UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 2001 Commission File No. 0-516
SONOCO PRODUCTS COMPANY
-----------------
Incorporated under the laws I.R.S. Employer Identification
of South Carolina No. 57-0248420
One North Second Street
Post Office Box 160
Hartsville, South Carolina 29551-0160
Telephone: 843-383-7000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
------ -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock at November 4, 2001:
Common stock, no par value: 95,567,916
--------------------------------------
SONOCO PRODUCTS COMPANY
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets - September 30, 2001
(unaudited) and December 31, 2000
Condensed Consolidated Statements of Operations - Three
Months and Nine Months Ended September 30, 2001
(unaudited) and October 1, 2000 (unaudited)
Condensed Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 2001 (unaudited) and October 1,
2000 (unaudited)
Notes to Condensed Consolidated Financial Statements
Report of Independent Accountants
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURE
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SONOCO PRODUCTS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
September 30,
2001 December 31,
(unaudited) 2000*
------------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 36,798 $ 35,219
Trade accounts receivable, net of allowances 326,444 329,467
Other receivables 27,309 26,875
Inventories:
Finished and in process 120,570 108,887
Materials and supplies 143,829 158,717
Prepaid expenses and other 39,778 36,628
----------- -----------
694,728 695,793
PROPERTY, PLANT AND EQUIPMENT, NET 997,214 973,470
COST IN EXCESS OF FAIR VALUE OF ASSETS PURCHASED, NET 330,979 236,733
OTHER ASSETS 300,793 306,615
----------- -----------
Total Assets $ 2,323,714 $ 2,212,611
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Payable to suppliers $ 199,200 $ 227,408
Accrued expenses and other 218,268 145,851
Notes payable and current portion of long-term debt 36,684 45,556
Taxes on income 57,581 18,265
----------- -----------
511,733 437,080
LONG-TERM DEBT 831,708 812,085
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS 34,930 27,611
DEFERRED INCOME TAXES AND OTHER 137,119 134,364
SHAREHOLDERS' EQUITY
Common stock, no par value
Authorized 300,000 shares
95,526 and 95,006 shares outstanding, of which
95,266 and 94,681 are issued as of September 30, 2001
and December 31, 2000, respectively 7,175 7,175
Capital in excess of stated value 297,328 289,657
Accumulated other comprehensive loss (180,734) (172,403)
Retained earnings 684,455 677,042
----------- -----------
Total Shareholders' Equity 808,224 801,471
----------- -----------
Total Liabilities and Shareholders' Equity $ 2,323,714 $ 2,212,611
=========== ===========
* The December 31, 2000 condensed consolidated balance sheet data was
derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
See accompanying Notes to Condensed Consolidated Financial Statements
SONOCO PRODUCTS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(Dollars and shares in thousands except per share data)
Three Months Ended Nine Months Ended
----------------------------- --------------------------------
September 30, October 1, September 30, October 1,
2001 2000 2001 2000
------------- ---------- ------------- -----------
Net sales $ 649,265 $ 677,469 $ 1,929,692 $ 2,042,454
Cost of sales 514,009 529,972 1,520,792 1,588,414
Selling, general and administrative expenses 63,495 69,001 199,201 205,796
Other (income) expense (see Note 6) (6,121) 5,499 46,207 5,499
--------- --------- ----------- -----------
Income before interest and taxes 77,882 72,997 163,492 242,745
Interest expense 11,932 15,026 38,754 45,709
Interest income (1,617) (929) (3,056) (2,427)
--------- --------- ----------- -----------
Income before income taxes 67,567 58,900 127,794 199,463
Provision for income taxes 25,733 22,382 65,011 75,796
--------- --------- ----------- -----------
Income before equity in earnings of
affiliates/Minority interest in subsidiaries 41,834 36,518 62,783 123,667
Equity in earnings of affiliates/Minority
interest in subsidiaries 990 2,014 1,645 6,282
--------- --------- ----------- -----------
Net income $ 42,824 $ 38,532 $ 64,428 $ 129,949
========= ========= =========== ===========
Average common shares outstanding:
Basic 95,483 99,478 95,291 99,953
Assuming exercise of options 511 152 414 197
--------- --------- ----------- -----------
Diluted 95,994 99,630 95,705 100,150
========= ========= =========== ===========
Per common share
Net income:
Basic $ .45 $ .39 $ .68 $ 1.30
========= ========= =========== ===========
Diluted $ .45 $ .39 $ .67 $ 1.30
========= ========= =========== ===========
Cash dividends $ .20 $ .20 $ .60 $ .59
========= ========= =========== ===========
See accompanying Notes to Condensed Consolidated Financial Statements
SONOCO PRODUCTS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Dollars in thousands)
Nine Months Ended
-----------------------------
September 30, October 1,
2001 2000
------------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 286,625 $ 271,975
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (74,316) (79,837)
Cost of acquisitions, exclusive of cash (171,610) (2,080)
Proceeds from the sale of assets 4,742 1,002
Investments in joint ventures/affiliates (2,308) (1,153)
--------- ---------
Net cash used by investing activities (243,492) (82,068)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 21,480 13,071
Principal repayment of debt (26,899) (105,534)
Net increase in commercial paper borrowings 13,028 31,700
Net increase (decrease) in bank overdrafts 223 (8,188)
Cash dividends (57,015) (58,876)
Shares acquired (2,041) (46,364)
Common shares issued 9,529 2,417
--------- ---------
Net cash used by financing activities (41,695) (171,774)
--------- ---------
EFFECTS OF EXCHANGE RATE CHANGES ON CASH 141 (688)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,579 17,445
Cash and cash equivalents at beginning of period 35,219 36,515
--------- ---------
Cash and cash equivalents at end of period $ 36,798 $ 53,960
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements
SONOCO PRODUCTS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
(unaudited)
NOTE 1: BASIS OF INTERIM PRESENTATION
In the opinion of the management of Sonoco Products Company (the
"Company"), the accompanying unaudited condensed consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the consolidated financial
position, results of operations, and cash flows for the interim periods
reported hereon. Operating results for the three and nine months ended
September 30, 2001, are not necessarily indicative of the results that
may be expected for the year ending December 31, 2001. These condensed
consolidated financial statements should be read in conjunction with
the consolidated financial statements and the notes thereto included in
the Company's annual report for the fiscal year ended December 31,
2000.
NOTE 2: DIVIDEND DECLARATIONS
On July 18, 2001, the Board of Directors declared a regular quarterly
dividend of $.20 per share. This dividend was paid September 10, 2001,
to all shareholders of record August 17, 2001.
On October 17, 2001, the Board of Directors declared a regular
quarterly dividend of $.20 per share payable December 10, 2001, to all
shareholders of record November 16, 2001.
NOTE 3: ACQUISITIONS
During the third quarter 2001, the Company completed its previously
announced purchase of U.S. Paper Mills Corp., a privately-held company
that produces and sells lightweight paperboard for conversion into
cores, composite cans and tubes, and produces paper cores. The
acquisition is part of the Industrial Packaging Segment.
The Company also completed the all-cash purchase of Cumberland Wood
Products, Inc.'s, plywood reel operation in Helenwood, Tennessee during
the third quarter of 2001. The transaction was for the purchase of
equipment and inventory only and is part of the Industrial Packaging
Segment.
During the third quarter 2001, the Company announced and completed the
all-cash purchase of Phoenix Packaging Corporation, a privately-held
company headquartered in North Canton, Ohio that produces and sells
steel easy-open closures. The acquisition is part of the Consumer
Packaging Segment.
The Company also acquired for cash a paper-based textile tube
converting facility in Kaiping, China during the third quarter of 2001.
The acquisition is part of the Industrial Packaging Segment.
Acquisitions completed in the third quarter 2001 had an aggregate cost
of approximately $171,000 in cash and the assumption of $4,085 in debt.
SONOCO PRODUCTS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
(Dollars in thousands except per share data)
(unaudited)
NOTE 3: ACQUISITIONS, CONTINUED
Sonoco completed two small acquisitions during the first quarter of
2001. An engineered carrier operation in Georgia was acquired at a cash
cost of $3,622, and the assets of a packaging services operation in the
United Kingdom were acquired for $1,733 in cash. These acquisitions are
part of the Industrial Packaging Segment and Consumer Packaging
Segment, respectively.
NOTE 4: FINANCIAL INSTRUMENTS
As of January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133, 'Accounting for Derivative Instruments
and Hedging Activities' (FAS 133), as amended by FAS No. 137 and FAS
No. 138. The Standard establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments
embedded in other contracts, and hedging activities. It requires the
recognition of all derivative instruments as assets or liabilities in
the Company's balance sheet and measurement of those instruments at
fair value. The Statement requires that changes in a derivative
instrument's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative instrument's gains and losses to
offset related results on the hedged item in the income statement or to
be deferred in accumulated other comprehensive income (loss), a
component of shareholders' equity, until the hedged item is recognized
in results of operations.
The Company uses derivatives from time to time to manage the cost of
certain raw materials and to mitigate exposure to foreign currency
fluctuations. The Company purchases commodities such as recovered
paper, resins, and energy generally at market or fixed prices that are
established with the vendor as part of the purchase process for
quantities expected to be consumed in the ordinary course of business.
On occasion, where the correlation between selling price and commodity
price is less direct, the Company may enter into commodity futures or
swaps to reduce the effect of price fluctuations. In addition, the
company uses foreign currency forward contracts and other risk
management instruments, including contractual provisions, to manage
exposure to changes in foreign currency cash flows on the Company's
financial statements. These derivatives are marked to market on the
Company's Consolidated Balance Sheet in accordance with the provisions
of FAS 133.
In the third quarter 2001, the Company entered into cash flow hedges to
mitigate exposure to commodity and foreign exchange risks in 2001
through 2004. Changes in the fair value of these cash flow hedge
instruments, amounting to ($2,704) net of tax, have been recorded in
accumulated other comprehensive income (loss) and will be reclassified
to earnings in the same periods the forecasted purchases or payments
affect earnings. Based on the current amount of the derivative loss in
other comprehensive income (loss), approximately $1,200, net of tax,
will be reclassified into earnings in the coming 12 months. As a result
of the high correlation between the hedged instruments and the
underlying transactions, ineffectiveness did not have a material impact
on the Company or on it's Consolidated Statements of Operations for the
three months and the nine months ended September 30, 2001.
SONOCO PRODUCTS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
(Dollars in thousands except per share data)
(unaudited)
NOTE 5: COMPREHENSIVE INCOME
The following table reconciles net income to comprehensive income:
Three Months Ended Nine Months Ended
---------------------------- -----------------------------
September 30, October 1, September 30, October 1,
2001 2000 2001 2000
------------- ---------- ------------- ---------
Net income $ 42,824 $ 38,532 $ 64,428 $ 129,949
Other comprehensive income (loss):
Foreign currency translation
adjustments 9,731 (9,627) (5,627) (34,740)
Other adjustments (2,704) -- (2,704) --
-------- -------- -------- ---------
Comprehensive income $ 49,851 $ 28,905 $ 56,097 $ 95,209
======== ======== ======== =========
The following table summarizes the components of the current period
change in the accumulated other comprehensive loss balances:
Foreign Minimum Accumulated
Currency Pension Other
Translation Liability Comprehensive
Adjustments Adjustment Other Loss
------------ ---------- ------- -------------
Balance at January 1, 2001 $(168,815) $(3,588) -- $(172,403)
Year to date change (5,627) -- $(2,704) (8,331)
--------- ------- ------- ---------
Balance at September 30, 2001 $(174,442) $(3,588) $(2,704) $(180,734)
========= ======= ======= =========
SONOCO PRODUCTS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
(Dollars in thousands except per share data)
(unaudited)
NOTE 6: FINANCIAL SEGMENT INFORMATION
Sonoco reports its results in two primary segments, Industrial
Packaging and Consumer Packaging. The Industrial Packaging Segment
includes engineered carriers (high performance paper and plastic tubes
and cores, paper manufacturing, and recovered paper operations); and
protective packaging (designed interior packaging and protective
reels). The Consumer Packaging Segment includes composite cans;
flexible packaging (printed flexibles, high density bags and film
products); and packaging services and specialty products (supply chain
management/e-marketplace, graphics management, folding cartons, and
paper glass covers and coasters). The Consumer Packaging Segment also
included the Capseals unit, maker of container seals, which was sold in
December 2000.
FINANCIAL SEGMENT INFORMATION (Unaudited)
Three Months Ended Nine Months Ended
----------------------------- --------------------------------
September 30, October 1, September 30, October 1,
2001 2000 2001 2000
------------ --------- ------------- -----------
NET SALES
Industrial Packaging $ 320,046 $ 362,452 $ 977,357 $ 1,103,103
--------- --------- ----------- -----------
Consumer Packaging 329,219 308,777 952,335 921,048
Divested Business -- 6,240 -- 18,303
--------- ----------- -----------
Total Consumer 329,219 315,017 952,335 939,351
--------- --------- ----------- -----------
Consolidated $ 649,265 $ 677,469 $ 1,929,692 $ 2,042,454
========= ========= =========== ===========
OPERATING PROFIT
Industrial Packaging $ 41,946 $ 52,677 $ 124,823 $ 162,113
Consumer Packaging 29,815 25,754 84,876 85,653
Divested Business -- 65 -- 478
Other income (expense)* 6,121 (5,499) (46,207) (5,499)
Interest, net (10,315) (14,097) (35,698) (43,282)
--------- --------- ----------- -----------
Consolidated $ 67,567 $ 58,900 $ 127,794 $ 199,463
========= ========= =========== ===========
*2001 results include restructuring charges of $111 and $46,433 for the three
months and nine months ended September 30, 2001, respectively. In addition, 2001
includes net gains from legal settlements and corporate-owned life insurance
adjustments of $6,232 and $226 for the three and nine months ended September 30,
2001, respectively. 2000 results include executive severance agreement
adjustments.
SONOCO PRODUCTS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
(Dollars in thousands except per share data)
(unaudited)
NOTE 7: RESTRUCTURING AND ASSET IMPAIRMENT CHARGES
During the fourth quarter of 2000, the Company recognized pretax
restructuring charges of $5,226 ($3,240 after tax). Severance and
termination benefits of approximately $1,100 remained accrued on the
Consolidated Balance Sheet as of December 31, 2000. Additional
restructuring charges of $46,433 ($32,188 after tax) were recorded in
the first nine months of 2001 as a result of further restructuring
actions announced during the period. The restructuring charges
consisted of severance and termination benefits of $21,574, asset
impairment charges of $12,972 and other exit costs of $11,887,
consisting of building lease termination expenses of $9,348 and other
miscellaneous charges of $2,539. Restructuring charges were determined
in accordance with the provisions of SEC Staff Accounting Bulletin No.
100 "Restructuring and Impairment Charges" and Emerging Issues Task
Force No. 94-3 "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity". The original
restructuring plan, which included a global reduction of 241 salaried
and 387 hourly positions, was revised to a total of 244 salaried
positions (180 in the United States) and 482 hourly positions (370 in
the United States) during the second quarter of 2001. In addition to
revised headcount reductions, the restructuring plan included
adjustments in the second quarter of 2001 related to the closure of an
additional plant and the decision to downsize, rather than close, a
plant originally included in the restructuring plan. The restructuring
plan includes the closure of 13 plant locations, including 8 in the
United States. As of September 30, 2001, 11 plants have been closed,
and approximately 643 employees have been terminated (223 salaried and
420 hourly). The restructuring costs in the first nine months of 2001
are included in "Other (income) expense" in the Company's Consolidated
Statements of Operations.
In connection with the Company's restructuring actions, asset
impairment charges of $12,972 were recognized related to the
write-off/write-down of assets associated with the eight Industrial
Packaging Segment and five Consumer Packaging Segment plant locations
identified for closure. Impaired assets were written down to the lower
of carrying amount or fair value, less costs to sell, if applicable.
The Company recognized write-offs/write-downs of impaired facilities
and equipment/other of $2,623 and $7,883, respectively, and
write-offs/write-downs related to facilities and equipment/other held
for disposal of $1,017 and $1,449, respectively. As of September 30,
2001, the carrying value of assets held for disposal was $298. The
Company anticipates disposition of these assets by the end of the first
quarter 2002. Results of operations and effects of suspending
depreciation on assets held for disposition were not material for the
nine months ended September 30, 2001.
SONOCO PRODUCTS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
(Dollars in thousands except per share data)
(unaudited)
NOTE 7: RESTRUCTURING AND ASSET IMPAIRMENT CHARGES, CONTINUED
The following table sets forth the activity related to the liability
accrued in conjunction with the restructuring and asset impairment
charges as of September 30, 2001:
Severance and
Termination Asset Other
Benefits Impairment Exit Costs Total
------------- ---------- ---------- --------
Beginning Liability Dec. 31, 2000 $ 1,100 -- -- $ 1,100
New Charges 21,996 $ 12,665 $ 12,327 46,988
Cash Payments (10,273) -- (2,122) (12,395)
Asset Impairment -- (12,972) -- (12,972)
Adjustments (422) 307 (440) (555)
-------- -------- -------- --------
Ending Liability Sept. 30, 2001 $ 12,401 $ -- $ 9,765 $ 22,166
======== ======== ======== ========
The Company expects to pay the remaining restructuring costs, with the
exception of on-going pension subsidies and certain building lease
termination expenses, by the end of the first quarter 2002 using cash
from operations.
Additionally, restructuring charges of $2,545 ($1,658 after tax), were
recognized in the first nine months of 2001 by affiliates accounted for
on the equity method of accounting. These costs include the closing of
a plant and other miscellaneous restructuring activities. The affiliate
restructuring charges are included in "Equity in earnings of
affiliates/Minority interest in subsidiaries" in the Company's
Consolidated Statements of Operations.
NOTE 8: CORPORATE OWNED LIFE INSURANCE
In the second quarter 2001, the Company surrendered its Corporate-Owned
Life Insurance (COLI) policies as a result of the settlement with the
Internal Revenue Service over deductibility of COLI loan interest. The
surrender of these policies resulted in additional income taxes of
$11,296 and other costs of $7,021. Other costs are included in "Other
(income) expense" in the Company's Consolidated Statements of
Operations.
SONOCO PRODUCTS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
(Dollars in thousands except per share data)
(unaudited)
NOTE 9: NEW ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 141, `Business
Combinations' (FAS 141), and Statement of Financial Accounting
Standards No. 142, `Goodwill and Other Intangible Assets' (FAS 142).
FAS 141 requires business combinations initiated after June 30, 2001 to
be accounted for using the purchase method of accounting, and broadens
the criteria for recording intangible assets separate from goodwill.
Recorded goodwill and intangibles will be evaluated against this new
criteria and may result in certain intangibles being included with
goodwill, or alternatively, amounts initially recorded as goodwill may
be separately identified and recognized apart from goodwill. FAS 142
requires the use of a non-amortization approach to account for
purchased goodwill and certain intangibles. Under a non-amortization
approach, goodwill and certain intangibles will not be amortized into
results of operations, but instead will be reviewed for impairment and
written down and charged to results of operations only in the periods
in which the recorded value of goodwill and certain intangibles is in
excess of its fair value. The provisions of each statement which apply
to goodwill and intangible assets acquired prior to June 30, 2001 will
be adopted by the Company on January 1, 2002. The Company expects the
adoption of these accounting standards to result in a reduction of the
amortization of goodwill and intangibles commencing January 1, 2002;
however, impairment reviews may result in future periodic write-downs.
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 143, `Accounting for Asset Retirement Obligations' (FAS
143), which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. FAS 143 is required
to be adopted for fiscal years beginning after June 15, 2002. The
Company has not yet determined what effect this statement will have on
its financial statements.
Also in August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, `Accounting for the Impairment or Disposal of
Long-Lived Assets' (FAS 144), which supersedes FASB Statement No. 121,
`Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of'. This new statement also supersedes certain
aspects of APB 30 `Reporting the Results of Operations-Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions', with
regard to reporting the effects of a disposal of a segment of a
business and will require expected future operating losses from
discontinued operations to be reported in discontinued operations in
the period incurred (rather than as of the measurement date as
presently required by APB 30). In addition, more dispositions may
qualify for discontinued operations treatment. The provisions of this
statement are required to be applied for fiscal years beginning after
December 15, 2001 and interim periods within those fiscal years. The
Company has not yet determined what effect this statement will have on
its financial statements.
SONOCO PRODUCTS COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
(Dollars in thousands except per share data)
(unaudited)
NOTE 10: SUBSEQUENT EVENTS
Debt Issuance
During the fourth quarter 2001, the Company issued debt securities of
$250,000 pursuant to shelf registrations with the Securities and
Exchange Commission. The Notes bear interest at 6.50% per year, payable
semi-annually on May 15 and November 15, and will mature on November
15, 2013.
Acquisitions and Joint Venture
During the fourth quarter 2001, the Company announced and completed the
all-cash purchase of a 90,000-ton paper mill at Hutchinson, Kansas,
from Republic Group LLC, a privately owned investment group. The
acquisition is part of the Industrial Packaging Segment.
The Company also recently announced and completed during the fourth
quarter 2001 the all-cash purchase of Hayes Manufacturing Group Inc., a
privately held manufacturer of paper-based tubes, cores and composite
cans headquartered in Neenah, Wisconsin. The acquisition is part of
both the Industrial and Consumer Packaging Segments.
In the aggregate, the all cash purchase price of these acquisitions in
the fourth quarter 2001 was approximately $74,000.
During the fourth quarter 2001, the Company announced an agreement to
form a joint venture with Dyecor Limited, a privately held company in
the United Kingdom. The Company's contribution to the joint venture was
not material.
Report of Independent Accountants
To the Shareholders and Directors of Sonoco Products Company
We have reviewed the accompanying condensed consolidated balance sheet of Sonoco
Products Company as of September 30, 2001, and the related condensed
consolidated statements of operations for each of the three-month and nine-month
periods ended September 30, 2001 and October 1, 2000, and the condensed
consolidated statements of cash flows for the nine-month periods ended September
30, 2001 and October 1, 2000. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated interim financial statements
for them to be in conformity with accounting principles generally accepted in
the United States of America.
We previously audited in accordance with auditing standards generally accepted
in the United States of America, the consolidated balance sheet as of December
31, 2000, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for the year then ended (not presented
herein); and in our report dated January 31, 2001, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 2000 is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
/s/PricewaterhouseCoopers LLP
---------------------------------
PricewaterhouseCoopers LLP
Charlotte, North Carolina
November 9, 2001
SONOCO PRODUCTS COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations, and elsewhere in this report, that are not
historical in nature, are intended to be, and are hereby identified as "forward
looking statements" for purposes of the safe harbor provided by section 21E of
the Securities Exchange Act of 1934, as amended. 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. Such forward-looking statements are based on current
expectations, estimates and projections about our industry, management's beliefs
and certain 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 certain 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. Such risks and uncertainties
include, without limitation; availability and pricing of raw materials; success
of new product development and introduction; ability to maintain or increase
productivity levels; international, national and local economic and market
conditions; ability to maintain market share; pricing pressures and demand for
products; continued strength of our paperboard-based engineered carrier and
composite can operations; anticipated results of restructuring activities;
ability to successfully integrate newly acquired businesses into the Company's
operations; currency stability and the rate of growth in foreign markets;
actions of government agencies; and loss of consumer confidence and economic
disruptions resulting from terrorist activities.
THIRD QUARTER 2001 COMPARED WITH THIRD QUARTER 2000
RESULTS OF OPERATIONS
Consolidated net sales for the third quarter of 2001 were $649.3 million, versus
$677.5 million in the third quarter of 2000. Sales in the third quarter of 2001
were adversely affected by weak volume, with company-wide volume decreases
averaging approximately 4%, compared with the same period last year. This
decrease resulted primarily from a 6% decline in the Company's Industrial
Segment volume, principally in our North American engineered carriers/paper
business. Overall, the lower sales compared with the same period in 2000 were
due primarily to the impact of reduced volume and lower pricing on trade sales
of recovered paper of $42.5 million, unfavorable exchange rate variances of
$12.6 million, and divested operations of $6.2 million, offset partially by the
impact of acquisitions and additional contract service revenue of $32.0 million.
Net income for the third quarter of 2001, excluding one-time transactions, was
$39.7 million, versus $41.9 million in the third quarter of 2000. Including
one-time transactions, net income for the third quarter 2001 was $42.8 million,
versus $38.5 million in the third quarter of 2000. One time transactions are
primarily comprised of net gains from legal settlements in the third quarter of
2001 and executive severance charges in the third quarter of 2000. Compared with
the same period in 2000, third quarter 2001 results, excluding one-time
transactions, declined primarily due to lower volume/mix of $19.1 million,
higher energy prices of approximately $2.0 million, and increased pension
expense of approximately $5.0 million. Partially offsetting these increases were
the favorable impact of productivity initiatives of $10.7 million, lower fixed
costs
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTINUED
THIRD QUARTER 2001 COMPARED WITH THIRD QUARTER 2000, CONTINUED
RESULTS OF OPERATIONS, CONTINUED
of $9.6 million, and the impact of acquisitions and additional contract service
revenue of $2.1 million.
The Company reported earnings per diluted share, excluding one-time
transactions, of $.41 and $.42 in the third quarters of 2001 and 2000,
respectively. Including one-time transactions, earnings per diluted share were
$.45 and $.39 in the third quarters of 2001 and 2000, respectively.
CONSUMER PACKAGING SEGMENT
The Consumer Packaging segment includes composite cans; flexible packaging
(printed flexibles, high density bags and film products); and packaging services
and specialty products (supply chain management/e-marketplace, graphics
management, folding cartons, and paper glass covers and coasters). The Consumer
Packaging Segment also included the Capseals unit, maker of container seals,
which was sold in December 2000.
Third quarter sales in the Consumer Segment were $329.2 million, compared with
$308.8 million in the same quarter of 2000, excluding divested operations.
Operating profits in this segment, excluding divested operations, were $29.8
million in the third quarter of 2001, compared with $25.8 million in the same
period last year.
The increase in third quarter sales was due primarily to higher revenues in
packaging services and flexible packaging, and the impact of acquisitions. The
increase in profits resulted from higher volume and increased pricing in
flexible packaging; higher prices in composite cans; favorable cost/price
relationship in high density film; and the impact of acquisitions, along with
overall higher productivity and lower fixed costs in the segment. While
continued year over year improvement and a progressively greater impact from
restructuring savings is expected in the Consumer Packaging Segment during the
fourth quarter 2001, there is some apparent slowing in discetionary consumer
spending for certain snack food products.
INDUSTRIAL PACKAGING SEGMENT
The Industrial Packaging Segment includes engineered carriers (high performance
paper and plastic tubes and cores, paper manufacturing and recovered paper
operations) and protective packaging (designed interior packaging and protective
reels).
Third quarter 2001 sales for the Industrial Segment were $320.0 million, versus
$362.5 million in the same period last year. Operating profit for the segment,
excluding one-time transactions, was $41.9 million, versus $52.7 million in the
same period last year.
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTINUED
THIRD QUARTER 2001 COMPARED WITH THIRD QUARTER 2000, CONTINUED
INDUSTRIAL PACKAGING SEGMENT CONTINUED
The decrease in third quarter sales and operating profits in the Industrial
Segment was due primarily to lower volumes in the Company's engineered carriers
and paper operations reflecting the adverse impact of continuing general
economic weakness in this segment, and does not reflect any significant net loss
of market share. Sales were impacted by a decline in volume/pricing of
approximately $41.0 million coupled with unfavorable exchange rate variances of
approximately $9.0 million, compared with the same period in 2000. Operating
profit was negatively impacted by lower sales volume and decreased prices for
outside sales of recovered paper. Higher year-over-year energy and benefit costs
were more than offset by lower fixed costs due primarily to savings from
restructuring and other cost savings programs. There are no current indications
of an upturn in the general economy, particularly in the Industrial Segment
markets, and consequently the Company does not anticipate significant
improvement in volumes for the fourth quarter 2001.
During the third quarter 2001, additional restructuring adjustments of $0.1
million were recorded related to severance and other charges in the Industrial
Packaging Segment.
SEPTEMBER 2001 YEAR-TO-DATE COMPARED WITH SEPTEMBER 2000 YEAR-TO-DATE
RESULTS OF OPERATIONS
For the first nine months of 2001, sales were $1.93 billion, versus $2.04
billion in the same period last year. Sales for the first nine months of 2001
were adversely affected by lower volume of approximately $90.0 million,
principally in the North American engineered carriers and composite can
businesses, and decreased prices for outside sales of recovered paper. In
addition, sales were impacted by unfavorable exchange rate variances of $36.5
million and divested operations of $18.3 million, offset partially by the impact
of acquisitions and new businesses of $47.9 million. Higher prices in certain
consumer businesses, coupled with increased sales volume from acquisitions and
packaging services also partially offset the sales shortfall.
Excluding one-time transactions, net income for the first nine months of 2001
was $112.1 million, versus $133.4 million in the same period last year.
Including one-time transactions, net income for this year's first nine months
was $64.4 million, versus $129.9 million in the first nine months of 2000.
One-time transactions include restructuring charges, net gains from legal
settlements, and corporate-owned life insurance policy adjustments in 2001 and
executive severance charges in 2000. Compared with the same period in 2000, net
income for the first nine months of 2001, excluding one-time transactions,
declined primarily due to lower volume, lower prices of outside sales of
recovered paper, and less favorable mix of products sold. In addition, higher
energy prices of
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTINUED
SEPTEMBER 2001 YEAR-TO-DATE COMPARED WITH SEPTEMBER 2000 YEAR-TO-DATE
RESULTS OF OPERATIONS CONTINUED
approximately $10.0 million, and increased pension expense of approximately
$13.5 million, contributed to the lower profit compared to the same period last
year. Lower material costs, principally in the North American engineered
carriers/paper and high density film businesses, higher productivity and lower
fixed costs partially offset these items.
Earnings per diluted share for the first nine months of 2001, excluding one-time
transactions, were $1.17 versus $1.33 in the same period in 2000. Including
one-time transactions, earnings per diluted share were $.67 and $1.30 for the
first nine months of 2001 and 2000, respectively.
CONSUMER PACKAGING SEGMENT
Consumer Segment sales for the first nine months of 2001 were $952.3 million,
versus $921.0 million in the same period of 2000, excluding divested operations.
Higher packaging services revenue coupled with higher selling prices in the
composite can and flexible packaging businesses during the first nine months of
2001 were partially offset by lower volume.
Operating profit in this segment, excluding one-time charges and divested
operations, was $84.9 million, versus $85.7 million in the same period last
year. The decrease in profits in the first nine months of 2001 was due primarily
to lower overall volume in the segment. The lower volume was partially offset by
higher prices, lower resin costs and productivity improvements.
Restructuring charges of $23.7 million, recorded in the first quarter of 2001,
included a reduction in force and asset impairment charges associated with the
closing of five facilities. The segment recognized write-offs/write-downs of
impaired facilities and equipment/other of $5.1 million and
write-offs/write-downs related to equipment/other held for disposal of $0.5. No
new restructuring or asset impairment charges were recorded during the second
and third quarters of 2001.
INDUSTRIAL PACKAGING SEGMENT
Sales for the first nine months of 2001 in this segment were $977.4 million,
versus $1.1 billion in 2000. Operating profit for the Industrial Segment in the
first nine months of 2001, excluding one-time transactions, was $124.8 million,
versus $162.1 million in the same period last year.
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTINUED
INDUSTRIAL PACKAGING SEGMENT CONTINUED
The decrease in sales and profits in this segment, compared with the first nine
months of 2000, resulted primarily from decreased volume in the North American
engineered carriers and paper businesses. The decrease reflects the adverse
impact of continuing general weakness in the industrial sector of the United
States economy. Although volumes have also weakened in the other areas of the
world, they remain stronger than in the United States.
During the first nine months of 2001, restructuring charges of $19.6 million
were recorded in the Industrial Packaging Segment. Restructuring charges of
$17.5 million, in the first quarter of 2001, included a reduction in force and
eight plant closings (two engineered carrier operations in the United States,
two in Europe and one in Asia; and paper operation closings in Canada, Mexico
and the United States). Additional net restructuring charges of $2.0 million, in
the second quarter of 2001, included $2.7 million related to the closing of an
additional plant, partially offset by $0.7 million related to the decision to
downsize, rather than close, another plant originally included in the
restructuring plan, as well as other miscellaneous adjustments. Adjustments of
$0.1 million related to severance and other miscellaneous restructuring
activities were recorded during the third quarter 2001. For the first nine
months of 2001, restructuring charges included asset impairment charges for
write-offs/write-downs of impaired facilities and equipment/other of $5.4
million and write-offs/write-downs related to facilities and equipment/other
held for disposal of $1.9 million. As of September 31, 2001, the carrying value
of assets held for disposal was $0.3 million.
CORPORATE
On August 13, 2001, Moody's changed the ratings outlook for the Company's "A-2"
long term debt ratings and Prime-1 short term ratings for commercial paper to
negative from stable. Additionally, on July 12, 2001, Standard and Poor's
announced that they reduced the Company's long-term debt rating from "A" to "A
minus" and the commercial paper rating from "A-1" to "A-2" with a stable
outlook. Both agencies cited recent acquisitions which are expected to result in
increased leverage in the near term as a major reason for the rating revisions.
General corporate expenses have been allocated as operating costs to each of the
segments. Year to date net interest expense was $7.6 million lower in the first
nine months of 2001 compared with the same period last year due to lower average
debt levels and interest rates.
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTINUED
CORPORATE CONTINUED
As previously disclosed, early in the second quarter of 2001, the Company
surrendered its Corporate-Owned Life Insurance (COLI) policies as a result of
the settlement with the Internal Revenue Service over deductibility of COLI loan
interest. The surrender of these policies resulted in additional income taxes of
$11.3 million and other costs of $7.0 million. Other costs are included in
"Other (income) expense" in the Company's Consolidated Statements of Operations.
In February 2001, Sonoco's board of directors authorized the repurchase of up to
5.0 million shares of the Company's common stock. Although no shares were
repurchased in the first nine months of 2001 related to this authorization, in
April 2001, 92 thousand shares were repurchased under previous authorizations.
Restructuring charges of $3.1 million, recorded in the first quarter of 2001,
were primarily comprised of severance and termination charges. No new
restructuring charges were recorded during the second and third quarters of
2001.
NEW ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 141, `Business Combinations' (FAS 141),
and Statement of Financial Accounting Standards No. 142, `Goodwill and Other
Intangible Assets' (FAS 142). FAS 141 requires business combinations initiated
after June 30, 2001 to be accounted for using the purchase method of accounting,
and broadens the criteria for recording intangible assets separate from
goodwill. FAS 142 requires the use of a non-amortization approach to account for
purchased goodwill and certain intangibles. Under a non-amortization approach,
goodwill and certain intangibles will not be amortized into results of
operations, but instead will be reviewed for impairment and written down and
charged to results of operations only in the periods in which the recorded value
of goodwill and certain intangibles is in excess of its fair value. The
provisions of each statement which apply to goodwill and intangible assets
acquired prior to June 30, 2001 will be adopted by the Company on January 1,
2002. The Company expects the adoption of these accounting standards to result
in a reduction of the amortization of goodwill and intangibles commencing
January 1, 2002; however, impairment reviews may result in future periodic
write-downs.
In August 2001, the FASB issued Statement of Financial Accounting Standards No.
143, `Accounting for Asset Retirement Obligations' (FAS 143), which addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. FAS 143 is required to be adopted for fiscal years beginning after June
15, 2002. The Company has not yet determined what effect this statement will
have on its financial statements.
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTINUED
NEW ACCOUNTING PRONOUNCEMENTS CONTINUED
Also in August 2001, the FASB issued Statement of Financial Accounting Standards
No. 144, `Accounting for the Impairment or Disposal of Long-Lived Assets' (FAS
144), which supersedes FASB Statement No. 121, `Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of'. This new
statement also supersedes certain aspects of APB 30 `Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions', with
regard to reporting the effects of a disposal of a segment of a business and
will require expected future operating losses from discontinued operations to be
reported in discontinued operations in the period incurred (rather than as of
the measurement date as presently required by APB 30). In addition, more
dispositions may qualify for discontinued operations treatment. The provisions
of this statement are required to be applied for fiscal years beginning after
December 15, 2001 and interim periods within those fiscal years. The Company has
not yet determined what effect this statement will have on its financial
statements.
RESTRUCTURING AND ASSET IMPAIRMENT
During the fourth quarter of 2000, the Company recognized pretax restructuring
charges of $5.2 million ($3.2 million after tax). Severance and termination
benefits of approximately $1.1 million remained accrued on the Consolidated
Balance Sheet as of December 31, 2000. Additional restructuring charges of $46.4
million ($32.2 million after tax) were recorded in the first nine months of 2001
as a result of further restructuring actions announced during the period. The
restructuring charges consisted of severance and termination benefits of $21.6
million, asset impairment charges of $12.9 million and other exit costs of $11.9
million, consisting of building lease termination expenses of $9.4 million and
other miscellaneous charges of $2.5 million. As previously disclosed, the
objective of the restructuring is to realign and centralize a number of staff
functions and to permanently remove approximately $30.0 million of annualized
costs from the Company's cost structure, of which approximately one half is
estimated to be realized in 2001. The savings are expected to reduce fixed and
variable costs of sales and reduce selling and administrative costs. Additional
restructuring-related adjustments may be recorded during the fourth quarter
2001. The Company expects to pay the remaining restructuring costs, with the
exception of on-going pension subsidies and certain building lease termination
expenses, by the end of the first quarter 2002 using cash from operations.
In connection with the Company's restructuring actions, asset impairment charges
of $12.9 million were recognized related to the write-off/write-down of assets
associated with the eight Industrial Packaging Segment and five Consumer
Packaging Segment plant locations identified for closure. Impaired assets were
written down to the lower of carrying amount or fair value, less costs to sell,
if applicable. The Company recognized write-
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTINUED
RESTRUCTURING AND ASSET IMPAIRMENT CONTINUED
offs/write-downs of impaired facilities and equipment/other of $2.6 million and
$7.9 million, respectively, and write-offs/write-downs related to facilities and
equipment/other held for disposal of $1.0 million and $1.4 million,
respectively. As of September 30, 2001, the carrying value of assets held for
disposal was $0.3. The Company anticipates disposition of these assets by the
end of the first quarter 2002. Results of operations and effects of suspending
depreciation on assets held for disposition were not material for the nine
months ended September 30, 2001.
The Company recorded restructuring charges of $2.5 million ($1.7 million after
tax), during the first nine months of 2001 by affiliates accounted for on the
equity method of accounting. These costs include the closing of a plant and
other miscellaneous restructuring activities. The affiliate restructuring
charges are included in "Equity in earnings of affiliates/Minority interest in
subsidiaries" in the Company's Consolidated Statements of Operations.
The Company continues to evaluate existing operations for further restructuring
opportunities.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position remained strong through the first nine months
of 2001. The debt-to-capital ratio increased slightly to 48.6% at September 30,
2001, from 48.5% at December 31, 2000.
Net working capital decreased $75.7 million to $183.0 million at September 30,
2001 from December 31, 2000, driven by an increase in current liabilities.
Increases in accrued expenses, primarily due to the restructuring reserve
recorded in 2001 and new acquisitions, were partially offset by a decrease in
trade accounts payable.
Depreciation and amortization expense for the third quarter and first nine
months of 2001 was $39.8 million and $115.9 million, respectively.
The effective income tax rate was 38.1% and 50.9% for the three-month and
nine-month periods ended September 30, 2001, respectively. Excluding the impact
of one-time additional COLI charges and certain non-deductible foreign
restructuring charges, the effective income tax rate would have been 37.5% for
the three-month and nine-month periods ended September 30, 2001. This compares
to an effective income tax rate of 38.0% for the three-month and nine-month
periods ended October 1, 2000.
SONOCO PRODUCTS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS CONTINUED
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES CONTINUED
Cash generated from operations of $286.6 million was used to partially fund
capital expenditures of $74.3 million, pay dividends of $57.0 million and fund
acquisitions of $171.6 million. The Company expects internally generated cash
flows, along with borrowings available under its commercial paper and other
existing credit facilities, to be sufficient to meet operating and normal
capital expenditure requirements.
During the fourth quarter 2001, the Company issued debt securities of $250
million pursuant to shelf registrations with the Securities and Exchange
Commission. The Notes bear interest at 6.50% per year, payable semi-annually on
May 15 and November 15, and will mature on November 15, 2013. The Company used
the net proceeds from the sales of the Notes to pay down maturing commercial
paper.
SONOCO PRODUCTS COMPANY
PART I. FINANCIAL INFORMATION
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information about the Company's exposure to market risk was
disclosed in its 2000 Annual Report on Form 10-K which was filed
with the Securities and Exchange Commission on March 30, 2001.
There have been no material quantitative or qualitative changes
in market risk exposures since the date of this filing.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 4.1 - Indenture, dated as of June 15, 1991, between
the Company and the Trustee (incorporated by reference to
Exhibit 4.2 to the Company's Registration Statement on Form
S-3 (File No. 33-50503)).
Exhibit 4.2 - Form of Note relating to the Company's
$250,000,000 6.5% Notes due November 15, 2013.
Exhibit 10 - Credit Agreement, dated as of July 17, 2001,
among the Company, the several lenders from time to time party
thereto and Bank of America, N.A., as agent, (incorporated by
reference to the Company's Registration Statement on Form S-3
(File No. 333-69388)).
Exhibit 15 - Letter re unaudited interim financial
information.
(b) (i) Form 8-K filed September 12, 2001, relating to Item 5 of
that form with respect to other events.
(ii) Form 8-K filed October 30, 2001, relating to Item 5 of that
form with respect to other events.
SONOCO PRODUCTS COMPANY
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SONOCO PRODUCTS COMPANY
------------------------------
(Registrant)
Date: November 13, 2001 By: /s/ F. T. Hill, Jr.
---------------------- ---------------------------
F. T. Hill, Jr.
Vice President and
Chief Financial Officer
SONOCO PRODUCTS COMPANY
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
4.1 Indenture, dated as of June 15, 1991, between the Company and
the Trustee (incorporated by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-3 (File No.
33-50503)).
4.2 Form of Note relating to the Company's $250,000,000 6.5% Notes
due November 15, 2013.
10 Credit Agreement, dated as of July 17, 2001, among the
Company, the several lenders from time to time party thereto
and Bank of America, N.A., as agent, (incorporated by
reference to the Company's Registration Statement on Form S-3
(File No. 333-69388)).
15 Letter re unaudited interim financial information.