Greetings and welcome to the Sonoco Products Company Third Quarter 2009 Earnings Conference Call. At this time all participants are in the 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, Roger Schrum, Vice President Investor Relations for Sonoco Products Company. Thank you. Mr. Schrum, you may now begin.

Thank you Sherry and good morning everyone. Welcome to Sonoco's 2009 third quarter earnings investor call. This call is being conducted on October 22 2009. Joining me today 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 website 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 projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore actual result may differ materially. Additional information about factors that could cause different results and information about the use by the company of non-GAAP financial measures is available in our annual report and on the company's website. With that I'll turn things over to Charlie Hupfer.

Thank you, Roger. Today Sonoco reported EPS of $0.47 per share for the third quarter of 2009. These are our GAAP earnings and they include restructuring charges and also non operating gains and losses. We reported base EPS of $0.50 a share, which excludes those restructuring charges and in this year's third quarter some non-operating gains. This was a good quarter for us. Our guidance was $0.43 to $0.47. So at $0.50 we exceeded the high side of the guidance by $0.03 a share. And as I go through my notes, the general theme I believe will be that domestic volume showed some improvement over the second quarter, price cost was positive and productivity was very good for the quarter. So let me begin by reconciling GAAP net income to base net income. GAAP net income was $47.7 million or $0.47 per share versus base net income of $50.9 million or $0.50 a share. The difference is a net of $3 per share at the charge and that consists of restructuring charges in the quarter net of some one time non-operating income, a little bit confusing so I will walk you through how that affects the P&L. During the quarter we recorded 7.2 million in restructuring charges, those were expenses. And most of that related to the consolidation of 19 divisions in the six business units. We also recorded, as an offset, income of $7 million. And most of that related to a gain on the sell of properties at our former paper mill in China. So the net amount rounds to an extent of $100,000 as the earnings before interest and tax line. This is where it starts to get confusing, because the minority interest impact of that is a charge of $3.1 million and that represents our Asian…

Thank you. We will now be conducting a question and answer session. (Operator Instructions). Our first question comes from Joseph Naya from UBS.

Good morning guys.

Good morning Joe.

Good morning Joe.

I was just curious in packaging services in the quarter; you saw some pretty significant improvement there versus the second quarter. Are there any particular things going on there that led to that?

Joe, this is Harris. I don't think there was anything in particular that caused it. We see in all known seasonality, we see a much stronger third quarter than generally a second quarter and we actually saw that again this year. But that volume is still not back up to what I would call traditional level at this time.

Have you seen, I guess what kind of trends have you seen there and in other businesses in terms of customer activity. Have you seen any pick up or any sequential improvement?

We've seen sequential improvement quarter-over-quarter in most all other businesses. And obviously, for a second and third and the first, it varied and in fact in the second. So we have clearly seen there and most all other businesses, and our customers are, I will have to say, our forecast which Charlie referred to it is basically a bottoms up forecast, it starts with the customers. And I would say that our customers based on what they counted last November-December are optimistic but very cautious. And I would say that guidance reflects that same trend.

Okay. In terms of new products, obviously you've done well with the coffee cans and or in the infant formula. Are there any other things that you can point to at this time, or kind of what is the pipeline that looks like there?

Well, the pipeline of the new products is quite strong. I don't know that if Charlie has mentioned it, but through the quarter, we had year-to-date, we had about a $124 million of new products, a $125 million versus 136 for the total of the year, last year. I think it was about $42 million for the quarter. And in that we have some things that actually are grand fathering all, the snacking seal, but you mention the coffee cans and the Maxwell House coffee can and we have some another conversions and all the ranks that are coming out as well Joe. So we are quite optimistic and confident that we will hit that 125 to $150 million next year as well.

Have you seen a lot of interest from your customers in term of growing out new products? Do you see any sort of change there?

Absolutely. Particularly on the plastic side, we got... you mentioned the coffee can within that, you got the layer in that, we got some fluid calls and some bottle sales. We've got new six or three net can that is out there. And we got some re-talked bows (ph) and a lot of that sort of... probably a lot of activity going on, we are quite optimistic about it frankly.

Okay. Great, thanks a lot.

Thank you, Joe.

Thank you. Our next question is coming from George Staphos form Bank of America/Merrill Lynch.

Hi, guys. How are you, good morning.

Good morning George, how are you?

Not too bad. I guess the question I had to start, and we look at it a little bit differently here, I apologies, busy day with earnings. Even with the sequential pickup in the third quarter and 2% cores and paper. The EBIT number if we look at it correctly, didn't really move much from the second quarter level. If that's correct, what were the impairments to think a better, if you will conversion of volume sequentially to dollar profitability?

George, let me comment just briefly, obviously the Tubes and Cores/Paper segment was up from the third quarter. And that would have been the volume, that would have been the 6% and it is actually by 5.7% if I recall correctly, that was up. And then, where we did see some squeeze. We had a positive price cost in the second quarter in that particular segment and modestly negative one in the third quarter. And again that's because we set those contract prices when OCC was at $60 a ton and then propylene moved up to 80. And so I think that the volume was there or as I said, improvement in the volume was there. But we did see a flip between positive price cost in second quarter and negative price cost in the third quarter. And again though, I mentioned earlier that we may see some of that same impact in the fourth quarter because we would have set the same prices with the September OCC at $80 a ton. And then propylene moved down to 70, and I don't know what it will do through the rest of the year, but it probably shows more weakness than strength.

Okay, understood. I guess, I would have expected to see a bit more incremental profitability given that sequential pick up in volume. But was there any other factor as in the price cost flip that kept if you will led on the Tube and Core segment profitability in the quarter?

George, I would say two things to that. Actually we had two product quality claims in the quarter, and it cost us 7.5 or $0.02 a share which was very disappointing in that one time occurrences and I think behind us. And in addition to that with metal volumes on the industrial side of the business, we have some more on accruals or performance based calculations that kicked in and we had to go back to the first of the year and catch that up and the quarter as well. So that would be... those would be the other few factors that will impact full earnings down a little bit.

Okay. To follow-on and I will turn it over. The product quality claims, can you give us any color on that? And my take on that was that the $0.02 in total impact, right Harris?

I would say more to 7.5 George.

Okay, got it. And the other thing, Charlie do you happen to have for the consolidated operations, the pre-tax had after-tax affect of the restructuring and the gain?

Yeah, I do. Actually, looking at that, I just walk down once again; the EBIT impact, there is a little bit of rounding here. So, it is about $100,000 negative at the income before equity line, and then... so that the income line, its $100,000 negative, there is no tax impact on that number. And then the minority interest, it's a negative 3.1 million and that's what brings the total to 3.2 million. So, as I am looking across this, the as reported EBIT was $74.8 million, $200,000 of restructuring takes back to 75 million. And then interest is unchanged, taxes are unchanged. That means that the income before equity and others is 49 million and base equity and affiliates is 49.1. Everything is unchanged until you get controlling in for its minority interest, which shows that the reported negative $3.7 million, I'm going to adjust that 3.1 of that to take that to on a base earnings income statement to a negative $600,000.

Okay. Thanks very much. I will turn it over.

Thank you. Our next question is coming from Ghansham Panjabi from Robert W. Baird.

Hey guys, good morning.

Good morning Ghansham, how are you?

Good, thank you. So historically on tubes and cores; can you give us a sense as to what volumes do between 3Q and 2Q typically?

Between two and three? I don't know percentage wise, Charlie may as normally in uplift, third quarter is generally better than the second quarter. The fourth quarter generally reflects more like about the second quarter from...

But about the 6% improvement is clearly up there, right?

Yes, it is.

It is about what the, the year-over-year improvement was, because as I said, with 22% down second quarter over second quarter and 17 down third quarter over third quarter. And when we compare, just looking at volumes this us another analysis that division does, it was up 5.7%. So, I think all those pieces fit together reasonably well.

Okay. And then Charlie, you commented on the consumer business, Matrix, plastics has got some improvement there, can you give us some more color there please?

Well the Matrix, plastics sales, they are benefiting from sanitizers sales that in fact running full loud. So, I don't know, and that is obviously related to that H1N1 Flu. And then also we had certainly seen improved volume in the insure products and for grease product, as well as running full out with some of that energy between products that we do. So just a solid quarter for them, from a volume prospective.

Okay. And just one final one Charlie if I could. On pension, the year sort of ended today in terms of where the Pen rates are and what your pension performance has done year-to-date. What can we look forward to for pension expense for next year, in terms of the variance between this year and next year?

Well, the one variable I mentioned that we're running a little bit less than 18% as a positive return but the discount rates will be down to 5.5% range versus a little over six. And so that's a negative factor. I think if you close it right now, there will be about a $25 million improvement in our unfunded position. So it gets sort of washed out there. There are two things that will affect us next year. One of them is the change that was made in February to freeze the plan after 10 years and then the other change would be just this improved performances, the net return versus the discount rate and that will probably add 5 to $0.06. Those two elements alone, if we just close them will add probably about $0.06 a share.

Okay, great, thanks so much. That's very helpful.

Thank you. Our next question is coming from Chris Manuel from KeyBanc Capital Markets.

Good morning, gentlemen.

Good morning, Chris. How are you?

Okay, thank you. A couple of questions for you, kind of follow-up with regards to what Ghansham was just asking. With respect to the volume trajectory, was there any change as the quarter progressed or was it the lift kind of came in June, it's been running at that same improved June level the whole way through. And if you don't mind, Harris, could you kind of address that, looking both -- across the different pieces of business as well?

Well, let me take the Tubes and Cores business. Chris, I would say that what we saw in June basically continued across the entire quarter. We in North America, we didn't see much of a pick-up. But it stayed within the band. In Europe, actually, the first part of the quarter was flat. We did see some improvement in Europe in September and that has continued into October. So we're hopeful that we're starting to see some improvement in Europe in the Tube and Core business. I think Charlie commented on South America and Asia, both of them were up, low single digit range. On the consumer side, the composite can volume is showing more of what I would call a normal seasonality pick-up that we normally see going into the third quarter and fourth quarter. And that's probably the same for the rest of the consumer businesses. And I think I commented in response to -- on the Packaging Services business.

That's helpful. At what point would some of these industrial businesses will start to lap on, what are going to be obviously much easier comparison in the next couple of quarters. Do you anticipate that at some point as such in turn, one would anticipate some of that will start to flip and potentially flat not return positive?

I would think, they will turn positive in the first quarter of next year. The fourth quarter of last year, October was a reasonably strong month as I recall. And we saw, certainly the downturn in October and November. So we speculate our fourth quarter is going to be comparatively vast. But clearly in the first quarter, we'll start running in much easier comps over time.

Yeah that's helpful. And then last question I had was, kind of few parts, was on the restructuring side, some of the stuff you announced going from 19 divisions to six. I think you mentioned a 20 million savings. How should we anticipate the phasing of that flowing through, is the first part?

Chris, we are in the embryonic stages of that now. We've obviously seen some of the savings as we had some reductions of people. There will be also be some structural savings that will probably take place in the first quarter of next year. So I would think by the second quarter next year, you should start seeing that coming in.

Okay and then the second part of my question with the restructuring stuff was, from looking through that release, it seems that most of that has generally been business realignment and streamlining the organizational structure.

Oh that's exactly what it was. Chris, the intention of this was obviously -- I mean, to reduce some cost which is positive. The idea and objective of this was to basically streamline the organization to what we felt like volume levels were going to be when we come out of this recession and create an organization structure to grow the business for the next decade. I think that's what we've done.

Okay. So let me -- may be I -- as I look at how you've been running and that too in Core segment who's volume are in the high teens, low 20's, you kind of at about half the profit levels you used to be, looking at last year or even going back '07, '06 sort of level? It seemed that at least my impression was most of the actions were -- that you've taken thus far have been more personnel streamlining and less of structural, i.e. closing footprint consolidation, things of that nature. And there A, maybe correct me if I'm incorrect there, but B, could you talk about the thought process to potentially address the footprint as well?

Well, that is an ongoing exercise, Chris. But you are, in my opinion, you are incorrect as well. Because in -- this process started not to realign the process, but addressing the footprint. We basically started at the beginning of '08 and since that time we've taken about 16% of head count out of the industrial side of the business. We've close four paper mills. I forget how many converting plans seven or eight in the process. So we have clearly been addressing over the period of time. And there are couple of more plants that will likely come out over the next 12 to 18 months internationally. But and that's in the Q I think, Charlie is looking at.

That's right. We'll delineate all that in the Q that'll be out next week. But what we have taken out a number of plants. So I'm just reading this, the 2009 actions, the company initiated closures in it's Tubes and Cores paper segment, including a paper mill, five tubes and cores plants, three in U.S., one in Europe, one in Canada. I think if I read through the rest of this, we'd see that this has been an ongoing thing and there's been a lot of structural change.

So I would say Chris that we've been aggressively ahead of the curve on what we felt the curve was going to be when these volumes started falling in the middle of late '07 downwards.

Okay, thank you for the color, gentlemen.

You're welcome, Chris.

Thank you. Our next question is coming from Claudia Hueston from J.P. Morgan Chase & Co.

Hi. Thanks very much. How are you?

Hi Claudia, how are you?

I'm good, thank you. It was quite challenging in the quarter and I know Charlie, you talked about some of the puts and takes of the first quarter but it is still looks like you're going to see and really get to the sense (ph). I was wondering if you could just talk a little bit about your priorities for cash, how you are thinking about things? And may be just comment also on the M&A environment. I know you said when you were talking about the position to put money into the pension, that there weren't any acquisitions that are eminently happening here that but maybe just comment on the environment as a whole and what you're seeing out there? Thanks.

Claudia, thank you. As Charlie said, we've been looking over the couple of months. We're not required to make a pension payment this year. And in fact with the new regs of September, we're probably not required to make one in 2010 either. However, we have as you pointed generated a nice amount of cash this year. We have no commercial paper outstanding at the end of the quarter and our debt to capital is frankly lower than I'd like to have it. And as I look at over the next couple of years, I think we are going to see a fairly active M&A activity for the company and environment driven by a couple of things, the least of which is not the fact that some individuals who own businesses, I think probably think the taxes are probably going to go up in this country. And that -- maybe the sentiment was right. So we're probably being a little conservative about our pension situation and saying, we have the cash now and we're not going and replacing the pension contribution and we'll probably do it before year-end rather than late into 2011 or 2012 when we maybe -- we would be more active we think in the M&A. As Charlie said, we don't have anything significant, large significant acquisition on the board at this point in time. I generally say, I'm not going to comment about acquisition activity, that Charlie's already commented on that. But we do in fact; we always have dialogues going on. But that's still our top priority and we'll look from time to time and start buybacks and that's the second priority. So hopefully that that gives you some flavor of my thought process.

Yeah, that helps quite a lot. You mentioned that the caps are probably a bit lower than you'd like. I mean where are you really comfortable with that on a longer-term basis?

You know I think we have been obviously over 50% level I think in the mid 40 level, debt cap is probably where we're more comfortable.

Okay, great, thank you.

Charlie's even agreeing with me.

Thank you, our next question is coming from Chip Dillon from Credit Suisse Group.

Hi. Good morning.

Good morning, Chip.

First question; just on the pension, you mention that if you froze everything today, I guess the plan... the liability would be 25 million lower. But when you look at the actual cash contribution from that, do you see that changing a lot from this year to next year?

It would have been affective. I don't know how to answer that because if the pension protection actually rules are entirely different from the FAS 87 calculation. And that's why we said that, if the unfunded position hasn't change substantially, we still be around 28% unfunded and at this, if just you take in the consideration, the performance today than the change in the discount rate. I would think that over the long haul and that may make some concessions obviously is the results of this release act to put this company in a position where they don't have to make it sizeable pension contribution. But over the long haul, you got to recover that on deficit position. So, before this, we would have said that, that the thinking was over above a five year period of time, that unfunded position had to be covered. That's not true for 2010, but I don't know any reason why it wouldn't be true, going out. So, we certainly still have to have to some combination of improved pension performance and funding to recover that negative position.

Got you. And Harris, I know you were talking and not to forget, price that closed one of your own acquisitions, but you brought up a great plate which was, at the end of 2010, capital gains rates go up and there is a lot of other uncertainty about what people pay? Will they sell their businesses or sell their stock? And my question is I guess is, when you sort of look at your flexibility to look at all your alternatives, what is your... could you just review for us quickly, what your unused lines are, you mentioned you don't have commercial paper out. What kind of capability would you have there assuming you did issue equity?

Well, let me clear, I intend not to be the issue of equity. So let Charlie talk about the credit side.

I can certainly talk about part of it. This third quarter isn't anything like last year or fourth quarter isn't anything like last year's fourth quarter. We could certainly... the bond markets have opened back up for us and we could certainly issue that and it would probably be under 6% range for 10 years. So, I mean that's always a possibility. Now our commercial paper program is a $500 million program, its fully back stocked, its going to back stop and then expire until the year 2011, I think April or May 2011 and we have been in talks with the banks to know that those markets have open back up again. So we won't have any trouble re-establishing the back stocks when the time comes. So, unless we hear on the credit side, we have all the flexibility that is required. And frankly, when you talk about pension and unfunded position, we considered that a debt too. And so, using some cash and/or debt capacity to pay down some of that unfunded position really is just a wash from the perspective of capacity. So I don't think anything we have said suggest that we don't have the capacity on the borrowing side, not equity but on the borrowing side to do everything that we would expect to do in inside our strategic thinking.

Got you. And then, just last question. As we kind of gone into this tailspin that hopefully we are comfortable well on the way of coming out of have you, can you talk a little bit just in general terms about what your customers, especially in the customer side are thinking in terms of developing new delivery/packaging systems. I know that's a big effort you have there. And has the appetite for that, did it vain from point, has it started to come back or did it just remain constant throughout the recession?

No Chip, it hasn't remained calm, constant. I think our consumer customers were clearly impacted by our customer spending turning down and they reacted in advertising dollars and hunkering down. You know they certainly have not turned on performance lease, but we are certainly seeing more discussions about sustainable packaging, about how we can create new offerings that can help us grow the side of our business which fits right into what we talk to them about creating value products like Maxwell House Coffee is obviously a good example of that. They are advertising now this new package with the seal click, there is a way to try to grow market share. So the elevation that we are doing plays right in to what they are trying to do.

Got you. Thank you.

Thank you very much.

. Thank you. Our next question is coming from Steve Chercover from D. A. Davidson.

Thank you. Good morning.

Good morning.

When Charlie went through the EBIT bridge, I guess I would say that volume and price cost ratios, basically you had good control but productivity is perhaps the one thing that you can't control, is there still much to be secured there?

Absolutely. We have productivity efforts. If you go back, I guess eight to 10 years and it's based on Lean Six Sigma and we have a goal that we are trying to drive somewhere around 2.5, 2.75% cost out of our business on productivity. And when we look out in to 2010 right now, I mean we know basically what the 2010 productivity number is going to be because we have found if you don't have productivity lined up from mid-year for the next year, if you generally just don't get it. So we funded it, we put people in and we feel very optimistic about the ongoing productivity program.

Great. Many of my question been answered but with respect to the cash, I heard you loud and clear that you would talk about the pension. You mentioned share re-purchases as maybe second priority. I'm surprised that the dividend wasn't mentioned since it's the first year that you haven't raised in a decade?

Well actually, you said some thing's right and some things wrong. Actually our second priority would be to grow the business and with acquisitions and the share re-purchase would actually be our third priority. Actually our first priority is that dividend because I probably get links (ph) of our shareholders if we did something with that. So obviously, we will continue to pay the dividend. It's very important to us. We have the cash flow to do it and at the proper time we will look to increase that.

Thanks very much.

You're welcome. Thank you.

Thank you. Our next question is coming from Al Kabili from Macquarie Group.

Great. Good morning guys.

Hello, Al. Good morning.

Just Harris, I wanted to ask you a question on the competitive environment and one of your major competitors just recently been emerged from Chapter 11. And wanted to see if there's been any meaningful change in the competitive environment in Tube and Core?

I would say there's not been any increase or decrease in competitive activity than we would have expected in any kind of economic downturn. In fact, I would say it's probably been less competitive than the activity that now we're seeing in all the recessions and the competitor you are talking about has always been a good competitor. And in fact, they understand about making money and I think they may have led the last price increase in paper. So competitive activity is quite good.

Okay. And they what's certain I guess is that paper board prices have been increased recently with OCC. I haven't heard the same on Tube and Core and usually, that follows a paper board price increase. I wanted to get your thoughts there?

Following my lawyer's advice, I don't talk a lot about pricing on these conference calls but much of our business is under contract and we are always renegotiating these contracts as we go along.

Okay, okay and then lastly, just wanted to clarify on the guidance for 4Q. Are you assuming tube and core big volumes flattish sequentially in the guidance? I'm just trying to struggle with that. If you take away the kind of the $0.03 benefit from the unusually low tax rate, you're at best, flat sequentially in terms of earnings. You've got price mix potentially at tail-end as you've mentioned in Tube and Core, you got a little bit of a benefit from FX. I mean seasonally there's not been, usually too much difference, I'm just trying to reconcile that.

Normally, what we are budgeting, I think our forecast is that we will see the normal seasonality in Tubes and Cores in the fourth quarter. But we're saying would be the normal shutdowns that we would anticipate and our customers in particularly the Tube and Core, they only take down around Thanksgiving and depending on inventories, around Christmas. And we're saying that we think we will see a normal year there. And normally the fourth quarter's a little volume wise is a little down from the third quarter. And that's what we're anticipating to the extent that obviously the economy, the inventory levels are having in fact more downtime to the extent that -- sales are better they will probably take less. But that's probably the best color we can give at this point, Al to be perfectly honest.

Okay, very good, thanks.

Thank you very much.

Thank you, our next question is coming from Christopher Shunk from Deutsche Bank.

Yeah thanks. Good morning, Harris. How are you?

Good morning, Chris.

Hey, I -- just wondering, what is your normal tax-rate, what should we use for 2010 and beyond?

Charlie.

Yeah. And we'll obviously give that with some fair guidance at our Analyst Meeting that's coming up. But I would expect it would be about 31, 31.5% would be ordinary rate. And we have certainly benefited from some of the tax planning initiatives that we put in place. And then actually I guess, just thinking that through, this 30.5% that we've projected into the fourth quarter doesn't have any special adjustments to as such. I would be inclined to think 31% would be a pretty good overall number we'd use.

Okay. And then I have a question about perspective margins in consumer packaging in 2010. As far as I know you don't want to talk about potential crisis. But this is more a question about how your contracts are structured and the lag that may be in place between the movements and resident implied costs. If those costs remain where they are today, should we expect a meaningful change in those margins in 2010 compared to where there are in quarter two?

If they were to stay where they are, I would not expect a meaningful change. I think the key to that is basically returning some of these contracts. Some of them, we said the first year and some mid year. And we'll try to give you some more color of that in December, Chris as we get along and see what the movement really looks like.

Okay. So there are not any significant sort of lags that are waiting to be adjusted at the end of the year?

I wouldn't think so.

Okay. And then my final question has to deal with Tube and Core margins and OCC cost. Here you mention that the higher OCC cost in 3Q were a head wind for margins, but you do your own collecting. So I guess I am wondering, how what you pay at the point of collection varies with public OCC cost, whether that's just a one for one ratio there?

No, not necessarily. But I think what Charlie was saying is basically on the tubing cost side in the third quarter we had an $70 OCC, a $60 OCC at the beginning of the quarter and we actually had $80 OCC and that was the hidden one that we had. I think he also mentioned in the fourth quarter, we said in September that I think $80 a ton and now its $70 a ton. And we can speculate on what it's going to be in the next quarter. But we don't see a lot of variation over the course of the year in that because we're restating that quarterly Chris to be honest.

Right, but I guess I'm wondering how much variation is there in terms of what you pay at the point of collection per recovered paper?

I'm not sure that it has a lot of variation. They move on under different basis. So we buy at a percentage below yellow sheet price or we may buy at a dollar amount below yellow sheet price. And whenever I was talking about the $78 compared with 110. Our contracts will use as an index, the yellow sheet, obviously that's our basic raw material. So it goes into our production process from that point that we buy OCC, there is freight, there is dealing, the whole collection effort, but our overall costs are going to run pretty much in portion. So when OCC dropped 30% and now they have mentioned as the fact that our total furnish cost which is that loaded cost was down 32%. So they are moving in large steps.

Okay. That's helpful. Thank you

Okay.

Thank you. Our next question is coming from David Leibowitz from Horizon Asset Management.

Good morning or good afternoon at this point.

Good morning.

Firstly, the acquisitions you are looking at, are they more consumers or are they more industrial.

I wouldn't say they were more either David. We are looking on both sides of the equation with different types of acquisitions on those side, but I would say its probably 50-50.

Do you have a preference?

Well, I am looking both of them differently. Actually, on the consumer side, if its tube and core, they have consolidation opportunities and they have probably more of the P&L impact immediately, because we're consolidating into number of our plans. I look at the consumer side more in the long term growth side of it. So its all of the balancing act actually.

And in terms of pension funding, when we enter next, you said don't have make a contribution but you probably will, is that correct Charlie?

That's what I had said.

And coming out of next year, presuming that the stock market is kind to you and meets your necessary allotment. Where do you wind up, will you then be equal to what you actually have unfunded or you still have an un-funding?

There is still an unfunded position. Because as I said, we are about... our U.S. plant is probably $260 million, $265 million unfunded to-date. So there would still be an unfunded position. And that I will point out that any funding that we would make in 2009, really is carryover into 2010-11, 12, and so we are really preserving that credit or that carryover credit on the future year. So, we are not doing anything to limit our flexibility here.

And the last question, what are your biggest concerns Harris, to the next year?

My biggest concerns, clearly over the economy that we would be sailing into David.

And that appearance, there are no major accounts you are concerned about losing there in all competitive, evolution is coming up that would make you pause or anything of that nature?

Well, you have always got customers you are concerned about. You have always got competitors you are concerned about, but the thing which keep me up would be the general accounting, we will all be swimming into and the rest of the things we manage quite well as we normally do.

Thank you very much.

Thank you.

Thank you. Our next question is a follow-up from George Staphos from Banc of America.

Thanks. Hi guys. Well, I will try to ask you in sequence, since we are getting late in the call. First question: Harris, in the industrial business, given all the restructuring you have been doing and the further productivity move that you have underway, do you think you should be able and manage the up turn that we hopefully are in relatively well but differently. Is there a level of volume pickup that would begin to impact your efficiency within tubes and cores and industrial business overall? And then related question, I don't know if this is an emergency orders again or lead times or whatever in execute to use to gauge it. But dies it feel like a normal recovery at this juncture given those metrics that you look at?

George, we have plenty of capacity. As we went through this realignment of restructuring, we made certain that we have plenty of capacity to handle on up tick back to what we would consider will be on a normal level. So, capacity is not an issue with us even on either side or our converting side or tube and core, or any of our businesses for that matter. George, I don't know its emergency orders or like that, I don't think that's a right term. But clearly it feels like that as a slow up-tick taking place in all of our businesses, as I said earlier, we saw sequential improvement in all the businesses and that just continued on into the October, least till yesterday and probably this morning. So it feels like an improvement. I think we will see our customers as they approach the holidays. I believe last year they were expecting a much better holiday season and obviously they had. So, I think a lot of the November-December slowdown last year was because of inventories dealt that obviously we are not moving. They have been pretty cautious this year and building that inventory and pulling it down. So I don't think there is a lot of inventory out there, and I think to the extent that we keep at this level, we will continue where we are, if there is an improved concern or containment improve, we will continue to see an up tick.

It sounds like a hands and mouth kind of recovery, it sounds like.

It really is I believe.

Harris, two last ones. One; in terms of the priorities for CapEx next year, you think that you are more new products or productivity driven. And then, what's the latest with the GP arrangements? Thanks, out of the quarter.

I think the bulk of the capital next year would be more new product and they have been basically maintaining a productivity capital. We haven't gotten through the budgets yet, but early signs that is the case. The GP arrangement; we are in discussions now on our contract, some contractual arrangements with them. And I think it would be basically mature presumptuous to me to comment on it George.

Okay. Thanks guys. See you next time.

Thank you very much.

Thank you. At this time, we have no further questions. I would like to turn the call back over to the speakers for any closing comments.

Thank you again Sherry. As Harris and Charlie mentioned, we want to extend an invitation to all interested investors to join us on Friday December 4th, for Sonoco's Annual New York Analyst Meeting. The meeting will be held at the New York Grand Hyatt. However, because of growth and participation, we are going hold our meetings in our larger conference room on the slain level of the hotel. The meeting will also be webcast for those of you that cannot join us in person. As we've done in the past, Harris and Charlie and other members of our senior management team will be on hand to provide you with an update on the company's business performance in 2009 and offer an outlook for 2010. We will also supply you with information on new business developments and hand-on-hand some new products that we will be launching in 2010 as well. We will be sending out electronic invitations letter today regarding the specifics of the meting. If you are interested in attending, please RSPP us in advance so we will have a better idea of the total number of participants. As usual, the meeting will begin with breakfast starting at 7.30 AM and presentation will begin promptly at 7.50 AM. The meeting should be concluded before 9:30 depending upon questions. And again thank you all for joining us today. We always appreciates you interest in the company. And always, if you have further question, please don't hesitate to contact us. Thank you.

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