Greetings, ladies and gentlemen and welcome to the Sonoco Products Company Third Quarter 2007 Earnings Conference Call. [Operator Instructions]. As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Mr. Roger Schrum. Thank you. You may begin.

Thank you, Joe. And good morning everyone and welcome to Sonocoís 2007, third quarter earnings investor call. Joining me today are Harris DeLoach Chairman, President and Chief Executive Officer. And Charlie Hupfer, Senior Vice President and Chief Financial Officer. Our financial results for the third quarter of 2007 were released before the market opened today and are available via our website at sonoco.com. Let me begin by stating that todayís investor call may contain a number of forward-looking statements that are based on current expectations estimates and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties; therefore actual results may differ materially. Additional information about factors that could cause different results and about the use by the company of non-GAAP financial measures is available on Form 10-K, 10-Q and 8-K, filed with the SEC. Iíll briefly review the highlights of our third quarter and then Charlie will provide a more detailed analysis, before we open the call for your questions. GAAP earnings for the third quarter of 2007 were $0.63 per diluted share versus $0.60 for the same period in 2006. Results for the third quarter benefited from a significantly lower effective tax rate partially offset by restructuring and asset impairment charges. Base earnings for the third quarter were $0.64 per diluted share compared with $0.61 in the same period last year. Base earnings is a non-GAAP financial measure that excludes certain nonrecurring or infrequent and unusual items. Our third quarter base earnings exceeded the high end of revised guidance that we reported on September 18, due to the lower than expected effective tax rates. Results from operations during the quarter were in line with our revised projections. We announced in today's press release that we expect base earnings in the fourth quarter of 2007 to be in the range of $0.52 to $.55 per diluted share. In addition, ful year 2007 guidance was raised to $2.28 to $2.31 per share to reflect the favorable effect of third quarter tax adjustments. Our fourth quarter guidance assumes an effective tax rate of 34% and fourth quarter will have six fewer days than last year's final quarter. With that introduction, I will now turn it over to Charlie.

Thanks, thank you, Roger. As we just mentioned today we reported third quarter sales, sales over $1.298 billion and EPS of $0.63 a share, base EPS $0.64 a share. Of course GAAP earnings include restructuring and other unusual items, and the base earnings adjustment that we'll make will take those items out, and I'll go through that. This particular quarter we have a number of elements that I'll try to carefully discuss. First I'll discuss the reconciling items between GAAP earnings and base earnings especially the impairment charge and the tax credits, specifically what it takes to get us from $0.63 of GAAP EPS to $0.64 base EPS, and what those different elements mean. Then having clarified the make up of base earnings, I'll discuss the impact of a lower effective tax rate on a comparison, for the quarter, and to our earlier guidance, to last quarter and to our earlier guidance. And then lastly, I'll discuss operations in terms of the usual sales in EBIT bridges, I'll talk about cash flow, the balance sheet and then some other items. So let me start with the adjustments from GAAP earnings to base earnings. The first adjustment, which is an add back is for restructuring. We took a $2.3 million pretax charge, thatís $1.6 million after tax or $0.02 a share rounded. This represents miscellaneous costs associated with our prior year plan. Next we have an add-back for environmental expenses of $1.1 million pre-tax, thatís 600,000 after-tax or a rounded $0.01 a share. This charge relates to Sonoco's share of higher than budgeted costs to clean up the hotspot on the Fox River; thatís the hotspot thatís outside of our DePere plant. Mega point here, we would not ordinarily include such a minimal amount $1.1 million from base. But this is…

Joes, we'll go ahead and take questions. Question and Answer

Thank you. Ladies and gentlemen we are going to conduct question-and-answer session. [Operator Instructions]. Our first question is from Ghansham Panjabi with Wachovia Securities. Please go ahead with your questions

Good morning, guys. This is actually Phil calling in for Ghansham. A quick question on the pricing front. I mean you guys in the past have had a positive price cost spread for as long as I remember. But with OCC prices up, do you guys have any price increases on tap for the rest of í07 or early í08?

Phil, this is Harris. I fully expect the year to be a positive price, going forward, the quarter was down, we expect the year to be positive price cost. Actually, as you know, a good bit of our business is under contract, and we actually raise prices under those contracts on the first of October.

Okay.

And we have been in the other business weíve been raising prices on many of our paper-based products throughout the last month or so.

Okay.

Weíre actively doing that. We have not made an announcement but weíll sort of play that by ear over the coming 30, 45 days or so.

Okay. But are you seeing a more difficult environment in terms of pricing power just because your time's [ph] obviously slowing down, in more prospects?

I donít think weíll see any more difficulties than weíve normally seen in the cycle.

Okay, thank you so much.

Youíre welcome.

Thank you, the next question is from George Staphos with Banc of America Securities. Please state your question. George Staphos ñ Banc of America Securities: Hi everyone, good morning.

Hello, George. George Staphos ñ Banc of America Securities: I just want to follow up on the pricing question. So, if you are negative on price cost in the third quarter, which you were, notwithstanding the positives youíve seen in prior years and quarters and the market itself is no more difficult to raise pricing in the past quarters, why would you not come out with a general price increase, why would you need to look out the next 30 to 40 days?

George, I think what we have, what I said and what weíve done is we have been sort of, with inside the businesses targeting price increases and going out with those rather than making a general announcement. It clearlyÖ the paper industry that we compete in, the capacity utilization is lower than we would like. And, but weíve seen increases of OCC, weíve also seen increases of other commodities such as adhesives and starch and weíre going out pretty aggressively and are recovering those. I would not be surprised to see us announce something between now and year end or shortly after the first of the year. Now I really donít want to get into a lot more than that at this point. George Staphos ñ Banc of America Securities: Okay.

But you know, we will continue to aggressively raise prices. Weíre doing that as we speak. George Staphos ñ Banc of America Securities: And the recent tinplate price hikes, my guess is that will also be something you need to consider as you look out to 2008 for pricing and have you had any discussions initially with your customers there?

George, most of that business is obviously is, as you know on the consumer side of the business. We have seen the tinplate increases that have been announced. We are talking to customers, and most of those have passed through to our contracts that we have in place. That generally change January the 1st on the consumer side although some of them, I think March 1st and one or two of them are June 1st. George Staphos ñ Banc of America Securities: Okay.

But we are having discussions and I do anticipate pushing those through. George Staphos ñ Banc of America Securities: Okay. Switching gears, in flexible packaging the pace of improvement would appear to beÖ given our research, given your comments coming at a slower pace, perhaps a much slower pace than I think youíd hoped for in the second quarter. If thatís correct, great; if not please correct me. But if itís correct, why is that the case?

Fair question. I think Iíve answered in response to one of your questions that I expected to see a turnaround in the fourth quarter in that business, at the last conference call. And we have in fact seen nice, and I use that word loosely, nice operating improvement in the third quarter in the flexible business as compared to the first and second quarters, particularly the second quarter where we were having some customer issues. So, the operating plan, the operating performance of that business is on track with what we anticipated and Iíd expect to see that continue through the balance of the year and into next year. As Charlie said, we saw volumes down in that business in this quarter, year over year, reflecting two things. One, just frankly a softness in the market and that obviously affected the financial performance. In addition, as Charlie said, we had some bids in the latter part of last year and the early this year where we actually lowered some pricing and that affected the financial performance. And what I wanted to get in, under control first was the operating performance, which I think we have. And I expect the financial performance will follow behind that, George. George Staphos ñ Banc of America Securities: Okay. I know it's perhaps hard to say, but you would expect maybe '08 to be comparable to '06 for flexible in terms of EBIT or is it too early to call that and we're too optimistic to expect that.

It is probably too early to call that. I do expect certainly a nice improvement over '07. We are early into our budgeting process right now and to be quite honest, I havenít seen the projections for '08, George. George Staphos ñ Banc of America Securities: Okay thanks I will turn over, Iíll be back.

Okay .

The next question is from Chris Manuel with Keybanc Capital Markets.. Please go ahead with your question.

Good morning, gentlemen.

Good morning Chris

Couple of questions for you. First, if we could talk about the volume trajectory, as you went through the quarter. I think in terms of your pre-announcement, you talked about how volumes were soft through theÖ at that point through July into August. Did you begin to see any pick up at all from those levels in September or in AugustÖ I am sorryÖ in September and thus far into October or can you give us a little more color there?

Iíll be happy to, Chris. I would say thatÖ let me break it out by business segment, if I may. If I looked at the industrial side of the business, it was pretty much the status quo in September, and I would have to say status quo in October, with what we saw inÖ if I took in what we had into July and August. On the consumer side, we saw composite cans improve in September, we saw the services business improve in September and we are seeing those trends continue into October. So thatís sort of what we are seeing.

And that was built into our guidance.

It was.

The September 18th guidance.

Okay. So still somewhat sluggish, but improving, would that be a fair way to characterize it or should we anticipate what sales we roll through the fourth quarter built into your guidance is overall flattish or how can we rectify that.

Chris, I would say that sluggish, not declining, but not improving other than those two areas that I said, and Charlie talked, they were in our guidance, I would say sluggish status quo and thatís pretty much that is built into our guidance.

Okay, perfect. And then, the second question I wanted to ask was, you specifically called our in your press release some point-of-purchase displays where you had lost some business. And last quarter, I think we asked you about how you were coming back with winning back some other business. Can you give us an update on how you are progressing there? Do you anticipate that '08 can be similar to, I guess, refill the business that you potentially lost?

Chris, I assume you are talking about our announcement last quarter, when we talked about the POP business because I donít think there was anything in this quarter.

Okay .

That was, we were talking about in the second quarter, the mega bid.

Right .

Actually, I think that situation is probably improved a little bit to what we talked about at the end of the second quarter conference call. I really have to respond to that infrastructure sort of the same way I responded to George, about flexibles. I havenít seen the roll up yet of '08. So it'd be a bit premature to talk about, but I certainly reviewed the plans 60 days ago and they anticipate business coming in. The performance in the quarter was good year over year, and I expect continued good performance out of that business.

Okay. And then the last question, actually it goes back to the volumes issue for a moment. And could we talk a little bit aboutÖ you gave me a trajectory of the whole company and by a few of the product segments. Could we look at it geographically. I think you had indicated most of the weakness was here in North America. The European piece and the other pieces of the world, have they been generally pretty steady this whole time and was the fall-off principally North America and then now starting to pick back a little in North America, is that fair?

I think what I said, it is North America, it is the principal one. And I think what I said is while weíre seeing a pick-up in composite cans and the services business, CorrFlex, in particular in the quarter, I would still say the status quo of what weíve seen is what I expect for the balance of the year. Europe, I think Charlie said, tubes and cores and paper in Europe are up about 4% - 4.5%. So weíre seeing a pretty good economy in Europe. Asia is up. South America is up, with the exception of Brazil which is clearly effects of a pretty strong currency. So, I would say, if I'm looking for a place to place the slowness, it's in North America.

Okay perfect, thank you very much.

You are welcome, Chris.

The next question is from David Liebowitz with Burnham Securities. Please state your question.

Good morning, a couple of under related items. First question, in terms of the new products for the second half of the year, weíve already had the third quarter, are fourth quarter shipments of new products as robust as you had originally budgeted?

David, I think they're certainly in the ballpark with what we had planned for the year. And the fourth quarter will be similar to the third quarter, I would guess.

And, much of it coming from the second generation of the Snack 'n Seal product, which really was coming on in the third quarter. And so, I would expect that the overall, if you just focus on new products, it would be a stronger quarter.

Great. And how much of that product is holiday re-weighted, so you do not have that product continuing into the first quarter? Guess Iím looking, is there a slippage factor here, which may boost the first quarter at the expense of the fourth quarter.

I donít think that any of the new products will be holiday related, so I think it would be a continuation in the first quarter, David.

Excellent. The second question is, in terms of top-line growth, is there any reason to believe, given the vicissitudes of the economy right now that next year will see definitely an uptick based on programs we have put in place, what products we have developed and now it's simply a mater of shipping to a contract that will be signed as soon as the customer has a timeframe to delivery?

David, I would expect with the projects that we have in place for this year and the new investments weíve made, that I would expect to see certainly an improved top-line next year or year-over-year.

And the last question, Charlie, has been doing yeoman service working overtime for each of these quarterly conference calls, because of all the one time events. Do we have any timeframe in mind where Charlie can get back to being just the overworked CFO, rather than all of the extra weight that he has to put in for one time charges?

Charlie, is so overworked I am going to ask him to answer that.

David, I think clearly we had the two big restructurings in '01 and in '03 and a smaller restructuring last year. I think the big restructuring, as I said previously, are behind us. We will continue to have from time to time, things thatís just a phenomena of operating 325 plants, many of them are dedicated to customers around the world. As the customer change we move that equipment from one place to another. So I think it's all in the nature of our business but the big ones are behind us.

In other words, then youíre going to have to be burning the midnight oil for each quarter upcoming for the foreseeable future?

I expect David, Charlie would be burning the midnight oil whether we had those or not.

Okay, thatís fine deal with me, if his wife doesnít mind.

I donít know that.

She'll take the compliment.

Thank you so much.

[Operator Instructions]. The next question is from George Staphos with Banc of America Securities, please state your question. George Staphos ñ Banc of America Securities: Thanks guys. I just wanted to come back to, it seemed like Chris was hinting on itÖ and may be itís overdoing it or over-reading it, but just to make sure. You said in your press release something to effect that either volumes were slow or down, most notably in North America. That wording could suggest that while North America was the biggest component that other markets might have slowed. For the record, you havenít seen any other big market slow for you right now within 3-Q or early into 4-Q, it's just North America.

That is correct, George. George Staphos ñ Banc of America Securities: Now on productivity, I am guessing it's too early to call, you havenít seen the roll up, but can you give usÖ maybe not, and if so, could you give us some direction terms of what productivity might look like next year, what areas you are looking into improve upon?

George, it is probably too early, and I suspect that some of my general managers may be on this phone call, but my expectation for productivity is not changed. It is, we are trying to drive 3.5% cost reduction year-over-year. And we made some investments so this year which we would anticipate, driving that productivity into the first half and into next year and they're putting their budges together. But I think those are the kind of expectations we have at this point in time. George Staphos ñ Banc of America Securities: Okay, fair enough. On capital spending, as we look out to next year and also consider some of the dislocations or less than anticipated performance that you had in some areas where you have been investing like flexibles or plastic bottles, are you using an even more critical analysis of capital budgets or capital requests are coming to you, to Charlie but tougher than you expected, CapEx is going up, a couple of your growth areas have not been performing well. Should we expect reduced CapEx or reduced projects for next year?

I would think the answer to that is yes, we spent, as Charlie said, a little more than we were anticipating this time last year because some opportunities actually presented themselves with Matrix and some others. So, I would think, George, until we digest those CapEx, we'll be down, I would think, we will probably be in the $130 million $125 million, $130 million range going out into the next year. George Staphos ñ Banc of America Securities: All right thanks, two last ones, and I'll turn it over. One, so whatís happened at Wausau that itís likely you are removing that business, especially that you've only recently gotten into that facility, if you could refresh my memory there. And then just a reforecast on cash from operations, where is the pick up coming? Thanks, guys.

George, fair question. I think we opened Wausau three or four years ago, I donít remember the exact time. We had three blow-molders at the time. And two of the blow-molders, the acquisition of Matrix and their plant configuration, the major customers for these blow-molders are actually very close to the Matrix plant. And so we made the decision that we could consolidate that plant into the Matrix operations, get into the call side of the operation, and obviously enhance earnings. That leaves one blow-molder up there that we will work out of and do something with as we shut that plan down. So that was basically the driver of it. Charlie, you want to give someÖ

Yes. And as it relates to cash flow, cash flow operations, our estimate is now between $375 million and $400 million but there is really not any significant year-over-year change. When we were looking at the year-to-date number, it's $257 million, almost $260 million and our fourth quarter generally is our high generation quarter. And so I think itís just a combination of where we are right now, projected into the fourth quarter, where a little bit more improvement in net working capital that we would expect to see. So there is nothing magic in there. Certainly nothing that stands out relative to the fourth quarter or the whole year from where we are right now. George Staphos ñ Banc of America Securities: Okay. Thanks, guys, good luck in the quarter.

Thank you, George.

Your next question is from Chris Manuel with Keybanc Capital Markets. Please state your question.

Just a couple of quick follow-ups. First, actually for you, Charlie, what, with some adjustments in taxes and things of that nature, in tax rates and such that have gone on globally now, what would you anticipate going forward? Aside from, I think you said, 34% in the fourth quarter, what would you anticipate being a normalized rate beyond that?

Yes, thatís an interesting question. And the normalized rate that we have right now is 33.8% and thatís where 34% came from. But if you go back and look at our effective tax rates over the last couple of years, it has been less than that. So, I would hope that it would certainly come in less than that. But when you make the calculation, it comes in as 33.8%. Where we have seen adjustments is just things, as I described, that are in this quarter like freeing up of some reserves, as we true-up tax accruals. So perhaps a little bit on the conservative side, when we make, when we set up these reserves and I hope they come in less than 33.8%. But the number calculates out to 33.8%, less than 34%. And so, I'm really not answering your question. The answer is, that is the number. If you went to the tax department, thatís what they'd tell you it is. I'm hoping it comes in less than that and frankly over the last couple of years, with these adjustments, it has.

And I was just thinking, with Germany has got a tax rate thatís moving down, I think the 1st of the year or some time soon, and with more of your income coming from frontier or some of these other places that presumably have a lower tax rate than, we in the US now seem to have the highest tax rate in the world, so that may be moving down. But, okay, thatís fair.

But some of that stuff's already filled, or certainly is filled into these numbers now, it's the mix changes, but the profitability thatís coming out of Europe has had the tendency to modestly reduce the overall effective tax rate, especially when it's coming in countries like Germany and France for us. But what, our sales are what, 15% out of Europe, so the mix effect gets that to be a fairly modest number on the overall effective rate.

And then a question for you Harris is, I saw you had increased, the Board had increased the authorization for share purchase. Is that something that with cash remaining good here the rest of the year, you would consider stepping up?

Chris, we've traditionally kept $5 million share authorization in our pocket for I donít know, about years and years. So we're simply bucking it back up to that. We bought back up $5.5 million of shares of stock in the last, this beginning of last year. Cash flow, if we canít find other opportunities, we certainly would consider additional stock buyback.

Okay, thank you, gentlemen.

The next question is from Alan Zwicker [phonetic] with First Manhattan. Please state your question.

Good day. Going back to second quarter you mentioned some problems, production problems by virtue of which maybe you had to move some people around. Could you just give us an update about whether you have seen the end of that and notwithstanding what business conditions are, thatís just a problem that we could put in the past.

I think you could put that in the past. As I responded I think to George Staphos' question, operationally in flexibles and thatís the business you are referring to.

Yes .

We have seen nice improvement in the quarter operationally. And so I think, as you said, you can put that in the past.

And then secondarily, just from a volume standpoint of view, when you talk about the Americas, excuse me, not the Americas, America being weak, would it be fair to assume that if you have a customer say that in America and also say in other parts of the world, that it's possible that in other parts of the world they may be doing more business and it's just sort of US based weakness based on maybe the retailers in the US, just kind of differentiate since you do so much business with the same clients in different territories.

I think its US based and probably Canadian based.

So them theoretically, if you were doing business with a consumer packaging company also in Europe or in Asia business there hasnít been as affective as it is in the US, is that a fair statement?

Yes, I think thatís a fair statement. It's probably not necessarily such a good comparison but clearly the US economy, at least in our business is generally [ph] what the weakness is right now.

Okay. And lastly, just in terms of the tubes and paper, again, I know you mentioned about the US, but in terms of the textile business, are you continuing to see some of those same customers that may not be giving you business in the US, are you picking up some of that business, say in China or in other parts of the world?

Our business in China continues to grow particularly in the textile area but also in Turkey in some of the Eastern block countries as well. Our textile volume, generally you are not picking it up with the same customers over there. You are picking it up with someone different

Okay thank you.

Thank you.

Thank you. The next question is from Mark Masters [ph] with JP Morgan. Please state your question.

'Afternoon, guys.

'Afternoon, Mark.

I wonder if you could just talk a little bit about the current acquisition environment and if you are seeing any potential opportunities there. Thanks.

We always have, look out at acquisitions, I think I saw something the other day that we made 35 to 36 acquisitions over the last five years. So at any given time we have always got the nail out, if you will, as being cast. And I guess what you are talking about we are seeing more opportunities perhaps because the private equity folks are not engaged. And the answer to that is the private equity guys are probably not as engaged as you were six months ago. And so we are not seeing those issues. But I think it's probably inappropriate for me to talk a lot more about acquisitions other than to say we always are looking and you shouldnít be surprised to see us do something.

Okay, great; thanks, guys.

Gentlemen, at this time I have no further questions, thank you. I would like to turn it back to you for closing comments

Let me again thank all of you for joining us today. I do want to remind to please reserve the day of Friday December 7th to attend our annual investor conference at the Grand Hyatt Hotel located at Park Avenue in Grand Central in New York. We will begin with a breakfast that day at 7:30 am and presentations will start at about 7:50 am. You will receive an invitation with details next week. And if you have any questions please donít hesitate to contact myself or my group. And you can contact us at 843-383-7794. Again we appreciate you interest in the company and look forward to talking with you in New York on December 7th. Thank you again.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.