<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 June 30, 1996 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 June 30, 1996:
Common stock, no par value: 91,056,163
----------------------------------------
<PAGE> 2
SONOCO PRODUCTS COMPANY
INDEX
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets - June 30, 1996 and
December 31, 1995
Consolidated Statements of Income -
Three Months and Six Months Ended June 30, 1996
and July 2, 1995
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996 and
July 2, 1995
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
SIGNATURE
<PAGE> 3
SONOCO PRODUCTS COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(unaudited)
------------- --------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 99,231 $ 61,624
Trade accounts receivable, net of allowances 338,213 314,207
Other receivables 19,065 17,074
Inventories:
Finished and in process 112,515 103,073
Materials and supplies 132,065 128,403
Prepaid expenses 15,007 21,277
Deferred income taxes 14,222 16,125
---------- ----------
730,318 661,783
Property, Plant and Equipment, Net 922,810 865,629
Cost in Excess of Fair Value of Assets Purchased, Net 436,992 411,343
Other Assets 236,389 176,658
---------- ----------
Total Assets $2,326,509 $2,115,413
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities
Payable to suppliers $ 178,117 $ 149,512
Accrued expenses and other 111,179 105,750
Accrued wages and other compensation 13,161 30,885
Notes payable and current portion of
long-term debt 76,584 94,898
Taxes on income 33,529 51,410
----------- ----------
412,570 432,455
Long-Term Debt 761,540 591,894
Postretirement Benefits Other than Pensions 106,319 103,898
Deferred Income Taxes and Other 87,116 68,417
Shareholders' Equity
Serial preferred stock, no par value
Authorized 30,000 shares
3,450 shares issued and outstanding 172,497 172,500
Common stock, no par value
Authorized 150,000 shares
91,056 and 91,117 shares issued and outstanding 7,175 7,175
at June 30, 1996 and December 31, 1995, respectively
Capital in excess of stated value 92,400 100,318
Translation of foreign currencies (65,319) (55,925)
Retained earnings 752,211 694,681
---------- ----------
Total shareholders' equity 958,964 918,749
---------- ----------
Total liabilities and shareholders' equity $2,326,509 $2,115,413
========== ==========
</TABLE>
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 Six Months Ended
----------------------------- --------------------------
June 30, July 2, June 30, July 2,
1996 1995 1996 1995
--------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Sales $689,855 $691,726 $1,359,086 $1,336,868
Cost of sales 522,221 540,719 1,035,096 1,045,522
Selling, general and administrative expenses 78,174 70,527 151,967 140,557
Interest expense 13,614 10,561 25,192 20,337
Interest income (1,692) (1,195) (2,911) (1,690)
-------- -------- ---------- ----------
Income from operations before
income taxes 77,538 71,114 149,742 132,142
Taxes on income 30,549 27,950 58,998 51,900
-------- -------- ---------- ----------
Income from operations before
equity in earnings of affiliates 46,989 43,164 90,744 80,242
Equity in earnings of affiliates (234) 949 (741) 1,408
-------- -------- ---------- ----------
Net income 46,755 44,113 90,003 81,650
Preferred dividends (1,941) (1,941) (3,882) (3,882)
-------- -------- ---------- ----------
Net income available to
common shareholders $ 44,814 $ 42,172 $ 86,121 $ 77,768
======== ======== ========== ==========
Average common shares outstanding:
Assuming no dilution 91,119 91,163 91,119 91,163
Assuming full dilution 100,494 100,211 100,494 100,211
Earnings per common share:
Assuming no dilution $ .50 $ .46 $ .95 $ .85
======== ======== ========== ==========
Assuming full dilution $ .47 $ .44 $ .90 $ .81
======== ======== ========== ==========
Dividends per common share $ .165 $ .15 $ .315 $ .283
======== ======== ========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE> 5
SONOCO PRODUCTS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------
June 30, July 2,
1996 1995
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 90,003 $ 81,650
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 66,073 63,790
Equity in earnings of affiliates 741 (1,408)
Deferred taxes 684 (995)
Loss (Gain) on disposition of assets 1,096 (110)
Changes in assets and liabilities, net of
effects from acquisitions, dispositions
and foreign currency adjustments:
Accounts receivable (25,475) (47,534)
Inventories (9,070) (27,616)
Prepaid expenses 6,150 7,239
Payables and taxes (2,766) 28,339
Other assets and liabilities 15,768 (712)
Net cash provided by operating activities 143,204 102,643
Cash Flows From Investing Activities:
Purchase of property, plant and equipment (96,754) (84,667)
Cost of acquisitions, exclusive of cash (55,711) (50,234)
Investment in Company-owned life insurance (54,682) (11,575)
Proceeds from the sale of assets 912 1,477
Net cash used by investing activities (206,235) (144,999)
Cash Flows From Financing Activities:
Net increase in commercial paper borrowings 134,500 84,300
Proceeds from issuance of debt 43,655 54,804
Principal repayment of debt (37,422) (19,064)
Cash dividends (32,594) (29,696)
Common shares acquired (18,595) (12,447)
Common shares issued 11,437 5,371
Net cash provided by financing activities 100,981 83,268
Effects of exchange rate changes on cash (343) 1,717
Net Increase in Cash and Cash Equivalents 37,607 42,629
Cash and cash equivalents at beginning of period 61,624 28,444
Cash and cash equivalents at end of period $ 99,231 $ 71,073
========= ========
</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>
SIX MONTHS ENDED
--------------------------
June 30, July 2,
1996 1995
-------- -------
<S> <C> <C>
Interest paid $20,507 $17,576
Income taxes paid $76,358 $41,813
</TABLE>
Non-cash 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
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.
Operating results for the six months ended June 30, 1996, are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1996. 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, 1995.
Certain amounts in the 1995 Consolidated Financial Statements have been
reclassified to conform with the current year presentation.
Note 2: Dividend Declarations
On July 17, 1996, the Board of Directors declared a regular quarterly
dividend of $.165 per share. This 285th consecutive dividend will be
payable September 10 to shareholders of record August 16. The Board
also declared a quarterly dividend of $.5625 per share on the $2.25
Series A Cumulative Convertible Preferred Stock payable November 1 to
shareholders of record as of October 11.
Note 3: Acquisitions
During the first quarter of 1996, the Company finalized the Sonoco
Hongwen joint venture to produce paperboard in Shanghai, China, and
initiated a joint venture in Indonesia that will manufacture composite
cans, tubes and cores. In February of 1996, the Company acquired
Moldwood Products Company, of York, Alabama, formerly owned by Gulf
States Paper Corporation. Moldwood Products is a producer of moldwood
plugs for the paper industry with annual sales of approximately $12
million. The Company also added two operations to its Baker Division,
which produces reels for the wire and cable industry.
During the second quarter of 1996, the Company acquired Hamilton Hybar,
Inc., of Richmond, VA. Hamilton, with annual sales of approximately
$32 million, is a leading supplier of vapor barrier packaging materials
to the paper industry. The Company also signed a letter of intent to
acquire Specialty Packaging, a niche producer of specialty composite
cans, specialty lines of metal closures and tubes and cores with annual
sales of approximately $38 million. The pro forma impact of these
acquisitions is not material.
Subsequent to June 30, 1996, the Company acquired two of Germany's
leading paperboard can manufacturers, Dosen Schmitt of Mayen and Buck
Verpackungen GmbH of Freilassing. These additions to the European
consumer packaging operations have combined sales between $10 and $15
million.
<PAGE> 8
SONOCO PRODUCTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(unaudited)
Note 4: Treasury Shares
A change in South Carolina law, effective in 1989, eliminated the legal
distinction between treasury shares and authorized but unissued shares.
At the time of the change, the Company elected to continue to present
its Consolidated Balance Sheets showing treasury shares as it had
historically done. In 1996 the Company changed the presentation of
reacquired shares to better reflect the legal status of such shares.
Accordingly, shares acquired by the Company are now treated as
retirements of such shares, and the cost of such shares is charged to
Capital in Excess of Stated Value. The prior year Consolidated
Financial Statements have been reclassified to conform with the current
year presentation.
<PAGE> 9
SONOCO PRODUCTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
(unaudited)
Note 5: Financial Segment Information
The Company changed its segment reporting format effective the second
quarter of 1996. Under the new format, the Company reports its
operations as Industrial Packaging and Consumer Packaging. The
Industrial Packaging segment includes: tubes, cores, cones, roll wrap,
molded plugs and related products and services (the Company's global
Industrial Products Division); fibre drums, plastic drums and
intermediate bulk containers (the Industrial Container Division);
molded and extrusion plastics (Sonoco Crellin); paper manufacturing and
recovered paper collections (the Paper Division); fibre partitions;
molded pulp and Sonopost(R) corner posts (the Protective Packaging
Division); reels for wire and cable (Sonoco Baker); adhesives;
machinery manufacturing; and forest products. The Consumer Packaging
segment includes: composite cans, fibre and plastic caulk cartridges
(the Consumer Products Division); capseals; plastic tennis ball
containers; flexible packaging (the Flexible Packaging Division);
plastic bags (the High Density Film Products Division); and
pressure-sensitive labels, screen printing, paperboard packaging and
label machinery (Sonoco Engraph). The Company's previous reporting
format included segments called Converted Products, Paper and
International.
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 SIX MONTHS ENDED
----------------------------- -----------------------------
June 30, 1996 July 2, 1995 June 30, 1996 July 2, 1995
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Total Revenue
Industrial Packaging $402,080 $429,243 $ 786,595 $ 821,163
Consumer Packaging 298,363 276,236 593,874 540,837
-------- -------- ---------- ----------
Consolidated $700,443 $705,479 $1,380,469 $1,362,000
======== ======== ========== ==========
Sales to Unaffiliated Customers
Industrial Packaging $391,948 $416,187 $ 766,118 $ 797,183
Consumer Packaging 297,907 275,539 592,968 539,685
-------- -------- ---------- ----------
Consolidated $689,855 $691,726 $1,359,086 $1,336,868
======== ======== ========== ==========
Operating Profit
Industrial Packaging $ 55,736 $ 53,782 $ 107,511 $ 98,669
Consumer Packaging 33,724 26,698 64,511 52,121
Interest, net (11,922) (9,366) (22,280) (18,648)
-------- -------- ---------- ----------
Consolidated $ 77,538 $ 71,114 $ 149,742 $ 132,142
======== ======== ========== ==========
</TABLE>
<PAGE> 10
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Unaudited)
Second Quarter 1996 Compared with Second Quarter 1995
Results of Operations
Consolidated net sales for the second quarter of 1996 were $689.9 million,
compared with $691.7 million recorded in the second quarter of 1995. Net
income available to common shareholders was up 6.3% to $44.8 million from the
$42.2 million reported in 1995. Fully diluted earnings per share were $.47, up
from $.44 in the second quarter of 1995.
The second quarter comparisons were against one of the highest performing
quarters in the Company's 97-year history, the second quarter of 1995. Yet the
Company continued to show healthy earnings growth and some slight increases in
sales volume in many product lines, which management expects will continue
through the remainder of 1996. The modest second quarter sales dollar decline
reflects the lower paperboard, recovered paper and converted product prices
resulting from reduced materials costs.
Industrial Packaging Segment
Trade sales for the Industrial Packaging segment were $391.9 million, a 5.8%
decrease from 1995's second quarter sales of $416.2 million. Operating profits
were $55.7 million for the second quarter, an increase of 3.6% from the $53.8
million in the second quarter of 1995, primarily as a result of margin
expansion. The two most significant sources of sales dollar decline in the
second quarter were the drop in recovered paper prices and the decrease in
selling price for the Company's cylinder paperboard and corrugating medium.
While approximately 80% of the Company's paperboard is used internally, all of
the corrugating medium is sold on contract to Georgia-Pacific. Corrugating
medium prices were down $150 per ton from the second quarter of 1995. Another
major factor in this segment's sales decline was in recovered paper. The
Company uses much of the paper collected by its paper recycling businesses.
However, expansion of the Company's collection efforts has resulted in a larger
market for external sales of this raw material. During the second quarter of
1995, prices for this material were approximately $200 per ton. In the
second quarter of 1996, those prices were approximately $60 per ton,
significantly affecting sales in the industrial packaging segment.
Overall sales were up in the tube and core business, reflecting some recent
acquisitions and increases in the Company's general film core business in the
United States and slight increases in the textile carrier business in Mexico
and Germany. The paper mill core business was down in all geographic regions,
reflecting the lower demand in the paper industry. Overall, business was
strong in Canada. The new operations in Brazil, which were not included in
last year's second quarter results, also added to sales in the second quarter
of 1996.
The Company announced the realignment of several operations in its Industrial
Products Division as part of the ongoing activities of Process Excellence, a
continuing, aggressive business redesign effort in the Company's North American
industrial products and paper operations. Seven of the division's facilities
will be closed in this realignment. Two of those closings took place during
the second quarter, with the other five scheduled to take place over the
remainder of 1996. The sales volume and assets of those plants are being
transferred to several other facilities around the country. Process Excellence
continues on schedule with savings expected to balance program-related costs
during 1996 and with savings expected to begin in 1997.
<PAGE> 11
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Unaudited), continued
Second Quarter 1996 Compared with Second Quarter 1995, continued
Results of Operations, continued
The Company's Crellin operations, molded and extrusion plastics, showed a good
increase during the second quarter as their textile carrier business began to
rebound and the Sebro automotive plastics business remained strong. The
intermediate bulk container business had strong sales during the quarter while
both fibre and plastic drum sales were weak. Partitions, protective packaging,
reels, adhesives and machinery manufacturing all increased volume during the
quarter.
Consumer Packaging Segment
Trade sales for the consumer packaging segment were $297.9 million, an 8.1%
increase over 1995's second quarter sales of $275.5 million. Operating profits
increased 26.3% to $33.7 million, compared with $26.7 million in the second
quarter of 1995. Overall volumes continued to increase during the quarter
which, accompanied by further growth in international operations, acquisitions
and production gains, accounted for the strong performance in this segment.
Volume was up approximately 10% in the composite can operations led by strong
sales in several food and beverage markets in the United States and good
performance in Europe and Latin America. This operation continued to benefit
from increased sales of its new rectangular can and sales to a major customer
that was formerly a self manufacturer. The capseals operation, based in
England, continued to expand sales and benefitted from a new poly extrusion
machine that was in full production during the second quarter.
The High Density Film Products operation had strong volume during the second
quarter, with grocery bag volume up more than 17% over 1995. The division,
which increased capacity by more than two billion bags in 1995, is operating at
full capacity during 1996. The patent infringement suit that had been filed
against the Company in May 1994 was dismissed by the U.S. District Court for
the District of Massachusetts in May 1996.
Sales were off in the flexible packaging business, resulting from start-up
problems with new presses. Sales improved in the Sonoco Engraph operations
primarily due to the fourth quarter 1995 acquisition of Cricket Converters,
which was not included in the second quarter performance of 1995. Sonoco
Engraph continued consolidating its various label operations under the Sonoco
Engraph brand during the quarter, resulting in the closing of a plant in
Moorestown, New Jersey. In addition, the screen printing operations had solid
sales performance in the quarter, with added volume in fleet graphics for the
Olympic games in Atlanta.
<PAGE> 12
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Unaudited), continued
June 1996 Year-to-Date Compared with June 1995 Year-to-Date
Results of Operations
Consolidated net sales for the first six months of 1996 were $1.36 billion, a
1.7% increase over the $1.34 billion in the first six months of 1995. Net
income available to common shareholders for the first half of 1996 was $86.1
million, a 10.7% increase over the $77.8 million in 1995. Fully diluted
earnings per share for the first half of 1996 were $.90, an 11.1% increase over
the $.81 recorded in the first six months of 1995.
Despite sluggish economies in several areas of the world, the Company continued
to show both sales and earnings growth during the first six months of 1996,
when compared with the first half of 1995, two of the strongest quarters in the
Company's history. Overall, the Company's operations showed a slight volume
increase for the reporting period, as well as an increased profit margin. On a
consolidated basis, the gross profit margin for the first half of 1996 was
23.8%, compared with 21.8% for the first six months of 1995.
The strength of the Company's portfolio (60% serving industrial packaging and
40% serving consumer packaging) is evident in the first half results, where the
strong performance by consumer packaging helped bolster the Company's growth.
Industrial Packaging Segment
Trade sales for the Industrial Packaging segment during the first six months
were $766.1 million compared with $797.2 million in 1995. Operating profits
for the first six months of 1996 were $107.5 million, a 9.0% increase over
1995's first half results of $98.7 million. The sales decline in this segment
primarily reflects the lower selling prices for paperboard, recovered paper and
converted products. During the first half of 1995, prices for recovered paper
were at all-time highs. While the Company increased its external sales of
recovered paper, the steep decline in selling prices impacted revenue for the
first half of 1996. Sales volume for many of the industrial packaging
businesses declined in the first quarter, but rebounded slightly in the second
quarter. The Company expects to continue showing some volume increases through
the end of the year.
The Industrial Packaging segment is continuing to grow through tactical
acquisitions. During the first half of 1996, the Company acquired a majority
ownership of a joint venture paper mill in Shanghai, China. In addition, the
Company acquired two companies that extend its ability to serve the paper mill
industry by adding both core plugs and vapor-barrier roll wrap packaging to the
product portfolio. The Company's Baker operation, which produces reels for the
wire and cable industry, added some volume with two small acquisitions during
the first quarter. Realignment in the Industrial Products and Paper Divisions
through Process Excellence has resulted in two plant closings during the
first half of 1996, with five more closings expected to take place by year-end.
Process Excellence savings are expected to balance out the costs of this
continuing business redesign effort, with savings expected to begin in 1997.
International performance in the industrial packaging segment was similar to
domestic performance, with operations in Canada, Mexico and Europe maintaining
strength, despite slow economies.
<PAGE> 13
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Unaudited), continued
June 1996 Year-to-Date Compared with June 1995 Year-to-Date, continued
Results of Operations, continued
Consumer Packaging Segment
Trade sales for the Consumer Packaging segment during the first six months were
$593 million, a 9.9% increase over 1995's first half sales of $539.7 million.
Operating profits were $64.5 million compared with $52.1 million for the first
six months of 1995.
This segment continued to grow with strong market demand, new product
introductions and acquisitions. Unit volume increased in nearly all of the
consumer packaging operations during the first six months, with the plastic bag
operation producing at full capacity, composite can volume increasing from
sales to a major customer that was formerly a self manufacturer and demand for
the Company's new rectangular cans and continued strong performance in nearly
all markets. Label sales were also up, pushed by the results from the fourth
quarter 1995 acquisition of Cricket Converters, which is part of Sonoco Engraph.
International performance in the consumer packaging segment was strong during
the first half of 1996.
Growth of consumer packaging remains a continuing goal for the Company. During
the first half of 1996, the Company announced an agreement to acquire Specialty
Packaging Inc. in the United States. Subsequent to June 30, 1996, the Company
acquired two of Germany's leading paperboard can producers.
Corporate
General corporate expenses have been allocated as operating costs to each of
the segments under the new segmental reporting method. Interest expense
increased in 1996 due to higher debt levels.
Liquidity and Capital Resources
The Company's financial position remained strong through the first six months
of 1996. The debt to capital percentage, after adjusting debt levels for
excess cash related to the issuance of restricted purpose bonds, increased to
44.1% at June 30, 1996, from 39.6% at December 31, 1995. Debt increased
primarily as a result of increased capital expenditures, acquisition funding,
and interest and premiums paid for Company-owned life insurance.
Working capital increased $88.4 million to $317.7 million during the first six
months of 1996 primarily due to increases in cash equivalents, accounts
receivable and inventory, and decreases in current liabilities. The increase
in cash equivalents is primarily due to the April 1996 issuance of $35 million
of 6.0% Industrial
<PAGE> 14
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Unaudited), continued
June 1996 Year-to-Date Compared with June 1995 Year-to-Date, continued
Liquidity and Capital Resources, continued
Development Revenue Bonds due April 1, 2026, to finance the start up of some
new operations. The proceeds from these bonds have been invested in marketable
securities until qualified capital expenditures take place. The increase in
receivables and inventory is a result of business growth and acquisitions.
The Company expects internally generated cash flows along with borrowings
available under its commercial paper and other existing credit facilities to be
sufficient to meet operating and normal capital expenditure requirements.
On July 17, 1996, the Company's Board of Directors authorized a public stock
repurchase program for the repurchase of up to $100 million of the Company's
common stock and/or Series A Cumulative Convertible preferred stock at current
market prices. The Company intends to repurchase shares by means of open
market purchases and privately negotiated transactions at prevailing market
prices. The timing of repurchases will depend on market conditions, the market
price of the Company's common stock and management's assessment of the
Company's liquidity and cash flow needs.
<PAGE> 15
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, 1995. The patent
infringement action filed against the Company in the United
States District Court for the District of Massachusetts, which
has been discussed in previous reports, was dismissed in May 1996.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's annual meeting of shareholders was held on April
17, 1996. The following matters, as described in more detail in the
Company's Proxy Statement, were approved by the shareholders at this
meeting:
(1) The following directors were elected:
VOTES
-----
Term For Withheld
---- ---------- --------
C.J. Bradshaw 3-year 78,693,497 796,502
R.J. Brown 3-year 79,130,338 359,661
J.L. Coker 3-year 79,027,949 462,050
Paul Fulton 3-year 78,670,347 819,652
H.L. McColl, Jr. 3-year 78,601,434 888,565
Dona Davis Young 1-year 79,169,985 320,014
The following directions continue their terms of office as
directors:
Leo Benatar; P. C. Browning; C. W. Coker; F. L. H. Coker;
T. C. Coxe, III; A. T. Dickson; R. E. Elberson; J. C.
Fort; B. L. M. Kasriel; R. C. King, Jr; E. H. Lawton, Jr. and
E. C. Wall, Jr.
(2) Coopers & Lybrand L.L.P., Certified Public Accountants,
was re-elected as the independent auditors of the
corporation for the fiscal year ending December 31, 1996. The
shareholders voted 79,100,296 for and 201,351 against this
appointment, with 188,352 votes abstaining.
(3) The 1996 Non-Employee Directors' Stock Plan was approved with
65,993,011 votes for and 11,661,327 against this issue,
with 1,835,661 votes abstaining.
There were 11,677,621 non-votes for each of the above matters
voted upon.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit (10) - Material Contracts
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 June 30, 1996. On August 5,
1996, the Company filed a Current Report on Form 8-K
disclosing the change in its segmental reporting format
effective the second quarter of 1996.
<PAGE> 16
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: August 13, 1996 By: /s/ F. T. Hill, Jr.
--------------------------- --------------------------------------
F. T. Hill, Jr.
Vice President and
Chief Financial Officer
<PAGE> 17
SONOCO PRODUCTS COMPANY
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- ------------
<S> <C>
10 Material Contracts
11 Computation of Earnings Per Share
27 Financial Data Schedule (for SEC use only)
</TABLE>
<PAGE> 1
Exhibit (10)
SONOCO PRODUCTS COMPANY
MATERIAL CONTRACTS
Sonoco Products Company 1996 Non-Employee Directors' Stock Plan
Reference is made to Exhibit 10 of the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996.
<PAGE> 1
Exhibit (11)
SONOCO PRODUCTS COMPANY
Computation of Earnings Per Share (unaudited)
(Dollars in thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------- ----------------------------
June 30, July 2, June 30, July 2,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Primary earnings
Net income available to common shareholders $ 44,814 $ 42,172 $ 86,121 $ 77,768
============ ============ ============ ============
Weighted average number
of common shares outstanding 91,118,603 91,162,867 91,118,603 91,162,867
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 2,126,956 1,829,883 2,073,118 1,690,865
------------ ------------ ------------ ------------
Weighted average number of shares
outstanding as adjusted 93,245,559 92,992,750 93,191,721 92,853,732
============ ============ ============ ============
Primary earnings per common share $ 0.48 $ 0.46 $ 0.92 $ 0.84
============ ============ ============ ============
Assuming full dilution
Net income available to common shareholders $ 44,814 $ 42,172 $ 86,121 $ 77,768
Elimination of preferred dividends 1,941 1,941 3,882 3,882
------------ ------------ ------------ ------------
Fully diluted net income $ 46,755 $ 44,113 $ 90,003 $ 81,650
============ ============ ============ ============
Weighted average number of
common shares outstanding 91,118,603 91,162,867 91,118,603 91,162,867
Assuming exercise of options reduced by the number
of shares which could have been purchased (at the
higher of the end-of-period price or the average)
with proceeds from exercise of such options 2,220,167 1,892,901 2,220,167 1,892,901
Assuming conversion of preferred stock 7,155,269 7,155,300 7,155,269 7,155,300
------------ ------------ ------------ ------------
Weighted average number of
shares outstanding as adjusted 100,494,039 100,211,068 100,494,039 100,211,068
============ ============ ============ ============
Earnings per common share assuming full dilution $ 0.47 $ 0.44 $ 0.90 $ 0.81
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SONOCO PRODUCTS COMPANY FOR THE SIX MONTHS ENDED JUNE
30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 44,751
<SECURITIES> 54,480
<RECEIVABLES> 345,321
<ALLOWANCES> 7,108
<INVENTORY> 244,580
<CURRENT-ASSETS> 730,318
<PP&E> 1,725,602
<DEPRECIATION> 802,792
<TOTAL-ASSETS> 2,326,509
<CURRENT-LIABILITIES> 412,570
<BONDS> 761,540
0
172,497
<COMMON> 7,175
<OTHER-SE> 779,292
<TOTAL-LIABILITY-AND-EQUITY> 2,326,509
<SALES> 1,359,086
<TOTAL-REVENUES> 1,359,086
<CGS> 1,035,096
<TOTAL-COSTS> 1,035,096
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,361
<INTEREST-EXPENSE> 25,192
<INCOME-PRETAX> 149,742
<INCOME-TAX> 58,998
<INCOME-CONTINUING> 90,003
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90,003
<EPS-PRIMARY> .95
<EPS-DILUTED> .90
</TABLE>
