Base earnings for the first quarter of 2009 were $0.29 per diluted share, compared with $0.54 per diluted share reported in the same period in 2008. Base earning is a non-GAAP financial measure that excludes restructuring charges, asset impairment charges, environmental charges, and certain non-recurring or infrequent and unusual items, as applicable. Both GAAP and base earnings for the 2009 first quarter reflect a year-over-year increase in after-tax pension expense of $.09 per diluted share. Excluded from base earnings in the 2009 period was an after-tax restructuring charge of $.06 per diluted share stemming from the company’s previously announced cost-reduction measures. Base earnings in the first quarter of 2008 excluded an after-tax charge of $.31 per diluted share for the impairment of the company’s remaining financial interest in the 2003 sale of its high density film business and after-tax restructuring totaling $.10 per diluted share associated with previous cost-reduction initiatives.

“First quarter results, which have historically been our weakest, were significantly lower than the prior year as the deepening global recession exacerbated volume declines companywide, but particularly so in our businesses which serve industrial markets,” stated Harris E. DeLoach, Jr., chairman, president and chief executive officer of Sonoco. “Yet our strategy to change the mix of our businesses to take advantage of faster growing and less volatile consumer-related markets while reducing the cyclicality of our more mature industrial businesses continues to show positive results. Our Consumer Packaging segment had a record quarterly operating profit, up nearly nine% from last year’s first quarter, while also registering the fifth consecutive year-over-year improvement in quarterly results.”

“Sales declined 23% during the first quarter due to dramatically lower companywide volumes, particularly in our economically sensitive industrial businesses, and the negative effect of foreign currency translation, which reduced revenue year over year for the quarter by about $75 million,” stated DeLoach. “New product sales in our Consumer Packaging segment reached a record $36 million during the quarter, which partially offset some of the decline.”

Net income attributable to Sonoco for the first quarter of 2009 was $23.1 million, compared with $13.3 million for the same period in 2008. First quarter 2009 base earnings were $29.2 million, compared with $54.0 million last year. This year’s first quarter base earnings include $15.3 million in higher year-over-year pre-tax pension expenses and exclude after-tax restructuring charges of $6.1 million. As previously mentioned, 2008 first quarter base earnings excluded a charge for the impairment of financial assets totaling $31 million, after tax, and $9.7 million in impairment and restructuring charges, after tax.

“The impact of lower volumes was partially offset by the benefit of selling price increases realized before the flow-through of higher material costs in the Consumer Packaging segment,” added DeLoach. “While the price/cost benefit seen this quarter is not expected to be sustained, future quarters should continue to benefit from our ongoing cost-reduction actions, including aligning our manufacturing footprint to reflect declining market demand.”

Cash generated from operations in the first quarter of 2009 was $75.5 million, compared with $64 million in the same period in 2008. Increases in long-term accrued expenses together with a decline in the use of cash needed to fund changes in working capital and other items in the first quarter of 2009, compared to last year’s first quarter, contributed to the increase in operating cash flow. Capital expenditures and cash dividends totaled $34.6 million and $26.9 million, respectively, in the first quarter of 2009, compared with $34.1 million and $25.9 million, respectively, in the first quarter of 2008. Depreciation, depletion and amortization expense for the first quarter of 2009 was $40.9 million, compared with $45.9 million in the same period in 2008.

As of the end of the first quarter, total debt was $667 million, compared with $840 million at the end of the first quarter of 2008, and $690 million as of the end of 2008. The company has no significant debt refinancing requirements until November 2010 when bonds totaling about $100 million are due. Sonoco continues to operate its $500 million commercial paper program with $74 million outstanding at the end of the first quarter of 2009. The commercial paper program is fully supported by a bank credit facility provided by a syndicate of banks that is committed until May 2011. The company believes these banks are capable of meeting their commitments.

Second Quarter and Full-Year 2009 Outlook:

Sonoco anticipates second quarter 2009 base earnings to be in the range of $.34 to $.38 per diluted share. Full-year 2009 base earnings are projected to be in the range of $1.55 to $1.75 per diluted share. As previously reported by the company, second quarter and full-year guidance include a year-over-year increase in pension expense of $.08 and $.35 per diluted share, respectively. The company’s 2009 annual earnings guidance reflects an expected tax rate of about 30%.

In commenting on the updated guidance, DeLoach noted that the low end for the full year is based on continued weak volumes in businesses serving industrial markets. It is also based on realizing the expected improvements from previously announced cost-reduction plans as well as the impact of normal seasonality and returning to a more historical price/cost relationship in the consumer businesses. The range in the full-year guidance reflects the degree of continued uncertainty in today’s business environment.

“Sonoco has faced many challenges through its 110-year history and we have always responded decisively in ways that have helped us emerge a stronger, more competitive and successful company,” added DeLoach. “Our cost reduction efforts which began in 2008 have helped. Regrettably, we’re not seeing meaningful improvement to the global economy so we must continue to take further cost-reduction steps to remain competitive in a dramatically changing marketplace.”

Segment Review:

Sonoco uses a non-GAAP financial measure, Base Operating Profit, when discussing the operational results of its segments. Base Operating Profit is defined as the segments’ portion of consolidated Income Before Income Taxes, excluding restructuring charges, impairment charges, environmental charges, net interest expense and certain non-recurring or infrequent and unusual items.

Consumer Packaging:

Sonoco’s Consumer Packaging segment includes the following products: round and shaped rigid packaging (both composite and plastic); printed flexible packaging; and metal and peelable membrane ends and closures.

First quarter 2009 sales for the segment were $351.9 million, compared with $387.4 million in the same period in 2008. Operating profit for this segment reached a record $39.4 million in the first quarter of 2009, compared with $36.3 million in the same period in 2008.

Sales in this segment declined nine% during the first quarter as lower volumes and the negative effect of foreign currency translation of about $20 million were only partially offset by higher selling prices. The selling price increases were implemented to offset rising raw materials and other costs, the negative impact of which was not fully realized in the first quarter. This delay in realizing the negative effect of higher material costs, along with productivity improvements, contributed to the first quarter’s nine% increase in operating profit.