<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 30, 1997 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 29550-0160
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 May 4, 1997:
Common stock, no par value: 90,145,320
<PAGE> 2
SONOCO PRODUCTS COMPANY
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets - March 30, 1997 and
December 31, 1996
Consolidated Statements of Income -
Three Months Ended March 30, 1997 and
March 31, 1996
Consolidated Statements of Cash Flows -
Three Months Ended March 30, 1997 and
March 31, 1996
Notes to Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURE
<PAGE> 3
SONOCO PRODUCTS COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
<TABLE>
<CAPTION>
(unaudited)
March 30, December 31,
ASSETS 1997 1996
------ ----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 81,730 $ 71,260
Trade accounts receivable, net of allowances 346,910 329,963
Other receivables 33,248 38,240
Inventories
Finished and in process 122,417 123,224
Materials and supplies 132,853 137,236
Prepaid expenses 23,324 26,121
Deferred income taxes 11,436 11,605
----------- -----------
751,918 737,649
PROPERTY, PLANT AND EQUIPMENT, NET 996,667 995,415
COST IN EXCESS OF FAIR VALUE OF ASSETS PURCHASED, NET 438,001 455,567
OTHER ASSETS 218,095 198,909
----------- -----------
Total Assets $ 2,404,681 $ 2,387,540
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Payable to suppliers $ 216,684 $ 205,741
Accrued expenses and other 153,929 111,804
Accrued wages and other compensation 11,916 29,428
Notes payable and current portion of
long-term debt 97,183 102,062
Taxes on income 35,672 26,081
----------- -----------
515,384 475,116
LONG-TERM DEBT 750,161 791,026
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 107,305 107,265
DEFERRED INCOME TAXES AND OTHER 96,846 93,520
SHAREHOLDERS' EQUITY
Serial preferred stock, no par value
Authorized 30,000 shares
2,394 and 2,395 shares issued and outstanding as of
March 30, 1997 and December 31, 1996, respectively 119,706 119,756
Common shares, no par value
Authorized 150,000 shares
90,058 and 89,864 shares issued and outstanding as of
March 30, 1997 and December 31, 1996, respectively 7,175 7,175
Capital in excess of stated value 54,035 50,378
Translation of foreign currencies (71,136) (56,572)
Retained earnings 825,205 799,876
----------- -----------
Total shareholders' equity 934,985 920,613
----------- -----------
Total Liabilities and Shareholders' Equity $ 2,404,681 $ 2,387,540
=========== ===========
</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
----------------------------
March 30, March 31,
1997 1996
--------- ---------
<S> <C> <C>
Net sales $ 687,648 $ 669,231
Cost of sales 535,677 512,876
Selling, general and administrative expenses 71,806 73,793
Interest expense 13,549 11,578
Interest income (1,098) (1,219)
--------- ---------
Income from operations before income taxes 67,714 72,203
Taxes on income 26,205 28,448
--------- ---------
Income from operations before equity in
earnings of affiliates/Minority interest
in subsidiaries 41,509 43,755
Equity in earnings of affiliates/
Minority interest in subsidiaries (263) (507)
--------- ---------
Net income 41,246 43,248
Preferred dividends (1,066) (1,941)
--------- ---------
Net income available to common shareholders $ 40,180 $ 41,307
========= =========
Average common shares outstanding:
Assuming no dilution 89,976 91,137
Assuming full dilution 96,741 100,367
Earnings per common share:
Assuming no dilution $ .45 $ .45
========= =========
Assuming full dilution $ .43 $ .43
========= =========
Dividends per common share $ .165 $ .15
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE> 5
SONOCO PRODUCTS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
March 30, March 31,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 41,246 $ 43,248
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation, depletion and amortization 37,910 34,125
Equity in earnings of affiliates/
Minority interest in subsidiaries 263 507
Deferred taxes 1,872 2,049
Loss on disposition of assets 403 37
Changes in assets and liabilities, net of effects from acquisitions,
dispositions and foreign currency adjustments:
Accounts receivable (26,341) (20,482)
Inventories (7,453) (5,752)
Prepaid expenses 2,704 7,490
Payables and taxes 22,176 (10,741)
Other assets and liabilities (14,640) 8,785
-------- --------
Net cash provided by operating activities 58,140 59,266
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (50,365) (46,354)
Cost of acquisitions, exclusive of cash (1,870) (33,073)
Other, net 570 0
Proceeds from the sale of assets 62,634 134
-------- --------
Net cash provided (used) by investing activities 10,969 (79,293)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in commercial paper borrowings (44,091) 57,700
Proceeds from issuance of debt 17,138 6,790
Principal repayment of debt (17,891) (13,197)
Cash dividends - common and preferred (15,917) (15,616)
Shares acquired - common and preferred (50) (11,805)
Common shares issued 3,121 5,755
-------- --------
Net cash (used) provided by financing activities (57,690) 29,627
-------- --------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH (949) (107)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,470 9,493
Cash and cash equivalents at beginning of period 71,260 61,624
-------- --------
Cash and cash equivalents at end of period $ 81,730 $ 71,117
======== ========
</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>
Three Months Ended
---------------------------------
March 30, March 31,
1997 1996
------- -------
<S> <C> <C>
Interest paid $10,066 $10,085
Income taxes paid $ 6,652 $ 9,052
</TABLE>
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. Operating results for the
three months ended March 30, 1997, are not necessarily indicative
of the results that may be expected for the year ending December
31, 1997. 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, 1996.
NOTE 2: DIVIDEND DECLARATIONS
On April 16, 1997, the Board of Directors declared and increased
the regular quarterly dividend from $.165 per share to $.18 per
share, payable June 10, to shareholders of record May 16. On
February 5, 1997, the Board declared a quarterly dividend of $.5625
per share on the $2.25 Series A Cumulative Convertible Preferred
Stock, payable May 1, to shareholders of record April 11.
NOTE 3: ACQUISITIONS/DISPOSITIONS
In March of 1997, the Company completed the sale of its screen
print operations acquired in the October 1993 acquisition of
Engraph, Inc. This division was sold because the business did not
fit with the Company's overall focus on the packaging industry. In
addition, the Company signed a letter of intent to form a joint
venture with the Rock-Tenn Company, combining their fibre
partitions businesses into a joint venture company called RTS
Packaging, owned 35% by Sonoco and 65% by Rock-Tenn, with combined
annual sales of approximately $150 million. This transaction is
awaiting regulatory approval.
<PAGE> 8
SONOCO PRODUCTS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(unaudited)
NOTE 4: FINANCIAL SEGMENT INFORMATION
As of the 1996 second quarter, the Company has been reporting its
operations in two segments, Industrial Packaging and Consumer
Packaging. 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
-------------------------------
March 30, March 31,
1997 1996
--------- ---------
<S> <C> <C>
Total Revenue
Industrial Packaging $ 390,946 $ 384,515
Consumer Packaging 306,372 295,511
--------- ---------
Consolidated $ 697,318 $ 680,026
========= =========
Net Sales
Industrial Packaging $ 381,300 $ 374,170
Consumer Packaging 306,348 295,061
--------- ---------
Consolidated $ 687,648 $ 669,231
========= =========
Operating Profit
Industrial Packaging $ 50,194 $ 51,775
Consumer Packaging 29,971 30,787
Interest, net (12,451) (10,359)
--------- ---------
Consolidated $ 67,714 $ 72,203
========= =========
</TABLE>
<PAGE> 9
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations 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 Company cautions readers that forward looking
statements, including without limitation those relating to the Company's future
business prospects, revenues, working capital, liquidity, capital needs,
interest costs, and income, are subject to certain risks and uncertainties that
could cause actual results to differ materially from those indicated in the
forward looking statements.
FIRST QUARTER 1997 COMPARED WITH FIRST QUARTER 1996
RESULTS OF OPERATIONS
Consolidated net sales for the first quarter of 1997 were $687.6 million,
compared with $669.2 million recorded for the first quarter of 1996. Net income
available to common shareholders for the first quarter was $40.2 million,
compared with $41.3 million in the first quarter of 1996. Fully diluted earnings
per share for the first quarter of 1997 were $.43, equal to the all-time high
first quarter results of 1996. First quarter earnings per share were favorably
impacted by the repurchase of 3.44 million common share equivalents during 1996.
First quarter performance was in line with Management's expectations that
earnings for the first two quarters of 1997 would be flat to slightly down,
compared with 1996, and then improve in the second half of the year.
INDUSTRIAL PACKAGING SEGMENT
The Industrial Packaging segment includes tubes; cores; cones; roll wrap; molded
plugs and related products and services; fibre drums; plastic drums;
intermediate bulk containers; injection molded and extruded plastics; paper
manufacturing and recovered paper collections; fibre partitions; molded pulp;
corner posts; reels for wire and cable packaging; adhesives; converting
machinery; and forest products.
Trade sales for the Industrial Packaging segment were $381.3 million, a 1.9%
increase over the $374.2 million recorded in the first quarter of 1996.
Operating profits were $50.2 million for the first quarter of 1997 compared with
$51.8 million in the first quarter of 1996.
Volume continued improving in the first quarter in nearly every product line in
the global tube and core business, led by strong increases in sales to textile
carriers, particularly in the United States and Europe. Profits in industrial
products were negatively impacted by further declines in selling prices,
although such prices appear to be stabilizing. Although improving, start-up and
consolidation costs in Brazil and China continued to negatively impact segment
results. The industrial segment began seeing some of the benefits of the plant
consolidations that took place during 1996 in conjunction with the Company's
Process Excellence initiative. Continued improvement is expected from this and
other initiatives undertaken over the past couple of years.
In the paper operations, lower selling prices for corrugating medium and
linerboard, which is sold by the Company to external markets, reduced sales and
profits by approximately $4 million for the quarter. Approximately 85% of the
paperboard produced by the Company is for internal consumption.
<PAGE> 10
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED), CONTINUED
FIRST QUARTER 1997 COMPARED WITH FIRST QUARTER 1996, CONTINUED
RESULTS OF OPERATIONS, CONTINUED
Volume was excellent in the injection molded and extruded plastics business, led
by sales of a new heating tray used in the fast food industry. Volume also
increased in both the textile and filtration markets. In addition, the
automotive business continues to be strong.
Volume in the industrial container group was nearly even with the first quarter
1996, but sales dollars were down because of declining prices and product mix.
Performance in this group is also being impacted by start-up costs for the new
plastic drum plant that began operations in Pennsylvania during 1996. However,
volume was up significantly in the first quarter in the group's intermediate
bulk container business.
CONSUMER PACKAGING SEGMENT
The Consumer Packaging segment includes composite cans; fibre and plastic caulk
cartridges; capseals; flexible packaging; pressure-sensitive labels; label
application machinery; paperboard cartons, sleeves, blister packs, coasters and
glass covers; and high density film products.
Trade sales for the consumer packaging segment were $306.3 million for the first
quarter of 1997, a 3.8% increase over 1996's first quarter sales of $295.1
million. Operating profits were $30.0 million for the first quarter of 1997,
compared with $30.8 million in the first quarter of 1996.
The Company's composite can operations continued their strong performance during
the first quarter of 1997, led by sales increases in the snack food, powdered
beverages and adhesives and sealants markets. Volume was also up in the
Capseals business, which is located in England.
This segment is still being negatively impacted by reorganization in the label
and flexible packaging businesses. Costs associated with the reorganization and
consolidation of its label business, which previously operated as multiple
independent companies, should improve throughout 1997 as the Company continues
to build a label business under a unified brand. Sales and profits in the
flexible packaging operations improved over the fourth quarter of 1996 and
should continue improving throughout 1997.
Volume was off in the high density film products business as several customers
had built inventories during the previous quarter. This business was also
impacted by increased resin costs, which have not been fully recovered through
selling price increases.
<PAGE> 11
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED), CONTINUED
FIRST QUARTER 1997 COMPARED WITH FIRST QUARTER 1996, CONTINUED
RESULTS OF OPERATIONS, CONTINUED
CORPORATE
General corporate expenses have been allocated as operating costs to each of the
segments. Interest expense increased in the first quarter of 1997 over 1996 due
to higher debt resulting from the 1996 share repurchase program, capital
spending and acquisitions.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position remained strong through the first quarter. The
debt to capital percentage, after adjusting debt levels for excess cash related
to the issuance of restricted purpose bonds, decreased to 45.1% at March 30,
1997, from 47.2% at December 31, 1996. Debt decreased primarily as a result of
proceeds from the sale of the screen print operations.
Working capital decreased $26 million to $236.5 million during the first three
months of 1997 primarily due to the sale of the screen print operations and
seasonal increases in payables to suppliers.
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.
In February 1997, the Financial Accounting Standards Board issued Financial
Accounting Standard No. 128 "Earnings Per Share" (FAS 128). This standard is
effective for financial statements issued for periods ending after December 15,
1997 and will be implemented in the Company's 10K for the year ended December
31, 1997. The Company does not expect that FAS No. 128 will have a material
impact on the earnings per share computation.
<PAGE> 12
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, 1996.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's annual meeting of shareholders was held on April 16,
1997. 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:
<TABLE>
<CAPTION>
VOTES
---------------------
Term For Withheld
---- --------- --------
<S> <C> <C> <C>
C. W. Coker 3-year 72,786,353 361,628
A. T. Dickson 3-year 72,777,991 369,990
R. E. Elberson 3-year 72,792,535 355,446
J. C. Fort 3-year 72,686,552 461,429
Dona Davis Young 3-year 72,751,895 396,086
</TABLE>
(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, 1997. The shareholders
voted 73,060,008 for and 27,438 against this appointment,
with 60,535 votes abstaining.
There were 16,873,508 non-votes for each matter voted upon.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit (3) - By-laws
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 March 30, 1997.
<PAGE> 13
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: May 13, 1997 By: /s/ F. Trent Hill, Jr.
---------------- ----------------------------
F. Trent Hill, Jr.
Vice President and
Chief Financial Officer
<PAGE> 14
SONOCO PRODUCTS COMPANY
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
3 By-laws
11 Computation of Earnings per Share
27 Financial Data Schedule (for SEC use only)
<PAGE> 1
(Exhibit 3)
BY-LAWS
SONOCO PRODUCTS COMPANY
HARTSVILLE, S.C.
(Incorporated under the laws of the
State of South Carolina)
Revised through April 16, 1997
ARTICLE I - OFFICE
1. THE PRINCIPAL OFFICE of the corporation shall be at Hartsville,
Darlington County, South Carolina.
2. THE CORPORATION may also have offices at such other places as the
Board of Directors may from time to time determine or as the business of the
corporation may require.
ARTICLE II - SHAREHOLDERS' MEETINGS
1. THE PLACE OF ALL MEETINGS of shareholders shall be at Hartsville,
Darlington County, State of South Carolina.
2. THE ANNUAL MEETING of the shareholders of the corporation for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on the third Wednesday
of April at 11:00 A.M., or such other date as the Board of Directors may, in its
discretion, choose.
3. SPECIAL MEETINGS OF SHAREHOLDERS for any purpose or purposes may be
called by or at the direction of the Board of Directors, or by the Chairman of
the Board of Directors, or by the President. Special meetings shall be called by
the Chairman of the Board of Directors at the request of: (a) holders of
Preferred Stock as may be provided in provisions of the Articles of
Incorporation at the time in effect with respect to the rights, preferences,
privileges, limitations and conditions affecting the capital stock of the
corporation; or (b) shareholders to the extent required by applicable law.
Business to be transacted at all special meetings shall be confined to the
purpose or purposes stated in the notice of the meeting. The time, date and
place of any special meeting shall be determined by the Chairman of the Board of
Directors, except as otherwise required by the Articles of Incorporation.
4. NOTICE of the time, date and place of the annual meeting and any
special meeting of shareholders shall be given by the corporation by
transmitting written or printed notice of the same not less than twenty (20)
days nor more than sixty (60) days prior to the meeting to each shareholder of
record of the corporation entitled to notice of such meeting, addressed to the
shareholder at such shareholder's address appearing on the stock transfer books
of the corporation. Such notice may be amended or withdrawn after it is given in
the discretion of the Chairman of the Board of Directors.
<PAGE> 2
NOTICE SHALL BE DEEMED TO HAVE BEEN GIVEN when actually received or when
deposited with postage prepaid in the United States mail, addressed to the
shareholder at the address appearing on the stock transfer books of the
corporation.
A RECORD DATE may be set by the Board of Directors for a date which is
not less than ten (10) nor more than seventy (70) days preceding the date of any
meeting of the shareholders, as a record date for the determination of the
shareholders entitled to notice of and to vote at any such meeting or
adjournment thereof.
5. A COMPLETE LIST OF SHAREHOLDERS ENTITLED TO NOTICE at the annual
shareholders' meeting or any adjournment thereof, or any special meeting of the
shareholders or adjournment thereof, shall be prepared by the corporation, such
list to be arranged by voting group in alphabetical order with each
shareholder's address appearing on the stock transfer books of the corporation,
showing the number of voting shares held by each shareholder, subject to the
provisions of the laws of the State of South Carolina.
6. THE VOTING AT ALL MEETINGS of the shareholders may be by voice vote,
but any shareholder entitled to vote may demand a stock vote whereupon such
stock vote shall be taken by ballot, each of which shall state the name of the
shareholder voting and the number of shares voted by him; and if such ballots be
cast by proxy, it shall also state the name of such proxy.
7. EVERY SHAREHOLDER HAVING THE RIGHT TO VOTE at any meeting of the
shareholders shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such shareholder. Unless otherwise provided
in the Articles of Incorporation, each shareholder entitled to vote shall have
one vote for each share of stock having voting power registered in his name on
the books of the corporation as of the record date set by the Board of
Directors.
NO PROXY SHALL BE VALID after the expiration of eleven (11) months from
its execution.
8. A QUORUM as to any matter to come before any annual or special
meeting of shareholders shall consist of shareholders representing, either in
person or by proxy, a majority of shares of each voting group entitled to vote
on such matter. A majority of the votes cast on such matter shall decide any
question that may come before such meeting except as otherwise provided by law
and except as otherwise may be provided by provisions of the Articles of
Incorporation at the time in effect with respect to the rights, preferences,
privileges, limitations and conditions affecting shares of the corporation.
9. IN THE ABSENCE OF A QUORUM at a properly called shareholders'
meeting, such meeting may be adjourned from time to time by the Chairman as
provided in Section 12 of this Article. If the meeting is adjourned for thirty
(30) days or more, a notice of such adjournment shall be sent to all
shareholders entitled to vote thereat stating the time and place of holding such
adjourned meeting.
10. NO NOTICE OF ANY ADJOURNED MEETING for less than thirty (30) days
need be given if the time and place of the adjourned meeting are announced at
the meeting at which the adjournment is taken.
11. RESOLUTIONS TO BE VOTED ON BY SHAREHOLDERS, other than resolutions
proposed by the Board of Directors, shall be submitted to the Secretary of the
corporation in writing not less than seventy-five (75) days prior to the meeting
at which the vote is to occur. No resolution shall be considered at any meeting
of shareholders unless such resolution is proposed by the Board of Directors or
by a shareholder of record at the date of submission to the Secretary and on the
record date for the meeting. The person presiding at the meeting, in addition to
making any other determinations that may be appropriate to the conduct of the
meeting, shall determine whether such notice has been duly given and shall
direct that proposals and nominees not be considered if such notice has not been
duly given.
<PAGE> 3
12. THE PRESIDING OFFICER OF ALL SHAREHOLDERS' MEETINGS shall be the
Chairman of the Board of Directors unless he or the Board of Directors shall
designate some other person to preside at the meeting. The presiding officer
may, in his discretion, adjourn any meeting to such later date and time as he
shall state whether or not there is a quorum present at the time of such
adjournment. The presiding officer shall determine the manner in which the
meeting shall be conducted, including the order of business, and all rulings of
the presiding officer shall be final and binding. The presiding officer may, in
his discretion, designate various persons to perform tasks associated with the
conduct of the meeting.
ARTICLE III - DIRECTORS
1. THE MANAGEMENT of all the affairs, property and the business of the
corporation shall be vested in a Board of Directors. The number of directors of
the corporation shall be (i) the number fixed from time to time by the Board of
Directors, which number shall not be less than nine, plus (ii) any directors
elected exclusively by the holders of Preferred Stock as provided in the
corporation's Articles of Incorporation. Directors shall be shareholders, each
owning not less than one hundred (100) shares of the voting stock of the
corporation. The directors need not be residents of the State of South Carolina.
2. EXCEPT FOR ANY DIRECTOR elected exclusively by the holders of
Preferred Stock, the Board of Directors shall be divided into three classes of
as nearly equal size as possible in accordance with the provisions of the
Articles of Incorporation.
3. ALL DIRECTORS SHALL SERVE until their successors shall have been duly
elected and qualify or until their earlier resignation, retirement, removal from
office, death or incapacity except as otherwise provided by provisions of the
Articles of Incorporation with respect to the rights, preferences, privileges,
limitations and conditions affecting the shares of the corporation. No reduction
in the size of the Board of Directors shall have the effect of shortening the
term of any director in office at the time.
4. ALL DIRECTORS OF AN EXPIRING CLASS shall be eligible for re-election
to the Board of Directors.
5. ALL VACANCIES OCCURRING IN THE BOARD OF DIRECTORS whether caused by
resignation, death, increase in number of directors, or otherwise may be filled
by a majority vote of the remaining directors, even if such number would not
constitute a quorum.
6. RETIREMENT OF DIRECTORS shall be automatic upon each reaching the age
of seventy-two (72), and a special meeting of the Board of Directors may be
called to fill the vacancy thus created by the retirement.
7. REMOVAL OF A DIRECTOR OR THE ENTIRE BOARD OF DIRECTORS for cause
shall only be accomplished by a vote of the holders of at least a majority of
the outstanding shares then entitled to vote at an election for such Directors,
subject to the provisions of the laws of the State of South Carolina and the
Articles of Incorporation. Directors may be removed only for cause as defined by
the South Carolina Business Corporation Act.
8. REGULAR MEETINGS OF THE BOARD OF DIRECTORS shall be held quarterly
and ten (10) days written notice shall be given prior to the meeting date. The
date of each quarterly meeting shall be decided upon by the Chairman of the
Board of Directors or by the President or, in their absence, by any two Vice
Presidents or by any two directors.
<PAGE> 4
9. SPECIAL MEETINGS of the Board of Directors may be called at any time
to be held at the principal office of the corporation at Hartsville, South
Carolina or elsewhere by:
(a) The Chairman of the Board of Directors;
(b) The President;
(c) Unanimous written consent of all the members at any time and place
without notice; or
(d) The presence of all members at such meeting.
Notice of all special meetings of the Board of Directors shall be given
to each director at such director's address given to the Secretary for the
purpose of giving notices, by telegram, telephone, facsimile, letter, or other
reasonable means reasonably calculated to be received not less than twenty-four
hours prior to the meeting. Notice of a meeting of the directors need not be
given to any director who signs a waiver of notice either before or after the
meeting.
10. NOTICE OF ADJOURNMENT OF A MEETING OF THE BOARD OF DIRECTORS need
not be given if the time and place to which it is adjourned are fixed and
announced at such meeting.
11. NEITHER THE BUSINESS TO BE TRANSACTED at nor the purpose of any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice.
12. A QUORUM at any meeting of the Board of Directors shall consist of a
majority of the total number of directors then in office, but less than a quorum
may adjourn the meeting which may be held on a subsequent date without further
notice if the time and place to which it is adjourned are fixed and announced at
such meeting.
13. COMPENSATION shall be paid directors not otherwise currently
employed by the corporation for their services in such form and in such amount
as may be determined by Resolution of the Board of Directors.
ARTICLE IV - OFFICERS
1. THE OFFICERS OF THE CORPORATION shall consist of a President, one or
more Vice Presidents, a Secretary and Treasurer who shall be appointed for one
year by the directors at their first meeting after the annual meeting of
shareholders and who shall hold office until their successors are appointed and
qualify. The Board of Directors may also in their discretion elect one of their
number as Chairman of the Board of Directors for a term of one year. The
position of Vice President and Treasurer and/or Secretary and Treasurer and/or
Vice President and Secretary may be united in one person. The Board of Directors
may also appoint one or more Assistant Secretaries and Assistant Treasurers. The
Board of Directors may alter or modify the duties of any officer set forth
herein.
2. THE CHAIRMAN OF THE BOARD OF DIRECTORS shall preside at all meetings
of the shareholders and directors, except as provided in Article II, Section 12.
The Chairman shall possess the same power as the President to sign all
certificates, contracts and other instruments of the corporation which may be
authorized by the Board of Directors. He shall perform all such other duties as
are incident to his office or are properly required of him by the Board of
Directors. Unless otherwise provided by the Board of Directors, the Chairman of
the Board of Directors shall serve as the Chief Executive Officer of the
Corporation.
<PAGE> 5
3. THE PRESIDENT shall have general supervision of the affairs of the
corporation, shall sign or countersign all certificates, contracts and other
instruments of the corporation as authorized by the Board of Directors, shall
make reports to the Board of Directors and shareholders and shall perform all
such other duties as are incident to his office or are properly required of him
by the Board of Directors.
4. THE VICE PRESIDENTS, in the order designated by the Board of
Directors, shall exercise the functions of the President during the absence or
disability of the President and the Chairman of the Board of Directors. Each
Vice President shall have such powers and discharge such duties as may be
assigned to him from time to time by the Board of Directors.
5. THE SECRETARY shall issue notices for all meetings, shall keep
minutes of all meetings, shall have charge of the seal and corporate books,
shall have responsibility to authenticate corporate documents, shall sign with
the President such instruments that require his signature, shall make such
reports and shall perform such other duties as are incident to his office or are
properly required of him by the Board of Directors.
6. THE ASSISTANT SECRETARIES, in the order designated by the Board of
Directors, shall in the absence or disability of the Secretary, or as delegated
by the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties as the Board of Directors may prescribe.
7. THE TREASURER shall have custody of all funds and securities of the
corporation and shall keep regular books of account. He shall disburse the funds
of the corporation in payment of just demands against the corporation or as may
be ordered by the Board of Directors, taking proper vouchers for disbursements,
and shall render to the Board of Directors from time to time as may be required
of him an account of all his transactions as Treasurer and of the financial
condition of the corporation. He shall perform all duties incident to his office
or which are properly required of him by the Board of Directors.
8. THE ASSISTANT TREASURERS, in the order designated by the Board of
Directors, shall in the absence or disability of the Treasurer, or as delegated
by the Treasurer, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties as the Board of Directors may prescribe.
9. IN THE CASE OF ABSENCE OR INABILITY TO ACT of any officer of the
corporation or of any person herein authorized to act in his place, the Board of
Directors may from time to time delegate the powers or duties of such officer to
any other officer or any director or other person whom it may select.
10. VACANCIES in any office may be filled by the directors at any
regular or special meeting.
11. THE SALARIES of all officers receiving both officer compensation and
officer benefits shall be fixed by the Board of Directors.
ARTICLE V - SHARES
1. CERTIFICATES FOR SHARES, Common and Preferred, respectively, shall be
issued in numerical order, and each shareholder shall be entitled to a
certificate signed by the Chairman of the Board of Directors or by the President
or any Vice President and by the Secretary or Treasurer of the corporation or
bearing the facsimile signatures of such officers and bearing the corporate seal
or a facsimile thereof. A record of such certificates issued shall be kept by
the corporation or a designated transfer agent and/or registrar. No certificate
shall be issued covering or evidencing a fractional part of a share of either
Common or Preferred shares but in lieu thereof the corporation may issue script
in registered or bearer form over the manual or facsimile signature of an
officer of the corporation or of its agents, exchangeable as therein
<PAGE> 6
provided for full shares, but such script shall not entitle the holder to any
right of a shareholder except as therein provided. Such script may be issued
subject to the condition that it shall become void if not exchanged for
certificates representing full shares before a specified date or, subject to the
condition that the shares for which such script is exchangeable, may be sold by
the corporation and the proceeds thereof distributed to the holders of such
script or subject to any other conditions which the Board of Directors may
determine.
2. TRANSFERS OF SHARES shall be made only upon the transfer books of the
corporation kept at the principal office of the corporation or by a transfer
agent designated to transfer the Common or Preferred shares; and before a new
certificate is issued, the old certificate must be surrendered for cancellation.
3. REGISTERED HOLDERS only shall be entitled to be treated by the
corporation as holders in fact of the shares standing in their respective names
at their respective addresses appearing in the stock transfer books of the
corporation, and the corporation shall not be bound to recognize any equitable
or other claim to or interest in any share on the part of any person, whether or
not it shall have express or other notice thereof.
4. IN CASE OF LOSS OR DESTRUCTION BY A SHAREHOLDER of the original
certificate, another may be issued in its place upon proof of such loss or
destruction and upon the giving of a satisfactory bond of indemnity to the
corporation and/or to the transfer agent of such shares, subject to the
provisions of the laws of the State of South Carolina.
5. TRANSFER AGENTS OR REGISTRARS of the Common or Preferred shares of
the corporation may from time to time be designated by the Board of Directors
which may provide for their countersigning of share certificates.
ARTICLE VI - DIVIDENDS AND FINANCE
1. THE BOARD OF DIRECTORS MAY DECLARE and the corporation may pay
dividends at such time as the Board of Directors may designate on its
outstanding shares, in cash or property or from authorized but unissued shares
and may declare stock splits, but no dividends or splits shall be declared that
shall impair the capital stock of the corporation or violate any right,
preference, privilege, limitation or condition affecting any class of shares of
the corporation as fixed and determined by the shareholders or that shall
violate any agreement or undertaking made by the corporation or that shall not
conform to the laws of the State of South Carolina.
2. THE FUNDS of the corporation shall be deposited in the name of the
corporation in such bank or banks or trust company or trust companies as the
Board of Directors may designate and shall be drawn out by checks signed by any
two officers or any two designated employees or by an officer together with a
designated employee or by the use of facsimile signatures in lieu thereof.
3. THE FISCAL year of the corporation shall begin on the first day of
January in each year unless otherwise provided by the Board of Directors.
ARTICLE VII - SEAL
1. THE CORPORATE SEAL shall consist of two concentric circles between
which are written the words, "SONOCO PRODUCTS COMPANY, S.C.," and in the center
of which is written "INCORPORATED 1899," and such seal is impressed on the
margin hereof, has been and is hereby adopted as the corporate seal
<PAGE> 7
of the corporation. Failure to affix the seal to a document shall not in any way
affect the validity of the document.
ARTICLE VIII - INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
1. Any present or former director, officer or employee of the
corporation or any person who, at the request of the corporation, may have
served as director or officer of another corporation in which it owns shares or
of which it is a creditor shall be entitled to reimbursement of expenses and
other liabilities to the maximum extent permitted by the laws of the State of
South Carolina or by order of any Court having jurisdiction in any action or
proceeding to which he is a party by reason of being or having been a director,
officer or employee.
ARTICLE IX - AMENDMENTS
1. The By-Laws may be amended, repealed or altered, in whole or in part,
or new By-Laws adopted, by a majority of the outstanding shares of the
corporation entitled to vote at any annual meeting of the shareholders of the
corporation or at any special meeting called for such purpose or, to the extent
permitted by law, by a majority of the Board of Directors at any regular meeting
or special meeting called for that purpose; PROVIDED, HOWEVER, that no such
amendment, repeal, alteration or adoption shall violate any right, preference,
privilege, limitation or condition affecting any class of stock of the
corporation as fixed and determined by shareholders or, acting under or pursuant
to authority in the Articles of Incorporation, by the Board of Directors, or
violate any agreement or understanding made by the corporation; and PROVIDED
FURTHER that Article III, Sections 1, 2, 7, and Article IX, Section 1, of the
By-Laws may not be amended, repealed or altered, in whole or in part, and no
By-Law may be amended, repealed, altered or adopted which is inconsistent with
any of such Sections or either Article 4 or Article 9 of the Articles of
Incorporation, other than by an affirmative vote of shareholders sufficient to
amend Articles 4 and 9 of the Articles of Incorporation of the corporation.
ARTICLE X - SUITS BY SHAREHOLDERS
1. No shareholder shall bring any action in law or in equity against the
corporation, or any of its officers or directors which is based on any right of
the shareholder as a shareholder except in compliance with the following
conditions:
a. The shareholder shall have first presented the substance of the
complaint to the corporation in writing in sufficient detail to
permit the corporation to determine the validity of the
complaint. Such complaint shall have been submitted to the
Secretary of the corporation not less than 90 days prior to the
commencement of a legal proceeding.
b. The legal proceeding shall be commenced and maintained in a court
of competent jurisdiction in the State of South Carolina or in
the United States District Court for the District of South
Carolina.
ARTICLE XI - CONTROL SHARE ACQUISITIONS
1. Except as otherwise provided herein, terms in this Article shall have
the meaning assigned to such terms in Article 1 of Chapter 2 of Title 35 of the
Code of Laws of South Carolina, 1976, as amended (the "Control Share
Acquisitions Act").
<PAGE> 8
2. The corporation is authorized, but not required, to redeem control
shares as provided in Section 35-2-110 of the Code of Laws of South Carolina,
1976, as amended. The fair value of such shares and the price at which they
shall be redeemed shall be the lesser of the lowest price paid by the holder of
the shares being redeemed in the ninety days immediately preceding the date on
which the control share acquisition occurred or the average closing price of the
shares on the ten trading days immediately preceding the earlier of: (i) a
public announcement of the acquiring person's acquisition of, or plan to
acquire, shares; or (ii) ten days prior to the date on which the acquiring
person would be required to file a Schedule 13D pursuant to Section 13(d) of the
Securities Exchange Act of 1934. In the event that the corporation exercises its
right to redeem control shares, it shall give written notice of such redemption
to the record owner of such shares. Upon receipt of such notice, such shares
shall be deemed to have been redeemed and the rights of the holder of such
shares shall be limited to the right to receive payment for such shares. Payment
for shares redeemed shall be made within two business days after surrender to
the corporation of the certificates for the shares redeemed.
3. For purposes of determining whether a control share acquisition has
occurred, whether shares are control shares, what are interested shares and
other rights with respect to control shares under the Control Share Acquisitions
Act, all shares tendered in response to any tender offer or made subject to any
option (other than an option granted by the corporation) shall be considered to
be held by the members of a group with respect to a control share acquisition.
Such group shall include all tendering shareholders and option granting
shareholders as well as the persons to whom or for whose benefit the shares were
tendered or optioned.
<PAGE> 1
Exhibit (11)
SONOCO PRODUCTS COMPANY
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
(Dollars in thousands, except per share)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 30, March 31,
1997 1996
----------- ------------
<S> <C> <C>
PRIMARY EARNINGS
Net income available to common shareholders $ 40,180 $ 41,307
=========== ============
Weighted average number of common shares
outstanding 89,976,285 91,136,586
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 1,755,338 2,071,449
----------- ------------
Weighted average number of common shares
outstanding as adjusted 91,731,623 93,208,035
=========== ============
Primary earnings per common share $ 0.44 $ 0.44
=========== ============
ASSUMING FULL DILUTION
Net income available to common shareholders $ 40,180 $ 41,307
Elimination of preferred dividends 1,066 1,941
----------- ------------
Fully diluted net income $ 41,246 $ 43,248
=========== ============
Weighted average number of common shares
outstanding 89,976,285 91,136,586
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 1,798,728 2,074,957
Assuming conversion of preferred stock 4,965,765 7,155,300
----------- ------------
Weighted average number of common shares
outstanding as adjusted 96,740,778 100,366,843
=========== ============
Earnings per common share assuming
full dilution $ 0.43 $ 0.43
=========== ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SONOCO PRODUCTS COMPANY FOR THE THREE MONTHS ENDED
MARCH 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-30-1997
<CASH> 52,133
<SECURITIES> 29,597
<RECEIVABLES> 352,570
<ALLOWANCES> 4,928
<INVENTORY> 255,270
<CURRENT-ASSETS> 751,918
<PP&E> 1,832,333
<DEPRECIATION> 835,666
<TOTAL-ASSETS> 2,404,681
<CURRENT-LIABILITIES> 515,384
<BONDS> 750,161
0
119,706
<COMMON> 7,175
<OTHER-SE> 808,104
<TOTAL-LIABILITY-AND-EQUITY> 2,404,681
<SALES> 687,648
<TOTAL-REVENUES> 687,648
<CGS> 535,677
<TOTAL-COSTS> 535,677
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,111
<INTEREST-EXPENSE> 13,549
<INCOME-PRETAX> 67,714
<INCOME-TAX> 26,205
<INCOME-CONTINUING> 41,246
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,246
<EPS-PRIMARY> .45
<EPS-DILUTED> .43
</TABLE>
