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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 11-K
ANNUAL REPORT
/X/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended March 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
Commission file number 1-3203
SALARIED EMPLOYEES' STOCK PURCHASE PLAN
CHESAPEAKE CORPORATION
1021 East Cary Street
P. O. Box 2350
Richmond, Virginia 23218-2350
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SALARIED EMPLOYEES' STOCK PURCHASE PLAN
Administration of the Plan:
The Plan is administered by the Salaried 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
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 and serves as the Committee Chairman.
(2) Mr. Causey is Senior Vice President, Secretary & General Counsel of
the Corporation.
(3) Mr. Tolley is Group Vice President - Finance & Chief Financial Officer
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:
Salaried Employees' Stock Purchase Plan:
Statements of Financial Condition
Statements of Income and Changes in Plan Equity
(b) Exhibit:
23.1 Consent of Coopers & Lybrand L.L.P.
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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.
SALARIED EMPLOYEES' STOCK PURCHASE PLAN
By: \s\ Thomas A. Smith
------------------------------------------
Thomas A. Smith, Chairman of the Committee
June 5, 1998
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Report of Independent Accountants
To the Salaried Employees' Stock
Purchase Plan Committee:
We have audited the accompanying statements of financial condition of the
Salaried Employees' Stock Purchase Plan (the "Plan") of Chesapeake
Corporation and participating subsidiaries as of March 31, 1998 and 1997,
and the related statements of income and changes in plan equity for each of
the three fiscal years in the period ended March 31,1998. 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 in accordance with generally accepted auditing
standards. 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Plan as of March 31, 1998
and 1997, and the statements of income and changes in plan equity for each of
the three fiscal years in the period ended March 31, 1998, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
June 5, 1998
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<TABLE>
<CAPTION>
SALARIED EMPLOYEES' STOCK PURCHASE PLAN
STATEMENTS OF FINANCIAL CONDITION
March 31, 1998 and 1997
1998 1997
<S> <C> <C>
Asset:
Funds held by Chesapeake Corporation and
participating subsidiaries (Note 2) $ 13,459$ 16,186
Plan equity $ 13,459$ 16,186
<CAPTION>
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
for the years ended March 31, 1998, 1997 and 1996
1998 1997 1996
<S> <C> <C> <C>
Contributions (Notes 1 and 4):
Employees $2,121,744$2,657,641$2,324,732
Employer: $373,316 in 1998, $583,918 in
1997 and $1,349,630 in 1996; less
withheld taxes of $146,564, $229,388 and
$541,479, respectively 226,752 354,530 808,151
-------------------- ----------
$2,348,496$3,012,171 $3,132,883
Deductions:
Purchase and distribution to participants
at year end of 59,857 shares in 1998
($34.9313 per share), 102,842 shares in
1997 ($28.7625 per share) and 108,134
shares in 1996 ($28.2625 per share) of
common stock of Chesapeake Corporation
(Note 1) 2,090,882 2,957,9933,056,137
Refunds to employees withdrawing from the
Plan attributable to:
Employees' contributions for the year 117,132 52,269 81,668
Employees' account balances at beginning
of year 1,881 1,009 1,650
-------- ------ ------
2,209,895 3,011,271 3,139,455
--------- -------- ---------
Increase (decrease) in plan equity
before transfers 138,601 900 (6,572)
Net transfers from Hourly Employees' Stock
Purchase Plan 266 1,454 6,451
Net transfers due to sale to St. Laurent
Paperboard Inc. (Note 5) (141,594) - -
-------------------- ----------
(Decrease) increase in plan equity (2,727) 2,354 (121)
Plan equity, beginning of year 16,186 13,832 13,953
---------- -------- ------
Plan equity, end of year $ 13,459$ 16,186$ 13,832
=============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
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SALARIED EMPLOYEES' STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of the Plan:
The stockholders of Chesapeake Corporation (the "Corporation") have approved
the Salaried Employees' Stock Purchase Plan (the "Plan") and reserved a total
of 2,587,559 shares of the Corporation's common stock for sale to eligible
full-time salaried employees of the Corporation and participating subsidiaries
(the "Employer").
Participants in the Plan are permitted to invest up to 5% of their basic
compensation as defined by the Plan. The Employer contributes to the Plan, as
of the end of the Plan year, an amount equal to the applicable percentage,
determined by the Executive Compensation Committee of the Board of Directors
of the Corporation, of the participant's contribution reduced by amounts
required to be withheld under income tax, F.I.C.A. and comparable laws.
For fiscal 1997, the employer contribution was 20%. 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.
As of March 31, 1998, 2,164,248 shares (59,857 shares in the current year and
2,104,391 in prior years) of the Corporation's common stock had been issued
under the Plan and 423,311 shares were available for future issuance.
An employee's participation in the Plan terminates if the participant ceases
to be employed by the Employer for any reason, including death or retirement.
A participant who retires may continue to participate in the Plan until the
end of the Plan year next following the date of the participant's
retirement without making future contributions. A participant may also
voluntarily terminate his participation in the Plan at any time. The Plan
provides that any participant whose participation in the Plan terminates and
who receives a refund of contributions will also receive an interest payment
for the contributions credited as of the end of the calendar quarter
preceding the date participation in the Plan is terminated. The Salaried
Employees' Stock Purchase Plan Committee will prescribe the applicable
interest rate, or the manner in which such interest rate will be
determined, for each plan year. The interest rate for plan years
commencing April 1, 1995 and later has been 5% per annum compounded quarterly.
This interest rate will stay in effect from year to year until it is
changed by the Salaried Employees' Stock Purchase Plan Committee. The
employer paid $1,159, $460 and $984 ofinterest for the plan year ended
March 31, 1998, 1997 and 1996, respectively. An individual who terminates
participation in the plan forfeits all rights to any contribution from the
Employer with respect to the plan year that includes the date of such
termination, except for any interest credit. Participants have a 100%
vested interest in their contributions.
The fiscal year of the Plan ends each March 31.
2. 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.
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3. 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.
4. Contributions to the Plan:
Contributions (net of withheld taxes) were as follows:
<TABLE>
<CAPTION>
For the Year Ended March 31,
1998 1997 1996
------------------- ------------------ ----------------------
Employer Employees Employer Employees Employer Employees
<S> <C> <C> <C> <C> <C> <C>
Chesapeake Corporation $ 25,639 $ 221,168$ 27,636 $ 182,021$ 52,999 $ 145,219
Subsidiaries:
Delmarva Properties Inc. 2,909 23,627 3,210 23,225 6,118 16,757
Stonehouse Inc. 354 978
Chesapeake Packaging Co. 119,396 1,097,676 164,274 1,242,962 370,540 1,053,808
Wisconsin Tissue Mills Inc. 71,237 615,185 72,219 548,515 154,166 430,858
Chesapeake Paper Products
Company 91,050 72,348 547,643 184,293 522,274
Chesapeake Forest Products
Company 7,571 73,038 14,843 113,275 39,681 111,340
Chesapeake Consumer Products
Company 43,498
------------------- ------------------- -------------------
Totals $ 226,752$2,121,744 $ 354,530$2,657,641 $ 808,151$2,324,732
=================== =================== ===================
</TABLE>
5. Sale of Kraft and Packaging Facilities:
On May 23, 1997, the Corporation sold specific 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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EXHIBIT 23.1
Consent of Coopers & Lybrand L.L.P.
---------
We consent to the incorporation by reference in the registration statement on
Form S-8 of Chesapeake Corporation for the Salaried Employees' Stock Purchase
Plan (File No. 33-14926) of our report dated June 5, 1998 on our audits of the
financial statements of the Salaried Employees' Stock Purchase Plan as of March
31, 1998 and 1997, and for the years ended March 31, 1998, 1997 and 1996, which
report is included in this Annual Report on Form 11-K.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
June 26, 1998
