Filed Pursuant to Rule 424(b)(5)
Registration No. 333-69388
Prospectus Supplement
October 30, 2001
(To Prospectus Dated October 29, 2001)
[LOGO OF SONOCO]
$250,000,000
Sonoco Products Company
6.50% Notes Due November 15, 2013
We will pay interest on the Notes each May 15 and November 15. The
first interest payment will be made on May 15, 2002. We may redeem the Notes
prior to maturity, in whole or in part, at a redemption price equal to the
greater of the principal amount of the Notes or the make-whole price described
in this prospectus supplement, plus in each case accrued interest to the date of
redemption. See "Description of the Notes -- Optional Redemption" on page S-5.
The Notes will be unsecured and will rank equally with all of our other
existing and future unsecured and unsubordinated indebtedness.
Per Note Total
Price to public (1)........................................................ 99.420% $248,550,000
Underwriting discounts and commissions..................................... 0.675% $1,687,500
Proceeds, before expenses, to us (1)....................................... 98.745% $246,862,500
(1) Plus accrued interest, if any, from November 2, 2001.
Delivery of the Notes will be made in book-entry form only, through the
facilities of the Depository Trust Company on or about November 2, 2001.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus to which it relates is
truthful or complete. Any representation to the contrary is a criminal offense.
Joint Book - Running Managers
Banc of America Securities LLC Credit Suisse First Boston
.........
Wachovia Securities
Deutsche Banc Alex. Brown
SunTrust Robinson Humphrey
BMO Nesbitt Burns
You should rely only on the information contained in, or incorporated
by reference into, this prospectus supplement and the accompanying prospectus.
We have not, and the underwriters have not, authorized anyone to provide you
with information that is different. If anyone provides you with different or
inconsistent information, you should not rely on it. This prospectus supplement
and the accompanying prospectus may only be used where it is legal to sell these
securities. The information in, or incorporated by reference into, this
prospectus supplement and the accompanying prospectus may only be accurate on
the date of this prospectus supplement. Our business, financial condition,
results of operations and prospects may have changed since that date.
TABLE OF CONTENTS
Prospectus Supplement
Page
Where You Can Find More Information..... ................................ S-3
Forward-Looking Statements............................................... S-3
Sonoco Products Company.................................................. S-4
Ratio of Earnings to Fixed Charges....................................... S-4
Use of Proceeds.......................................................... S-5
Description of the Notes................................................. S-5
Underwriting............................................................. S-7
Notice to Canadian Residents............................................. S-9
Validity of the Notes.................................................... S-9
Experts.................................................................. S-10
Prospectus
Page
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
These offering materials consist of two documents: (a) this prospectus
supplement, which describes the terms of the Notes that we are currently
offering, and (b) the accompanying prospectus, which provides general
information about our debt securities, some of which may not apply to the Notes
that we are currently offering. The information in this prospectus supplement
supersedes any inconsistent information included in the accompanying prospectus.
In various places in this prospectus supplement and the accompanying
prospectus, we refer you to other sections of such documents for additional
information by indicating the caption headings of such other sections. The page
on which each principal caption included in this prospectus supplement and the
accompanying prospectus can be found is listed in the table of contents above.
S-2
All such cross references in this prospectus supplement are to captions
contained in this prospectus supplement and not in the accompanying prospectus,
unless otherwise stated.
WHERE YOU CAN FIND MORE INFORMATION
The Securities and Exchange Commission, or SEC, allows us to
"incorporate by reference" the information in documents that we file with the
SEC. This means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus supplement and the accompanying prospectus and
should be read with the same care. Later information that we file with the SEC
will automatically update and supersede that information.
The following documents are currently incorporated in and made a part
of this prospectus supplement and the accompanying prospectus by reference in
connection with the offering of the Notes:
o Our Annual Report on Form 10-K, and our Annual Report on Form 10-K/A,
for our fiscal year ended December 31, 2000.
o Our Quarterly Reports on Form 10-Q for the quarters ended April 1,
2001, and July 1, 2001.
o Our Current Reports on Form 8-K dated September 11, 2001 and October
30, 2001.
Any future documents that we file with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the completion of the offering of the Notes will also
be incorporated by reference into this prospectus supplement and the
accompanying prospectus.
We will provide without charge to each person (including any beneficial
owner) to whom this prospectus supplement and the accompanying prospectus is
delivered, upon written or oral request, a copy of any documents incorporated by
reference in this prospectus supplement and the accompanying prospectus (other
than the exhibits to such documents unless those exhibits are specifically
incorporated by reference). You should direct your request to Charles J. Hupfer,
Vice President, Treasurer and Secretary, Sonoco Products Company, One North
Second Street, Hartsville, South Carolina 29550, telephone (843) 383-7000, or
e-mail info@sonoco.com.
FORWARD-LOOKING STATEMENTS
This prospectus supplement 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;
S-3
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 our
operations;
o currency stability and the rate of growth in foreign markets;
o actions of government agencies; and
o loss of consumer confidence and economic disruptions resulting from
terrorist activities.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties, and assumptions,
the forward-looking events discussed in this prospectus supplement and the
accompanying prospectus might not occur.
SONOCO PRODUCTS COMPANY
The following summary description of our business is qualified entirely
by, and should be read together with, the more detailed information and
financial statements incorporated by reference in this prospectus supplement and
the accompanying prospectus.
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 in the future 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. (803) 383-7000).
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.
Nine Months Ended Years Ended December 31
September 30, 2001 -----------------------
------------------ 2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges................ 3.53x 4.53x 5.27x 5.95x 1.92x 5.03x
Ratio of Earnings (adjusted) to Fixed Charges.... 3.53x 4.46x 5.22x 4.49x 5.18x 5.03x
S-4
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.
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately
$246,562,500 from the sale of the Notes, after we deduct the underwriting
discounts and commissions and expenses of the offering. We plan to use the net
proceeds from the sale of the Notes to pay down maturing commercial paper. The
commercial paper matures daily and has an average rate of approximately 2.72%.
DESCRIPTION OF THE NOTES
Particular terms of the Notes offered by this prospectus supplement are
summarized below. The summary supplements the description of the general terms
of the debt securities, of which the Notes offered by this prospectus supplement
are a part, set forth under "Description of the Debt Securities" in the
accompanying prospectus. If anything summarized below is inconsistent with the
general terms described in the accompanying prospectus, you should consider the
particular terms summarized below to be the ones that prevail. You should read
the accompanying prospectus in conjunction with this prospectus supplement. The
following summary of certain provisions of the Indenture governing the Notes and
the Notes does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all of the provisions of the Indenture, including
the definitions of certain terms in the Indenture and those terms made a part of
the Indenture by the Trust Indenture Act of 1939.
General
The Notes will be issued initially in the principal amount of
$250,000,000. The Notes will be issued in denominations of $1,000 and integral
multiples of $1,000. Additional Notes may be issued in the future, from time to
time by a resolution of our Board of Directors without the consent of the
existing holders of the Notes, under the same series with the same terms and
conditions and with the same CUSIP number as the Notes being offered hereby. The
Notes will be unsecured obligations issued under the Indenture, dated as of June
15, 1991, between us, as issuer, and The Bank of New York, as successor trustee,
and will rank equally with all of our other existing and future unsecured and
unsubordinated indebtedness.
The Notes will bear interest at 6.50% per year and will mature on
November 15, 2013. Interest on each Note will be payable semiannually on May 15
and November 15 of each year, commencing May 15, 2002, to the person in whose
name the Notes are registered at the close of business on May 1 and November 1,
as the case may be, immediately preceding such interest payment dates. Interest
on the Notes will accrue from the date of issue and will be paid on the basis of
a 360-day year consisting of twelve 30-day months.
Optional Redemption
The Notes will be redeemable, in whole or in part, at our option at any
time at a redemption price equal to the greater of (i) 100% of the principal
amount of the Notes, or (ii) as determined by the Quotation Agent (as defined
below), the sum of the present values of the remaining scheduled payments of
principal and interest on the Notes (not including any portion of those payments
of interest accrued as of the redemption date) discounted to the redemption date
on a semi-annual basis assuming a 360 day year consisting of twelve 30 day
months at the Adjusted Treasury Rate (as defined below) plus 35 basis points
plus, in each case, accrued and unpaid interest on the Notes to the redemption
date.
In the case of a partial redemption, selection of the Notes for
redemption will be made pro rata, by lot or such other method as the Trustee in
its sole discretion deems appropriate and fair; however, any redemption relating
to a public equity offering of equity securities will be made on a pro rata
basis or on as nearly a pro rata basis as practicable (subject to the
Depositary's procedures). No Notes of a principal amount of $1,000 or less will
be redeemed in part. Notice of any redemption will be mailed by first class mail
at least 30 days but not more than 60 days before the redemption date to each
S-5
holder of the Notes to be redeemed at its registered address. If any Notes are
to be redeemed in part only, the notice of redemption that relates to the Notes
will state the portion of the Notes to be redeemed. New Notes in principal
amounts of $1,000 equal to the unredeemed portion of the Notes will be issued in
the name of the holder of the Notes upon surrender for cancellation of the
original Notes. Unless we default in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the Notes or the
portions of the Notes called for redemption.
Definitions of some of the terms used in this section are as follows:
"Adjusted Treasury Rate" means, with respect to any redemption date,
the annual rate equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price of the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for that redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the remaining
term of the Notes to be redeemed that would be utilized, at the time of a
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the Reference Treasury Dealer Quotations for that redemption
date, after excluding the highest and lowest Reference Treasury Dealer
Quotation, or (ii) if the trustee obtains fewer than three Reference Treasury
Dealer Quotations, the average of the quotations.
"Reference Treasury Dealer" means (i) each of Banc of America
Securities LLC and Credit Suisse First Boston Corporation and their respective
successors; however, if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), we
will substitute another Primary Treasury Dealer; and (ii) any other Primary
Treasury Dealer selected by us.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
us, of the bid and asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) quoted in writing to the
trustee by the Reference Treasury Dealer at 5:00 p.m., New York City time, on
the third business day preceding the redemption date.
"Quotation Agent" means the Reference Treasury Dealer appointed by us.
Book-Entry System
The Notes will be issued in book-entry form as one or more global
securities, and may only be withdrawn from The Depository Trust Company, as
depositary, and exchanged for physical securities in the limited situations
described under "Description of the Debt Securities--Book-Entry Securities" in
the accompanying prospectus.
Sinking Fund
There is no provision for a sinking fund for the Notes.
Defeasance
Under certain circumstances, we will be deemed to have discharged the
entire indebtedness on all of the outstanding Notes, or certain restrictive
covenants under the Indenture, by defeasance. See "Description of the Debt
Securities-- Defeasance of Offered Debt Securities or Certain Covenants in
Certain Circumstances" in the accompanying prospectus for a description of the
terms of any such defeasance that will be applicable to the Notes.
S-6
Covenants
The Indenture governing the Notes contains covenants that will, among
other things, limit our ability to:
o incur certain liens securing indebtedness; and
o engage in certain sale-leaseback transactions.
For a description of these covenants, see "Description of the Debt
Securities--Certain Covenants of the Company" in the accompanying prospectus.
Consolidation, Merger and Sale of Assets
We are not permitted under the Indenture to consolidate with or merge
into another person or transfer or lease substantially all of our assets to
another person unless such person is a U.S. entity that assumes our obligations
under the Indenture and certain other conditions are met. For a description of
these conditions, see "Description of the Debt Securities--Consolidation, Merger
and Sale of Assets" in the accompanying prospectus.
UNDERWRITING
Under the terms and subject to the conditions contained in an
underwriting agreement dated October 30, 2001, we have agreed to sell to the
underwriters named below, and each of the underwriters has severally agreed to
purchase, the respective principal amounts of the Notes set forth opposite its
name. Banc of America Securities LLC and Credit Suisse First Boston Corporation
are acting as representatives for the underwriters in the offering of the Notes.
Principal
Underwriters Amount of Notes
Banc of America Securities LLC................... $87,500,000
Credit Suisse First Boston Corporation........... 87,500,000
First Union Securities, Inc. .................... 30,000,000
Deutsche Banc Alex. Brown, Inc. ................. 20,000,000
SunTrust Capital Markets, Inc. .................. 20,000,000
BMO Nesbitt Burns Corp. ......................... 5,000,000
------------
Total................................................ $250,000,000
============
First Union Securities, Inc. ("FUSI"), a subsidiary of
Wachovia Corporation, conducts its investment banking, institutional, and
capital markets businesses under the trade name of Wachovia Securities. Any
references to "Wachovia Securities" in this prospectus supplement, however, do
not include Wachovia Securities, Inc., a separate broker-dealer subsidiary of
Wachovia Corporation and sister affiliate of FUSI which may or may not be
participating as a separate selling dealer in the distribution of the Notes.
The underwriters propose to offer the Notes initially at the public
offering price on the cover page of this prospectus supplement and to selling
group members at that price less a concession of 0.400% of the principal amount
per Note. The underwriters and selling group members may allow a discount of
0.275% of such principal amount per Note on sales to other broker/dealers. After
the initial public offering, the public offering price and concession and
discount to broker/dealers may be changed by the underwriters.
We estimate that our out-of-pocket expenses for this offering,
excluding underwriting discounts and commissions, will be approximately
$300,000.
The Notes are a new issue of securities with no established trading
market. We do not intend to apply for listing of the Notes on any national
securities exchange or for quotation of the Notes on any automated dealer
quotation system. One or more of the underwriters intend to make a secondary
market for the Notes. However, they are not obligated to do so and may
discontinue making a secondary market for the Notes at any time without notice.
S-7
No assurance can be given as to how liquid the trading market for the Notes will
be or that a public trading market for the Notes will develop. If no active
public trading market develops, the market price and liquidity of the Notes may
be adversely affected. If the Notes are traded, they may trade at a discount
from their initial offering price, depending on factors such as prevailing
interest rates, the market for similar securities, our performance and other
factors.
The underwriters may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act.
o Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position.
o Stabilizing transactions permit bids to purchase the
underlying security so long as the stabilizing bids do not
exceed a specified maximum.
o Syndicate covering transactions involve purchases of
the Notes in the open market after the distribution has been
completed in order to cover syndicate short positions.
o Penalty bids permit the underwriters to reclaim a
selling concession from a syndicate member when the Notes
originally sold by the syndicate member are purchased in a
stabilizing transaction or a syndicate covering transaction to
cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the Notes to be higher than it would
otherwise be in the absence of these transactions. The underwriters are not
obligated to enter into any such transactions, and, if commenced, they may be
terminated at any time without notice. We and the underwriters make no
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Notes.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments which the underwriters may be required to make in respect thereof.
In the ordinary course of their respective businesses, Banc of America
Securities LLC and Credit Suisse First Boston Corporation have provided, and in
the future may provide, investment banking and financial advisory services to
us. Various of the other underwriters named above or their affiliates also have
provided, and in the future may provide, investment banking, commercial banking,
trust or financial advisory services to us. Additionally, in the ordinary course
of their respective businesses, affiliates of Banc of America Securities LLC and
Credit Suisse First Boston Corporation have provided, and in the future may
provide, commercial banking services to us. In particular, Bank of America,
N.A., an affiliate of Banc of America Securities LLC, an underwriter in this
offering, is the administrative agent, and Bank of America, N.A. and Credit
Suisse First Boston are lenders under our credit facility. Banc of America
Securities LLC and Credit Suisse First Boston Corporation and their affiliates
have received, and may continue to receive, customary fees in connection with
those services. Charles W. Coker, our Chairman, and Paul Fulton, another of our
directors, serve both on our Board of Directors as well as on the Board of
Directors of Bank of America Corporation, the parent company of Banc of America
Securities LLC. Hugh L. McColl, Chairman Emeritus of Bank of America Corporation
also serves on our Board of Directors. R. J. Brown and Dona Davis Young, both of
whom are directors of the Company, are also directors of Wachovia Corporation,
the parent company of First Union Securities, Inc. The decisions of Banc of
America Securities LLC and Credit Suisse First Boston Corporation to distribute
the Notes were made independent of their lending affiliates, Bank of America,
N.A. and Credit Suisse First Boston, respectively, which lenders had no
involvement in determining whether or when to distribute the Notes under this
offering or the terms of this offering. Banc of America Securities LLC and
Credit Suisse First Boston Corporation will not receive any benefit from this
offering other than the underwriting discounts and commissions paid by us.
S-8
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the Notes are made. Any resale of the Notes in Canada must be made
under applicable securities laws, which will vary depending on the relevant
jurisdiction, and which may require resales to be made under available statutory
exemptions or under a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the Notes.
Representations of Purchasers
By purchasing the Notes in Canada and accepting a purchase confirmation
a purchaser is representing to us and the dealer from whom the purchase
confirmation is received that
o the purchaser is entitled under applicable provincial
securities laws to purchase the Notes without the benefit of a
prospectus qualified under those securities laws,
o where required by law, that the purchaser is purchasing as principal
and not as agent, and o the purchaser has reviewed the text above
under "Resale Restrictions."
Rights of Action (Ontario Purchasers)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
Enforcement of Legal Rights
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgement obtained in Canadian courts against such issuer or
persons outside of Canada.
Taxation and Eligibility for Investment
Canadian purchasers of Notes should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the Notes in
their particular circumstances and about the eligibility of the Notes for
investment by the purchaser under relevant Canadian legislation.
VALIDITY OF THE NOTES
The validity of the Notes offered hereby will be passed upon for us by
Haynsworth Sinkler Boyd, P.A., Columbia, South Carolina, our general counsel.
Moore & Van Allen PLLC, Charlotte, North Carolina, will issue opinions to the
underwriters regarding certain legal matters relating to the Notes. Various
attorneys in the firms of Haynsworth Sinkler Boyd, P.A., and Moore & Van Allen
PLLC, and members of their immediate families own or have beneficial interests
in shares of our common stock.
S-9
EXPERTS
See "EXPERTS" in the accompanying prospectus.
S-10
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 October 29, 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
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.
2
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.
3
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.
4
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.
5
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
6
Subsidiary's liquidation or reorganization or otherwise are effectively
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 DebtSecurities 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;
7
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;
8
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 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
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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 (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,
(iii) all obligations in respect of letters of credit or bankers acceptances or
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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
11
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
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.
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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
13
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 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
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$250,000,000
Sonoco Products Company
[Sonoco Products Logo]
6.50% Notes Due November 15, 2013
Prospectus Supplement
October 30, 2001
Joint Book - Running Managers
Banc of America Securities LLC Credit Suisse First Boston
Wachovia Securities
Deutsche Banc Alex. Brown
SunTrust Robinson Humphrey
BMO Nesbitt Burns
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