þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Incorporated under the laws | I.R.S. Employer Identification | |
of South Carolina | No. 57-0248420 |
Title of each class | Name of exchange on which registered | ||
No par value common stock | New York Stock Exchange, Inc. |
Securities registered pursuant to Section 12(g) of the Act: None |
Page | ||||||
PART I |
||||||
Item 1. | Business |
3 | ||||
Item 1A. | Risk Factors |
9 | ||||
Item 1B. | Unresolved Staff Comments |
10 | ||||
Item 2. | Properties |
10 | ||||
Item 3. | Legal Proceedings |
10 | ||||
Item 4. | Submission of Matters to a Vote of Security Holders |
10 | ||||
PART II |
||||||
Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
11 | ||||
Item 6. | Selected Financial Data |
12 | ||||
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
13 | ||||
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk |
31 | ||||
Item 8. | Financial Statements and Supplementary Data |
31 | ||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
32 | ||||
Item 9A. | Controls and Procedures |
32 | ||||
Item 9B. | Other Information |
32 | ||||
PART III |
||||||
Item 10. | Directors and Executive Officers of the Registrant |
33 | ||||
Item 11. | Executive Compensation |
33 | ||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters |
33 | ||||
Item 13. | Certain Relationships and Related Transactions |
34 | ||||
Item 14. | Principal Accounting Fees and Services |
34 | ||||
PART IV |
||||||
Item 15. | Exhibits and Financial Statement Schedules |
34 |
1
2
(a) | General development of business |
The Company is a South Carolina corporation founded in Hartsville, South Carolina, in 1899 as the Southern Novelty Company. The name was subsequently changed to Sonoco Products Company (the Company or Sonoco). Sonoco is a manufacturer of industrial and consumer packaging products and a provider of packaging services, with 317 locations in 35 countries. |
Information regarding the Companys acquisitions, dispositions, joint ventures and restructuring activities is provided in Notes 2, 3 and 4 to the Consolidated Financial Statements on pages F-8 through F-14 of this Annual Report on Form 10-K. |
(b) | Financial information about segments |
Information regarding the Companys reportable segments is provided in Note 16 to the Consolidated Financial Statements on pages F-33 through F-35 of this Annual Report on Form 10-K. |
(c) | Narrative description of business |
Products and Services The following discussion outlines the principal products produced and services provided by the Company. |
Consumer Packaging |
The Consumer Packaging segment accounted for 35.4%, 35.9% and 37.9% of the Companys net sales in 2005, 2004 and 2003, respectively. The operations in this segment consist of 49 plants throughout the world. The products, services and markets of the Consumer Packaging segment are as follows: |
Products and Services | Markets | |||
Rigid Packaging Paper
|
Round and shaped composite paperboard cans, single-wrap paperboard packages, fiber cartridges | Food: snacks, nuts, cookies and crackers, confectionery, frozen concentrate, powdered beverages and infant formula, coffee, refrigerated dough, spices/seasonings, nutritional supplements, pet food Nonfood: adhesives, caulks, cleansers, chemicals, lawn and garden, automotive, pet products | ||
Rigid Packaging Plastic
|
Bottles, jars, tubs, cups, trays, squeeze tubes | Food: Liquid beverage (noncarbonated), including functional beverage and ready-to-drink coffee, processed foods, sauces and pet foods, powdered beverages including coffee, snacks and nuts Nonfood: household chemicals, industrial chemicals, adhesives and sealants, personal care |
3
Products and Services | Markets | |||
Ends and Closures
Plastic and Metal
|
Aluminum, steel and peelable membrane easy-open closures for composite, metal and plastic containers | Canned processed foods, coffee, beverage, powdered beverages and infant formula, snacks, nuts, nutritional supplements, spices/ seasonings, pet food and treats, nonfood products | ||
Printed Flexible Packaging
|
Flexible packaging made from thin-gauge, high value-added rotogravure, flexographic and combination printed film including high-performance laminations and rotogravure cylinder engraving | Confectionery and gum, hard-baked goods, coffee, retort, beverages, snack foods, pet food, home and personal care |
Products and Services | Markets | |||
Tubes and Cores
(formerly known as
Engineered Carriers)
|
Paperboard tubes, cores, roll packaging, molded plugs, supply-chain packaging services | Construction, film, flowable products, metal, paper mill, shipping and storage, tape and label, textiles, converters | ||
Paper
|
Recycled paperboard, chipboard, tubeboard, lightweight corestock, boxboard, linerboard, specialty grades, recovered paper | Converted paper products, spiral winders, beverage insulators, displays, gaming, paper manufacturing |
4
Products and Services | Markets | |||
Packaging Services
|
Designing, manufacturing, assembling, packing and distributing temporary, semi-permanent and permanent point-of-purchase (P-O-P) displays; providing brand artwork management and supply chain management services including: contract packing, fulfillment and scalable Service Centers | Consumer packaged goods, including: personal care, beauty, healthcare, electronics, hosiery, confectionery, home and garden, sporting goods, office supplies, pharmaceuticals |
Products and Services | Markets | |||
Wire and Cable Reels
|
Baker steel, nailed wooden, plywood, recycled and poly-fiber reels | Wire and cable manufacturers | ||
Molded and Extruded
Plastics
|
Complete offering of product design, tool design and fabrication; manufacturing in both injection molding and extrusion technologies | Consumer and industrial packaging, food services, textiles, wire and cable, fiber optics, plumbing, filtration, automotive, medical, healthcare | ||
Paperboard Specialties
|
Custom-printed Rixie coasters, Stancap® glass covers, other paper amenities | Hotels and resorts, casinos, country clubs, catering services, cruise lines, airlines, healthcare facilities, restaurants | ||
Protective Packaging
|
Proprietary SonoPost® Technology, SonoBase Carrier System and a partnership with Sonoco CorrFlex to provide the SonoPop Display System. Services include an ISTA-certified lab for engineering and testing solutions, on-site engineering and just-in-time fulfillment of multiple packaging materials | Household appliances, heating and air conditioning, lawn and garden including outdoor grills, furniture and office furnishings, automotive, promotional display and palletized distribution solutions |
5
6
these markets are influenced by the overall rate of economic activity. Throughout the year, the Company remained highly competitive within each of the markets served. The Company manufactures and sells many of its products globally. Having operated internationally since 1923, the Company considers its ability to serve its customers worldwide in a timely and consistent manner a competitive advantage. The Company also believes that its technological leadership, reputation for quality and vertical integration are competitive advantages. Furthermore, the Companys product development and global expansion reflect the rapidly changing needs of its major customers, who demand high-quality, state-of-the-art, environmentally compatible packaging, wherever they choose to do business. In addition, the Company is focusing on productivity improvements with the objective of being the low-cost producer in value-added niches of the packaging market. The Company continues to pursue several productivity initiatives aimed at reducing costs and improving processes using the latest in technology. |
Research and Development Company-sponsored research and development expenses totaled approximately $14.7 million in 2005, $15.4 million in 2004 and $14.2 million in 2003. Customer-sponsored research and development costs were not material in any of these periods. Significant projects in Sonocos Tubes and Cores/Paper segment during 2005 included efforts to design and develop a new generation of products for the construction industry and to enhance performance characteristics of the Companys tubes and cores in the textile, film and paper packaging areas, as well as projects aimed at enhancing productivity. The Consumer Packaging segment continued to invest in new materials technology and new process technology for a range of packaging options during 2005. |
Compliance with Environmental Laws Information regarding compliance with environmental laws is provided in Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations under the caption Risk Management, and Note 14 to the Consolidated Financial Statements on pages F-30 and F-31 of this Annual Report on Form 10-K. |
Number of Employees Sonoco had approximately 17,600 employees worldwide as of December 31, 2005. |
(d) | Financial information about geographic areas |
Financial information about geographic areas is provided in Note 16 to the Consolidated Financial Statements on page F-35 of this Annual Report on Form 10-K, and in the information about market risk under the caption Risk Management in Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 24 and 25 of this Annual Report on Form 10-K. |
(e) | Available information |
The Company electronically files with the Securities and Exchange Commission (SEC) its annual reports on Form 10-K, its quarterly reports on Form 10-Q, its periodic reports on Form 8-K, amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 (the 1934 Act), and proxy materials pursuant to Section 14 of the 1934 Act. The SEC maintains a site on the Internet, www.sec.gov, that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Sonoco also makes its filings available, free of charge, through its Web site, www.sonoco.com, as soon as reasonably practical after the electronic filing of such material with the SEC. |
7
Executive Officers of the Registrant |
Position and Business Experience | ||||||
Name | Age | For the Past Five Years | ||||
Harris E. DeLoach, Jr.
|
61 | Chairman of the Board, President & Chief Executive Officer since April 2005. Previously President and Chief Executive Officer July 2000-April 2005; Chief Operating Officer April-July 2000; Sr. Executive Vice President, Global Industrial Products/Paper/Molded Plastics 1999-2000; Executive Vice President, High Density Film, Industrial Container, Fibre Partitions, Protective Packaging, Sonoco Crellin and Baker Reels 1996-1999. Joined Sonoco in 1985. | ||||
Jim C. Bowen
|
55 | Sr. Vice President since 2002. Previously Sr. Vice President, Global Paper Operations 2000-2002; Vice President/General Manager Paper 1997-2000; Vice President, Manufacturing N.A. Paper 1994-1997; Director of Manufacturing 1993-1994. Joined Sonoco in 1972. | ||||
Allan V. Cecil
|
64 | Vice President, Investor Relations & Corporate Affairs since 1998. Previously Vice President, Investor Relations and Corporate Communications 1996-1998. Prior experience: Vice President, Corporate Communications & Investor Relations, National Gypsum Company and Mesa Petroleum Co. Joined Sonoco in 1996. | ||||
Cynthia A. Hartley
|
57 | Sr. Vice President, Human Resources since 2002. Previously Vice President, Human Resources 1995-2002. Prior experience: Vice President, Human Resources, Dames & Moore and National Gypsum Company. Joined Sonoco in 1995. | ||||
Ronald E. Holley
|
63 | Sr. Vice President since 2002. Previously Sr. Vice President, Global Industrial Products/Molded Plastics 2000-2002; Vice President, Industrial Products N.A. 1999-2000; Vice President, High Density Film 1993-1999; Vice President, Total Quality Management 1990-1993. Joined Sonoco in 1964. | ||||
Charles J. Hupfer
|
59 | Sr. Vice President, Chief Financial Officer and Corporate Secretary since April 2005. Previously Vice President, Chief Financial Officer and Corporate Secretary 2002-2005; Vice President, Treasurer and Corporate Secretary 1995-2002; Treasurer 1988-1995. Joined Sonoco in 1975. | ||||
M. Jack Sanders
|
52 | Vice President, Global Industrial Products since January 2006. Previously Vice President, Industrial ProductsN.A. 2001-2006; Division Vice President/General Manager, Protective Packaging 1998-2001; General Manager, Protective Packaging 1991-1998. Joined Sonoco in 1987. | ||||
Eddie L. Smith
|
54 | Vice President, Customer & Business Development since 2002. Previously Vice President/General Manager, Flexible Packaging 1998-2002; Division Vice President/General Manager, Flexible Packaging 1996-1998; Division Vice President, Consumer Products Europe 1994-1996. Joined Sonoco in 1971. | ||||
Charles L. Sullivan, Jr.
|
62 | Executive Vice President since April 2005. Previously Sr. Vice President 2000-2005; Regional Director, Cargill Asia/Pacific in 2000 and President, Cargills Salt Division 1995-2000. Joined Sonoco in 2000. |
8
9
10
Item 5.
|
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Cash | ||||||||||||
High | Low | Dividends | ||||||||||
2005 |
||||||||||||
First Quarter |
$ | 30.24 | $ | 25.58 | $ | .22 | ||||||
Second Quarter |
$ | 29.13 | $ | 25.46 | $ | .23 | ||||||
Third Quarter |
$ | 28.84 | $ | 25.79 | $ | .23 | ||||||
Fourth Quarter |
$ | 30.64 | $ | 25.43 | $ | .23 | ||||||
2004 |
||||||||||||
First Quarter |
$ | 25.21 | $ | 22.92 | $ | .21 | ||||||
Second Quarter |
$ | 25.99 | $ | 23.70 | $ | .22 | ||||||
Third Quarter |
$ | 26.50 | $ | 24.53 | $ | .22 | ||||||
Fourth Quarter |
$ | 29.73 | $ | 25.12 | $ | .22 |
11
Item 6.
|
Selected Financial Data |
(Dollars and shares in thousands except | ||||||||||||||||||||
per share data) | Years ended December 31 | |||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||
Operating Results1 |
||||||||||||||||||||
Net sales |
$ | 3,528,574 | $ | 3,155,433 | $ | 2,758,326 | $ | 2,701,419 | $ | 2,464,445 | ||||||||||
Cost of sales and operating expenses |
3,232,590 | 2,897,046 | 2,549,726 | 2,455,357 | 2,204,874 | |||||||||||||||
Other expense, net2 |
21,237 | 18,982 | 50,056 | 10,409 | 51,175 | |||||||||||||||
Interest expense |
51,559 | 47,463 | 52,399 | 54,196 | 52,217 | |||||||||||||||
Interest income |
(7,938 | ) | (5,400 | ) | (2,188 | ) | (1,649 | ) | (3,800 | ) | ||||||||||
Income before income taxes |
231,126 | 197,342 | 108,333 | 183,106 | 159,979 | |||||||||||||||
Provision for income taxes3 |
84,174 | 58,858 | 37,698 | 65,075 | 77,269 | |||||||||||||||
Equity in earnings of affiliates/
minority interest4 |
14,925 | 12,745 | 7,543 | 7,437 | (1,214 | ) | ||||||||||||||
Income from continuing operations |
161,877 | 151,229 | 78,178 | 125,468 | 81,496 | |||||||||||||||
Income from discontinued operations, net of
income taxes |
¾ | ¾ | 60,771 | 9,848 | 10,113 | |||||||||||||||
Net income available to common shareholders |
$ | 161,877 | $ | 151,229 | $ | 138,949 | $ | 135,316 | $ | 91,609 | ||||||||||
Per common share |
||||||||||||||||||||
Net income available to common
shareholders: |
||||||||||||||||||||
Basic |
$ | 1.63 | $ | 1.54 | $ | 1.44 | $ | 1.40 | $ | .96 | ||||||||||
Diluted |
1.61 | 1.53 | 1.43 | 1.39 | .96 | |||||||||||||||
Cash dividends common |
.91 | .87 | .84 | .83 | .80 | |||||||||||||||
Average common shares outstanding: |
||||||||||||||||||||
Basic |
99,336 | 98,018 | 96,819 | 96,373 | 95,370 | |||||||||||||||
Diluted |
100,418 | 98,947 | 97,129 | 97,178 | 95,807 | |||||||||||||||
Actual common shares outstanding at
December 31 |
99,988 | 98,500 | 96,969 | 96,380 | 95,453 | |||||||||||||||
Financial Position |
||||||||||||||||||||
Net working capital |
$ | 265,014 | $ | 282,226 | $ | 75,671 | $ | 104,671 | $ | 204,899 | ||||||||||
Property, plant and equipment, net |
943,951 | 1,007,295 | 923,569 | 975,368 | 1,008,944 | |||||||||||||||
Total assets |
2,981,740 | 3,041,319 | 2,520,633 | 2,436,439 | 2,352,197 | |||||||||||||||
Long-term debt |
657,075 | 813,207 | 473,220 | 699,346 | 885,961 | |||||||||||||||
Total debt |
781,605 | 906,961 | 674,587 | 833,846 | 921,810 | |||||||||||||||
Shareholders equity |
1,263,314 | 1,152,879 | 1,014,160 | 867,425 | 804,122 | |||||||||||||||
Current ratio |
1.4 | 1.4 | 1.1 | 1.2 | 1.4 | |||||||||||||||
Total debt to total capital5 |
35.7 | % | 40.7 | % | 36.4 | % | 44.5 | % | 49.3 | % | ||||||||||
1 | Operating results for 2004 and 2005 are not comparable to previous years due the impact of the CorrFlex acquisition that occurred in May 2004, and the formation of the Sonoco-Alcore joint venture that occurred in November 2004. Operating results for 2001-2002 have been restated to reclassify the High Density Film business, which was sold in 2003, as discontinued operations. | |
2 | 2005 data reflects net charges of $21,237 pretax, $14,343 after tax, for restructuring costs. 2004 data reflects net charges of $18,982 pretax, $16,154 after tax, for restructuring costs. 2003 data reflects net charges of $50,056 pretax, $35,329 after tax, for restructuring costs. 2002 data reflects net charges of $10,409 pretax, $6,663 after tax, for restructuring costs. 2001 data reflects net charges of $51,175 pretax, $49,028 after tax, for the net gain from legal settlements, costs of corporate-owned life insurance (COLI) and restructuring costs. | |
3 | The provision for income taxes included $10,074 in 2005 related to the repatriation of foreign earnings under the American Jobs Creation Act of 2004, ($9,261) associated with the closing of previous years examinations in 2004 and $11,295 related to COLI in 2001. | |
4 | 2005, 2004, 2003 and 2001 data includes restructuring charges/(income) of $(1,260), $(1,778), $1,455 and $6,591, respectively. | |
5 | Calculated as Total Debt divided by the sum of Total Debt, Shareholders Equity and Long-term Deferred Tax Liability. |
12
Item 7.
|
Managements Discussion and Analysis of Financial Condition and Results of Operations |
13
14
15
16
($ in millions) | ||||
| | ||||
Volume |
$ | 100 | ||
Selling price |
60 | |||
Currency exchange rate |
43 | |||
Acquisitions |
167 | |||
Other |
3 | |||
Total sales increase |
$ | 373 | ||
($ in millions) | 2005 | 2004 | % Change | |||||||||
Consumer Packaging Segment |
$ | 103.5 | $ | 83.1 | 24.5 | % | ||||||
Tubes and Cores/Paper Segment |
107.0 | 113.0 | (5.3 | )% | ||||||||
Packaging Services Segment |
44.8 | 30.3 | 47.9 | % | ||||||||
All Other Sonoco |
40.6 | 32.0 | 26.9 | % | ||||||||
Restructuring and Related
Impairment charges |
(21.2 | ) | (19.0 | ) | (11.6 | )% | ||||||
Interest expense, net |
(43.6 | ) | (42.1 | ) | (3.6 | )% | ||||||
Consolidated operating profits |
$ | 231.1 | $ | 197.3 | 17.1 | % | ||||||
17
18
($ in millions) | 2005 | 2004 | % Change | |||||||||
Trade sales |
$ | 1,247.5 | $ | 1,132.1 | 10.2 | % | ||||||
Operating profits |
103.5 | 83.1 | 24.5 | % | ||||||||
Depreciation, depletion and amortization |
56.3 | 59.4 | (5.2 | )% | ||||||||
Capital spending |
50.8 | 50.7 | 0.2 | % | ||||||||
19
($ in millions) | 2005 | 2004 | % Change | |||||||||
Trade sales |
$ | 1,482.1 | $ | 1,388.5 | 6.7 | % | ||||||
Operating profits |
107.1 | 113.0 | (5.2 | )% | ||||||||
Depreciation, depletion and amortization |
83.7 | 85.2 | (1.8 | )% | ||||||||
Capital spending |
62.3 | 59.4 | 4.9 | % | ||||||||
20
($ in millions) | 2005 | 2004 | % Change | |||||||||
Trade sales |
$ | 455.9 | $ | 321.0 | 42.0 | % | ||||||
Operating profits |
44.8 | 30.3 | 47.9 | % | ||||||||
Depreciation, depletion and amortization |
12.0 | 8.2 | 46.3 | % | ||||||||
Capital spending |
4.9 | 3.3 | 48.5 | % | ||||||||
($ in millions) | 2005 | 2004 | % Change | |||||||||
Trade sales |
$ | 343.2 | $ | 313.8 | 9.3 | % | ||||||
Operating profits |
40.6 | 32.0 | 26.9 | % | ||||||||
Depreciation, depletion and amortization |
11.1 | 11.1 | 0.0 | % | ||||||||
Capital spending |
11.1 | 6.4 | 73.4 | % | ||||||||
21
Payments Due In | ||||||||||||||||||||
($ in millions) | Total | 2006 | 2007-2008 | 2009-2010 | Beyond 2010 | |||||||||||||||
Debt obligations |
$ | 781.6 | $ | 124.5 | $ | 4.5 | $ | 103.6 | $ | 549.0 | ||||||||||
Interest payments1 |
272.3 | 25.0 | 50.0 | 48.2 | 149.1 | |||||||||||||||
Operating leases |
132.6 | 31.3 | 45.2 | 26.4 | 29.7 | |||||||||||||||
Environmental remediation (U.S.
Mills) |
12.5 | .5 | 12.0 | |||||||||||||||||
Purchase obligations2 |
149.0 | 15.3 | 20.7 | 19.1 | 93.9 | |||||||||||||||
Total contractual obligations |
$ | 1,348.0 | $ | 196.6 | $ | 132.4 | $ | 197.3 | $ | 821.7 | ||||||||||
1 | Includes interest payments on outstanding fixed-rate, long-term debt obligations that do not have associated fair value hedges as well as financing fees on the backstop line of credit. | |
2 | Includes only long-term contractual commitments. Does not include short-term obligations for the purchase of goods and services used in the ordinary course of business. |
22
23
24
($ in millions) | ||||
Volume |
$ | 124 | ||
Selling price |
43 | |||
Currency exchange rate |
70 | |||
Acquisitions |
148 | |||
Other |
12 | |||
Total sales increase |
$ | 397 | ||
($ in millions) | 2004 | 2003 | % Change | |||||||||
Consumer Packaging Segment |
$ | 83.1 | $ | 78.7 | 5.6 | % | ||||||
Tubes and Cores/Paper Segment |
113.0 | 103.0 | 9.7 | % | ||||||||
Packaging Services Segment |
30.3 | 7.9 | >100 | % | ||||||||
All Other Sonoco |
32.0 | 19.0 | 68.4 | % | ||||||||
Restructuring and Related
Impairment charges |
(19.0 | ) | (50.1 | ) | 62.1 | % | ||||||
Interest expense, net |
(42.1 | ) | (50.2 | ) | 16.1 | % | ||||||
Consolidated operating profits |
$ | 197.3 | $ | 108.3 | 82.2 | % | ||||||
25
26
($ in millions) | 2004 | 2003 | % Change | |||||||||
Trade sales |
$ | 1,132.1 | $ | 1,044.4 | 8.4 | % | ||||||
Operating profits |
83.1 | 78.7 | 5.6 | % | ||||||||
Depreciation, depletion and amortization |
59.4 | 52.5 | 13.1 | % | ||||||||
Capital spending |
50.7 | 51.0 | (0.6 | )% | ||||||||
($ in millions) | 2004 | 2003 | % Change | |||||||||
Trade sales |
$ | 1,388.5 | $ | 1,259.8 | 10.2 | % | ||||||
Operating profits |
113.0 | 103.0 | 9.8 | % | ||||||||
Depreciation, depletion and amortization |
85.2 | 83.6 | 1.9 | % | ||||||||
Capital spending |
59.4 | 48.6 | 22.2 | % | ||||||||
27
($ in millions) | 2004 | 2003 | % Change | |||||||||
Trade sales |
$ | 321.0 | $ | 184.6 | 73.9 | % | ||||||
Operating profits |
30.3 | 7.9 | >100 | % | ||||||||
Depreciation, depletion and amortization |
8.2 | 3.5 | >100 | % | ||||||||
Capital spending |
3.3 | 5.1 | (35.3 | )% | ||||||||
($ in millions) | 2004 | 2003 | % Change | |||||||||
Trade sales |
$ | 313.8 | $ | 269.5 | 16.4 | % | ||||||
Operating profits |
32.0 | 19.0 | 68.4 | % | ||||||||
Depreciation, depletion and amortization |
11.1 | 13.0 | (14.6 | %) | ||||||||
Capital spending |
6.4 | 3.8 | 68.4 | % | ||||||||
28
29
30
December 31, 2005 | ||||||||||||
Projected Benefit | ||||||||||||
Assumption | Percentage Point | Obligation | 2005 Expense | |||||||||
($ in millions) | Change | Higher (Lower) | Higher (Lower) | |||||||||
Discount rate |
-.25 pts | $ | 33.7 | $ | 3.3 | |||||||
Expected return on assets |
-.25 pts | N/A | $ | 1.8 | ||||||||
31
F-1
F-2
(Dollars and shares in thousands) | ||||||||
At December 31 | 2005 | 2004 | ||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 59,608 | $ | 117,725 | ||||
Trade accounts receivable, net of allowances of $8,325 in 2005 and
$8,286 in 2004 |
413,209 | 390,024 | ||||||
Other receivables |
45,225 | 37,457 | ||||||
Inventories |
||||||||
Finished and in process |
124,891 | 123,924 | ||||||
Materials and supplies |
193,425 | 191,087 | ||||||
Prepaid expenses |
23,068 | 36,386 | ||||||
Deferred income taxes |
26,074 | 25,509 | ||||||
885,500 | 922,112 | |||||||
Property, Plant and Equipment, Net |
943,951 | 1,007,295 | ||||||
Goodwill |
573,903 | 570,508 | ||||||
Other Intangible Assets |
73,037 | 88,790 | ||||||
Prepaid Pension Costs |
281,904 | 237,200 | ||||||
Other Assets |
223,445 | 215,414 | ||||||
Total Assets |
$ | 2,981,740 | $ | 3,041,319 | ||||
Liabilities and Shareholders Equity |
||||||||
Current Liabilities |
||||||||
Payable to suppliers |
$ | 265,219 | $ | 274,224 | ||||
Accrued expenses and other |
186,559 | 219,123 | ||||||
Accrued wages and other compensation |
44,082 | 36,850 | ||||||
Notes payable and current portion of long-term debt |
124,530 | 93,754 | ||||||
Accrued taxes |
96 | 15,935 | ||||||
620,486 | 639,886 | |||||||
Long-term Debt |
657,075 | 813,207 | ||||||
Pension and Other Postretirement Benefits |
173,939 | 148,214 | ||||||
Deferred Income Taxes |
146,981 | 168,776 | ||||||
Other Liabilities |
119,945 | 118,357 | ||||||
Commitments and Contingencies |
||||||||
Shareholders Equity |
||||||||
Serial preferred stock, no par value |
||||||||
Authorized 30,000 shares |
||||||||
0 shares issued and outstanding as of December 31, 2005 and 2004 |
||||||||
Common shares, no par value |
||||||||
Authorized 300,000 shares |
||||||||
99,988 and 98,500 shares issued and outstanding
at December 31, 2005 and 2004, respectively |
7,175 | 7,175 | ||||||
Capital in excess of stated value |
418,668 | 376,750 | ||||||
Accumulated other comprehensive loss |
(106,389 | ) | (103,155 | ) | ||||
Retained earnings |
943,860 | 872,109 | ||||||
Total Shareholders Equity |
1,263,314 | 1,152,879 | ||||||
Total Liabilities and Shareholders Equity |
$ | 2,981,740 | $ | 3,041,319 | ||||
F-3
(Dollars and shares in thousands except per share data) | ||||||||||||
Years ended December 31 | 2005 | 2004 | 2003 | |||||||||
Net sales |
$ | 3,528,574 | $ | 3,155,433 | $ | 2,758,326 | ||||||
Cost of sales |
2,867,623 | 2,580,643 | 2,259,887 | |||||||||
Selling, general and administrative expenses |
364,967 | 316,403 | 289,839 | |||||||||
Restructuring charges |
21,237 | 18,982 | 50,056 | |||||||||
Income before interest and taxes |
274,747 | 239,405 | 158,544 | |||||||||
Interest expense |
51,559 | 47,463 | 52,399 | |||||||||
Interest income |
(7,938 | ) | (5,400 | ) | (2,188 | ) | ||||||
Income before income taxes |
231,126 | 197,342 | 108,333 | |||||||||
Provision for income taxes |
84,174 | 58,858 | 37,698 | |||||||||
Income before equity in earnings of affiliates/minority interest
in subsidiaries |
146,952 | 138,484 | 70,635 | |||||||||
Equity in earnings of affiliates/minority interest in subsidiaries |
14,925 | 12,745 | 7,543 | |||||||||
Income from continuing operations |
161,877 | 151,229 | 78,178 | |||||||||
Income from discontinued operations, net of income taxes |
¾ | ¾ | 60,771 | |||||||||
Net income |
$ | 161,877 | $ | 151,229 | $ | 138,949 | ||||||
Average common shares outstanding: |
||||||||||||
Basic |
99,336 | 98,018 | 96,819 | |||||||||
Assuming exercise of options |
1,082 | 929 | 310 | |||||||||
Diluted |
100,418 | 98,947 | 97,129 | |||||||||
Per common share |
||||||||||||
Net income |
||||||||||||
Basic: |
||||||||||||
From continuing operations |
$ | 1.63 | $ | 1.54 | $ | .81 | ||||||
From discontinued operations |
$ | ¾ | $ | ¾ | $ | .63 | ||||||
Net income |
$ | 1.63 | $ | 1.54 | $ | 1.44 | ||||||
Diluted: |
||||||||||||
From continuing operations |
$ | 1.61 | $ | 1.53 | $ | .80 | ||||||
From discontinued operations |
$ | ¾ | $ | ¾ | $ | .63 | ||||||
Net income |
$ | 1.61 | $ | 1.53 | $ | 1.43 | ||||||
Cash dividends common |
$ | .91 | $ | .87 | $ | .84 | ||||||
F-4
Accumulated | ||||||||||||||||||||||||
Capital in | Other | |||||||||||||||||||||||
Comprehensive | Common Shares | Excess of | Comprehensive | Retained | ||||||||||||||||||||
(Dollars and shares in thousands) | Income | Outstanding | Amount | Stated Value | Loss | Earnings | ||||||||||||||||||
January 1, 2003 |
96,380 | $ | 7,175 | $ | 324,295 | $ | (212,164 | ) | $ | 748,119 | ||||||||||||||
Net income |
$ | 138,949 | 138,949 | |||||||||||||||||||||
Other comprehensive
income (loss): |
||||||||||||||||||||||||
Translation gain |
77,903 | |||||||||||||||||||||||
Minimum pension liability
adjustment, net of tax |
(3,403 | ) | ||||||||||||||||||||||
Derivative financial
instruments, net of tax |
1,573 | |||||||||||||||||||||||
Other comprehensive income |
76,073 | 76,073 | ||||||||||||||||||||||
Comprehensive income |
$ | 215,022 | ||||||||||||||||||||||
Cash dividends |
(81,128 | ) | ||||||||||||||||||||||
Exercise of stock options |
589 | 8,752 | ||||||||||||||||||||||
Stock-based compensation |
4,089 | |||||||||||||||||||||||
December 31, 2003 |
96,969 | 7,175 | 337,136 | (136,091 | ) | 805,940 | ||||||||||||||||||
Net income |
$ | 151,229 | 151,229 | |||||||||||||||||||||
Other comprehensive
income (loss): |
||||||||||||||||||||||||
Translation gain |
36,917 | |||||||||||||||||||||||
Minimum pension liability
adjustment, net of tax |
(4,479 | ) | ||||||||||||||||||||||
Derivative financial
instruments, net of tax |
498 | |||||||||||||||||||||||
Other comprehensive income |
32,936 | 32,936 | ||||||||||||||||||||||
Comprehensive income |
$ | 184,165 | ||||||||||||||||||||||
Cash dividends |
(85,060 | ) | ||||||||||||||||||||||
Exercise of stock options |
1,531 | 34,463 | ||||||||||||||||||||||
Stock-based compensation |
5,151 | |||||||||||||||||||||||
December 31, 2004 |
98,500 | 7,175 | 376,750 | (103,155 | ) | 872,109 | ||||||||||||||||||
Net income |
$ | 161,877 | 161,877 | |||||||||||||||||||||
Other comprehensive
income (loss): |
||||||||||||||||||||||||
Translation loss |
(12,844 | ) | ||||||||||||||||||||||
Minimum pension liability
adjustment, net of tax |
568 | |||||||||||||||||||||||
Derivative financial
instruments, net of tax |
9,042 | |||||||||||||||||||||||
Other comprehensive loss |
(3,234 | ) | (3,234 | ) | ||||||||||||||||||||
Comprehensive income |
$ | 158,643 | ||||||||||||||||||||||
Cash dividends |
(90,126 | ) | ||||||||||||||||||||||
Exercise of stock options |
1,488 | 37,370 | ||||||||||||||||||||||
Stock-based compensation |
4,548 | |||||||||||||||||||||||
December 31, 2005 |
99,988 | $ | 7,175 | $ | 418,668 | $ | (106,389 | ) | $ | 943,860 | ||||||||||||||
F-5
(Dollars in thousands) | ||||||||||||
Years ended December 31 | 2005 | 2004 | 2003 | |||||||||
Cash Flows from Operating Activities |
||||||||||||
Net income |
$ | 161,877 | $ | 151,229 | $ | 138,949 | ||||||
Adjustments to reconcile net income to net cash provided
by operating activities |
||||||||||||
Asset impairment |
9,515 | 6,153 | 8,381 | |||||||||
Depreciation, depletion and amortization |
163,074 | 163,928 | 163,234 | |||||||||
Equity in earnings of affiliates/minority interest
in subsidiaries |
(14,925 | ) | (12,745 | ) | (7,543 | ) | ||||||
Cash dividends from affiliated companies |
6,758 | 7,114 | 11,327 | |||||||||
(Gain) loss on disposition of assets |
(555 | ) | 2,460 | 1,228 | ||||||||
Gain on sale of High Density Film business |
¾ | ¾ | (49,433 | ) | ||||||||
Non-cash tax effect of nonqualified stock options |
2,753 | 3,013 | 410 | |||||||||
Deferred taxes |
(24,722 | ) | 5,310 | 11,175 | ||||||||
Change in assets and liabilities, net of effects from
acquisitions, dispositions, assets held for sale and
foreign currency adjustments |
||||||||||||
Receivables |
(24,026 | ) | (23,893 | ) | 5,324 | |||||||
Inventories |
(6,447 | ) | (38,395 | ) | (10,117 | ) | ||||||
Prepaid expenses |
2,298 | 1,272 | (7,955 | ) | ||||||||
Payables and taxes |
(10,554 | ) | 12,082 | 70,727 | ||||||||
Cash contribution to pension plans |
(77,024 | ) | (33,360 | ) | (22,946 | ) | ||||||
Other assets and liabilities |
39,341 | 8,020 | 19,487 | |||||||||
Net cash provided by operating activities |
227,363 | 252,188 | 332,248 | |||||||||
Cash Flows from Investing Activities |
||||||||||||
Purchase of property, plant and equipment |
(129,112 | ) | (119,800 | ) | (113,574 | ) | ||||||
Cost of acquisitions, net of cash acquired |
(3,566 | ) | (267,016 | ) | (6,232 | ) | ||||||
Proceeds from the sale of assets |
13,377 | 8,638 | 2,709 | |||||||||
Proceeds from sale of High Density Film business |
¾ | ¾ | 81,177 | |||||||||
Net cash used by investing activities |
(119,301 | ) | (378,178 | ) | (35,920 | ) | ||||||
Cash Flows from Financing Activities |
||||||||||||
Proceeds from issuance of debt |
43,859 | 206,157 | 20,715 | |||||||||
Principal repayment of debt |
(11,699 | ) | (168,528 | ) | (120,287 | ) | ||||||
Net (decrease) increase in commercial paper borrowings |
(150,000 | ) | 180,000 | (65,500 | ) | |||||||
Net increase (decrease) in bank overdrafts |
7,765 | (7,976 | ) | (8,075 | ) | |||||||
Cash dividends common |
(90,126 | ) | (85,060 | ) | (81,128 | ) | ||||||
Common shares issued |
34,617 | 31,450 | 8,342 | |||||||||
Net cash (used) provided by financing activities |
(165,584 | ) | 156,043 | (245,933 | ) | |||||||
Effects of Exchange Rate Changes on Cash |
(595 | ) | 2,818 | 3,054 | ||||||||
(Decrease) Increase in Cash and Cash Equivalents |
(58,117 | ) | 32,871 | 53,449 | ||||||||
Cash and cash equivalents at beginning of year |
117,725 | 84,854 | 31,405 | |||||||||
Cash and cash equivalents at end of year |
$ | 59,608 | $ | 117,725 | $ | 84,854 | ||||||
Supplemental Cash Flow Disclosures |
||||||||||||
Interest paid, net of amounts capitalized |
$ | 46,650 | $ | 41,530 | $ | 50,079 | ||||||
Income taxes paid, net of refunds |
$ | 115,253 | $ | 72,647 | $ | 27,182 | ||||||
Value of stock issued for acquisition |
$ | ¾ | $ | ¾ | $ | 2,700 | ||||||
F-6
Ownership Interest | ||||
Entity | Percentage | |||
RTS Packaging JVCO |
35.0 | % | ||
Cascades Conversion, Inc. |
50.0 | % | ||
Cascades Sonoco, Inc. |
50.0 | % | ||
1191268 Ontario, Inc. |
50.0 | % | ||
Enstel Manufacturing Inc. |
50.0 | % | ||
AT-Spiral Oy |
48.9 | % | ||
Demolli Industria Cartaria S.p.A. |
25.0 | % | ||
Showa Products Company Ltd. |
20.0 | % | ||
Conitex Sonoco Holding BVI Ltd. |
30.0 | % |
F-7
F-8
F-9
2003 | ||||
Net sales |
$ | 198,759 | ||
Operating income before income taxes |
17,758 | |||
Gain on sale |
63,112 | |||
Income tax expense |
(20,099 | ) | ||
Income from discontinued operations |
$ | 60,771 | ||
Income from discontinued
operations per basic share |
$ | .63 | ||
Income from discontinued
operations per diluted share |
$ | .63 | ||
Severance | Asset | |||||||||||||||
and | Impairment/ | Other | ||||||||||||||
Termination | Disposal | Exit | ||||||||||||||
Benefits | of Assets | Costs | Total | |||||||||||||
Tubes and Cores/Paper Segment |
$ | 35,982 | $ | 16,012 | $ | 12,415 | $ | 64,409 | ||||||||
Consumer Packaging Segment |
10,334 | 4,586 | 6,154 | 21,074 | ||||||||||||
Packaging Services Segment |
333 | ¾ | ¾ | 333 | ||||||||||||
All Other Sonoco |
2,995 | 326 | 92 | 3,413 | ||||||||||||
Corporate |
5,094 | ¾ | 213 | 5,307 | ||||||||||||
Cumulative Restructuring Charges,
net of adjustments |
$ | 54,738 | $ | 20,924 | $ | 18,874 | $ | 94,536 | ||||||||
F-10
Severance | Asset | |||||||||||||||
and | Impairment/ | Other | ||||||||||||||
Termination | Disposal | Exit | ||||||||||||||
Benefits | of Assets | Costs | Total | |||||||||||||
Tubes and Cores/Paper Segment |
$ | 4,834 | $ | 4,999 | $ | 6,194 | $ | 16,027 | ||||||||
Consumer Packaging Segment |
733 | 1,557 | 2,321 | 4,611 | ||||||||||||
All Other Sonoco |
640 | (41 | ) | ¾ | 599 | |||||||||||
Total |
$ | 6,207 | $ | 6,515 | $ | 8,515 | $ | 21,237 | ||||||||
Severance | Asset | |||||||||||||||
and | Impairment/ | Other | ||||||||||||||
Termination | Disposal | Exit | ||||||||||||||
Benefits | of Assets | Costs | Total | |||||||||||||
Tubes and Cores/Paper Segment |
$ | 7,021 | $ | 4,459 | $ | 3,254 | $ | 14,734 | ||||||||
Consumer Packaging Segment |
1,513 | 1,327 | 2,439 | 5,279 | ||||||||||||
All Other Sonoco |
559 | 367 | 92 | 1,018 | ||||||||||||
Corporate |
(2,548 | ) | ¾ | 499 | (2,049 | ) | ||||||||||
Total |
$ | 6,545 | $ | 6,153 | $ | 6,284 | $ | 18,982 | ||||||||
F-11
Severance | Asset | |||||||||||||||
and | Impairment/ | Other | ||||||||||||||
Termination | Disposal | Exit | ||||||||||||||
Benefits | of Assets | Costs | Total | |||||||||||||
Tubes and Cores/Paper Segment |
$ | 22,306 | $ | 6,621 | $ | 2,486 | $ | 31,413 | ||||||||
Consumer Packaging Segment |
6,253 | 1,760 | 1,456 | 9,469 | ||||||||||||
Packaging Services Segment |
335 | ¾ | ¾ | 335 | ||||||||||||
All Other Sonoco |
1,806 | ¾ | ¾ | 1,806 | ||||||||||||
Corporate |
7,033 | ¾ | ¾ | 7,033 | ||||||||||||
Total |
$ | 37,733 | $ | 8,381 | $ | 3,942 | $ | 50,056 | ||||||||
F-12
Severance | Asset | |||||||||||||||
and | Impairment/ | Other | ||||||||||||||
Termination | Disposal | Exit | ||||||||||||||
Benefits | of Assets | Costs | Total | |||||||||||||
Liability, December 31, 2002 |
$ | 9,162 | $ | | $ | 5,214 | $ | 14,376 | ||||||||
2003 Charges |
40,526 | 8,709 | 3,142 | 52,377 | ||||||||||||
Cash payments |
(21,953 | ) | | (2,970 | ) | (24,923 | ) | |||||||||
Asset impairment (noncash) |
| (8,381 | ) | | (8,381 | ) | ||||||||||
Reclassifications to
pension liability |
(10,234 | ) | | | (10,234 | ) | ||||||||||
Adjustments |
(2,793 | ) | (328 | ) | 1,000 | (2,121 | ) | |||||||||
Liability, December 31, 2003 |
14,708 | | 6,386 | 21,094 | ||||||||||||
2004 Charges |
9,815 | 5,894 | 5,970 | 21,679 | ||||||||||||
Cash payments |
(16,595 | ) | | (5,642 | ) | (22,237 | ) | |||||||||
Asset impairment/pension
curtailment (noncash) |
| (6,153 | ) | (1,926 | ) | (8,079 | ) | |||||||||
Foreign Currency Translation |
2,016 | | 66 | 2,082 | ||||||||||||
Adjustments |
(3,270 | ) | 259 | 314 | (2,697 | ) | ||||||||||
Liability, December 31, 2004 |
6,674 | | 5,168 | 11,842 | ||||||||||||
2005 Charges |
6,232 | 7,099 | 8,992 | 22,323 | ||||||||||||
Cash payments |
(8,600 | ) | | (7,329 | ) | (15,929 | ) | |||||||||
Asset impairment (noncash) |
| (6,515 | ) | | (6,515 | ) | ||||||||||
Foreign Currency Translation |
(859 | ) | | 140 | (719 | ) | ||||||||||
Adjustments |
(538 | ) | (584 | ) | 36 | (1,086 | ) | |||||||||
Liability, December 31, 2005 |
$ | 2,909 | $ | | $ | 7,007 | $ | 9,916 | ||||||||
F-13
2005 | 2004 | |||||||
Land |
$ | 46,541 | $ | 51,041 | ||||
Timber resources |
38,224 | 37,695 | ||||||
Buildings |
388,414 | 396,083 | ||||||
Machinery and equipment |
1,995,737 | 1,981,331 | ||||||
Construction in progress |
68,886 | 76,428 | ||||||
2,537,802 | 2,542,578 | |||||||
Accumulated depreciation and depletion |
(1,593,851 | ) | (1,535,283 | ) | ||||
Property, plant and equipment, net |
$ | 943,951 | $ | 1,007,295 | ||||
F-14
Tubes and | ||||||||||||||||||||
Cores | Consumer | Packaging | ||||||||||||||||||
/Paper | Packaging | Services | All Other | |||||||||||||||||
Segment | Segment | Segment | Sonoco | Total | ||||||||||||||||
Balance as of January 1, 2005 |
$ | 183,671 | $ | 172,630 | $ | 148,268 | $ | 65,939 | $ | 570,508 | ||||||||||
Goodwill purchase price
adjustments |
12,936 | (4,015 | ) | 16 | ¾ | 8,937 | ||||||||||||||
Goodwill on 2005 acquisitions |
1,022 | 59 | ¾ | ¾ | 1,081 | |||||||||||||||
Other adjustments |
(2,686 | ) | ¾ | ¾ | ¾ | (2,686 | ) | |||||||||||||
Foreign currency translation |
(5,308 | ) | 1,709 | (159 | ) | (179 | ) | (3,937 | ) | |||||||||||
Balance as of December 31, 2005 |
$ | 189,635 | $ | 170,383 | $ | 148,125 | $ | 65,760 | $ | 573,903 | ||||||||||
F-15
2005 | 2004 | |||||||
Amortizable intangibles Gross cost |
||||||||
Patents |
$ | 3,378 | $ | 3,378 | ||||
Customer lists |
81,026 | 88,791 | ||||||
Land use rights |
6,011 | 6,011 | ||||||
Supply agreements |
5,261 | 5,261 | ||||||
Other |
6,703 | 6,644 | ||||||
Total gross cost |
102,379 | 110,085 | ||||||
Accumulated amortization |
||||||||
Patents |
(3,110 | ) | (2,843 | ) | ||||
Customer lists |
(14,690 | ) | (8,251 | ) | ||||
Land use rights |
(2,148 | ) | (2,107 | ) | ||||
Supply agreements |
(4,619 | ) | (4,444 | ) | ||||
Other |
(4,775 | ) | (3,650 | ) | ||||
Total accumulated amortization |
(29,342 | ) | (21,295 | ) | ||||
Net amortizable intangibles |
$ | 73,037 | $ | 88,790 | ||||
F-16
2005 | 2004 | |||||||
Commercial paper, average rate of 3.26% in 2005 and 1.40% in 2004 |
$ | 30,000 | $ | 180,000 | ||||
6.75% debentures due November 2010 |
99,912 | 99,898 | ||||||
6.5% debentures due November 2013 |
249,092 | 250,879 | ||||||
5.625% debentures due November 2016 |
149,250 | 157,014 | ||||||
9.2% debentures due August 2021 |
41,305 | 41,305 | ||||||
6.125% IRBs due June 2025 |
34,674 | 34,650 | ||||||
6.0% IRBs due April 2026 |
34,360 | 34,329 | ||||||
Foreign denominated debt, average rate of 8.3% in 2005 and 8.5%
in 2004 |
124,937 | 93,640 | ||||||
Other notes |
18,075 | 15,246 | ||||||
Total debt |
781,605 | 906,961 | ||||||
Less current portion and short-term notes |
124,530 | 93,754 | ||||||
Long-term debt |
$ | 657,075 | $ | 813,207 | ||||
F-17
December 31, 2005 | December 31, 2004 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount of | Value of | Amount of | Value of | |||||||||||||
Liability | Liability1 | Liability | Liability2 | |||||||||||||
Long-term debt |
$ | 657,075 | $ | 705,989 | $ | 813,207 | $ | 880,223 | ||||||||
1 | The fair value of long-term debt at December 31, 2005, does not include the impact of interest-rate swaps. The fair value of long-term debt is $692,489, when the impact of interest rate swaps is included. | |
2 | The fair value of long-term debt at December 31, 2004, does not include the impact of interest-rate swaps. The fair value of long-term debt is $861,430, when the impact of interest-rate swaps is included. |
F-18
Weighted- | ||||||||
Option | average Exercise | |||||||
Shares | Price | |||||||
2003 |
||||||||
Outstanding at beginning of year |
10,875,626 | $ | 25.12 | |||||
Granted |
1,419,694 | $ | 21.19 | |||||
Exercised |
(438,470 | ) | $ | 20.96 | ||||
Canceled |
(518,209 | ) | $ | 24.59 | ||||
Outstanding at end of year |
11,338,641 | $ | 24.81 | |||||
Options exercisable at end of year |
9,943,286 | $ | 25.32 | |||||
2004 |
||||||||
Granted |
1,085,817 | $ | 24.08 | |||||
Exercised |
(1,579,386 | ) | $ | 20.95 | ||||
Canceled |
(1,091,928 | ) | $ | 29.16 | ||||
Outstanding at end of year |
9,753,144 | $ | 24.87 | |||||
Options exercisable at end of year |
8,700,656 | $ | 24.97 | |||||
2005 |
||||||||
Granted |
1,140,648 | $ | 27.26 | |||||
Exercised |
(1,469,431 | ) | $ | 23.75 | ||||
Canceled |
(51,056 | ) | $ | 26.41 | ||||
Outstanding at end of year |
9,373,305 | $ | 25.33 | |||||
Options exercisable at end of year |
9,373,305 | $ | 25.33 | |||||
F-19
2005 | 2004 | 2003 | ||||||||||
Expected dividend yield |
3.5 | % | 3.6 | % | 3.6 | % | ||||||
Expected stock price volatility |
26.2 | % | 27.4 | % | 31.8 | % | ||||||
Risk-free interest rate |
3.7 | % | 3.2 | % | 3.0 | % | ||||||
Expected life of options |
4.5 years | 4.5 years | 4.5 years | |||||||||
Options Outstanding | ||||||||||||
Weighted- | Weighted- | |||||||||||
average | average | |||||||||||
Range of | Number | Remaining | Exercise | |||||||||
Exercise Prices | Outstanding | Contractual Life | Price | |||||||||
$17.25 - $23.80 |
3,238,329 | 5.5 years | $ | 21.75 | ||||||||
$23.83 - $26.81 |
2,963,137 | 5.2 years | $ | 24.51 | ||||||||
$27.31 - $37.10 |
3,171,839 | 4.8 years | $ | 29.74 | ||||||||
$17.25 - $37.10 |
9,373,305 | 5.2 years | $ | 25.33 | ||||||||
Options Exercisable | ||||||||||||
Range of | Number | Weighted-average | ||||||||||
Exercise Prices | Outstanding | Exercise Price | ||||||||||
$17.25 $23.80
|
3,238,329 | $ | 21.75 | |||||||||
$23.83 $26.81
|
2,963,137 | $ | 24.51 | |||||||||
$27.31 $37.10
|
3,171,839 | $ | 29.74 | |||||||||
$17.25 $37.10
|
9,373,305 | $ | 25.33 | |||||||||
F-20
2005 | 2004 | 2003 | ||||||||||
Net income, as reported |
$ | 161,877 | $ | 151,229 | $ | 138,949 | ||||||
Add: Stock-based employee compensation cost,
net of related tax effects included in net
income, as reported |
3,078 | 3,430 | 869 | |||||||||
Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related tax
effects |
(7,647 | ) | (6,355 | ) | (5,889 | ) | ||||||
Pro forma net income |
$ | 157,308 | $ | 148,304 | $ | 133,929 | ||||||
Earnings per share: |
||||||||||||
Basic as reported |
$ | 1.63 | $ | 1.54 | $ | 1.44 | ||||||
Basic pro forma |
$ | 1.58 | $ | 1.51 | $ | 1.38 | ||||||
Diluted as reported |
$ | 1.61 | $ | 1.53 | $ | 1.43 | ||||||
Diluted pro forma |
$ | 1.57 | $ | 1.50 | $ | 1.38 | ||||||
F-21
2005 | 2004 | 2003 | ||||||||||
Retirement Plans |
||||||||||||
Service cost |
$ | 25,994 | $ | 22,880 | $ | 20,209 | ||||||
Interest cost |
60,489 | 57,953 | 51,767 | |||||||||
Expected return on plan assets |
(72,316 | ) | (65,967 | ) | (55,290 | ) | ||||||
Amortization of net translation (asset) obligation |
575 | 615 | 576 | |||||||||
Amortization of prior service cost |
1,770 | 1,558 | 1,665 | |||||||||
Amortization of net actuarial loss |
22,705 | 21,153 | 22,223 | |||||||||
Special termination benefit cost |
203 | 198 | 10,234 | |||||||||
Other |
¾ | ¾ | 70 | |||||||||
Effect of curtailment loss |
¾ | ¾ | 611 | |||||||||
Net periodic benefit cost |
$ | 39,420 | $ | 38,390 | $ | 52,065 | ||||||
2005 | 2004 | 2003 | ||||||||||
Retiree Health and Life Insurance Plans |
||||||||||||
Service cost |
$ | 3,487 | $ | 3,608 | $ | 4,360 | ||||||
Interest cost |
7,097 | 8,431 | 11,558 | |||||||||
Expected return on plan assets |
(2,881 | ) | (3,543 | ) | (3,650 | ) | ||||||
Amortization of prior service cost |
(7,679 | ) | (6,160 | ) | (6,581 | ) | ||||||
Amortization of net actuarial loss |
4,896 | 5,031 | 9,026 | |||||||||
Special termination benefit gain |
¾ | ¾ | (1,096 | ) | ||||||||
Effect of curtailment gain |
(1,344 | ) | ¾ | ¾ | ||||||||
Net periodic benefit cost |
$ | 3,576 | $ | 7,367 | $ | 13,617 | ||||||
F-22
Retiree Health and | ||||||||||||||||
Retirement Plans | Life Insurance Plans | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Change in Benefit Obligation |
||||||||||||||||
Benefit obligation at January 1 |
$ | 1,080,525 | $ | 911,083 | $ | 146,764 | $ | 186,363 | ||||||||
Service cost |
25,994 | 22,880 | 3,487 | 3,608 | ||||||||||||
Interest cost |
60,489 | 57,953 | 7,097 | 8,431 | ||||||||||||
Plan participant contributions |
1,557 | 1,332 | 4,586 | 3,558 | ||||||||||||
Plan amendments |
4,082 | 715 | (38,132 | ) | ¾ | |||||||||||
Actuarial loss (gain) |
96,078 | 110,923 | (2,396 | ) | (36,261 | ) | ||||||||||
Benefits paid |
(53,255 | ) | (53,031 | ) | (19,251 | ) | (18,982 | ) | ||||||||
Impact of foreign exchange rates |
(19,869 | ) | 19,574 | 58 | 47 | |||||||||||
Special termination benefit cost |
203 | 198 | ¾ | ¾ | ||||||||||||
Effect of curtailment |
¾ | ¾ | ¾ | ¾ | ||||||||||||
Other |
579 | 8,898 | ¾ | ¾ | ||||||||||||
Benefit obligation at December 31 |
$ | 1,196,383 | $ | 1,080,525 | $ | 102,213 | $ | 146,764 | ||||||||
Change in Plan Assets |
||||||||||||||||
Fair value
of plan assets at January 1 |
$893,384 | $ | 790,470 | $ | 42,347 | $ | 50,081 | |||||||||
Actual return on plan assets |
75,435 | 94,969 | 2,270 | 5,238 | ||||||||||||
Company contributions |
82,163 | 39,975 | 2,930 | 2,704 | ||||||||||||
Plan participant contributions |
1,557 | 1,332 | 4,586 | 3,558 | ||||||||||||
Benefits paid |
(53,255 | ) | (53,031 | ) | (19,251 | ) | (18,982 | ) | ||||||||
Impact of foreign exchange rates |
(14,093 | ) | 13,721 | ¾ | ¾ | |||||||||||
Expenses paid |
(4,245 | ) | (3,104 | ) | (177 | ) | (252 | ) | ||||||||
Other |
496 | 9,052 | ¾ | ¾ | ||||||||||||
Fair value of plan assets at
December 31 |
$ | 981,442 | $ | 893,384 | $ | 32,705 | $42,347 | |||||||||
Reconciliation of Funded Status,
December 31 |
||||||||||||||||
Funded status of plan |
$ | (214,941 | ) | $ | (187,565 | ) | $ | (69,508 | ) | $ | (104,417 | ) | ||||
Unrecognized net actuarial loss |
439,287 | 372,669 | 57,560 | 64,127 | ||||||||||||
Unrecognized prior service cost |
9,356 | 7,048 | (37,917 | ) | (8,782 | ) | ||||||||||
Unrecognized
net transition obligation |
5,627 | 5,914 | ¾ | ¾ | ||||||||||||
Net amount recognized |
$ | 239,329 | $ | 198,066 | $ | (49,865 | ) | $ | (49,072 | ) | ||||||
Retirement Plans | ||||||||
2005 | 2004 | |||||||
Total Recognized Amounts in the
Consolidated Balance Sheets |
||||||||
Prepaid benefit cost |
$ | 281,904 | $ | 237,200 | ||||
Accrued benefit liability |
(133,545 | ) | (129,555 | ) | ||||
Intangible asset |
6,486 | 5,228 | ||||||
Accumulated other comprehensive loss |
84,484 | 85,193 | ||||||
Net amount recognized |
$ | 239,329 | $ | 198,066 | ||||
F-23
Retiree Health and | ||||||||
Year | Retirement Plans | Life Insurance Plans | ||||||
2006 |
$ | 51,214 | $ | 10,347 | ||||
2007 |
52,492 | 10,069 | ||||||
2008 |
54,459 | 9,561 | ||||||
2009 |
55,662 | 9,472 | ||||||
2010 |
58,230 | 9,404 | ||||||
2011-2015 |
334,398 | 44,840 |
Weighted-average assumptions used to | ||||||||
determine benefit obligations at December 31 | U.S. | Foreign Plans | ||||||
Retirement Plans and Retiree Health
and Life Insurance Plans: |
||||||||
Discount Rate |
||||||||
2005 |
5.50 | % | 4.00-5.25 | % | ||||
2004 |
5.75 | % | 4.50-6.25 | % | ||||
Rate of Compensation Increase |
||||||||
2005 |
4.80 | % | 3.00-5.50 | % | ||||
2004 |
4.60 | % | 1.50-4.00 | % |
Weighted-average assumptions used to determine | ||||||||
net periodic benefit cost for years ended December 31 | U.S. | Foreign Plans | ||||||
Retirement Plans and Retiree Health
and Life Insurance Plans: |
||||||||
Discount Rate |
||||||||
2005 |
5.75 | % | 4.25-6.00 | % | ||||
2004 |
6.25 | % | 5.00-6.50 | % | ||||
2003 |
6.75 | % | 5.00-7.00 | % | ||||
Expected Long-term Rate of Return |
||||||||
2005 |
8.50 | % | 3.75-8.00 | % | ||||
2004 |
8.50 | % | 4.00-8.00 | % | ||||
2003 |
8.75 | % | 5.50-8.50 | % | ||||
Rate of Compensation Increase |
||||||||
2005 |
4.60 | % | 3.00-5.50 | % | ||||
2004 |
4.60 | % | 1.50-4.00 | % | ||||
2003 |
4.60 | % | 1.50-5.00 | % |
F-24
Healthcare Cost Trend Rate |
||||
2005 |
13.30 | % | ||
2004 |
10.0 | % | ||
Ultimate Trend Rate |
||||
2005 |
6.0 | % | ||
2004 |
6.0 | % | ||
Year at which the Rate Reaches
the Ultimate Trend Rate |
||||
2005 |
2014 | |||
2004 |
2008 |
F-25
Asset Category | U.S. | U.K. | Canada | |||||||||
Equity securities |
||||||||||||
2005 |
56.0 | % | 74.0 | % | 62.6 | % | ||||||
2004 |
66.6 | % | 71.4 | % | 59.9 | % | ||||||
Debt securities |
||||||||||||
2005 |
25.7 | % | 20.7 | % | 37.4 | % | ||||||
2004 |
28.1 | % | 22.8 | % | 40.1 | % | ||||||
Alternative |
||||||||||||
2005 |
10.2 | % | 4.4 | % | 0.0 | % | ||||||
2004 |
5.3 | % | 4.4 | % | 0.0 | % | ||||||
Cash |
||||||||||||
20051 |
8.1 | % | 0.9 | % | 0.0 | % | ||||||
2004 |
0.0 | % | 1.4 | % | 0.0 | % | ||||||
Total |
||||||||||||
2005 |
100.0 | % | 100.0 | % | 100.0 | % | ||||||
2004 |
100.0 | % | 100.0 | % | 100.0 | % | ||||||
1 | A contribution of $63,000 made to the U.S. Defined Benefit Pension Plan in late December 2005 is included in cash. |
F-26
Asset Category | ||||
Equity securities |
||||
2005 |
54.8 | % | ||
2004 |
63.1 | % | ||
Debt securities |
||||
2005 |
30.4 | % | ||
2004 |
31.2 | % | ||
Alternative |
||||
2005 |
6.9 | % | ||
2004 |
3.9 | % | ||
Cash |
||||
2005 |
7.9 | % | ||
2004 |
1.8 | % | ||
Total |
||||
2005 |
100.0 | % | ||
2004 |
100.0 | % | ||
Projected | ||||
Year | Subsidy | |||
2006 |
$ | 188 | ||
2007 |
198 | |||
2008 |
206 | |||
2009 |
213 | |||
2010 |
218 | |||
2011-2015 |
1,181 | |||
F-27
2005 | 2004 | 2003 | ||||||||||
Pretax income |
||||||||||||
Domestic |
$ | 185,089 | $ | 151,707 | $ | 157,889 | ||||||
Foreign |
46,037 | 45,635 | 31,317 | |||||||||
Total pretax income |
$ | 231,126 | $ | 197,342 | $ | 189,206 | ||||||
Current |
||||||||||||
Federal |
$ | 85,047 | $ | 30,427 | $ | 26,831 | ||||||
State |
4,311 | 199 | 2,682 | |||||||||
Foreign |
19,538 | 22,922 | 17,109 | |||||||||
Total current |
$ | 108,896 | $ | 53,548 | $ | 46,622 | ||||||
Deferred |
||||||||||||
Federal |
$ | (27,110 | ) | $ | 5,971 | $ | 9,644 | |||||
State |
4,116 | 1,995 | 1,813 | |||||||||
Foreign |
(1,728 | ) | (2,656 | ) | (282 | ) | ||||||
Total deferred |
$ | (24,722 | ) | $ | 5,310 | $ | 11,175 | |||||
Total taxes |
$ | 84,174 | $ | 58,858 | $ | 57,797 | ||||||
F-28
2005 | 2004 | |||||||
Depreciation |
$ | 100,623 | $ | 123,874 | ||||
Employee benefits |
116,090 | 107,380 | ||||||
Other |
10,516 | 10,524 | ||||||
Gross deferred tax liabilities |
227,229 | 241,778 | ||||||
Retiree health benefits |
(26,429 | ) | (21,345 | ) | ||||
Foreign loss carryforwards |
(39,023 | ) | (36,617 | ) | ||||
Capital loss carryforwards |
(4,448 | ) | (7,176 | ) | ||||
Employee benefits |
(45,659 | ) | (44,528 | ) | ||||
Accrued liabilities and other |
(33,785 | ) | (32,037 | ) | ||||
Gross deferred tax assets |
(149,344 | ) | (141,703 | ) | ||||
Valuation allowance on deferred tax assets |
43,022 | 43,192 | ||||||
Total deferred taxes, net |
$ | 120,907 | $ | 143,267 | ||||
2005 | 2004 | 2003 | ||||||||||||||||||||||
Statutory tax rate |
$ | 80,894 | 35.0 | % | $ | 69,070 | 35.0 | % | $ | 66,222 | 35.0 | % | ||||||||||||
State income taxes, net of
federal tax benefit |
1,204 | .5 | 1,425 | 0.7 | 3,085 | 1.6 | ||||||||||||||||||
Repatriation |
9,891 | 4.3 | ¾ | ¾ | ¾ | ¾ | ||||||||||||||||||
Valuation allowance |
5,001 | 2.2 | 7,777 | 3.9 | (8,790 | ) | (4.6 | ) | ||||||||||||||||
IRS examination |
¾ | ¾ | (9,261 | ) | (4.7 | ) | ¾ | ¾ | ||||||||||||||||
Other, net |
(12,816 | ) | (5.6 | ) | (10,153 | ) | (5.1 | ) | (2,720 | ) | (1.5 | ) | ||||||||||||
Total taxes |
$ | 84,174 | 36.4 | % | $ | 58,858 | 29.8 | % | $ | 57,797 | 30.5 | % | ||||||||||||
F-29
F-30
F-31
2005 | 2004 | 2003 | ||||||||||
Numerator: |
||||||||||||
Net income |
$ | 161,877 | $ | 151,229 | $ | 138,949 | ||||||
Denominator: |
||||||||||||
Average common shares outstanding |
99,336,000 | 98,018,000 | 96,819,000 | |||||||||
Dilutive effect of stock based
compensation |
1,082,000 | 929,000 | 310,000 | |||||||||
Diluted outstanding shares |
100,418,000 | 98,947,000 | 97,129,000 | |||||||||
Net income per common share |
||||||||||||
Basic |
$ | 1.63 | $ | 1.54 | $ | 1.44 | ||||||
Diluted |
$ | 1.61 | $ | 1.53 | $ | 1.43 | ||||||
F-32
F-33
Years ended | Tubes and Cores | Consumer | Packaging | All Other | ||||||||||||||||||||
December 31 | /Paper | Packaging | Services | Sonoco | Corporate | Consolidated | ||||||||||||||||||
Total Revenue |
||||||||||||||||||||||||
2005 |
$ | 1,569,170 | $ | 1,250,916 | $ | 456,161 | $ | 377,968 | $ | ¾ | $ | 3,654,215 | ||||||||||||
2004 |
1,470,213 | 1,134,782 | 321,251 | 343,813 | ¾ | 3,270,059 | ||||||||||||||||||
2003 |
1,334,223 | 1,046,525 | 185,006 | 295,029 | ¾ | 2,860,783 | ||||||||||||||||||
Intersegment
Sales1 |
||||||||||||||||||||||||
2005 |
$ | 87,113 | $ | 3,465 | $ | 284 | $ | 34,779 | $ | ¾ | $ | 125,641 | ||||||||||||
2004 |
81,701 | 2,712 | 206 | 30,007 | ¾ | 114,626 | ||||||||||||||||||
2003 |
74,391 | 2,143 | 386 | 25,537 | ¾ | 102,457 | ||||||||||||||||||
Sales to
Unaffiliated
Customers |
||||||||||||||||||||||||
2005 |
$ | 1,482,057 | $ | 1,247,451 | $ | 455,877 | $ | 343,189 | $ | ¾ | $ | 3,528,574 | ||||||||||||
2004 |
1,388,512 | 1,132,070 | 321,045 | 313,806 | ¾ | 3,155,433 | ||||||||||||||||||
2003 |
1,259,832 | 1,044,382 | 184,620 | 269,492 | ¾ | 2,758,326 | ||||||||||||||||||
Operating
Profits2 |
||||||||||||||||||||||||
2005 |
$ | 107,060 | $ | 103,505 | $ | 44,813 | $ | 40,607 | $ | (64,859 | ) | $ | 231,126 | |||||||||||
2004 |
113,032 | 83,111 | 30,266 | 31,978 | (61,045 | ) | 197,342 | |||||||||||||||||
2003 |
102,938 | 78,733 | 7,935 | 18,995 | (100,268 | ) | 108,333 | |||||||||||||||||
Identifiable
Assets3 |
||||||||||||||||||||||||
2005 |
$ | 1,258,166 | $ | 738,023 | $ | 321,742 | $ | 189,369 | $ | 474,440 | $ | 2,981,740 | ||||||||||||
2004 |
1,107,223 | 735,162 | 320,401 | 191,975 | 686,558 | 3,041,319 | ||||||||||||||||||
2003 |
1,075,707 | 683,284 | 49,191 | 195,799 | 516,652 | 2,520,633 | ||||||||||||||||||
Depreciation,
Depletion and
Amortization |
||||||||||||||||||||||||
2005 |
$ | 83,737 | $ | 56,281 | $ | 11,994 | $ | 11,062 | $ | ¾ | $ | 163,074 | ||||||||||||
2004 |
85,153 | 59,413 | 8,236 | 11,126 | ¾ | 163,928 | ||||||||||||||||||
2003 |
83,647 | 52,549 | 3,453 | 13,040 | ¾ | 152,689 | ||||||||||||||||||
Capital
Expenditures |
||||||||||||||||||||||||
2005 |
$ | 62,312 | $ | 50,802 | $ | 4,913 | $ | 11,085 | $ | ¾ | $ | 129,112 | ||||||||||||
2004 |
59,410 | 50,686 | 3,279 | 6,425 | ¾ | 119,800 | ||||||||||||||||||
2003 |
48,612 | 50,951 | 5,069 | 3,785 | ¾ | 108,417 |
1 | Intersegment sales are recorded at a market-related transfer price. | |
2 | Corporate 2005, 2004 and 2003 includes restructuring costs of $(16,020), $(14,752) and $(31,413), respectively, associated with the Tubes and Cores/Paper segment; $(4,617), $(5,261) and $(9,469), respectively, associated with the Consumer Packaging segment; $0, $0 and $(335), respectively, associated with the Packaging Services segment; $(600), $(1,018) and $(1,806), respectively, associated with All Other Sonoco; a reversal of previously recorded restructuring charges of $2,049 in 2004 and $(7,033) for 2003, for Corporate related restructuring. Interest expense and interest income are also shown under Corporate. | |
3 | Identifiable assets are those assets used by each segment in its operations. Corporate assets consist primarily of cash and cash equivalents, investments in affiliates, headquarters facilities and prepaid expenses. |
F-34
2005 | 2004 | 2003 | ||||||||||
Sales to Unaffiliated Customers |
||||||||||||
United States |
$ | 2,303,890 | $ | 2,112,248 | $ | 1,859,609 | ||||||
Europe |
539,918 | 443,463 | 392,198 | |||||||||
Canada |
340,532 | 315,978 | 262,826 | |||||||||
All other |
344,234 | 283,744 | 243,693 | |||||||||
Total |
$ | 3,528,574 | $ | 3,155,433 | $ | 2,758,326 | ||||||
Long-lived Assets |
||||||||||||
United States |
$ | 1,054,430 | $ | 1,090,187 | $ | 884,863 | ||||||
Europe |
342,601 | 277,088 | 187,588 | |||||||||
Canada |
165,243 | 164,550 | 157,587 | |||||||||
All other |
143,894 | 130,409 | 120,886 | |||||||||
Total |
$ | 1,706,168 | $ | 1,662,234 | $ | 1,350,924 | ||||||
Foreign | Minimum | Accumulated | ||||||||||||||
Currency | Pension | Derivative | Other | |||||||||||||
Translation | Liability | Financial | Comprehensive | |||||||||||||
Adjustments | Adjustments | Instruments | Loss | |||||||||||||
Balance at December 31, 2003 |
$ | (83,906 | ) | $ | (53,826 | ) | $ | 1,641 | $ | (136,091 | ) | |||||
Change during 2004 |
36,917 | (4,479 | ) | 498 | 32,936 | |||||||||||
Balance at December 31, 2004 |
(46,989 | ) | (58,305 | ) | 2,139 | (103,155 | ) | |||||||||
Change during 2005 |
(12,844 | ) | 568 | 9,042 | (3,234 | ) | ||||||||||
Balance at December 31, 2005 |
$ | (59,833 | ) | $ | (57,737 | ) | $ | 11,181 | $ | (106,389 | ) | |||||
F-35
F-36
First | Second | Third | Fourth | |||||||||||||
(Unaudited) | Quarter | Quarter | Quarter | Quarter | ||||||||||||
2005 |
||||||||||||||||
Net sales |
$ | 814,438 | $ | 878,170 | $ | 881,058 | $ | 954,908 | ||||||||
Gross profit |
148,316 | 160,744 | 163,392 | 188,499 | ||||||||||||
Net income1,2 |
36,989 | 40,176 | 45,913 | 38,799 | ||||||||||||
Per common share |
||||||||||||||||
Net income basic |
$ | .37 | $ | .40 | $ | .46 | $ | .39 | ||||||||
diluted |
.37 | .40 | .46 | .38 | ||||||||||||
Cash dividends common |
.22 | .23 | .23 | .23 | ||||||||||||
Market price high |
30.24 | 29.13 | 28.84 | 30.64 | ||||||||||||
low |
25.58 | 25.46 | 25.79 | 25.43 | ||||||||||||
2004 |
||||||||||||||||
Net sales |
$ | 695,416 | $ | 763,902 | $ | 811,117 | $ | 884,998 | ||||||||
Gross profit |
121,582 | 143,149 | 153,545 | 156,514 | ||||||||||||
Net income3,4 |
38,590 | 36,705 | 40,940 | 34,994 | ||||||||||||
Per common share |
||||||||||||||||
Net income basic |
$ | .40 | $ | .37 | $ | .42 | $ | .36 | ||||||||
diluted |
.39 | .37 | .41 | .35 | ||||||||||||
Cash dividends common |
.21 | .22 | .22 | .22 | ||||||||||||
Market price high |
25.21 | 25.99 | 26.50 | 29.73 | ||||||||||||
low |
22.92 | 23.70 | 24.53 | 25.12 |
1 | Includes restructuring charges of $5,042 ($3,646 after tax), $9,143 ($6,126 after tax), $4,275 ($2,599 after tax) and $2,777 ($1,972 after tax) in the first, second, third and fourth quarter, respectively. The first, second, third and fourth quarters also include income of $528, $536, $140 and $56 after tax, respectively, associated with the allocation of restructuring charges to the minority interest shareholder of Sonoco-Alcore. | |
2 | The fourth quarter of 2005 includes $10,074 for additional tax expense associated with the repatriation of $124,658 in foreign earnings under AJCA and a charge of $12,500 ($7,596 after tax) related to an increase in the environmental reserve at a Company subsidiarys paper operations in Wisconsin. | |
3 | Includes restructuring charges of $1,328 ($1,091 after tax), $5,768 ($4,604 after tax), $1,148 ($952 after tax) and $10,738 ($9,507 after tax) in the first, second, third and fourth quarter, respectively. The fourth quarter also includes income of $1,778 ($1,778 after tax) associated with the allocation of restructuring charges to the minority interest shareholder of Sonoco-Alcore. | |
4 | The fourth quarter of 2004 includes the correction associated with the misstatement of expenses in the Companys wholly owned subsidiary in Spain. This correction totaled approximately $9,400, before and after tax, of which $2,200 was related to restructuring charges. Of the remaining $7,200, approximately $1,600 was associated with the first three quarters of 2004, approximately $1,300 was associated with 2003, approximately $300 was associated with 2002 approximately $1,900 was associated with 2001 and the remaining amount of approximately $2,100 was associated with years prior to 2001. |
F-37
Column A | Column B - Additions | Column C | Column D | |||||||||||||||||
Balance at | Charged to | Balance | ||||||||||||||||||
Beginning | Costs and | Charged to | at End | |||||||||||||||||
of Year | Expenses | Other | Deductions | of Year | ||||||||||||||||
2005 |
||||||||||||||||||||
Allowance for Doubtful
Accounts |
$ | 8,286 | $ | 3,661 | 2 | $ | (162 | )2 | $ | 3,460 | 1 | $ | 8,325 | |||||||
LIFO Reserve |
$ | 10,701 | $ | 867 | 3 | $ | 11,568 | |||||||||||||
Valuation Allowance on Deferred Tax Assets |
$ | 43,192 | $ | 5,001 | 5 | $ | 5,171 | 2,4 | $ | 43,022 | ||||||||||
2004 |
||||||||||||||||||||
Allowance for Doubtful
Accounts |
$ | 8,199 | $ | 4,186 | 2 | $ | 4,099 | 1 | $ | 8,286 | ||||||||||
LIFO Reserve |
$ | 10,462 | $ | 239 | 3 | $ | 10,701 | |||||||||||||
Valuation Allowance on
Deferred Tax Assets |
$ | 26,941 | $ | 7,777 | 4 | $ | 8,474 | 2,4 | $ | 43,192 | ||||||||||
2003 |
||||||||||||||||||||
Allowance for Doubtful
Accounts |
$ | 8,335 | $ | 5,132 | 2 | $ | 5,268 | 1 | $ | 8,199 | ||||||||||
LIFO Reserve |
$ | 10,284 | $ | 178 | 3 | $ | 10,462 | |||||||||||||
Valuation Allowance on
Deferred Tax Assets |
$ | 35,731 | $ | 13,617 | 4 | $ | 22,407 | 2,4 | $ | 26,941 |
1 | Includes amounts written off. | |
2 | Includes translation adjustments. | |
3 | Includes adjustments based on pricing and inventory levels. | |
4 | Includes utilization and expiration of domestic capital loss carryforwards and increases from foreign net operating losses for which no tax benefit can be realized. | |
5 | Includes utilization of domestic capital loss carryforwards and increases from foreign net operating losses for which no tax benefit can be realized. |
1) | Awards vest in three years if performance targets are met, or in five years otherwise. | |
2) | The financial performance measures used to determine the amount of share units vested are corporate earnings per share (as adjusted to exclude certain items) and average return on net assets employed (RONAE). |
F-38
F-39
32
33
Number of | ||||||||||||
securities | ||||||||||||
remaining available | ||||||||||||
Number of | for future issuance | |||||||||||
securities to be | under equity | |||||||||||
issued upon | Weighted-average | compensation plans | ||||||||||
exercise of | exercise price of | (excluding | ||||||||||
outstanding | outstanding | securities | ||||||||||
options, warrants | options, warrants | reflected in column | ||||||||||
Plan category | and rights | and rights | (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation
plans approved by
security holders |
9,780,300 | 24.27 | 4,476,838 | |||||||||
Equity compensation
plans not approved
by security holders |
¾ | ¾ | ¾ | |||||||||
Total |
9,780,300 | 24.27 | 4,476,838 |
| Consolidated Balance Sheets as of December 31, 2005 and 2004 | ||
| Consolidated Statements of Income for the years ended December 31, 2005, 2004 and 2003 | ||
| Consolidated Statements of Changes in Shareholders Equity for the years ended December 31, 2005, 2004 and 2003 | ||
| Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003 | ||
| Notes to Consolidated Financial Statements | ||
| Report of Independent Registered Public Accounting Firm |
2. | Financial Statement Schedules All schedules are omitted because they are not required, are not applicable or the required information is given in the financial statements or Notes thereto. |
34
3.
|
Exhibits | |
3-1
|
Articles of Incorporation, as amended (incorporated by reference to the Registrants Form 10-Q for the quarter ended June 27, 1999) | |
3-2
|
By-Laws, as amended (incorporated by reference to the Registrants Form 10-K for the year ended December 31, 2003) | |
4-1
|
Indenture, dated as of June 15, 1991, between Registrant and The Bank of New York, as Trustee (incorporated by reference to the Registrants Form S-4 (File Number 333-119863)) | |
4-2
|
First Supplemental Indenture, dated as of June 23, 2004, between Registrant and The Bank of New York, as Trustee (incorporated by reference to the Registrants Form 10-Q for the quarter ended June 27, 2004) | |
4-3
|
Form of Note for 5.625% Notes due 2016 (incorporated by reference to the Registrants Form S-4 (File Number 333-119863)) | |
10-1
|
1991 Sonoco Products Company Key Employee Stock Plan, as amended (incorporated by reference to the Registrants Form 10-K for the year ended December 31, 2002) | |
10-2
|
Sonoco Products Company 1996 Non-Employee Directors Stock Plan, as amended (incorporated by reference to the Registrants Form 10-K for the year ended December 31, 2003) | |
10-3
|
Sonoco Savings Plan (incorporated by reference to the Registrants Form S-8 filed October 28, 2002 (File No. 333-100799)) | |
10-4
|
Credit Agreement, dated as of July 7, 2004, among Sonoco Products Company, the several lenders from time to time party thereto and Bank of America, N.A., as agent (incorporated by reference to the Registrants Form 10-Q for the quarter ending June 27, 2004) | |
10-5
|
Deferred Compensation Plan for Corporate Officers of Sonoco Products Company (incorporated by reference to the Registrants Form 10-K for the year ended December 31, 2002) | |
10-6
|
Omnibus Benefit Restoration Plan of Sonoco Products Company (incorporated by reference to the Registrants Form 10-K for the year ended December 31, 2002) | |
10-7
|
Contribution Agreement, dated April 19, 2004, between Registrant and Ahlstrom Corporation (incorporated by reference to the Registrants Form 10-Q for the quarter ending June 27, 2004) | |
10-8
|
Form of Executive Bonus Life Agreement between the Company and each of the persons who are named executive officers, as defined in Regulation S-K, Item 402(a)(3), and between the Company and certain other executive officers (incorporated by reference to the Registrants Form 10-Q for the quarter ending September 26, 2004) | |
10-9
|
Form of Executive Bonus Life Agreement between the Company and Charles L. Sullivan, Jr. (incorporated by reference to Registrants Form 10-K for the year ending December 31, 2004) | |
10-10
|
Adjustment to Supplemental Executive Retirement Plan for Charles L. Sullivan, Jr. (incorporated by reference to Registrants Form 8-K filed April 22, 2004) | |
10-11
|
Description of Long-term Restricted Stock Unit Grants (incorporated by reference to the Registrants Form 8-K filed February 7, 2005) | |
10-12
|
Amendment to terms of Restricted Stock Units granted to Harris E. DeLoach, Jr. (incorporated by reference to Registrants Form 8-K filed October 19, 2005) | |
10-13
|
Amendment to 2006 Director Compensation Program (incorporated by reference to Registrants Form 8-K filed October 19, 2005) | |
10-14
|
Description of Retirement Agreement with Charles W. Coker (incorporated by reference to the Registrants Form 8-K filed February 7, 2005) | |
10-15
|
Description of Stock Appreciation Rights and Long-term Restricted Stock Units granted to executive officers of the Registrant on January 31, 2006 (incorporated by reference to Registrants Form 8-K filed February 3, 2006) |
35
10-16
|
Amendment to Non-employee Directors Stock Plan (incorporated by reference to Registrants Form 8-K filed February 3, 2006) | |
12
|
Statements regarding Computation of Ratio of Earnings to Fixed Charges |
|
21
|
Subsidiaries of the Registrant | |
23
|
Consent of Independent Registered Public Accounting Firm with respect to Registrants Form 10-K | |
31
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(a) | |
32
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(b) | |
99
|
Proxy Statement, filed in conjunction with annual shareholders meeting scheduled for April 19, 2006 (to be filed within 120 days after December 31, 2005) |
36
SONOCO PRODUCTS COMPANY |
||||
/s/ Harris E. DeLoach, Jr. | ||||
Harris E. DeLoach, Jr. | ||||
Chairman, President and Chief Executive Officer |
||||
/s/C. J. Hupfer | ||||
C. J. Hupfer | ||||
Senior Vice President and Chief Financial Officer (principal financial officer) |
||||
/s/Barry L. Saunders | ||||
Barry L. Saunders | ||||
Staff Vice President and Corporate Controller (principal accounting officer) |
37
/s/ H.E. DeLoach, Jr.
|
President, Chief Executive Officer and Director (Chairman) | |
Director | ||
Director | ||
Director | ||
/s/ J. L. Coker
|
Director | |
/s/ P. L. Davies
|
Director | |
/s/ C. C. Fort
|
Director | |
Director | ||
Director | ||
/s/ E. H. Lawton, III
|
Director | |
Director | ||
/s/ J. M. Micali
|
Director | |
Director | ||
/s/ M. D. Oken
|
Director | |
/s/ T. E. Whiddon
|
Director |
38
3-1
|
Articles of Incorporation, as amended (incorporated by reference to the Registrants Form 10-Q for the quarter ended June 27, 1999) | |
3-2
|
By-Laws, as amended (incorporated by reference to the Registrants Form 10-K for the year ended December 31, 2003) | |
4-1
|
Indenture, dated as of June 15, 1991, between Registrant and The Bank of New York, as Trustee (incorporated by reference to the Registrants Form S-4 (File Number 333-119863)) | |
4-2
|
First Supplemental Indenture, dated as of June 23, 2004, between Registrant and The Bank of New York, as Trustee (incorporated by reference to the Registrants Form 10-Q for the quarter ended June 27, 2004) | |
4-3
|
Form of Note for 5.625% Notes due 2016 (incorporated by reference to the Registrants Form S-4 (File Number 333-119863)) | |
10-1
|
1991 Sonoco Products Company Key Employee Stock Plan, as amended (incorporated by reference to the Registrants Form 10-K for the year ended December 31, 2002) | |
10-2
|
Sonoco Products Company 1996 Non-Employee Directors Stock Plan, as amended (incorporated by reference to the Registrants Form 10-K for the year ended December 31, 2003) | |
10-3
|
Sonoco Savings Plan (incorporated by reference to the Registrants Form S-8 filed October 28, 2002 (File No. 333-100799)) | |
10-4
|
Credit Agreement, dated as of July 7, 2004, among Sonoco Products Company, the several lenders from time to time party thereto and Bank of America, N.A., as agent (incorporated by reference to the Registrants Form 10-Q for the quarter ending June 27, 2004) | |
10-5
|
Deferred Compensation Plan for Corporate Officers of Sonoco Products Company (incorporated by reference to the Registrants Form 10-K for the year ended December 31, 2002) | |
10-6
|
Omnibus Benefit Restoration Plan of Sonoco Products Company (incorporated by reference to the Registrants Form 10-K for the year ended December 31, 2002) | |
10-7
|
Contribution Agreement, dated April 19, 2004, between Registrant and Ahlstrom Corporation (incorporated by reference to the Registrants Form 10-Q for the quarter ending June 27, 2004) | |
10-8
|
Form of Executive Bonus Life Agreement between the Company and each of the persons who are named executive officers, as defined in Regulation S-K, Item 402(a)(3), and between the Company and certain other executive officers (incorporated by reference to the Registrants Form 10-Q for the quarter ending September 26, 2004) | |
10-9
|
Form of Executive Bonus Life Agreement between the Company and Charles L. Sullivan, Jr. (incorporated by reference to Registrants Form 10-K for the year ending December 31, 2004) | |
10-10
|
Adjustment to Supplemental Executive Retirement Plan for Charles L. Sullivan, Jr. (incorporated by reference to Registrants Form 8-K filed April 22, 2004) | |
10-11
|
Description of Long-term Restricted Stock Unit Grants (incorporated by reference to the Registrants Form 8-K filed February 7, 2005) | |
10-12
|
Amendment to terms of Restricted Stock Units granted to Harris E. DeLoach, Jr. (incorporated by reference to Registrants Form 8-K filed October 19, 2005) | |
10-13
|
Amendment to 2006 Director Compensation Program (incorporated by reference to Registrants Form 8-K filed October 19, 2005) | |
10-14
|
Description of Retirement Agreement with Charles W. Coker (incorporated by reference to the Registrants Form 8-K filed February 7, 2005) | |
10-15
|
Description of Stock Appreciation Rights and Long-term Restricted Stock Units granted to executive officers of the Registrant on January 31, 2006 (incorporated by reference to Registrants Form 8-K filed February 3, 2006) | |
10-16
|
Amendment to Non-employee Directors Stock Plan (incorporated by reference to Registrants Form 8-K filed February 3, 2006) | |
12
|
Statements regarding Computation of Ratio of Earnings to Fixed Charges | |
21
|
Subsidiaries of the Registrant |
39
23 | Consent of Independent Registered Public Accounting Firm with respect to Registrants Form 10-K | |
31 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(a) | |
32 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(b) | |
99 | Proxy Statement, filed in conjunction with annual shareholders meeting scheduled for April 19, 2006 (to be filed within 120 days after December 31, 2005) |
40
(Unaudited) | Years Ended December 31, | |||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||
EARNINGS |
||||||||||||||||||||
Pretax income |
231,126 | 197,342 | 108,333 | 183,106 | 159,979 | |||||||||||||||
Add: Fixed charges |
67,958 | 61,403 | 66,329 | 67,128 | 67,183 | |||||||||||||||
Amortization of capitalized interest |
1,911 | 1,868 | 1,868 | 2,136 | 2,403 | |||||||||||||||
Total Earnings |
300,995 | 260,613 | 176,530 | 252,370 | 229,565 | |||||||||||||||
Less: Capitalized Interest |
(2,042 | ) | (1,535 | ) | (2,000 | ) | (1,750 | ) | (2,085 | ) | ||||||||||
Adjusted Earnings |
298,953 | 259,078 | 174,530 | 250,620 | 227,480 | |||||||||||||||
FIXED CHARGES |
||||||||||||||||||||
Interest expense |
51,559 | 47,463 | 52,399 | 54,196 | 52,217 | |||||||||||||||
Capitalized interest |
2,042 | 1,535 | 2,000 | 1,750 | 2,085 | |||||||||||||||
Amortization of bond discounts |
390 | 538 | 597 | 615 | 711 | |||||||||||||||
Portion of rents representative of the
interest factor |
13,967 | 11,867 | 11,333 | 10,567 | 12,170 | |||||||||||||||
Total Fixed Charges |
67,958 | 61,403 | 66,329 | 67,128 | 67,183 | |||||||||||||||
Ratio of Earnings to Fixed Charges |
4.40 | 4.22 | 2.63 | 3.73 | 3.39 | |||||||||||||||
1. | Sonoco Engraph Puerto Rico, Inc., a 100%-owned domestic subsidiary, incorporated in Delaware | ||
2. | Engraph Puerto Rico, Inc., a 100%-owned domestic subsidiary, incorporated in Delaware | ||
3. | Sonoco Flexible Packaging Co., Inc., a 100%-owned domestic subsidiary, incorporated in South Carolina | ||
4. | Gunther of America, Inc., a 100%-owned domestic subsidiary, incorporated in Delaware | ||
5. | Sonoco Development, Inc., a 100%-owned domestic subsidiary, incorporated in South Carolina | ||
6. | Paper Stock Dealers, Inc., a 100%-owned domestic subsidiary, incorporated in North Carolina | ||
7. | Inspiral LLC, a 100%-owned domestic subsidiary, incorporated in Delaware | ||
8. | Sonoco (SPG), Inc., a 100%-owned domestic subsidiary, incorporated in Wisconsin | ||
9. | Sonoco Crellin Holding, Inc., a 100%-owned domestic subsidiary, incorporated in Delaware | ||
10. | Keating Gravure LLC, a 100%-owned domestic subsidiary, incorporated in North Carolina | ||
11. | Gunther USA, Inc., a 100%-owned domestic subsidiary, incorporated in Tennessee | ||
12. | Sonoco Paperboard Group LLC, a 100%-owned domestic subsidiary, incorporated in South Carolina | ||
13. | Sonoco Crellin International, Inc., a 100%-owned domestic subsidiary, incorporated in Delaware | ||
14. | Sonoco Crellin, Inc., a 100%-owned domestic subsidiary, incorporated in New York | ||
15. | Sebro Plastics, Inc., a 100%-owned domestic subsidiary, incorporated in Michigan | ||
16. | Injecto Mold, Inc., a 100%-owned domestic subsidiary, incorporated in Illinois | ||
17. | Crellin Europe BV, a 100%-owned foreign subsidiary, incorporated in Netherlands | ||
18. | Convex Mold, Inc., a 100%-owned domestic subsidiary, incorporated in Michigan |
19. | Crellin BV, a 100%-owned foreign subsidiary, incorporated in Netherlands | ||
20. | Southern Plug & Manufacturing, Inc., a 100%-owned domestic subsidiary, incorporated in Louisiana | ||
21. | Sonoco Partitions, Inc., a 100%-owned domestic subsidiary, incorporated in South Carolina | ||
22. | Industrial Machine Co., Inc., a 100%-owned domestic subsidiary, incorporated in Missouri | ||
23. | Sonoco Structural Fiber, LLC, a 90%-owned domestic subsidiary, incorporated in South Carolina | ||
24. | Polysack AS, Inc., a 100%-owned domestic subsidiary, incorporated in South Carolina | ||
25. | Georgia Paper Tube, Inc., a 100%-owned domestic subsidiary, incorporated in Georgia | ||
26. | Sonoco CorrFlex LLC, a 100%-owned domestic subsidiary, incorporated in North Carolina | ||
27. | Sonoco CorrFlex D & P LLC, a 100%-owned domestic subsidiary, incorporated in North Carolina | ||
28. | Sonoco CorrFlex Display & Packaging LLC, a 100%-owned domestic subsidiary, incorporated in North Carolina | ||
29. | Sonoco Hutchinson, LLC, a 100%-owned domestic subsidiary, incorporated in Kansas | ||
30. | Sonoco U.S. Mills, Inc., a 100%-owned domestic subsidiary, incorporated in Wisconsin | ||
31. | Hayes Manufacturing Group, Inc., a 100%-owned domestic subsidiary, incorporated in Wisconsin | ||
32. | Sonoco Phoenix, Inc., a 100%-owned domestic subsidiary, incorporated in Ohio | ||
33. | SPC Management, Inc., a 100%-owned domestic subsidiary, incorporated in Delaware | ||
34. | SPC Capital Management, Inc., a 100%-owned domestic subsidiary, incorporated in Delaware | ||
35. | SPC Resources, Inc., a 100%-owned domestic subsidiary, incorporated in Delaware | ||
36. | Sonoco International, Inc., a 100%-owned domestic subsidiary, incorporated in Delaware | ||
37. | Sonoco Machinery, Inc., a 100%-owned domestic subsidiary, incorporated in Delaware |
38. | Sonoco of Puerto Rico, a 100%-owned domestic subsidiary, incorporated in South Carolina | ||
39. | Sonoco Luxembourg SARL I, a 100%-owned foreign subsidiary, incorporated in Luxembourg | ||
40. | Sonoco Netherlands Holding II BV, a 100%-owned foreign subsidiary, incorporated in Netherlands | ||
41. | Sonoco Canada Corporation, a 100%-owned foreign subsidiary, incorporated in Canada | ||
42. | Wisenberg US, Inc., a 100%-owned domestic subsidiary, incorporated in South Carolina | ||
43. | Sonoco Montreal Corporation, a 100%-owned foreign subsidiary, incorporated in Canada | ||
44. | Sonoco Flexible Packaging Canada Corporation, a 100%-owned foreign subsidiary, incorporated in Canada | ||
45. | 1190138 Ontario Inc, a 100%-owned foreign subsidiary, incorporated in Canada | ||
46. | SW Inc, a 100%-owned foreign subsidiary, incorporated in Canada | ||
47. | Sonoco Ventures UK Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
48. | Inspiral UK Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
49. | Sonoco Holdings UK Limited, a 100%-owned foreign subsidiary, incorporated in the UK | ||
50. | Sonoco Milnrow, a 100%-owned foreign subsidiary, incorporated in the UK | ||
51. | Sonoco Products Co UK Unlimited, a 100%-owned foreign subsidiary, incorporated in the UK | ||
52. | Sonoco Ltd UK, a 100%-owned foreign subsidiary, incorporated in the UK | ||
53. | Sonoco Capseals Liners Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
54. | TPT Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
55. | Sonoco Polysack UK Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
56. | Sonoco Packaging Tapes, a 100%-owned foreign subsidiary, incorporated in the UK | ||
57. | Sonoco Board Mills Ltd, a 100%-owned foreign subsidiary, incorporated in the UK |
58. | Sonoco UK Leasing Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
59. | Sonoco Reels, a 100%-owned foreign subsidiary, incorporated in the UK | ||
60. | Capseals Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
61. | Sonoco Europe Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
62. | Unit Reels and Drums Limited, a 100%-owned foreign subsidiary, incorporated in the UK | ||
63. | Grove Paper Mill Co Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
64. | TPT Board Mills Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
65. | Heathfield Reels Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
66. | Capseals Liners Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
67. | Cap Liners Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
68. | Sonoco Packaging Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
69. | Nathaniel Lloyd and Co Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
70. | Sonoco Corepack Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
71. | Sonoco Consumer Products Ltd, a 100%-owned foreign subsidiary, incorporated in the UK | ||
72. | Sonoco Iberia, S.L., a 64.5%-owned foreign subsidiary, incorporated in Spain | ||
73. | Sonoco Bonmati, S.A., a 64.5%-owned foreign subsidiary, incorporated in Spain | ||
74. | Sonoco Pina, S.A., a 64.5%-owned foreign subsidiary, incorporated in Spain | ||
75. | Sonoco Alcore Nederland BV, a 64.5%-owned foreign subsidiary, incorporated in Netherlands | ||
76. | Sonoco Consumer Products NV, a 100%-owned foreign subsidiary, incorporated in Belgium | ||
77. | Sonoco Holding Italia SRL, a 64.5%-owned foreign subsidiary, incorporated in Italy |
78. | Sonoco Netherlands Holding I BV, a 64.5%-owned foreign subsidiary, incorporated in Netherlands | ||
79. | Sonoco Norge AS, a 64.5%-owned foreign subsidiary, incorporated in Norway | ||
80. | Sonoco Ambalaj Snaai Vs Ticaret AS, a 64.5%-owned foreign subsidiary, incorporated in Turkey | ||
81. | Sonoco Alcore Sp Zoo, a 64.5%-owned foreign subsidiary, incorporated in Poland | ||
82. | Sonoco International Holdings Gmbh, a 100%-owned foreign subsidiary, incorporated in Switzerland | ||
83. | Sonoco Alcore NV, a 64.5%-owned foreign subsidiary, incorporated in Belgium | ||
84. | Sonoco International BVI, a 100%-owned foreign subsidiary, incorporated in British Virgin Islands | ||
85. | Sonoco Paper Mill & IPD Hellas Sa, a 64.5%-owned foreign subsidiary, incorporated in Greece | ||
86. | Sonoco CPD Greece S.A., a 100%-owned foreign subsidiary, incorporated in Greece | ||
87. | Sonoco S.A.S., a 64.5%-owned foreign subsidiary, incorporated in France | ||
88. | Sonoco Eurocore S.A., a 64.5%-owned foreign subsidiary, incorporated in Belgium | ||
89. | Tubetex NV, a 64.5%-owned foreign subsidiary, incorporated in Belgium | ||
90. | Sonoco Paper France S.A.S., a 64.5%-owned foreign subsidiary, incorporated in France | ||
91. | Sonoco IPD France S.A., a 64.5%-owned foreign subsidiary, incorporated in France | ||
92. | Sonoco Consumer Products S.A.S., a 100%-owned foreign subsidiary, incorporated in France | ||
93. | Sonoco Plastics Germany GmbH, a 100%-owned foreign subsidiary, incorporated in Germany | ||
94. | Sonoco Deutschland CPD GmbH, a 100%-owned foreign subsidiary, incorporated in Germany | ||
95. | Sonoco Deutschland Holdings GmbH, a 64.5%-owned foreign subsidiary, incorporated in Germany |
96. | Sonoco Caprex Karton und Papierverarbeitungs AG, a 46.4%-owned foreign subsidiary, incorporated in Switzerland | ||
97. | Sonoco Deutschland GmbH, a 64.5%-owned foreign subsidiary, incorporated in Germany | ||
98. | Sonoco Alcore GmbH, a 64.5%-owned foreign subsidiary, incorporated in Germany | ||
99. | Beteiligungen Sonoco Deutschland Vermogensverwaltungsgesellschaft mbh, a 100%-owned foreign subsidiary, incorporated in Germany | ||
100. | Sonoco Australia Pty Ltd, a 100%-owned foreign subsidiary, incorporated in Australia | ||
101. | Sonoco New Zealand, a 100%-owned foreign subsidiary, incorporated in New Zealand | ||
102. | Sonoco Asia Holdings LLC, a 100%-owned domestic subsidiary, incorporated in Delaware | ||
103. | Sonoco Asia LLC, a 78.7%-owned domestic subsidiary, incorporated in Delaware | ||
104. | Sonoco Asia Mgmt Co LLC, a 70%-owned domestic subsidiary, incorporated in Delaware | ||
105. | Sonoco Thailand Ltd, a 78.7%-owned foreign subsidiary, incorporated in Thailand | ||
106. | Sonoco Taiwan Ltd, a 78.7%-owned foreign subsidiary, incorporated in Taiwan | ||
107. | Sonoco Singapore Pte Ltd, a 78.7%-owned foreign subsidiary, incorporated in Singapore | ||
108. | Sonoco Holdings Sdn Bhd, a 78.7%-owned foreign subsidiary, incorporated in Malaysia | ||
109. | Sonoco Malaysia Sdn Bhd, a 78.7%-owned foreign subsidiary, incorporated in Malaysia | ||
110. | Sonoco Products Malaysia Sdn Bhd, a 78.7%-owned foreign subsidiary, incorporated in Malaysia | ||
111. | Sonoco Hongwen Paper Co Ltd, a 63.1%-owned foreign subsidiary, incorporated in China | ||
112. | Sonoco Asia Recycling Ltd, a 78.7%-owned foreign subsidiary, incorporated in British Virgin Islands | ||
113. | Sonoco Recycling Hong Kong Ltd, a 78.7%-owned foreign subsidiary, incorporated in Hong Kong | ||
114. | PT Sonoco Indonesia, a 78.7%-owned foreign subsidiary, incorporated in Indonesia | ||
115. | Sonoco (Suzhou) Packaging Co Ltd, a 78.7%-owned foreign subsidiary, incorporated in China |
116. | Sonoco Kaiping Packaging Company Ltd, a 78.7%-owned foreign subsidiary, incorporated in China | ||
117. | Sonoco do Brazil Ltda, a 100%-owned foreign subsidiary, incorporated in Brazil | ||
118. | Sonoco Participacoes LTDA, a 100%-owned foreign subsidiary, incorporated in Brazil | ||
119. | Sonoco For Plas do Brazil Ltda, a 51%-owned foreign subsidiary, incorporated in Brazil | ||
120. | Sonoco de Colombia Ltda, a 100%-owned foreign subsidiary, incorporated in Colombia | ||
121. | Colombiana PM, a 100%-owned domestic subsidiary, incorporated in Delaware | ||
122. | Inversionne Sonoco do Chile LTDA, a 100%-owned foreign subsidiary, incorporated in Chile | ||
123. | Sonoco do Chile S.A., a 100%-owned foreign subsidiary, incorporated in Chile | ||
124. | Sonoco Venezolana, a 90%-owned foreign subsidiary, incorporated in Venezuela | ||
125. | Sonoco Netherlands Holding III BV, a 100%-owned foreign subsidiary, incorporated in Netherlands | ||
126. | Sonoco de Mexico S.A. de C.V., a 100%-owned foreign subsidiary, incorporated in Mexico | ||
127. | Manufacuras Sonoco S.A. de C.V., a 100%-owned foreign subsidiary, incorporated in Mexico | ||
128. | Servicios Mexicanos Ejecutivos S.A. de C.V., a 100%-owned foreign subsidiary, incorporated in Mexico | ||
129. | Sonoco S.A. de C.V., a 100%-owned foreign subsidiary, incorporated in Mexico | ||
130. | Sonoco Weifang Packaging Co Ltd, a 78.7%-owned foreign subsidiary, incorporated in China | ||
131. | Sonoco Yatai Pinghu Packaging Co Ltd, a 78.7%-owned foreign subsidiary, incorporated in China | ||
132. | Sonoco Alcore OY, a 64.5%-owned foreign subsidiary, incorporated in Finland | ||
133. | Sonoco Alcore Holding AB, a 64.5%-owned foreign subsidiary, incorporated in Sweden |
134. | Sonoco Alcore AB, a 64.5%-owned foreign subsidiary, incorporated in Sweden | ||
135. | Sonoco Alcore S.A.S., a 64.5%-owned foreign subsidiary, incorporated in France | ||
136. | Ahlstrom Cores BV, a 64.5%-owned foreign subsidiary, incorporated in Netherlands | ||
137. | ZAO Sonoco Alcore, a 64.5%-owned foreign subsidiary, incorporated in Russia | ||
138. | Sonoco Alcore OU, a 64.5%-owned foreign subsidiary, incorporated in Estonia | ||
139. | Sonoco Operadora S de R L de C V, a 100%-owned foreign subsidiary, incorporated in Mexico | ||
140. | Sonoco Ventures International Holding Gmbh, a 64.5%-owned foreign subsidiary, incorporated in Switzerland | ||
141. | Sonoco Alcore Sarl, a 64.5%-owned foreign subsidiary, incorporated in Luxembourg | ||
142. | Sonoco Cores and Paper Ltd, a 64.5%-owned foreign subsidiary, incorporated in the UK | ||
143. | Sonoco Mexico Holdings BV, a 100%-owned foreign subsidiary, incorporated in Netherlands | ||
144. | Sonoco JV GmbH and Co Kg, a 64.5%-owned foreign subsidiary, incorporated in Germany | ||
145. | Sonoco Poland Packaging Services Sp zoo, a 100%-owned foreign subsidiary, incorporated in Poland | ||
146. | Keating Gravure Corporation, a 100%-owned foreign subsidiary, incorporated in Canada | ||
147. | Sonoco Luxembourg S.N.C., a 100%-owned foreign subsidiary, incorporated in Luxembourg | ||
148. | Sonoco Plastics Turkey, a 100%-owned foreign subsidiary, incorporated in Turkey | ||
149. | Sonoco (Xiamen) Packaging Company Ltd, a 78.7%-owned foreign subsidiary, incorporated in China |
/s/ PricewaterhouseCoopers LLP | ||
PricewaterhouseCoopers LLP |
1. | I have reviewed this annual report on Form 10-K of Sonoco Products Company; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: February 27, 2006
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/s/Harris E. DeLoach, Jr.
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Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Sonoco Products Company; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: February 27, 2006
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/s/Charles J. Hupfer
Senior Vice President and Chief Financial Officer |
/s/ Harris E. DeLoach, Jr.
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Chief Executive Officer | ||||
/s/ Charles J. Hupfer
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Chief Financial Officer | ||||