REGISTRATION NO. 333-69388
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SONOCO PRODUCTS COMPANY
(Exact Name Of Registrant As Specified In Its Charter)
SOUTH CAROLINA 57-0248420
(State or other jurisdiction (I.R.S. Employer
Of incorporation or organization) Identification no.)
One North Second Street
Post Office Box 160
Hartsville, South Carolina 29551
Telephone: 843-383-7000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive office)
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Copies to:
F. TRENT HILL, JR. GEORGE S. KING, JR., ESQ.
Vice President and Chief Financial Officer SUZANNE HULST CLAWSON, ESQ.
SONOCO PRODUCTS COMPANY HAYNSWORTH SINKLER BOYD, P.A
One North Second Street 1426 Main Street, 12th Floor
Post Office Box 160 Columbia, South Carolina 29201
Hartsville, South Carolina 29551 (803) 779-3080
Telephone: 843-383-7000 facsimile (803) 765-1243
(Name, address and telephone number,
including area code, of agent for service)
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Approximate date of commencement of proposed sale to public: From time to time
after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus herein
also relates to and describes such aggregate principal amount of debt securities
as shall result in aggregate proceeds to the Registrant of $100,000,000, which
debt securities are registered under Registration Statement No. 333-12701 of the
Registrant.
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion, dated October __, 2001
SONOCO PRODUCTS COMPANY
[LOGO] (R)
$250,000,000
Debt Securities
We may offer from time to time debt securities. We will describe the
specific terms of the debt securities in supplements to this prospectus. You
should read this prospectus and the accompanying prospectus supplement carefully
before you invest.
____________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
____________________
We may offer the debt securities in amounts, at prices and on terms
determined at the time of offering. We may sell the debt securities directly to
you, through agents we select, or through underwriters and dealers we select. If
we use agents, underwriters or dealers to sell the debt securities, we will name
them and describe their compensation in a prospectus supplement.
The date of this Prospectus is ___, 2001.
TABLE OF CONTENTS
RISK FACTORS.................................................................2
ABOUT THIS PROSPECTUS........................................................3
WHERE YOU CAN FIND MORE INFORMATION..........................................4
SONOCO PRODUCTS COMPANY......................................................5
FORWARD-LOOKING STATEMENTS...................................................5
USE OF PROCEEDS..............................................................6
RATIO OF EARNINGS TO FIXED CHARGES...........................................6
DESCRIPTION OF THE DEBT SECURITIES...........................................6
PLAN OF DISTRIBUTION........................................................16
EXPERTS 16
VALIDITY OF THE DEBT SECURITIES.............................................17
RISK FACTORS
In addition to the other information set forth or incorporated by
reference in this Prospectus, you should carefully consider the following risk
factors before purchasing the Debt Securities.
Conditions in foreign countries where we operate may reduce our earnings.
We have operations throughout North and South America, Europe and Asia
with facilities in 33 countries serving customers in 85 countries. In 2000,
approximately 27% of our sales and 24% of our pretax income came from operations
and sales outside of the United States. Accordingly, our revenues and income may
be adversely affected by economic conditions, political situations and changing
laws and regulations in those countries.
Foreign exchange rate fluctuations may reduce our earnings.
As a result of operating globally, we are exposed to market risk from
changes in foreign exchange rates. We monitor these exposures and from time to
time use currency swaps and forward foreign exchange contracts to hedge a
portion of the net investment in foreign subsidiaries, foreign currency assets
and liabilities, or forecasted transactions denominated in foreign currencies.
Nonetheless, to the extent we have unhedged positions or our hedging procedures
do not work as planned, fluctuating currencies could reduce our sales and net
income. Our financial performance is directly affected by exchange rates by
translations into U. S. dollars for financial reporting purposes of the assets
and liabilities of our foreign operations conducted in local currencies.
We may encounter difficulties arising from integrating acquisitions,
restructuring our operations or closing or disposing of facilities.
We have completed acquisitions, closed higher cost facilities, sold
non-core assets, and otherwise restructured our operations in an effort to
improve our cost competitiveness and profitability. Some of these activities are
ongoing, and we cannot guarantee that any such activities will not divert the
attention of management or disrupt our ordinary operations or those of our
subsidiaries. Moreover, our production capacity or the actual amount of products
we produce may be reduced as a result of these activities.
We have made numerous acquisitions in recent years, are currently
involved in a number of acquisitions and actively seek new acquisitions that
meet our criteria. Acquired businesses may not achieve the levels of revenue,
profit or productivity or otherwise perform as we expect.
Acquisitions also involve special risks, including without limitation
the potential assumption of unanticipated liabilities and contingencies and
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difficulties in integrating acquired businesses. While we believe that our
acquisitions will improve our competitiveness and profitability, we can give no
assurance that acquisitions will be successful or accretive to earnings.
We are subject to environmental regulations and liabilities that could weaken
our operating results.
Federal, state, provincial, foreign and local environmental
requirements, particularly those relating to air and water quality, are a
significant factor in our business. In the past we have had, and in the future
may face, environmental liability for the costs of remediating soil or
groundwater that is or was contaminated by us or a third party at various sites
which are now or were previously owned or operated by us. Legal proceedings may
result in the imposition of fines or penalties as well as mandated remediation
programs that require substantial, and in some instances, unplanned capital
expenditures. There also may be similar liability at sites with respect to which
either we have received, or in the future may receive, notice that we may be a
potentially responsible party and which are the subject of cleanup activity
under the Comprehensive Environmental Response, Compensation and Liability Act,
analogous state laws and other laws concerning hazardous substance
contamination.
We have incurred in the past and may incur in the future, fines and
penalties relating to environmental matters and costs relating to the damage of
natural resources, lost property values and toxic tort claims. We have made
expenditures to comply with environmental regulations and expect to make
additional expenditures in the future. As of July 1, 2001, we had approximately
$4 million reserved for environmental liabilities. However, we could incur
additional expenditures due to changes in law or the discovery of new
information, and those expenditures could have a material adverse effect on our
operating results.
Raw materials price increases may reduce our earnings.
Many of the raw materials we use are commodities purchased from third
parties. Principal examples are recovered paper and resin. Prices of these
commodities are subject to substantial fluctuations which are beyond our control
and can adversely affect our profitability. Even though many of our long term
contracts with buyers of our products permit limited price adjustments to
reflect increased raw material costs and even though we may increase our prices
in an effort to offset increases in raw materials costs, such adjustments may
not occur quickly enough or be sufficient to prevent adverse effects on
earnings.
Energy price increases may reduce our earnings.
Our manufacturing operations require the use of substantial amounts of
electricity and natural gas. These are subject to significant price fluctuations
as the result of changes in overall supply and demand. Increases in energy costs
can adversely affect our earnings.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC using a "shelf" registration process. Under this shelf registration
process, we may sell in one or more offerings up to a total dollar amount of
$250,000,000 of debt securities.
This prospectus provides you with a general description of the debt
securities we may sell. Each time we sell debt securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement also may add to, update or change
information contained in this prospectus.
You should read both this prospectus and any prospectus supplement
together with additional information described under the caption "Where You Can
Find More Information." We may only use this prospectus to sell debt securities
if it is accompanied by a prospectus supplement.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. Our SEC file number is 0-516. Our SEC filings
are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file with the SEC
at its public reference facilities at 450 Fifth Street, N.W., Washington, D.C.
20549. You may also obtain copies of the documents at prescribed rates by
writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference facilities. Our SEC filings
are also available at the office of the New York Stock Exchange, 20 Broad
Street, 7th Floor, New York, New York 10005. For further information on
obtaining copies of our public filings at the New York Stock Exchange, you
should call (212) 656-5060.
The SEC allows us to "incorporate by reference" the information that we
file with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we subsequently file
with the SEC will automatically update and supersede information in this
prospectus and in our other filings with the SEC. We incorporate by reference
the documents listed below, which we have already filed with the SEC, and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to termination of this offering:
o Our Annual Report on Form 10-K for the year ended December 31, 2000;
o Our Amended Annual Report on Form 10-K/A for the year ended December
31, 2000 (amended for the purpose of furnishing the financial
statements required by Form 11-K with respect to the Sonoco Savings
Plan as permitted by Rule 15d-21 under the Securities Exchange Act of
1934);
o Our Quarterly Reports on Form 10-Q for the quarters ended April 1,
2001 and July 1, 2001; and
o Our current report on Form 8-K, dated September 11, 2001.
We will provide you free copies of these filings, other than exhibits
to filings unless the exhibits are specifically incorporated by reference into a
filing, if you write or call us at:
Sonoco Products Company
Attn: Charles J. Hupfer, Vice President, Treasurer and Secretary
One North Second Street
P.O. Box 160
Hartsville, South Carolina 29551-0160
Telephone: (843) 383-7000.
We have also filed a registration statement with the SEC relating to
the debt securities described in this prospectus. This prospectus is part of the
registration statement. You may obtain from the SEC a copy of the registration
statement and exhibits that we filed with the SEC when we registered the debt
securities. The registration statement contains additional information that may
be important to you.
You should rely only on the information contained or incorporated by
reference in this prospectus or the applicable prospectus supplement. We have
not authorized anyone else to provide you with additional or different
information. We are only offering these debt securities in states where the
offer is permitted. You should not assume that the information in this
prospectus or the applicable prospectus supplement is accurate as of any date
other than the dates on the front of those documents, unless the information
specifically indicates that another date applies.
Unless the context requires otherwise, references to "we," "us," and
"our" mean Sonoco Products Company and its subsidiaries.
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SONOCO PRODUCTS COMPANY
We are a South Carolina corporation founded in Hartsville, South
Carolina in 1899. We are a major global manufacturer of paperboard-based and
other industrial and consumer packaging products. We are also vertically
integrated into paperboard production and recovered paper collection, which
means that the paperboard used in our packaging products is produced
substantially from recovered paper our subsidiaries collect. We operate an
extensive network of plants in the United States and have subsidiaries in Asia,
Europe, Canada, Mexico, South America, Australia, and New Zealand, and
affiliates in numerous locations around the world. We have made a number of
acquisitions, and we expect to acquire additional companies that we believe
provide meaningful opportunities in industrial and consumer markets. We may also
dispose of operations when we believe that doing so is consistent with our
overall goals and strategies. Our principal executive offices are located at One
North Second Street, P.O. Box 160, Hartsville, South Carolina 29551-0160,
Telephone No. (843) 383-7000.
FORWARD-LOOKING STATEMENTS
This prospectus includes and incorporates by reference "forward-looking
statements" within the meaning of the securities laws. All statements that are
not historical facts are "forward-looking statements." The words "estimate,"
"project," "intend," "expect," "believe," "anticipate" and similar expressions
identify forward-looking statements. Forward-looking statements include, but are
not limited to, statements regarding offsetting high raw material costs,
adequacy of income tax provisions, refinancing of debt, adequacy of cash flows,
effects of acquisitions and dispositions, and financial strategies and the
results expected from them.
These forward-looking statements are based on current expectations,
estimates and projections about our industry, management's beliefs, and
assumptions made by management. Such information includes, without limitation,
discussions as to estimates, expectations, beliefs, plans, strategies, and
objectives concerning our future financial and operating performance. These
statements are not guarantees of future performance and are subject to risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
results may differ materially from those expressed or forecasted in such
forward-looking statements. The risks and uncertainties include, without
limitation:
o availability and pricing of raw materials;
o success of new product development and introduction;
o ability to maintain or increase productivity levels;
o international, national and local economic and market conditions;
o ability to maintain market share;
o pricing pressures and demand for products;
o continued strength of our paperboard-based engineered carrier and
composite can operations;
o anticipated results of restructuring activities;
o ability to successfully integrate newly acquired businesses into the
Company's operations;
o currency stability and the rate of growth in foreign markets; and
o actions of government agencies.
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USE OF PROCEEDS
Except as we otherwise set forth in a prospectus supplement, we intend
to use the net proceeds from the sale of the debt securities for general
corporate purposes, including working capital, capital expenditures and the
repayment or reduction of bank indebtedness and commercial paper obligations.
RATIO OF EARNINGS TO FIXED CHARGES
The following table shows for the periods indicated:
o our ratio of earnings to fixed charges, as well as
o our ratio of earnings adjusted to exclude gains or losses on assets
held for sale to fixed charges.
Years Ended December 31
Six Months Ended -----------------------
July 1, 2001 2000 1999 1998 1997 1996
------------ ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges ......................... 2.71x 4.53x 5.27x 5.95x 1.92x 5.03x
Ratio of Earnings (adjusted) to Fixed Charges .............. 2.71x 4.46x 5.22x 4.49x 5.18x 5.03x
For purposes of these calculations, "earnings" consist of income from
operations before income taxes, fixed charges and amortization of capitalized
interest, less capitalized interest. "Earnings (adjusted)" consist of earnings
as described in the preceding sentence plus or minus gains or losses,
respectively, on assets held for sale. "Fixed charges" consist of interest on
all indebtedness, capitalized interest, amortization of bond discounts and the
portion of rental expense considered to be representative of the interest
factor.
DESCRIPTION OF THE DEBT SECURITIES
We may from time to time issue debt securities, consisting of notes,
debentures or other evidences of indebtedness, in one or more series under an
Indenture dated as of June 15, 1991 between us and The Bank of New York, as
Successor Trustee. The Indenture is included as an exhibit to the Registration
Statement of which this Prospectus is a part. When we use the term "Debt
Securities" in this Prospectus and the accompanying Prospectus Supplement, we
are referring to all of the Debt Securities that may be issued under the
Indenture, and not merely to the debt securities we are offering under this
Prospectus and the accompanying Prospectus Supplement. We refer to the Debt
Securities we are offering under this Prospectus and the accompanying Prospectus
Supplement as the "Offered Debt Securities."
Because the following is only a summary of the Indenture and the Debt
Securities, it does not contain all information that you may find useful. For
further information about the Indenture and the Debt Securities, you should read
the Indenture and the accompanying Prospectus Supplement. Whenever we refer to
particular provisions of the Indenture or terms that are defined in the
Indenture, those provisions or defined terms are incorporated by reference into
this Prospectus.
The covenants in the Indenture do not necessarily protect you from a
decline in our credit quality due to highly-leveraged or other transactions or
events involving us.
General
The Debt Securities will be our unsecured obligations and will rank
equally with all of our other currently outstanding unsecured and unsubordinated
indebtedness. Except as described under "Certain Covenants of the Company," the
Indenture does not limit us or any of our Subsidiaries from incurring more
indebtedness or issuing more securities. The Indenture does not restrict us or
our Subsidiaries from incurring unsecured Indebtedness and does not contain
financial or similar restrictions on us or any of our Subsidiaries. Our rights
and the rights of our creditors, including holders of debt securities, to
participate in any distribution of assets of any of our Subsidiaries upon the
Subsidiary's liquidation or reorganization or otherwise are effectively
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subordinated to the claims of the Subsidiary's creditors, except to the extent
that we or any of our creditors may be a creditor of that Subsidiary.
The Debt Securities of any series may be issued in definitive form or,
if provided in the Prospectus Supplement relating to the series, may be
represented in whole or in part by a global Security or Securities, which will
be deposited with, or on behalf of, The Depository Trust Company, New York, New
York, or other successor depositary that we may appoint (the "Depositary"), and
registered in the name of the Depositary's nominee. Each Debt Security
represented by a global Security is referred to in this Prospectus as a
"Book-Entry Security."
The Indenture does not limit the amount of Debt Securities or of any
particular series of Offered Debt Securities that may be issued thereunder or
otherwise and provides that Debt Securities may be issued thereunder from time
to time in one or more series. All Debt Securities of one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without notice to or the consent of any holder, for issuances of
additional Debt Securities of that series, and the additional Debt Securities
will be consolidated and form a single series with those Debt Securities.
You should look in the Prospectus Supplement for the following terms of
the Offered Debt Securities:
o the title of the Offered Debt Securities;
o any limit on the aggregate principal amount of the Offered Debt
Securities;
o the price (expressed as a percentage of the aggregate principal amount
thereof) at which the Offered Debt Securities will be issued;
o the date or dates on which the principal of the Offered Debt
Securities will be payable;
o the rate or rates (which may be fixed or variable) per annum at which
the Offered Debt Securities will bear interest, if any, or the method
of determining such rate or rates;
o the date or dates from which interest, if any, on the Offered Debt
Securities will accrue or the method of determining such date or
dates, the dates on which interest, if any, will be payable, the date
on which payment of interest, if any, will commence, and the regular
record dates for interest payment dates, if any;
o the period or periods within which, the price or prices at which and
the terms and conditions upon which the Offered Debt Securities may be
redeemed, in whole or in part, at our option;
o our obligation, if any, to redeem or purchase Offered Debt Securities
pursuant to any sinking fund or analogous provisions or at the option
of a Holder, and the periods within, the prices at, and the terms and
conditions upon which such Offered Debt Securities shall be redeemed
or purchased;
o if it is other than the principal amount, the amount of Offered Debt
Securities which shall be payable upon declaration of acceleration of
the maturity thereof;
o if other than U.S. dollars, the currency (including composite
currencies) in which payment of principal of (and premium, if any)
and/or interest on the Offered Debt Securities shall be payable;
o any currency (including composite currencies) other than the stated
currency of the Offered Debt Securities in which the principal of (and
premium, if any) and/or interest on the Offered Debt Securities may,
at our election or the election of the Holders, be payable, and the
periods within which, and terms and conditions upon which, such
election may be made;
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o if the amount of payments of principal of (and premium, if any) and/or
interest on the Offered Debt Securities may be determined with
reference to an index based on a currency (including composite
currencies) other than the stated currency of the Debt Securities, the
manner in which such amounts shall be determined;
o our right, if any, to defease the Offered Debt Securities or certain
covenants under the Indenture;
o whether any of the Offered Debt Securities shall be Book-Entry
Securities and, in such case, the Depositary for such Book-Entry
Securities;
o the terms and conditions, if any, pursuant to which the Debt
Securities may be converted or exchanged for the cash value of other
securities issued by us or by a third party; and
o any other terms relating to the Offered Debt Securities (which are not
inconsistent with the Indenture).
Unless otherwise provided and except with respect to Book-Entry
Securities, principal of and premium, if any, and interest, if any, on the Debt
Securities will be payable, and the transfer of the Debt Securities will be
registrable, at the Corporate Trust Office of the Trustee. We have the option of
paying interest by mailing a check to, or making a wire transfer to, the Holders
of record entitled to the payment.
For a description of payments of principal of, premium, if any, and
interest on, and transfer of, Book-Entry Securities, and exchanges of global
Securities representing Book-Entry Securities, see "Book-Entry Securities."
Unless otherwise indicated in the Prospectus Supplement relating
thereto and except with respect to Book-Entry Securities, the Debt Securities
will be issued only in fully registered form without coupons and in
denominations of $1,000 or any multiple thereof. No service charge will be made
for any registration of transfer or exchange of the Offered Debt Securities, but
we may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount below their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities will be
described in the Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security which provides for the declaration of
acceleration of the maturity of an amount less than the principal amount thereof
upon the occurrence of an Event of Default and the continuation thereof.
Certain Covenants of The Company
Restriction on Liens
The Indenture provides that, so long as any Debt Securities are
Outstanding, we will not issue, assume or guarantee, and we will not permit any
Domestic Subsidiary to issue, assume or guarantee, any Indebtedness which is
secured by a mortgage, pledge, security interest, lien or encumbrance (any
mortgage, pledge, security interest, lien or encumbrance is referred to as a
"lien" or "liens") of or upon any of our currently owned or later acquired
assets, or any such assets of a Domestic Subsidiary without effectively
providing that the Debt Securities (together with, if we shall so determine, any
of our other Indebtedness that ranks equally with the Debt Securities) shall be
equally and ratably secured by a lien ranking ratably with and equal to (or at
our option, prior to) such secured Indebtedness; provided, however, that the
foregoing restriction shall not apply to:
o liens on any assets of any corporation existing at the time such
corporation becomes a Domestic Subsidiary;
o liens on any assets existing at the time of our acquisition of such
assets or acquisition of such assets by a Domestic Subsidiary, or
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liens to secure the payment of all or any part of the purchase price
of such assets upon our acquisition of such assets or acquisition of
such assets by a Domestic Subsidiary or to secure any Indebtedness
incurred, assumed or guaranteed by us or a Domestic Subsidiary prior
to, at the time of, or within 180 days after such acquisition (or in
the case of real property, the completion of construction (including
any improvements on an existing asset) or commencement of full
operation of such asset, whichever is later) which Indebtedness is
incurred, assumed or guaranteed for the purpose of financing all or
any part of the purchase price thereof or, in the case of real
property, construction or improvements thereon; provided, however,
that in the case of any such acquisition, construction or improvement,
the lien shall not apply to any assets theretofore owned by us or a
Domestic Subsidiary, other than, in the case of any such construction
or improvement, any real property on which the property so
constructed, or the improvement, is located;
o liens on any assets to secure Indebtedness of a Domestic Subsidiary to
us or to any wholly owned Domestic Subsidiary;
o liens on any assets of a corporation existing at the time such
corporation is merged into or consolidated with us or a Domestic
Subsidiary or at the time of a purchase, lease or other acquisition by
us or a Domestic Subsidiary of the assets of a corporation or firm as
an entirety or substantially as an entirety;
o liens on any of our assets or assets of a Domestic Subsidiary in favor
of the United States or any State thereof, or any department, agency
or instrumentality or political subdivision of the United States or
any State thereof, or in favor of any other country, or any political
subdivision thereof, to secure partial, progress, advance or other
payments pursuant to any contract or statute or to secure any
Indebtedness incurred or guaranteed for the purpose of financing all
or any part of the purchase price (or, in the case of real property,
the cost of construction) of the assets subject to such liens
(including, but not limited to, liens incurred in connection with
pollution control, industrial revenue or similar financings);
o any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any lien referred to
in the foregoing clauses; provided, however, that the principal amount
of Indebtedness secured thereby shall not exceed the principal amount
of Indebtedness so secured at the time of such extension, renewal or
replacement, and that such extension, renewal or replacement shall be
limited to all or a part of the assets which secured the lien so
extended, renewed or replaced (plus improvements and construction on
real property);
o liens not permitted by the clauses above if at the time of, and after
giving effect to, the creation or assumption of any such lien, the
aggregate amount of all of our Indebtedness and all Indebtedness of
our Domestic Subsidiaries secured by all such liens not so permitted
by the clauses above together with the Attributable Debt in respect of
Sale and Lease-Back Transactions permitted by the Indenture do not
exceed 10% of Consolidated Net Tangible Assets.
Restriction on Sale and Lease-Back Transactions
The Indenture also provides that we will not, and will not permit any
Subsidiary to, enter into any arrangement with any person providing for the
leasing by us or a Domestic Subsidiary of any property or assets, other than any
such arrangement involving a lease for a term, including renewal rights for not
more than 3 years, whereby such property or asset has been or is to be sold or
transferred by us or any Domestic Subsidiary to such person (referred to as a
"Sale and Lease-Back Transaction"), unless:
o we or such Domestic Subsidiary would, at the time of entering into
a Sale and Lease-Back Transaction, be entitled to incur
Indebtedness secured by a lien on the property or asset to be
leased in an amount at least equal to the Attributable Debt in
respect of such Sale and Lease-Back Transaction without equally
and ratably securing the Debt Securities pursuant to the
Indenture; or
o the proceeds of the sale of the property or assets to be leased
are at least equal to the fair value of such property or assets
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(as determined by our Board of Directors) and an amount equal to
the net proceeds from the sale of the property or assets so leased
is applied, within 180 days of the effective date of any such Sale
and Lease-Back Transaction, to the purchase or acquisition (or, in
the case of property, the construction) of property or assets or
to the retirement (other than at maturity or pursuant to a
mandatory sinking fund or redemption provision) of Debt Securities
or of our Funded Indebtedness or Funded Indebtedness of a
consolidated Domestic Subsidiary ranking on a parity with or
senior to the Debt Securities.
Applicability of Covenants
Any series of Debt Securities may provide that any one or more of the
covenants described above shall not be applicable to the Securities of such
series if certain conditions are met.
Certain Definitions
"Attributable Debt", when used in connection with a Sale and Lease-Back
transaction referred to above, means, as of any particular time, the aggregate
of present values (discounted at a rate per annum equal to the average interest
borne by all Outstanding Securities determined on a weighted average basis and
compounded semi-annually) of our obligations or obligations of any Subsidiary
for net rental payments during the remaining term of all leases (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended). The term "net rental payments" under any lease of any
period means the sum of the rental and other payments required to be paid in
such period by the lessee thereunder, not including, however, any amounts
required to be paid by such lessee (whether or not designated as rental or
additional rental) on account of maintenance and repairs, reconstruction,
insurance, taxes, assessments, water rates or similar charges required to be
paid by such lessee thereunder or any amounts required to be paid by such lessee
thereunder contingent upon the amount of sales, maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges.
"Consolidated Net Tangible Assets" means at any date, the total assets
appearing on our most recently prepared consolidated balance sheet as of the end
of a fiscal quarter, prepared in accordance with generally accepted accounting
principles at the time of calculation, less (a) all current liabilities as shown
on such balance sheet and (b) intangible assets.
"Intangible assets" means the value (net of any applicable reserves),
as shown on or reflected in such balance sheet of: (i) all trade names,
trademarks, licenses, patents, copyrights and goodwill; (ii) organizational
costs; and (iii) deferred charges (other than prepaid items such as insurance,
taxes, interest, commissions, rents and similar items and tangible assets being
amortized); but in no event shall the term "intangible assets" include product
development costs.
"Domestic Subsidiary" means any Subsidiary (a) incorporated under the
laws of the United States or any state, territory or possession thereof, or the
Commonwealth of Puerto Rico, (b) the operations of which are substantially
conducted in the United States or its territories or possessions, or in the
Commonwealth of Puerto Rico, or (c) a substantial portion of the assets of which
are located in the United States or its territories or possessions or in the
Commonwealth of Puerto Rico. A "wholly owned Domestic Subsidiary" is any
Domestic Subsidiary of which all Outstanding securities having the voting power
to elect the Board of Directors of such Domestic Subsidiary (irrespective of
whether or not at the time securities of any other class or classes of such
Domestic Subsidiary shall have or might have voting power by reason of the
happening of any contingency) are at the time directly or indirectly owned or
controlled by us, or by one or more wholly owned Domestic Subsidiaries, or by us
and one or more wholly owned Domestic Subsidiaries.
"Funded Indebtedness" means any Indebtedness maturing by its terms more
than one year from the date of the determination thereof, including any
Indebtedness renewable or extendible at the option of the obligor to a date
later than one year from the date of the determination thereof.
"Indebtedness" means (i) all obligations for borrowed money, (ii) all
obligations evidenced by bonds, debentures, notes or other similar instruments,
10
(iii) all obligations in respect of letters of credit or bankers acceptances or
similar instruments (or reimbursement obligations with respect thereto), (iv)
all obligations to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of business, (v)
all obligations as lessee which are capitalized in accordance with generally
accepted accounting principles at the time of calculation, and (vi) all
Indebtedness of others guaranteed by us or any of our subsidiaries or for which
we or any of our subsidiaries are otherwise responsible or liable (whether by
agreement to purchase indebtedness of, or to supply funds or to invest in,
others).
"Subsidiary" means any corporation of which at least a majority of
Outstanding securities having the voting power to elect a majority of the Board
of Directors of such corporation (irrespective of whether or not at the time
securities of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by us, or by one or more of the
Subsidiaries, or by us and one or more Subsidiaries.
Events of Default
An Event of Default with respect to the Debt Securities of any series
is defined in the Indenture as:
o default in payment of principal of or premium, if any, on any Debt
Security of that series at maturity;
o default for 30 days in payment of interest on any Debt Security of
that series;
o default in the deposit of any sinking fund payment when due in respect
of that series;
o our failure to perform any other of the covenants or warranties in the
Indenture (other than a covenant or warranty where such failure to
perform or breach is dealt with elsewhere in the events of default
section of the Indenture, or a covenant or warranty included in the
Indenture solely for the benefit of a series of Debt Securities other
than that series) continued for 60 days after due notice by the
Trustee or by Holders of at least 10% in principal amount of the
Outstanding Debt Securities of that series;
o a default under any bond, debenture, note or other evidence of our
Indebtedness (including a default with respect to Debt Securities of
any series other than that series) or under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any of our current or future Indebtedness
(including this Indenture), which default constitutes a failure to pay
such Indebtedness in a principal amount in excess of $10 million when
due and payable at final maturity after the expiration of any
applicable grace period or shall have resulted in such Indebtedness in
a principal amount in excess of $10 million becoming or being declared
due and payable prior to the date on which it would otherwise have
become due and payable, without such Indebtedness having been
discharged, or such acceleration having been rescinded or annulled,
within a period of 15 days after there shall have been given, by
overnight mail or other same day or overnight delivery service which
can provide evidence of delivery, to us by the Trustee, or to us and
the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series, a written notice specifying
such default and requiring us to cause such Indebtedness to be
discharged or cause such acceleration to be rescinded or annulled and
stating that such notice is a Notice of Default under the Indenture;
o certain events of bankruptcy, insolvency or reorganization; and
o any other Event of Default provided with respect to Debt Securities of
that series.
The Indenture provides that, if any Event of Default with respect to
Debt Securities of any series at the time Outstanding occurs and is continuing,
either the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Debt Securities of that series may declare the principal amount
(or, if the Debt Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Debt Securities as may
be specified in the terms thereof) of all Debt Securities of that series to be
due and payable immediately. However, upon certain conditions such declaration
may be annulled and past defaults (except, unless theretofore cured, a default
in payment of principal of or premium, if any, or interest, if any, on the Debt
11
Securities of that series and certain other specified defaults) may be waived by
the Holders of a majority in principal amount of the Outstanding Debt Securities
of that series on behalf of the Holders of all Debt Securities of that series.
Please refer to the Prospectus Supplement relating to each series of
Outstanding Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to acceleration of the Maturity of a portion of
the principal amount of such Original Issue Discount Securities upon the
occurrence of an Event of Default and the continuation thereof.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to Debt Securities of any series at the
time Outstanding, give to the Holders of the Outstanding Debt Securities of that
series notice of such default known to it if uncured or not waived. However,
except in the case of default in the payment of principal of or premium, if any,
or interest on any Debt Security of that series, or in the payment of any
sinking fund installment, the Trustee may withhold such notice if the Trustee in
good faith determines that the withholding of such notice is in the interest of
the Holders of the Outstanding Debt Securities of such series. The Indenture
also provides that such notice shall not be given until at least 30 days after
the occurrence of a default or breach with respect to Outstanding Debt
Securities of any series in the performance of a covenant or warranty in the
Indenture other than for the payment of the principal of or premium, if any, or
interest on any Debt Security of such series or the deposit of any sinking fund
payment with respect to the Debt Securities of such series. The term default
with respect to any series of Outstanding Debt Securities for the purpose of
this provision means any event that is, or after notice or lapse of time or both
would become, an Event of Default as specified in the Indenture relating to such
series of Outstanding Debt Securities.
The Indenture contains a provision entitling the Trustee, subject to
the duty of the Trustee during default to act with the required standard of
care, to be indemnified by the Holders of any series of Outstanding Debt
Securities before proceeding to exercise any right or power under the Indenture
at the request of the Holders of such series of Debt Securities. The Indenture
provides that the Holders of a majority in principal amount of Outstanding Debt
Securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
other power conferred on the Trustee, with respect to the Debt Securities of
such series provided that the Trustee may decline to act if such direction is
contrary to law or the Indenture. In the case of Book-Entry Securities, the
Indenture requires the Trustee to establish a record date for purposes of
determining which Holders are entitled to join in such direction.
No Holder of a Debt Security will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of a receiver
or trustee, or for any other remedy under the Indenture, unless:
o the Holder has previously given to the Trustee written notice of a
continuing event of default regarding the Debt Securities of that
series;
o Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series have made a written request
to the Trustee to institute the proceeding and the Holder or Holders
have offered reasonable indemnity to the Trustee; and
o the Trustee has failed to institute the proceeding, and has not
received from the Holders of a majority in aggregate principal amount
of the outstanding Debt Securities of that series a direction
inconsistent with that request, within 60 days after the notice,
request and offer.
However, these limitations do not apply to a suit instituted by a Holder of a
Debt Security to enforce payment of the principal of, premium, if any, or
interest on the Debt Security on or after the applicable due date specified in
the Debt Security.
The Indenture includes a covenant that we will file annually with the
Trustee a certificate specifying whether, to the best knowledge of the signers,
we are in default under the Indenture.
12
Modification of the Indenture and Waiver of Covenants
We and the Trustee may make agreed modifications and amendments to the
Indenture, without the consent of any Holder of any Debt Security of any series,
to add covenants and Events of Default, and to make provisions with respect to
other matters and issues arising under the Indenture, provided that any such
provision does not adversely affect the rights of the Holders of Debt Securities
of any series.
The Indenture contains provisions permitting us and the Trustee, with
the consent of the Holders of not less than 66 2/3% in principal amount of
Outstanding Debt Securities of each series affected thereby, to execute
supplemental indentures adding any provisions to or changing or eliminating any
of the provisions of the Indenture or modifying the rights of the Holders of
Outstanding Debt Securities of such series, except that no such supplemental
indenture may, without the consent of the Holder of each Outstanding Debt
Security affected thereby, (a) change the Stated Maturity, or reduce the
principal amount, the premium, if any, thereon or the rate of payment of
interest thereon, of any Debt Security of any series, (b) reduce the percentage
in principal amount of Outstanding Debt Securities of any series, the consent of
the Holders of which is required for any supplemental indenture or for waiver of
compliance with certain provisions of the Indenture or certain defaults
thereunder or (c) effect certain other changes. The Indenture also permits us to
omit compliance with certain covenants in the Indenture with respect to Debt
Securities of any series upon waiver by the Holders of not less than 66 2/3% in
principal amount of Outstanding Debt Securities of such series.
Consolidation, Merger and Sale of Assets
The Indenture contains a provision permitting us, without the consent
of the Holders of any of the Outstanding Debt Securities under the Indenture, to
consolidate with or merge into any other entity or transfer or lease its assets
substantially as an entirety to any person provided that:
o the successor is an entity organized and validly existing under the
laws of any United States domestic jurisdiction;
o the successor entity assumes our obligations on the Debt Securities
and under the Indenture;
o after giving effect to the transaction no Event of Default, and no
event which, after notice or lapse of time, would become an Event of
Default, shall have happened and be continuing; and
o certain other conditions are met.
Book-Entry Securities
The following description of Book-Entry Securities will apply to any
series of Debt Securities issued in whole or in part in the form of a global
Security or Securities except as otherwise provided in the Prospectus Supplement
relating thereto.
Upon issuance, all Book-Entry Securities of like tenor and having the
same date of original issue will be represented by one or more global
Securities. Each global Security representing Book-Entry Securities will be
deposited with, or on behalf of, the Depositary, which will be a clearing agent
registered under the Exchange Act. The global Security will be registered in the
name of the Depositary or a nominee of the Depositary.
Ownership of beneficial interests in a global Security representing
Book-Entry Securities will be limited to institutions that have accounts with
the Depositary or its nominee ("participants") or persons that may hold
interests through participants. In addition, ownership of beneficial interests
by participants in such a global Security only will be evidenced by, and the
transfer of that ownership interest only will be effected through, records
maintained by the Depositary or its nominee for such global Security. Ownership
of beneficial interest in such a global Security by persons that hold through
participants only will be evidenced by, and the transfer of that ownership
interest within such participant only will be effected through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
13
definitive form. Such laws may impair the ability to transfer beneficial
interests in such a global Security.
Payment of principal of and any premium and interest on Book-Entry
Securities represented by any global Security registered in the name of or held
by the Depositary or its nominee will be made to the Depositary or its nominee,
as the case may be, as the registered owners and Holder of the global Security
representing such Book-Entry Securities. None of us, the Trustee or any agent of
ours or the Trustee will have any responsibility or liability for any aspect of
the Depositary's records or any participant's records relating to or payments
made on account of beneficial ownership interests in a global Security
representing such Book- Entry Securities or for maintaining, supervising or
reviewing any of the Depositary's records or any participant's records relating
to such beneficial ownership interests. Payments by participants to owners of
beneficial interests in a global Security held through such participants will be
governed by the Depositary's procedures, as is now the case with securities held
for the accounts of customers registered in "street name," and will be the sole
responsibility of such participants.
No global Security described above may be transferred except as a whole
by the Depositary for such global Security to a nominee of the Depositary or by
a nominee of the Depositary to the Depositary or another nominee of the
Depositary.
A global Security representing Book-Entry Securities is exchangeable
for definitive Debt Securities in registered form, of like tenor and of an equal
aggregate principal amount, only if:
o the Depositary notifies us that it is unwilling or unable to continue
as Depositary for such global Security or if at any time the
Depositary ceases to be a clearing agency registered under the
Exchange Act,
o we, in our sole discretion determine that such global Security shall
be exchangeable for definitive Debt Securities in registered form, or
o there shall have occurred and be continuing an Event of Default with
respect to the Debt Securities.
Any global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable in whole for definitive Debt Securities in
registered form, of like tenor and of an equal aggregate principal amount, and,
unless otherwise specified in the Prospectus Supplement relating thereto, in
denominations of $1,000 and integral multiples thereof. Such definitive Debt
Securities shall be registered in the name or names of such person or persons as
the Depositary shall instruct the Trustee. It is expected that such instructions
may be based upon directions received by the Depositary from its participants
with respect to ownership of beneficial interests in such global Security.
Except as provided above, owners of beneficial interests in such global
Security will not be entitled to receive physical delivery of Debt Securities in
definitive form and will not be considered the Holders thereof for any purpose
under the Indenture, and no global Security representing Book-Entry Securities
shall be exchangeable, except for another global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee.
Accordingly, each person owning a beneficial interest in such global Security
must rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a Holder under the Indenture. We
understand that under existing industry practices, in the event that we request
any action of Holders, or an owner of a beneficial interest in such global
Security desires to give or take any action that a Holder is entitled to give or
take under the Indenture, the Depositary would authorize the participants
holding the relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such participant
to give or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
The information contained in this section regarding the Depositary and
its procedures is based on publicly available information reviewed by us. The
rules applicable to the Depositary and its participants are on file with the
SEC.
14
Defeasance of Offered Debt Securities or Certain Covenants in Certain
Circumstances
Defeasance and Discharge
The Indenture provides that the terms of any series of Debt Securities
may provide that we will be discharged from any and all obligations in respect
of the Debt Securities of such series (except for certain obligations to
register the transfer or exchange of Debt Securities of such series, to replace
stolen, lost or mutilated Debt Securities of such series, to maintain paying
agencies and hold moneys for payment in trust) upon the deposit with the
Trustee, in trust, of money and/or U.S. Government Obligations or, in the case
of Debt Securities denominated in foreign currencies, money and/or Foreign
Government Securities, which, through the payment of interest and principal
thereof in accordance with their terms, will provide money in an amount
sufficient to pay any installment of principal (and premium, if any) and
interest on, and any mandatory sinking fund payments in respect of, the Debt
Securities of such series on the stated maturity of such payments in accordance
with the terms of the Indenture and such Debt Securities. Such discharge may
only occur if, among other things, we have delivered to the Trustee an Opinion
of Counsel to the effect that we have received from, or there has been published
by, the United States Internal Revenue Service a ruling, or there has been a
change in tax law, in either case to the effect that such a discharge will not
be deemed, or result in, a taxable event with respect to Holders of the Debt
Securities of such series; and such discharge will not be applicable to any Debt
Securities of such series then listed on the New York Stock Exchange or any
other securities exchange if the provision would cause said Debt Securities to
be de-listed as a result thereof.
Defeasance of Certain Covenants
The Indenture provides that the terms of any series of Debt Securities
may provide us with the option to omit to comply with certain restrictive
covenants described in Sections 1008 and 1009 of the Indenture. In order to
exercise such option, we will be required to deposit with the Trustee money
and/or U.S. Government Obligations or, in the case of Debt Securities
denominated in foreign currencies, money and/or Foreign Government Securities,
which, through the payment of interest and principal thereof in accordance with
their terms, will provide money in an amount sufficient to pay principal (and
premium, if any) and interest on, and any mandatory sinking fund payments in
respect of, the Debt Securities of such series on the stated maturity of such
payments in accordance with the terms of the Indenture and such Debt Securities.
We will also be required to deliver to the Trustee an opinion of counsel to the
effect that the deposit and related covenant defeasance will not cause the
Holders of the Debt Securities of such series to recognize income, gain or loss
for federal income tax purposes. In the event we exercise this option and the
Debt Securities of such series are declared due and payable because of the
occurrence of any Event of Default, the amount of money and U.S. Government
Obligations or Foreign Government Securities, as the case may be, on deposit
with the Trustee will be sufficient to pay amounts due on the Debt Securities of
such series at the time of their Stated Maturity but may not be sufficient to
pay amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. However, we shall remain
liable for such payments.
The Prospectus Supplement will state if any defeasance provision will
apply to the Offered Debt Securities.
Trustee
The Trustee may resign or be removed with respect to one or more series
of Debt Securities and a successor Trustee may be appointed to act with respect
to such series. In the event that two or more persons are acting as Trustee with
respect to different series of Debt Securities, each such Trustee shall be a
Trustee of a trust under the Indenture separate and apart from the trust
administered by any other such Trustee, and any action described herein to be
taken by the "Trustee" may then be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Securities for which it is
Trustee.
We maintain customary banking relationships with the Trustee.
15
PLAN OF DISTRIBUTION
We may sell the Offered Debt Securities in four ways:
o directly to purchasers,
o through agents,
o through underwriters, and
o through dealers.
We may solicit offers to purchase Debt Securities directly, or we may
designate agents from time to time to solicit offers to purchase. Any such
agent, who may be deemed to be an underwriter as that term is defined in the
Securities Act, involved in the offer or sale of the Debt Securities will be
named, and any commissions payable by us to such agent will be set forth, in the
Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a reasonable efforts basis for the period of
its appointment. We will have the sole right to accept offers to purchase Debt
Securities and may reject any proposed offer in whole or in part. Agents shall
have the right, in their sole discretion, to reject any offer received by them
to purchase the Debt Securities in whole or in part. Agents may be entitled
under agreements which may be entered into with us to indemnification by us
against certain liabilities, including liabilities under the Securities Act, and
may be customers of, engage in transactions with or perform services for us in
the ordinary course of business.
If we use an underwriter or underwriters in the sale of the Debt
Securities, we will execute an underwriting agreement with such underwriters at
the time of the sale to them and the names of the underwriters and the terms of
the transaction will be set forth in the Prospectus Supplement, which will be
used by the underwriters to make resales of the Debt Securities to the public.
The obligations of the underwriters to purchase the Debt Securities will be
subject to conditions, including the approval of some legal matters by
underwriters' counsel. The underwriters will be obligated to purchase all of the
Debt Securities offered if any are purchased. The underwriters may be entitled,
under the relevant underwriting agreement, to indemnification by us against
certain liabilities, including liabilities under the Securities Act.
If we use a dealer in the sale of the Debt Securities, we will sell
such Debt Securities to the dealer, as principal. The dealer may then resell
such Debt Securities to the public at varying prices to be determined by such
dealer at the time of resale. Dealers may be entitled to indemnification by us
against certain liabilities, including liabilities under the Securities Act.
If we offer and sell Debt Securities directly to a purchaser or
purchasers, purchasers involved in the reoffer or resale of such Debt Securities
who may be deemed to be underwriters as that term is defined in the Securities
Act, will be named and the terms of such reoffers or resales will be set forth
in a Prospectus Supplement. Such purchasers may then reoffer and resell such
Debt Securities to the public or otherwise at varying prices to be determined by
such purchasers at the time of resale or as otherwise described in the
Prospectus Supplement. Purchasers of Debt Securities directly from us may be
entitled under agreements which they may enter into with us to indemnification
by us against certain liabilities, including liabilities under the Securities
Act, and may engage in transactions with or perform services for us in the
ordinary course of their business or otherwise.
The place and time of delivery for the Debt Securities will be as set
forth in the Prospectus Supplement.
EXPERTS
The financial statements incorporated in this Prospectus by reference
to our Annual Report on Form 10-K/A for the year ended December 31, 2000 have
been so incorporated in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
16
VALIDITY OF THE DEBT SECURITIES
The validity of the Offered Debt Securities will be passed upon for us
by Haynsworth Sinkler Boyd, P.A., Columbia, South Carolina, our general counsel,
and for any underwriter, dealer or agent by counsel to such underwriter, dealer
or agent named in the Prospectus Supplement. In rendering their opinions,
underwriters' counsel may rely on Haynsworth Sinkler Boyd, P.A., as to certain
matters of South Carolina law. Various attorneys in the firm of Haynsworth
Sinkler Boyd, P.A., and members of their immediate families own or have
beneficial interests in shares of our common stock.
17
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the issuance of the securities being
registered hereby are estimated as follows:
Registration Fee $37,500
Trustee's fees and expenses 15,000
Printing and engraving costs 125,000
Rating Agencies' fees 110,000
Legal fees and expenses 200,000
Accounting fees and expenses 100,000
Blue Sky fees and expenses 20,000
Miscellaneous 10,500
--------
TOTAL $618,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VIII of the By-laws of the Company provides for the
indemnification by the Company of any present or former director, officer or
employee of the Company, or any person, who, at the request of the Company, may
have served as director or officer of another corporation in which it owns
shares or of which it is a creditor. Any such person shall be entitled to
reimbursement of expenses and other liabilities, to the maximum extent permitted
by the laws of the State of South Carolina or by order of any court having
jurisdiction in any action or proceeding to which he is a party by reason of
being or having been a director, officer or employee.
Article 9 of the Restated Articles of Incorporation of the Company
states that no director of the Company shall be personally liable to the Company
or to its shareholders for monetary damages for breach of fiduciary duty as
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the laws of South Carolina, as presently in
effect or as the same may hereafter be amended.
Under Article 5 of Chapter 8 of the South Carolina Business Corporation
Act of 1988 (the "Corporation Act"), a corporation has the power to indemnify
directors and officers who meet the standards of good faith and reasonable
belief that conduct was lawful and in the corporate interest (or not opposed
thereto) set forth in the Corporation Act. The Corporation Act also empowers a
corporation to provide insurance for directors and officers against liability
arising out of their positions even though the insurance coverage is broader
than the power of the corporation to indemnify. Under the Corporation Act,
unless limited by its articles of incorporation, a corporation must indemnify a
director or officer who is wholly successful, on the merits or otherwise, in the
defense of any proceeding to which he was a party because he is or was a
director or officer against reasonable expenses incurred by him in connection
with the proceeding. The registrant's Restated Articles of Incorporation do not
provide otherwise.
In addition, the Company maintains directors' and officers' liability
insurance for the benefit of its directors and officers.
The form of Underwriting Agreement included as Exhibit 1 hereto
provides for indemnification of directors, certain officers and controlling
persons of the Company against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Act").
II-1
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions (other than insurance), the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 16. EXHIBITS
* 1 Form of Underwriting Agreement.
4.1 Indenture, dated as of June 15, 1991, between the
Company and the Trustee. (Incorporated by
reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-3 (File No.
33-50503).)
* 4.2 Credit Agreement, dated as of July 17, 2001, among
the Company, the several lenders from time to time
party thereto and Bank of America, N.A., as agent.
5.1 Opinion (including consent) of Haynsworth Sinkler
Boyd, P.A.
12.1 Statements re: computation of ratio of earnings to
fixed charges.
15 Accountants' letter re: unaudited interim
financial information
23.1 Consent of Haynsworth Sinkler Boyd, P.A. (included
in Exhibit 5).
23.2 Consent of PricewaterhouseCoopers LLP.
* 24 Power of Attorney (Included on Signature Page).
* 25 Statement of eligibility of the Trustee on Form
T-1.
*Previously filed.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
Provided however, that paragraphs (1)(i) and (1)(ii) do not apply,
since this Registration Statement is on Form S-3, if such information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
II-2
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
In connection with any offering of Debt Securities made in reliance
upon Rule 430A, the undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Hartsville, State of South Carolina,
on October 19, 2001.
SONOCO PRODUCTS COMPANY
By: s/H. E. DeLoach, Jr.
----------------------------------------
H. E. DeLoach, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Name Position Date
---- -------- ----
s/C. J. Bradshaw*
---------------------------------------------------
C. J. Bradshaw Director October 22, 2001
s/R. J. Brown*
---------------------------------------------------
R. J. Brown Director October 22, 2001
s/ F. L. H. Coker *
---------------------------------------------------
F. L. H. Coker Director October 22, 2001
s/ J. L. Coker *
---------------------------------------------------
J. L. Coker Director October 22, 2001
s/ C. W. Coker *
---------------------------------------------------
C. W. Coker Director and Chairman October 22, 2001
s/ T. C. Coxe, III *
---------------------------------------------------
T. C. Coxe, III Director October 22, 2001
s/ A. T. Dickson *
---------------------------------------------------
A. T. Dickson Director October 22, 2001
s/ H. E. DeLoach, Jr.
---------------------------------------------------
H. E. DeLoach, Jr. Director, President and October 22, 2001
Chief Executive Officer
s/ C. C. Fort *
---------------------------------------------------
C. C. Fort Director October 22, 2001
s/ Paul Fulton *
---------------------------------------------------
Paul Fulton Director October 22, 2001
s/ F. Trent Hill, Jr.
---------------------------------------------------
F. Trent Hill, Jr. Principal Financial and October 19, 2001
Accounting Officer
II-4
s/B. L. M. Kasriel*
---------------------------------------------------
B. L. M. Kasriel Director October 22, 2001
s/ E. H. Lawton, III *
---------------------------------------------------
E. H. Lawton, III Director October 22, 2001
s/ H. L. McColl, Jr.*
---------------------------------------------------
H. L. McColl, Jr. Director October 22, 2001
s/ T. E. Whiddon *
---------------------------------------------------
T. E. Whiddon Director October 22, 2001
s/ D. D. Young *
---------------------------------------------------
D. D. Young Director October 22, 2001
*s/ H. E. DeLoach, Jr.
---------------------------------------------------
By: H. E. DeLoach, Jr.
Attorney-in-fact
EXHIBIT INDEX
EXHIBIT PAGE NO.
* 1 Form of Underwriting Agreement.
4.1 Indenture, dated as of June 15, 1991, between the
Company and the Trustee. (Incorporated by
reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-3 (File No.
33-50503).)
* 4.2 Credit Agreement, dated as of July 17, 2001, among
the Company, the several lenders from time to time
party thereto and Bank of America, N.A., as agent.
5.1 Opinion (including consent) of Haynsworth Sinkler
Boyd, P.A.
12.1 Statements re: computation of ratio of earnings to
fixed charges.
15 Accountants' letter re: unaudited interim
financial information
23.1 Consent of Haynsworth Sinkler Boyd, P.A. (included
in Exhibit 5).
23.2 Consent of PricewaterhouseCoopers LLP.
* 24 Power of Attorney (Included on Signature Page).
* 25 Statement of eligibility of the Trustee on Form
T-1.
*Previously filed
EXHIBIT 12.1
SONOCO PRODUCTS COMPANY
Computation of Ratio of Earnings to Fixed Charges
(Dollars in Thousands)
Six Months
Ended Years Ended December 31,
---------- --------------------------------------------------------
July 1,
2001 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ----
EARNINGS
Pretax income - as reported ........................... 60,227 270,595 289,560 339,598 63,719 280,075
Add: Fixed charges ................................... 34,874 76,094 67,509 68,380 69,484 69,223
Amortization of capitalized interest ......... 777 1,209 566 498 498 378
------ ------- ------- ------- ------- -------
Total Earnings ............................................. 95,878 347,898 357,635 408,476 133,701 349,676
Less: Capitalized Interest ................................. (1,346) (3,449) (2,000) (1,353) - (1,200)
------ ------- ------- ------- ------- -------
Adjusted Earnings .......................................... 94,532 344,449 355,635 407,123 133,701 348,476
====== ======= ======= ======= ======= =======
FIXED CHARGES
Interest expense ...................................... 26,822 59,604 52,466 54,779 57,194 55,481
Capitalized interest .................................. 1,346 3,449 2,000 1,353 - 1,200
Amortization of bond discounts ........................ 306 508 210 248 290 209
Portion of rents representative of the
interest factor .................................... 6,400 12,533 12,833 12,000 12,000 12,333
------ ------- ------- ------- ------- -------
Total Fixed Charges ........................................ 34,874 76,094 67,509 68,380 69,484 69,223
====== ======= ======= ======= ======= =======
Ratio of Earnings to Fixed Charges ......................... 2.71 4.53 5.27 5.95 1.92 5.03
====== ======= ======= ======= ======= =======
1
EXHIBIT 12.1
SONOCO PRODUCTS COMPANY
Computation of Ratio of Earnings to Fixed Charges - adjusted
(Dollars in Thousands)
Six Months
Ended Years Ended December 31,
---------- -----------------------------------------------------
July 1,
2001 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ----
EARNINGS
Pretax income - as reported .............................. 60,227 270,595 289,560 339,598 63,719 280,075
Less: (Gain) or Loss on assets held for sale ............ - (5,182) (3,500) (100,354) 226,358 -
------ ------- ------- ------- ------- -------
Pretax income - adjusted ................................. 60,227 265,413 286,060 239,244 290,077 280,075
Add: Fixed charges ...................................... 34,874 76,094 67,509 68,380 69,484 69,223
Amortization of capitalized interest ............ 777 1,209 566 498 498 378
------ ------- ------- ------- ------- -------
Total Earnings ................................................ 95,878 342,716 354,135 308,122 360,059 349,676
Less: Capitalized Interest .................................... (1,346) (3,449) (2,000) (1,353) - (1,200)
------ ------- ------- ------- ------- -------
Adjusted Earnings ............................................. 94,532 339,267 352,135 306,769 360,059 348,476
====== ======= ======= ======= ======= =======
FIXED CHARGES
Interest expense ......................................... 26,822 59,604 52,466 54,779 57,194 55,481
Capitalized interest ..................................... 1,346 3,449 2,000 1,353 - 1,200
Amortization of bond discounts ........................... 306 508 210 248 290 209
Portion of rents representative of the
interest factor ....................................... 6,400 12,533 12,833 12,000 12,000 12,333
------ ------- ------- ------- ------- -------
Total Fixed Charges ........................................... 34,874 76,094 67,509 68,380 69,484 69,223
====== ======= ======= ======= ====== =======
Ratio of Earnings to Fixed Charges ............................ 2.71 4.46 5.22 4.49 5.18 5.03
====== ======= ======= ======= ====== =======
2
Exhibit 15
October 23, 2001
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Commissioners:
We are aware that our reports dated May 16, 2001 and August 8, 2001 on our
reviews of interim financial information of Sonoco Products Company for the
period ended April 1, 2001 and July 1, 2001, respectively, and included in the
Company's quarterly reports on Form 10-Q for the quarters then ended are
incorporated by reference in its Registration Statement on Form S-3 dated
October 24, 2001.
Yours very truly,
PricewaterhouseCoopers LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Amendment
No. 1 to Registration Statement on Form S-3, of our report dated January 31,
2001 relating to the financial statements of Sonoco Products Company, which
appears in the 2000 Annual Report to Shareholders, which is incorporated by
reference in Sonoco Products Company's Annual Report on Form 10-K and Amended
Annual Report on Form 10-K/A for the year ended December 31, 2000. We also
consent to the incorporation by reference of our report dated May 11, 2001
relating to the financial statements of the the Sonoco Savings Plan, which is in
the Form 10-K/A for the year ended December 31, 2000. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers, LLP
Charlotte, North Carolina
October 23, 2001
EXHIBIT 5.1
Haynsworth Sinkler Boyd, P.A.
Attorneys At Law
1426 Main Street, Suite 1200
Columbia, South Carolina 29201
September 13, 2001
Sonoco Products Company
Post Office Box 160
Hartsville, South Carolina 29551
Dear Sirs:
In connection with the registration under the Securities Act of 1933
(the "Act") of $150,000,000 aggregate amount of debt securities (the
"Securities") of Sonoco Products Company, a South Carolina corporation (the
"Company"), we, as your counsel, have examined such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion. We have
also relied as to certain matters on information obtained from public officials,
officers of the Company and other sources believed by us to be responsible.
Upon the basis of such examination, we advise you that, in our opinion,
when the Registration Statement has become effective under the Act, the terms of
the Securities and of their issuance and sale have been duly established in
conformity with the Indenture between the Company and The Bank of New York as
successor trustee, dated as of June 15, 1991 (the "Indenture") relating to the
Securities so as not to violate any applicable law or result in a default under
or breach of any agreement or instrument binding upon the Company and so as to
comply with any requirement or restriction imposed by any court or governmental
body having jurisdiction over the Company, and the Securities have been duly
executed and authenticated in accordance with the Indenture and issued, sold and
delivered as contemplated in the Registration Statement, the Securities will
constitute valid and legally binding obligations of the Company, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
We note that, as of the date of this opinion, a judgment for money in
an action based on a Security denominated in a foreign currency or currency unit
in a Federal or state court in the United States ordinarily would be enforced in
the United States only in United States dollars. The date used to determine the
rate of conversion of the foreign currency or currency unit in which a
particular Security is denominated into United States dollars will depend upon
various factors, including which court renders the judgment.
We express no opinion as to matters governed by laws other than those
of the States of South Carolina and New York and the federal laws of the United
States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity of
Debt Securities" in the Prospectus. By giving such consent we do not admit that
we are in the category of persons whose consent is required under Section 7 of
the Act.
Very truly yours,
HAYNSWORTH SINKLER BOYD, P. A.
By:s/Martin C. McWilliams, Jr.
---------------------------
Martin C. McWilliams, Jr.
