EXHIBIT 99
EXCERPTS FROM SONOCO PRODUCTS COMPANY'S
2001 THIRD QUARTER EARNINGS RELEASE
Hartsville, SC - - Sonoco (NYSE:SON) today reported earnings per diluted
share, excluding one-time adjustments, of $.41 for the third quarter of 2001,
compared with $.42 for the same period in 2000 and in line with previous Company
guidance, it was announced by Harris E. DeLoach, Jr., president and chief
executive officer.
Sales for the third quarter of 2001 were $649.3 million, versus $677.5
million in the same period last year. Excluding one-time transactions, net
income for the third quarter of 2001 was $39.7 million, versus $41.9 million in
the third quarter of 2000. Including one-time transactions, net income for the
third quarter 2001 was $42.8 million, versus $38.5 million in the third quarter
of 2000. Including one-time adjustments, earnings per diluted share for the
third quarter 2001 were $.45. One-time items in the third quarter included a net
gain of $6.1 million from legal settlements. Free cash flow, after capital
expenditures of $20.3 million and dividends of $19 million, for the third
quarter of 2001 was $88.6 million, versus $52.8 million in the third quarter of
last year.
For the first nine months of 2001, sales were $1.93 billion, versus $2.04
billion in the same period last year. The first quarter of 2000 included
stronger volumes while the first nine months of 2000 reflected higher selling
prices, primarily related to trade sales of recovered paper, compared with the
first nine months of this year. Excluding one-time transactions, net income for
the first nine months of 2001 was $112.1 million, versus $133.4 million in the
same period last year. Including one-time transactions, net income for this
year's first nine months was $64.4 million, versus $129.9 million in the first
nine months of 2000. Free cash flow, after capital expenditures of $74.3 million
and dividends of $57 million for this year's first nine months, was $155.3
million, versus $133.3 million in the same period of 2000. Free cash flow
generated year-to-date was used to help fund approximately $174 million in
acquisitions.
"Sales and earnings continued to be adversely impacted by weak volume,
reflecting recessionary-type general economic conditions, particularly in the
nation's manufacturing sector. Company-wide volume decreases averaged
approximately 4%, compared with the same period last year. This decrease
resulted primarily from a 6% decline in the Company's industrial segment volume,
principally in our North American engineered carriers/paper business," said
DeLoach. He noted that volumes had weakened in Europe, though were still
stronger than in North America. DeLoach also said that lower prices for trade
sales of recovered paper had hurt third quarter results.
"Soft volumes in our engineered carriers/paper business are being driven by
continuing weakness in all our industrial customer segments. We see no current
signs of improvement, with volumes remaining relatively flat on a consecutive
quarterly basis," stated DeLoach. "We have not yet seen any significant change
since the September 11 tragedies," he added.
"For the second consecutive quarter, sales and profits improved in the
Company's consumer segment. Increased sales in flexible packaging reflecting the
initial impact of the previously announced $60 million of new flexible business
on an annual basis, continued increases in sales and profits from packaging
services, improved profits in composite cans and in our high density film
business plus the initial effect of the acquisition of Phoenix Packaging (makers
of easy-open metal closures), all helped partially offset the decline in
industrial volumes," stated DeLoach. He also said that the quarter was helped by
the progressively positive effect from about $10 million year-to-date of at
least $30 million expected in annualized savings from completed restructuring
actions.
<Page>
Segment Review
Consumer Packaging
The Consumer Packaging segment includes composite cans; flexible packaging
(printed flexibles, high density bags and film products); and packaging services
and specialty products (supply chain management/e-marketplace, graphics
management, folding cartons and paper glass covers and coasters).
Third quarter 2001 sales for the consumer segment were $329.2 million,
versus $308.8 million in the same period last year, excluding divested
operations. Operating profit for this segment, excluding divested operations,
was $29.8 million, versus $25.8 million in the third quarter of 2000.
Sales for the first nine months in the consumer segment were $952.3
million, versus $921 million in the same period of 2000, excluding divested
operations. Operating profit in this segment, excluding one-time charges and
divested operations, was $84.9 million, versus $85.7 million in the same period
last year.
The increase in third quarter sales was due primarily to higher revenues in
packaging services and flexible packaging. The increase in profits resulted from
higher sales and prices in flexible packaging; higher prices in composite cans;
and a favorable cost/price relationship in high density film, along with overall
higher productivity and lower fixed cost in the segment.
Industrial Packaging
The Industrial Packaging segment includes engineered carriers (high
performance paper and plastic tubes and cores, paper manufacturing and recovered
paper operations) and protective packaging (designed interior packaging and
protective reels).
Third quarter 2001 sales for the industrial segment were $320 million,
versus $362.5 million in the same period last year. Operating profit for the
segment, excluding one-time transactions, was $41.9 million, versus $52.7
million in the same period last year.
Sales for the first nine months of 2001 in this segment were $977.4
million, versus $1.1 billion in 2000. Operating profit for the industrial
segment in the first nine months of 2001 was $124.8 million, excluding one-time
transactions, versus $162.1 million in the same period last year.
The decrease in third quarter sales and operating profits in the industrial
sector was due primarily to lower volumes in the Company's engineered carriers
and paper operations resulting from general economic conditions and does not
reflect any net loss in market share. In addition, sales were negatively
impacted by lower prices for outside sales of recovered paper. Higher
year-over-year energy and benefit costs were more than offset by lower fixed
cost due primarily to savings from restructuring and other cost savings
programs.
<Page>
Corporate
Net interest expense declined $3.8 million quarter-over-quarter due to
lower average debt levels and interest rates.
Depreciation and amortization expense for the third quarter of 2001 was
$39.8 million.
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; anticipated results of restructuring activities;
ability to successfully integrate newly acquired businesses into the Company's
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 website or from the
Company's investor relations department.
<Page>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars and shares in thousands except per share)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
September 30, October 1, September 30, October 1,
2001 2000 2001 2000
---- ---- ---- ----
Sales .................................................. $ 649,265 $ 677,469 $ 1,929,692 $ 2,042,454
Cost of sales .......................................... 514,009 529,972 1,520,792 1,588,414
Selling, general and administrative expenses ........... 63,495 69,001 199,201 205,796
Other (income) expense* ................................ (6,121) 5,499 46,207 5,499
----------- ----------- ----------- -----------
Income before interest and taxes ....................... 77,882 72,997 163,492 242,745
Interest expense ....................................... (11,932) (15,026) (38,754) (45,709)
Interest income ........................................ 1,617 929 3,056 2,427
----------- ----------- ----------- -----------
Income before income taxes ............................. 67,567 58,900 127,794 199,463
Provision for income taxes** ........................... 25,733 22,382 65,011 75,796
----------- ----------- ----------- -----------
Income before equity in earnings of affiliates/
Minority interest in subsidiaries ................. 41,834 36,518 62,783 123,667
Equity in earnings of affiliates/Minority
interest in subsidiaries ....................... 1,343 2,014 3,303 6,282
Affiliate restructuring ................................ (353) - (1,658) -
----------- ----------- ----------- -----------
Net income ............................................. $ 42,824 $ 38,532 $ 64,428 $ 129,949
=========== =========== =========== ===========
Average shares outstanding - diluted ................... 95,994 99,630 95,705 100,150
Diluted earnings per share ............................. $ .45 $ .39 $ .67 $ 1.30
=========== =========== =========== ===========
Dividends per common share ............................. $ .20 $ .20 $ .60 $ .59
=========== =========== =========== ===========
</Table>
*2001 results include restructuring charges of $111 and $46,433 for the three
months and nine months ended September 30, 2001, respectively. In addition, 2001
includes net gains from legal settlements and corporate-owned life insurance
adjustments of $6,232 and $226 for the three and nine months ended September 30,
2001, respectively. 2000 results include executive severance agreement
adjustments.
**Includes $11,300 tax expense related to the surrender of corporate-owned life
insurance policies for the nine months ended September 30, 2001.
<Page>
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
<Table>
<Caption>
September 30, December 31,
2001 2000
---- ----
Assets
Current Assets:
Cash and cash equivalents .......................................................... $ 36,798 $ 35,219
Trade Accounts receivables ......................................................... 326,444 329,467
Other receivables .................................................................. 27,309 26,875
Inventories ........................................................................ 264,399 267,604
Prepaid expenses and deferred taxes ................................................ 39,778 36,628
---------- ----------
694,728 695,793
Property, plant and equipment, net ................................................. 997,853 973,470
Cost in excess of fair value of assets purchased, net .............................. 330,979 236,733
Other assets ....................................................................... 300,793 306,615
---------- ----------
$2,324,353 $2,212,611
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities:
Payable to suppliers and others ................................................. $ 418,107 $ 373,259
Notes payable and current portion of long-term debt ............................. 36,684 45,556
Taxes on income ................................................................. 57,581 18,265
---------- ----------
512,372 437,080
Long-term debt ..................................................................... 831,708 812,085
Postretirement benefits other than pensions ........................................ 34,930 27,611
Deferred income taxes and other .................................................... 138,741 134,364
Shareholders' equity ............................................................... 806,602 801,471
---------- ----------
$2,324,353 $2,212,611
========== ==========
</Table>
FINANCIAL SEGMENT INFORMATION (Unaudited)
(Dollars in thousands)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
September 30, October 1, September 30, October 1,
2001 2000 2001 2000
---- ---- ---- ----
Net Sales
Industrial Packaging ........................ $ 320,046 $ 362,452 $ 977,357 $ 1,103,103
Consumer Packaging .......................... 329,219 308,777 952,335 921,048
Other* ...................................... - 6,240 - 18,303
----------- ----------- ----------- -----------
Total Consumer .............................. 329,219 315,017 952,335 939,351
----------- ----------- ----------- -----------
Consolidated ................................ $ 649,265 $ 677,469 $ 1,929,692 $ 2,042,454
=========== =========== =========== ===========
Operating Profit
Industrial Packaging ........................ $ 41,946 $ 52,677 $ 124,823 $ 162,113
Consumer Packaging .......................... 29,815 25,754 84,876 85,653
Other* ...................................... 65 478
One-time non-operational items** ............... 6,121 (5,499) (46,207) (5,499)
Interest, net ............................... (10,315) (14,097) (35,698) (43,282)
----------- ----------- ----------- -----------
Consolidated ................................ $ 67,567 $ 58,900 $ 127,794 $ 199,463
=========== =========== =========== ===========
</Table>
* Includes net sales and operating profits of divested businesses.
** Includes restructuring charges, net gains from legal settlements and
corporate-owned life insurance adjustments in 2001 and executive severance
agreements in 2000.