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 33-14927
CHESAPEAKE CORPORATION 401(k)
SAVINGS PLAN FOR SALARIED 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
Exhibit:
23.1 - Consent of PricewaterhouseCoopers LLP 13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Chesapeake Corporation 401(k) Savings Plan for Salaried
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 SALARIED 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 Salaried 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 Salaried
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 schedule of
assets held for investment purposes 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 Department of
Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The supplemental schedule
is the responsibility of the Plan's management. The supplemental schedule
has been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is 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 SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 30, 1999 and 1998
1999 1998
---- ----
Assets:
Investments at fair value (Note 4) $48,401,072 $73,155,892
Receivables:
Accrued income 19,890 37,174
Employee contributions - 148,071
Employer contributions - 317,390
Other receivables 1,083,481 2,110,131
----------- -----------
Total assets 49,504,443 75,768,658
Liabilities:
Other liabilities 1,110,075 2,226,884
----------- -----------
Total liabilities 1,110,075 2,226,884
Net assets available
for benefits $48,394,368 $73,541,774
=========== ===========
The accompanying notes are an integral part of the financial statements.
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CHESAPEAKE CORPORATION 401(k) SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the years ended December 30, 1999 and 1998
1999 1998
---- ----
Additions:
Interest and dividends $ 1,439,106 $ 1,337,445
Contributions (Note 2)
Employee 4,151,955 3,944,252
Employer 1,500,434 1,426,905
Rollovers 466,854 1,327,239
Net appreciation in fair
value of investments (Notes 1 and 4) 2,383,106 6,188,534
----------- -----------
9,941,455 14,224,375
Deductions:
Distributions to
participating employees (Note 2) 7,811,289 7,132,778
Administrative fees 128,814 136,209
----------- -----------
7,940,103 7,268,987
----------- -----------
Net increase 2,001,352 6,955,388
----------- -----------
Interplan transfers, net (Note 6) (27,148,758) 44,189
Net assets available for
benefits, beginning of year 73,541,774 66,542,197
----------- -----------
Net assets available for
benefits, end of year $48,394,368 $73,541,774
=========== ===========
The accompanying notes are an integral part of the financial statements.
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CHESAPEAKE CORPORATION 401(k) SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
General
The Chesapeake Corporation 401(k) Savings Plan for Salaried Employees
(the "Plan") covers certain employees of Chesapeake Corporation
("Chesapeake" or the "Employer") 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 statements 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 15% 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 a matching contribution each Plan year in an
amount equal to 50% of the first 5% (increased to 60% of the first 6%
on January 1, 2000)of each participant's compensation that the
participant elects to contribute to the Plan as an elective deferral
contribution for the Plan year. Matching contributions for highly
compensated participants are limited by the Internal Revenue Code as
described in the Plan document. Chesapeake may make contributions on
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NOTES TO FINANCIAL STATEMENTS, Continued
2. Description of Plan, continued:
behalf of specified participants, regardless of whether the
participants make elective deferral contributions, as nonelective
contributions. 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.
Discretionary Contributions
The Employer may make discretionary contributions in cash or Company
stock as the Board of Directors or the Executive Compensation
Committee of the Board may determine.
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 7.50% to
9.25%. Principal and interest is paid ratably through monthly 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 $75,731 and $92,617 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 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 the Company 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 Salaried
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 (591,052 and
1,036,728 shares, respectively) $10,627,119 $18,733,672
Diversified Equity Fund (453,293 and
830,326 shares, respectively) 11,502,318 20,199,353
American Century Ultra Fund
(258,531 and 329,445 shares, respectively) 11,835,552 11,006,760
Fixed income funds:
Phoenix High Yield Fund (296,574 and
578,875 shares, respectively) 2,339,967 4,509,436
Common stock:
Chesapeake Corporation (205,405 and
252,161 shares, respectively) 6,264,853 9,298,437
Money market funds:
LaSalle Interest Income Fund (3,763,792 and
5,952,093 shares, respectively) 3,763,792 5,952,093
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 $2,383,106 as follows:
Mutual funds $3,907,696
Common stock (1,524,590)
----------
$2,383,106
==========
5. Tax Status:
The Plan obtained its latest determination letter on March 30, 1995, 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.
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NOTES TO FINANCIAL STATEMENTS, Continued
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). 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
approximately $27 million.
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 applicable participants' accounts will be
transferred to a G-P sponsored plan.
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CHESAPEAKE CORPORATION 401(k) SAVINGS PLAN FOR SALARIED EMPLOYEES
Line 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
December 30, 1999
(c)
(b) Description of
Identity of Investment
(a) Issue, Including (e)
Partie Borrower, Maturity Date, (d) Cost Current
s- Lessor or Rate of of Asset Value of
In- Similar Interest, Par, Asset
Intere Party Collateral or
st Maturity Value
Partners Equity-income
Trust Fund fund $8,633,998 $10,627,119
Diversified Domestic and 6,130,702 11,502,318
Equity Fund foreign equity
fund
LaSalle Managed stable 3,763,792 3,763,792
Interest capital income
Income Fund fund
American Equity fund 8,586,106 11,835,552
Century
Ultra Fund
Phoenix High yield 2,458,730 2,339,967
High Yield bond fund
Fund
Dreyfus A Corporate and 1,140,335 1,088,406
Bond Plus government
Fund bond fund
* Common Corporate 6,075,203 6,264,853
Stock common stock
Chesapeake
Corporation
* Loans to Interest rates 605,517
Participant range from
s of the 7.50% to 9.25%
Plan
* Cash Collective 373,548 373,548
Equivalents short-term
The Bank of Investment
New York Fund
* Indicates party-in-interest
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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. 33-14927) of Chesapeake Corporation of our
report dated June 16, 2000 relating to the financial statements of the
Chesapeake Corporation 401(k) Savings Plan for Salaried Employees, which
appears in this Form 11-K.
/S/ PRICEWATERHOUSECOOPERS LLP
-----------------------------
PRICEWATERHOUSECOOPERS LLP
Richmond, Virginia
June 16, 2000
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