1
COMPARATIVE HIGHLIGHTS (UNAUDITED)
Sunoco Products Company
First Second Third Fourth
(Dollars in thousands except per share) Quarter* Quarter* Quarter* Quarter Year
- ------------------------------------------------------------------------------------------------------------------------------------
1993
Net Sales.......................................................... $466,938 $478,508 $462,324 $539,454 $1,947,224
Gross Profit....................................................... 101,716 107,435 100,561 111,841 421,553
Net income available to common shareholders........................ 26,908 31,808 28,504 30,350 117,570
Per common share
- ----------------
Net income available to common shareholders..................... .31 .36 .33 .35 1.35
Dividends - common.............................................. .125 .135 .135 .135 .53
Book value per common share..................................... 7.04
Market price - high............................................. 24-7/8 24-3/4 24 22-1/2 24-7/8
- low.............................................. 21-7/8 21-3/4 20-1/2 19-3/4 19-3/4
- ------------------------------------------------------------------------------------------------------------------------------------
1992 * *
Net Sales.......................................................... $429,793 $461,574 $462,603 $484,056 $1,838,026
Gross Profit....................................................... 85,775 100,582 98,448 101,969 386,774
Income before cumulative effect of changes in
accounting principles............................................ 22,128 28,854 27,156 3,113 81,251
Cumulative effect of changes in accounting for
postretirement benefits and income taxes......................... (37,892) (37,892)
Net income (loss).................................................. (15,764) 28,854 27,156 3,113 43,359
Per common share
- ----------------
Income before cumulative effect of changes in
accounting principles......................................... .26 .33 .31 .04 .94
Cumulative effect of changes in accounting for
postretirement benefits and income taxes...................... (.44) (.44)
Net income (loss)................................................ (.18) .33 .31 .04 .50
Dividends - common............................................... .115 .125 .125 .125 .49
Book value per common share...................................... 6.45
Market price - high.............................................. 21-3/8 21 24-3/8 25-1/4 25-1/4
- low............................................... 17-5/8 18-3/8 19 21-1/2 17-5/8
Per share amounts reflect the two-for-one stock split on June 10, 1993.
* First, second and third quarters restated to reflect the reclassification of
certain costs.
** First quarter 1992 includes a $38,000 after-tax charge, or $.44 per share,
to comply with the accounting changes required by FAS 106 and FAS 109,
described in Notes 12 and 13 to the Financial Statements. Fourth quarter
1992 includes a $25,000 after-tax, or $.29 per share, restructuring charge
described in Note 4, to the Financial Statements.
1993 - THE YEAR IN REVIEW
JANUARY
- - Completed acquisition of
the OPV/Durener Group,
Germany's second largest
manufacturer of tubes and
cores.
- - Purchased Crellin Holding,
Inc., a major manufacturer
of molded plastics.
MARCH
- - Sold the European
operations of the
High Density Film
Products Division.
APRIL
- - Announced a two-for-
one split of Sonoco
common stock effective
June 10, 1993.
- - Robert Brown elected to
Sonoco's Board of Directors.
- - Sold Edgeboard operations.
MAY
- - Completed purchase of
the Jefferson Smurfit
composite can operation
in Mexico.
- - Sold liquid packaging
operations to Liqui-Box
Corporation.
SEPTEMBER
- - Began producing
Engineered Cushion Fibre
(ECF) protective packaging
in the United States
and Singapore.
- - Made tender offer to
purchase Engraph, Inc.
OCTOBER
- - Acquired Engraph, Inc.
after a successful tender
offer. Acquisition valued at
approximately $300 million,
net of debt assumed.
- - Leo Benatar, Chairman and
CEO of Engraph, joined
Sonoco and was named to
the Board of Directors.
- - Peter Browning, former
Chairman and CEO of
National Gypsum, joined
Sonoco as Executive Vice
- President responsible for
the global operation of the
Industrial Products and
Paper businesses.
- - Completed successful
offering of $172 million in
convertible preferred stock
and $175 million in long-
term notes.
DECEMBER
- - Completed the year with a
10% decrease in the
Sonoco Personal Injury
Rate, which was a record
low .98.
- - Posted best annual sales
and earnings in the 95-year
history of Sonoco.
2
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations 1993-1992
Consolidated net sales for 1993 were $1.95 billion compared with $1.84
billion in 1992, an increase of 5.9%. The sales gain included acquisitions and
base business growth offset by operations sold as part of the 1992
restructuring and exchange rate changes in 1993. The acquisitions of Engraph,
Crellin, OPV/Durener and a composite can plant in Mexico added $154 million in
sales in 1993. Edgeboard, European plastic bags, liquid packaging, packaging
tapes and U.K. reel operations were sold, reducing sales in 1993 by $38.6
million compared with 1992. The exchange rate losses associated with the
stronger dollar in 1993 were $35 million, or 1.9% of 1992 sales.
Net income for 1993 was $117.6 million, or $1.35 per share, compared
with a restated 1992 income of $106.3 million, or $1.23 per share. The $1.23
per share in 1992 has been restated to exclude the 1992 cumulative effect of
FAS 106 and FAS 109, as well as the restructuring reserve (all of which had a
total negative impact of $.73 per share). The 1993 earnings represent a 10.7%
increase over restated 1992 earnings. The 1993 profit included a non-operating
gain of $.04 per share, as described in Note 3 to the financial statements.
On a consolidated basis, the gross profit margin in 1993 increased to 21.6%
from 21% in 1992. While some of our major industrial packaging operations felt
the impact of poor business conditions, our consumer businesses performed well.
The increase also reflects restructuring actions the Company has taken and
investments made over the past couple of years. Further information on sales
and profits is included in the segment discussion below. Acquisitions had a
significant impact on 1993 earnings, which is expected to continue in the
future. The aggregate cost of these acquisitions, net of debt assumed, was $393
million. With the additional goodwill ($292 million) and preferred stock and
debt financing, dilution of approximately $.04 per share is expected in 1994,
declining in 1995, with no dilution anticipated in 1996.
Capital expenditures in 1993 of $115.6 million include projects to expand
capacity and improve productivity and quality. Research and development costs
charged to expense in 1993 were $12.9 million as compared with $11.7 million in
1992.
Sonoco's effective tax rate in 1993 was 39% compared with 39.5% in 1992.
CONVERTED PRODUCTS SEGMENT. The converted products segment consists of
businesses that manufacture fibre and plastic tubes, cores and cones--used
primarily as industrial carriers; composite canisters--used to package a
variety of products including frozen concentrates, snack foods, nuts, solid
shortening, refrigerated dough, biscuits and pastries, powdered beverages,
coffee, paints, cleansers and other products; caulking cartridges--used for
packaging adhesives and sealants; fibre drums, plastic drums, intermediate bulk
containers--used for packaging a wide variety of products for bulk packaging;
protective packaging products like solid fibre partitions, Sonopost(R) corner
posts and Engineered Cushion Fibre; injection molded plastic products,
pressure-sensitive labels and package inserts, screen printing for fleet
graphics and vending machines, paperboard cartons, flexible packaging and
specialties. Converted products is the largest of Sonoco's business segments
representing approximately 60% of the Company's consolidated sales and profits.
Trade sales for this segment in 1993 were $1.19 billion compared with $1.07
billion in 1992, an increase of 11.2%. This increase is primarily due to the
acquisition of Engraph and Crellin. Demand in our industrial businesses was
down, reflecting the depressed state of many of the major markets served.
Selling price pressures were intense due to competition and customer profit
pressures in these markets. The economic improvement experienced in the fourth
quarter of 1993, and expected to continue in 1994, should improve the sales
growth outlook for our industrial businesses in 1994. Our consumer businesses
also experienced selling price pressure and low growth in 1993.
The overall operating profit for the converting segment was $122.5 million
compared with $94.4 million in 1992. The 1992 results included a restructuring
charge of $9.7 million. Profits in the converting segment increased due to
acquisitions, lower material costs and the benefits of the restructuring
actions taken in 1992.
Capital spending rose to $37.9 million in 1993 from $33.8 million in 1992.
Major projects included actions to expand capacity and improve productivity and
quality.
PAPER SEGMENT. The paper segment consists of 21 U.S. cylinder board
(Graph)
NET SALES BY SEGMENT
(Millions $)
3
MANAGEMENT'S DISCUSSION AND ANALYSIS
machines, one Fourdrinier paper machine and Paper Stock Dealers, Inc.,
a recovered paper collection and processing subsidiary.
The Fourdrinier paper machine, located in Hartsville, S.C., has an
annual capacity of approximately 176,000 tons. This machine produces
corrugated medium sold under contract to Georgia-Pacific Corporation.
Sonoco's U.S. cylinder board capacity is approximately 750,000 tons a year.
Most of the board produced on these machines is sold to Sonoco's paper
converting operations with about 18% of the capacity going to external
customers.
Paper Stock Dealers has more than 20 collection facilities purchasing
and processing recovered paper for use by Sonoco paper mills and for sale to
external customers. Sonoco annually recycles more than a million tons of
recovered paper and much of this is provided through this subsidiary and
mill-site collections.
Total domestic paper sales, including both internal and external, for
1993 were $278.9 million, a decrease of 1.3%, compared with $282.6 million for
1992. Lower prices in corrugated medium (which began to rise late in 1993
indicating a strengthening in the domestic market) coupled with flat
industrial products sales and lower fibre drum sales were the primary factors
affecting this segment.
Operating profits for 1993 were $57.9 million, 11.5% below the $65.4
million in 1992. The decline in profits is due to lower volume and reduced
prices in corrugated medium; lower external cylinder board volume and prices
slightly below 1992 levels; and higher costs in several areas.
Capital spending of $20.5 million in 1993 compared with $15.6 million in
1992. Projects were primarily focused on process improvements and productivity
enhancements on cylinder board machines.
INTERNATIONAL SEGMENT. The international segment includes all of Sonoco's
non-U.S. operations, the largest of which are in the United Kingdom, Canada,
France, Mexico, Australia and Germany. These operations are similar to the U.S.
operations in products and markets served.
Trade sales in the international segment totaled $404.1 million in 1993
compared with $444.7 million in 1992. Unfavorable exchange rates and the
disposition of several business units that were a part of the 1992
restructuring program, accounted for $35 million and $37 million, respectively,
of the sales decline. Sales were also negatively impacted by depressed paper
markets in Canada, Mexico and Europe. Partially offsetting these were
additional sales from acquisitions completed during 1993 and increased sales in
the Asia Pacific region.
Operating profits in the international segment totaled $11.9 million as
compared with a loss in 1992 of $12.4 million. Included in the 1992 results is
a $31.8 million restructuring charge. Excluding this charge, profits in 1993
were $7.5 million lower than 1992. Although Canada, Mexico and Australia had
profit improvements in their converting operations, these improvements were
more than offset by inefficiencies in consolidating businesses in Europe,
exchange rate losses, and lower paper volume and prices due to several weak
economies.
Capital spending in this segment was $41.2 million compared with $48.3
million in 1992. Major projects include the start-up of a tape core operation
in Italy and a project in Canada to generate power for internal use.
MISCELLANEOUS SEGMENT. The miscellaneous segment is made up of several
operations, the largest being High Density Film Products, producers of plastic
bags for the grocery and retail industries, agricultural mulch film and other
products. Also included is Baker Reels, a national manufacturer of nailed wood
and metal reels for the wire and cable industries.
Trade sales were $244 million in 1993, or 14.5% more than the $213 million
in 1992. Volume increased in both operations. In addition, selling prices were
increased in our reels business in response to higher lumber cost.
Operating profits for the miscellaneous segment were $34.9 million in 1993
compared with $23.5 million in 1992. The improved profit in this segment is due
to increased volume and excellent cost control.
Capital spending in this segment was $9.1 million compared with $5.5
million in 1992. Major projects included capacity expansion at several High
Density Film Products plants.
(Graph)
Identifiable Assets By Segment
(Millions $)
4
MANAGEMENT'S DISCUSSION AND ANALYSIS
CORPORATE. Interest income, interest expense and unallocated corporate
expenses are excluded from the operating profits by segment and are shown under
Corporate. Interest expense in 1993 was $31.2 million compared with $30.4
million in 1992. In 1993, the benefit of declining global short-term interest
rates was more than offset by higher average debt levels as a result of
acquisitions. Corporate operating profit in 1993 includes a non-operating gain
of $5.8 million described in Note 3.
Results of Operations 1992-1991
Consolidated net sales for 1992 were $1.84 billion, an increase of 8.2%
compared with 1991 sales of $1.70 billion. This sales increase was due to
strong demand at some of our operations, selling price increases and the
effect of several small acquisitions. Net income for 1992 was $43.4 million,
or $.50 per share, compared with $94.8 million, or $1.10 per share, in 1991.
Results in 1991 included a $.05 per share gain from the sale of Sonoco's 40%
interest in Sonoco Graham.
Income in 1992 was reduced by a charge to comply with adoption of
accounting standards FAS 106 ("Employers' Accounting for Postretirement
Benefits Other Than Pensions") and FAS 109 ("Accounting for Income Taxes").
The net impact of these two accounting changes was a non-cash, after-tax charge
of $38 million, or $.44 per share, retroactive to the beginning of 1992.
Adoption of FAS 106 also resulted in an incremental, annual retiree benefit
expense of approximately $3 million after-tax, or $.03 per share, which was
retroactively charged over all four quarters in 1992. The accounting changes
are described more fully in Notes 12 and 13. In addition to accounting changes,
income was reduced by a one-time, after-tax charge of $25 million, or $.29 per
share, that was taken in the fourth quarter to cover costs associated with
restructuring several of the Company's operations, primarily at foreign
locations. The restructuring included closing, consolidating or relocating
several plants worldwide.
Earnings adjusted for the accounting changes and restructuring charge would
have been $109 million, or $1.26 per share, in 1992, an increase of 20% over
the comparable $1.05 per share from operations reported in 1991.
On a consolidated basis, the gross profit margin in 1992 increased to 21%
from 20.5% in 1991. This performance reflected the rebound of our operations
from the worldwide economic conditions that negatively impacted performance
during 1991. These results also reflected actions the Company had taken and
investments made over the past two years to enhance competitiveness in our
markets.
Capital expenditures in 1992 were $109.3 million. This spending included
projects undertaken as part of our continuous improvement efforts to increase
quality, reduce costs and improve safety throughout the Company.
Research and development costs charged to expense increased in 1992 to
$11.7 million compared with $9.9 million in 1991. This increased spending
focused on projects related to Sonoco's primary businesses and reflects our
commitment to ensure the Company is the technology leader in our markets.
Also during 1992, the Company invested approximately $10 million in outside
consultants to assist us on a variety of projects. This investment began to
pay off during the year and will show continued results. This level of
investment did not continue in 1993.
Sonoco's effective tax rate in 1992 was 39.5% compared with 40.8% in
1991.
CONVERTED PRODUCTS SEGMENT. Trade sales in this segment totaled $1.07
billion in 1992, an increase of 4.9% over the $1.02 billion in 1991. Sales
increased in all of our traditional businesses due primarily to improved demand
and selling prices in some markets coupled with two smaller acquisitions
completed during the first quarter of 1992.
Operating profits in this segment were $94.4 million compared with $92.8
million in 1991. Included in the 1992 operating profits is a $9.7 million
restructuring charge for the consolidation and relocation of several plants. In
addition, the incremental cost of adopting FAS 106 to this segment was $2.8
million. Excluding these charges, operating profits would have been $106.9
million. The profit improvement was due to improved demand, increased selling
prices and the acquisitions during the year.
Capital spending in this segment was $33.8 million in 1992 compared with
$25.5 million in 1991. Major projects included the completion of a new corner
post plant and a new industrial carrier research and development facility, as
well as other projects to enhance productivity and improve quality.
(Graph)
Operating Income by Segment
(millions $)
5
MANAGEMENT'S DISCUSSION AND ANALYSIS
PAPER SEGMENT. Total segment sales, including both internal and
external paper sales, were $282.6 million in 1992, a 5% increase over the
$269.1 million in 1991. Internal consumption of Sonoco's cylinder board
remained about the same as 1991.
Corrugated medium volume increased 6.6% in 1992, reflecting an increase
in demand from Georgia-Pacific. Selling prices, which had been down because of
adverse market conditions, increased about 2% in 1992.
Operating profits in this segment were $65.4 million compared with
$56.6 million in 1991 due primarily to increased selling prices and lower
recovered paper cost.
Capital spending of $15.6 million was invested to improve processes and
productivity on several of the cylinder board machines as paper operations
worked to focus certain mills on specific grades of board.
INTERNATIONAL SEGMENT. Trade sales in the international segment were
$444.7 million in 1992, an 18.3% increase over the $375.9 million in 1991. This
sales increase is due primarily to the acquisition of the Trent Valley paper
mill in Canada during the first quarter of 1992, as well as the impact of
full-year sales from several 1991 acquisitions--Sonoco Containers Inc., Rolex
and Coretech-Sonoco Limited.
Operating losses in the international segment totaled $12.4 million in
1992, compared with profits of $14.4 million in 1991. Included in the 1992
results is a $31.8 million restructuring charge for the closing and
consolidation of several plants, as well as elimination of some operations that
drained profits. Excluding the restructuring charge, profits for this segment
would have been $19.4 million. The profit increase was attributed to increased
volume due to acquisitions in Canada and improved operating performance in the
European and South American regions. Profits in this segment were adversely
impacted by consulting costs in support of efforts to position the Company for
longer-term international growth.
Capital spending for 1992 was $48.3 million compared with $40.7 million
in 1991. Major projects included significant reinvestment in Mexico to
enhance tube and core quality, a new tube and core plant in Malaysia and a new
partitions plant in Mexico. It also included a new research and development
facility in France.
MISCELLANEOUS SEGMENT. Trade sales in 1992 were $213 million compared
with $197.9 million in 1991. The sales increase is due primarily to the
increased volume in the plastic bag operations. Operating profits for 1992
were $23.5 million compared with $21.1 million in 1991. Selling prices for
plastic bags declined in 1992 due to competitive pressures. However, the
selling price decline was more than offset by volume increases, high-capacity
utilization and improved productivity.
Capital spending in this segment was $5.5 million in 1992 compared with
$9.7 million in 1991. Spending was primarily focused on projects to improve
processes and quality in the plastic bag operations. During 1992, Baker Reels
acquired a West Coast reel manufacturer.
CORPORATE. Interest expense in 1992 was $30.4 million compared with
$28.2 million in 1991. In 1992, the benefit of declining short-term interest
rates was more than offset by slightly higher average debt levels and a higher
average ratio of fixed-to-floating rate debt as compared to 1991. The $8.5
million pretax gain from the sale of Sonoco Graham was included under Corporate
in 1991.
Corporate capital expenditures were $6.1 million in 1992 compared with
$1.9 million in 1991, representing a return to normal spending levels and
includes several projects delayed in 1991 due to cost containment efforts.
Financial Position, Liquidity and Capital Resources
Sonoco's financial position remained strong in 1993 and 1992. The debt
to total capital ratio was 38% at December 31, 1993, compared with 35.1% and
30.6% at December 31, 1992 and 1991, respectively. Debt increased $200 million
to $515.8 million at December 31, 1993, primarily due to increased spending
on acquisitions, partially offset by $42.5 million in proceeds from asset
dispositions and $33.7 million from the early repayment of the 10.9% Sonoco
Graham note. Debt increased $32.8 million in 1992 to $316 million, due to
increased capital spending and acquisitions. Capital spending, including
acquisitions, was $508.5 million in 1993 compared with $144.3 million in 1992
and $102 million in 1991.
In September 1993, the Company entered into a $375 million term-loan
agreement (the "bridge facility") in order to obtain the financing required for
the acquisition of the outstanding shares of Engraph, Inc., to repay certain
existing facilities, and to pay related expenses. As of December 31, 1993, the
commitment under the bridge facility had been terminated and all advances had
been repaid primarily from the proceeds of the debt and convertible preferred
stock as described later.
In October 1993, the Company filed a shelf registration with the
Securities and Exchange Commission for the future issuance of
6
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Graph)
CAPITAL SPENDING BY SEGMENT
(millions $)
up to an additional $225 million of debt securities, thereby increasing the
amount of registered debt securities available for issuance to $325 million
(including $100 million previously filed under the June 1991 registration),
referred to collectively as the "registered debt securities." The Company
issued $100 million of 5.875% notes, due November 1, 2003, of its registered
debt securities in October. The net proceeds were used to reduce the bridge
facility.
The Company issued $75 million of 5.49% notes, due April 15, 2000, of its
registered debt securities directly to an institutional investor (the "direct
placement") on November 18, 1993. Approximately $41 million of the proceeds of
the direct placement were used to prepay the outstanding balance of 9.3%
privately placed notes due 1994 through 1998 (including a make-whole premium of
$3.2 million), with the balance used for repayment of other indebtedness. The
Company has $150 million of registered debt securities available for issuance
at December 31, 1993.
The Company also filed a registration statement with the Securities and
Exchange Commission for the issuance of up to 3,450,000 shares of $2.25 Series
A Cumulative Convertible Preferred Stock in October 1993. The sale of these
securities at $50.00 per share, convertible to the Company's common stock at a
price of $25.31, was completed in October, providing $172.5 million in funds
before fees. The net proceeds from this issue were used to reduce the bridge
facility.
In 1993, the Company increased the authorized commercial paper program from
$200 million to $250 million and increased the fully committed bank lines of
credit supporting the program by a like amount.
The Company expects internally generated cash flow along with borrowings
under its existing credit facilities to be sufficient to meet operating and
normal capital expenditure requirements. Capital spending for 1994 is expected
to be approximately $121 million.
Acquisitions are expected to continue to be an important part of the
Company's strategy for growth. The Company would expect to acquire additional
companies with market and technology positions that provide meaningful
opportunities when consistent with its overall goals and strategies.
Net working capital was $210 million at December 31, 1993, as compared with
$152 million and $164 million at December 31, 1992 and 1991, respectively.
Working capital increased in 1993 primarily as a result of working capital
acquired through acquisitions. Working capital decreased in 1992 primarily
because of an increase in the restructuring reserve. The ratio of current
assets to current liabilities was 1.7 at December 31, 1993, as compared with
1.5 and 1.6 at December 31, 1992 and 1991, respectively. Excluding
restructuring accruals, the ratio was approximately 1.9 in 1993 and 1.7 in 1992
and 1991.
Shareholders' equity of $788.4 million in 1993, which includes $172.5
million for the issuance of preferred stock, compares with $561.9 million in
1992. The book value per common share in 1993 was $7.04 compared with $6.45 per
common share in 1992. This increase was attributable to higher net income in
1993 as compared with 1992. Return on common equity was 19.9% in 1993 compared
with 13.7% in 1992 (excluding the cumulative effect of accounting changes) and
17.8% in 1991. Excluding the impact of the restructuring costs and accounting
changes, return on equity was 18.2% in 1992.
On April 21, 1993, the Board of Directors authorized a two-for-one split of
common stock and increased the dividend, after giving effect to the stock
split, to $.135 per share from the $.125 per share that had been paid since the
second quarter of 1992. The Company plans to increase dividends as earnings
justify.
The Company is subject to various federal, state and local environmental
laws and regulations, concerning among other matters, wastewater effluent and
air emissions. Compliance costs have not been significant due to the nature of
the materials and processes used in manufacturing operations. The Company has
been named as a potentially responsible party at five sites in the Northeast.
These sites are believed to represent the Company's largest potential
environmental problems. The Company has presently accrued $3.1 million as of
December 31, 1993, with respect to these sites. Due to the complexity of
determining clean-up costs associated with the sites, an estimate of the
ultimate cost to the Company cannot be determined; however, costs will be
accrued once reasonable estimates are determined.
During 1993, 1992 and 1991, inflation had an immaterial effect on the
Company's operations.
7
SELECTED ELEVEN-YEAR FINANCIAL DATA (UNAUDITED)
Sonoco Products Company
(Dollars and shares in thousands except per share data) 1993 1992** 1991
- -------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . $1,947,224 $1,838,026 $1,697,058
Cost of sales and operating expenses. . . . . . . . . . . . 1,734,980 1,641,075 1,528,543
Interest expense . . . . . . . . . . . . . . . . . . . . . 31,154 30,364 28,186
Interest income . . . . . . . . . . . . . . . . . . . . . . (6,017) (6,416) (6,870)
Unusual items* . . . . . . . . . . . . . . . . . . . . . . (5,800) 42,000 (8,525)
-------------------------------------------
Income from operations before income taxes. . . . . . . . . 192,907 131,003 155,724
Taxes on income . . . . . . . . . . . . . . . . . . . . . . 75,200 51,800 63,600
Equity in earnings of affiliates. . . . . . . . . . . . . . 1,127 2,048 2,681
-------------------------------------------
Net income before discontinued operations and cumulative
effect of changes in accounting principles. . . . . . . . 118,834 81,251 94,805
Loss from discontinued operations, net of tax . . . . . . .
Cumulative effect of changes in accounting principles
(FAS 106 and FAS 109) . . . . . . . . . . . . . . . . . . (37,892)
-------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . 118,834 43,359 94,805
Preferred dividends . . . . . . . . . . . . . . . . . . . . (1,264)
-------------------------------------------
Net income available to common shareholders . . . . . . . . 117,570 43,359 94,805
Returns before cumulative effect of changes
in accounting principles
Return on weighted-average common shareholders' equity 19.9% 13.7% 17.8%
Return on net sales . . . . . . . . . . . . . . . . . . 6.1% 4.4% 5.6%
Per common share:(1)
Net income before discontinued operations and
cumulative effect of changes in
accounting principles . . . . . . . . . . . . . . . . . 1.35 .94 1.10
Loss from discontinued operations, net of tax . . . . . .
Cumulative effect of changes in accounting principles . . (.44)
Net income available to common shareholders . . . . . . . 1.35 .50 1.10
Dividends declared - common . . . . . . . . . . . . . . . .53 .49 .46
Average common shares outstanding(1). . . . . . . . . . . . 87,316 86,732 86,304
Actual common shares outstanding at December 31(1). . . . . 87,447 87,144 86,490
-------------------------------------------
FINANCIAL POSITION
Net working capital . . . . . . . . . . . . . . . . . . . . 209,932 152,478 163,860
Property, plant and equipment . . . . . . . . . . . . . . . 737,154 614,018 580,787
Total assets. . . . . . . . . . . . . . . . . . . . . . . . 1,707,125 1,246,531 1,135,940
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . 455,262 240,982 227,528
Shareholders' equity. . . . . . . . . . . . . . . . . . . . 788,364 561,890 562,306
Current ratio . . . . . . . . . . . . . . . . . . . . . . . 1.7 1.5 1.6
Total debt to total capital . . . . . . . . . . . . . . . . 38.0% 35.1% 30.6%
Book value per common share(1). . . . . . . . . . . . . . . 7.04 6.45 6.50
-------------------------------------------
OTHER DATA
Depreciation, depletion and amortization expense. . . . . . 95,745 83,309 76,561
Dividends declared - common . . . . . . . . . . . . . . . . 46,333 42,443 39,703
Market price per common share (ending)(1) . . . . . . . . . 22.00 23.88 17.25
* See Note 3 to Consolidated Financial Statements.
**Includes restructuring charges of $42,000 pretax, or $25,000 after-tax, in
1992 and $75,000 pretax, or $54,650 after-tax, in 1990 (see Note 4 to
Consolidated Financial Statements). Also includes acquisition consolidation
charges of $10 million pretax, or $5,600 after-tax in 1987.
(1) Prior years' data adjusted for stock splits.
8
1990** 1989 1988 1987** 1986 1985 1984 1983
------------------------------------------------------------------------------------------------------------------------------
$1,669,142 $1,655,830 $1,599,751 $1,312,052 $963,796 $869,598 $740,869 $668,628
1,481,271 1,470,877 1,413,912 1,174,777 858,680 773,910 661,457 601,098
28,073 29,440 25,175 18,593 8,552 8,686 4,420 5,104
(2,196) (2,573) (1,517) (1,045) (602) (1,782) (1,006) (708)
75,000 10,000
------------------------------------------------------------------------------------------------------------------------------
86,994 158,086 162,181 109,727 97,166 88,784 75,998 63,134
43,934 60,906 67,029 48,714 44,435 41,871 35,282 28,085
7,308 6,381 1,125 469 1,945 2,496 1,819 2,225
------------------------------------------------------------------------------------------------------------------------------
50,368 103,561 96,277 61,482 54,676 49,409 42,535 37,274
(3,740)
------------------------------------------------------------------------------------------------------------------------------
50,368 103,561 96,277 61,482 54,676 49,409 42,535 33,534
------------------------------------------------------------------------------------------------------------------------------
50,368 103,561 96,277 61,482 54,676 49,409 42,535 33,534
9.6% 21.3% 23.0% 17.0% 17.4% 17.7% 16.9% 16.2%
3.0% 6.3% 6.0% 4.7% 5.7% 5.7% 5.7% 5.6%
.58 1.18 1.10 .70 .63 .57 .49 .43
(.04)
.58 1.18 1.10 .70 .63 .57 .49 .39
.45 .41 .32 .25 .21 .18 .16 .14
87,110 87,794 87,632 87,730 87,612 87,450 87,264 87,166
86,100 87,454 87,722 87,532 87,636 87,580 87,330 87,210
------------------------------------------------------------------------------------------------------------------------------
184,066 193,035 188,085 143,972 104,614 105,070 90,430 79,098
562,591 494,290 533,427 482,357 267,353 245,990 201,211 199,712
1,113,594 995,132 977,459 877,625 559,459 500,833 408,205 383,203
279,135 226,240 275,535 263,489 58,440 73,383 31,469 42,140
512,828 511,574 454,486 379,912 332,890 295,743 260,640 236,609
1.7 2.1 2.0 1.8 1.9 2.1 2.2 2.2
34.7% 30.4% 36.8% 38.6% 17.7% 19.9% 12.4% 16.7%
5.96 5.85 5.18 4.34 3.80 3.38 2.99 2.72
------------------------------------------------------------------------------------------------------------------------------
72,152 67,263 69,055 57,086 35,654 31,182 27,324 25,806
39,216 35,583 28,046 21,942 17,963 15,746 13,634 11,987
16.25 18.50 17.13 10.63 9.50 7.69 4.91 5.53
9
CONSOLIDATED BALANCE SHEETS
Sonoco Products Company
December 31
-------------------------------------------
(Dollars and shares in thousands) 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 25,858 $ 38,068
Trade accounts receivables, net of
allowances for doubtful amounts of
$6,514 and $3,511, respectively . . . . . . . . . . . . . . . . . . . 232,628 202,837
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,989 18,794
Inventories
Finished and in process . . . . . . . . . . . . . . . . . . . . . . . 83,660 67,714
Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . 102,465 91,864
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,750 28,670
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 14,760 17,000
-----------------------------------------
513,110 464,947
Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . 737,154 614,018
Cost in Excess of Fair Value of Assets Purchased . . . . . . . . . . . . . 339,653 59,003
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,208 108,563
-----------------------------------------
$1,707,125 $1,246,531
=========================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Payable to suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . $ 129,389 $ 109,777
Accrued expenses and other . . . . . . . . . . . . . . . . . . . . . . . 60,407 53,774
Accrued wages and other compensation . . . . . . . . . . . . . . . . . . 22,633 16,039
Restructuring reserve . . . . . . . . . . . . . . . . . . . . . . . . . 27,114 39,130
Notes payable and current portion of long-term debt . . . . . . . . . . 60,564 75,028
Taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,071 18,721
-----------------------------------------
303,178 312,469
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455,262 240,982
Postretirement Benefit Obligation . . . . . . . . . . . . . . . . . . . . . 99,165 97,993
Deferred Income Taxes and Other . . . . . . . . . . . . . . . . . . . . . . 61,156 33,197
Commitments and Contingencies . . . . . . . . . . . . . . . . . . . . . . .
Shareholders' Equity
Serial preferred stock, no par value
Authorized 30,000 shares
Issued 3,450 shares . . . . . . . . . . . . . . . . . . . . . . . . . 172,500
Common shares, no par value
Authorized 150,000 shares
Issued 91,841 shares . . . . . . . . . . . . . . . . . . . . . . . . . 7,175 7,175
Capital in excess of stated value . . . . . . . . . . . . . . . . . . . 62,277 61,608
Translation of foreign currencies . . . . . . . . . . . . . . . . . . . (39,016) (19,952)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 623,500 552,263
Treasury shares at cost (1993--4,394 shares; 1992--4,697 shares) . . . . . (38,072) (39,204)
-----------------------------------------
788,364 561,890
-----------------------------------------
$1,707,125 $1,246,531
=========================================
Shares reflect the two-for-one stock split on June 10, 1993.
The Notes are an integral part of these financial statements.
10
CONSOLIDATED STATEMENTS OF INCOME
Sonoco Products Company
YEARS ENDED DECEMBER 31
--------------------------------------------------
(Dollars and shares in thousands except per share) 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,947,224 $1,838,026 $1,697,058
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . 1,525,671 1,451,252 1,348,489
Selling, general and
administrative expenses. . . . . . . . . . . . . . . . . . . . 209,309 189,823 180,054
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . 31,154 30,364 28,186
Interest income . . . . . . . . . . . . . . . . . . . . . . . . (6,017) (6,416) (6,870)
Unusual items . . . . . . . . . . . . . . . . . . . . . . . . . (5,800) 42,000 (8,525)
----------------------------------------------
Income from operations before income
taxes and cumulative effect of
changes in accounting principles . . . . . . . . . . . . . . . 192,907 131,003 155,724
Taxes on income. . . . . . . . . . . . . . . . . . . . . . . . . 75,200 51,800 63,600
----------------------------------------------
Income from operations before
equity in earnings of affiliates and
cumulative effect of changes in
accounting principles. . . . . . . . . . . . . . . . . . . . . 117,707 79,203 92,124
Equity in earnings of affiliates . . . . . . . . . . . . . . . . 1,127 2,048 2,681
----------------------------------------------
Income before cumulative effect of
changes in accounting principles . . . . . . . . . . . . . . . 118,834 81,251 94,805
Cumulative effect of changes in accounting for postretirement
benefits (Note 12) and income taxes (Note 13). . . . . . . . . (37,892)
----------------------------------------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,834 43,359 94,805
Preferred dividends. . . . . . . . . . . . . . . . . . . . . . . (1,264)
----------------------------------------------
Net income available to common shareholders. . . . . . . . . . . $ 117,570 $ 43,359 $ 94,805
===============================================
Per common share
- ----------------
Income before cumulative effect of
changes in accounting principles . . . . . . . . . . . . . . . $ 1.35 $ .94 $ 1.10
Cumulative effect of changes in
accounting for postretirement
benefits and income taxes. . . . . . . . . . . . . . . . . . . (.44)
----------------------------------------------
Net income available to common shareholders. . . . . . . . . . . $ 1.35 $ .50 $ 1.10
==============================================
Dividends - common . . . . . . . . . . . . . . . . . . . . . . . $ .53 $ .49 $ .46
Average common shares outstanding. . . . . . . . . . . . . . . . 87,316 86,732 86,304
Shares and per-share data reflect the two-for-one stock split on June 10, 1993
The Notes are an integral part of these financial statements.
11
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Sonoco Products Company
Common Shares Preferred Capital in Translation Treasury
------------------- Stock Excess of of Foreign Retained Shares
(Dollars and shares in thousands except per share) Outstanding Amount Amount Stated Value Currencies Earnings Amount
- ------------------------------------------------------------------------------------------------------------------------------------
JANUARY 1, 1991 . . . . . . . . . . 86,100 $7,175 $ $ 50,643 $2,583 $496,245 $(43,818)
Net income . . . . . . . . . . . 94,805
Dividends, $.46
per share . . . . . . . . . . . (39,703)
Translation loss. . . . . . . . . (10,812)
Issuance of treasury
shares under
Stock option plan . . . . . . 352 1,795 2,761
Employee stock
ownership plan . . . . . . 244 2,383 1,925
Treasury shares
acquired . . . . . . . . . . . (206) (3,676)
-------------------------------------------------------------------------------
DECEMBER 31, 1991 . . . . . . . . . 86,490 7,175 54,821 (8,229) 551,347 (42,808)
Net income. . . . . . . . . . . . 43,359
Dividends, $.49
per share . . . . . . . . . . . (42,443)
Translation loss. . . . . . . . . (11,723)
Issuance of treasury
shares under
Stock option plan . . . . . . 682 3,894 4,864
Employee stock
ownership plan . . . . . . 224 2,893 1,854
Treasury shares
acquired . . . . . . . . . . . (252) (3,114)
-------------------------------------------------------------------------------
DECEMBER 31, 1992 . . . . . . . . . 87,144 7,175 61,608 (19,952) 552,263 (39,204)
Net income . . . . . . . . . . . 118,834
Dividends
Preferred . . . . . . . . . . . (1,264)
Common, $.53
per share . . . . . . . . . . (46,333)
Translation loss . . . . . . . . (19,064)
Issuance of 3,450
preferred shares. . . . . . . . 172,500 (3,968)
Issuance of treasury
shares under
Stock option plan . . . . . . 208 1,388 1,493
Employee stock
ownership plan . . . . . . 235 3,249 2,001
Treasury shares
acquired . . . . . . . . . . . (140) (2,362)
-------------------------------------------------------------------------------
DECEMBER 31, 1993 . . . . . . . . . 87,447 $7,175 $172,500 $ 62,277 $(39,016) $623,500 $(38,072)
===============================================================================
Shares and per share data reflect the two-for-one stock split on June 10, 1993.
The Notes are an integral part of these financial statements.
12
CONSOLIDATED STATEMENTS OF CASH FLOWS
Sonoco Products Company
Years ended December 31
---------------------------------------------
(Dollars in thousands) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $118,834 $ 43,359 $94,805
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation, depletion and amortization . . . . . . . . . 95,745 83,309 76,561
Cumulative effect of changes in accounting principles. . . 37,892
Restructuring charge . . . . . . . . . . . . . . . . . . . 39,130
Loss on assets retired . . . . . . . . . . . . . . . . . . 836 2,941 5,987
Equity in earnings of affiliates, net of dividends . . . . (975) (1,893) (2,532)
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . 22,361 (13,619) (328)
Gain on sale of investment in affiliate. . . . . . . . . . (15,299) (8,525)
Changes in assets and liabilities, net of
effects from acquisitions, dispositions
and foreign currency adjustments
Accounts receivable. . . . . . . . . . . . . . . . . . 860 (13,178) (8,917)
Inventories. . . . . . . . . . . . . . . . . . . . . . 5,545 (3,719) 5,555
Prepaid expenses . . . . . . . . . . . . . . . . . . . (1,411) 831 2,675
Payables and taxes . . . . . . . . . . . . . . . . . . (45,881) (7,930) (3,644)
Other assets and liabilities . . . . . . . . . . . . . (17,771) (9,711) (5,155)
---------------------------------------------
Net cash provided by operating activities. . . . . . . . . . . 162,844 157,412 156,482
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment. . . . . . . . . . . (115,596) (109,305) (90,557)
Cost of acquisitions, exclusive of cash. . . . . . . . . . . . (392,950) (34,964) (11,413)
Proceeds from the sale of assets . . . . . . . . . . . . . . . 42,467 6,626 21,735
Proceeds from collection of a note receivable. . . . . . . . . 33,672
---------------------------------------------
Net cash used by investing activities. . . . . . . . . . . . . (432,407) (137,643) (80,235)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt . . . . . . . . . . . . . . . . 662,800 168,072 199,256
Principal repayment of debt. . . . . . . . . . . . . . . . . . (523,817) (132,163) (241,882)
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . (46,333) (42,443) (39,703)
Treasury shares acquired . . . . . . . . . . . . . . . . . . . (2,362) (3,114) (3,676)
Treasury shares issued . . . . . . . . . . . . . . . . . . . . 2,428 7,781 3,935
Preferred shares issued. . . . . . . . . . . . . . . . . . . . 172,500
---------------------------------------------
Net cash provided (used) by financing activities . . . . . . . 265,216 (1,867) (82,070)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH . . . . . . . . . . . (7,863) (8,456) (5,482)
---------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (12,210) 9,446 (11,305)
Cash and cash equivalents at beginning of year . . . . . . . . 38,068 28,622 39,927
---------------------------------------------
Cash and cash equivalents at end of year . . . . . . . . . . . $ 25,858 $38,068 $28,622
=============================================
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid. . . . . . . . . . . . . . . . . . . . . . . . $ 31,504 $29,265 $23,431
Income taxes paid. . . . . . . . . . . . . . . . . . . . . . $ 75,374 $65,224 $61,798
Excluded from the consolidated statements of cash flows was the effect of
certain non-cash activities. The Company assumed $75,000 and $16,300 of debt
obligations in 1993 and 1991, respectively, in conjunction with acquisitions.
The Company also received a note for $33,700 in conjunction with the sale of
the Sonoco Graham Company in 1991.
The Notes are an integral part of these financial statements.
13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sonoco Products Company
(Dollars in thousands except per share)
The following notes are an integral part of the consolidated financial
statements. The accounting principles followed by the Company appear in bold
type.
1 PRINCIPLES OF CONSOLIDATION.
The consolidated financial statements include the accounts of Sonoco Products
Company and its United States and international subsidiaries after elimination
of intercompany accounts and transactions. Investments in affiliated companies
in which the Company owns 20% to 50% of the voting stock are included on the
equity method of accounting.
2 ACQUISITIONS/DISPOSITIONS.
During the first quarter of 1993, the Company completed several acquisitions
totaling approximately $100,000. The most notable was the acquisition of all
the outstanding stock of Crellin Holding, Inc., an international manufacturer,
designer and marketer of molded plastics products.
In October 1993, the Company acquired Engraph, Inc. following the
successful conclusion of a cash tender offer and merger transaction. The tender
offer of approximately $300,000 reflects a price of $15.63 per share for each
of Engraph's outstanding shares of common stock. Engraph's markets include
labels and package inserts, flexible packaging, screen process printing and
paperboard cartons and specialties.
Debt assumed in connection with the above acquisitions was approximately
$75,000. The Company has accounted for each of these acquisitions as a purchase
and, accordingly, has included their results of operations in consolidated net
income from the date of acquisition. The aggregate excess purchase price over
the fair value of assets purchased was $292,000 and is being amortized over 40
years.
Pro forma sales for the twelve months ended December 31, 1993 and 1992,
giving effect to the acquisitions described above as though they occurred
January 1, 1992, would have been approximately $2,100,000 for both years. Pro
forma net income for the same period would have been approximately $105,000 and
$72,000, or $1.21 and $.83 per share. Net income for 1992 includes a $25,000
after-tax restructuring charge but excludes the $37,892 cumulative effect of
changes in accounting principles.
Also during 1993, the Company disposed of several operations whose
businesses were not consistent with the long-term strategic direction of the
Company. These dispositions were provided for as a part of the 1992
restructuring plan as discussed in Note 4. Operations sold in 1993 included
the European bag, the bag-in-box liquid packaging, the Edgeboard and packaging
tapes operations. The net proceeds from these sales were approximately
$42,000.
3 UNUSUAL ITEMS.
Included in 1993 and 1991 were gains on the sale of Sonoco Graham. The 1993
gain from the early payment of a note issued in connection with the sale was
partially offset by charges for refinancing debt related to the Engraph
acquisition and various other unusual items. The 1992 unusual items represent
restructuring reserves, which are discussed more fully in Note 4.
4 RESTRUCTURING CHARGES IN 1992 AND 1990.
During the fourth quarter of 1992, the Company recorded a charge to earnings
for costs associated with the restructuring, closing, consolidating and
relocating of various plants, principally at foreign locations. The
restructuring reduced income before taxes, net income and earnings per share by
$42,000, $25,000 and $.29, respectively.
During the third quarter of 1990, the Company restructured several
operations to improve its cost and competitive position associated primarily
with domestic operations. The restructuring reduced income before taxes, net
income and earnings per share by $75,000, $54,650 and $.63, respectively.
5 CASH AND CASH EQUIVALENTS.
Cash equivalents are composed of all highly liquid investments with an original
maturity of three months or less.
At December 31, 1993 and 1992, $18,751 and $25,005, respectively, of
outstanding checks were included in Payables to Suppliers.
6 INVENTORIES.
Inventories are stated at the lower of cost or market. The last-in, first-out
(LIFO) method was used to determine costs of approximately 44% of total
inventories in 1993 and 40% in 1992. The remaining inventories are determined
on the first-in, first-out (FIFO) method.
If the FIFO method of accounting had been used for all inventories, the
totals would have been higher by $7,885 in 1993 and $10,061 in 1992.
7 PROPERTY, PLANT and EQUIPMENT.
Plant assets represent the original cost of land, buildings and equipment less
depreciation computed under the straight-line method over the estimated useful
life of the asset. Equipment lives range from 5 to 11 years, buildings from 20
to 30 years.
Timber resources are stated at cost. Depletion is charged to operations
based on the number of units of timber cut during the year.
Depreciation and depletion expense amounted to $87,721 in 1993; $79,455 in
1992 and $73,111 in 1991.
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sonoco Products Company
(Dollars in thousands except per share)
Note 7: PROPERTY, PLANT AND EQUIPMENT - CONTINUED
Details of property, plant and equipment at December 31 are as follows:
1993 1992
- ----------------------------------------------------------
Land . . . . . . . . . . . . $ 25,694 $ 19,151
Timber resources . . . . . . 25,349 24,420
Buildings . . . . . . . . . . 267,933 226,758
Machinery & equipment . . . . 935,247 820,553
Construction in progress . . 61,473 44,118
--------------------------
1,315,696 1,135,000
Accumulated depreciation
and depletion . . . . . . . (578,542) (520,982)
--------------------------
$ 737,154 $ 614,018
==========================
Estimated costs for completion of authorized capital additions under
construction totaled approximately $63,000 at December 31, 1993.
Certain operating properties and equipment are leased under non-cancellable
operating leases. Total rental expense under operating leases was $26,400,
$23,400 and $23,700 in 1993, 1992 and 1991, respectively. Future minimum
rentals under non-cancellable operating leases with terms of more than one year
are as follows: 1994 - $15,400; 1995 - $14,000; 1996 - $11,400; 1997 - $8,500;
1998 - $7,300; 1999 and thereafter - $12,700.
8 COST IN EXCESS OF FAIR VALUE OF ASSETS PURCHASED.
Goodwill arising from business acquisitions ($292,000 in 1993) is amortized on
the straight-line basis over periods ranging from 20 to 40 years. Amortization
expense amounted to $8,024 in 1993; $3,854 in 1992 and $3,450 in 1991.
Accumulated amortization at December 31, 1993 and 1992 was $24,403 and $22,040,
respectively.
9 DEBT.
Debt at December 31 was as follows:
1993 1992
- -----------------------------------------------------------------
Commercial paper, average rate
of 3.2% in 1993 and 3.7% in 1992 $146,500 $ 80,000
9.2% notes due August 2021 . . . . . 99,920 99,917
5.875% notes due November 2003 . . . 99,339
5.49% notes due April 2000 . . . . . 75,000
Private placement notes payable,
interest at 9.3% . . . . . . . . . . 42,860
Foreign denominated debt, average
rate of 6.8% at December 31, 1993
and 9.8% at December 31, 1992 . . . 70,618 78,001
Other notes . . . . . . . . . . . . . 24,449 15,232
----------------------
Total debt . . . . . . . . . . . . . 515,826 316,010
Less current portion and
short-term notes . . . . . . . . . . 60,564 75,028
----------------------
Long-term debt . . . . . . . . . . . $455,262 $240,982
======================
The Company sold $100,000 of 5.875% notes due November 2003 and $75,000 of
5.49% notes due April 2000 in October 1993 and November 1993, respectively. Net
proceeds were used primarily for the Engraph acquisition and to repay other
indebtedness, including the 9.3% privately placed notes due 1994 through 1998
and the related make-whole premium of $3.2 million.
In 1993, the Company increased the authorized commercial paper program from
$200 million to $250 million and increased the fully committed bank lines of
credit supporting the program by a like amount. These bank lines expire in
1998. Accordingly, commercial paper borrowings are classified as long-term
debt.
The Company has entered into various agreements with banks for managing
exposure to interest rates. The differential to be paid or received is accrued
as interest rates change. All of the Company's interest rate swap agreements
mature in 1994.
The estimated fair value of debt, including the impact of interest rate
swaps, is $539,200 at December 31, 1993. This estimate is based on quoted
market prices or by discounting future cash flows using interest rates
available to the Company for issues with similar terms and average maturities.
The approximate principal requirements of debt maturing in the next five
Note 9: Debt - continued
years are: 1994 - $60,600; 1995 - $2,400; 1996 - $5,400; 1997 - $1,400; and
1998 - $1,600. It is management's intent to extend indefinitely the line of
credit agreements supporting the commercial paper program. Accordingly, no
principal repayments are projected through 1998.
Certain of the Company's debt agreements impose restrictions with respect
to the maintenance of financial ratios and the disposition of assets. The most
restrictive covenant currently requires that tangible net worth at the end of
each fiscal quarter be greater than $200,000 through April 3, 1994, and
$365,000 thereafter.
In addition to the Committed availability under the commercial paper
program, unused lines of credit for general Company Purposes at December 31,
1993, were approximately $48,000 with interest at mutually agreed upon rates.
10 STOCK OPTIONS.
The Company has stock option plans under which common shares are reserved for
sale to certain employees. Options granted under the plans were at the market
value of the shares at the date of grant. Options are generally exercisable one
year after the date of grant, and expire 10 years after the date of grant. At
December 31, 1993, 2,594,000 shares were reserved for future grants.
15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sonoco Products Company
(Dollars in thousands except per share)
Note 10: STOCK OPTIONS - CONTINUED
Information with respect to the Company's stock option plans follows:
Option Option
Shares Price Range
- ---------------------------------------------------------
1991
Outstanding at beginning
of year . . . . . . . . . 2,776,250 $ 5.02-$17.38
Granted . . . . . . . . . 826,900 $16.88-$18.25
Exercised . . . . . . . . (410,132) $ 5.02-$17.00
Cancelled . . . . . . . . (70,150) $15.25-$17.63
---------
Outstanding at end
of year . . . . . . . . . 3,122,868 $ 5.02-$18.25
1992
Granted . . . . . . . . . 862,350 $18.75
Exercised . . . . . . . . (683,234) $ 5.02-$17.63
Cancelled . . . . . . . . (48,400) $10.50-$18.75
---------
Outstanding at end
of year . . . . . . . . . 3,253,584 $ 5.02-$18.75
1993
Granted . . . . . . . . . 957,300 $20.75-$24.13
Assumed - Engraph . . . . 623,156 $ 3.73-$18.40
Exercised . . . . . . . . (208,274) $ 5.02-$18.75
Cancelled . . . . . . . . (5,900) $24.13
---------
Outstanding at end
of year . . . . . . . . . 4,619,866 $ 3.73-$24.13
=========
Options exercisable at
December 31, 1993 . . . . 3,507,893
Number of shares and share price restated to reflect the two-for-one stock
split on June 10, 1993.
11 RETIREMENT BENEFIT PLANS.
Non-contributory defined benefit pension plans cover substantially all U.S.
employees. Under the plans, retirement benefits are based either on both years
of service and compensation or on service only. IT IS THE COMPANY'S POLICY TO
FUND THESE PLANS, AT A MINIMUM, IN AMOUNTS REQUIRED UNDER ERISA. Plan assets
consist primarily of common stocks, bonds and real estate.
The Company also maintains a plan to supplement executive benefits limited
through qualified plans. Benefits are based on years of service and
compensation. The plan is partially funded through a grantor trust as defined
under Section 671 of the Internal Revenue Service Code of 1986.
The Company's subsidiaries in the United Kingdom have contributory pension
plans covering about 70% of the groups' employees. Pension benefits are based
either on the employee's salary in the year of retirement or the average of the
final three years. THE FUNDING POLICY IS TO CONTRIBUTE ANNUALLY AT ACTUARIALLY
DETERMINED RATES THAT ARE INTENDED TO REMAIN A LEVEL PERCENTAGE OF SALARY.
Net pension cost for the domestic and United Kingdom plans included the
following components:
Combined Plans
---------------------------------
1993 1992 1991
- ------------------------------------------------------------------
Service cost-benefits earned
during year . . . . . . . . . $ 9,555 $ 9,074 $ 9,334
Interest cost on projected
benefit obligation . . . . . . 23,881 22,196 20,559
Actual return on plan
assets . . . . . . . . . . . . (32,165) (19,510) (49,456)
Net amortization and
deferral . . . . . . . . . . . 2,031 (9,581) 25,819
---------------------------------
$ 3,302 $ 2,179 $ 6,256
=================================
Note 11 RETIREMENT BENEFIT PLANS- Continued
The following table sets forth the funded status of the plans at December 31:
Over-Funded Plan Under-Funded Plan
---------------------------------------------
1993 1992 1993 1992
- -----------------------------------------------------------------------------
Projected benefit obligation
Vested benefits . . . . . . $271,733 $196,641 $ $
Non-vested benefits . . . . 9,757 7,862 14,473 12,548
-----------------------------------------------
Accumulated benefit
obligation . . . . . . . . 281,490 204,503 14,473 12,548
Effect of assumed increase
in compensation levels . . 35,768 39,060 1,369 1,048
-----------------------------------------------
Projected benefit
obligation . . . . . . . . 317,258 243,563 15,842 13,596
Plan assets at fair value . . 341,669 300,365 12,502 10,446
-----------------------------------------------
Plan assets in excess of
(less than) projected
benefit obligation . . . . . 24,411 56,802 (3,340) (3,150)
Unrecognized net loss
(gain) . . . . . . . . . . . 26,729 (14,178) 1,142 1,356
Unrecognized prior service
cost . . . . . . . . . . . . 3,333 2,527 2,235 555
Unrecognized net transition
(asset) obligation from
initial application of
FAS 87 . . . . . . . . . . . (6,150) (6,426) 1,599 1,826
Adjustment required to
recognize minimum
liability . . . . . . . . . (3,607) (2,382)
-----------------------------------------------
Prepaid (accrued) pension
cost . . . . . . . . . . . . $ 48,323 $ 38,725 $ (1,971) $ (1,795)
===============================================
Prepaid pension costs of $7,011 and $8,189 were included in Prepaid
Expenses in 1993 and 1992, respectively. In addition, $41,312 and $30,536 were
included in Other Assets in 1993 and 1992, respectively.
A weighted-average discount rate of 7%, and a 4% rate of increase in future
compensation levels, were used in determining the actual present value of the
projected benefit obligations in 1993. A 9% discount rate, and 6% rate of
compensation increase, were used in 1992 and 1991. The expected long-term rate
of return on assets was 9.5% for all years presented.
The Company's other international subsidiaries have pension plans covering
most of its employees. The cost for these plans is considered immaterial.
The Company's Employee Savings and Stock Ownership Plan provides that all
eligible employees may contribute 1% to 16% of their gross pay to the Plan
subject to Internal Revenue Service regulations. The Company may make matching
contributions in an amount to be determined annually by the Company's Board of
Directors. The Company's contributions, made entirely in Company stock for
1993, 1992 and 1991, were $5,250, $4,747 and $4,308, respectively.
16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sonoco Products Company
(Dollars in thousands except per share)
12 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS.
Postretirement medical and life insurance benefits are offered to substantially
all U.S. employees. In 1992, the Company adopted Statement of Financial
Accounting Standard 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" (FAS 106). This standard requires accrual for
postretirement benefits other than pensions over an employee's career, rather
than expensing these costs when paid, as had been the Company's practice prior
to 1992. The cost of these benefits included as expense for 1991 was $5,442.
The Company elected to immediately recognize the cumulative effect of the
change in accounting for postretirement benefits of $93,500 pretax, or $58,000
after-tax, which represents the accumulated postretirement benefit obligation
(APBO) existing at January 1, 1992. Also, adoption of FAS 106 resulted in an
incremental annual retiree benefit expense of $4,500 pretax, or $2,700
after-tax, which represents the difference between pay-as-you-go amounts and
estimated 1992 non-pension retirement benefits. THE COMPANY CONTINUES TO FUND
BENEFIT COSTS PRINCIPALLY ON A PAY-AS-YOU-GO BASIS, WITH THE RETIREE PAYING A
PORTION OF THE COSTS. In situations where full-time employees retire from the
Company between age 55 and age 65, most are eligible to receive, at a cost to
the retiree equal to the cost for an active employee, certain health-care
benefits identical to those available to active employees. After attaining age
65, an eligible retiree's health-care benefit coverage becomes coordinated with
Medicare. For purposes of projecting future benefit payments, early retiree
contributions were assumed to increase at the health-care cost trend.
Non-pension retirement benefit expense includes the following:
1993 1992
- ----------------------------------------------------------------
Service cost-benefits earned
during year . . . . . . . . . $ 2,482 $ 2,283
Interest cost on APBO . . . . . . 8,196 8,239
Actual return on plan assets . . (1,063) (304)
---------------------
Net periodic postretirement
benefit cost . . . . . . . . $ 9,615 $10,218
=====================
The following sets forth the accrued obligation included in the
accompanying December 31 balance sheet applicable to each employee group for
non-pension retirement benefits:
1993 1992
- ------------------------------------------------------------------
Accumulated postretirement
benefit obligation
Retired employees . . . . . . . . $ 57,610 $56,048
Active employees-fully eligible . 18,514 13,446
Active employees-not yet eligible 50,460 28,499
----------------------
Accumulated benefit obligation . . . 126,584 97,993
Plan assets at fair value . . . . . . 10,776 4,748
----------------------
Accumulated benefit obligation
greater than plan assets . . . . . 115,808 93,245
Unrecognized net loss from
changes in assumptions . . . . . . (28,964)
Unrecognized prior service cost . . . 1,545
----------------------
Accrued postretirement
benefit cost . . . . . . . . . . . $ 88,389 $93,245
======================
Prepaid postretirement medical costs of $10,776 and $4,748 were included in
Other Assets in 1993 and 1992, respectively.
The discount rate used in determining the APBO was 7% in 1993 and 9% in
1992. The assumed health-care cost-trend rate used in measuring the APBO was
12% in 1993 declining to 6.5% in the year 2010. Increasing the assumed trend
rate for health-care costs by one percentage point would result in an increase
in the APBO of approximately $10,000 at December 31, 1993, and an increase of
$1,000 in the related 1993 expense. Plan assets are the result of funding
these benefit costs in amounts representing the maximum allowable under
Section 401(H) of the Internal Revenue Code. These assets are commingled with
the pension plan assets and consist primarily of common stocks, bonds and real
estate. The expected long-term rate of return on assets was 9.5% in 1993.
13 INCOME TAXES.
The Company adopted Statement of Financial Accounting Standard 109, "Accounting
for Income Taxes" (FAS 109), effective January 1, 1992. The cumulative effect,
which was recorded in 1992, increased earnings by $20,100.
The provision (benefit) for taxes on income for the years ending December
31 consists of the following:
1993 1992 1991
- -----------------------------------------------------------------
Pretax income
Domestic . . . . . . . $189,122 $160,637 $153,500
Foreign . . . . . . . 3,785 (29,634) 2,224
---------------------------------------
Total . . . . . . . . $192,907 $131,003 $155,724
=======================================
Current
Federal . . . . . . . $ 43,998 $ 50,642 $ 48,620
State . . . . . . . . 7,320 8,731 8,434
Foreign . . . . . . . 1,521 6,046 6,874
---------------------------------------
Total current . . . . 52,839 65,419 63,928
---------------------------------------
Deferred
Federal . . . . . . . 14,005 (455) 3,206
State . . . . . . . . 2,924 (96) 692
Foreign . . . . . . . 5,432 (13,068) (4,226)
---------------------------------------
Total deferred . . . 22,361 (13,619) (328)
---------------------------------------
Total taxes . . . . . . $ 75,200 $ 51,800 $ 63,600
=======================================
Deferred income tax expense (benefit) results from temporary differences in
the recognition of revenue and expense for tax and financial statement
purposes. The source of these differences and the tax effect of each are as
follows:
1993 1992 1991
- -------------------------------------------------------------
Restructuring charge . $ 8,711 $(15,065) $10,220
Sale of an affiliate . 6,409 (14,810)
Depreciation expense . 1,163 700 5,253
Benefit plan costs . . 7,379 2,643 3,773
Other items, net . . . (1,301) (1,897) (4,764)
-----------------------------------
Total deferred . . . $22,361 $(13,619) $ (328)
===================================
17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sonoco Products Company
(Dollars in thousands except per share)
NOTE 13: INCOME TAXES - CONTINUED
Deferred tax liabilities (assets) are comprised of
the following at December 31:
1993 1992
- ------------------------------------------------------------
Depreciation . . . . . . . . . . . $ 62,975 $ 45,811
Employee benefits . . . . . . . . . 15,410 13,281
Other . . . . . . . . . . . . . . . 9,762 5,129
-------------------
Gross deferred tax liabilities . . 88,147 64,221
-------------------
Restructuring . . . . . . . . . . . (5,403) (18,046)
Retiree health benefits . . . . . . (23,910) (27,084)
Loss carry-forwards
(foreign and domestic) . . . . . . (11,684) (5,879)
Employee benefits . . . . . . . . . (11,494) (8,400)
Other . . . . . . . . . . . . . . . (7,303) (10,741)
-------------------
Gross deferred tax assets . . . . (59,794) (70,150)
Valuation allowance on deferred
tax assets . . . . . . . . . . . 4,899 5,879
-------------------
Total deferred taxes, net . . . . $ 33,252 $ (50)
===================
The net decrease in the valuation allowance in 1993 resulted from the
disposal of a European entity; this decrease was partially offset by the
inclusion of current net operating losses from various foreign subsidiaries.
Approximately $12,000 of net operating losses remain available in various
foreign subsidiaries at December 31, 1993. Their use is limited to future
taxable earnings of those foreign subsidiaries. No benefit has been recognized
in the financial statements for any of these loss carry-forwards.
The principal differences between the effective tax rate and the federal
statutory rate are as follows:
1993 1992 1991
- --------------------------------------------------------------------------------
Statutory tax rate. . . $67,517 35.0% $44,587 34.0% $52,946 34.0%
State income taxes,
net of federal tax
benefit . . . . . . . 7,039 3.6 4,983 3.8 6,023 3.9
Net effect of foreign
income at lower rates
and foreign losses
with no tax benefit. . 2,155 1.1 2,360 1.8 2,853 1.8
Goodwill . . . . . . . 1,694 .9 524 .4 487 .3
Company owned
life insurance (1,570) (.8)
Other, net . . . . . . (1,635) (.8) (654) (.5) 1,291 .8
---------------------------------------------------
Total taxes . . . . . $75,200 39.0% $51,800 39.5% $63,600 40.8%
===================================================
Undistributed earnings of international subsidiaries totaled $36,634 at
December 31, 1993. There have been no United States income taxes provided on
the undistributed earnings since the Company considers the earnings to be
indefinitely reinvested to finance international growth and expansion. If such
amounts were remitted, loaned to the Company or the stock in the foreign
subsidiaries sold, these earnings could become subject to tax; however, the
Company believes United States foreign tax credits would substantially
eliminate any tax due.
14 COMMITMENTS AND CONTINGENCIES.
The Company is a party to various legal proceedings incidental to its business
and is subject to a variety of environmental and pollution control laws and
regulations in all jurisdictions in which it operates. As is the case with
other companies in similar industries, the Company faces exposure from actual
or potential claims and legal proceedings. The Company has been named as a
potentially responsible party at five sites in the Northeast. As of December
31, 1993, the Company has $3,100 accrued for these contingencies. This compares
with $1,900 accrued as of December 31, 1992. Although the level of future
expenditures for legal and environmental matters is impossible to determine
with any degree of probability, it is management's opinion that such costs when
finally determined will not have a material adverse effect on the consolidated
financial position of the Company.
15 INTERNATIONAL OPERATIONS.
Following are operating profits, net assets and dividends received by the
Company from international operations. Restructuring costs of $31,800 are
included in 1992 results.
1993 1992
- -----------------------------------------------------------
Operating profits (loss) . . . . $ 11,923 $ (12,398)
Net assets . . . . . . . . . . . 185,723 229,641
Dividends . . . . . . . . . . . . 2,087 1,473
Following are sales to unaffiliated customers, operating profit and total
assets for Europe. Restructuring costs of $28,200 are included in 1992
results.
1993 1992 1991
- -----------------------------------------------------------
Sales to unaffiliated
customers . . . . . . $180,044 $226,127 $215,677
Operating (loss) profit (890) (20,325) 7,375
Total assets . . . . . 171,073 222,164 218,354
16 STOCKHOLDERS' EQUITY.
On April 21, 1993, the Board of Directors approved a two-for-one stock split
effective June 10, 1993. All references in these financial statements to
dividends paid, numbers of common shares, stock prices and earnings per share
amounts have been restated to give retroactive effect to the stock split.
On October 26, 1993, the Company issued 3,450,000 shares of $2.25 Series A
Cumulative Convertible Preferred Stock for $172,500, or $50.00 per share. These
securities are convertible into the Company's common stock at a price of $25.31
per share. This stock is redeemable at the option of the Company, on or after
November 8, 1996, at a redemption price of $51.575 per share and decreasing
ratably annually to $50 per share on or after November 1, 2003. Dividends on
the Convertible Preferred Stock accrue and are cumulative from the date of
original issuance and are payable quarterly commencing on February 1, 1994.
Fully diluted earnings per share is not presented as it approximates
primary earnings per share.
18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sonoco Products Company
FINANCIAL REPORTING FOR BUSINESS SEGMENTS
(Years ended December 31)
The Financial Reporting for Business Segments should be read in conjunction
with the Management's Discussion and Analysis (which describes the segments in
detail).
Converted
(Dollars in thousands) Products Paper International Misc. Corporate Consolidated
- ----------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE
1993 . . . . . . . . . $1,200,225 $278,904 $406,914 $266,261 $2,152,304
1992 . . . . . . . . . 1,078,611 282,583 447,029 233,324 2,041,547
1991 . . . . . . . . . 1,027,715 269,077 376,119 219,170 1,892,081
INTERSEGMENT SALES
1993 . . . . . . . . . $ 6,333 $173,640 $ 2,825 $ 22,282 $ 205,080
1992 . . . . . . . . . 5,294 175,629 2,280 20,318 203,521
1991 . . . . . . . . . 4,271 169,266 255 21,231 195,023
SALES TO UNAFFILIATED CUSTOMERS
1993 . . . . . . . . . $1,193,892 $105,264 $404,089 $243,979 $1,947,224
1992 . . . . . . . . . 1,073,317 106,954 444,749 213,006 1,838,026
1991 . . . . . . . . . 1,023,444 99,811 375,864 197,939 1,697,058
OPERATING PROFIT*
1993 . . . . . . . . . $ 122,538 $ 57,867 $ 11,923 $ 34,888 $ (34,309) $ 192,907
1992 . . . . . . . . . 94,397 65,437 (12,398) 23,509 (39,942) 131,003
1991 . . . . . . . . . 92,848 56,579 14,406 21,138 (29,247) 155,724
IDENTIFIABLE ASSETS
1993 . . . . . . . . . $ 884,280 $140,406 $349,144 $133,776 $199,519 $1,707,125
1992 . . . . . . . . . 392,511 130,486 390,644 136,808 196,082 1,246,531
1991 . . . . . . . . . 378,929 125,124 351,032 139,492 141,363 1,135,940
DEPRECIATION, DEPLETION AND AMORTIZATION
1993 . . . . . . . . . $ 36,923 $ 12,974 $ 26,135 $ 14,437 $ 5,276 $ 95,745
1992 . . . . . . . . . 27,447 12,746 23,897 15,020 4,199 83,309
1991 . . . . . . . . . 26,140 12,456 20,124 13,818 4,023 76,561
CAPITAL EXPENDITURES
1993 . . . . . . . . . $ 37,891 $ 20,450 $ 41,209 $ 9,078 $ 6,968 $ 115,596
1992 . . . . . . . . . 33,824 15,581 48,317 5,459 6,124 109,305
1991 . . . . . . . . . 25,516 12,705 40,656 9,735 1,945 90,557
Intersegment sales are recorded at a market-related transfer price.
*Interest income, interest expense and unallocated corporate expenses are
excluded from the operating profits by segment and are shown under corporate.
In addition, 1993 and 1991 corporate operating profit includes $5,800 and
$8,525, respectively, for unusual items, as described in Note 3 to the
financial statements.
Identifiable assets are those assets used by each segment in its
operations. Corporate assets consist primarily of cash and cash equivalents,
investments in affiliates, headquarters facility and prepaid expenses.
Identifiable assets in the converted products segment more than doubled in 1993
as a result of the acquisitions. The decrease in 1993 in the international
segment is due to dispositions and exchange rate changes.
See Note 4 regarding restructuring charges in 1992. These costs have been
allocated to the appropriate segments.
19
SHAREHOLDERS' INFORMATION
CORPORATE OFFICES.
North Second Street
Hartsville, SC 29550
(803) 383-7000
Fax:(803) 339-6078
INDEPENDENT ACCOUNTANTS.
Coopers & Lybrand
NationsBank Corporate Center
100 North Tryon Street, Suite 3400
Charlotte, NC 28202
TRANSFER AGENT.
Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
P.O. Box 3001
Winston-Salem, NC 27102
LEGAL COUNSEL
Sinkler & Boyd, P.A.
P.O. Box 11889
Columbia, SC 29211
SHAREHOLDER RELATIONS
Sonoco Products Company
Treasurer
P.O. Box 160
Hartsville, SC 29551
(803) 383-7277
CORPORATE COMMUNICATION.
Sonoco Products Company
Corporate Communication - A09
P.O. Box 160
Hartsville, SC 29551
(803) 383-7437
ANNUAL MEETING OF SONOCO
SHAREHOLDERS. The annual meeting of
shareholders will be held at the Center
Theater on Fifth Street in Hartsville, SC,
at 11 a.m., Wednesday, April 20, 1994.
COMMON STOCK. Sonoco Products
Company common stock is traded
on the national over-the-counter
securities market. NASDAQ Symbol:
SONO.
FORM 10-K AVAILABLE. A copy of
the Company's annual report filed with
the Securities and Exchange Commission
on Form 10-K may be obtained by
shareholders without charge after April
1, 1994, by writing to :
Sonoco Products Company
Treasurer
P.O. Box 160
Hartsville, SC 29551
DIVIDEND REINVESTMENT. A dividend
reinvestment plan is available to
registered Sonoco shareholders. For
more information write to:
Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
P.O. Box 3001
Winston-Salem, NC 27102
DIRECT DEPOSIT OF DIVIDENDS.
Sonoco shareholders may request
automatic deposit of cash dividends
to checking, savings or money market
accounts that participate in the
Automatic Clearinghouse System. If you
would like this service, please contact:
Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
P.O. Box 3001
Winston-Salem, NC 27102
SHARE ACCOUNT INFORMATION
Stockholders with inquiries concerning
their accounts may call Wachovia Bank
of North Carolina, N.A. on their toll-free
line. The number is 1-800-633-4236.
DIVIDENDS DECLARED - COMMON
(millions $)
(Graph)
MARKET VS. BOOK VALUE PER COMMON SHARE
($)
(Graph)
MARKET PRICE OF STOCK AT YEAR END
($)
(Graph)
20
Visual Aids Contained in Annual Report Pages Incorporated By Reference
Exhibit 13
Page Number Chart or Picture Described
- ----------- --------------------------
2 Graph reflecting net sales by operating segment for 5 years.
2 Picture of a wooden reel produced by Sonoco.
3 Graph reflecting identifiable assets by segment for 5 years.
3 Picture of a filter tube produced by Sonoco.
4 Graph reflecting operating income by segment for 5 years.
4 Picture of a SonoLoc(R) tube produced by Sonoco.
5 Picture of a dough can produced by Sonoco.
6 Graph reflecting capital spending by segment for 5 years.
6 Picture of a paper core produced by Sonoco.
19 Graph reflecting dividends declared on common stock for 5 years.
19 Graph reflecting market verses book value per common share for 10 years.
19 Graph reflecting market price of stock at year end for 5 years.
19 Picture of a toner cartridge produced by Sonoco.
19 Picture of a paper tube produced by Sonoco.