EX 99.1
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 [FEE REQUIRED]
for the fiscal year ended November 30, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
for the transition period from _______ to _______
Commission file number 2-79636
HOURLY EMPLOYEES' STOCK PURCHASE PLAN
CHESAPEAKE CORPORATION
1021 East Cary Street
P.O. Box 2350
Richmond, Virginia 23218-2350
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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"). At
November 30, 1998, the Committee members were:
Name Address
Thomas A. Smith*(1) Richmond, Virginia 23218
J.P. Causey Jr. (2) Richmond, Virginia 23218
William T. Tolley (3) Richmond, Virginia 23218
(1) Mr. Smith is Vice President - Human Resources & Assistant
Secretary of the Corporation.
(2) Mr. Causey is Senior Vice President, Secretary & General
Counsel of the Corporation.
(3) Mr. Tolley is Senior Vice President - Finance & 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) Financial statements:
Hourly Employees' Stock Purchase Plan:
Statements of Financial Condition
Statements of Income and Changes in Plan Equity
(b) Exhibits:
See Exhibit 23.1 to the Chesapeake Corporation Annual
Report on Form 10-K for the year ended December 31,
1998 for consent of independent accountants.
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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 by the undersigned hereunto duly authorized.
HOURLY EMPLOYEES' STOCK PURCHASE PLAN
BY: /S/ THOMAS A. SMITH
-------------------------------------
THOMAS A. SMITH, CHAIRMAN OF THE
COMMITTEE
March 5, 1999
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Hourly Employees' Stock
Purchase Plan Committee:
In our opinion, the accompanying statements of financial
condition and the related statements of income and changes in
plan equity present fairly, in all material respects, the
financial position of the Hourly Employees' Stock Purchase Plan
(the "Plan") as of November 30, 1998, and the changes in plan
equity for each of the three years in the period ended November
30, 1998, in conformity with generally accepted accounting
principles. 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
generally accepted auditing standards 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.
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
March 5, 1999
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HOURLY EMPLOYEES' STOCK PURCHASE PLAN
STATEMENTS OF FINANCIAL CONDITION
November 30, 1998 and 1997
1998 1997
---- ----
Asset:
Funds held by Chesapeake Corporation and
participating subsidiaries (Note 4) $5,199 $4,598
====== ======
Plan equity $5,199 $4,598
====== ======
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STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
for the years ended November 30, 1998, 1997 and 1996
1998 1997 1996
---- ---- ----
Contributions:
Employees, net of refunds $325,114 $301,928 $1,226,144
Employer; $105,007 in 1998,
$144,964 in 1997, and $598,671
in 1996; less withheld taxes of
$42,753, $59,132 and $245,301,
respectively 62,254 85,832 353,370
-------- -------- ----------
387,368 387,760 1,579,514
-------- -------- ----------
Deductions:
Purchase and distribution to
participants at year end of
10,876 shares in 1998 ($35.45
per share), 11,764 shares in
1997 ($32.89 per share), and
53,574 shares in 1996 ($29.17
per share) of common stock of
Chesapeake Corporation (Note 1) 385,551 386,907 1,562,687
-------- -------- ----------
385,551 386,907 1,562,687
Net transfers to Salaried
Employees' Stock Purchase Plan 1,216 516 2,640
Net transfers due to sale to St.
Laurent Paperboard Inc. (Note 7) - 7,961 -
Net transfers to the Wisconsin
Tissue Mill Hourly Employees'
Stock Purchase Plan - - 14,792
-------- -------- ----------
386,767 395,384 1,580,119
-------- -------- ----------
Increase (decrease) in
plan equity 601 (7,624) (605)
Plan equity, beginning of year 4,598 12,222 12,827
-------- -------- ----------
Plan equity, end of year $ 5,199 $ 4,598 $ 12,222
======== ======== ==========
The accompanying notes are an integral part of these financial
statements.
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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 subsidiaries
(the "Employer").
The Plan is administered by a committee (the "Committee")
appointed by the Corporation's Board of Directors. Participants
in the Plan, which became effective in December 1982, 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 (see Note 3), a percentage
(determined by the Committee of the Plan, generally 30% to 50%)
of the participant's contribution reduced by amounts required to
be withheld under income tax, Federal Insurance Contributions Act
tax and comparable laws. 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 20
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. A participant may
terminate his participation in the Plan at any time. Upon
termination, the Employer will return his contributions and the
participant will forfeit all rights to any contribution which
would have been made at the end of the plan year.
As of November 30, 1998, 683,858 shares (10,876 shares in the
current year and 672,982 in prior years) of the Corporation's
common stock had been issued under the Plan and 216,142 shares
were available for future issuance.
Hourly paid employees of certain divisions of Chesapeake Display
and Packaging Company, Chesapeake Packaging Co., and Chesapeake
Forest Products Company are eligible to become participants in
the Hourly Employees' Stock Purchase Plan provided that such
employees otherwise meet the requirements for participation set
forth in the Plan.
2. RECLASSIFICATIONS:
Certain 1997 and 1996 amounts have been reclassified to conform
with the current year's presentation.
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3. PLAN YEAR:
The fiscal year of the Plan ends each November 30.
4. FUNDS HELD BY CHESAPEAKE CORPORATION AND PARTICIPATING
SUBSIDIARIES:
Funds received or held by the Employer with respect to the Plan
may be used for any corporate purpose; therefore, the Plan does
not prevent the Employer from creating a lien on these funds.
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:
Contributions (net of withheld taxes and refunds) were as
follows:
1998
---------------------
Employer Employees
Chesapeake Corporation Subsidiaries:
Chesapeake Display and
Packaging Company $46,623 $262,825
Chesapeake Packaging Co. 11,284 37,521
Chesapeake Paper Products
Company - -
Chesapeake Forest Products
Company 4,347 24,768
Wisconsin Tissue Mills, Inc.* - -
------- --------
Totals $62,254 $325,114
======= ========
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6. CONTRIBUTIONS TO THE PLAN, CONTINUED:
1997
---------------------
Employer Employees
Chesapeake Corporation Subsidiaries:
Chesapeake Display and
Packaging Company $69,759 $236,640
Chesapeake Packaging Co. 11,067 36,869
Chesapeake Paper Products
Company - -
Chesapeake Forest Products
Company 5,006 28,419
Wisconsin Tissue Mills, Inc.* - -
------- --------
Totals $85,832 $301,928
======= ========
1996
---------------------
Employer Employees
Chesapeake Corporation Subsidiaries:
Chesapeake Display and
Packaging Company $ 70,704 $ 239,249
Chesapeake Packaging Co. 32,143 108,514
Chesapeake Paper Products
Company 237,010 804,273
Chesapeake Forest Products
Company 13,513 59,316
Wisconsin Tissue Mills, Inc.* - 14,792
-------- ----------
Totals $353,370 $1,226,144
======== ==========
*During 1996 contributions totaling $14,792 attributable to
Wisconsin Tissue Mills, Inc. hourly employees were made to the
Plan. Such contributions were made prior to the establishment of
the Wisconsin Tissue Mills Hourly Employees' Stock Purchase Plan
("WTM Plan"). Such assets were transferred to the WTM Plan on
November 1, 1996.
7. SALE TO ST. LAURENT PAPERBOARD INC.:
On May 22, 1997, the Corporation sold certain kraft and packaging
facilities to St. Laurent Paperboard Inc. ("St. Laurent"). The
Corporation transferred accumulated 1996 carryover employee and
employer contributions and 1997 employee contributions made to
the Plan prior to the date of the sale to St. Laurent.
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