<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended October 1, 1995 Commission File No. 1-11261
SONOCO PRODUCTS COMPANY
Incorporated under the laws I.R.S. Employer Identification
of South Carolina No. 57-0248420
Post Office Box 160
Hartsville, South Carolina 29551-0160
Telephone: 803-383-7000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock at October 1, 1995.
Common stock, no par value: 91,097,635
-----------------------------------------
<PAGE> 2
SONOCO PRODUCTS COMPANY
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets - October 1, 1995 and
December 31, 1994
Consolidated Statements of Income -
Three Months and Nine Months Ended October 1,
1995 and October 2, 1994
Consolidated Statements of Cash Flows -
Nine Months Ended October 1, 1995 and
October 2, 1994
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
SIGNATURE
</TABLE>
<PAGE> 3
SONOCO PRODUCTS COMPANY
CONSOLIDATED BALANCE SHEETS (unaudited)
(Dollars and shares in thousands)
<TABLE>
<CAPTION>
October 1, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
------
Current Assets
Cash and cash equivalents $ 79,573 $ 28,444
Trade accounts receivable, net of allowances 323,270 270,439
Other receivables 20,802 20,211
Inventories:
Finished and in process 112,066 86,238
Materials and supplies 135,633 121,424
Prepaid expenses 13,458 29,943
Deferred income taxes 13,966 14,012
------------ ------------
698,768 570,711
Property, Plant and Equipment, Net 824,827 763,109
Cost in Excess of Fair Value of Assets Purchased, Net 384,286 358,965
Other Assets 158,245 142,268
------------ ------------
Total Assets $ 2,066,126 $ 1,835,053
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Payable to suppliers $ 157,935 $ 158,098
Accrued expenses and other 108,790 83,268
Accrued wages and other compensation 26,124 30,855
Notes payable and current portion of long-term debt 68,573 59,421
Taxes on income 31,270 17,001
------------ ------------
392,692 348,643
Long-Term Debt, Net of Current Maturities 588,097 487,959
Postretirement Benefits Other Than Pensions 107,827 104,179
Deferred Income Taxes and Other 70,085 62,054
Shareholders' Equity
Serial preferred stock, no par value
Authorized 30,000 shares
Issued 3,450 shares 172,500 172,500
Common stock, no par value
Authorized 150,000 shares
Issued 96,433 shares 7,175 7,175
Capital in excess of stated value (Note 2) 173,572 60,908
Translation of foreign currencies (43,532) (46,252)
Retained earnings (Note 2) 668,056 697,299
Treasury shares at cost (1995 - 5,335
shares; 1994 - 5,179 shares*) (70,346) (59,412)
------------ ------------
Total shareholders' equity 907,425 832,218
------------ ------------
Total Liabilities and Shareholders' Equity $ 2,066,126 $ 1,835,053
============ ============
</TABLE>
*Restated to reflect the 5% common stock dividend on June 9, 1995.
See accompanying Notes to Consolidated Financial Statements
<PAGE> 4
SONOCO PRODUCTS COMPANY
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars and shares in thousands except per share)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- ------------------------------
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
---------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $686,998 $591,178 $2,023,866 $1,692,941
Cost of sales 537,050 466,468 1,582,572 1,332,628
Selling, general and
administrative expenses 72,377 63,254 212,934 182,626
Interest expense 11,828 9,435 32,165 27,007
Interest income (1,409) (538) (3,099) (1,459)
-------- -------- ---------- ----------
Income from operations before
income taxes 67,152 52,559 199,294 152,139
Taxes on income 26,370 20,500 78,270 59,300
-------- -------- ---------- ----------
Income from operations before
equity in earnings of affiliates 40,782 32,059 121,024 92,839
Equity in earnings of affiliates (142) 450 1,266 605
-------- -------- ---------- ----------
Net income 40,640 32,509 122,290 93,444
Preferred dividends (1,941) (1,941) (5,823) (5,823)
-------- -------- ---------- ----------
Net income available to
common shareholders $ 38,699 $ 30,568 $ 116,467 $ 87,621
======== ======== ========== ==========
Average common shares outstanding* 91,149 91,454 91,149 91,454
Earnings per common share*
- -------------------------
Assuming no dilution $ .43 $ .33 $ 1.28 $ .96
======== ======== ========== ==========
Assuming full dilution $ .41 $ .33 $ 1.22 $ .94
======== ======== ========== ==========
Dividends per common share* $ .15 $ .133 $ .433 $ .395
======== ======== ========== ==========
</TABLE>
* Shares outstanding and per share data have been restated to reflect the
5% common stock dividend on June 9, 1995.
See accompanying Notes to Consolidated Financial Statements
<PAGE> 5
SONOCO PRODUCTS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------
October 1, October 2,
1995 1994
----------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $122,290 $ 93,444
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 93,665 82,130
Equity in earnings of affiliates (1,266) (605)
Deferred taxes 4,586 2,737
Loss on disposition of assets 123 1,100
Changes in assets and liabilities net of
effects from acquisitions/dispositions
and foreign currency adjustments:
Receivables (41,444) (52,795)
Inventories (27,907) (9,278)
Prepaid expenses 16,286 12,320
Payables and taxes 18,127 42,533
Other assets and liabilities (14,769) (3,284)
-------- --------
Net cash provided by operating activities 169,691 168,302
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (122,915) (90,252)
Cost of acquisitions, exclusive of cash (50,234) (26,457)
Proceeds from the sale of assets 3,320 2,912
-------- --------
Net cash used by investing activities (169,829) (113,797)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 173,464 72,734
Principal repayment of debt (67,530) (70,478)
Cash dividends - common and preferred (45,301) (41,893)
Treasury shares acquired (18,307) (18,602)
Treasury shares issued 7,486 2,728
-------- --------
Net cash provided (used) by financing activities 49,812 (55,511)
-------- --------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH 1,455 1,056
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 51,129 50
Cash and cash equivalents at beginning of period 28,444 25,858
-------- --------
Cash and cash equivalents at end of period $ 79,573 $ 25,908
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE> 6
SONOCO PRODUCTS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited), continued
(Dollars in thousands)
SUPPLEMENTAL CASH FLOW DISCLOSURES:
- -----------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------------------
October 1, October 2,
1995 1994
----------- -------------
<S> <C> <C>
Interest paid $28,752 $27,522
Income taxes paid 56,770 40,033
</TABLE>
NONCASH TRANSACTION:
- --------------------
On June 9, 1995, the Company issued a 5% common stock dividend ($106,213 fair
value).
See accompanying Notes to Consolidated Financial Statements
<PAGE> 7
SONOCO PRODUCTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1: BASIS OF INTERIM PRESENTATION
In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to
present fairly the financial position and results of operations
for the interim periods reported hereon. These consolidated
financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto
included in the Company's annual report for the fiscal year
ended December 31, 1994.
NOTE 2: DIVIDEND DECLARATIONS
On October 18, 1995, the Board of Directors declared a regular
common stock dividend of $.15 per share, payable December 8 to
shareholders of record November 17, 1995. The Board also
declared a dividend of $.5625 per share on the $2.25 Series A
Cumulative Convertible Preferred Stock payable February 1,
1996, to shareholders of record as of January 12, 1996.
On June 9, 1995, the Company issued a 5% common stock dividend
($106.2 million fair value), which was declared April 19 for
all shareholders of record May 19. All 1994 shares and per
share data in the accompanying Consolidated Financial
Statements have been restated to reflect the stock dividend.
As a result of the stock dividend, the conversion price for
holders of the Company's $2.25 Series A Cumulative Convertible
Preferred Stock has been adjusted from $25.31 to $24.11 per
share of common stock.
NOTE 3: ACQUISITIONS
In January 1995, the Company acquired the remaining 50%
interest in the CMB/Sonoco joint venture. CMB/Sonoco is a
producer of composite cans with manufacturing facilities in
Manchester, U.K. and Lievin, France. In March 1995, the
Company completed the purchase of a flexible packaging plant in
Edinburgh, Indiana, that was formerly owned by Hargro Flexible
Packaging Corporation. The Edinburgh plant manufactures
packaging for the confection, snack food and pharmaceutical
markets and had sales of more than $30 million in 1994. During
the second quarter of 1995, the Company purchased three
converting operations in Brazil and a converting plant and
small paper mill in France. The Company also purchased two
additional recovered paper collection plants.
Subsequent to October 1, 1995, the Company completed the
acquisition of Cricket Converters, Inc. of Hightstown, N.J.
Cricket, with sales of approximately $27 million, supplies
labels to the pharmaceutical and health care markets. The
Company also purchased a recovered paper collection business in
Washington, D.C. and a paper mill in Brazil in October 1995.
The pro forma impact of all 1995 acquisitions to date is not
material.
<PAGE> 8
SONOCO PRODUCTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(unaudited)
NOTE 4: FINANCIAL SEGMENT INFORMATION
The Financial Segment Information provided below should be read in
conjunction with the Management's Discussion and Analysis
immediately following the Notes to Consolidated Financial
Statements.
FINANCIAL SEGMENT INFORMATION (unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- -----------------------------
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
---------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total Revenue
Converted Products $502,621 $449,923 $1,487,793 $1,313,616
Paper 117,905 90,194 349,521 237,275
International 147,308 115,275 422,412 315,263
-------- -------- ---------- ----------
Consolidated $767,834 $655,392 $2,259,726 $1,866,154
======== ======== ========== ==========
Sales to Unaffiliated Customers
Converted Products $494,733 $442,085 $1,463,250 $1,290,960
Paper 47,419 34,456 143,327 89,894
International 144,846 114,637 417,289 312,087
-------- -------- ---------- ----------
Consolidated $686,998 $591,178 $2,023,866 $1,692,941
======== ======== ========== ==========
Operating Profit
Converted Products $ 51,652 $ 49,590 $ 159,503 $ 140,509
Paper 24,673 15,726 66,070 41,962
International 11,442 1,473 30,207 11,543
Corporate* (20,615) (14,230) (56,486) (41,875)
-------- -------- ---------- ----------
Consolidated $ 67,152 $ 52,559 $ 199,294 $ 152,139
======== ======== ========== ==========
</TABLE>
*Includes interest income, interest expense and unallocated corporate expenses.
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(unaudited)
THIRD QUARTER 1995 COMPARED WITH THIRD QUARTER 1994
RESULTS OF OPERATIONS
- ---------------------
Consolidated net sales for the third quarter of 1995 were $687 million, a 16.2%
increase over the $591.2 million recorded in the third quarter of 1994. Net
income available to common shareholders was up 26.6% to $38.7 million from the
$30.6 million reported in 1994. Earnings per share (assuming no dilution) for
the quarter were up 30.3% to $.43, compared with $.33 in the same quarter last
year. Fully diluted earnings per share were $.41, up from $.33 in the third
quarter of 1994. Prior earnings per share numbers have been restated to
reflect the 5% common stock dividend issued in June 1995.
CONVERTED PRODUCTS SEGMENT
Trade sales for the converted products segment were $494.7 million, an 11.9%
increase over 1994's third quarter sales of $442.1 million. Operating profits
were $51.7 million, compared with the $49.6 million in the third quarter of
1994. Volume showed declines in several converting businesses as the United
States economy continued its sluggish performance. Raw material prices
continued their volatility during the quarter with recovered paper prices
falling significantly from the all-time high levels established earlier this
year. Subsequent to quarter-end, as paper prices continued to decline, our
tube and core business reduced selling prices accordingly. This segment was
impacted by consulting fees for Process Excellence, a project reengineering
major processes in its oldest and strongest businesses, the tube, core and
paperboard operations. Consulting fees incurred in connection with Process
Excellence during the third quarter were $3.7 million pretax, of which $3.0
million are included in this segment and $.7 million are included in the paper
segment. Fourth quarter results will likely incur similar costs. Subsequent
costs are expected to be offset by benefits accruing to the project.
In the tube and core business, sales and profits increased during the third
quarter despite declines in sales volume directly related to a weakening
economy. The paper mill core and textile carrier markets were weak during the
quarter. The sales increase in the tube and core business resulted from price
increases implemented during the past year to offset increases in raw material
costs.
Sales and profits increased in the consumer packaging businesses. While most of
the food packaging markets were strong during the third quarter, the nut
segments were down. The sales increase for the quarter came from unit
increases and from price increases implemented during the year to offset some
of the higher costs of raw materials. Newly designed equipment for the
production of a revolutionary new rectangular composite package with a
hermetically sealed paper bottom is now operational. This business anticipates
a strong fourth quarter based on sales volume increases.
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (unaudited), continued
THIRD QUARTER 1995 COMPARED WITH THIRD QUARTER 1994, continued
RESULTS OF OPERATIONS, continued
- ---------------------
Sales and profits were down in the industrial container business as volume in
both fibre and plastic drums was down for the quarter. Most of the volume
shortfall in fibre drums was related to the size and timing of the West Coast
crop season. The fourth quarter will benefit from the delayed harvest this
year, though the size of the harvest is expected to be below the 1994 season.
The intermediate bulk container business continued to expand volume with both
existing and new customers. This operation added a new blow molder during the
third quarter to support the continuing growth.
Engraph's sales and profits were up in the third quarter. The flexible
packaging operations included the acquisition of the Edinburgh, Ind., plant of
Hargro Flexible Packaging Corp., which added to both sales and profits of the
division. Additional capacity is coming on line in the flexible packaging
area, as new presses have been added at both Morristown, Tenn., and Edinburgh.
In early October, the Company completed the acquisition of Cricket Converters
in Hightstown, N.J. Cricket, with sales of $27 million, supplies labels to the
pharmaceutical and health care markets. Engraph is taking steps to reorganize
its label businesses with the expected benefits of lower cost, better capital
utilization and more effective strategy implementation. The label group has
strong bookings for the remainder of the year and is expecting a good fourth
quarter. Business in the glass cover and coaster operations remained good and
the paperboard carton business increased slightly over the third quarter of
last year.
Sales and profits were up in the Company's plastic bag operations. Sales
volume increased during the quarter as the division continued to develop the
independent wholesale grocery market. Resin costs increased significantly
earlier in the year and prices were increased to help offset some of these
costs. The division continued its expansion program during the quarter as new
machines began producing bags at plants in North Carolina, Pennsylvania and
California. Efficiencies are now approaching expectations.
Sales were flat in the Crellin Molded and Extrusion Plastics operation due to
weakness in several end markets including wire and cable and textiles. Profit
was down from the prior year's third quarter due to the inability to recover
all resin cost increases. The Sebro operation, which serves the automotive
industry, saw continued good volume levels. The Company's wire and cable reel
operation, the Baker Division, saw a drop in sales and profits resulting from
decreased volume reflecting slower growth in the economy. The fibre partitions
group expanded both sales and profits as they continued to convert customers
from corrugated to fibre partitions. The protective packaging operations saw
continued increases in sales from the Company's packaging forms but start-up
problems are hurting profits in the engineered cushion fibre operation.
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (unaudited), continued
THIRD QUARTER 1995 COMPARED WITH THIRD QUARTER 1994, continued
RESULTS OF OPERATIONS, continued
- ---------------------
PAPER SEGMENT
Total domestic paper sales were $117.9 million, a 30.7% increase over the $90.2
million reported in the third quarter of 1994. Operating profits were $24.7
million, up 56.9% from the $15.7 million in 1994. Volume was off during the
quarter as the Company's paper mills operated at about 95% capacity, compared
with nearly 98% capacity in the third quarter of 1994. This volume decrease is
directly related to the decline in sales from the paper converting operations
and a general decline in demand for paper across the industry. Prices for the
Company's major raw material, recovered paper, began to fall during the third
quarter, though recovered paper costs remained above the levels of 1994's third
quarter. Also during the third quarter, some external board purchases were
moved to internal supply, resulting in some productivity losses as volume was
refocused in the paper mill system. Profits in the recovered paper collection
operations declined as prices fell, but lower recovered paper cost to the paper
mills more than offset that decline. Subsequent to quarter-end, the continued
dramatic decline in recovered paper cost resulted in selling price reductions
to paper customers.
INTERNATIONAL SEGMENT
The Company's international operations continued strong performance in the
third quarter, with sales of $144.8 million, 26.4% ahead of 1994's third
quarter sales of $114.6 million. The sales gain resulted from the January 1,
1995, acquisition of the remaining 50% interest in CMB/Sonoco, higher volumes
in some geographic areas and selling price increases in response to higher
material costs. Profits increased to $11.4 million from $1.5 million in the
prior year's third quarter. The Company's tube and core business in Asia
experienced higher volume in most operations, while this business in Europe,
Mexico and Australia saw declines in volume related to slowing economies. The
European paper mills will take downtime in the fourth quarter in response to
lower demands in light of the weak economies. Increased volume in the consumer
packaging operations in Mexico is expected to result from gaining new business
in the powdered beverage market. In New Zealand, the new protective packaging
business, which has been suffering start-up losses, began to turn around in the
third quarter and should be profitable over the balance of the year.
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(unaudited), continued
SEPTEMBER 1995 YEAR-TO-DATE COMPARED WITH SEPTEMBER 1994 YEAR-TO-DATE
RESULTS OF OPERATIONS
- ---------------------
Consolidated net sales for the first nine months of 1995 were $2.02 billion, a
19.5% increase over the $1.69 billion in the first nine months of 1994. The
increase in sales was largely the result of acquisitions, volume gains and
selling price increases implemented during the year to offset increasing raw
material costs, especially recovered paper. Net income available to common
shareholders for the first three quarters of 1995 was $116.5 million, compared
with $87.6 million during the same reporting period last year. Earnings per
share (assuming no dilution) for the first nine months were up 33.3% to $1.28,
compared with $.96 for the same period last year. Fully diluted earnings per
share were $1.22, up from $.94 in 1994. Prior earnings per share numbers have
been restated to reflect the 5% common stock dividend issued in June 1995.
On a consolidated basis, the gross profit margin increased from 21.3% for the
first nine months of 1994 to 21.8% for the same period in 1995. The first nine
months of 1995 were characterized by volatile raw material costs, especially in
recovered paper and plastic resins. Most operations were successful in
recovering the increased costs. Although the weakened economy impacted the
Company's businesses in the third quarter, nearly all of the Company's
operations showed strong results during the first nine months.
CONVERTED PRODUCTS SEGMENT
Trade sales for the converted products segment during the first nine months
were $1.46 billion, a 13.3% increase over 1994 sales of $1.29 billion.
Operating profits were $159.5 million compared with $140.5 million in 1994.
The increase in sales for this segment represents both price increases
implemented to meet rising raw material costs and volume increases. Increased
profits resulted from the higher prices and a variety of productivity
improvements and cost reduction programs. Profits in this segment have been
impacted by consulting fees for Process Excellence, the process-reengineering
project undertaken by the Company during 1995. The first two phases of this
project have been completed. The Process Excellence project is expected to
make the tube and core business even stronger and thus provide significant
returns to this segment over the next few years.
PAPER SEGMENT
Total domestic paper sales were $349.5 million compared with $237.3 million in
the first nine months of 1994. Operating profits were $66.1 million, up 57.5%
from the $42 million reported for the same period in 1994. A contributing
factor to the increase in sales and profits is the improved pricing for
corrugating medium that is produced as a joint venture with Georgia-Pacific.
The division has also increased prices in response to the increases in the cost
of recovered paper grades. Although prices for recovered paper began to fall
during the third quarter of 1995, they remained above the levels experienced
through the third quarter of 1994. In 1995 the Paper Stock Dealer subsidiary
increased sales and profits because of the increased demand for recovered
paper. During the year, this division invested in programs to strengthen its
access to recovered paper. The paper segment also invested in improvements to
paper machines to increase productivity.
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(unaudited), continued
SEPTEMBER 1995 YEAR-TO-DATE COMPARED WITH SEPTEMBER 1994 YEAR-TO-DATE,
continued
Results of Operations, continued
- --------------------------------
INTERNATIONAL SEGMENT
Sales in the international segment were $417.3 million, up 33.7% from the
$312.1 million reported for the first nine months of 1994. The 1995 results
include the Harland acquisition, which was completed in June 1994, and the
purchase of the remaining 50% of the composite can operations in Europe,
effective January 1, 1995. Selling price increases implemented in response to
higher material costs as well as higher volumes in some geographic areas also
contributed to the sales increase in 1995. Operating profits in the
international segment were $30.2 million compared with $11.5 million in 1994.
The strong international performance in the first nine months was led by the
tube, core and paperboard businesses in Europe, Canada and Mexico and the
composite can business in Latin America.
CORPORATE
Interest income, interest expense and unallocated corporate expenses are
excluded from the operating profits by segment and are shown under Corporate.
Total expenses, net of interest income, for the corporate segment were $56.5
million, up from $41.9 million for the same period last year. Corporate
interest expense increased, reflecting higher debt levels. General corporate
expense also increased in 1995 because of increased costs associated with
premiums for the Company's broad-based company-owned life insurance program and
higher incentive and benefit costs. The tax benefit from the life insurance
program is reflected in the Company's effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's financial position remained strong through the first nine months.
The debt to capital percentage increased to 40.4% at October 1, 1995, from
38.1% at December 31, 1994. Debt increased in 1995 primarily as a result of
increased capital expenditures, acquisition funding and the increase in cash
and cash equivalents. In June 1995, the Company issued $35.1 million of 6.125%
Industrial Development Revenue Bonds (IRBs) due June 1, 2025. As of October 1,
1995, $33.6 million of the proceeds from the IRBs were invested in marketable
securities, explaining most of the increase in cash and cash equivalents.
Working capital increased $84 million during the first nine months of 1995
primarily due to the increases in cash equivalents, accounts receivable and
inventory, partially offset by increased payables. The increases in
receivables, inventory and payables in 1995 is a result of price increases and
business growth.
In April 1995, the Company increased the amount available under its commercial
paper program from $250 million to $300 million and increased fully committed
bank lines of credit supporting the program by a like amount.
On November 10, 1995, the Company issued $100 million of 6.75% Debentures due
November 1, 2010, in order to lengthen the maturities of the Company's
indebtedness. The net proceeds from the issue were used to reduce outstanding
commercial paper obligations.
The Company expects internally generated cash flow along with borrowings
available under its commercial paper and other existing credit facilities to be
sufficient to meet operating and normal capital expenditure requirements.
<PAGE> 14
SONOCO PRODUCTS COMPANY
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- ------ -----------------
Reference is made to Item 3 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
Item 6. Exhibits and Reports on Form 8-K
- ------ --------------------------------
(a) Exhibit (11) - Computation of Earnings Per Share
Exhibit (27) - Financial Data Schedule (for SEC use only)
(b) There were no reports on Form 8-K filed by the Company
during the quarter ended October 1, 1995.
<PAGE> 15
SONOCO PRODUCTS COMPANY
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 thereunto duly authorized.
SONOCO PRODUCTS COMPANY
------------------------------------
(Registrant)
Date: November 14, 1995 By: /s/ F. T. Hill, Jr.
--------------------------- ---------------------------------
F. T. Hill, Jr.
Chief Financial Officer
<PAGE> 16
SONOCO PRODUCTS COMPANY
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
11 Computation of Earnings Per Share
27 Financial Data Schedule (for SEC use only)
<PAGE> 1
EXHIBIT (11)
SONOCO PRODUCTS COMPANY
COMPUTATION OF EARNINGS PER SHARE (unaudited)
(Dollars in thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ -----------------------------
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Primary earnings
- ----------------
Net income available to common shareholders $ 38,699 $ 30,568 $ 116,467 $ 87,621
============= ============= ============ =============
Weighted average number of common shares
outstanding 91,148,586 91,454,472 91,148,586 91,454,472
Assuming exercise of options reduced by the
number of shares which could have been
purchased (at average price) with proceeds
from exercise of such options 2,155,951 916,006 1,740,709 929,872
------------- ------------- ------------ -------------
Weighted average number of common shares
outstanding as adjusted 93,304,537 92,370,478 92,889,295 92,384,344
============= ============= ============ =============
Primary earnings per common share $ 0.41 $ 0.33 $ 1.25 $ 0.95
============= ============= ============ =============
Assuming full dilution
- ----------------------
Net income available to common shareholders $ 38,699 $ 30,568 $ 116,467 $ 87,621
Elimination of preferred dividends 1,941 1,941 5,823 5,823
------------- ------------- ------------ -------------
Fully diluted net income $ 40,640 $ 32,509 $ 122,290 $ 93,444
============= ============= ============ =============
Weighted average number of common shares
outstanding 91,148,586 91,454,472 91,148,586 91,454,472
Assuming exercise of options reduced by the
number of shares which could have been
purchased (at the higher of end-of-period
price or average) with proceeds from
exercise of such options 2,342,663 1,120,563 2,342,663 1,120,637
Assuming conversion of preferred stock 7,155,300 7,155,300 7,155,300 7,155,300
------------- ------------- ------------ -------------
Weighted average number of common shares
outstanding as adjusted
100,646,549 99,730,335 100,646,549 99,730,409
============= ============= ============ =============
Earnings per common share assuming
full dilution $ 0.41 $ 0.33 $ 1.22 $ 0.94
============= ============= ============ =============
</TABLE>
Shares outstanding and per share data have been restated to reflect the 5%
common stock dividend on June 9, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SONOCO PRODUCTS COMPANY FOR THE NINE MONTHS ENDED
OCTOBER 1, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> OCT-01-1995
<CASH> 21,811
<SECURITIES> 57,762
<RECEIVABLES> 328,930
<ALLOWANCES> (6,791)
<INVENTORY> 247,699
<CURRENT-ASSETS> 698,768
<PP&E> 1,541,889
<DEPRECIATION> (717,062)
<TOTAL-ASSETS> 2,066,126
<CURRENT-LIABILITIES> 392,692
<BONDS> 588,097
<COMMON> 7,175
0
172,500
<OTHER-SE> 727,750
<TOTAL-LIABILITY-AND-EQUITY> 2,066,126
<SALES> 2,023,866
<TOTAL-REVENUES> 2,023,866
<CGS> 1,582,572
<TOTAL-COSTS> 1,582,572
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,564
<INTEREST-EXPENSE> 32,165
<INCOME-PRETAX> 199,294
<INCOME-TAX> 78,270
<INCOME-CONTINUING> 122,290
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 122,290
<EPS-PRIMARY> 1.28
<EPS-DILUTED> 1.22
</TABLE>
