Sonoco Reports First Quarter Earnings

Apr 18, 2001, 01:00 ET from Sonoco

    HARTSVILLE, S.C., April 18 /PRNewswire/ -- Sonoco (NYSE:   SON) today
 reported earnings per diluted share, excluding one-time charges, of $.37 for
 the first quarter of 2001, compared with $.45 for the first quarter of 2000,
 in line with earlier Company guidance, it was announced by Harris E. DeLoach,
 Jr., president and chief executive officer.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19991006/SNCLOGO )
     One-time restructuring charges in the first quarter of 2001 amounted to
 $44.3 million ($30.8 million after-tax).  These initiatives are expected to
 remove approximately $30 million of annualized costs, of which the Company
 expects to realize about one-half during the last nine months of this year.
 Including restructuring charges, earnings per diluted share for the first
 quarter 2001 were $.05.
     Sales for the first quarter of 2001 were $632.8 million, versus
 $676.3 million in the same period last year that included two more billing
 days.  Net income for the first quarter of 2001, excluding one-time
 transactions, was $35.5 million, versus $45 million in the first quarter of
 2000.  Including one-time transactions, net income for the first quarter 2001
 was $4.7 million.  Cash flow from operations for the first quarter 2001 was
 $76.6 million.  Free cash flow (after capital expenditures of $30.4 million
 and dividends of $19 million) was $27.2 million.
     "Although the Company continues to maintain or increase its market share
 in all its principal businesses, our first quarter results were adversely
 affected by unit volume decreases averaging about 5%, principally in our North
 American engineered carriers/paper and composite can businesses.  This decline
 reflects the impact on our customers of the continuing general economic
 weakness in the United States," said DeLoach.  "Other major factors hurting
 the first quarter results were $5 million of higher energy costs and lower
 prices and demand for trade sales of recovered paper," he added.
     DeLoach noted that the first quarter's earnings per share of $.37,
 excluding the impact of the first quarter restructuring charge, was in line
 with the Company's guidance of $.35 to $.40 per diluted share issued in its
 year-end 2000 earnings release in January.  As indicated at that time, the
 2001 quarterly results include the impact of approximately $.02 per diluted
 share each quarter due to increased expense as a result of lower year-over-
 year investment earnings in its pension plan.
     "We expect ongoing softness in volume, particularly in the industrial
 sector, at least into the third quarter of this year with no indication of
 near-term improvement.  Therefore, we expect second quarter earnings per
 diluted share in the range of $.36 to $.40.  This compares with second quarter
 earnings in 2000 of $.47," stated DeLoach.
     "As a result of a number of recent significant changes, we believe Sonoco
 is extremely well positioned when general economic conditions improve to
 progress toward its goal of average annual double digit earnings and total
 return to shareholders over each economic cycle," said DeLoach.
     He said that to reach Sonoco's growth objective and to remain financially
 strong requires being the low-cost producer in all of the Company's businesses
 and having the right people in the right places.  To that end, DeLoach cited
 Sonoco's recent restructuring actions that are expected to remove
 approximately $30 million of annualized costs, including the elimination of
 about 630 positions and the closing of 13 plants.  He said the restructuring
 will also improve the efficiency of the Company's operating structure by
 consolidating division staff functions in major businesses.  He also noted
 that in the last nine months, changes have been made in 13 of the top
 21 operating positions in the Company to provide improved execution and
 accountability.
     "We have also changed our stock option system to gain better linkage to
 individual performance and corporate earnings goals," stated DeLoach.
 "Despite soft volume and the pension impact, we expect a stronger second half
 this year.  We will have continued strong free cash flow, with over
 $100 million expected for 2001, including restructuring costs, and the
 resulting flexibility this provides; we expect improved profits from our
 composite can and high density film operations; some $60 million annually of
 new flexible packaging business will begin coming on line; and we expect to
 realize about one-half of our annualized cost savings from our restructuring
 actions.  How much improvement we realize in the second half, however, will
 depend principally on the degree of volume improvement," said DeLoach.
     "We will conserve our cash and maintain our financial flexibility.  We are
 convinced that further consolidation in packaging will occur and that no one
 in the industry is better positioned to benefit than are we.  We will pursue
 appropriate opportunities that are complementary to our existing businesses.
 And, we shall continue paying down debt and buying back stock, if
 appropriate," he concluded.
 
                                 Segment Review
                               Consumer Packaging
 
     The Consumer Packaging segment includes composite cans; flexible packaging
 (printed flexibles and high density bags) and film products; packaging
 services and specialty products (supply chain management/e-marketplace,
 graphics management, folding cartons, and paper glass covers and coasters).
     First quarter 2001 sales for the consumer segment were $300.9 million,
 versus $306.7 million in the same period last year.  Operating profit for this
 segment, excluding one-time transactions, was $25.6 million, versus
 $31 million in the first quarter of 2000.
     The decrease in first quarter sales was due primarily to lower volume in
 composite cans, offset partially by increased prices in composite can and
 flexible packaging, and increased volume in high density film.  The decline in
 operating profit was due primarily to lower composite can volume, principally
 in snacks and concentrate.  The first quarter 2000 was particularly strong,
 with over 30% of the full year's snack production shipped in the first
 quarter.  More favorable comparisons should occur throughout the remainder of
 this year.
 
                              Industrial Packaging
 
     The Industrial Packaging segment includes engineered carriers (paper and
 plastic tubes and cores, paper manufacturing and recovered paper operations)
 and protective packaging (designed interior packaging and protective reels).
     First quarter 2001 sales for the industrial segment were $331.8 million,
 versus $363.4 million in the same period last year.  Operating profit for the
 segment, excluding one-time transactions, was $43 million versus $53 million
 in the first quarter of 2000.
     The decrease in first quarter sales and operating profits in the
 industrial segment was due primarily to lower volume in the Company's
 engineered carriers and paper operations resulting from the slowing in the
 general economy and does not reflect any significant loss of market share.  In
 addition, operating profit was negatively impacted by decreased prices for
 outside sales of recovered paper.
 
                                   Corporate
 
     Net interest expense declined $1 million quarter-over-quarter due to lower
 average debt levels.
     Depreciation and amortization expense for the first quarter of 2001 was
 $39.1 million.
     The Company will incur approximately $17 million of additional charges
 related to the ultimate settlement of corporate-owned life insurance policies
 with the Internal Revenue Service in the second quarter of 2001.  The
 surrender of these policies will eliminate approximately $27.8 million of
 anticipated costs of carrying the policies to their full term.
 
                                Conference Call
 
     Sonoco will host its regular quarterly conference call concerning current
 earnings results on Wednesday, April 18 at 2:00 p.m. EDT.  The conference call
 can be accessed in a "listen only" mode via Internet at
 http://www.videonewswire.com/SONOCO/041801/.  A replay will be available
 through Sonoco's web site's (www.sonoco.com)  Investor Information section for
 90 days after the conference.
     Sonoco, founded in 1899, is a $2.7 billion manufacturer of industrial and
 consumer packaging products and provider of packaging services, with
 295 operations in 33 countries serving customers in some 85 nations.
 
                             Cautionary Statements
 
     Statements included herein that are not historical in nature are intended
 to be, and are hereby identified as, "forward-looking statements" for purposes
 of the safe harbor provided by Section 21E of the Securities Exchange Act of
 1934, as amended.  Such forward-looking statements are based on current
 expectations, estimates and projections about the company's industry,
 management's beliefs and certain assumptions made by management.  Such
 information includes, without limitation, discussions as to estimates,
 expectations, beliefs, plans, strategies and objectives concerning the
 company's future financial and operating performance.
     These statements are not guarantees of future performance and are subject
 to certain risks, uncertainties and assumptions that are difficult to predict.
 Therefore, actual results may differ materially from those expressed or
 forecasted in such forward-looking statements.  Such risks and uncertainties
 include, without limitation: availability and pricing of raw materials;
 success of new product development and introduction; ability to maintain or
 increase productivity levels; international, national and local economic and
 market conditions; ability to maintain market share; pricing pressures and
 demand for products; continued strength of the company's paperboard-based
 tube, core and composite can operations; currency stability and the rate of
 growth in foreign markets; and actions of government agencies.  Additional
 information concerning some of the factors that could cause materially
 different results is included in the company's reports on Forms 10-K, 10-Q and
 8-K filed with the Securities and Exchange Commission.  Such reports are
 available from the Securities and Exchange Commission's public reference
 facilities and its Internet web site or from the Company's investor relations
 department.
 
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
               (Dollars and shares in thousands except per share)
 
                                          THREE MONTHS ENDED
                                       April 1,        April 2,
                                         2001            2000
 
     Sales                             $632,768        $676,299
     Cost of sales                      495,481         524,638
     Selling, general and
      administrative expenses            68,721          67,426
     Restructuring charges               44,283              --
     Income before interest and taxes    24,283          84,235
     Interest expense                    14,226          15,519
     Interest income                       (475)           (763)
     Income before income taxes          10,532          69,479
     Provision for income taxes
     Income before equity in earnings
      of affiliates/Minority interest
      in subsidiaries                     3,425          43,057
     Equity in earnings of affiliates
      /Minority interest in subsidiaries  1,235           1,960
 
     Net income                        $  4,660        $ 45,017
 
     Average shares outstanding -
      diluted                            95,405         101,084
 
     Diluted earnings per share        $    .05        $    .45
     Dividends per common share        $    .20        $    .19
 
 
               CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                             (Dollars in thousands)
 
                                          April 2,    Dec. 31,
                                           2001          2000
 
     Assets
     Current Assets:
      Cash and cash equivalents        $  32,888      $ 35,219
      Trade accounts receivable          334,374       329,467
      Other receivables                   26,203        26,875
      Inventories                        267,479       267,604
      Prepaid expenses and deferred
       taxes                              34,371        36,628
                                         695,315       695,793
     Property, plant and equipment, net  971,812       973,470
     Cost in excess of fair value of
      assets purchased, net              236,539       236,733
     Other assets                        310,151       306,615
                                      $2,213,817    $2,212,611
 
     Liabilities and Shareholders' Equity
     Current Liabilities:
      Payable to suppliers and
       others                         $  408,333     $ 373,259
      Notes payable and current
       portion of long-term debt          38,167        45,556
      Taxes on income                     20,826        18,265
                                         467,326       437,080
     Long-term debt                      787,650       812,085
     Postretirement benefits other
      than pensions                       28,862        27,611
     Deferred income taxes and other     132,926       134,364
     Shareholders' equity                797,053       801,471
                                      $2,213,817    $2,212,611
 
 
                   FINANCIAL SEGMENT INFORMATION (Unaudited)
                             (Dollars in thousands)
 
                                       Three Months  Three Months
                                           Ended        Ended
                                         April 1,     April 2,
                                          2001          2000
     Net Sales
      Industrial Packaging             $ 331,848     $ 363,362
      Consumer Packaging                 300,920       306,662
      Other*                                  --         6,275
 
      Consolidated                     $ 632,768     $ 676,299
     Operating Profit
      Industrial Packaging             $  43,011     $  52,999
      Consumer Packaging                  25,555        31,033
      Restructuring charges              (44,283)           --
      Other*                                  --           203
      Interest, net                      (13,751)      (14,756)
 
     Consolidated                      $  10,532     $  69,479
 
     *  Includes net sales and operating profits of divested businesses.
 
 

SOURCE Sonoco
    HARTSVILLE, S.C., April 18 /PRNewswire/ -- Sonoco (NYSE:   SON) today
 reported earnings per diluted share, excluding one-time charges, of $.37 for
 the first quarter of 2001, compared with $.45 for the first quarter of 2000,
 in line with earlier Company guidance, it was announced by Harris E. DeLoach,
 Jr., president and chief executive officer.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19991006/SNCLOGO )
     One-time restructuring charges in the first quarter of 2001 amounted to
 $44.3 million ($30.8 million after-tax).  These initiatives are expected to
 remove approximately $30 million of annualized costs, of which the Company
 expects to realize about one-half during the last nine months of this year.
 Including restructuring charges, earnings per diluted share for the first
 quarter 2001 were $.05.
     Sales for the first quarter of 2001 were $632.8 million, versus
 $676.3 million in the same period last year that included two more billing
 days.  Net income for the first quarter of 2001, excluding one-time
 transactions, was $35.5 million, versus $45 million in the first quarter of
 2000.  Including one-time transactions, net income for the first quarter 2001
 was $4.7 million.  Cash flow from operations for the first quarter 2001 was
 $76.6 million.  Free cash flow (after capital expenditures of $30.4 million
 and dividends of $19 million) was $27.2 million.
     "Although the Company continues to maintain or increase its market share
 in all its principal businesses, our first quarter results were adversely
 affected by unit volume decreases averaging about 5%, principally in our North
 American engineered carriers/paper and composite can businesses.  This decline
 reflects the impact on our customers of the continuing general economic
 weakness in the United States," said DeLoach.  "Other major factors hurting
 the first quarter results were $5 million of higher energy costs and lower
 prices and demand for trade sales of recovered paper," he added.
     DeLoach noted that the first quarter's earnings per share of $.37,
 excluding the impact of the first quarter restructuring charge, was in line
 with the Company's guidance of $.35 to $.40 per diluted share issued in its
 year-end 2000 earnings release in January.  As indicated at that time, the
 2001 quarterly results include the impact of approximately $.02 per diluted
 share each quarter due to increased expense as a result of lower year-over-
 year investment earnings in its pension plan.
     "We expect ongoing softness in volume, particularly in the industrial
 sector, at least into the third quarter of this year with no indication of
 near-term improvement.  Therefore, we expect second quarter earnings per
 diluted share in the range of $.36 to $.40.  This compares with second quarter
 earnings in 2000 of $.47," stated DeLoach.
     "As a result of a number of recent significant changes, we believe Sonoco
 is extremely well positioned when general economic conditions improve to
 progress toward its goal of average annual double digit earnings and total
 return to shareholders over each economic cycle," said DeLoach.
     He said that to reach Sonoco's growth objective and to remain financially
 strong requires being the low-cost producer in all of the Company's businesses
 and having the right people in the right places.  To that end, DeLoach cited
 Sonoco's recent restructuring actions that are expected to remove
 approximately $30 million of annualized costs, including the elimination of
 about 630 positions and the closing of 13 plants.  He said the restructuring
 will also improve the efficiency of the Company's operating structure by
 consolidating division staff functions in major businesses.  He also noted
 that in the last nine months, changes have been made in 13 of the top
 21 operating positions in the Company to provide improved execution and
 accountability.
     "We have also changed our stock option system to gain better linkage to
 individual performance and corporate earnings goals," stated DeLoach.
 "Despite soft volume and the pension impact, we expect a stronger second half
 this year.  We will have continued strong free cash flow, with over
 $100 million expected for 2001, including restructuring costs, and the
 resulting flexibility this provides; we expect improved profits from our
 composite can and high density film operations; some $60 million annually of
 new flexible packaging business will begin coming on line; and we expect to
 realize about one-half of our annualized cost savings from our restructuring
 actions.  How much improvement we realize in the second half, however, will
 depend principally on the degree of volume improvement," said DeLoach.
     "We will conserve our cash and maintain our financial flexibility.  We are
 convinced that further consolidation in packaging will occur and that no one
 in the industry is better positioned to benefit than are we.  We will pursue
 appropriate opportunities that are complementary to our existing businesses.
 And, we shall continue paying down debt and buying back stock, if
 appropriate," he concluded.
 
                                 Segment Review
                               Consumer Packaging
 
     The Consumer Packaging segment includes composite cans; flexible packaging
 (printed flexibles and high density bags) and film products; packaging
 services and specialty products (supply chain management/e-marketplace,
 graphics management, folding cartons, and paper glass covers and coasters).
     First quarter 2001 sales for the consumer segment were $300.9 million,
 versus $306.7 million in the same period last year.  Operating profit for this
 segment, excluding one-time transactions, was $25.6 million, versus
 $31 million in the first quarter of 2000.
     The decrease in first quarter sales was due primarily to lower volume in
 composite cans, offset partially by increased prices in composite can and
 flexible packaging, and increased volume in high density film.  The decline in
 operating profit was due primarily to lower composite can volume, principally
 in snacks and concentrate.  The first quarter 2000 was particularly strong,
 with over 30% of the full year's snack production shipped in the first
 quarter.  More favorable comparisons should occur throughout the remainder of
 this year.
 
                              Industrial Packaging
 
     The Industrial Packaging segment includes engineered carriers (paper and
 plastic tubes and cores, paper manufacturing and recovered paper operations)
 and protective packaging (designed interior packaging and protective reels).
     First quarter 2001 sales for the industrial segment were $331.8 million,
 versus $363.4 million in the same period last year.  Operating profit for the
 segment, excluding one-time transactions, was $43 million versus $53 million
 in the first quarter of 2000.
     The decrease in first quarter sales and operating profits in the
 industrial segment was due primarily to lower volume in the Company's
 engineered carriers and paper operations resulting from the slowing in the
 general economy and does not reflect any significant loss of market share.  In
 addition, operating profit was negatively impacted by decreased prices for
 outside sales of recovered paper.
 
                                   Corporate
 
     Net interest expense declined $1 million quarter-over-quarter due to lower
 average debt levels.
     Depreciation and amortization expense for the first quarter of 2001 was
 $39.1 million.
     The Company will incur approximately $17 million of additional charges
 related to the ultimate settlement of corporate-owned life insurance policies
 with the Internal Revenue Service in the second quarter of 2001.  The
 surrender of these policies will eliminate approximately $27.8 million of
 anticipated costs of carrying the policies to their full term.
 
                                Conference Call
 
     Sonoco will host its regular quarterly conference call concerning current
 earnings results on Wednesday, April 18 at 2:00 p.m. EDT.  The conference call
 can be accessed in a "listen only" mode via Internet at
 http://www.videonewswire.com/SONOCO/041801/.  A replay will be available
 through Sonoco's web site's (www.sonoco.com)  Investor Information section for
 90 days after the conference.
     Sonoco, founded in 1899, is a $2.7 billion manufacturer of industrial and
 consumer packaging products and provider of packaging services, with
 295 operations in 33 countries serving customers in some 85 nations.
 
                             Cautionary Statements
 
     Statements included herein that are not historical in nature are intended
 to be, and are hereby identified as, "forward-looking statements" for purposes
 of the safe harbor provided by Section 21E of the Securities Exchange Act of
 1934, as amended.  Such forward-looking statements are based on current
 expectations, estimates and projections about the company's industry,
 management's beliefs and certain assumptions made by management.  Such
 information includes, without limitation, discussions as to estimates,
 expectations, beliefs, plans, strategies and objectives concerning the
 company's future financial and operating performance.
     These statements are not guarantees of future performance and are subject
 to certain risks, uncertainties and assumptions that are difficult to predict.
 Therefore, actual results may differ materially from those expressed or
 forecasted in such forward-looking statements.  Such risks and uncertainties
 include, without limitation: availability and pricing of raw materials;
 success of new product development and introduction; ability to maintain or
 increase productivity levels; international, national and local economic and
 market conditions; ability to maintain market share; pricing pressures and
 demand for products; continued strength of the company's paperboard-based
 tube, core and composite can operations; currency stability and the rate of
 growth in foreign markets; and actions of government agencies.  Additional
 information concerning some of the factors that could cause materially
 different results is included in the company's reports on Forms 10-K, 10-Q and
 8-K filed with the Securities and Exchange Commission.  Such reports are
 available from the Securities and Exchange Commission's public reference
 facilities and its Internet web site or from the Company's investor relations
 department.
 
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
               (Dollars and shares in thousands except per share)
 
                                          THREE MONTHS ENDED
                                       April 1,        April 2,
                                         2001            2000
 
     Sales                             $632,768        $676,299
     Cost of sales                      495,481         524,638
     Selling, general and
      administrative expenses            68,721          67,426
     Restructuring charges               44,283              --
     Income before interest and taxes    24,283          84,235
     Interest expense                    14,226          15,519
     Interest income                       (475)           (763)
     Income before income taxes          10,532          69,479
     Provision for income taxes
     Income before equity in earnings
      of affiliates/Minority interest
      in subsidiaries                     3,425          43,057
     Equity in earnings of affiliates
      /Minority interest in subsidiaries  1,235           1,960
 
     Net income                        $  4,660        $ 45,017
 
     Average shares outstanding -
      diluted                            95,405         101,084
 
     Diluted earnings per share        $    .05        $    .45
     Dividends per common share        $    .20        $    .19
 
 
               CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                             (Dollars in thousands)
 
                                          April 2,    Dec. 31,
                                           2001          2000
 
     Assets
     Current Assets:
      Cash and cash equivalents        $  32,888      $ 35,219
      Trade accounts receivable          334,374       329,467
      Other receivables                   26,203        26,875
      Inventories                        267,479       267,604
      Prepaid expenses and deferred
       taxes                              34,371        36,628
                                         695,315       695,793
     Property, plant and equipment, net  971,812       973,470
     Cost in excess of fair value of
      assets purchased, net              236,539       236,733
     Other assets                        310,151       306,615
                                      $2,213,817    $2,212,611
 
     Liabilities and Shareholders' Equity
     Current Liabilities:
      Payable to suppliers and
       others                         $  408,333     $ 373,259
      Notes payable and current
       portion of long-term debt          38,167        45,556
      Taxes on income                     20,826        18,265
                                         467,326       437,080
     Long-term debt                      787,650       812,085
     Postretirement benefits other
      than pensions                       28,862        27,611
     Deferred income taxes and other     132,926       134,364
     Shareholders' equity                797,053       801,471
                                      $2,213,817    $2,212,611
 
 
                   FINANCIAL SEGMENT INFORMATION (Unaudited)
                             (Dollars in thousands)
 
                                       Three Months  Three Months
                                           Ended        Ended
                                         April 1,     April 2,
                                          2001          2000
     Net Sales
      Industrial Packaging             $ 331,848     $ 363,362
      Consumer Packaging                 300,920       306,662
      Other*                                  --         6,275
 
      Consolidated                     $ 632,768     $ 676,299
     Operating Profit
      Industrial Packaging             $  43,011     $  52,999
      Consumer Packaging                  25,555        31,033
      Restructuring charges              (44,283)           --
      Other*                                  --           203
      Interest, net                      (13,751)      (14,756)
 
     Consolidated                      $  10,532     $  69,479
 
     *  Includes net sales and operating profits of divested businesses.
 
 SOURCE  Sonoco

RELATED LINKS

http://www.sonoco.com