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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): April 16, 2003
SONOCO PRODUCTS COMPANY
Incorporated under the Commission File No. 0-516 I.R.S. Employer
laws of South Carolina Identification No.
57-0248420
One North Second Street
Post Office Box 160
Hartsville, South Carolina 29551-0160
Telephone: 843-383-7000
Item 9. Regulation FD Disclosure; Information Provided Pursuant to Item 12.
First Quarter Earnings
Pursuant to Item 12 of this form, please see Exhibit 99 for the
Registrant's 2003 first quarter earnings release.
Item 7. Financial Statements and Exhibits
(c) Exhibit 99 Registrant's 2003 First Quarter Earnings Release
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
SONOCO PRODUCTS COMPANY
(Registrant)
Date: April 16, 2003 By: /s/ C. J. Hupfer
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C. J. Hupfer
Vice President and Chief Financial Officer
3
EXHIBIT INDEX
Exhibit 99 Registrant's 2003 First Quarter Earnings Release
4
EXHIBIT 99
SONOCO
NEWS RELEASE
#14N - April 16, 2003 Contact:Allan V. Cecil
Vice President
+843-383-7524
allan.cecil@sonoco.com
SONOCO REPORTS FIRST QUARTER FINANCIAL RESULTS
Hartsville, SC - - Sonoco (NYSE:SON), the global packaging company, today
reported earnings per diluted share for the first quarter 2003 of $.30, versus
$.35 for the same period in 2002, it was announced by Harris E. DeLoach, Jr.,
president and chief executive officer. Earnings for the first quarter included
restructuring charges of $.01 per share in both 2003 and 2002. These results are
in line with the Company's previous guidance.
Sales for the first quarter of 2003 were $681.4 million, versus $654.2
million for the same period in 2002. Net income for the first quarter of 2003
was $29 million, versus $33.5 million in the first quarter of 2002. Net income
for the first quarter included charges related to the Company's previously
announced restructuring actions of $1.3 million ($.9 million after tax) and $1.4
million ($.9 million after tax) in 2003 and 2002, respectively.
Cash generated from operations for the first quarter 2003 was $40.7
million, compared with $39 million for the same period in 2002. First quarter
2003 cash generated from operations, which included funding of benefit plans of
$.9 million, was used to partially fund capital expenditures of $25.4 million
and to pay dividends of $20.3 million.
"Sales for the first quarter were up 4.2 percent, compared with the same
period last year, primarily reflecting increased selling prices for old
corrugated containers (OCC) through the Company's recovered paper operations
(Sonoco is a net seller of OCC) in the industrial segment. Increased sales
volume during the quarter in the metal and plastic closures and flexible
packaging businesses of the consumer segment also contributed to the Company's
sales increase. In addition, sales for the quarter were impacted by favorable
exchange rates as the dollar weakened against foreign currencies. Company-wide
volumes were up 1.7 percent, compared with the first quarter of 2002," said
DeLoach.
"Earnings results for the first quarter were adversely impacted by a
negative price/cost relationship, primarily associated with lower average
selling prices for global engineered carriers and higher costs for OCC, the
primary raw material for engineered carriers; by higher resin costs; and by
higher energy costs across the Company," he stated.
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North Second Street
Hartsville, S.C. 29550 USA
843/383-7794
www.sonoco.com
Sonoco Reports 1st Qtr Financial Results - page 2
DeLoach also said that higher pension and post-retirement costs negatively
impacted the first quarter by approximately $.04 per share, compared with the
same period of 2002, resulting primarily from the effect of lower investment
earnings on assets in Sonoco's pension and post-retirement benefit plans.
DeLoach noted that the Company expects 2003 annual earnings to be reduced by an
incremental increase of approximately $.19 per diluted share for the year.
"Like most companies, certainly those in the manufacturing sector, we
continue to see industrial segment volumes hurt by the uncertainties of the
general economy. Our volumes have been basically flat for some time, although we
have seen some very modest increases in recent months. Therefore, with no
significant economic improvement in sight, we expect our second quarter earnings
to be in the range of $.32 to $.36," said DeLoach. The Company did not change
its previously announced guidance for the full year 2003 of $1.46 to $1.50.
"Meanwhile, we are aggressively continuing to reduce our cost structure,
seeking price increases to help recover higher raw material, energy and pension
costs; and continuing to successfully drive productivity improvements," DeLoach
added.
"Our cash flow remains strong as does our balance sheet, positioning us
well to take advantage of consolidation opportunities. We continue to
aggressively pursue selective acquisition opportunities and to develop and bring
to market innovative products and services to meet our customers' and market
needs. I continue to be very optimistic about our ability to benefit from an
improved general economic environment," DeLoach concluded.
Segment Review
Consumer Packaging
The consumer packaging segment includes the following products and
services: round and shaped rigid packaging, both composite and plastic; printed
flexible packaging; metal and plastic ends and closures; high density film
products; specialty packaging; and packaging services.
First quarter 2003 sales for the consumer segment were $339.2 million,
versus $328.5 million in the same period of 2002. Operating profit was $25.7
million in the first quarter of 2003, versus $27.6 million in the same period of
2002.
"In the consumer sector, sales were up year-over-year in the first quarter,
primarily reflecting increased volume in the Company's metal and plastic
closures business and in flexible packaging. Volumes in the consumer sector were
up 2.4 percent, compared with last year's first quarter. Operating profits for
the first quarter in the consumer sector declined from the same period in 2002
primarily because of increased pension expense, and higher raw material costs in
composite cans and high density film operations," added DeLoach.
Industrial Packaging
The industrial packaging segment includes the following products:
high-performance paper, plastic and composite engineered carriers; paperboard;
wooden, metal and composite reels for wire and cable packaging; fiber-based
construction tubes and forms; custom designed protective packaging; and supply
chain management capabilities.
First quarter 2003 sales for the industrial segment were $342.2 million,
versus $325.7 million in the same period in 2002. First quarter operating profit
was $30.7 million, versus $37.0 million in the same period of 2002.
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Sonoco Reports 1st Qtr Financial Results - page 3
"First quarter sales in the industrial sector increased over the first
quarter of 2002 primarily because of the impact of higher OCC prices on external
sales of recovered paper. Volumes in the industrial segment were up 1 percent,
compared with last year's first quarter. Operating profits for the segment
declined, reflecting the unfavorable impact of increased OCC prices on Sonoco's
engineered carriers and paper operations, increased energy costs, and higher
pension costs," said DeLoach.
Corporate
Depreciation and amortization expense for the first quarter of 2003 was
$38.3 million, versus $38.4 million in 2002. Net interest expense declined $.8
million in the first quarter of 2003, compared with the same period in 2002,
primarily due to lower commercial paper balances and rates during the first
quarter of 2003.
Conference Call
Sonoco will host its regular quarterly conference call concerning current
earnings results on Wednesday, April 16, 2003, at 2:00 p.m. ET. The conference
call can be accessed in a "listen only" mode via internet
http://www.firstcallevents.com/service/ajwz378074538gf12.html. A replay will be
available through Sonoco's Web Site's (www.sonoco.com) Investor Information
section for 90 days after the conference.
Sonoco, founded in 1899, is a $2.8 billion(sales) manufacturer of
industrial and consumer products and provider of packaging services, with more
than 300 operations in 32 countries serving customers in some 85 nations. For
more information about the Company, visit the Sonoco web site at www.sonoco.com.
Forward-looking Statements and Other Information
Statements included herein that are not historical in nature are intended
to be, and are hereby identified as, "forward-looking statements" for purposes
of the safe harbor provided by Section 21E of the Securities Exchange Act of
1934, as amended. The words "estimate," "project," "intend," "expect,"
"believe," "anticipate," "objective," "goal," and similar expressions identify
forward-looking statements. Forward-looking statements include, but are not
limited to, statements regarding offsetting high raw material costs, adequacy of
income tax provisions, refinancing of debt, adequacy of cash flows, effects of
acquisitions and dispositions, and adequacy of provisions for environmental
liabilities and financial strategies and the results expected from them. Such
forward-looking statements are based on current expectations, estimates and
projections about our industry, management's beliefs and certain assumptions
made by management. Such information includes, without limitation, discussions
as to estimates, expectations, beliefs, plans, strategies and objectives
concerning our future financial and operating performance. These statements are
not guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
results may differ materially from those expressed or forecasted in such
forward-looking statements. Such risks and uncertainties include, without
limitation: availability and pricing of raw materials; success of new product
development and introduction; ability to maintain or increase productivity
levels; international, national and local economic and market conditions;
fluctuations in obligations and earnings of pension and post-retirement benefit
plans; ability to maintain market share; pricing pressures and demand for
products; continued strength of our paperboard-based engineered carrier and
composite can operations; anticipated results of restructuring activities;
resolution of income tax contingencies; ability to successfully
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Sonoco Reports 1st Qtr Financial Results - page 4
integrate newly acquired businesses into the Company's operations; currency
stability and the rate of growth in foreign markets; use of financial
instruments to hedge foreign exchange, interest rate and commodity price risk;
actions of government agencies; and loss of consumer confidence and economic
disruptions resulting from terrorist activities.
Information about the Company's use of non-GAAP financial measures, why
management believes presentation of non-GAAP financial measures provides useful
information to investors about the Company's financial condition and results of
operations, and the purposes for which management uses non-GAAP financial
measures is included in the Company's 2002 Annual Report on Form 10-K filed with
the Securities and Exchange Commission. Additional information concerning some
of the factors that could cause materially different results is included in the
Company's reports on forms 10-K, 10-Q and 8-K filed with the Securities and
Exchange Commission. Such reports are available from the Securities and Exchange
Commission's public reference facilities and its Internet Web site, the
Company's investor relations department and the Company's Web Site
www.sonoco.com.
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Sonoco Reports 1st Qtr Financial Results - page 5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars and shares in thousands except per share data)
THREE MONTHS ENDED
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March 30, March 31,
2003 2002
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Sales .............................................. $ 681,444 $ 654,236
Cost of sales ...................................... 551,478 519,027
Selling, general and administrative expenses ....... 73,604 70,613
Restructuring charges .............................. 1,337 1,439
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Income before interest and taxes ................... 55,025 63,157
Interest expense ................................... (12,730) (13,507)
Interest income .................................... 447 427
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Income before income taxes ......................... 42,742 50,077
Provision for income taxes ......................... 15,387 18,007
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Income before equity in earnings of affiliates/
Minority interest in subsidiaries ............. 27,355 32,070
Equity in earnings of affiliates/Minority
Interest in subsidiaries ................... 1,643 1,412
Affiliate restructuring ............................ - 65
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Net income ......................................... $ 28,998 $ 33,547
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Average shares outstanding - diluted ............... 96,958 96,817
Diluted earnings per share ......................... $ .30 $ .35
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Dividends per common share ......................... $ .21 $ .20
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
March 30, December 31,
2003 2002
---- ----
Assets
Current Assets:
Cash and cash equivalents ......................... $ 43,685 $ 31,405
Trade Accounts receivables ........................ 348,959 314,429
Other receivables ................................. 40,899 32,724
Inventories ....................................... 260,681 244,554
Prepaid expenses and deferred taxes ............... 43,897 40,155
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738,121 663,267
Property, plant and equipment, net ................... 967,486 975,368
Goodwill ............................................. 364,233 359,418
Other assets ......................................... 438,511 438,386
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$2,508,351 $2,436,439
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Liabilities and Shareholders' Equity
Current Liabilities:
Payable to suppliers and others ................... $ 437,471 $ 418,457
Notes payable and current portion of long-term debt 136,509 134,500
Taxes on income ................................... 18,680 5,639
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592,660 558,596
Long-term debt ....................................... 700,226 699,346
Pension and other post-retirement benefits ........... 127,022 121,176
Deferred income taxes and other ...................... 195,578 189,896
Shareholders' equity ................................. 892,865 867,425
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$2,508,351 $2,436,439
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Prior years' data has been reclassified to conform to the current year
presentation.
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Sonoco Reports 1st Qtr Financial Results - page 6
FINANCIAL SEGMENT INFORMATION (Unaudited)
(Dollars in thousands)
THREE MONTHS ENDED
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March 30, March 31,
2003 2002
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Net Sales
Industrial Packaging .................. $ 342,217 $ 325,697
Consumer Packaging .................... 339,227 328,539
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Consolidated .......................... $ 681,444 $ 654,236
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Operating Profit
Industrial Packaging .................. $ 30,705 $ 36,993
Consumer Packaging .................... 25,657 27,603
Restructuring charges ................. (1,337) (1,439)
Interest, net ......................... (12,283) (13,080)
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Consolidated .......................... $ 42,742 $ 50,077
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