Feb 08, 2007. /Lesprom Network/. Sonoco, the global packaging company, reported on February 7 earnings per diluted share for the fourth quarter of 2006 of $0.39, compared with $0.38 for the same period in 2005, it was announced by Harris E. DeLoach, Jr., chairman, president and chief executive officer. Results for the fourth quarter of 2006 included after-tax restructuring charges of $17.4 million ($0.17 per diluted share) related to previously announced cost-reduction measures primarily focused on certain of the company's international operations. Results for the fourth quarter of 2005 included after-tax restructuring and non-recurring or infrequent and unusual expenses totaling $19.6 million ($0.20 per diluted share) related to additional tax expense associated with the repatriation of foreign earnings, an increase in the environmental reserve at a subsidiary's paper operation and restructuring charges. Base earnings per diluted share for the fourth quarter of 2006 were $0.56, compared with $0.58 for the same period of 2005. "Base earnings during the fourth quarter of 2006 were above the high end of our guidance and First Call's mean estimate and just under the unusually robust results generated in the same period in 2005," said Mr. DeLoach. "Base operating profit increased year over year as strong productivity and increased selling prices more than offset higher costs of labor, material, energy and freight; slightly lower volumes; and an unfavorable shift in the mix of business. However, base earnings were lower in the fourth quarter of 2006, compared with the same period in 2005 due to a higher effective tax rate on base operating profit." Net sales for the fourth quarter of 2006 were $990 million, up 3.6%, compared with $955 million in the same period in 2005. According to Mr. DeLoach, "Sales increased in our tubes and core/paper, consumer packaging and packaging services segments during the fourth quarter. The overall increase in sales was due primarily to higher selling prices and favorable foreign currency translation." Net income for the fourth quarter of 2006 was $39.5 million, compared with $38.8 million for the fourth quarter of 2005. Base earnings totalled $56.9 million, compared with $58.4 million for the same period in 2005. Cash generated from operations for the fourth quarter of 2006 was $151.7 million, compared with $66.7 million for the same period in 2005. Cash flow increased due primarily to lower benefit plan contributions, as the company contributed $2.9 million in the fourth quarter of 2006, versus $65.5 million in the same period of 2005. In addition, the company's working capital improvement initiatives contributed to the improvement in cash from operations. Capital expenditures and cash dividends were $35.8 million and $24 million, respectively, in the fourth quarter of 2006. For the twelve months ended December 31, 2006, net sales were $3.7 billion, up 3.6%, compared with $3.5 billion for 2005. Net income for 2006 was $195.1 million ($1.92 per diluted share), up 21%, compared with $161.9 million ($1.61 per diluted share) during 2005. Net income in 2006 was negatively impacted by after-tax restructuring charges of $20.9 million, all of which relate to previously announced cost-reduction and restructuring activities. Net income for 2005 was negatively impacted by $10.1 million of additional tax expense associated with the repatriation of foreign earnings, a $7.6 million after-tax expense to increase an environmental reserve and $13 million of after-tax restructuring costs. Base earnings for 2006 totalled $216 million ($2.13 per diluted share), up 12.1%, compared with $192.6 million ($1.92 per diluted share) for 2005. The increase in base earnings for 2006 was primarily due to productivity improvements and maintaining a positive selling price/material cost relationship. These favorable factors were partially offset by increased costs for energy, freight and labor, along with an unfavorable shift in the mix of business. "2006 was a strong year for Sonoco. We achieved record sales, net income and cash flow from operations. We produced a third consecutive year of operating margin improvement driven by strong productivity gains and a continued focus on price management, cost reductions and the turnaround of under-performing operations. Our initiative to reduce working capital strengthened cash flow, which we used to further grow the Company, increase dividends, reduce debt and buy back stock. We continued to grow sales from new products and received a number of awards for packaging innovation. In addition, our employees developed new initiatives to better serve the changing needs of our customers," DeLoach said. "While we are proud of what was accomplished in 2006, we remain focused on accelerating top-line growth, further improving margins and building cash flow to help meet our ongoing objective of providing shareholders with average annual double-digit total returns." First quarter 2007 outlook Both the upcoming quarter and annual forecasts are given assuming no significant change in companywide volumes and/or prices due to a change in general economic conditions. Sonoco expects first quarter 2007 base earnings to be in the range of $.47 to $.50 per diluted share. The first quarter of the calendar year has historically been Sonoco's weakest quarter of the year. However, as a result of the company's accounting calendar, the first quarter of 2007 will benefit from six more calendar days than the same period in 2006. As previously announced, the company expects full-year 2007 base earnings per diluted share to be in the range of $2.28 to $2.31. The company's earnings guidance reflects an expected effective tax rate of approximately 35 percent during the coming year. Founded in 1899, Sonoco is a $3.7 billion global manufacturer of industrial and consumer packaging products and provider of packaging services, with more than 300 operations in 35 countries, serving customers in 85 nations.