Greetings, ladies and gentlemen, and welcome to the Sonoco Products Company Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions). As a reminder this conference is being recorded. It is now my pleasure to introduce your host Mr. Roger Schrum, Vice President of Investor Relations. Thank you, Mr. Schrum, you may begin.

Thank you, LaTonya. Good morning, everyone and welcome to Sonoco 2008 Third Quarter Earnings cum 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 were released before the market opened today and are available via our Web site at sonoco.com. Let me begin by stating that today's investor call may contain a number of forward-looking statements that are based on current expectations, estimates, and projection. 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 Forms 10-K, 10-Q and 8-K, filed with the SEC. With that brief introduction, I'll now turn it over to Charlie Hupfer.

Thank you, Roger. Today, Sonoco reported third quarter financial results. We reported that EPS on a GAAP basis is $0.57 a share and the base EPS was $0.60 a share. The base EPS is $0.60 a share, was below our guidance of $0.63 to $0.65. We were not displeased with this quarter but frankly, September was a little weaker than we had expected especially the last half of September. Let me start by reconciling the reported earnings to base earnings. In the third quarter, we took a $5.5 million pretax restructuring charge, related to the closure of one paper mill and one converting plant. Tax benefit on this charge was $2 million and there was a 2/10 million or $200,000 restructuring adjustment in the equity and affiliate section. The net effect of all of that is that $3.3 million or $0.03 is added back to GAAP net income to arrive a base net income of $60.6 million and base EPS of $0.50 a share. Reconciling the third quarter of 2007 GAAP to base is more complicated. Last year, GAAP earnings of $464.5 million or $0.63 a share including restructuring, asset impairment and an adjustment to the environmental reserve of – all that total $18.5 million. Related tax benefit on the $18.5 million was $6.4 million which means the net was $12.1 million around in the $0.13 a share. In addition to that, going in the other direction was a tax credit of $11.8 million or $0.12 a share. That's the tax credit that we brought into income when the statute expired on our 2003 tax year. The net of the pluses and the pluses were $0.13 a share and the minus is $0.12 a share was an add back of $0.01 per share to arrive at base net income of…

(Operator instructions). Our first question comes from George Staphos with Banc of America. Please proceed with your question. George Staphos – Banc of America: Hi, everyone, good morning.

Good morning, George George Staphos – Banc of America: First question I had, and perhaps you covered it, Charlie, but a little bit more detail perhaps it will be helpful from our standpoint. You mentioned that tubes and core volumes were not that similar in terms of the change versus the second quarter experience that you have. I mean round numbers, I think you're looking at minus 5%. What therefore was as you think about the biggest one or two sources of negative variance relative guidance in the quarter which is a volume sort out better than expected in July and August and then follow-up much more quickly and hurt your overhead absorption in tubes and core, give us a bit more detail if you don't mind? Thanks. I have a follow-on.

Okay. I think that's exactly right. When we look at our volume, overall, it wasn't too dissimilar from the second quarter or the first quarter. As I look at monthly results I see, a drop in January, that has more or less than level, since that point in time. But clearly, we saw a fall off as in the last half of September. How much of that was due to the customers slowing down, how much of that was due perhaps to the hurricane Ike that affected us and shut down some plants. I really don't know. But we did see some volume shortfall as we got into the latter part of the quarter. George Staphos – Banc of America: Charlie, what was the run rate coming out of September into October for tubes and core? Was it therefore more like a minus 6 or minus 7?

In the last half it might have been minus 7, minus 8 range, but the real question is that how much of that may have come back in early October. George Staphos – Banc of America: And you don't know that at this time.

We don't – we haven't seen a lot of it in the first part of October. I think it may be picking up here in the second half. George Staphos – Banc of America: The other question I had same topic. If within your consumer business you've seen any signs of the consumer further retrenching. Which product lines have been weakest as a result – you mentioned composite cans in Europe bit slow. It sounds like composite cans you have in the U.S. perhaps varying rates of volume change over the last quarter. Fill us in on what you're seeing there?

There's a story to the European volume. That was largely a customer that change locations and shut down for a period of time for a month. That's a part of the story so. And then I think part of it is just weak volume there out of our especially our U.K. operation. But I look at the volume clearly a major – besides this one major customer that effectively shut down for a month we saw weak volume coming out of another customer and also in the U.K. as well as EuroDough, which is one of our big customers out of our French plant. So I think there is a combination of the unique circumstances plus some weakness with some customers. George Staphos – Banc of America: U.S. hold in that pretty well on composite –?

The U.S. held in real well. No question. I think I cited some numbers like snack volume up 16%, refrigerated dough up. The only negative was caulk cartridge was down 7.5%. I didn't mention that. And my recollection is that was even improved from the second quarter – my recollection is that was down 12%, 13%. So volume overall on the composite cans side held up well. George Staphos – Banc of America: Thanks. I will turn it over. I will be back

Our next question comes from Claudia [ph], JP Morgan. Please proceed with your question. Claudia – JP Morgan: Thank you very much. Good morning.

Good morning, Claudia. Claudia – JP Morgan: I was hoping you can talk a little bit more about the tubes and cores business in Europe. I think last quarter maybe you talked about some weakness in southern France and Italy. Just wonder sort of how that trends are in Europe, did it get worse over the quarter or there where you mentioned sort of the strength in Frontier but are there any sort of particular pockets of weakness in the western part of Europe? And then I know you have a price initiative you have unveiled for Europe. Just wondering sort of how that has been received in light of the weaker demand environment?

Claudia, let me take the last question first. I think it's probably too early to tell how the pricing movement is taking place with this recent price increase in Europe. You're absolutely correct. We talked in the last meeting that southern France and Italy, Spain, showing some weakness. And that continues but we have seen more square of weakness in Europe, about the same timing is the U.S. normally July and August are weaker times in Europe because holiday, vacation period both those months and we normally see coming back in the September time frame, nice rebound in Europe. We did not see that and they still have particularly weak almost all over western Europe in the September time frame, particularly in the latter half of time frame. The U.S. has shown a little improvement in October over that September run rate, but I think it's anybody's guess what's going to happen there.

And to put some numbers to that, in the second quarter we said that what we call legacy Europe was down 3.4% and this quarter it's down 4.8%, a little bit of weakness. Some of that maybe just reflect in the fact that we also closed our Spanish plant, and that would account for some little bit of that, but generally some weakness. Claudia – JP Morgan: That's very helpful. Thanks. And then I was just hoping you could maybe just comment on implicit in your guidance, what your assumptions are for OCC prices, pulled back half a lot lately. And then if you have any thoughts on the trajectory of OCC in 2009?

Claudia, I believe Charlie can correct me that in our guidance we have factoring in current OCC prices of $95 for the balance of the year. If there is any upside in the guidance that it would be that OCC continues to fall. I think you will see OCC prices continue to decline over the balance of the year. I think the pricing into '09 is going to be determined almost entirely by two things. That's the economy in North America, and exports to China. If I were guessing I think you will see a fairly weak OCC market at least for the next six months to eight months.

Great. Thank you very much, guys.

You're welcome.

Our next question comes from Mark Wilde with Deutsche Bank. Please proceed with your question. Mark Wilde – Deutsche Bank: Good morning.

Hi, Mark. Mark Wilde – Deutsche Bank: I like to just follow-up on the cost side. I mean, seems to me the other places you maybe seeing some relief now are kind of things like energy and resin. Can you just comment on that?

We clearly have seen natural gas fall, but we are hedged on about 75% of our natural gas into any given year, Mark, so we are not going to benefit to that to the extent perhaps some others might. We certainly will benefit as diesel fuel comes down on our freight side. We have not seen quite the relief that we anticipate on the resin side. It's slight a pretty high, and June and July and we felt we will start seeing some decline in August, but hurricane at least affected us. And we had difficulty getting resin now. I think it will continue to decline over the balance of the year and that will be some benefit to us. Mark Wilde – Deutsche Bank: And just sort of back on the OCC issue. If prices stay where they are at or they go down further, how was that going to affect do you think the paperboard pricing over the next three to six months? Do you wind up having to kind of give some of that back?

If I look at our tube pricing, Mark, probably about 55% or 60% of that is tied to an OCC indicator that reset itself at the beginning of the quarter based on the last month in the quarter. So obviously we have locked in on the price that for the balance of this year would be adjusted in the first part of the year. The paper industry as you well know as well as any others we're seeing significant cost other than just raw materials and I am talking about energy costs and others. So our hope is that we will be able to maintain the pricing that's out there. Mark Wilde – Deutsche Bank: And then just switching gears a little bit here. Could you talk a little bit about what you think we may see in terms of kind of packaging services over the next few quarters? How do you expect that business to perform in an economic slowdown? Do you actually see more promotional activities, less promotional activities, use of point of purchase – ?

I think I was asked this question at the – either the April conference call or either the July conference call and my answer was we have not been in this business before during an economic recession, but my folks told me normally during economic recession particularly in 2000 and 2001 that they saw increased volume as people were continuing to advertise more. We clearly have not seen that impact. We have seen weakness in that business and it's being attributed to customers telling our folks that they were basically holding on to their advertising dollars, on their promotional dollars right now. So if they are doing it right now because they have to anticipate we are going to continue to see that phenomenal working certainly through the next couple quarters. Mark Wilde – Deutsche Bank: My last question for Charlie. If the euro stays where it's at to the $1.34 today, any idea what that will mean for you as you look into '09?

The impact that we have in this quarter is $26 million on sales, lot of that the euro is all translation, and then of course you have to then translate sales, cost of sales, all the way down to net income, and our calculation show that it was about $2 million or $0.02 a share. So it's just a calculation so if you didn't have that that's top line calculation effect we will have it on the bottom line. It doesn't really – because we buy and sell for the most part locally, we don't do a lot of cross-border transaction it doesn't affect us economically, really just affects the reported results as they come to the translation process. So I would expect if you just said if we didn't have a – we had a flat dollar in the third quarter we would probably have $0.02 less per share. Mark Wilde – Deutsche Bank: Very good. Thanks.

Our next question comes from Ghansham Panjabi with Wachovia. Please proceed with your question. Ghansham Panjabi – Wachovia: Hey, guys, good morning.

Hi, Ghansh. How are you? Ghansham Panjabi – Wachovia: Good. How are you, Harris?

Good. Ghansham Panjabi – Wachovia: Looking at the consumer packaging business more specifically, Harris, I was wondering if you could just break out the different niches, composite cans, flexible packaging, et cetera, and just talk about what's happen on the competitive side? Margins on this business have seen quite a bit of an erosion over the last couple of quarters, and some of this probably is inflation-driven, but I am just curious on the competitive side?

I don't know that we have seen a lot more competitive activity there, Ghansham, than normal – Charlie mentioned we lost a little business in the flexibles to a bid. But overall, I think no more competitive activity is normal. On the composite cans side, we continue to see good opportunity of conversion because of metal prices, and we saw conversions of coffee and anticipate that continuing. When I look at the consumer side, I think the consumer side is operating pretty much the way I would expect it to be operating. And you look at the margins, EBIT margins, in this quarter, basically they were affected by two or three things. And one Charlie mentioned the customer in the U.K. that was down from (inaudible) of a month as they moved their filling equipment and that's a largest customer, they built some inventory and obviously, you worked out inventory. They are now back up and running. The quality claim that Charlie mentioned we don't have any of these and I am pleased with that that this was an international customer and PIF had asked us to strengthen the end because they were having some issues in transit and we strengthened the end. We strengthened it to the point that was hard for anybody to open. So we obviously took back about a 1.7 million of ends, which obviously affected it. Charlie mentioned we've had several bankruptcies of customers. We had one customer in the rigid plastics that we took about $700,000 hit on in the quarter, so if you factor those things out our margins are about where they have been for the last couple of quarters. Talking about bankruptcies I will say that we are keeping a very close eye on all our accounts receivable and I believe that is the end of the quarter, we had more than 100% accrual reserves set aside for any customers over 90 days or more. So it's a concern to us, but I think we are on top of that. Ghansham Panjabi – Wachovia: Okay. And in terms of the phenomenal free cash flow you generated, your balance sheet being in the best shape at least in since I've covered the company, clearly, the competitive environment also going to go through a distressed phase, as the credit cycle has lasted a little bit longer than anyone would have thought. What are you doing in the interim? Do you just kind of wait it out, build cash on the balance sheet or do you start getting a little bit more offensive?

Ghansham, I think what you do right now is you just wait it out, read the signs and signals, at the right time, hopefully you hit the right time and you move it. But I think at least from our perspective it's Sonoco with a credit crisis that we have out there right now and the ability on people who need to borrow money being what it is we will be grateful in serve our cash and look for opportunities. Ghansham Panjabi – Wachovia: Okay. Sounds great. Thanks so much.

Thank you.

Our next question comes from Chris Manuel, KeyBanc Capital Markets. Please proceed with the question. Chris Manuel – KeyBanc Capital Markets: Good afternoon, gentlemen.

Hi, Chris, good morning.

Good morning, Chris. Chris Manuel – KeyBanc Capital Markets: Couple questions for you. First of all, if I could dissect a little further into maybe in the composite can business, where you saw a bit of a bifurcation with, you mentioned some European dough customers that were softer but in North America doing better. Is there any – I think you gave some explanation of why the European business is a bit slow in general with the customer, but with some other products, but is there anything in particular that is happening to affect the competitiveness of the product?

Chris, there is nothing that is on my radar screen. It's still – I think it's probably just slowness in the season for dough.

That's a through the wall operation so that's a (inaudible). Chris Manuel – KeyBanc Capital Markets: That's helpful. Here picking up, and they are slowing down, I know there was a difference in trend. The second is if you look at last couple quarters, I know tube, core volumes have been off a bit in Europe, but if memory serves, the piece you referred to as Frontier Europe had normally been up double digit. Anything more recently in a changing trajectory in developing regions, not only in tube and core, but in any of your products, you think of developing regions?

Charlie's looking at his notes.

I give you the numbers, and then we can put some color to it. That you're absolutely right. We've said that in the Frontier, at the end of the second quarter, it was up 9%, Russia was up, Turkey was up 10%, and here I've said in the third quarter, that it was up 5.3% and Turkey was up 10.7%. These are pretty small numbers, so I don't think there is any significant change that I heard of in our –what we call Frontier Europe businesses in terms of major shift. Chris Manuel – KeyBanc Capital Markets: How about any of the other products lines as you look into Brazil, as you look into Asia, as you look into – whether consumer, whether it's any of product line?

I think Charlie mentioned, Chris, is that we have seen slowing in tube and core in Europe and Asia as well. So obviously some slowing there. On the consumer side, the composite can side, the opportunities in Asia, continue to be very strong and there are certainly on the international opportunities that we are working on now on the private and performance side, moving folks from tin into composites. So it still seems to be very good opportunity. Chris Manuel – KeyBanc Capital Markets: Two last questions. The first is now every few years you typically take a step back and review the footprint for and to kind of right size it with (inaudible) for end markets and migration et cetera. With some of the continued slowing volumes here in North America and some further shift in Europe, is there – what is the effect or do you feel there is a need to review the footprint again for any potential restructuring type activities?

Chris we are always looking at the footprint and that is not necessarily something that we do in times of slowdown. We look at it at all times, as I think you do know. But clearly as we see these volumes slowdown around the world in some of our businesses, we are questioning what the footprint will be and what is the affordable fixed cost that we have to add to maintain the kind of margins that we want to generate the value for our shareholders and you know we are looking at that affordable fixed cost as we speak and I would anticipate something to in fact come out of it. Chris Manuel – KeyBanc Capital Markets: That's helpful and then the last question I had is as we – it kind of come back in connection to last question with free cash flow. On one hand you have indicated to us that your – in the acquisition pipeline is you are looking at lots of different things, and separately you have told us that if you didn’t find anything by year-end you may look at a share repurchase. How do you – does the credit situation change that i.e. it makes you more inclined to hold the cash as opposed to do share repurchase this year.

I don’t want to speculate on what we might do from an acquisition standpoint or buying back shares, but I will say like I did right now in our opinion it is not a bad time to have cash sitting around. So you can read what Chris Manuel – KeyBanc Capital Markets: Fair enough. Thank you gentlemen.

Thank you Chris.

Our next question comes from Tim Burns with Cranial Capital. Please proceed with your question. Tim Burns – Cranial Capital: Hi Harris and Charlie.

Hello.

Hello Tim. How are you? Tim Burns – Cranial Capital: Nice to hear your voices. I missed part of the call. I apologize. The question – one of the questions I had was do you see the composite can in the states picking up any volume based on the environment and the green footprint type of thing?

Tim absolutely, I mean we have converted two of Kraft's coffee metal into composite and one of the things they wanted was approve that this was totally recyclable and green and they actually used that advertisement on the label. So, we are seeing a lot of opportunities in the composites, A, we call this sustainability, and B, which probably drives the cost differential which continues to widen between composites and metal. Tim Burns – Cranial Capital: Got you. Got you and the other question I had was if you guys could get the Cinnabon account. I’ve got a feeling your volumes would rise?

It is a joke. Tim Burns – Cranial Capital: I mean that is like a dinner. It is like a steak, I don’t know if you guys had that one but –

I better have one. Tim Burns – Cranial Capital: You got to try one.

I will do that for you too. Tim Burns – Cranial Capital: You can call home to your wife and tell her not to cook dinner tonight?

Shall I do it tomorrow night? Tim Burns – Cranial Capital: Absolutely.

Okay. Tim Burns – Cranial Capital: The other question I had was you know you have got this one phase of the customer strategy and you know I have seen you get into like personal care containers and I – you know what I have read about your strategy is you know we are willing to provide services and products of a wide range that benefit our customers, I mean how far does that go? Are you willing to go even you know deeper or further afield to make you know one of your many, many blue-chip customers happy?

No, we have the portfolio Tim that we need at this point and it is working quite well. I have a chart that I have used on many presentations. It shows how we have grown the business through this strategy across the numerous portfolios and I will be happy to share it with you but it is going quite well and I don’t see the need right now to extend the value offering. Tim Burns – Cranial Capital: And I heard, again I may have missed this. So, I apologize, but I heard that there was a loss of flexibles in a bidding process, but generally speaking how do you feel about flexibles, has it made more progress, is it closer to your targets?

It is certainly performing much better from an operational standpoint and from a P&L bottom line standpoint then it was over the past year and a half and basically nothing but improving conditions. I frankly don’t even recall who the bidding contest was with, but I think we will continue to see flexibles improve as it has this year. I think there will be some exiting new business that I can talk about in December that I cannot talk about today, but basically we feel very good about it. Tim Burns – Cranial Capital: Great and one more piece of advice, when you have the (inaudible) make sure you are sitting down.

I will certainly follow your good advice Tim. Tim Burns – Cranial Capital: Hi Harris and Charlie have a good one.

You bet.

You have a follow up question from Mr. George Staphos of Bank of America. Please proceed with your questions. George Staphos – Banc of America: Thanks everyone. As far as flexible packaging goes and obviously you have improved the performance relative to last year which was obviously a very tough year for the business Harris. Do you see a need to invest any more within the business or invest at a higher run rate then what you have seen in 2008. Can you give some idea in terms of the level of invested capital you have in the business currently and are you happy with the return on capital within flexible packaging?

Well George you asked me about 4 questions as you normally do which is fine. First of all, I do not see the need to invest significant amounts of capital in that business right now. We have – we have improved the efficiency of the equipment and the changeover times and so we have basically created the capacity that I think we need particularly on the flexible side for the next several years. So the answer to that is no. We – I don’t know, I just keep repeating myself we have seen improved performance over there. Is it returning the kind of returns on that capital and I expect them to get? No, it is not. Am I satisfied with the returns today? No, I am not. George Staphos – Banc of America: Is it earning cost to capital Harris maybe –

It is on the cost to capital George. George Staphos – Banc of America: Okay. Now switching to the bottles business, you know we have been hearing some of the early reports discussion about customers pushing backwaters and taking inventories down and certainly not (inaudible) given what has been going on the last several week and months. Have you seen any kind of similar developments within your business and with some of your bigger customers. If you had mentioned earlier I had missed it.

George, I think we have only seen that with one customer and it is not widespread but they have – I think there has been some destocking at that particular customer. George Staphos – Banc of America: Is it a big customer?

It is not a small customer. But that is one of the things that I think is Charlie and I both pause in our forecast for the month – for the quarter and that is I think Charlie said the consumer side right now the run rate particularly in composites is what we would expect it to be and normally we see that run rate continue up until the second week of December. We are more conscious this year because I think there is going to be reluctance on peoples part to build a lot of inventory for the holiday season in anticipation that the consumer might not try as much and so that is the real question for us in this quarter as Charles said one of them. George Staphos – Banc of America: I know we will talk about this in December, but as you think of 2009 what do you think will be the levers at the disposal to – or just trendwise that will help you grow earnings or EBIT next year or is that perhaps understandably so not necessarily on the horizon?

I guess we are going into the budget – we haven’t started our budget process for 2009 and we will start them in a couple of weeks but clearly I think volume next year is going to be issue and the economy is going to be an issue. I think the levers that we will pull will be on the productivity side, which I currently anticipate our productivity numbers to be as good next year as they have been in the last several years and we will look at the cost side. We will prudently use cash as appropriate to improve those numbers either from acquisition or otherwise, but I think those are the kind of levers that we will pull next year George. George Staphos – Banc of America: Okay, well that is relatively well I would think. Thanks guys I will turn it over.

Thank you George.

Thank you.

There are no further questions in queue at this time. I like to turn the call back over to management for closing comments.

Well, thank you very much and again let me again thank all of you for joining us today. We certainly appreciate your interest in the company. Please reserve the date of Friday, December 5 to attend Sonoco’s annual breakfast meeting with financial community in New York. You are invited to join our senior management team for an operating and financial update including a review of new products like Harris alluded to. The breakfast meeting will begin at 7.30 a.m. in the Grand Hyatt Hotel Manhattan Ballroom. Our presentation will begin at 7.50 a.m. followed by your questions. Invitations will be sent out next week and we ask that you RSVP in advance so that we have an idea of how many people will be attending and we certainly look forward to meeting with you in New York on December 5. As always if you have any questions please don’t hesitate to give us a call and thank you for attending.

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