| U. S. SECURITIES AND EXCHANGE COMMISSION |
| WASHINGTON, D. C. 20549 |
| |
FORM 11-K |
| |
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
| For the fiscal year ended December 31, 2006 |
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| OR |
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[ ] 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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CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN |
(Full title of the plan and the address of the plan if different from that of the issuer named below) |
| |
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) |
REQUIRED INFORMATION
The Chesapeake Corporation Retirement and 401(K) Savings Plan is subject to the requirements of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Attached hereto are the financial statements of the Chesapeake Corporation Retirement and 401(K) Savings Plan for the fiscal year ended December 31, 2006, prepared in accordance with the financial reporting requirements of ERISA.
CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN FOR THE YEAR ENDED DECEMBER 31, 2006 INDEX | |
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| | Page |
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| Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . | 1 |
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| Financial Statements: | |
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Statements of Net Assets Available for Benefits at December 31, 2006 and December 30, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . | 2 |
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Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . .. . . . . . . . . | 3 |
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| Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . | 4-11 |
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| Supplemental Schedule*: | |
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| Schedule of Assets (Held at End of Year) at December 31, 2006. . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .. . . . . . | 12-13 |
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| Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . .. . . . . . . . | 14 |
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| Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . | 15 |
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* All other schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of the
Chesapeake Corporation Retirement And 401k Savings Plan
Richmond, VA
We have audited the accompanying statement of net assets available for benefits of Chesapeake Corporation Retirement And 401k Savings Plan as of December 31, 2006, and the related statement of changes in net assets available for benefits for the year then ended. 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. The statement of net assets available for benefits of Chesapeake Corporation Retirement And 401k Savings Plan as of December 31, 2005, was audited by other auditors whose report, dated June 16, 2006, expressed an unqualified opinion on that statement.
We conducted our audit in accordance with the auditing 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Chesapeake Corporation Retirement And 401k Savings Plan as of December 31, 2006, and the changes in net assets available for benefits for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at year end) as of the year ended December 31, 2006, is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the United States Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ MCGLADREY & PULLEN, LLP
_______________________________
MCGLADREY & PULLEN, LLP
Richmond, Virginia
June 28, 2007
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CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2006 and December 30, 2005
| | | | 2006 | | | 2005 | |
| | | | --------------- | | | --------------- | |
| | | | | | | | |
| Assets: | | | | | | | |
| Investments at fair value (Notes 2 and 4) | | $ | 20,291,315 | | $ | 21,281,634 | |
| Receivables: | | | | | | | |
| Employer contributions ( Note 1) | | | 328,469 | | | - | |
| | | | --------------- | | | --------------- | |
| Total assets | | $ | 20,619,784 | | $ | 21,281,634 | |
| | | | --------------- | | | --------------- | |
| | | | | | | | |
| Liabilities: | | | | | | | |
| Liability due to Chesapeake Corporation 401(k) | | | | | | | |
| Savings Plan for Hourly Employees (Note 1) | | | - | | | 917,862 | |
| | | --------------- | | | --------------- | |
| Total liabilities | | | - | | | 917,862 | |
| | | | --------------- | | | --------------- | |
| | | | | | | | |
| Net assets available for benefits | | $ | 20,619,784 | | $ | 20,363,772 | |
| | | | ========= | | | ========= | |
The accompanying notes are an integral part of the financial statements.
-2-
CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the year ended December 31, 2006
| | | | 2006 | |
| | | | --------------- | |
| Additions to net assets: | | | | |
| Investment income: | | | | |
| Interest and dividends | | $ | 1,036,136 | |
Net appreciation in fair value of investments (Notes 2 and 4) | | | 1,318,688 | |
| | | | --------------- | |
| | | | 2,354,824 | |
| | | | | |
| Contributions (Note 1): | | | | |
| Employees | | | 382,706 | |
| Rollovers | | | 26,222 | |
| Employer | | | 509,286 | |
| | | --------------- | |
| | | | 918,214 | |
| | | | --------------- | |
| Total additions | | | 3,273,038 | |
| | | | | |
| Deductions from net assets: | | | | |
| Distributions to participants (Note 1) | | | (3,936,849 | ) |
| | | | --------------- | |
| Net (decrease) before plan transfers | | | (663,811 | ) |
| | | | | |
| Plan transfers (Note 6) | | | 919,823 | |
| | | | --------------- | |
| Net increase | | | 256,012 | |
| | | | | |
| Net assets available for benefits, beginning of year | | | 20,363,772 | |
| | | | --------------- | |
| Net assets available for benefits, end of year | | $ | 20,619,784 | |
| | | | ========= | |
The accompanying notes are an integral part of the financial statements.
-3-
CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
NOTES TO FINANCIAL STATEMENTS
1. Description of Plan:
General
The Chesapeake Corporation Retirement and 401(k) Savings Plan (the "Plan") covers certain employees of Chesapeake Corporation ("Chesapeake" or the "Employer") as described in the Plan document.
Effective January 1, 2005 Mercer Trust Company ("Mercer") assumed the trustee responsibilities for the Plan for Putnum Investments.
The Plan is a defined contribution plan and is subject to certain provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Information regarding Plan benefits, priority of distributions upon termination of the Plan, allocation of Plan investment earnings, disposition of forfeitures, and vesting is provided in the Plan document which is available at the main office of the Plan administrator at 1021 East Cary Street, Richmond, Virginia 23219.
Effective January 1, 2006 the Chesapeake Corporation 401(k) Savings Plan for Hourly Employees (the "Hourly Plan") was merged with and into the Plan, at which time all participants in the Hourly Plan became participants in the Plan (the "Merger"). The investment options under the Hourly Plan are the same as the investment options under the Plan; therefore, participant accounts that were transferred into the Plan maintained the same investments as under the Hourly Plan.
Effective January 1, 2006 the Plan was renamed the Chesapeake Corporation Retirement and 401(k) Savings Plan.
As a result of the Merger being effective as of January 1, 2006 and the Plan’s year end date moving to December 31st from December 30th, the one day ended December 31, 2005 has not been included within these financial statements. There was no change in the net assets available for benefits between the net assets available for benefits as of December 30, 2005 and the net assets available for benefits as of January 1, 2006.
Employee Contributions
Participants are automatically enrolled to defer 2% of annual before-tax compensation. The Plan also provides for automatic increases of 1% per year. A participant may elect to defer receipt of 2% to 100% of annual before-tax compensation, in increments of 1% into the Plan. Elective deferral contributions may not exceed statutory limits ($15,000 in 2006 and $14,000 in 2005) per participant in any taxable year. Participants may also contribute to the Plan amounts representing distributions from other qualified defined contribution plans. Participants direct the investment of their contributions into various investment options offered by the Plan. Participants may discontinue their election to contribute at any time.
Beginning in 2002, employees who reached age 50 by the Plan year end were allowed to contribute an additional $1,000 to their Plan account. The additional contribution allowed has increased $1,000 per year through 2006. As of December 30, 2006 and 2005, total additional contributions allowed were $5,000 and $4,000, respectively therefore, increasing the adjusted statutory limits for these employees to $20,000 in 2006 and $18,000 in 2005.
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CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
NOTES TO FINANCIAL STATEMENTS, Continued
1. Description of Plan, continued:
Employer Contributions
The Plan provides for a matching employer contribution each Plan year in an amount equal to 100% of the first 3% and 50% of the next 2% of each participant's compensation that the participant elects to contribute to the Plan as an elective deferral contribution for the Plan year. In addition, the Plan provides for a basic non-elective employer contribution which equals 5% of the participant's compensation for a salaried employee and 2.5% for an hourly employee. However, if on December 31, 2005, the participant was a participant in the Chesapeake Corporation Retirement Plan for Salaried Employees, was a salaried employee, had completed at least five years of service, had attained at least age 45, and was not a participant in the Chesapeake Corporation Executive Supplemental Retirement Plan during the Plan year then the basic non-elective contribution equals 7.5% of the participant compensation. The matching contributions are credited to participant accounts and invested in accordance with the participants' investment elections. Matching contributions for highly compensated participants are limited by the Internal Revenue Code as described in the Plan document. Chesapeake may make contributions on behalf of specified participants, regardless of whether the participants make elective deferral contributions, as non-elective contributions. At December 31, 2006 there was $328,469 in employer contributions due to the Plan as a result of the basic non-elective contribution.
Discretionary Contributions
The Employer may make discretionary contributions in cash or Chesapeake stock as the Board of Directors or the Executive Compensation Committee of the Board may determine. No such discretionary contributions were made in 2006 or 2005.
Participant Accounts
Each participant's account is credited with the participant's contribution and allocations of (a) the Employer's contribution and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account.
Vesting
Participants are fully and immediately vested in all employee contributions. Participants are immediately vested in employer matching contributions. In addition, participants are generally vested in the basic non-elective contribution and any discretionary contributions 20% per year over a five year period, such that a participant is 100% vested after five years of credited service. Employer matching contributions prior to January 1, 2006 for certain salaried employees are subject to the same vesting schedule.
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CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
NOTES TO FINANCIAL STATEMENTS, Continued
1. Description of Plan, continued:
Participant Loans
Employees that are participants may borrow from the vested portion of their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of the non-forfeitable portion of their account balance. Loan terms range from 1-5 years or up to 10 years for the purchase of a primary residence. The loans are collateralized by the balance in the participant's account and bear interest at a rate equal to the prime lending rate plus one percent at the date of origination of the loan, as determined monthly by the Plan administrator. Repayment of loans (which includes principal and interest) is amortized in level payments, made no less frequently than quarterly. Loan repayments are generally made through payroll deductions on each paycheck. Loans generally become due and payable in full once a participant terminates employment. The loans are subject to certain restrictions as defined in the Plan document and applicable restrictions under the Internal Revenue Code. At December 31, 2006 and December 30, 2005, interest rates on outstanding loans ranged from 5.00% to 9.25% and 5.00% to 9.50%, respectively.
Distributions
Benefits under the Plan become distributable upon termination of employment, upon early retirement, on or after normal retirement, or upon death or disability. Benefit payments are made to the participant as a lump-sum distribution or installment payment. If the present value of the benefit to be received is less than $1,000, a lump-sum distribution is required.
Forfeitures
Termination of employment for reasons other than retirement, disability or death generally results in forfeiture of the non-vested portion of a participant's account. Forfeitures are held in the Plan and serve to reduce future employer contributions under certain conditions described in the Plan document. The balances of forfeited nonvested accounts were $31 and $15,468 at December 31, 2006 and December 30, 2005, respectively. Forfeitures in the amounts of $21,876 and $11,861 were used to reduce employer contributions in 2006 and 2005, respectively.
Plan Expenses
Fees of investment managers or expenses incurred in connection with the purchase or transfer of Chesapeake Corporation common stock, if any, are borne by participants who select such investments and are netted against investment income. All other expenses associated with the administration of the Plan are paid by Chesapeake.
2. Summary of Significant Accounting Policies:
Basis of Accounting
The accompanying financial statements of the Plan have been prepared on the accrual basis in conformity with accounting principles generally accepted in the United States of America.
-6-
CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
NOTES TO FINANCIAL STATEMENTS, Continued
2. Summary of Significant Accounting Policies, continued
Investment Valuation and Income
Investments are stated at fair value determined as follows:
| Mutual and money market funds | - Quoted market value |
| Common and collective trusts | - Information reported by the investment advisor |
| Chesapeake common stock | - Last published year-end sale price on the New York Stock Exchange |
| Loans to participants | - Balances due which approximate fair value |
Purchases and sales of securities are recorded on a trade-date basis. Investment income is recorded as earned. Dividend income is recorded on the ex-dividend date. The Plan presents in the Statement of Changes in Net Assets Available for Benefits the "net appreciation in fair value of investments" which consists of the realized gains and losses and the change in unrealized appreciation (depreciation) on those investments.
Distributions to Participants
Distributions are recorded when paid.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the financial statements and related disclosures. Actual results could differ from those estimates.
As described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the FSP), investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contact value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. The plan invests in investment contracts through a collective trust. Because contract value approximates fair value, the Statements of Net Assets Available for Benefits present the contract value of the investment in the collective trust and do not show an adjustment of the investment in the collective trust from fair value to contract value relating to the investment contracts. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.
-7-
CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
NOTES TO FINANCIAL STATEMENTS, Continued
3. Plan Termination:
While Chesapeake has not expressed any intent to discontinue its contributions, continuance is not assumed as a contractual obligation and any such discontinuance is subject to the provisions of ERISA. In the event such discontinuance results in the termination of the Plan, the Plan provides that each participant shall be fully vested in his or her account and payment of such amounts will be made by the Trustee as directed by the Plan Committee.
4. Investments:
Individual investments that represent 5% or more of the Plan's net assets available for benefits are as follows:
| | | December 31, | | December 30, | | |
| | | 2006 | | 2005 | | |
| | | ------------ | | ------------ | | |
| Investments at fair value as determined by quoted market price: | | | | | | |
| Growth funds | | | | | | |
Putnam Growth Opportunities Fund (139,291 and 180,276 shares, respectively) | | $ | 2,036,431 | | $ | 2,412,093 | |
| Growth and Income funds | | | | | | | |
| Dodge and Cox Stock Fund (52,078 and 57,140 shares, respectively) | | | 7,991,827 | | | 7,840,709 | |
Neuberger & Berman Genesis Trust (38,941 and 47,717 shares, respectively) | | | 1,858,648 | | | 2,316,678 | |
| Income funds | | | | | | | |
| PIMCO Total Return Fund (172,973 and 205,944 shares, respectively) | | | 1,795,461 | | | 2,162,408 | |
| Capital Preservation funds | | | | | | | |
Putnam Stable Value Fund (1,599,825 and 2,571,571 shares, respectively) | | | 1,599,825 | | | 2,571,571 | |
| | | | | | | | |
| | | | | | | | |
| During 2006 and 2005, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows: | |
| | | 2006 | | 2005 | |
| | | -------- | | - -------- | |
| Mutual funds | | $ | 1,256,625 | | $ | 823,475 | |
| Common and collective trusts | | | 68,272 | | | 20,769 | |
| Common stock | | | (6,209 | ) | | (586,585 | ) |
| | | | --------- | | | --------- | |
| Net appreciation in fair value of investments | | $ | 1,318,688 | | $ | 257,659 | |
| | | | ========= | | | ========= | |
Certain prior year amounts reported above have been reclassified to conform with current year presentation. Net appreciation in fair value of investments is unchanged due to these reclassifications.
-8-
CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
NOTES TO FINANCIAL STATEMENTS, Continued
5. Tax Status:
The Plan obtained its latest determination letter on November 21, 2003, in which the Internal Revenue Service stated that the Plan, as designed, was in compliance with the applicable requirements of the Internal Revenue Code (the “Code”). Although the Plan has been amended since receiving the determination letter, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code.
6. Plan Transfers:
On December 30, 2005 investments of $917,862 were transferred into the Plan. As the Merger did not occur until January 1, 2006, the Plan recorded a liability to the Hourly Plan for this amount at December 30, 2005. Additionally, there was $1,961 in receivables recorded on the Hourly Plan Statement of Net Assets Available for Benefits at December 30, 2005. The transfer of investments and receivables has been recognized within the Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 2006. (See Note 8, Reconciliation of Financial Statements to Form 5500).
7. Party-in-Interest Transactions:
Certain Plan investments are shares of mutual funds, money market funds, and common and collective trusts managed by Mercer and/or Putnam Investments. Purchases of Mercer and/or Putnam Investments of 207,716 shares in 2006 and 749,113 shares in 2005 totaled $589,767 and $1,264,848, respectively. Sales of Mercer and/or Putnam Investments of 1,224,736 shares in 2006 and 565,546 shares in 2005 totaled $2,191,646 and $1,425,594, respectively. Certain Plan investments are shares of Chesapeake Corporation common stock. Purchases of Chesapeake Corporation common stock of 5,846 shares in 2006 and 9,204 shares in 2005 totaled $85,826 and $167,603, respectively. Sales of Chesapeake Corporation common stock of 10,884 shares in 2006 and 11,734 shares in 2005 totaled $163,027 and $243,072, respectively. These transactions qualify as party-in-interest transactions that are allowable under ERISA.
-9-
CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
NOTES TO FINANCIAL STATEMENTS, Continued
8. Reconciliation of Financial Statements to Form 5500:
As a result of the transfer of Plan assets in advance of the Merger, certain amounts were recorded differently in the financial statements than in the Form 5500. The following is a reconciliation of net assets available for benefits per the financial statements to Form 5500:
| | | December 31, | | December 30, | |
| | | 2006 | | 2005 | |
| | | --------------- | | --------------- | |
| | | | | | |
Net assets available for benefit per the financial statements | | $ | 20,619,784 | | $ | 20,363,772 | |
| | | | | | | | |
| Receivables: | | | | | | | |
| Employer contribution for Hourly employees | | | - | | | 1,013 | |
| Employee contribution for Hourly employees | | | - | | | 948 | |
| | | | | | | | |
| Liability due to Chesapeake Corporation 401(k) | | | - | | | 917,862 | |
| Savings Plan for Hourly Employees | | | | | | | |
| | | | --------- | | | --------- | |
| Net assets available for benefits per Form 5500 | | $ | 20,619,784 | | $ | 21,283,595 | |
| | | | ========= | | | ========= | |
The following is a reconciliation of Plan transfers per the financial statements to Form 5500:
| | | 2006 | |
| | | ------------- | |
| | | | |
| Plan transfers per financial statements | | $ | 919,823 | |
| Transfer of investment from Hourly Plan | | | (917,862 | ) |
| Transfer of employer contributions from Hourly Plan | | | (1,013 | ) |
| Transfer of employee contributions from Hourly Plan | | | (948 | ) |
| | | | -------- | |
| Plan transfers per Form 5500 | | | - | |
| | | | ========= | |
Prior to January 1, 2006, the Plan's year-end was December 30. Therefore the 2005 financial statements were as of and for the year ended December 30, 2005. The 2005 Form 5500 filed with the December 30, 2005 finanacial statements was filed for the calendar year ended December 31, 2005 because of the change in year-end for the Plan (see Note 1). As December 31, 2005 was a Sunday, there was no activity on that day and therefore the 2006 financial statements do not show activity for the day ended December 31, 2005. Additionally, the $917,862 transfer from the Hourly Plan was reported on the December 31, 2005 Form 5500, Schedule H.
-10-
9. Risks and Uncertainties:
The Plan provides for various mutual fund investment options in stocks, bonds, money market, and fixed income securities, common and collective trusts, and as a direct Chesapeake common stock investment. Investments are exposed to various risks, such as interest rate, market and credit. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is reasonably possible that changes in values of investment securities will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the Statements of Net Assets Available for Benefits.
10. Plan Amendments:
Effective January 1, 2006 the Plan was amended as follows:
| · | To include an annual non-elective Employer contribution based on total compensation (base and annual bonus) of 2.5% for hourly employees and 5.0% for salaried employees. |
| · | To increase the Employer match to 100% of the first 3% of pay contributed and 50% of the next 2% of pay contributed (a maximum Employer match of 4% of pay). |
| · | To include an additional annual non-elective Employer contribution of 2.5% of total compensation to the Plan for approximately 15 salaried employees who were at least age 45 as of December 31, 2005, had at least five years of service and were a participant in the Employers’ pension plans. |
| · | Vesting was accelerated on January 1, 2006 for anyone who was a participant in the Plan or the Hourly Plan on December 31, 2005, and future Employer matching contributions are immediately vested with the exception of the non-elective Employer contribution (2.5% for hourly employees and 5% or 7.5% for salaried employees) which has a five year graded vesting period. |
-11-
CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2006
| (a) Parties-In-Interest | (b) Identity of Issue, Borrower, Lessor or Similar Party | (c) Description of Investment Including Maturity Date, Rate of Interest, Par, Collateral or Maturity Value | ** (d) Cost | (e) Current Value |
| | | | | |
| | PIMCO Total Return Fund | Targets intermediate-maturity fixed-income securities for all major sectors of the bond market | - | $1,795,461 |
| | Dodge & Cox Stock Fund | Invests primarily in a broadly diversified portfolio of common stocks | - | 7,991,827 |
| | Franklin Small-Mid Cap Growth Fund | Invests primarily in stocks of small companies with market-cap values of less than $1.5 billion, similar in size to those in the Russell 2000 Index | - | 617,041 |
| | Neuberger & Berman Genesis Trust | Invests primarily in common stocks of companies with market capitalization of less than $1.5 billion at the time of purchase | - | 1,858,648 |
| * | Putnam Growth Opportunities Fund | Invests mainly in stocks of very large, highly competitive growth companies | - | 2,036,431 |
| * | Putnam S&P 500 Index Fund | Invests in common-stock securities, that seeks to approximate the performance of the S&P 500 | - | 456,773 |
| * | Putnam International Equity Fund | Invests mainly in stocks of companies located outside the United States | - | 560,123 |
| * | Putnam Stable Value Fund | Invests primarily in high-quality, fixed-income investments | - | 1,599,825 |
| * | George Putnam Fund of Boston | Seeks a balance of capital growth and current income by investing in a well-diversified portfolio composed mostly of stocks and corporate and U.S. government bonds | - | 117,722 |
| | Harbor International Fund Investor Shares | Invests primarily in equity securities, principally common and preferred stocks of foreign companies. | - | 628,844 |
| | Vanguard Prime Money Market Fund | Invests in short-term, high-quality money market instruments issued by financial institutions, nonfinancial institutions, the U.S. government, and federal agencies | - | 81,012 |
| | Growth Fund of America | Invests in a diversified portfolio of common stocks, convertibles, preferred stocks, US government securities, bonds and cash. | - | 248,919 |
| | Dodge & Cox Balanced Fund | Seeks regular income, conservation of principal and an opportunity for long-term growth of principal and income. | - | 993,665 |
| | Vanguard 500 Index Fund | Targets long-term growth of capital and income from dividends. | - | 232,890 |
| * | Common Stock Chesapeake Corporation | Corporate common stock, $1 par value | - | 910,898 |
| * | Loans to Participants of the Plan | Interest rates range from 5.00% to 9.25%; loans are amortized in level payments with current terms ranging from 2 to 5 years | - | 70,301 |
* Indicates party-in-interest
** Cost is not required for participant-directed investments.
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CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN
(FORMERLY CHESAPEAKE CORPORATION 401(K) SAVINGS PLAN FOR SALARIED EMPLOYEES)
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2006, continued
| (a) Parties-In-Interest | (b) Identity of Issue, Borrower, Lessor or Similar Party | (c) Description of Investment Including Maturity Date, Rate of Interest, Par, Collateral or Maturity Value | ** (d) Cost | (e) Current Value |
| | | | | |
| * | Putnam Retirementready 2015 Fund | Invests in other Putnam funds based on fund's target date. | - | 18,249 |
| * | Putnam Retirementready 2020 Fund | Invests in other Putnam funds based on fund's target date. | - | 8,814 |
| * | Putnam Retirementready 2025 Fund | Invests in other Putnam funds based on fund's target date. | - | 2,579 |
| * | Putnam Retirementready 2030 Fund | Invests in other Putnam funds based on fund's target date. | - | 8,598 |
| * | Putnam Retirementready 2040 Fund | Invests in other Putnam funds based on fund's target date. | - | 20,798 |
| * | Putnam Retirementready 2045 Fund | Invests in other Putnam funds based on fund's target date. | - | 3,154 |
| * | Putnam Retirementready 2050 Fund, Class A | Invests in other Putnam funds based on fund's target date. | - | 28,743 |
| | | | | ---------- |
| | | Total | | $20,291,315 |
| | | | | ========== |
| | | | | |
| | | | | |
| | | | | |
* Indicates party-in-interest
** Cost is not required for participant-directed investments.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Chesapeake Corporation Retirement and 401(k) Savings Plan Committee (the "Committee") have duly caused this annual report to be signed by the undersigned thereunto duly authorized.
| CHESAPEAKE CORPORATION RETIREMENT AND 401(K) SAVINGS PLAN |
| |
By: /s/ Joel K. Mostrom Joel K. Mostrom Senior Vice President & Chief Financial Officer, Chesapeake Corporation |
June 28, 2007
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EXHIBIT INDEX | |
| | | |
Exhibit No. | Description of Exhibit |
| | |
| 23.1 | Consent of Independent Registered Public Accounting Firm |
| | |
| | | |
| | | |
| | | |
| |
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