Pursuant to Rule 424(b)(5)
Under the Securities Act of 1933
Registration No. 33-50503
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS SUBJECT TO COMPLETION +
+OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN +
+FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND DECLARED EFFECTIVE. +
+THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO +
+THE TIME THAT A FINAL PROSPECTUS SUPPLEMENT IS DELIVERED. THIS PROSPECTUS +
+SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO +
+SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF +
+THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD +
+BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS +
+OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED NOVEMBER 1, 1995
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 1, 1995)
[LOGO OF SONOCO PRODUCTS COMPANY APPEARS HERE]
SONOCO PRODUCTS COMPANY
$100,000,000
% Debentures due November 1, 2010
Interest payable May 1 and November 1
ISSUE PRICE: %
Interest on the Debentures is payable semiannually on May 1 and November 1 of
each year, commencing May 1, 1996. The Debentures are not redeemable prior to
maturity and will not be subject to any sinking fund. The Debentures will be
represented by one or more Global Securities registered in the name of The De-
pository Trust Company (the "Depositary") or its nominee. Interests in the
Global Securities will be shown on and transfer thereof will be effected only
through records maintained by the Depositary and its participants. Except as
provided herein, the Debentures in definitive form will not be issued. See "De-
scription of the Debentures."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -----------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT (2) COMPANY (1)(3)
- -----------------------------------------------------------
Per Debenture % % %
- -----------------------------------------------------------
Total $ $ $
- -----------------------------------------------------------
(1) Plus accrued interest from November 1, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated to be $ .
The Debentures are offered, subject to prior sale, when, as and if accepted by
the Underwriters and subject to approval of certain legal matters by Davis Polk
& Wardwell, counsel for the Underwriters. It is expected that delivery of the
Debentures will be made on or about November , 1995 through the facilities of
the Depositary, against payment therefor in same-day funds.
J.P. MORGAN SECURITIES INC. CS FIRST BOSTON
November , 1995
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AND OUTSTANDING NOTES OF THE COMPANY AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
All share and per share amounts herein have been restated to reflect a 5%
stock dividend on June 9, 1995.
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in
this Prospectus Supplement or the Prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized. This Prospectus Supplement and the Prospectus do not constitute an
offer to sell or the solicitation of an offer to buy any securities other than
the securities to which they relate or any offer to sell or the solicitation
of any offer to buy such securities in any circumstance in which such offer or
solicitation is unlawful. Neither the delivery of the Prospectus Supplement or
the Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof or that the information contained herein is
correct as of any time subsequent to its date.
The principal executive offices of Sonoco Products Company (the "Company")
are located at One North Second Street, P.O. Box 160, Hartsville, South
Carolina 29551-0160 (Telephone No. (803) 383-7000). As used herein, the
"Company" includes the Company's consolidated subsidiaries unless the context
requires otherwise.
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
The Company................................................................ S-3
Use of Proceeds............................................................ S-5
Capitalization............................................................. S-5
Selected Financial Information............................................. S-6
Description of the Debentures.............................................. S-7
Underwriting............................................................... S-9
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Ratio of Earnings to Fixed Charges......................................... 3
Description of the Debt Securities......................................... 4
Plan of Distribution....................................................... 12
Experts.................................................................... 13
Validity of the Debt Securities............................................ 13
S-2
THE COMPANY
The Company, a South Carolina corporation founded in Hartsville, South
Carolina in 1899, is a major global manufacturer of paperboard-based and
plastic-based packaging products. The Company is also vertically integrated
into paperboard production and recovered paper collection. The paperboard
utilized in the Company's packaging products is produced substantially from
recovered paper. The Company operates an extensive network of plants in the
United States and has subsidiaries in Europe, Canada, Mexico, South America,
Australia and Asia, and affiliates in Canada, Japan and France. The Company's
business is organized by global product lines in order to leverage its U.S.
customer base, to take advantage of synergies from its worldwide operations
and to serve its customers worldwide in a timely manner and with consistent
quality.
The Company serves a wide variety of industrial and consumer markets.
Industrial markets, which represented approximately 58% of the Company's sales
in 1994, include paper manufacturers, chemical and pharmaceutical producers,
textile manufacturers, automotive manufacturers, the wire and cable industry
and the building and construction industry. Consumer markets, which
represented approximately 42% of the Company's sales in 1994, include food and
beverage processors, the personal and health care industries, supermarkets,
retail outlets, household goods manufacturers and consumer electronics. The
Company believes that it is a leading producer in most markets served.
For financial reporting purposes, the Company divides its operations into
three segments: Converted Products, Paper and International.
CONVERTED PRODUCTS
The Converted Products segment manufactures fibre and plastic tubes, cores
and cones--used primarily as industrial carriers; composite canisters--used to
package a variety of products including frozen concentrates, snack foods,
nuts, solid shortening, refrigerated dough, biscuits and pastries, powdered
beverages, coffee, paints, cleansers and other products; caulking cartridges--
used for packaging adhesives and sealants; fibre drums, plastic drums and
intermediate bulk containers--used for packaging a wide variety of products
for bulk packaging; plastic bags--for the grocery and retail industries;
agricultural mulch film; wood, plywood and metal reels--for the wire and cable
industries; injection molded and extrusion plastics--including automotive
components, plumbing parts and reel products; and protective packaging
products--including solid fibre partitions, corner posts and engineered
cushioned fibre.
The October 1993 acquisition of Engraph, Inc., the Company's largest
acquisition to date, added several new products to the Converted Products
portfolio, including pressure-sensitive and extended-text labels; flexible
packaging--for confectionery and other industries; screen process printing--
for the beverage and fleet graphics industries; and paperboard specialties--
including cartons, sleeves and blister packs.
Converted Products is the largest of the Company's business segments with
1994 sales to unaffiliated customers of over $1.7 billion and operating profit
(before unallocated corporate expense, interest income and interest expense)
of $188.5 million. At December 31, 1994, the Converted Products segment had
approximately 10,400 employees and identifiable assets of $1.1 billion.
The Company believes it has several competitive advantages in the industrial
and consumer Converted Products markets it serves. First, the Company sells
many products within the Converted Products segment globally. As a result, the
Company believes it has the capability to respond effectively to customers
seeking national or international supply agreements. Secondly, the Company
believes its technological leadership, reputation for quality and vertical
integration have enabled the Company to coordinate its product development and
global expansion with the rapidly changing needs of its major customers, who
demand high quality, state of the art and environmentally compatible
packaging. Thirdly, the Company and its customers have jointly developed
international standards to reduce costs and increase quality. Finally, the
Company believes that its strategy of vertical integration increases its
control over the availability and quality of raw materials used in its
products.
PAPER
The Paper segment includes the Company's domestic production of uncoated
cylinder paperboard and corrugating medium, as well as the recovered paper
collection and processing operations. The primary objective
S-3
of the Paper segment is to provide a high-quality, cost-effective source of
paperboard for the Company's Converted Products operations. The Company
believes the Paper segment is one of the world's largest producers of uncoated
recycled cylinder paperboard and that it is among the five largest consumers
of recovered paper in the world.
In 1994, total Paper segment revenue was $331 million and operating profit
was $64.5 million. Approximately $203.6 million or 61.5% of the Company's
Paper segment sales were to the Company's paperboard-based Converted Products
units. The remaining $127.4 million or 38.5% of Paper segment sales, primarily
corrugating medium and specialty grade papers, were to unaffiliated customers.
The Company sells its corrugating medium production to a single customer under
a long term agreement, which expires in 2010. Revenues in 1994 under this
agreement were approximately $46 million.
The primary raw material used in the production of the Company's uncoated
cylinder paperboard is recovered paper. Approximately 98% of the recovered
paper consumed by the Company is obtained through its recovered paper
collection subsidiary, Paper Stock Dealers, Inc., and from recovered paper
collection sites at the Company's plants.
At December 31, 1994, the Paper segment had approximately 1,600 employees
and identifiable assets of $157.4 million. The Company believes the Paper
segment affords to the Company's other segments competitive advantages of
control over quality and availability of base product stock at a competitive
price.
INTERNATIONAL
The International segment includes all operations outside the United States.
The Company has operated internationally since 1923 and today operates through
subsidiaries and affiliates in 28 countries, including the European Community
(United Kingdom, France and Germany), Canada, Latin America (Mexico, Colombia,
Venezuela and Brazil), and Pacific/Asia (Australia, New Zealand, Thailand,
Malaysia, Singapore and Taiwan), essentially serving the same industrial and
consumer markets as its domestic operations. The Company believes it is the
largest supplier of tubes and cones in Europe, Canada, Mexico and Australia.
In 1994, the International segment reported sales to unaffiliated customers
of $431.2 million and an operating profit of $15.7 million. At December 31,
1994, the International segment had approximately 4,700 employees and
identifiable assets of $405.6 million.
Having operated internationally for over 70 years, the International segment
has been important in the Company's ability to serve and retain many of its
customers that have international packaging requirements. The Company
considers its ability to serve its customers worldwide in a timely, consistent
and cost-effective manner to be a competitive advantage. The Company expects
its international activities to provide an increasing portion of its future
growth.
ACQUISITION STRATEGY
Acquisitions and business combinations have been, and are expected to
continue to be, an important part of the Company's strategy for growth and its
ability to service customer needs. The Company continually evaluates
acquisition opportunities and frequently conducts due diligence activities and
enters into negotiations in connection with possible acquisitions. The Company
is currently conducting such negotiations and has submitted bids with respect
to several small acquisition opportunities. The Company expects to acquire
additional companies with market and technology positions that provide
meaningful opportunities in industrial and consumer markets, and possibly may
dispose of operations, when consistent with its overall goals and strategies.
During the first six months of 1995, the Company completed several
acquisitions at a total cost of approximately $50 million in cash, including
the purchase of an Edinburgh, Indiana flexible packaging plant from Hargro
Flexible Packaging Corporation and the purchase of the remaining 50% interest
in the CMB-Sonoco joint venture which manufactures composite containers in the
United Kingdom and France. These acquisitions are expected to add
approximately $90 million in sales annually. Since the end of the second
quarter 1995, the Company has completed acquisitions which are expected to add
approximately $50 million in sales annually.
S-4
USE OF PROCEEDS
The purpose of the offering of the Debentures is to lengthen the maturities
of the Company's indebtedness. Accordingly, the Company will apply the net
proceeds from the sale of the Debentures (estimated at $ ) to the
reduction of outstanding commercial paper obligations. Such commercial paper
obligations were incurred for general corporate purposes and at October 31,
1995 bore interest at an average rate of 5.77%. The Company expects to incur
additional commercial paper and other debt obligations from time to time for
general corporate purposes, including working capital, capital expenditures
and possible acquisitions.
CAPITALIZATION
The following table sets forth the historical consolidated capitalization of
the Company at July 2, 1995 as adjusted for the issuance of the Debentures
offered hereby.
AT JULY 2, AS
1995 ADJUSTED
---------- ----------
(DOLLARS IN
THOUSANDS)
SHORT-TERM DEBT (INCLUDING CURRENT MATURITIES OF LONG-
TERM DEBT)........................................... $ 69,287 $ 69,287
========== ==========
LONG-TERM DEBT (EXCLUDING CURRENT MATURITIES):
Commercial paper supported by long-term bank facili-
ties............................................... $ 258,000 $ 158,000
9.20% Notes due August 1, 2021...................... 99,917 99,917
5 7/8% Notes due November 1, 2003................... 99,438 99,438
5.49% Notes due April 15, 2000...................... 75,000 75,000
6.125% Notes due June 1, 2025....................... 34,427 34,427
Other long-term debt................................ 34,803 34,803
The Debentures offered hereby....................... -- 100,000
---------- ----------
TOTAL LONG-TERM DEBT.................................. 601,585 601,585
========== ==========
SHAREHOLDERS' EQUITY:
Convertible preferred stock......................... 172,500 172,500
Common stock........................................ 7,175 7,175
Capital in excess of stated value................... 171,831 171,831
Translation of foreign currencies................... (42,054) (42,054)
Retained earnings................................... 643,021 643,021
Treasury shares at cost............................. (66,045) (66,045)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY............................ 886,428 886,428
---------- ----------
TOTAL LONG-TERM DEBT AND SHAREHOLDERS' EQUITY......... $1,488,013 $1,488,013
========== ==========
S-5
SELECTED FINANCIAL INFORMATION
The selected consolidated financial data presented below for each of the
five years in the period ended December 31, 1994 have been derived from the
consolidated financial statements of the Company, which statements have been
audited by Coopers & Lybrand L.L.P., independent public accountants. The data
for the six months ended July 2, 1995 and July 3, 1994 have been derived from
the unaudited consolidated financial statements of the Company for such
periods and, in the opinion of management, include all adjustments (consisting
only of normal recurring adjustments) necessary to state fairly the
information included therein in accordance with generally accepted accounting
principles for interim financial information. The data should be read in
conjunction with the related notes and other financial information included
and incorporated by reference in the Company's Annual Report on Form 10-K for
the year ended December 31, 1994 and the Company's Quarterly Report on Form
10-Q for the quarterly period ended July 2, 1995, incorporated by reference
herein. Results for the three months and six months ended July 2, 1995 are not
necessarily indicative of results for any other interim period or for the year
as a whole. Due to acquisitions and dispositions, data may not be comparable
from year to year.
AT OR FOR THE SIX
MONTHS ENDED AT OR FOR THE YEARS ENDED DECEMBER 31,
---------------------- ---------------------------------------------------------------
JULY 2, JULY 3,
1995 1994 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE)
INCOME STATEMENT DATA:
Sales................... $1,336,868 $1,101,763 $2,300,127 $1,947,224 $1,838,026 $1,697,058 $1,669,142
Operating costs and
expenses:
Cost of sales.......... 1,045,522 866,160 1,803,427 1,525,671 1,451,252 1,348,489 1,307,421
Selling, general and
administrative........ 140,557 119,371 252,307 209,309 189,823 180,054 173,850
Restructuring charges.. 42,000 75,000
Unusual items(1)....... (5,800) (8,525)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income........ 150,789 116,232 244,393 218,044 154,951 177,040 112,871
Interest expense........ 20,337 17,572 35,861 31,154 30,364 28,186 28,073
Interest income......... (1,690) (921) (2,398) (6,017) (6,416) (6,870) (2,196)
Taxes on income......... 51,900 38,800 82,500 75,200 51,800 63,600 43,934
Equity in earnings of
affiliates............. (1,408) (155) (1,419) (1,127) (2,048) (2,681) (7,308)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before cumulative
effect of changes in
accounting principles.. 81,650 60,936 129,849 118,834 81,251 94,805 50,368
Cumulative effect of
changes in accounting
for post-retirement
benefits and income
taxes.................. (37,892)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.............. 81,650 60,936 129,849 118,834 43,359 94,805 50,368
---------- ---------- ---------- ---------- ---------- ---------- ----------
Preferred dividends..... (3,882) (3,882) (7,763) (1,264)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income available to
common shareholders.... $ 77,768 $ 57,054 $ 122,086 $ 117,570 $ 43,359 $ 94,805 $ 50,368
========== ========== ========== ========== ========== ========== ==========
Per Common Share(2)
Income before
cumulative effect of
changes in accounting
principles............ $ 0.85 $ 0.63 $ 1.34 $ 1.28 $ 0.89 $ 1.05 $ 0.55
Cumulative effect of
changes in accounting
for postretirement
benefits and income
taxes................. (0.41)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income available to
common shareholders:
Assuming no dilution.. $ 0.85 $ 0.63 $ 1.34 $ 1.28 $ 0.48 $ 1.05 $ 0.55
========== ========== ========== ========== ========== ========== ==========
Assuming full
dilution............. $ 0.81 $ 0.61 $ 1.31 $ 1.26 $ 0.47 $ 1.04 $ 0.55
========== ========== ========== ========== ========== ========== ==========
Dividends.............. $ 0.28 $ 0.26 $ 0.53 $ 0.51 $ 0.47 $ 0.44 $ 0.43
CASH FLOW DATA:
Net cash provided by
operating
activities(3).......... $ 91,068 $ 94,646 $ 219,515 $ 162,844 $ 157,412 $ 156,482 $ 187,914
Purchase of property,
plant and equipment
(excluding
acquisitions).......... 84,667 54,067 126,746 115,596 109,305 90,557 117,618
BALANCE SHEET DATA:
Net working capital..... $ 301,481 $ 228,138 $ 222,068 $ 209,932 $ 152,478 $ 163,860 $ 184,066
Property, plant and
equipment.............. 816,349 752,877 763,109 737,154 614,018 580,787 562,591
Total assets............ 2,065,485 1,810,839 1,835,053 1,707,125 1,246,531 1,135,940 1,113,594
Long-term debt,
excluding current
portion................ 601,585 505,881 487,959 455,262 240,982 227,528 279,135
Shareholders' equity.... 886,428 807,575 832,218 788,364 561,890 562,306 512,828
Total capitalization.... 1,488,013 1,313,456 1,320,177 1,243,626 802,872 789,834 791,963
Ratio of earnings to
fixed charges(4)....... 6.22x 5.48x 5.64x 5.79x 4.44x 5.41x 3.39x
- -------
(1) Included in unusual items in 1993 and 1991 are gains on the sale of Sonoco
Graham. The 1993 gain from the early repayment of a note issued in
connection with the sale was partially offset by charges for refinancing
debt related to the Engraph acquisition and various other unusual items.
(2) Per share data adjusted to reflect a 5% common stock dividend on June 9,
1995, and a two-for-one stock split effective on June 10, 1993.
(3) This item consists of net income, adjusted for non-cash items, changes in
working capital and changes in other operating assets and liabilities.
(4) For purposes of these calculations, "earnings" consist of income from
operations before income taxes and fixed charges (excluding capitalized
interest, if any). Fixed charges consist of interest on all indebtedness
and that portion of rental expense considered to be representative of the
interest factor.
S-6
RECENT RESULTS
The Company's sales for the quarter ended October 1, 1995 were $687.0
million compared with $591.2 million for the quarter ended October 2, 1994.
The sales increase was largely the result of higher selling prices implemented
earlier in the year to offset increasing raw material costs, especially
recovered paper. Operating income was $77.6 million for the third quarter of
1995 compared with $61.5 million in 1994. Net income available to common
shareholders for the quarter was $38.7 million compared with $30.6 million
last year. Earnings per share (assuming no dilution) were $.43 compared with
third quarter 1994 earnings of $.33 per share. Earnings per share (assuming
full dilution) were $.41 compared with third quarter 1994 earnings of $.33 per
share.
Sales for the first nine months of 1995 were $2,023.9 million compared with
$1,692.9 million for the same period in 1994. The increase in sales was
largely the result of both volume gains earlier in the year and the selling
price increases noted above. Operating income was $228.4 million compared with
$177.7 million during the same period last year. Net income available to
common shareholders for the first nine months of 1995 was $116.5 million
compared with $87.6 million in 1994. Earnings per share (assuming no dilution)
were $1.28 compared with $.96 for the nine month period in 1994. Earnings per
share (assuming full dilution) were $1.22 compared with $.94 for the same nine
month period in 1994.
Data for the three months and nine months ended October 1, 1995 and October
2, 1994 have been derived from the unaudited consolidated financial statements
of the Company for such periods and, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary to
state fairly the information included therein in accordance with generally
accepted accounting principles for interim financial information.
DESCRIPTION OF THE DEBENTURES
The following description of the particular terms of the Debentures offered
hereby (referred to in the Prospectus as "Offered Debt Securities")
supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities set
forth in the accompanying Prospectus, to which description reference is hereby
made.
GENERAL
The Debentures will be limited to $100,000,000 aggregate principal amount
and will mature on November 1, 2010. The Debentures will bear interest at %
per annum from November 1, 1995 or from the most recent interest payment date
to which interest has been paid or provided for, payable semiannually on May 1
and November 1 of each year, commencing May 1, 1996, to the persons in whose
names the Debentures are registered at the close of business on the April 15
or October 15, as the case may be, next preceding such interest payment date.
Sections 403 and 1010 of the Indenture dated as of June 15, 1991 (the
"Indenture"), relating respectively to defeasance and discharge of obligations
in respect of Debt Securities and defeasance of certain covenants, will apply
to the Debentures. See "Description of the Debt Securities--Defeasance of
Offered Debt Securities or Certain Covenants in Certain Circumstances" in the
Prospectus.
The Debentures will not be redeemable prior to maturity and will not be
subject to any sinking fund.
BOOK-ENTRY SYSTEM
Upon issuance, the Debentures will be represented by a Global Security
deposited with, or on behalf of, the Depositary. The Global Security
representing the Debentures will be registered in the name of a nominee of the
Depositary. Except under the circumstances described in the accompanying
Prospectus under "Description of the Debt Securities--Book-Entry Securities,"
the Debentures will not be issuable in definitive form. So long as the
Debentures are represented by a Global Security, the Depositary's nominee will
be considered the sole owner
S-7
or holder of the Debentures for all purposes under the Indenture, and the
beneficial owners of the Debentures will be entitled only to those rights and
benefits afforded to them in accordance with the Depositary's regular
operating procedures. See "Description of the Debt Securities--Book-Entry
Securities" in the Prospectus.
The Company expects that the Depositary, upon receipt of any payment of
principal, premium or interest on the Debentures represented by a Global
Security, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of such
Depositary. The Company also expects that payments by participants to owners
of beneficial interests in such Global Security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of such
participants.
The Depositary has advised the Company and the Underwriters as follows: the
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depositary was created to hold securities for its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. The Depositary's
participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to other
entities, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant either
directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Debentures will be made by the Underwriters in
immediately available funds. All payments of principal and interest will be
made in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
Debentures will trade in the Depositary's Same-Day Funds Settlement System
until maturity, and secondary market trading activity in the Debentures will
therefore be required by the Depositary to be settled in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Debentures.
S-8
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated the date hereof, the Company has agreed to sell to each of the
Underwriters named below severally, and each of the Underwriters has severally
agreed to purchase, the principal amount of the Debentures set forth opposite
its name below:
PRINCIPAL
AMOUNT OF
UNDERWRITERS DEBENTURES
------------ ------------
J.P. Morgan Securities Inc................................... $ 50,000,000
CS First Boston Corporation.................................. 50,000,000
------------
Total.................................................... $100,000,000
============
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are obliged to take and pay for all of the Debentures offered
hereby if any are taken.
The Underwriters initially propose to offer the Debentures directly to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession
not in excess of % of the principal amount of the Debentures. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of % of the principal amount of the Debentures to certain other
dealers. After the initial public offering, the public offering price and such
concessions may from time to time be changed.
The Debentures are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that the Underwriters
intend to make a market in the Debentures but are not obligated to do so and
may discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Debentures.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, or contribute to payments which the Underwriters may be required to
make in respect thereof.
In the ordinary course of their respective businesses, J.P. Morgan
Securities Inc. and CS First Boston Corporation have provided, and in the
future may provide, investment banking services for the Company. Additionally,
in the ordinary course of their respective businesses, affiliates of J.P.
Morgan Securities Inc. have provided, and in the future may provide,
commercial banking services for the Company. J.P. Morgan Securities Inc. acts
as a dealer for the Company's commercial paper program.
S-9
PROSPECTUS
[LOGO OF SONOCO PRODUCTS COMPANY APPEARS HERE]
SONOCO PRODUCTS COMPANY
Debt Securities
Sonoco Products Company (the "Company") may offer from time to time, in one or
more series, non-convertible debt securities consisting of debentures, notes
and/or other unsecured evidences of indebtedness (the "Debt Securities") with
an aggregate initial public offering price of up to U.S. $100,000,000, or the
equivalent thereof in any other currency or composite currency, on terms to be
determined at the time of sale. The specific terms of the Debt Securities, in-
cluding, where applicable, the designation, aggregate principal amount, denomi-
nations, purchase price, maturity, interest rate (which may be fixed or vari-
able), and time of payment of interest, if any, currency of payment, any terms
for mandatory or optional redemption, any terms for sinking fund payments, any
listing on a securities exchange and any other specific terms in connection
with the sale of the Debt Securities in respect of which this Prospectus is be-
ing delivered will be set forth in an accompanying Prospectus Supplement (the
"Prospectus Supplement").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Debt Securities may be offered directly, through agents designated from
time to time, through dealers or through underwriters also to be designated.
See "Plan of Distribution." The names of any such agents, dealers or underwrit-
ers will be set forth in the accompanying Prospectus Supplement.
The date of this Prospectus is November 1, 1995
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
OR ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN OR IN ANY PROSPECTUS SUPPLEMENT IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF OR THEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF. NEITHER
THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY DEBT SECURITIES IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"), all of which may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following Regional Offices of the Commission: Chicago Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
and New York Regional Office, 7 World Trade Center, New York, New York 10048.
Copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. Such material can also be inspected at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
This Prospectus does not contain all of the information set forth in the
Registration Statement on Form S-3, of which this Prospectus is a part, and
exhibits thereto (together with all amendments thereto, the "Registration
Statement"), which the Company has filed with the Commission under the
Securities Act of 1933 (the "Securities Act"), certain portions of which have
been omitted pursuant to the rules and regulations of the Commission, and to
which reference is hereby made for further information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by reference the following documents, which
also have been filed with the Commission:
(a) the Company's Annual Report on Form 10-K for the year ended December
31, 1994 filed on March 30, 1995 and the amendment thereto on Form 10-
K/A filed on June 29, 1995;
(b) the Company's Quarterly Reports on Form 10-Q for the quarterly periods
ended April 2, 1995 and July 2, 1995 filed on May 16, 1995 and August
15, 1995, respectively; and
(c) all documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to
the termination of the offering of the Debt Securities.
Any statement contained herein, in the Prospectus Supplement or in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of the Registration
Statement and this Prospectus to the extent that a statement contained herein,
in the Prospectus Supplement or in any subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
2
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY AND ALL OF THE DOCUMENTS THAT HAVE BEEN OR MAY BE INCORPORATED HEREIN
BY REFERENCE (NOT INCLUDING EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS
ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS
SHOULD BE DIRECTED TO: CHARLES J. HUPFER, TREASURER, SONOCO PRODUCTS COMPANY,
P.O. BOX 160, HARTSVILLE, SOUTH CAROLINA 29551-0160 (TELEPHONE: (803) 383-
7000).
THE COMPANY
The Company, a South Carolina corporation founded in Hartsville, South
Carolina in 1899, is a major global manufacturer of paperboard-based and
plastic-based packaging products. The Company is also vertically integrated
into paperboard production and recovered paper collection. The paperboard
utilized in the Company's packaging products is produced substantially from
recovered paper. The Company operates an extensive network of plants in the
United States and has subsidiaries in Europe, Canada, Mexico, South America,
Australia and Asia, and affiliates in Canada, Japan and France. The Company's
principal executive offices are located at One North Second Street, P.O. Box
160, Hartsville, South Carolina 29551-0160 (Telephone No. (803) 383-7000).
USE OF PROCEEDS
Except as may be set forth in the Prospectus Supplement, the Company intends
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 sets forth the Company's ratio of earnings to fixed
charges for the periods indicated.
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED ----------------------------
JULY 2, 1995 1994 1993 1992 1991 1990
------------ ---- ---- ---- ---- ----
Ratio of Earnings to
Fixed Charges.......... 6.22x 5.64x 5.79x 4.44x 5.41x 3.39x
For purposes of these calculations, "earnings" consist of income from
operations before income taxes and fixed charges (excluding capitalized
interest, if any). Fixed charges consist of interest on all indebtedness and
that portion of rental expense considered to be representative of the interest
factor.
3
DESCRIPTION OF THE DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which the
Prospectus Supplement will relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") and the
extent, if any, to which such general provisions may not apply thereto will be
described in the Prospectus Supplement relating to such Offered Debt
Securities.
The Debt Securities are to be issued under an Indenture, dated as of June
15, 1991 (the "Indenture"), between the Company and Wachovia Bank of North
Carolina, National Association, as Trustee (the "Trustee"), a form of which is
incorporated by reference into the Registration Statement. The following
summary of certain provisions of the Debt Securities and the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Indenture, including the
definitions therein of certain terms. Whenever particular provisions or
defined terms in the Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein. Section references used
herein are references to the Indenture.
GENERAL
The Debt Securities will be unsecured obligations of the Company and will
rank on a parity with all other currently outstanding unsecured and
unsubordinated indebtedness of the Company.
The Debt Securities of any series may be issued in definitive form or, if
provided in the Prospectus Supplement relating thereto, may be represented in
whole or in part by a permanent global Security or Securities, which will be
deposited with, or on behalf of, The Depository Trust Company, New York, New
York (the "Depositary"), and registered in the name of the Depositary's
nominee. Each Debt Security represented by a permanent global Security is
referred to herein 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.
Reference is made to the Prospectus Supplement relating to the particular
series of Offered Debt Securities offered thereby for the following terms or
additional provisions of the Offered Debt Securities: (i) the title of the
Offered Debt Securities; (ii) any limit on the aggregate principal amount of
the Offered Debt Securities; (iii) the price (expressed as a percentage of the
aggregate principal amount thereof) at which the Offered Debt Securities will
be issued; (iv) the date or dates on which the principal of the Offered Debt
Securities will be payable; (v) 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 determination of such rate or rates; (vi) the date or
dates from which such interest, if any, on the Offered Debt Securities will
accrue or the method of determination of such date or dates, the dates on
which such interest, if any, will be payable, the date on which payment of
such interest, if any, will commence, and the regular record dates for such
interest payment dates, if any; (vii) 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 the option of the
Company; (viii) the obligation, if any, of the Company 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; (ix) if other than the principal amount thereof, the amount of
Offered Debt Securities which shall be payable upon declaration of
acceleration of the maturity thereof; (x) 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; (xi) 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 the
election of the Company or the Holders, be payable, and the periods within
which, and terms and conditions upon which, such election may be made; (xii)
if
4
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; (xiii) the right of the Company, if any, to defease the Offered
Debt Securities or certain covenants under the Indenture; (xiv) whether any of
the Offered Debt Securities shall be Book-Entry Securities and, in such case,
the Depositary for such Book-Entry Securities; and (xv) any other terms
relating to the Offered Debt Securities (which are not inconsistent with the
Indenture). (Section 301)
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, except that, at the option of
the Company, interest may be paid by mailing a check to, or by wire transfer
to, the Holders of record entitled thereto. (Sections 301 and 305)
For a description of payments of principal of, premium, if any, and interest
on, and transfer of, Book-Entry Securities, and exchanges of permanent 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 the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (Sections 301, 302 and
305)
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. (Section 101)
In the case of a Debt Security denominated in a foreign currency, a state
court in the State of New York rendering a judgment on such Security would be
required under Section 27 of the New York Judiciary Law to render such
judgment in the foreign currency in which the Debt Security is denominated,
and such judgment would be converted into United States dollars at the
exchange rate prevailing on the date of entry of the judgment.
CERTAIN COVENANTS OF THE COMPANY
Restriction on Liens
The Indenture provides that, so long as any Debt Securities are Outstanding,
the Company will not issue, assume or guarantee, and 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 being hereinafter
referred to as a "lien" or "liens") of or upon any assets, whether now owned
or hereafter acquired, of the Company or any such Domestic Subsidiary without
effectively providing that the Debt Securities (together with, if the Company
shall so determine, any other Indebtedness of the Company ranking equally with
the Debt Securities) shall be equally and ratably secured by a lien ranking
ratably with and equal to (or at the Company's option, prior to) such secured
Indebtedness; provided, however, that the foregoing restriction shall not
apply to (a) liens on any assets of any corporation existing at the time such
corporation becomes a Domestic Subsidiary; (b) liens on any assets existing at
the time of acquisition of such assets by the Company or a Domestic
Subsidiary, or liens to secure the payment of all or any part of the purchase
price of such assets upon the acquisition of such assets by the Company or a
Domestic Subsidiary or to
5
secure any Indebtedness incurred, assumed or guaranteed by the Company 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 the Company 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; (c) liens
on any assets to secure Indebtedness of a Domestic Subsidiary to the Company
or to any wholly owned Domestic Subsidiary; (d) liens on any assets of a
corporation existing at the time such corporation is merged into or
consolidated with the Company or a Domestic Subsidiary or at the time of a
purchase, lease or other acquisition of the assets of a corporation or firm as
an entirety or substantially as an entirety by the Company or a Domestic
Subsidiary; (e) liens on any assets of the Company or 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); (f) 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 (a) to (e), inclusive; 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); (g) liens not permitted
by clauses (a) through (f) above if at the time of, and after giving effect
to, the creation or assumption of any such lien, the aggregate amount of all
Indebtedness of the Company and its Domestic Subsidiaries secured by all such
liens not so permitted by clauses (a) through (f) 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. (Section
1008)
Restriction on Sale and Lease-Back Transactions
The Indenture further provides that the Company will not, and will not
permit any Domestic Subsidiary to, enter into any arrangement with any person
providing for the leasing by the Company 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 the Company or
any Domestic Subsidiary to such person (herein referred to as a "Sale and
Lease-Back Transaction"), unless (a) the Company 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 (b) 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 (as determined by the Board of Directors of the
Company) 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 Funded Indebtedness of the
Company or a consolidated Domestic Subsidiary ranking on a parity with or
senior to the Debt Securities. (Section 1009)
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. (Section 1010)
6
Certain Definitions (Section 101)
"Attributable Debt", when used in connection with a Sale and Lease-Back
transaction referred to above, shall mean, 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 Debt Securities determined on a
weighted average basis and compounded semi-annually) of the obligations of the
Company or 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 shall mean 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 the most recently prepared consolidated balance sheet of the
Company and the Subsidiaries as of the end of a fiscal quarter of the Company,
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 the Company, or by one or more wholly owned
Domestic Subsidiaries, or by the Company 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, (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 the Company or any of its
subsidiaries or for which the Company or any of its subsidiaries is 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 the Company, or by
one or more of the Subsidiaries, or by the Company and one or more
Subsidiaries.
7
EVENTS OF DEFAULT
An Event of Default with respect to the Debt Securities of any series is
defined in the Indenture as: (a) default in payment of principal of or
premium, if any, on any Debt Security of that series at maturity; (b) default
for 30 days in payment of interest on any Debt Security of that series; (c)
default in the deposit of any sinking fund payment when due in respect of that
series; (d) failure by the Company in the performance of any other of the
covenants or warranties in the Indenture (other than 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; (e) a default under any bond,
debenture, note or other evidence of the Indebtedness of the Company
(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 Indebtedness
of the Company (including this Indenture), whether such Indebtedness now
exists or shall hereafter be created, which default shall constitute 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 with respect thereto 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 the
Company by the Trustee, or to the Company 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 the Company 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; (f) certain events of bankruptcy, insolvency or reorganization of
the Company; and (g) any other Event of Default provided with respect to Debt
Securities of that series. (Section 501)
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, but 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 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. (Sections 502 and 513)
Reference is made 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,
provided that, 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
deposit of any sinking fund payment which is provided, the Trustee will be
protected in withholding 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; and, provided further, that such
notice shall not be given until 30 days after the occurrence of a default with
respect to Outstanding Debt Securities of any series in the performance of a
covenant 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 only of
8
this provision means the happening of any of the Events of Default specified
in the Indenture and relating to such series of Outstanding Debt Securities,
excluding any grace periods and irrespective of any notice requirements.
(Section 602)
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. (Section 603) 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. (Section 512)
The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate of no default. (Section 1004)
MODIFICATION OF THE INDENTURE AND WAIVER OF COVENANTS
Modifications and amendments may be made by the Company and the Trustee 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 (Section 901).
The Indenture contains provisions permitting the Company 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 aforesaid percentage 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. (Section 902) The
Indenture also permits the Company 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. (Section 1011)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture contains a provision permitting the Company, without the
consent of the Holders of any of the Outstanding Debt Securities under the
Indenture, to consolidate with or merge into any other corporation or transfer
or lease its assets substantially as an entirety to any person provided that:
(i) the successor is a corporation organized under the laws of any United
States domestic jurisdiction; (ii) the successor corporation assumes the
Company's obligations on the Debt Securities and under the Indenture; (iii)
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 (iv) certain other conditions are met.
(Sections 801 and 802)
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 permanent
global Security or Securities except as otherwise provided in the Prospectus
Supplement relating thereto.
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Upon issuance, all Book-Entry Securities of like tenor and having the same
date of original issue will be represented by one or more permanent global
Securities. Each permanent 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 permanent global
Security will be registered in the name of the Depositary or a nominee of the
Depositary.
Ownership of beneficial interests in a permanent 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 permanent 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
permanent global Security. Ownership of beneficial interest in such a
permanent 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 definitive form. Such
laws may impair the ability to transfer beneficial interests in such a
permanent global Security.
Payment of principal of and any premium and interest on Book-Entry
Securities represented by any permanent global Security registered in the name
of or held by the Depositary or its nominee will be made in the Depositary or
its nominee, as the case may be, as the registered owners and Holder of the
permanent global Security representing such Book-Entry Securities. None of the
Company, the Trustee or any agent of the Company 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 permanent 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 permanent 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 permanent global Security described above may be transferred except as a
whole by the Depositary for such permanent 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 permanent 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 (a) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such permanent global Security or if at any time the Depositary ceases to
be a clearing agency registered under the Exchange Act, (b) the Company in its
sole discretion determines that such permanent global Security shall be
exchangeable for definitive Debt Securities in registered form or (c) there
shall have occurred and be continuing an Event of Default with respect to the
Debt Securities. Any permanent 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 permanent global Security.
Except as provided above, owners of beneficial interests in such permanent
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 permanent global Security
representing Book-Entry Securities shall be exchangeable, except for another
permanent 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 permanent global Security must rely on the
procedures of the Depositary and, if such person is not a
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participant, on the procedures of the participant through which such person
owns its interest, to exercise any rights of a Holder under the Indenture. The
Company understands that under existing industry practices, in the event that
the Company requests any action of Holders or an owner of a beneficial
interest in such permanent 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.
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 the Company 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, the Company
has delivered to the Trustee an Opinion of Counsel to the effect that the
Company has 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. (Section 403)
Defeasance of Certain Covenants. The Indenture provides that the terms of
any series of Debt Securities may provide the Company with the option to omit
to comply with certain restrictive covenants described in Sections 1008 and
1009 of the Indenture. The Company, in order to exercise such option, 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. The Company 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. (Section 1010) In the event the Company exercises 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, the
Company 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. (Section 610) 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
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trust under the Indenture separate and apart from the trust administered by
any other such Trustee (Section 611), 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.
The Company maintains customary banking relationships with the Trustee.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby in four ways:
(i) directly to purchasers, (ii) through agents, (iii) through underwriters,
and (iv) through dealers.
Offers to purchase Debt Securities may be solicited directly by the Company
or by agents designated by the Company from time to time. 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 in respect of which
this Prospectus is delivered, will be named, and any commissions payable by
the Company 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. The
Company shall 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 the Company to indemnification by
the Company against certain liabilities, including liabilities under the
Securities Act, and may be customers of, engage in transactions with or
perform services for the Company in the ordinary course of business.
If an underwriter or underwriters are utilized in the sale of the Debt
Securities in respect of which this Prospectus is delivered, the Company 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 in respect of which
this Prospectus is delivered to the public. The underwriters may be entitled,
under the relevant underwriting agreement, to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company 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 the Company against
certain liabilities, including liabilities under the Securities Act.
If the Company offers and sells Debt Securities directly to a purchaser or
purchasers in respect of which this Prospectus is delivered, purchasers
involved in the reoffer or resale of such Debt Securities, if such purchasers
in respect thereof 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 the Company may be entitled under agreements which they may enter into
with the Company to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and may engage in
transactions with or perform services for the Company in the ordinary course
of their business or otherwise.
The place and time of delivery for the Debt Securities in respect of which
this Prospectus is delivered will be as set forth in the Prospectus
Supplement.
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EXPERTS
The consolidated balance sheets of the Company as of December 31, 1994 and
1993, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1994, included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, have been audited by Coopers & Lybrand
L.L.P., independent public accountants, as indicated in their report with
respect thereto, dated February 1, 1995, and are incorporated by reference
herein in reliance upon the authority of Coopers & Lybrand L.L.P. as experts
in accounting and auditing.
VALIDITY OF THE DEBT SECURITIES
The validity of the Debt Securities offered hereby will be passed upon for
the Company by Sinkler & Boyd, P.A., Columbia, South Carolina, general counsel
to the Company, and Sullivan & Cromwell, New York, New York, special counsel
to the Company, and for any underwriter, dealer or agent by Davis Polk &
Wardwell, New York, New York. In rendering their opinions, Sullivan & Cromwell
and Davis Polk & Wardwell may rely on Sinkler & Boyd, P.A., as to certain
matters of South Carolina law, and Sinkler & Boyd, P.A. may rely on Sullivan &
Cromwell as to certain matters of New York law. Various attorneys in the firms
of Sinkler & Boyd, P.A., and of Sullivan & Cromwell and members of their
immediate families own or have beneficial interests in shares of the Company's
common stock.
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