SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
/x/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 30, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the transition period from ______ to ______
Commission file number 33-26150
CHESAPEAKE CORPORATION 401(k)
SAVINGS PLAN FOR HOURLY EMPLOYEES
CHESAPEAKE CORPORATION
1021 East Cary Street
P.O. Box 2350
Richmond, Virginia 23218-2350
INDEX OF FINANCIAL STATEMENTS AND SCHEDULES AND EXHIBIT
Page
Report of Independent Accountants 3
Financial Statements:
Statements of Net Assets Available for Benefits
at December 30, 1999 and December 30, 1998 4
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 30, 1999 and
December 30, 1998 5
Notes to Financial Statements 6-11
Supplemental schedules:
Line 27a - Schedule of Assets Held for Investment Purposes at
End of Year December 30, 1999 12
Line 27e - Schedule of Non-Exempt Transactions
for the Year Ended December 30, 1999 13
Exhibit:
23.1 - Consent of PricewaterhouseCoopers LLP 14
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the members of the Chesapeake Corporation 401(k) Savings Plan for Hourly
Employees Committee (the "Committee") have duly caused this annual report
to be signed by the undersigned thereunto duly authorized.
CHESAPEAKE CORPORATION 401(k)
SAVINGS PLAN FOR HOURLY EMPLOYEES
By: /s/ Thomas A. Smith
-------------------
Thomas A. Smith
Vice President - Human
Resources and Chairman of
the Committee
June 16, 2000
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Report of Independent Accountants
To the Chesapeake Corporation 401(k) Savings
Plan for Hourly Employees Committee:
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available
for benefits of the Chesapeake Corporation 401(k) Savings Plan for Hourly
Employees (the "Plan") at December 30, 1999 and 1998, and the changes in
net assets available for benefits for the years then ended in conformity
with accounting principles generally accepted in the United States. 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 auditing standards generally accepted in the United States which
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 the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes and non-exempt transactions are
presented for the purpose of additional analysis and are not a required
part of the basic financial statements but are supplementary information
required by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974.
These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audits 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/PRICEWATERHOUSECOOPERS LLP
-----------------------------
PRICEWATERHOUSECOOPERS LLP
Richmond, Virginia
June 16, 2000
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CHESAPEAKE CORPORATION 401(k) SAVINGS PLAN FOR HOURLY EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 30, 1999 and 1998
1999 1998
---- ----
Assets:
Investments at fair value (Note 4) $3,559,037 $2,344,113
Receivables:
Accrued income 1,489 1,134
Employee contributions - 46,431
Employer contributions - 26,597
Other receivables 74,582 80,818
---------- ----------
Total assets 3,635,108 2,499,093
Liabilities:
Other liabilities 74,582 80,818
---------- ----------
Total liabilities 74,582 80,818
Net assets available
for benefits $3,560,526 $2,418,275
========== ==========
The accompanying notes are an integral part of the financial statements.
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CHESAPEAKE CORPORATION 401(k) SAVINGS PLAN FOR HOURLY EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the year ended December 30, 1999 and 1998
1999 1998
---- ----
Additions:
Interest and dividends $ 84,701 $ 44,631
Contributions (Notes 2 and 4)
Employee 1,056,584 778,881
Employer 134,295 120,354
Net appreciation in fair
value of investments (Notes 1 and 4) 366,792 235,435
---------- ----------
1,642,372 1,179,301
Deductions:
Distributions to
participating employees (Note 2) 209,716 110,101
Administrative fees 3,595 2,449
---------- ----------
213,311 112,550
---------- ----------
Net increase 1,429,061 1,066,751
---------- ----------
Interplan transfers, net (Note 6) (286,810) (69,091)
Net assets available for
benefits, beginning of year 2,418,275 1,420,615
---------- ----------
Net assets available for
benefits, end of year $3,560,526 $2,418,275
========== ==========
The accompanying notes are an integral part of the financial statements.
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CHESAPEAKE CORPORATION 401(k) SAVINGS PLAN FOR HOURLY EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
General
The Chesapeake Corporation 401(k) Savings Plan for Hourly Employees
(the "Plan") covers eligible hourly employees of Chesapeake
Corporation's ("Chesapeake" or the "Employer") building products
division and certain display and packaging division locations, as
described in the Plan agreement. The Plan's assets are held by the
Bank of New York (the "Trustee"). The accompanying financial
statements of the Plan have been prepared on the accrual basis in
conformity with generally accepted accounting principles.
Investment Valuation and Income
Investments are stated at fair value determined as follows:
Mutual and money market funds - Quoted market value
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
the fair value of investments" which consists of the realized gains
and losses and the change in unrealized appreciation or depreciation
on those investments.
Risks and Uncertainties
The Plan provides for various mutual fund investment options in
stocks, bonds, money market, and fixed income securities as well as
direct common stock investments. 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 at least reasonably possible that changes in risks in the near
term would materially affect participants' account balances and the
amounts reported in the statements of net assets available for
benefits and the statement of changes in net assets available for
benefits.
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NOTES TO FINANCIAL STATEMENTS, Continued
1. Summary of Significant Accounting Policies, continued:
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
Reclassification
Certain amounts in the 1998 financial statements have been
reclassified to conform to the 1999 financial statement presentation.
2. Description of Plan:
General
The Plan is a defined contribution plan. 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 2104 West Laburnum Avenue,
Richmond, Virginia 23227.
Employee Contributions
A participant may elect to defer receipt of 1% to 10% of annual before-
tax compensation, in increments of 1%. Elective deferral
contributions may not exceed statutory limits ($10,000 in 1999 and
1998) per participant in any taxable year. Participants may also
contribute amounts representing distributions from other qualified
defined benefit or defined contribution plans. Participants direct the
investment of their contributions into various investment options
offered by the Plan.
Employer Contributions
The Plan provides for discretionary matching contributions ranging
from 20% to 50% of the participant's elective deferral contribution.
Matching contributions from Chesapeake are limited to annual dollar
and percentage thresholds which vary depending upon location.
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 nonelective contributions.
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NOTES TO FINANCIAL STATEMENTS, Continued
2. Description of Plan, continued:
In addition, the Employer establishes a fixed minimum contribution to
be made to the Plan as determined by the Employer each Plan year.
Total Employer contributions to the Plan, including salary deferrals
and matching contributions, will never be less than the established
fixed minimum contribution; if actual contributions are less than the
minimum, then a supplemental contribution would be made by the
Employer to the Plan. The minimum employer contribution for the Plan
year is allocated to each individual who is a participant on the first
day of the Plan year and who has made an elective deferral
contribution during the Plan year.
Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000
up to a maximum equal to the lesser of $50,000 or 50 percent 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 commensurate with the prime rate plus one percent as determined
monthly by the Plan administrator. Interest rates range from 8.75% to
9.50%. Principal and interest is paid ratably through payroll
deductions.
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 an annuity. If the present value of the
benefit to be received is less than $5,000, a lump-sum distribution is
required.
Forfeitures
Forfeitures resulting from separation from service are held in the Plan
and serve to reduce Employer contributions under certain conditions
described in the Plan document. The balance of forfeited nonvested
accounts was $7,203 and $1,189 at December 30, 1999, and December 30,
1998, respectively.
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NOTES TO FINANCIAL STATEMENTS, Continued
2. Description of Plan, continued:
Plan Expenses
Expenses incurred in connection with the purchase or transfer of
Chesapeake Corporation common stock are borne by a participant's
account. Fees, if any, of investment managers are borne by
participants who select such investments. All other expenses
associated with the administration of the Plan are paid by Chesapeake.
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 the
Employee Retirement Income Security Act of 1974 ("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
account and payment of such amounts will be made by the Trustee as
directed by the Chesapeake Corporation 401(k) Savings Plan for Hourly
Employees Committee.
4. Investments:
The investments are held in trust funds which are administered by the
Trustee.
The investments in Chesapeake common stock may be purchased by the
Trustee at fair market value in the open market, in private
transactions, or from the authorized but unissued shares of Chesapeake.
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NOTES TO FINANCIAL STATEMENTS, Continued
4. Investments, continued:
Individual investments that represent 5% or more of the Plan's net assets
available for benefits are as follows:
December 30,
1999 1998
---- ----
Investments at fair value as determined
by quoted market price:
Equity funds:
Partners Trust Fund (26,220 and
19,048 shares, respectively) $ 471,431 $ 344,192
Diversified Equity Fund (19,217 and
15,395 shares, respectively) 487,641 374,519
American Century Ultra Fund
(30,086 and 22,513 shares, respectively) 1,377,321 752,151
Fixed income funds:
Dreyfus A Bond Plus Fund (19,025 and
13,648 shares, respectively) 254,938 191,068
Phoenix High Yield Fund (23,921 and
16,758 shares, respectively) 188,736 130,547
Common stock:
Chesapeake Corporation (10,043 and
5,616 shares, respectively) 306,312 207,090
Money market funds:
LaSalle Interest Income Fund (281,346 and
206,676 shares, respectively) 281,346 206,676
Participant Loans 170,821 125,687
NOTES TO FINANCIAL STATEMENTS, Continued
4. Investments, continued:
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
appreciated in value by $366,792 as follows:
Mutual funds $402,195
Common stock (35,403)
--------
$366,792
========
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NOTES TO FINANCIAL STATEMENTS, Continued
5. Tax Status:
The Plan obtained its latest determination letter on May 20, 1996, 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 Plan has been amended since receiving the
determination letter. However, management and the Plan administrator
believe that the Plan is designed and is currently being operated in
accordance with all applicable rules and regulations.
6. Interplan Transfers:
Effective October 3, 1999, Chesapeake contributed its wholly owned
subsidiary, Wisconsin Tissue Mills, Inc.(WT), to a joint-venture with
Georgia-Pacific Corporation (G-P) and Chesapeake received a 5% interest
in the joint-venture. In connection with this transaction, all
participants who were employed by WT had their accounts transferred out
of the Plan and into a Plan sponsored by G-P. The net value of the
accounts transferred from the Plan to the G-P sponsored plan was
$225,217. The remaining net transfers of $61,593 related to transfers
from the Plan to the Chesapeake Corporation 401(k) Savings Plan for
Salaried Employees.
7. Subsequent Events:
On February 18, 2000, Chesapeake contributed its litho-laminated
business of Chesapeake Display and Packaging Company to a joint-venture
with G-P. The net value of the applicable participants' accounts will
be transferred to a G-P sponsored plan.
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CHESAPEAKE CORPORATION 401(k) SAVINGS PLAN FOR HOURLY EMPLOYEES
Line 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
December 30, 1999
(c)
Description of
(b) Investment
(a) Identity of Including (e)
Partie Issue, Maturity Date, (d) Cost Current
s- Borrower, Rate of of Asset Value of
In- Lessor or Interest, Par, Asset
Intere Similar Collateral or
st Party Maturity Value
Partners Equity-income $ 463,615 $ 471,431
Trust Fund fund
Diversified Domestic and 377,949 487,641
Equity Fund foreign equity
fund
LaSalle Managed stable 281,346 281,346
Interest capital income
Income Fund fund
American Equity fund 997,566 1,377,321
Century
Ultra Fund
Phoenix High yield 197,320 188,736
High Yield bond fund
Fund
Dreyfus A Corporate and 268,953 254,938
Bond Plus government
Fund bond fund
* Common Corporate 316,427 306,312
Stock common stock
Chesapeake
Corporation
* Loans to Interest rates 170,821
Participant range from
s of the 8.75% to 9.50%
Plan
* Cash Collective 20,491 20,491
Equivalents short-term
The Bank of Investment
New York Fund
* Indicates party-in-interest
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CHESAPEAKE CORPORATION 401(k) SAVINGS PLAN FOR HOURLY EMPLOYEES
Line 27e-SCHEDULE OF NON-EXEMPT TRANSACTIONS
For the Year Ended December 30, 1999
b. c. g.
Relationship Description of Expense j.
a. to plan, transactions including incurred in Net Gain
Identity of employer or maturity date, rate of d. e. f. connection i. (loss) on
party other party- interest collateral, par Purchase Selling Lease with h. Current each
involved in-interest or maturity value price price rental transaction Cost of asset value of asset transaction
Chesapeake Failure to
Corporation Plan Sponsor remit
participant $115,607 for
tion contributions the total of
within 15 the six
business separate
days of the occasions
month
following separat
the e
contribution occasio
on six ns
separate
occasions*
*Delayed remittance was the result of complications associated with the
implementation of a new payroll system. The Plan sponsor subsequently rectified
the situation; the allocation of participant investment earnings was
recalculated assuming that participant contributions were remitted in a timely
manner. Participants' accounts were then credited with any favorable difference.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 33-26150) of Chesapeake Corporation of our
report dated June 16, 2000 relating to the financial statements of the
Chesapeake Corporation 401(k) Savings Plan for Hourly Employees, which
appears in this Form 11-K.
/S/ PRICEWATERHOUSECOOPERS LLP
-----------------------------
PRICEWATERHOUSECOOPERS LLP
Richmond, Virginia
June 16, 2000
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