þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Incorporated under the laws | I.R.S. Employer Identification | |
of South Carolina | No. 57-0248420 |
2
September 30, | December 31, | |||||||
2007 | 2006* | |||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 80,854 | $ | 86,498 | ||||
Trade accounts receivable, net of allowances |
549,385 | 459,022 | ||||||
Other receivables |
36,619 | 33,287 | ||||||
Inventories: |
||||||||
Finished and in process |
142,438 | 126,067 | ||||||
Materials and supplies |
196,338 | 177,781 | ||||||
Prepaid expenses and other |
107,394 | 60,143 | ||||||
1,113,028 | 942,798 | |||||||
Property, Plant and Equipment, Net |
1,096,047 | 1,019,594 | ||||||
Goodwill |
817,878 | 667,288 | ||||||
Other Intangible Assets, Net |
141,575 | 95,885 | ||||||
Other Assets |
192,300 | 191,113 | ||||||
Total Assets |
$ | 3,360,828 | $ | 2,916,678 | ||||
Liabilities and Shareholders Equity |
||||||||
Current Liabilities |
||||||||
Payable to suppliers |
$ | 391,557 | $ | 357,856 | ||||
Accrued expenses and other |
283,444 | 243,387 | ||||||
Notes payable and current portion of long-term debt |
59,269 | 51,903 | ||||||
Accrued taxes |
8,386 | 6,678 | ||||||
742,656 | 659,824 | |||||||
Long-Term Debt, Net of Current Portion |
916,275 | 712,089 | ||||||
Pension and Other Postretirement Benefits |
226,142 | 209,363 | ||||||
Deferred Income Taxes and Other |
142,453 | 116,334 | ||||||
Commitments and Contingencies
|
||||||||
Shareholders Equity |
||||||||
Common stock, no par value |
||||||||
Authorized 300,000 shares
99,423 and 100,550 shares issued and outstanding
at September 30, 2007 and December 31, 2006, respectively |
7,175 | 7,175 | ||||||
Capital in excess of stated value |
388,059 | 430,002 | ||||||
Accumulated other comprehensive loss |
(183,883 | ) | (262,305 | ) | ||||
Retained earnings |
1,121,951 | 1,044,196 | ||||||
Total Shareholders Equity |
1,333,302 | 1,219,068 | ||||||
Total Liabilities and Shareholders Equity |
$ | 3,360,828 | $ | 2,916,678 | ||||
* | The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. |
3
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 24, | September 30, | September 24, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Net sales |
$ | 1,029,764 | $ | 931,522 | $ | 2,979,874 | $ | 2,667,301 | ||||||||
Cost of sales |
842,485 | 749,954 | 2,417,357 | 2,155,531 | ||||||||||||
Selling, general and administrative expenses |
96,881 | 88,777 | 306,390 | 258,777 | ||||||||||||
Restructuring / Asset impairment charges |
17,401 | 1,064 | 27,496 | 5,983 | ||||||||||||
Income before interest and income taxes |
72,997 | 91,727 | 228,631 | 247,010 | ||||||||||||
Interest expense |
16,188 | 12,542 | 45,261 | 38,659 | ||||||||||||
Interest income |
(2,134 | ) | (1,801 | ) | (6,959 | ) | (4,548 | ) | ||||||||
Income before income taxes |
58,943 | 80,986 | 190,329 | 212,899 | ||||||||||||
Provision for income taxes |
(2,029 | ) | 23,191 | 39,541 | 66,487 | |||||||||||
Income before equity in earnings of affiliates/minority
interest in subsidiaries |
60,972 | 57,795 | 150,788 | 146,412 | ||||||||||||
Equity in earnings of affiliates/minority interest in
subsidiaries, net of tax |
3,561 | 3,296 | 9,200 | 9,165 | ||||||||||||
Net income |
$ | 64,533 | $ | 61,091 | $ | 159,988 | $ | 155,577 | ||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
100,775 | 99,569 | 100,831 | 99,763 | ||||||||||||
Diluted |
101,859 | 101,011 | 102,243 | 101,176 | ||||||||||||
Per common share: |
||||||||||||||||
Net income: |
||||||||||||||||
Basic |
$ | 0.64 | $ | 0.61 | $ | 1.59 | $ | 1.56 | ||||||||
Diluted |
$ | 0.63 | $ | 0.60 | $ | 1.56 | $ | 1.54 | ||||||||
Cash dividends |
$ | 0.26 | $ | 0.24 | $ | 0.76 | $ | 0.71 | ||||||||
4
Nine Months Ended | ||||||||
September 30, | September 24, | |||||||
2007 | 2006* | |||||||
Cash Flows from Operating Activities: |
||||||||
Net income |
$ | 159,988 | $ | 155,577 | ||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
||||||||
Depreciation, depletion and amortization |
133,591 | 121,566 | ||||||
Environmental charges |
21,100 | | ||||||
Non-cash share-based compensation expense |
7,782 | 9,181 | ||||||
Equity in earnings of affiliates/minority interest in subsidiaries |
(9,200 | ) | (9,165 | ) | ||||
Loss (gain) on disposition of assets/asset impairment |
17,660 | (4,650 | ) | |||||
Tax effect of nonqualified stock options |
9,525 | 9,868 | ||||||
Excess tax benefit of share-based compensation |
(9,266 | ) | (9,868 | ) | ||||
Deferred taxes |
(11,931 | ) | (761 | ) | ||||
Cash dividend from affiliated companies |
7,638 | 6,151 | ||||||
Change in assets and liabilities, net of effects from acquisitions,
dispositions, and foreign currency adjustments: |
||||||||
Receivables |
(53,096 | ) | (47,572 | ) | ||||
Inventories |
(15,525 | ) | 20,496 | |||||
Prepaid expenses |
(32,239 | ) | 475 | |||||
Payables and taxes |
12,988 | 60,516 | ||||||
Benefit plan contributions |
(9,529 | ) | (7,591 | ) | ||||
Other assets and liabilities |
28,420 | 19,552 | ||||||
Net cash provided by operating activities |
257,906 | 323,775 | ||||||
Cash Flows from Investing Activities: |
||||||||
Purchase of property, plant and equipment |
(135,279 | ) | (87,529 | ) | ||||
Cost of acquisitions, exclusive of cash acquired |
(215,341 | ) | (40,017 | ) | ||||
Proceeds from the sale of assets |
11,618 | 19,157 | ||||||
Investment in affiliates and other |
2,652 | (2,328 | ) | |||||
Net cash used in investing activities |
(336,350 | ) | (110,717 | ) | ||||
Cash Flows from Financing Activities: |
||||||||
Proceeds from issuance of debt |
33,868 | 31,474 | ||||||
Principal repayment of debt |
(32,558 | ) | (58,181 | ) | ||||
Net increase (decrease) in commercial paper borrowings |
206,000 | (30,000 | ) | |||||
Net (decrease) increase in bank overdrafts |
(1,325 | ) | 425 | |||||
Excess tax benefit of share-based compensation |
9,266 | 9,868 | ||||||
Cash dividends common |
(76,646 | ) | (70,749 | ) | ||||
Shares acquired |
(108,139 | ) | (82,669 | ) | ||||
Common shares issued |
49,445 | 44,384 | ||||||
Net cash provided by (used in) financing activities |
79,911 | (155,448 | ) | |||||
Effects of Exchange Rate Changes on Cash |
(7,111 | ) | 707 | |||||
Net (Decrease) Increase in Cash and Cash Equivalents |
(5,644 | ) | 58,317 | |||||
Cash and cash equivalents at beginning of period |
86,498 | 59,608 | ||||||
Cash and cash equivalents at end of period |
$ | 80,854 | $ | 117,925 | ||||
* | Prior years data have been reclassified to conform to the current years presentation. |
5
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 24, | September 30, | September 24, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Numerator: |
||||||||||||||||
Net income |
$ | 64,533 | $ | 61,091 | $ | 159,988 | $ | 155,577 | ||||||||
Denominator: |
||||||||||||||||
Weighted
average common shares outstanding |
100,775,000 | 99,569,000 | 100,831,000 | 99,763,000 | ||||||||||||
Dilutive effect of: |
||||||||||||||||
Stock-based compensation |
1,084,000 | 1,442,000 | 1,412,000 | 1,413,000 | ||||||||||||
Dilutive shares outstanding |
101,859,000 | 101,011,000 | 102,243,000 | 101,176,000 | ||||||||||||
6
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 24, | September 30, | September 24, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Reported net income per common share: |
||||||||||||||||
Basic |
$ | 0.64 | $ | 0.61 | $ | 1.59 | $ | 1.56 | ||||||||
Diluted |
$ | 0.63 | $ | 0.60 | $ | 1.56 | $ | 1.54 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 24, | September 30, | September 24, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Restructuring |
$ | 2,296 | $ | 1,064 | $ | 12,391 | $ | 5,983 | ||||||||
Asset impairment |
15,105 | | 15,105 | | ||||||||||||
Total |
17,401 | 1,064 | 27,496 | 5,983 | ||||||||||||
Income tax benefit |
(5,835 | ) | (353 | ) | (8,290 | ) | (2,127 | ) | ||||||||
Restructuring / Asset
impairment charges, net
of adjustments (after tax) |
$ | 11,566 | $ | 711 | $ | 19,206 | $ | 3,856 | ||||||||
7
Severance | Asset | |||||||||||||||
2006 Plan | and | Impairment/ | Other | |||||||||||||
Restructuring Charges | Termination | Disposal | Exit | |||||||||||||
Inception to Date | Benefits | of Assets | Costs | Total | ||||||||||||
Tubes and Cores/Paper Segment |
$ | 11,313 | $ | 3,913 | $ | 4,220 | $ | 19,446 | ||||||||
Consumer Packaging Segment |
4,753 | 2,547 | 1,138 | 8,438 | ||||||||||||
Packaging Services Segment |
528 | | | 528 | ||||||||||||
All Other Sonoco |
847 | 261 | 534 | 1,642 | ||||||||||||
Cumulative Restructuring Charges,
net of adjustments |
$ | 17,441 | $ | 6,721 | $ | 5,892 | $ | 30,054 | ||||||||
8
Severance | Asset | |||||||||||||||
2006 Plan | and | Impairment/ | Other | |||||||||||||
Restructuring Charges | Termination | Disposal | Exit | |||||||||||||
Third Quarter | Benefits | of Assets | Costs | Total | ||||||||||||
2007 |
||||||||||||||||
Tubes and Cores/Paper Segment |
$ | 1,398 | $ | (84 | ) | $ | 789 | $ | 2,103 | |||||||
Consumer Packaging Segment |
68 | (50 | ) | 289 | 307 | |||||||||||
Packaging Services Segment |
| | | | ||||||||||||
All Other Sonoco |
| | 48 | 48 | ||||||||||||
Total |
$ | 1,466 | $ | (134 | ) | $ | 1,126 | $ | 2,458 | |||||||
Severance | Asset | |||||||||||||||
2006 Plan | and | Impairment/ | Other | |||||||||||||
Restructuring Charges | Termination | Disposal | Exit | |||||||||||||
Year to Date | Benefits | of Assets | Costs | Total | ||||||||||||
2007 |
||||||||||||||||
Tubes and Cores/Paper Segment |
$ | 2,848 | $ | (707 | ) | $ | 2,090 | $ | 4,231 | |||||||
Consumer Packaging Segment |
3,696 | 2,237 | 983 | 6,916 | ||||||||||||
Packaging Services Segment |
451 | | | 451 | ||||||||||||
All Other Sonoco |
472 | | 486 | 958 | ||||||||||||
Total |
$ | 7,467 | $ | 1,530 | $ | 3,559 | $ | 12,556 | ||||||||
9
Severance | Asset | |||||||||||||||
2006 Plan | and | Impairment/ | Other | |||||||||||||
Accrual Activity | Termination | Disposal | Exit | |||||||||||||
2007 Year to Date | Benefits | of Assets | Costs | Total | ||||||||||||
Liability, December 31, 2006 |
$ | 8,264 | $ | | $ | 1,685 | $ | 9,949 | ||||||||
New charges |
7,878 | 2,519 | 3,534 | 13,931 | ||||||||||||
Cash (payments)/receipts |
(12,791 | ) | 982 | (4,803 | ) | (16,612 | ) | |||||||||
Asset writedown/disposals (noncash) |
| (2,512 | ) | | (2,512 | ) | ||||||||||
Foreign currency translation |
359 | | 68 | 427 | ||||||||||||
Adjustments and disposal of assets |
(411 | ) | (989 | ) | 25 | (1,375 | ) | |||||||||
Liability, September 30, 2007 |
$ | 3,299 | $ | | $ | 509 | $ | 3,808 | ||||||||
Severance | Asset | |||||||||||||||
2003 Plan | and | Impairment/ | Other | |||||||||||||
Restructuring Charges | Termination | Disposal | Exit | |||||||||||||
Inception to Date | Benefits | of Assets | Costs | Total | ||||||||||||
Tubes and Cores/Paper Segment |
$ | 36,724 | $ | 17,048 | $ | 19,103 | $ | 72,875 | ||||||||
Consumer Packaging Segment |
11,195 | 5,084 | 4,730 | 21,009 | ||||||||||||
Packaging Services Segment |
333 | | | 333 | ||||||||||||
All Other Sonoco |
2,999 | 326 | 92 | 3,417 | ||||||||||||
Corporate |
5,094 | | 113 | 5,207 | ||||||||||||
Cumulative Restructuring Charges,
net of adjustments |
$ | 56,345 | $ | 22,458 | $ | 24,038 | $ | 102,841 | ||||||||
10
Severance | Asset | |||||||||||||||
2003 Plan | and | Impairment/ | Other | |||||||||||||
Restructuring Charges | Termination | Disposal | Exit | |||||||||||||
Third Quarter | Benefits | of Assets | Costs | Total | ||||||||||||
2007 |
||||||||||||||||
Tubes and Cores/Paper Segment |
$ | (149 | ) | $ | | $ | 441 | $ | 292 | |||||||
Consumer Packaging Segment |
| | (456 | ) | (456 | ) | ||||||||||
Total |
$ | (149 | ) | $ | | $ | (15 | ) | $ | (164 | ) | |||||
2006 |
||||||||||||||||
Tubes and Cores/Paper Segment |
$ | (138 | ) | $ | | $ | 820 | $ | 682 | |||||||
Consumer Packaging Segment |
182 | 498 | (302 | ) | 378 | |||||||||||
All Other Sonoco |
4 | | | 4 | ||||||||||||
Total |
$ | 48 | $ | 498 | $ | 518 | $ | 1,064 | ||||||||
Severance | Asset | |||||||||||||||
2003 Plan | and | Impairment/ | Other | |||||||||||||
Restructuring Charges | Termination | Disposal | Exit | |||||||||||||
Year to Date | Benefits | of Assets | Costs | Total | ||||||||||||
2007 |
||||||||||||||||
Tubes and Cores/Paper Segment |
$ | (210 | ) | $ | (1,025 | ) | $ | 1,524 | $ | 289 | ||||||
Consumer Packaging Segment |
| | (456 | ) | (456 | ) | ||||||||||
Total |
$ | (210 | ) | $ | (1,025 | ) | $ | 1,068 | $ | (167 | ) | |||||
2006 |
||||||||||||||||
Tubes and Cores/Paper Segment |
$ | 1,273 | $ | 2 | $ | 3,637 | $ | 4,912 | ||||||||
Consumer Packaging Segment |
849 | 498 | (280 | ) | 1,067 | |||||||||||
All Other Sonoco |
4 | | | 4 | ||||||||||||
Total |
$ | 2,126 | $ | 500 | $ | 3,357 | $ | 5,983 | ||||||||
11
Asset | ||||||||||||||||
2003 Plan | Severance and | Impairment/ | Other | |||||||||||||
Accrual Activity | Termination | Disposal | Exit | |||||||||||||
2007 Year to Date | Benefits | of Assets | Costs | Total | ||||||||||||
Liability, December 31, 2006 |
$ | 567 | $ | | $ | 4,112 | $ | 4,679 | ||||||||
New charges |
| | 1,522 | 1,522 | ||||||||||||
Cash (payments)/receipts |
(134 | ) | 2,104 | (2,117 | ) | (147 | ) | |||||||||
Asset writedown/disposals (noncash) |
| (1,079 | ) | | (1,079 | ) | ||||||||||
Foreign currency translation |
16 | | 122 | 138 | ||||||||||||
Adjustments and disposal of assets |
(210 | ) | (1,025 | ) | (454 | ) | (1,689 | ) | ||||||||
Liability, September 30, 2007 |
$ | 239 | $ | | $ | 3,185 | $ | 3,424 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 24, | September 30, | September 24, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Net income |
$ | 64,533 | $ | 61,091 | $ | 159,988 | $ | 155,577 | ||||||||
Other comprehensive income: |
||||||||||||||||
Foreign currency translation
adjustments |
42,206 | 12,820 | 77,797 | 26,692 | ||||||||||||
Changes in defined benefit plans |
(4,717 | ) | | 435 | | |||||||||||
Changes in derivative financial
instruments, net of income tax |
(1,669 | ) | (5,496 | ) | 190 | (13,005 | ) | |||||||||
Comprehensive income |
$ | 100,353 | $ | 68,415 | $ | 238,410 | $ | 169,264 | ||||||||
12
Foreign Currency | Defined | Derivative | Accumulated | |||||||||||||
Translation | Benefit | Financial | Other | |||||||||||||
Adjustments | Plans | Instruments | Comprehensive Loss | |||||||||||||
Balance at December 31, 2006 |
$ | (22,630 | ) | $ | (237,616 | ) | $ | (2,059 | ) | $ | (262,305 | ) | ||||
Year-to-date change |
77,797 | 435 | 190 | 78,422 | ||||||||||||
Balance at September 30, 2007 |
$ | 55,167 | $ | (237,181 | ) | $ | (1,869 | ) | $ | (183,883 | ) | |||||
Tubes and Cores | Consumer | Packaging | ||||||||||||||||||
/Paper | Packaging | Services | All Other | |||||||||||||||||
Segment | Segment | Segment | Sonoco | Total | ||||||||||||||||
Balance as of December 31, 2006 |
$ | 225,957 | $ | 224,657 | $ | 150,973 | $ | 65,701 | $ | 667,288 | ||||||||||
2007 Acquisitions |
| 126,434 | | | 126,434 | |||||||||||||||
Foreign currency translation |
11,758 | 14,873 | 44 | 198 | 26,873 | |||||||||||||||
Other |
| (2,423 | ) | | | (2,423 | ) | |||||||||||||
Adjustments |
254 | (529 | ) | 1 | (20 | ) | (294 | ) | ||||||||||||
Balance as of September 30, 2007 |
$ | 237,969 | $ | 363,012 | $ | 151,018 | $ | 65,879 | $ | 817,878 | ||||||||||
13
September 30, 2007 | December 31, 2006 | |||||||||||||||
Gross | Gross | |||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Patents |
$ | 3,360 | $ | 3,263 | $ | 3,360 | $ | 3,255 | ||||||||
Customer lists |
160,552 | 28,936 | 108,741 | 20,651 | ||||||||||||
Land use rights |
7,086 | 2,954 | 6,855 | 2,797 | ||||||||||||
Supply agreements |
1,000 | 625 | 1,000 | 550 | ||||||||||||
Other |
11,048 | 5,693 | 8,302 | 5,120 | ||||||||||||
Total |
$ | 183,046 | $ | 41,471 | $ | 128,258 | $ | 32,373 | ||||||||
14
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 24, | September 30, | September 24, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Retirement Plans |
||||||||||||||||
Service cost |
$ | 7,298 | $ | 5,990 | $ | 21,725 | $ | 20,878 | ||||||||
Interest cost |
17,316 | 14,734 | 52,050 | 46,810 | ||||||||||||
Expected return on plan assets |
(21,981 | ) | (18,645 | ) | (65,866 | ) | (58,971 | ) | ||||||||
Amortization of net transition
obligation |
58 | 154 | 174 | 457 | ||||||||||||
Other |
12 | | 12 | | ||||||||||||
Amortization of prior service cost |
495 | 374 | 1,461 | 1,180 | ||||||||||||
Amortization of net actuarial loss |
4,913 | 6,373 | 15,440 | 20,449 | ||||||||||||
Net periodic benefit cost |
$ | 8,111 | $ | 8,980 | $ | 24,996 | $ | 30,803 | ||||||||
Retiree Health and Life
Insurance Plans |
||||||||||||||||
Service cost |
$ | 586 | $ | 607 | $ | 1,810 | $ | 1,859 | ||||||||
Interest cost |
1,109 | 988 | 3,577 | 3,718 | ||||||||||||
Expected return on plan assets |
(542 | ) | (554 | ) | (1,584 | ) | (1,690 | ) | ||||||||
Amortization of prior service cost |
(2,427 | ) | (2,602 | ) | (7,279 | ) | (7,117 | ) | ||||||||
Amortization of net actuarial loss |
741 | 1,117 | 3,027 | 4,185 | ||||||||||||
Net periodic benefit (income)cost |
$ | (533 | ) | $ | (444 | ) | $ | (449 | ) | $ | 955 | |||||
15
16
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 24, | September 30, | September 24, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Net Sales: |
||||||||||||||||
Consumer Packaging |
$ | 369,472 | $ | 328,649 | $ | 1,051,178 | $ | 954,488 | ||||||||
Tubes and Cores/Paper |
433,686 | 387,477 | 1,268,300 | 1,112,626 | ||||||||||||
Packaging Services |
132,445 | 122,014 | 377,787 | 325,579 | ||||||||||||
All Other Sonoco |
94,161 | 93,382 | 282,609 | 274,608 | ||||||||||||
Consolidated |
$ | 1,029,764 | $ | 931,522 | $ | 2,979,874 | $ | 2,667,301 | ||||||||
Intersegment Sales: |
||||||||||||||||
Consumer Packaging |
$ | 748 | $ | 612 | $ | 2,375 | $ | 2,718 | ||||||||
Tubes and Cores/Paper |
23,642 | 22,698 | 70,181 | 65,895 | ||||||||||||
Packaging Services |
197 | | 521 | 38 | ||||||||||||
All Other Sonoco |
11,642 | 9,480 | 32,720 | 28,170 | ||||||||||||
Consolidated |
$ | 36,229 | $ | 32,790 | $ | 105,797 | $ | 96,821 | ||||||||
Income Before Income Taxes: |
||||||||||||||||
Operating Profit |
||||||||||||||||
Consumer Packaging |
$ | 23,696 | $ | 27,998 | $ | 75,781 | $ | 80,154 | ||||||||
Tubes and Cores/Paper1 |
42,339 | 42,817 | 106,036 | 107,557 | ||||||||||||
Packaging Services |
10,924 | 9,424 | 33,869 | 27,122 | ||||||||||||
All Other Sonoco |
13,439 | 12,552 | 40,441 | 38,160 | ||||||||||||
Restructuring / Asset impairment
charges |
(17,401 | ) | (1,064 | ) | (27,496 | ) | (5,983 | ) | ||||||||
Interest, net |
(14,054 | ) | (10,741 | ) | (38,302 | ) | (34,111 | ) | ||||||||
Consolidated |
$ | 58,943 | $ | 80,986 | $ | 190,329 | $ | 212,899 | ||||||||
1 | Operating profits for the three- and nine-month periods ended September 30, 2007, reflect an environmental remediation charge of $1,100 and $21,100, respectively. See Note 12 to the Companys Condensed Consolidated Financial Statements for details. |
17
18
19
/s/PricewaterhouseCoopers LLP | ||||||
Charlotte, North Carolina | ||||||
October 30, 2007 |
20
| Availability and pricing of raw materials; | ||
| Success of new product development and introduction; | ||
| Ability to maintain or increase productivity levels and contain or reduce costs; | ||
| International, national and local economic and market conditions; | ||
| Fluctuations in obligations and earnings of pension and postretirement benefit plans; | ||
| Ability to maintain market share; | ||
| Pricing pressures and demand for products; | ||
| Continued strength of our paperboard-based tubes and cores and composite can operations; | ||
| Anticipated results of restructuring activities; | ||
| Resolution of income tax contingencies; | ||
| Ability to successfully integrate newly acquired businesses into the Companys operations; | ||
| Currency stability and the rate of growth in foreign markets; | ||
| Use of financial instruments to hedge foreign currency, interest rate and commodity price risk; | ||
| Actions of government agencies and changes in laws and regulations affecting the Company; | ||
| Anticipated costs of environmental remediation actions; | ||
| Loss of consumer confidence; and | ||
| Economic disruptions resulting from terrorist activities. |
21
($ in millions) | ||||
Acquisitions/Divestitures |
$ | 53 | ||
Selling Prices |
19 | |||
Currency Exchange Rates |
28 | |||
Volume |
(1 | ) | ||
Total Sales Increase |
$ | 99 | ||
22
Three Months Ended | ||||||||
September 30, | September 24, | |||||||
2007 | 2006 | |||||||
Net Sales: |
||||||||
Consumer Packaging |
$ | 369,472 | $ | 328,649 | ||||
Tubes and Cores/Paper |
433,686 | 387,477 | ||||||
Packaging Services |
132,445 | 122,014 | ||||||
All Other Sonoco |
94,161 | 93,382 | ||||||
Consolidated |
$ | 1,029,764 | $ | 931,522 | ||||
23
Three Months Ended | ||||||||
September 30, | September 24, | |||||||
2007 | 2006 | |||||||
Operating Profit |
||||||||
Consumer Packaging |
$ | 23,696 | $ | 27,998 | ||||
Tubes and Cores/Paper |
42,339 | 42,817 | ||||||
Packaging Services |
10,924 | 9,424 | ||||||
All Other Sonoco |
13,439 | 12,552 | ||||||
Restructuring/Asset Impairment Charges |
(17,401 | ) | (1,064 | ) | ||||
Interest, net |
(14,054 | ) | (10,741 | ) | ||||
Income before income taxes |
$ | 58,943 | $ | 80,986 | ||||
24
25
($ in millions) | ||||
Volume |
$ | 65 | ||
Acquisitions/Divestitures |
123 | |||
Selling Prices |
62 | |||
Currency Exchange Rates |
63 | |||
Total Sales Increase |
$ | 313 | ||
26
Nine Months Ended | ||||||||
September 30, | September 24, | |||||||
2007 | 2006 | |||||||
Net Sales: |
||||||||
Consumer Packaging |
$ | 1,051,178 | $ | 954,488 | ||||
Tubes and Cores/Paper |
1,268,300 | 1,112,626 | ||||||
Packaging Services |
377,787 | 325,579 | ||||||
All Other Sonoco |
282,609 | 274,608 | ||||||
Consolidated |
$ | 2,979,874 | $ | 2,667,301 | ||||
Nine Months Ended | ||||||||
September 30, | September 24, | |||||||
2007 | 2006 | |||||||
Operating Profit |
||||||||
Consumer Packaging |
$ | 75,781 | $ | 80,154 | ||||
Tubes and Cores/Paper |
106,036 | 107,557 | ||||||
Packaging Services |
33,869 | 27,122 | ||||||
All Other Sonoco |
40,441 | 38,160 | ||||||
Restructuring/Asset
Impairment Charges |
(27,496 | ) | (5,983 | ) | ||||
Interest, net |
(38,302 | ) | (34,111 | ) | ||||
Income before income taxes: |
$ | 190,329 | $ | 212,899 | ||||
27
28
29
(c) Total Number of | (d) Maximum Number | |||||||||||||||
(a) Total | Shares Purchased as | of Shares that May | ||||||||||||||
Number of | Part of Publicly | Yet be Purchased | ||||||||||||||
Shares | (b) Average Price | Announced Plans or | under the Plans or | |||||||||||||
Period | Purchased1 | Paid per Share | Programs2 | Programs2,3 | ||||||||||||
7/02/07 8/05/07 |
471 | $ | 43.75 | | 5,000,000 | |||||||||||
8/06/07 9/02/07 |
1,500,000 | $ | 34.27 | 1,500,000 | 3,500,000 | |||||||||||
9/03/07 9/30/07 |
| | | 3,500,000 | ||||||||||||
Total |
1,500,471 | $ | 34.28 | 1,500,000 | 3,500,000 | |||||||||||
1 | The shares purchased include 471 shares withheld to cover the tax withholding obligations in association with the exercise of stock appreciation rights. These shares were not repurchased as part of a publicly announced plan or program. | |
2 | On April 19, 2006, the Companys Board of Directors rescinded all then existing programs in conjunction with its approval of a new program which authorized the repurchase of up to 5.0 million shares of the Companys common stock. This new repurchase program does not have a specific expiration date. On August 27, 2007, the Company completed the repurchase of 1.5 million shares of its common stock; accordingly, 3.5 million shares remain available for repurchase. | |
3 | On October 15, 2007, the Companys Board of Directors authorized the reinstatement of 1.5 million shares to the remaining authorized amount so that a total of 5 million shares were authorized and available for purchase as of that date. |
Exhibit 10-1
|
Sonoco Products Company 1991 Key Employee Stock Plan, as amended on July 18, 2007 | |
Exhibit 10-2
|
Sonoco Products Company 1996 Non-employee Directors Stock Plan, as amended on July 18, 2007 | |
Exhibit 10-3
|
Deferred Compensation Plan for Corporate Officers of Sonoco Products Company, as amended on July 18, 2007 | |
Exhibit 15
|
Letter re: unaudited interim financial information | |
Exhibit 31
|
Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(a) | |
Exhibit 32
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(b) |
30
SONOCO PRODUCTS COMPANY (Registrant) |
||||
Date: October 30, 2007 | By: | /s/ Charles J. Hupfer | ||
Charles J. Hupfer | ||||
Senior Vice President and Chief Financial Officer (principal financial officer) | ||||
By: | /s/ Barry L. Saunders | |||
Barry L. Saunders | ||||
Staff Vice President and Corporate Controller (principal accounting officer) |
31
Exhibit | ||
Number | Description | |
10-1
|
Sonoco Products Company 1991 Key Employee Stock Plan, as amended on July 18, 2007 | |
10-2
|
Sonoco Products Company 1996 Non-employee Directors Stock Plan, as amended on July 18, 2007 | |
10-3
|
Deferred Compensation Plan for Corporate Officers of Sonoco Products Company, as amended on July 18, 2007 | |
15
|
Letter re: unaudited interim financial information | |
31
|
Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(a) | |
32
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(b) |
32
1. | Purpose. The Sonoco Products Company 1991 Key Employee Stock Plan (the Plan) has been adopted by the Board of Directors (the Board) to encourage and create significant ownership of the Common Stock (Common Stock or Shares) of Sonoco Products Company (the Company) by employees. Additional purposes of the Plan include generating a meaningful incentive to participants to make substantial contributions to the Companys future success, enhancing the Companys ability to attract and retain persons who will make such contributions, and ensuring that the Company can provide competitive compensation opportunities for its key personnel. By meeting these objectives, the Plan is intended to benefit the shareholders of the Company. |
2. | Term. The Plan shall be effective as of February 6, 1991. The amendments to the Plan shall be effective when approved by shareholders and until terminated pursuant to Section 14.7. |
1
3. | Common Shares Available for Issuance. Subject to adjustments contemplated by Section 5, 5,000,000 shares of Common Stock of the Company became available for issuance under the Plan, on February 6, 1991. Beginning on January 1, 1995, and ending on January 1, 2005, the number of shares available for issuance under the Plan shall be increased on each January 1 by an amount equal to 1.2% of the number of shares of common stock issued on such day. Furthermore, the Committee may designate for issuance under the Plan any shares of common stock that are repurchased by the Company after April 19, 1995, and before April 19, 2005, (the Repurchased Shares) on the open market or in private transactions in which the Company paid fair market value, so long as the aggregate price paid for the Repurchased Shares does not exceed the cumulative amount received in cash by the Company after April 19, 1995, for the exercise of options granted under the Plan or the 1983 Key Employee Stock Option Plan (the Prior Plan). Shares available for issuance under the plan, which are not issued in a given year, will be carried forward and continue to be available in the succeeding year. Any shares issued under the Plan may be either authorized but unissued shares, or previously-issued shares reacquired by the Company. |
4. | Share Usage. If grants made under the Plan expire or are cancelled without the issuance of shares, the shares of stock covered by such grants shall remain available for issuance under the Plan. Further, any shares which are exchanged by a participant as full or partial payment to the Company of the purchase price of shares being acquired through the exercise of a stock option granted under the Plan or the Prior Plan shall be added to the aggregate number of shares available for issuance for grants other than incentive stock option grants. In instances |
2
where a stock appreciation right (SAR) or a stock grant is settled in cash or any form other than shares, then the shares covered by these settlements shall not be deemed issued and shall remain available for issuance under the Plan. The payment in shares of dividends in conjunction with outstanding grants shall not be counted against the shares available for issuance. |
5. | Adjustments and Reorganizations. The Board shall make such adjustments as it deems appropriate to meet the intent of the Plan in the event of changes that impact the Companys share price or share status, provided that any such actions are consistently and equitably applicable to all affected participants. |
a. | In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off or other distribution (other than normal cash dividends) of Company assets to shareholders, or any other change affecting shares, such proportionate adjustments, if any, are appropriate to reflect such change shall be made with respect to (i) aggregate number of shares that may be issued under the Plan; (ii) each outstanding grant made under the Plan; (iii) the price per share for any outstanding stock options, SARs and other rights granted under the Plan; and the limitations on share usage and allocation set forth in Section 9. In addition, any shares issued or settlement of grants by the Company through the assumption or substitution of outstanding grants or grant commitments from an acquired company or other entity shall not be counted against the limitations set forth in Section 3 and Section 9. |
3
b. | In the event that the Company is not the surviving company of a merger, consolidation or amalgamation with another company or in the event of a liquidation or reorganization of the Company, and in the absence of the surviving corporations assumption of outstanding grants made under the Plan, the Board shall provide for appropriate adjustments and settlements of such grants either at the time of grant or at a subsequent date. |
6. | Plan Administration. |
6.1 | The Committee. A Committee (the Committee) appointed by the Board shall be responsible for administering the Plan. The Committee shall be comprised of three or more members of the Board who qualify to administer the Plan as contemplated by Rule 16b-3 under the Securities Exchange Act of 1934 (the 1934 Act), or any successor rule. | ||
6.2 | Powers of the Committee. Subject only to the express restrictions and limitations otherwise set forth in the Plan, the Committee shall have sole, absolute and full authority and power to: |
(a) | Interpret the Plan and undertake such actions and make such determinations and decisions as it deems necessary and appropriate to carry out the Plan intent; | ||
(b) | Select individuals to receive grants; |
4
(c) | Determine the amount of shares to be covered by each grant; | ||
(d) | Decide the type grant or grants to be made to each participant and the terms and conditions applicable to each such grant; | ||
(e) | Award grants to individuals who are foreign nationals or who are employed outside the United States or both, on such terms and conditions (which may be different than specified by the Plan) which it deems are necessary to assure the viability of such grants in meeting the purposes of the Plan; | ||
(f) | Enter into grant agreements evidencing grants made under the Plan and their respective terms and conditions; | ||
(g) | Establish, amend and repeal rules and regulations relating to the Plan; and | ||
(h) | Amend the Plan to the extent permitted by Section 14.6. |
6.3 | Delegation of Authority. The Committee may designate persons other than members of the Committee or the Board to carry-out its responsibilities subject to such limitations, restrictions and conditions as it may prescribe, except that the Committee may not delegate its authority with regard to the awarding of grants to persons subject to Section 16 of the 1934 Act. |
5
Further, the Committee may not delegate its authority if such delegation would cause the Plan not to comply with the requirements of Rule 16b-3 or any successor rule under the 1934 Act. | |||
6.4 | Dividends and Dividend Equivalents. The Committee may provide that grants awarded under the Plan earn dividends or dividend equivalents. Such dividend equivalents may be paid currently or may be credited to a participants account. In addition, dividends paid on outstanding grants or issued shares may be credited to a participants account, including additional shares or share equivalents, rather than paid currently. Any crediting of dividends or dividend equivalents may be subject to such restrictions and conditions as the Committee may establish, including reinvestment in additional shares or share equivalents. | ||
6.5 | Deferrals and Settlements. The Committee may require or permit participants to elect to defer the issuance of shares or the settlement of grants in cash under such rules and procedures as it may establish under the Plan. It also may provide that deferred settlements include the payment or crediting of interest on the deferral amounts or the payment or crediting of dividend equivalents on deferred settlements denominated in shares. The Committee also may require or permit grants to be settled in the form of other grant types. | ||
6.6 | Documentation of Grants. Grants under the Plan shall be evidenced by written agreements or such other appropriate documentation as the |
6
Committee shall prescribe. The Committee need not require the execution of any instrument or acknowledgement of notice of a grant under the Plan, in which case acceptance of such a grant by the respective participant will constitute agreement to the terms of the grant. |
7. | Plan Eligibility. Any employee of the Company (including any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Committee) shall be eligible to be designated a participant under the Plan. |
8. | Grant Types. Awards under the Plan may consist of single, combination, tandem or replacement grants of the following types. |
8.1 | Stock Options. A stock option shall confer on a participant the right to purchase a specified number of shares from the Company subject to the terms and conditions of the stock option grant. A stock option may be in the form of an incentive stock option or any other option type. Any incentive stock option grant shall comply with the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the Code), and accordingly, the aggregate fair market value at the time of grant of the shares covered by incentive stock option grants exercisable by any one optionee in any calendar year shall not exceed $100,000 (or such other limit as may be required by the Code). The recipient of a stock option grant shall pay for the shares at the time of exercise in cash or such other form as the Committee may approve, including the transfer of shares (whether actual or |
7
constructive), valued at their fair market value on the date of exercise, or in a combination of payment forms. | |||
8.2 | Stock Appreciation Rights. A SAR grant shall confer on a participant the right to receive in shares, cash or a combination of both, up to the positive difference, if any, between the fair market value of a designated number of shares on the date the SARs are exercised and the designated price of the SARs contained in the terms and conditions of the grant. Shares issued in settlement of the exercise of SARs shall be valued at their fair market value on the date of the exercise of the SARs. | ||
8.3 | Stock Grants. A stock grant shall confer on a participant the right to receive a specified number of shares, cash equal in value to a designated number of shares or a combination of both, subject to the terms and conditions of the grant, which may include forfeitability contingencies based on continued employment with the Company or the meeting of performance criteria or both. The performance criteria that may be used by the Committee in awarding contingent stock grants will consist of total shareholders return, earnings growth, revenue growth, and/or profitability measured by return ratios. The Committee may select one criterion or multiple criteria for measuring performance, and the measurement may be based on absolute Company or business unit performance or based on comparative performance with other companies. A stock grant may be received by a participant as part of or in lieu of the participants normal compensation or as part of or in lieu of a payment under another incentive compensation or |
8
employee benefit plan of the Company, subject to such rules and conditions as the Committee may establish for such grants. |
9. | Grant Limits. Subject to adjustments contemplated by Section 5, the following limitations on the usage of shares of Common Stock shall be effective for grants made after April 19, 1995: |
9.1 | Stock Options and SARs. Commencing with 1995, no individual may receive a stock option or SAR, or combination of both, in any one calendar year that covers more than 200,000 shares plus unused shares carried forward for up to five years commencing in 1995. The aggregate number of shares that may be covered by incentive stock options granted under the Plan cannot exceed 5,000,000 shares. |
9.2 | Stock Grants. Commencing with 1995, no individual may receive a stock grant in any one calendar year that covers more than 100,000 shares plus unused shares carried forward for up to five years commencing in 1995. The aggregate number of shares that may be covered by stock grants made in any one calendar year shall not exceed 0.4% of the number of issued shares of Common Stock as of the first day of such calendar year commencing in 1995, plus any unused shares which were available for stock grants in any prior years commencing in 1995. |
9
10. | Transferability and Exercisability |
10.1 | Transferability. Any grant under the Plan will be non-transferable and, accordingly, shall not be assignable, alienable, salable or otherwise transferable by the participant other than as provided in Section 10.2 or: |
(a) | By will or the laws of descent and distribution; | ||
(b) | Pursuant to a qualified domestic relations order, to the extent permitted by the Committee, either at time of grant or subsequently; and | ||
(c) | By gift or other transfer to, either (i) a trust or estate in which the participant or such persons spouse, or other relative has a substantial interest, or (ii) the participants spouse or other relative, to the extent permitted by the Committee, either at time of grant or subsequently, provided further that any such transfer by a person subject to Section 16 of the 1934 Act, the Committee may require the shares covered by such grant to continue to be deemed beneficially owned. |
10.2 | Third Party Exercises. In the event that a participant terminates employment with the Company to assume a position with a governmental, charitable, educational or similar non-profit institution, the Committee may subsequently authorize a third party, including but not limited to a blind trust, to act on behalf of and for the benefit of the respective participant with respect to any outstanding grants held by the participant subsequent to |
10
such termination of employment. If permitted by the Committee, a participant may designate a beneficiary or beneficiaries to exercise the rights of the participant and receive any distributions under the Plan upon the death of the participant. |
11. | Grant Terms and Internal Revenue Code Section 409A |
11.1 | Grant Terms and Conditions. The Committee shall determine the provisions and duration of grants made under the Plan, including the purchase prices for all stock options, the established prices for all SARs, the consideration, if any, to be required from participants for all other grants and the conditions under which a participant will retain rights in the event of the participants termination of employment while holding outstanding grants made under the Plan. However, any stock option or SAR may not have an exercise or designated price of less than 100% of the fair market value of the covered shares on the date of grant, except that, in the case of a stock option or SAR granted retroactively in tandem with or as a substitution for another grant, the exercise or designated price may be the same as the exercise or designated price of such other grant. | ||
11.2 | Section 409A. If any award made under this Plan provides for deferred compensation subject to Internal Revenue Code Section 409A, the terms of the award shall be set forth in writing in a manner that complies with the requirements of Internal Revenue Code Section 409A and the regulations thereto. |
11
12. | Tax Withholding. The Company shall have the right to deduct from any settlement of a grant made under the Plan, including the delivery or vesting of shares, a sufficient amount to cover withholding of any federal, state or local taxes required by law or to take such other action as may be necessary to satisfy any such withholding obligations. The Committee may permit shares to be used to satisfy required tax withholding and such shares shall be valued at their fair market value as of the settlement date of the applicable grant. |
13. | Other Company Benefit and Compensation Programs. Unless otherwise determined by the Committee, settlements of grants received by participants under the Plan shall not be deemed a part of a participants regular, recurring compensation for purposes of calculating payments or benefits from any Company benefit or severance program (or severance pay law of any country). The above notwithstanding, the Company may adopt other compensation programs, plans or arrangements as it deems appropriate or necessary. | |
14. | General. The following provisions are applicable to the Plan generally: |
14.1 | Future Rights. No person shall have any claim or rights to be awarded a grant under the Plan, and no participant shall have any rights under the Plan to be retained in the employ of the Company. |
14.2 | Fair Market Value. The term fair market value as used in the Plan means the closing price of a share of Common Stock on the date of the applicable |
12
transaction or such other appropriate valuation method as the Committee may determine. |
14.3 | No Fractional Shares. No fractional shares shall be issued under the Plan and cash shall be paid in lieu of any fractional shares in settlement of grants awarded under the Plan. | ||
14.4 | Unfunded Plan. Unless otherwise determined by the Committee, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company and any participant or other person. To the extent any person holds any rights by virtue of a grant awarded under the Plan, such right (unless otherwise determined by the Committee) shall be no greater than the right of an unsecured general creditor of the Company. | ||
14.5 | Successors and Assigns. The Plan shall be binding on all successors and assigns of a participant, including, without limitation, the estate of such participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the participants creditors. | ||
14.6 | Plan Amendment. The Committee may amend the Plan as it deems necessary or appropriate to better achieve the purposes of the Plan, except |
13
that no amendment without the approval of the Companys shareholders shall be made which would: |
(a) | Subject to adjustments contemplated by Section 5, increase the total number of shares available for issuance under Section 3 or the share limits set forth in Section 9; and | ||
(b) | Reduce the minimum exercise or designated price for any stock options or SARs granted under the Plan. |
14.7 | Plan Termination. The Board may terminate the Plan at any time. However, if so terminated, then-existing previously-awarded grants shall remain outstanding and in effect in accordance with their applicable terms and conditions. | ||
14.8 | Governing Law. The validity, construction and effect of the Plan and any actions taken or relating to the Plan shall be determined in accordance with the laws of the State of South Carolina and applicable federal law. |
14
1. | Approval. The Plan was ratified by Sonoco shareholders on April 17, 1991. | |
2. | ERISA. This Plan is not subject to the Employee Retirement Income Security Act of 1974. | |
3. | Contact. For additional information contact: |
4. | Plan Administrators. The term of office of plan administrators is one year. Plan administrators are appointed to or removed from office by the Board of Directors. |
5. | Frequency of Reports. A report detailing terms, conditions, award amounts, administrative procedures and tax treatments is distributed to participants for each new grant. An additional report detailing the status of prior grants (grants outstanding, exercised, canceled, vesting provisions, term, etc.) is distributed on an annual basis and available upon request from Lana Roper. |
15
6. | Availability of Pertinent Information. Documents incorporated by reference in Item 3 Part II of the registration statement are available without charge, and are incorporated by reference in the Plan document. Other documents required to be delivered to employees pursuant to Securities Act Rule 428b are also available without charge. |
7. | Tax Information. Under the current federal tax law, the granting of a stock option does not produce income to the participant or a tax deduction for the Company. Upon exercise of a non-qualified stock option, the excess of the fair market value of the shares over the option exercise price is taxable to the participant as ordinary income and deductible by the Company. The cost basis of the shares acquired is the fair market value at the time of exercise. Upon exercise of an incentive stock option, the excess of the fair market value of the stock acquired over the option price will be an item of tax preference. If no disposition of the stock is made within two years from the date of granting of the incentive stock option or within one year after the transfer of the stock to the participant, the participant does not realize income as a result of exercising the incentive stock option; the tax basis of the stock received is the option price; any gain or loss realized on the ultimate sale of the stock is long-term capital gain or loss and the Company is not entitled to any tax deduction by reason of the exercise. If the participant disposes of the stock within the two-year or one-year periods referred to above, the excess of the fair market value of the stock at the time of exercise (or the proceeds of disposition, if less) over the option price will at that time be taxable to the participant as ordinary income and deductible by the Company. For determining capital gain or loss on |
16
such a disposition, the tax basis of the stock will be the fair market value at the time of exercise. |
COMPANY: SONOCO PRODUCTS COMPANY |
||||||||
(CORPORATE SEAL) | ||||||||
By: |
/s/ T. C. Coxe, III | |||||||
T. C. Coxe, III | Attest: | /s/ Lana Roper | ||||||
Title: Senior Executive Vice President | Lana Roper | |||||||
Title: | Assistant Secretary |
17
1. | Purpose. The Sonoco Products Company Non-Employee Directors Stock Plan (the Plan) is intended to enhance the Companys ability to attract and retain talented individuals to serve as members of the Board and to promote a greater alignment of interests between non-employee members of the Board and the shareholders of the Company. |
2. | Definitions. As used in the Plan, the following terms have the respective meanings: |
a. | Annual Stock Option means the Stock Option granted to each Eligible Director pursuant to Section 7. | ||
b. | Board means the Companys Board of Directors. | ||
c. | Common Stock means the Companys no par value Common Stock. | ||
d. | Company means Sonoco Products Company, a corporation established under the laws of the State of South Carolina. | ||
e. | Deferred Stock Unit means a bookkeeping entry, equivalent in value to a share of Common Stock, credited in accordance with an election made by an Eligible Director pursuant to Section 8. | ||
f. | Election Date means the date on which an Eligible Director files an election with the Secretary of the Company pursuant to Section 8(a). | ||
g. | Eligible Director means any director who is not an employee of the Company or any subsidiary or affiliate of the Company on the applicable Grant Date for purposes of Section 7 and on the applicable Election Date for purposes of Section 8. | ||
h. | Exercise Price shall mean (a) the Fair Market Value for a Stock Option granted pursuant to Section 7 of the Plan. | ||
i. | Fair Market Value means the closing price of a share of Common Stock as reported on the composite tape for securities listed on the New York Stock Exchange (the Exchange) for the specific Grant Date or other date in question. If no sales of Common Stock were made on the Exchange on that date, the closing price of a share of Common Stock as reported on said composite tape for the preceding day on which sales of Common Stock were made on the Exchange shall be used. | ||
j. | Grant Date means the date specified in Section 7 and Section 8(b) as shall be applicable. | ||
k. | Plan means this Stock Plan for Non-Employee Directors. | ||
l. | Stock Option means a right granted pursuant to Section 7 of the Plan to an Eligible Director to purchase Common Stock at the applicable Exercise Price. | ||
m. | 1934 Act means the Securities Exchange Act of 1934. |
1
3. | Effective Date. Subject to the approval by the shareholders of the Company prior to December 31, 1996, the Plan shall be effective as of February 7, 1996. |
4. | Common Shares Available for Issuance. Subject to any adjustments contemplated by Section 5, Beginning April 17, 1996, and ending April 17, 2006, for each calendar year the Plan is in effect 125,000 shares of common stock shall be cumulatively available for Stock Options and the settlement of Deferred Stock Units. Thus, any shares which are not issued in the year they become available, shall be available in subsequent years for the settlement of Stock Options and Deferred Stock Units. In addition, any shares of Common Stock which may be exchanged, either actually or by attestation, as full or partial payment to the Company upon the exercise of a Stock Option, shall be available for future awards under the Plan. If a Stock Option expires without being exercised, the shares of Common Stock covered by such option shall remain available for issuance under the Plan. If a Stock Option or Deferred Stock Unit is settled in cash or in any form other than shares, then the shares covered by these settlements shall not be deemed issued and shall remain available for issuance under the Plan. The crediting of dividend equivalent in conjunction with outstanding Deferred Stock Units shall not be counted against the shares available for issuance. Any shares issued under the Plan may be either authorized but unissued shares, or previously-issued shares reacquired by the Company. |
5. | Adjustments and Reorganizations. The Board may make such adjustments as it deems appropriate to meet the intent of the Plan in the event of changes that impact the Companys share price or share status, provided that any such actions are consistently and equitably applied to all affected Eligible Directors (and are not inconsistent with adjustments made to stock options and other stock-based awards held by employees of the Company). | |
Accordingly, in the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off or other distribution (other than normal cash dividends) of Company assets to shareholders, or any other change affecting shares, such proportionate adjustments, if any, as the Board in its discretion may deem appropriate to reflect such change, shall be made with respect to |
(i) | the aggregate number of shares that may be issued under the Plan; | ||
(ii) | the number of shares covered by each outstanding award made under the Plan; | ||
(iii) | the Exercise Price for each outstanding Stock Option, provided such adjustment does not result in the option becoming deferred compensation under Section 409A; and | ||
(iv) | the limit on the number of shares that may be covered by each annual stock option grant set forth in Section 7. |
6. | Plan Operation. The Plan is intended to permit Eligible Directors to qualify as disinterested persons under Rule 16b-3 promulgated by the Securities and Exchange Commission under the 1934 Act. Accordingly, in many respects the Plan is self-governing and requires no discretionary action by the Board except as contemplated by the language herein. However, should any questions of interpretation arise, they shall be resolved by the Board or such committee of the Board as may be designated from time to time. |
2
a. | Grants to be Made at the First Regularly Scheduled Meeting of the Board. Commencing with calendar year 1996, at the first regularly scheduled Board meeting of each calendar year the Plan is in effect, each Eligible Director will receive an Annual Stock Option to purchase 2,000 shares of Common Stock or such higher number as may be established pursuant to Section 17. The Exercise Price of each such option shall be the Fair Market Value on the Grant Date, and each such option shall have a ten-year term. | ||
b. | Grants to be Made Subsequent to the First Regularly Scheduled Meeting of the Board. A person who becomes an Eligible Director subsequent to The Boards initial regularly scheduled meeting of a calendar year during which the Plan is in effect shall receive an Annual Stock Option grant on the date such person becomes an Eligible Director. The number of shares covered by the annual Stock Option granted to such individual shall be the product of multiplying |
(i) | the number of shares to be covered by the annual Stock Option grant received by each Eligible Director for such calendar year pursuant to subsection (a) above by | ||
(ii) | (A) 100% if the person becomes an Eligible Director during the first calendar quarter, or |
(B) | 75% if the person becomes an Eligible Director during the second calendar quarter, or | ||
(C) | 50% if the person becomes an Eligible Director during the third calendar quarter, or | ||
(D) | 25% if the person becomes an Eligible Director during the fourth calendar quarter. If such calculation results in a fractional share, the number of shares shall be increased to the next whole number. |
8. | Deferred Stock Units in lieu of Retainers and Meeting Fees. Each Eligible Director may elect to take a portion or all of his or her annual retainer and committee and meeting fees in the form of Deferred Stock Units, provided that the Board has determined to permit such form of deferred payment to be available for such an election. However, in no event may the portion of the Eligible Directors annual compensation affected by such an election be less than 25%. |
a. | Method of Electing. In order to elect such form of deferred payment, the Eligible Director must complete and deliver to the Secretary of the Company a written election designating the portion of his or her compensation that is to be deferred and form of payment. Such an election to defer shall be made annually prior to the calendar year in which it is to be effective. Any such election shall only be effective to the extent that there are sufficient shares of Common Stock available under the Plan at the time the election is made pursuant to Section 4. |
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b. | Deferred Stock Units substituted for Compensation. If an Eligible Director elects to receive compensation in the form of Deferred Stock Units, such individual will have Deferred Stock Units credited to his or her account on the first business day of each calendar quarter during which his or her election is effective. The number of Deferred Stock Units covered by each such crediting shall be determined by the following formula: |
Number of |
= | Amount of Compensation to be Deferred | |||
Deferred Stock Units
|
Fair Market Value |
c. | Form of Payment Election. Subject to limitations as the Board may impose, a Director electing hereunder to defer compensation earned after 2004 into Deferred Stock Units shall also elect at the same time as his or her deferral election a fixed period of time commencing in the January following his or her separation from service with the company over which the elected amount deferred shall be paid to in substantially equal annual installments and a fixed period (which may be a different period) over which the unpaid portion of the elected amount deferred shall be paid to a Beneficiary or estate in annual installments in the event of the Directors death. | ||
d. | Any election to defer compensation that is earned and vested after December 31, 2004, and any form of payment election related to such compensation shall be irrevocable and may not be changed or modified thereafter by a Director, his or her beneficiary, his or her estate or the Company. Notwithstanding anything in this Plan to the contrary, a Director may make or change his or her form of payment election described in Section 8(c) above at any time on or before December 31, 2007. |
9. | Option Exercisability and Restoration. A Stock Option shall not be exercisable until the later of 12 months following its Grant Date, or 12 months following the date that the Plan is approved by the shareholders. The following terms and conditions shall apply if applicable: |
a. | Participants Death. In the event of the optionees death during the final year of the term of an outstanding Stock Option, such option shall remain exercisable for one full year after the participants death. | ||
b. | Exercise Payment. A Stock Option, or portion thereof, may be exercised by written notice of exercise delivered to the Secretary of the Company, accompanied by payment of the aggregate Exercise Price. Such payments may be made in cash, personal check or with Common Stock (either actually or by attestation) already owned by the individual valued at the Fair Market Value on the date of exercise, or a combination of such payment methods. The Board, however, may deny the exercise of Stock Options during a period of time that it deems necessary to prevent any possible violation of federal securities or any other laws. As soon as practicable after notice of exercise and receipt of full payment for shares of Common Stock being acquired, the Company shall deliver a certificate to the individual representing the Common Stock purchased through the Stock Option. | ||
c. | Restoration Option Right. Commencing in 1998, each Stock Option granted pursuant to the Plan will contain a restoration right whereby, if the optionee, who is an Eligible Director on the date of exercise, exercises the option by tendering, either actually or by attestation, previously acquired shares of Common Stock, such individual will receive a Stock Option covering the number of shares tendered with the term equal to the remaining term of the original Stock Option and with a per share Exercise Price equal to the Fair Market Value as of the date of exercise of the original |
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d. | Discretion to approve Restoration Option Right. The Board of Directors may, in its discretion, elect to delete Restoration Option Rights from the provisions of any Director Option grants pursuant to this section 9. |
10. | Termination of Board Service. Upon separation of service from the Board by an individual holding awards granted under the Plan, the following conditions shall apply: |
a. | Stock Options. Each Stock Option shall continue to remain outstanding for the duration of its term, subject to the extension of such term in the event of an optionees death while holding the option as provided in Section 9(a). | ||
b. | Deferred Stock Units. Unless the Eligible Director has made a form of payment election under Section 8(c) or Section 8(d) above (or with respect to amounts deferred on or before December 31, 2004, elected, prior to termination of Board service, to receive payment in fifteen or fewer annual installments commencing in the January following the individuals termination of Board service), he or she will receive a lump sum payment equal to the aggregate Fair Market Value of the Deferred Stock Units credited to his or her account as of such date. This payment may be in the form of shares of Common Stock equal in number to the amount of Deferred Stock Units credited to the Eligible Directors account. Installment payments may similarly be made in shares of Common Stock. However, the Board may determine to settle a portion of or all of an award payment in cash based on the Fair Market Value at time of payment. |
11. | No Fractional Shares. No fractional shares shall be issued under the Plan and cash shall be paid based on the Fair Market Value at time of payment in lieu of any fractional shares in settlement of Deferred Stock Units granted under the Plan pursuant to Section 8. |
12. | Transferability of Awards. Stock Options and Deferred Stock Units shall not be transferable or assignable other than |
a. | by will or the laws of descent and distribution; | ||
b. | pursuant to a qualified domestic relation order; or | ||
c. | to the extent permitted by Rule 16b-3 under the 1934 Act as then applicable to the Companys employee benefits plans, by gift or other transfer to either |
(i) | any trust or estate in which the original award recipient or such persons spouse or other immediate relative has a substantial beneficial interest or | ||
(ii) | a spouse or other immediate relative, provided that such a transfer would continue to require such awards to be disclosed pursuant to Item 403 of Regulation S-K under the Securities Act of 1933, as amended from time to time. |
13. | Award Documentation. Each award granted under the Plan shall be evidenced by written documentation which shall contain the terms and conditions governing such award. Directors need not execute any instrument or acknowledgment of notice of a grant under the Plan, in which case acceptance of such an award by the respective participant will constitute agreement to the terms of the award. |
14. | No Right to Service. Neither participation in the Plan nor any action under the Plan shall be construed to giving any Eligible Director a right to be retained in the service of the Company. |
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15. | Unfunded Plan. Unless otherwise determined the Board, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company or any participant or other individual. To the extent any individual holds any rights by virtue of a grant awarded under the Plan, such right (unless otherwise determined by the Board) shall be no greater than the right of an unsecured general creditor of the Company. |
16. | Successors and Assigns. The Plan shall be binding on all successors and assigns of a participant, including without limitation, the estate of such participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the participants creditors. |
17. | Plan Amendment. The Board may amend the Plan as it deems necessary or appropriate to better achieve the purposes of the Plan, except that no amendment without the approval of the Companys shareholders shall be made which would: |
(i) | Accelerate the payout of benefits under the plan. | ||
(ii) | Subject to adjustments contemplated by Section 5, increase with the total number of shares available for issuance under Section 4 or the individual Annual Stock Option limit set forth in Section 7, except that such individual limit may be increased to up to 10,000 shares of Common Stock if the Board has determined that such an amendment would not prevent Eligible Directors from being disinterested persons for purposes of Rule 16b-3, if required by such rule or any successor rule under the 1934 Act; or | ||
(iii) | To the extent such amendment would be inconsistent with the then-existing Rule 16b-3 or any successor rule under the 1934 Act , to materially increase the benefits accruing to participants under the Plan or to materially modify the requirements as to eligibility for participation in the Plan ; or | ||
(iv) | Otherwise cause the Plan not to comply with Rule 16B-3 or any successor rule under the 1934 Act, or | ||
(v) | Cause the plan not to comply with Section 409A of the Internal Revenue Service Code. |
18. | Plan Termination. The Board may terminate the Plan at any time. However, if so terminated, prior awards (including Deferred Stock Units) shall remain outstanding and in effect in accordance with their applicable terms and conditions. Notwithstanding the above, if the Company resolves to terminate and liquidate any other deferred compensation plan that is required under Internal Revenue Code Section 409A to be aggregated with the Plan, the Company will continue to pay any benefits otherwise due under the Plan during the first 12 months following a resolution to terminate and liquidate the Plan and shall pay out any remaining amounts deferred under the Plan during the second 12 months following such resolution to terminate and liquidate the Plan. |
19. | Governing Law. The validity, construction and effect of the Plan and any actions taken or relating to the Plan shall be determined in accordance with the laws of the State of South Carolina and applicable federal laws. |
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ARTICLE I
|
STATEMENT OF PURPOSE | 3 | ||||
ARTICLE II
|
DEFINITIONS | 4 - 5 | ||||
ARTICLE III
|
ELIGIBILTY AND PARTICIPATION | 6 | ||||
ARTICLE IV
|
DEFERRED COMPENSATION ELECTIONS | 7 | ||||
ARTICLE V
|
CREDITS TO DEFERRAL ACCOUNTS | 8 - 9 | ||||
ARTICLE VI
|
ADMINISTRATIVE COMMITTEE & CLAIMS | 10 - 11 | ||||
ARTICLE VII
|
AMENDEMENT AND TERMINATION | 12 | ||||
ARTICLE VIII
|
MISCELLANEOUS | 13 - 14 | ||||
ARTICLE IX
|
CONSTRUCTION | 15 |
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1. | Company: Sonoco Products Company, a South Carolina Corporation, and Corporate successors. | ||
2. | Committee: The Administrative Committee appointed by the Board of Directors of the Company to administer this plan. | ||
3: | Key Employee: Any person who is serving as an officer of the Company. | ||
4: | Participant: A Key Employee or former Key Employee who has deferred fees hereunder and has a credit balance in his deferred compensation account. | ||
5. | Separation from Service: The date of termination of an employees active service with the Company, which for this purpose includes all companies that would be considered a single employer under Section 414(b) of the Internal Revenue Code (Code) applying a standard of at least 50 percent instead of at least 80 percent as provided in the regulations to Section 409A of the Code. | ||
6. | Plan: The Deferred Compensation Plan for Key Employees of Sonoco Products Company as contained herein, and as may be amended from time to time hereafter, together with any election forms that the Committee requires a Participant to complete. | ||
7. | Plan Year: The period commencing January 1 and ending December 31. | ||
8. | Stock Equivalent Account: The account described in Article V. |
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9. | Interest Account: The account described in Article V. | ||
10. | Compensation: Salary and annual incentive compensation. |
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1. | Key Employees of the Company are eligible to become participants in the plan, subject to approval of the Board of Directors. | |
2. | An eligible Key Employee participates in the plan by irrevocably electing on an annual basis, in the manner specified herein, to defer future Compensation earned for which the related services commence in the calendar year following the year in which the election is made. | |
3. | An eligible Key Employee may elect to defer up to fifty (50) percent of salary and up to fifty (50) percent of annual incentive earned during the year for which the deferral choice is made. | |
4. | An eligible Key Employee becomes a Participant in the Plan upon the execution and delivery of a Deferred Compensation Agreement. Such Agreement must be executed (and must become irrevocable) in all cases on or before December 31 preceding the calendar year in which the services related to the Compensation to be deferred commence. |
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1. | An officer electing to defer payment of compensation may elect deferral to be invested in the Interest Account or the Stock Equivalent Account. | |
2. | Subject to such limitations as the Committee may impose, an officer electing to defer hereunder shall also elect at the same time as his deferral election, a Fixed Period commencing six months following the officers Separation from Service over which the amount deferred under such election shall be paid to him in annual installments and a Fixed Period (which may be a different period) over which the unpaid portion of the amount deferred shall be paid to his Beneficiary or estate in annual installments in the event of his death. | |
3. | Any Fixed Period Election to defer compensation shall be irrevocable and may not be changed or modified thereafter by a Participant or the Company. | |
4. | The fact that an officer has made a particular election with respect to a deferral shall not preclude such officer from making different elections with respect to new deferrals covering a future period of service. |
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1. | Deferred compensation shall be credited to the Stock Equivalent Account or the Interest Account of a Participant or a combination of these accounts, as the Participant may have elected, as follows: |
(a) | The deferred incentive amount shall be credited to the Deferral account on the closing date of the Companys fiscal month in which the incentive was to be paid in cash. | ||
(b) | The deferred salary shall be credited on the closing date of the Companys fiscal month in which the salary was to be paid in cash. |
2. | The compensation credited to a Stock Equivalent Account shall be converted on the closing date of each of the Companys fiscal months into Stock equivalents as though such compensation were applied to the purchase of common stock of the Company as follows: |
3. | As of the record date for each dividend declared on the Companys common stock, each Officers dividend shall be determined by multiplying the cash dividend per share by the number of full and fractional Stock Equivalents in the Officers Stock |
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Equivalent Account on the dividend record date. The resulting dividend amount will be converted into stock equivalents as though such dividend amounts were applied to the purchase of common stock of the Company. |
4. | The balance in the Interest Account will be credited with interest from the date the deferral is credited to the account until payment is complete, at a rate equal to the Merrill Lynch ten year high quality bond index for December 15 of each preceding year. |
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1. | This plan shall be administered by the Compensation Committee of the Board of Directors. | |
2. | The construction and interpretation by the Committee of any provision of this plan shall be final and conclusive. | |
3. | The administration of this plan is delegated to the Senior Vice President Human Resources who is responsible for executive compensation and benefits, or at his election, to the Director, Compensation. | |
4. | No member of the Committee shall be personally liable for any actions taken by the Committee unless the members action involves willful misconduct. | |
5. | If any claim for benefits under the Plan is wholly or partially denied, the claimant shall be given notice in writing of such denial within a reasonable period of time (not to exceed 90 days after receipt of the claim or, if special circumstances require an extension of time, written notice of the extension shall be furnished to the claimant and an additional 90 days will be considered reasonable) setting forth the following information: (a) the specific reason or reasons for the denial; (b) specific reference to pertinent Plan provisions on which denial is based; (c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (d) an explanation that a full and fair review by the Committee of the decision denying the claim may be requested by the claimant or his authorized representative by filing with the Committee, within 60 days after such notice has been received, a written request for such review. |
10
11
12
1. | NON-ALIENATION OF BENEFITS. No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any right or benefit under this Deferral shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefits. If the Participant or any beneficiary hereunder shall become bankrupt, or attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any right hereunder, then such right or benefit shall, in the discretion of the Committee, cease and terminate, and in such event, the Committee may hold or apply the same or any part thereof for the benefit of the Participant or his beneficiary, spouse, children, or other dependents, or any of them in such manner and in such amounts and proportions as the Committee may deem proper. | |
2. | NO TRUST CREATED. The obligations of the Company to make payments hereunder shall constitute a liability of the Company to a Participant. Such payments shall be made from the general funds of the Company, and the Company shall not be required to establish or maintain any special or separate fund, or purchase or acquire life insurance on a Participants life, or otherwise segregate assets to assure that payment shall be made, and neither a Participant, his estate nor Beneficiary shall have any interest in any particular asset of the Company by reason of its obligations hereunder. The Participants rights to deferred amounts will be the same as an unsecured general creditor of the Company, and all property and rights to |
13
property, including rights as a beneficiary of a life insurance contract purchased with deferred amounts, and all income attributable to the deferred amounts and property will remain solely the property of the Company and will be subject to claims of general creditors of the Company. Nothing contained in the Plan shall create or be construed as creating a trust of any kind of any other fiduciary relationship between the Company and a Participant or any other person. |
3. | The effective date of this plan is January 1, 1991. | |
4. | The plan has been amended effective July 18, 2007, to comply with Section 409A of the Code and the regulations thereunder. |
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1. | GOVERNING LAW. This Plan shall be construed and governed in accordance with the laws of the State of South Carolina. | |
2. | GENDER. The masculine gender, where appearing in the plan, shall be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary. | |
3. | HEADINGS, ETC. The cover page of this plan, the Table of Contents and all headings used in this plan are for the convenience of reference only and are not part of the substance of this plan. |
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1. | I have reviewed this quarterly report on Form 10-Q of Sonoco Products Company; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: October 30, 2007 | By: | /s/ Harris E. DeLoach, Jr. | ||
Harris E. DeLoach, Jr. | ||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Sonoco Products Company; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: October 30, 2007 | By: | /s/ Charles J. Hupfer | ||
Charles J. Hupfer | ||||
Senior Vice President and Chief Financial Officer |
/s/ Harris E. DeLoach, Jr. | ||||
Harris E. DeLoach, Jr. | ||||
Chief Executive Officer | ||||
/s/ Charles J. Hupfer | ||||
Charles J. Hupfer | ||||
Chief Financial Officer | ||||