LLP |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Committee have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
HOURLY EMPLOYEES' STOCK PURCHASE PLAN |
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By: /s/Joel K. Mostrom |
| Joel K. Mostrom |
Senior Vice President & Chief Financial Officer, Chesapeake Corporation |
| Committee Member |
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February 23, 2007 |
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Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of the Hourly Employees' Stock Purchase Plan
In our opinion, the accompanying statements of net assets available for plan benefits and the related statements of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for plan benefits of the Hourly Employees' Stock Purchase Plan (the "Plan") at November 30, 2006 and 2005, and the changes in net assets available for plan benefits for each of the three years in the period ended November 30, 2006 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Richmond, Virginia
February 14, 2007
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HOURLY EMPLOYEES' STOCK PURCHASE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
November 30, 2006 and 2005
| | | 2006 | | 2005 | |
| Asset: | | | | | |
| | | | | | |
Funds held by Chesapeake Corporation and participating subsidiary | | $ | 71 | | $ | 64 | |
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| Net assets available for plan benefits | | $ | 71 | | $ | 64 | |
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STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS |
| For the years ended November 30, 2006, 2005 and 2004 |
| | | | | | | | |
| | | 2006 | | 2005 | | 2004 | |
| | | | | | | | |
| Contributions: | | | | | | | |
| Employees, net of refunds | | $ | 7,165 | | $ | 5,921 | | $ | 7,572 | |
| | | | | | | | | | | |
Employer: $2,154 in 2006, $1,797 in 2005, and $1,985 in 2004; less withheld taxes of $833, $694 and $766, respectively | | | 1,321 | | | 1,103 | | | 1,219 | |
| | | | 8,486 | | | 7,024 | | | 8,791 | |
| Deductions: | | | | | | | | | | |
Purchase and distribution to participants at year end of 524 shares in 2006 ($16.18 per share), 385 shares in 2005 ($18.43 per share), and 308 shares in 2004 ($25.36 per share) of common stock of Chesapeake Corporation | | | 8,479 | | | 7,097 | | | 7,812 | |
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Net transfers to Salaried Employees' Stock Purchase Plan | | | - | | | - | | | 978 | |
| | | | 8,479 | | | 7,097 | | | 8,790 | |
Increase (decrease) in net assets available for plan benefits | | | 7 | | | (73 | ) | | 1 | |
| | | | | | | | | | | |
Net assets available for plan benefits, beginning of year | | | 64 | | | 137 | | | 136 | |
Net assets available for plan benefits, end of year | | $ | 71 | | $ | 64 | | $ | 137 | |
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The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
1. Description of the Plan:
The stockholders of Chesapeake Corporation (the "Corporation") have approved the Hourly Employees' Stock Purchase Plan (the "Plan") and reserved a total of 900,000 shares of the Corporation's common stock for sale to eligible hourly employees, as defined, of the Corporation and participating subsidiary (the "Employer").
The fiscal year of the Plan ends each November 30 (the "Plan Year") and is administered by a committee (the "Committee") whose members are appointed by the Corporation's Board of Directors and are employees of the Corporation. Participants in the Plan are permitted to invest between one and five percent of their basic compensation, as defined. The Employer contributes to the Plan, as of the end of the Plan Year, thirty percent of the participant's contribution reduced by amounts required to be withheld under income tax, Federal Insurance Contributions Act tax and comparable laws (see Note 5). The combined amount becomes available to purchase, from the Corporation, shares of its common stock at a price equal to the average of the closing prices of such common stock on the New York Stock Exchange (composite tape) for the twenty consecutive trading days immediately preceding the last day of the Plan Year. The funds held by the Employer at the end of the year represent the remaining amounts in participants' accounts after the purchase of whole shares, as the Plan does not provide for the purchase of fractional shares. Participants may terminate their participation in the Plan at any time. Upon termination, the Employer will return the participants' contributions and the participants will forfeit all rights to any contribution which would have been made at the end of the plan year by the Employer. Contributions returned to the participant, including their balance as of the beginning of the year, are netted with employee contributions in the Statements of Changes in Net Assets Available for Plan Benefits.
To be eligible in the Plan, the employee must be continuously employed by the Corporation for at least eleven months and be either (i) not covered by a collective bargaining agreement or (ii) covered by a collective bargaining agreement that incorporates the Hourly Plan.
As of November 30, 2006, 708,667 shares (524 shares in the current year and 708,143 in prior years) of the Corporation's common stock had been issued under the Plan and 191,333 shares were available for future issuance.
2. Basis of Accounting:
The accompanying financial statements are prepared on the accrual basis of accounting.
3. Accounting Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan's management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosures of contingent assets and liabilities. Actual results could differ from those estimates.
4. Funds Held by Chesapeake Corporation and Participating Subsidiary:
Funds received or held by the Employer with respect to the Plan consist of cash which may be used for any corporate purpose; therefore, the Plan does not prevent the Employer from creating a lien on these funds.
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NOTES TO FINANCIAL STATEMENTS, Continued
5. Taxes and Expenses:
The Plan is not qualified under Section 401(a) of the Internal Revenue Code and is not subject to the provisions of the Employee Retirement Income Security Act of 1974. The Employer's contribution, when made to the Plan, is taxable to a participant as ordinary income. Purchases of stock by the Plan result in no gain or loss to the participant; therefore, no tax consequences are incurred by a participant upon receipt of stock purchased under the Plan. Sale by a participant of shares acquired under the Plan will result in a gain or loss in an amount equal to the difference between the sale price and the price paid for the stock acquired pursuant to the Plan. The Plan is not subject to income taxes.
Expenses of administering the Plan are borne by the Employer.
6. Contributions to the Plan:
All contributions made in 2006, 2005, and 2004 were made by the participating subsidiary or its employees.
7. Plan Termination:
Although it has not expressed any intent to do so, the Corporation has the right under the Plan to discontinue its contributions at any time and to terminate the Plan. In the event of Plan termination, the net assets would be allocated to the participants of the Plan in amounts equal to the individual account balances.
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Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 33-14926) of Chesapeake Corporation of our report dated February 14, 2007 relating to the financial statements of the Hourly Employees' Stock Purchase Plan, which appears in this Form 11-K.
/s/PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Richmond, Virginia
February 23, 2007
