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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest
event reported) January 12, 1998
SONOCO PRODUCTS COMPANY
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(Exact name of registrant as specified in its charter)
SC 1-11261 57-0248420
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(State of (Commission File Number) (IRS Employer
incorporation) Identification No.)
North Second Street, Hartsville, South Carolina 29551-0160
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(Address of principal executive offices) (Zip Code)
(803) 383-7000
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(Registrant's telephone number, including area code)
NA
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
Sonoco Products Company announced that it has signed a letter of intent to
sell the company's North American labels operations to CCL Industries Inc., of
Willowdale, Ontario, for approximately $100 million (U.S.).
The all-cash sale is expected to close in the first quarter of 1998, subject to
a definitive agreement and regulatory approval. Sonoco's North American labels
business, acquired in the October 1993 acquisition of Engraph, Inc., had 1997
sales of approximately $146 million (U.S.) from seven labels facilities in the
United States, one in Mexico, and one in Puerto Rico.
In addition, Sonoco said it is investigating the sale of several smaller
businesses also acquired in the 1993 Engraph acquisition and also purchased
subsequently by Engraph. Combined 1997 sales for these businesses were
approximately $87 million. Sonoco's flexible packaging business, also acquired
from Engraph, is not for sale. Sonoco sold its screen printing business, also
acquired in the original Engraph acquisition, in the first quarter of 1997.
The company announced in December that it signed a letter of intent to sell its
industrial containers business to Greif Brothers Corporation for approximately
$225 million and its intent to repurchase, from time to time, up to $150
million of its common stock at prevailing market prices.
The anticipated proceeds on the sales of the North American labels operations
and other smaller Engraph businesses will be substantially less than the book
value of the net assets. Accordingly, in compliance with Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of", a one-time after-tax loss
of approximately $175 million will be recognized in the fourth quarter of 1997.
This loss will negatively impact Sonoco's 1997 fully diluted earnings per share
by approximately $(1.79). The sale of the industrial containers business should
produce a one-time after-tax gain in the first quarter of 1998 of about $55
million, or $0.56 per share.
Net cash proceeds of approximately $330 million are expected from the sales, of
which $150 million will be used for the stock repurchase program and $180
million for debt reduction and other corporate purposes.
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The net accretion from the stock buyback, the sales of the Company's labels and
containers businesses and the other proposed sales should add about $.05 per
share on an annualized basis to Sonoco's earnings beginning in 1998.
Sonoco's decision to sell the labels and industrial containers businesses is
based on the conclusion that neither of these businesses fit the Company's
long-term strategic objectives and that its shareholders will be better served
if Sonoco's resources are concentrated on its other businesses that meet its
strategic criteria.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SONOCO PRODUCTS COMPANY
By /s/ F.T. Hill, Jr.
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Name: F.T. Hill, Jr.
Title: Vice President and
Chief Financial Officer
Date: January 21, 1998