8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 14, 2004

SONOCO PRODUCTS COMPANY

Commission File No. 0-516

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 8 – Other Events.

               Item 8.01 Other Events

At the request of the staff of the SEC and in conjunction with its acquisition of CorrFlex Graphics, LLC (“CorrFlex”), Sonoco has reviewed the appropriateness of disclosures about its reportable segments in accordance with Statement of Financial Accounting Standards No. 131, ‘Disclosures about Segments of an Enterprise and Related Information’ (FAS 131). As a result of this review, the Company will revise its reportable segments on a prospective basis beginning with the third quarter of 2004. We plan to file with the SEC a registration statement on Form S-4 to register notes to exchange for unregistered notes that were privately placed in June of 2004. In conjunction with that filing, we have updated our financial statements to reflect the changes in our segment reporting in this current report on Form 8-K.

In Sonoco’s Annual Report on Form 10-K for the year ended December 31, 2003 and Quarterly Reports on Form 10-Q for the quarters ended March 28, 2004 and June 27, 2004, the Company reported its results in two segments, Industrial Packaging and Consumer Packaging. Going forward, the Company will report results in three segments, Engineered Carriers and Paper, Consumer Packaging and Packaging Services. Sonoco will report certain smaller operations as All Other Sonoco.

Certain businesses previously reported in the Industrial Packaging reportable segment have been reclassified as components of All Other Sonoco. These businesses include: molded plastics; wire and cable reels; adhesives; machinery manufacturing; and protective packaging. Upon the removal of these businesses from the Industrial Packaging reportable segment, the remaining operating segments are those specifically related to the production of engineered carriers and paper, and therefore, the name of this reportable segment has been changed to Engineered Carriers and Paper.

The Company’s specialty paperboard business, which was previously a component of the Consumer Packaging reportable segment, has been reclassified as a component of All Other Sonoco. In conjunction with the acquisition of CorrFlex in May 2004, the Company’s existing packaging services operations, which were previously included in the Consumer Packaging reportable segment, were combined with those of CorrFlex, which resulted in a newly created reportable segment, Packaging Services. The remaining businesses in the Consumer Packaging reportable segment include: rigid paper and plastics; closures; and flexible packaging.

The Company’s High Density Film business was divested in December 2003, and accordingly, the results of this business have been reclassified as discontinued operations. Historical information related to identifiable assets for this business was previously included in the Consumer Packaging reportable segment but has been reclassified as All Other Sonoco.

Changes to Previously Filed Reports

The information presented below is intended to reflect the information related to reportable segments that would have been reported in the referenced reports at the time of the filing of such reports if the Company had been using the revised reportable segments described above. The information does not reflect events or other changes occurring after the dates of the filing of the respective reports.

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Annual Report on Form 10-K for the year ended December 31, 2003

The Company has updated certain notes, which contain segment specific information, in its Consolidated Financial Statements as of December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001. These financial statements are provided in Exhibit 99.1. All of the changes relate solely to the presentation of segment specific disclosures on a basis consistent with the revised reporting structure and had no impact on the consolidated balance sheets, statements of income, statements of changes in shareholders’ equity or statements of cash flows.

The following notes were updated to reflect the revised segment structure:

Note 2 –	Acquisitions/Dispositions/Joint Ventures
Note 3 –	Restructuring Programs
Note 8 –	Goodwill and Intangible Assets
Note 17 –	Financial Reporting for Business Segments

The Company has also revised the following sections of Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of its Annual Report on Form 10-K for the year ended December 31, 2003 to reflect the changes in the Company’s segment disclosures:

              Restructuring Charges, One-time Items and Other Activities

• Restructuring Charges

• Acquisitions

              Results of Operations 2003 versus 2002

• Operating Revenue

• Operating Profits

• Operating Segments

The sections of Item 7 that have been revised are set forth below.

Restructuring Charges, One-time Items and Other Activities

     Restructuring Charges

During 2003, the Company recognized restructuring charges, net of adjustments, of $50.1 million ($35.3 million after tax), primarily related to six plant closings in the Engineered Carriers and Paper segment, three plant closings in the Consumer Packaging segment, three plant closings in All Other Sonoco and a global reduction in salaried positions. These restructuring charges consisted of severance and termination benefits of $37.7 million, asset impairment charges of $8.4 million and other exit costs of $4 million, consisting of building lease termination charges and other miscellaneous exit costs. These costs are associated with the Company’s general plans, announced in August 2003, to reduce its overall cost structure by $54 million pretax. Since August, the Company has announced specific plans that are expected to result in annualized savings of approximately $48 million pretax, of which $6 million had been realized by December 31, 2003. The Company expects to recognize an additional cost of approximately $16 million pretax in the future associated with these 2003 actions. The objectives of these restructuring actions are to realign and centralize a number of staff functions and eliminate excess plant capacity. As part of the target to reduce its cost structure by $54 million, the Company expects to identify, in 2004, an additional five to ten plant closings that are expected to result in additional savings of approximately $6 million pretax in annualized fixed cost reductions. Restructuring charges associated with these 2004 actions cannot be estimated at this time. With the exception of ongoing pension subsidies and certain building lease termination expenses, costs associated with the 2003 restructuring actions are expected to be paid by the end of the fourth quarter 2004 using cash generated from operations.

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In connection with the Company’s restructuring actions, asset impairment charges of $8.4 million were recognized during 2003 related to the writeoff/down of assets associated with four plant closings. Impaired assets were written down to the lower of carrying amount or fair value, less estimated costs to sell, if applicable. Of the $8.4 million, the Company recognized writeoffs/downs of impaired equipment of $7 million and writeoffs/downs related to facilities held for sale of $1.4 million.

During 2003, the Company also recorded restructuring charges of $1.5 million related to minority interest in subsidiaries and other miscellaneous charges. The restructuring charges are included in “Equity in earnings (loss) of affiliates/minority interest in subsidiaries” in the Company’s Consolidated Statements of Income.

During 2002, the Company recognized restructuring charges, net of adjustments, of $10.4 million pretax ($6.7 million after tax). Additionally, the Company’s High Density Film business, which was divested in 2003, incurred restructuring charges of $2.2 million pretax ($1.4 million after tax) in 2002. The 2002 restructuring charges were primarily related to three plant closings in the United States in the Consumer Packaging segment, one plant closing in the United States in the Engineered Carriers and Paper segment, one plant closing in All Other Sonoco, and severance costs associated with plant consolidations in Europe and. The restructuring charges consisted of severance and termination benefits of $10.5 million, asset impairment charges of $.4 million and other exit costs of $1.7 million, consisting of building lease termination charges and other miscellaneous costs.

During 2001, the Company recognized restructuring charges of $51.4 million pretax ($35.2 million after tax) as a result of two restructuring plans announced during the year. Additionally, the Company’s High Density Film business, which was divested in 2003, incurred restructuring charges of $2.2 million pretax ($1.4 million after tax) in 2001. The total restructuring charges associated with these plans consisted of severance and termination benefits of $27.3 million, asset impairment charges of $16.9 million and other exit costs of $9.4 million, consisting of building lease termination expenses of $7.7 million and other miscellaneous exit costs of $1.7 million.

The asset impairment charges were related to the writeoff/down of assets associated with 13 plant closings and nine plant locations identified for other restructuring actions. Impaired assets were written down to the lower of carrying amount or fair value, less estimated costs to sell, if applicable. Of the $16.9 million, the Company recognized writeoffs/downs of impaired facilities and equipment of $15.7 million and writeoffs/downs related to facilities and equipment held for disposal of $1.2 million.

During 2001, affiliates accounted for under the equity method of accounting recorded restructuring charges of $10 million pretax ($6.6 million after tax). These charges included the closing of two plants and other miscellaneous restructuring activities. The affiliate restructuring charges are included in “Equity in earnings (loss) of affiliates/minority interest in subsidiaries” in the Company’s Consolidated Statements of Income.

     Acquisitions

The Company completed four acquisitions during 2003, with an aggregate cost of approximately $11.1 million. Acquisitions in the Company’s Engineered Carriers and Paper segment included an engineered carriers manufacturer in Australia and a recovered paper operation in Savannah, Ga. The Company also acquired certain assets of a wooden reel manufacturer in Canada and the United States, which are classified as components of All Other Sonoco. In addition, the Company increased its ownership interest in a manufacturer of rotogravure cylinders in Charlotte, N.C., that is included in the Company’s Consumer Packaging segment. Pro forma information is not provided for 2003 acquisitions as the impact to the Company was not material.

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During the second quarter of 2002, the Company purchased a small paper recycling operation in Kansas City, Mo., and Topeka, Kan. and a small recovered paper trucking operation in Manhattan, Kan. in its Engineered Carriers and Paper segment. In addition, during the fourth quarter of 2002, the Company completed the purchase of Texas Reel Company’s plywood reel operations in Sherman, Texas, and Coonrod Reel Company’s nailed wooden reel operations in Bonham, Texas. The purchases, which included equipment, inventory and intangible assets, were classified as components of All Other Sonoco. The aggregate cost of all 2002 acquisitions was approximately $8.5 million.

During 2001, the Company made several acquisitions with an aggregate cost of approximately $273 million. Those in the Company’s Engineered Carriers and Paper segment included U.S. Paper Mills Corp., a lightweight paperboard and tube operation with operations in DePere, Wis., and Menasha, Wis.; a paper-based textile tube converting facility in Kaiping, China; a unit of Smurfit UK Limited, a paper-based core and tube operation in the United Kingdom; a paper mill in Hutchinson, Kan.; a paper-based core and tube facility in Sint-Denijs, Belgium; and, an engineered carriers operation in Cartersville, Ga. In 2001 the Company acquired Phoenix Packaging Corporation, a steel easy-open closure operation in North Canton, Ohio, which was included in the Consumer Packaging segment. In 2001, the Company also acquired Hayes Manufacturing Group, Inc., a manufacturer of paper-based tubes, cores and composite cans headquartered in Neenah, Wis. Approximately 80% of this operation is included in the Engineered Carriers and Paper segment and 20% in the Consumer Packaging segment.

In addition, during 2001, the Company purchased assets of a packaging services operation in Hemel Hempstead, England, U.K., which was included in the Packaging Services segment, and acquired Cumberland Wood Products, Inc., a plywood reel operation in Helenwood, Tenn., which was classified as a component of All Other Sonoco.

Results of Operations 2003 versus 2002

     Operating Revenue

Consolidated net sales for 2003 were $2.76 billion, versus $2.7 billion in 2002, an increase of approximately $57 million.

The components of the sales change were:

($ in millions)
Decrease in volume	$	(32	)
Selling price		14
Currency exchange rate		68
Other		7
Total sales increase	$	57

Sales for the year were higher than 2002 primarily as a result of favorable exchange rates as the dollar weakened against foreign currencies and higher average selling prices, mainly attributed to the Company’s engineered carriers and paper operations. Company-wide volume was approximately 1% lower than 2002. Domestic sales were $1.86 billion, down 1% from 2002 and international sales were $899 million, up 9% over 2002 due primarily to the impact of foreign exchange.

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     Operating Profits

Consolidated operating profits, which represent “Income before income taxes” on the Consolidated Statements of Income for 2003 and 2002, are comprised of the following:

($ in millions)	2003			2002			% Change
Engineered Carriers and Paper	$	103.0		$	127.9			(19	)%
Consumer Packaging		78.7			86.8			(9	)%
Packaging Services		7.9			6.2			27	%
All Other Sonoco		19.0			25.2			(25	)%
Restructuring/Impairment charges		(50.1	)		(10.4	)		(100	)%
Interest expense, net		(50.2	)		(52.6	)		4	%
Consolidated operating profit	$	108.3		$	183.1			(41	)%

Operating profits for 2003 were adversely impacted by lower volume and mix of approximately $24 million and a negative price/cost relationship of approximately $9 million, primarily associated with higher costs for old corrugated containers (OCC), the Company’s primary raw material, and higher raw material costs in the Company’s rigid paper and plastic packaging operations. The Company was impacted by operating issues in the flexible packaging business due to new equipment start-up issues and additional costs associated with the closing of one flexible packaging plant and the resulting transfer of these operations to other Sonoco facilities. In addition, the Company continued to experience pricing pressure reflecting growing global competition and industry overcapacity. Higher pension and postretirement expenses of approximately $28 million and higher energy costs of approximately $12 million were partially offset by approximately $42 million of lower fixed costs and the results of ongoing productivity initiatives. Gross profit as a percentage of net sales was 18.1% in 2003, compared with 19.3% in 2002. As previously discussed, operating profits included $50.1 million and $10.4 million of restructuring charges in 2003 and 2002, respectively.

Selling, general and administrative expenses as a percentage of sales remained flat with 2002 at approximately 10% of sales. In 2003, the Company continued to focus on controlling fixed cost spending. This focus was supported by the Company’s restructuring actions during the year.

Investment returns earned on assets held by the Company’s benefit plans are used to lower the Company’s cost of providing pension and postretirement benefits. During 2003, the Company experienced higher year-over-year expense of approximately $28 million pretax, primarily related to the impact of stock market performance on investment earnings of assets in U.S. pension and postretirement plans during 2002. The market value of U.S. benefit plan assets increased approximately 26% in 2003, compared with a decline of approximately 9% in 2002. There were no requirements under ERISA to fund the plan. The Company revised its 2004 pension and postretirement benefit plan assumptions for asset rate of return to 8.5% from 8.75% in 2003. The Company expects a slight incremental decrease in pension and postretirement expenses in 2004.

On December 8, 2003, President Bush signed into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“the Act”). The Act expands Medicare, primarily by adding a prescription drug benefit for Medicare-eligibles starting in 2006. The Act provides employers currently sponsoring prescription drug programs for Medicare-eligibles with a range of options for coordinating with the new government-sponsored program to potentially reduce program cost. These options include supplementing the government program on a secondary payor basis or accepting a direct subsidy from the government to support a portion of the cost of the employer’s program. In the months ahead, the Company intends to review its retiree healthcare strategy in light of the Act. The Company will most likely amend its retiree health program to coordinate with the new Medicare prescription drug program or to receive the direct subsidy from the government. As a result, the Company anticipates that its retiree health obligations and costs could be reduced once those amendments are adopted and/or the government subsidies are considered.

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Research and development costs charged to expense were $14.2 million and $13 million in 2003 and 2002, respectively. Significant projects in the Engineered Carriers and Paper segment included efforts to design new products for the construction industry and to enhance performance characteristics of the Company’s engineered carriers in the textile, film and paper packaging areas, as well as projects aimed at productivity enhancements. The Consumer Packaging segment continues to invest in new materials technology and new process technology in support of flexible and rigid packaging options. Research and development expenditures are expected to increase in 2004.

Net interest expense decreased $2.4 million over 2002. The decrease was primarily driven by lower debt levels and associated interest rates, the payoff of approximately $100 million in 5.875% bonds and swapping certain fixed rate debt for floating rates discussed under the Risk Management section of Management’s Discussion and Analysis.

The effective tax rate for continuing operations in 2003 was 34.8%, compared with 35.5% in 2002. The lower effective tax rate was primarily due to tax benefits relating to restructuring charges in higher tax rate jurisdictions.

Various regulatory tax authorities, including the IRS, routinely examine the Company’s income tax returns. In connection with such examinations, tax authorities often raise issues and propose tax deficiencies. Amounts that management has assessed as probable and estimable have been accrued through the income tax provisions. The Company has resolved all issues with the IRS for all years through 1998. The Company is currently under examination for the tax years 1999 through 2001. It is possible that the settlement of this examination, which is expected to occur within one year, could result in a favorable adjustment as compared to the amount accrued. For additional discussion of income taxes see Note 14 to the Consolidated Financial Statements.

Net income (including discontinued operations) for 2003 was $138.9 million, versus $135.3 million in 2002. Income from continuing operations for 2003 was $78.2 million, compared with $125.5 million in 2002. Net income included restructuring charges of $50.1 million ($36.8 million after tax), compared with restructuring charges of $12.6 million ($8.1 million after tax) in 2002. Earnings per diluted share in 2003 included a net gain on the sale of assets of $.51 per share and restructuring charges of $.38 per share, compared with restructuring charges of $.08 per share in 2002. Although foreign exchange rates had an impact on sales, they did not have a significant impact on earnings in 2003.

     Operating Segments

Sonoco reports results in three segments, Engineered Carriers and Paper, Consumer Packaging and Packaging Services. All Other Sonoco represents the activities and businesses of the Company’s consolidated subsidiaries that do not meet the aggregation criteria outlined in Statement of Financial Accounting Standards No. 131, ‘Disclosures about Segments of an Enterprise and Related Information’ (FAS 131) and therefore cannot be combined with other operating segments into a reportable segment. International results are reflected in the appropriate segment based on the products produced. Operating profit is defined as revenue less operating costs, with all corporate costs (excluding interest and income taxes) allocated to the three segments and All Other Sonoco. Previously described restructuring charges are included in Corporate operating profit and, accordingly, are excluded from the segments’ operating profits. Restructuring charges associated with the Engineered Carriers and Paper segment totaled $31.4 million, mainly attributed to the closing of six plant locations and a global reduction in salaried positions; restructuring charges associated with the Consumer Packaging segment of $9.5 million were primarily

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associated with three plant closings in the United States and a global reduction in salaried positions; restructuring charges associated with the Packaging Services segment of $0.3 million were primarily associated with a global reduction in salaried positions; restructuring charges associated with All Other Sonoco of $1.8 million were primarily associated with three plant closings and a global reduction in salaried positions and Corporate restructuring costs of approximately $7.0 million were associated with a reduction in salaried positions. For addition discussion of operating segments, see Note 17 to the Consolidated Financial Statements.

Engineered Carriers and Paper Segment – This segment represented approximately 46% of the Company’s net sales in 2003 and includes the following products: high-performance paper and composite engineered carriers; paperboard; and, fiber-based construction tubes and forms.

Results for this segment are presented below:

($ in millions)	2003		2002		% Change
Trade sales	$	1,259.8	$	1,206.4		4	%
Operating profit		103.0		127.9		(19	)%
Capital spending		48.6		54.9		(11	)%

The higher sales, compared with 2002, were due primarily to favorable exchange rates as the dollar weakened against foreign currencies and higher average selling prices. This increase in revenue was partially offset by lower volume, which declined less than 1% compared with 2002. Domestic sales were up $33.2 million or 4% and international sales were up $20.3 million, or 4%.

Earnings in this segment were adversely impacted by lower volumes and mix issues along with a negative price/cost relationship, primarily associated with higher costs for OCC. Additionally, higher pension and postretirement expenses and general inflation, particularly higher energy costs, were only partially offset by lower fixed costs and productivity initiatives.

Significant capital spending included the rebuilding of several paper mills, primarily in the United States, Canada and Europe. Depreciation, depletion and amortization expense was $83.6 million in 2003, compared with $79.8 million in 2002.

Consumer Packaging Segment — This segment represented approximately 37% of the Company’s net sales in 2003 and includes the following products: round and shaped rigid packaging, both composite and plastic; printed flexible packaging; and metal and plastic ends and closures.

Results for this segment are presented below:

($ in millions)	2003		2002		% Change
Trade sales	$	1,044.4	$	1,040.7		0	%
Operating profit		78.7		86.8		(9	)%
Capital spending		51.0		48.9		4	%

The slight increase in sales was due primarily to favorable exchange rates, which resulted as the dollar weakened against foreign currencies, partially offset by lower volume, which was down approximately 2% compared with 2002. Domestic sales were $801.8 million, down 1% from 2002, and international sales were $242.6 million, up 4% from 2002 due primarily to the impact of foreign exchange.

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Lower volume had a negative impact on operating profit. This lower volume, along with higher pension and postretirement expenses and general inflation, was partially offset by productivity initiatives. Operating issues in the flexible packaging division due to new equipment start-up issues and additional costs associated with the closing of one flexible packaging plant and the resulting transfer of business to other flexible packaging plants had a negative impact on segment earnings. The price/cost relationship for the segment was slightly negative.

Significant spending included numerous productivity enhancement and consolidation projects in the United States. The closures business invested significantly in new Brazil capacity to support increasing global demand. Depreciation, depletion and amortization expense in this segment was $52.5 million in 2003, compared with $50.0 million in 2002.

Packaging Services Segment – This segment represented approximately 7% of the Company’s net sales in 2003 and provides the following services: packaging fulfillment; product handling; brand management; and supply chain management. This segment also includes the production of folding cartons.

Results for this segment are presented below:

($ in millions)	2003		2002		% Change
Trade sales	$	184.6	$	184.5		0	%
Operating profit		7.9		6.2		27	%
Capital spending		5.1		1.8		100	%

Sales for the segment were flat as sales price decreases were offset by favorable exchange rates as the dollar weakened against foreign currencies. Overall, volumes were flat when compared with 2002. Domestic sales were $129.9 million, up 5% from 2002, and international sales were $54.7 million, down 10% from 2002.

Earnings in this segment increased as productivity initiatives along with a slightly favorable price/cost relationship were only partially offset by increased fixed costs, including pension and postretirement expenses.

Depreciation, depletion and amortization expense in this segment was $3.5 million in 2003, compared with $2.9 million in 2002.

All Other Sonoco — This represented approximately 10% of the Company’s net sales in 2003 and is comprised of the activities and businesses of the Company’s consolidated subsidiaries that do not meet the aggregation criteria outlined in FAS 131 and therefore cannot be combined with other operating segments into a reportable segment. All Other Sonoco includes the following products: wooden, metal and composite reels for wire and cable packaging; molded plastics; custom designed protective packaging; adhesives; machinery manufacturing; and specialty packaging.

Results for All Other Sonoco are presented below:

($ in millions)	2003		2002		% Change
Trade sales	$	269.5	$	269.9		0	%
Operating profit		19.0		25.2		(25	)%
Capital spending		3.8		5.9		(36	)%

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Sales for All Other Sonoco were flat as favorable exchange rates, which resulted as the dollar weakened against foreign currencies, and price increases were offset by volume declines, primarily in the cable and wire reels business and molded plastics business. Domestic sales were $219.3 million, down 1% from 2002, and international sales were $50.2 million, up 5% from 2002.

Earnings decreased as the impact of volume declines, along with a slightly unfavorable price/cost relationship more than offset the year-over year savings from productivity initiatives and fixed cost reductions.

Depreciation, depletion and amortization expense in All Other Sonoco was $13.0 million in 2003, compared with $13.3 million in 2002.

Results of Operations 2002 versus 2001

Operating revenue and operating profit for 2002 and 2001 have been restated to reflect the reclassification of the Company’s High Density Film business as discontinued operations.

     Operating Revenue

Consolidated net sales for 2002 were $2.70 billion, versus $2.46 billion in 2001, an increase of $237 million.

The components of the sales change were:

($ in millions)
Increase in volume	$	215
Increase in contract service revenue		25
Selling price		(9	)
Other		6
Total sales increase	$	237

The higher sales, compared with the same period in 2001, were due primarily to increased volume, principally as a result of the seven key acquisitions made during 2001; new flexible packaging business; and, increased volumes in the engineered carriers/paper operations. These higher sales volumes were, however, partially offset by lower volume in the Company’s molded plastics operations, cable and wire reels business and composite can operations. Higher contract service revenue in the packaging services business also contributed to the increase in sales. In addition, lower average selling prices of approximately $30 million, primarily in the engineered carriers business, were partially offset by approximately $22 million in higher selling prices for recovered paper sold externally. Domestic sales were $1.9 billion, up 10% over 2001, and international sales were $.8 billion, up 9% over 2001. The impact on both sales and operating profit from foreign exchange rate movement was not significant in 2002.

     Operating Profits

Consolidated operating profits, which represent “Income before income taxes” on the Consolidated Statements of Income for 2002 and 2001, are comprised of the following:

($ in millions)	2002			2001			% Change
Engineered Carriers and Paper	$	127.9		$	136.5			(6	)%
Consumer Packaging		86.8			96.9			(10	)%
Packaging Services		6.2			6.4			(3	)%
All Other Sonoco		25.2			31.9			(21	)%
Restructuring charges and one-time items		(10.4	)		(51.2	)		80	%
Goodwill amortization		—			(12.1	)		100	%
Interest expense, net		(52.6	)		(48.4	)		(9	)%
Consolidated operating profit	$	183.1		$	160.0			14	%

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Operating profits were impacted by higher volume driven principally by the effect of 2001 acquisitions. In addition, operating profits were impacted by lower average selling prices of approximately $30 million in engineered carriers, partially offset by higher selling prices of $22 million for recovered paper sold externally, driven by higher raw material costs for old corrugated containers (OCC). Gross profit as a percentage of net sales was 19.3% in 2002, compared with 20.7% in 2001. The decrease in 2002 was primarily related to the negative selling price/material cost relationship previously discussed.

Special charges and one-time items which represent “Other expenses, net” on the Consolidated Statements of Income consist of $10.4 million of restructuring charges in 2002, and restructuring charges of $51.4 million, and net gains from legal settlements and COLI adjustments of $.2 million in 2001.

Selling, general and administrative expenses as a percentage of sales remained flat with 2001, at approximately 10% of sales. In 2002, the Company continued to focus on controlling fixed cost spending. This focus was supported by the Company’s restructuring actions during the year.

During 2002, the Company experienced higher year-over-year expense of approximately $23 million pretax, primarily related to the impact of stock market performance on investment earnings of assets in U.S. pension and postretirement plans. The market value of U.S. benefit plan assets declined approximately 7% in 2001 and another 9% in 2002. As a result of declines in the market performance of U.S. pension fund assets, coupled with lower interest rates, the Company elected to fund its U.S. pension plan by approximately $76 million late in the fourth quarter of 2002, leaving the plan in a slightly over-funded at year-end. The Company contributed a total of $110 million to the U.S. pension plan during 2002. As a result of declines in the market performance of foreign pension fund assets, coupled with lower interest rates, the Company was required to record an additional minimum pension liability of approximately $31 million after tax. The Company revised its 2003 pension and postretirement benefit plan assumptions for asset rate of return to 8.75% from 9.5% in 2002.

Research and development costs charged to expense were $13 million and $11.9 million in 2002 and 2001, respectively. Significant projects in the Engineered Carriers and Paper segment included efforts to design new products for the construction industry and to enhance performance characteristics of the Company’s engineered carriers in the textile, film and paper packaging areas, as well as projects aimed at productivity enhancements. The Consumer Packaging segment continued to invest in new materials technology for a range of packaging options, including composite cans and other forms of shaped packaging.

Net interest expense increased $4.1 million over 2001. The increase was primarily driven by higher interest rates associated with fixed rate debt securities issued in the fourth quarter of 2001, partially offset by lower average debt levels in 2002.

The effective tax rate for 2002 was 35.5%, compared with 48.3% in 2001. The drop in tax rate in 2002 is mainly due to the impact of additional COLI charges and non-deductible restructuring charges in 2001. In addition, in 2002, non-deductible goodwill amortization was no longer being reported as an expense under FAS 142. The Company’s 401(k) plan participants were given the right to elect to receive cash dividends on Company stock in the plan which resulted in the tax deductibility of the related dividends paid by the Company. The examination by the IRS of the Company’s federal tax returns for the years 1996 through 1998 concluded in 2002. There was no material impact to the Company’s Consolidated Financial Statements.

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Equity in earnings (loss) of affiliates/minority interest in subsidiaries increased in 2002 to $7.4 million form $(1.2) million in 2001, primarily due to restructuring charges recorded by affiliates in 2001 of $6.6 million after tax.

Net income (including discontinued operations) for 2002 was $135.3 million, versus $91.6 million in 2001. Income from continuing operations for 2002 was $125.5 million, compared with $81.5 million in 2001. Net income included restructuring charges of $12.6 million ($8 million after tax) in 2002, compared with 2001 net charges of $65.5 million ($66.1 million after tax) comprised of restructuring, net gains from legal settlements and COLI adjustments, and the effect of not amortizing goodwill. Earnings per diluted share in 2002 were $1.39 per share, compared with $.96 in 2001. Earnings per diluted share in 2002 included restructuring charges of $.08 per share, compared with net charges of $.69 per share associated with restructuring charges, COLI adjustments, net gains from legal settlements and the effect of not amortizing goodwill in 2001.

     Operating Segments

Engineered Carriers and Paper Segment – Results for this segment are presented below:

($ in millions)	2002		2001		% Change
Trade sales	$	1,206.4	$	1,081.8		12	%
Operating profit		127.9		136.5		(6	)%
Capital spending		54.9		51.4		7	%

The higher sales, compared with 2001, were primarily due to increased volume, driven principally by the effect of 2001 acquisitions and increased volume in the engineered carriers and paper operations, partially offset by the impact of lower average selling prices. Domestic sales were up $81.3 million, or 13%, and international sales were up $43.3 million, or 9%.

Earnings in this segment were impacted by a decline in the Company’s price/cost relationship, primarily associated with lower average selling prices and higher raw material costs for OCC, partially offset by external sales of recovered paper. Historically, Sonoco has fully recovered increased OCC costs through price increases, with a normal six-to-eight week delay in recovery of each increase. During this cycle, however, the weak demand and rapid decrease in OCC price caused a longer than usual recovery period. OCC costs per ton in the United States increased significantly beginning in April 2002 from $35 to a high in July of $130, and then dropped to $100 in August, to $75 in September and to $50 in December. Although the timing of OCC movements was not the same, similar trends were noted in OCC markets globally. To recover higher OCC costs, the Company implemented price increases in the second and third quarters of 2002 in paperboard and converted products (tubes and cores) in the United States, Canada and Europe. However, as a result of the rapid decline of OCC prices and the competitive market environment, the Company was only able to implement one engineered carriers price increase during the cycle. This price increase was sufficient to cover the increase in OCC costs in late 2002, compared with OCC costs in late 2001.

Earnings were positively impacted by higher volume in engineered carriers, principally as a result of acquisitions completed in 2001 and ongoing productivity initiatives that resulted in reduced costs. Offsetting this, pension and postretirement expense was significantly higher in 2002 over the prior year.

Significant capital spending included the rebuilding of several paper mills, primarily in the United States, Canada and Europe. Depreciation, depletion and amortization expense was $79.8 million in 2002, compared with $78.7 million in 2001.

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Consumer Packaging Segment – Results for this segment are presented below:

($ in millions)	2002		2001		% Change
Trade sales	$	1,040.7	$	961.3		8	%
Operating profit		86.8		96.9		(10	)%
Capital spending		48.9		35.7		37	%

The increase in sales was due primarily to increased volume, driven by additional easy-open steel closures revenue at Sonoco Phoenix, which was acquired in 2001, and new flexible packaging business, partially offset by decreased volume in composite cans. Lower selling prices, primarily in the Company’s European composite can businesses partially offset the higher sales volume. Domestic sales in 2002 were $807.8 million, up 10% from 2001, and international sales were $232.9 million in 2002, up 3% from 2001.

Earnings in this segment decreased because of a negative price/cost relationship, new equipment start-up costs in flexible packaging and higher pension and postretirement expense. A portion of the negative impact was offset by earnings associated with acquisitions completed in 2001 and productivity initiatives that yielded year-over-year savings.

Significant spending included numerous productivity enhancement and consolidation projects in the United States. Additionally, the flexible packaging business continued to invest in a state-of-the-art flexographic press to support continued growth in the confectionary market. Depreciation, depletion and amortization expense in this segment was $50.0 million in 2002, compared with $47.4 million in 2001.

Packaging Services Segment – Results for this segment are presented below:

($ in millions)	2002		2001		% Change
Trade sales	$	184.5	$	129.7		42	%
Operating profit		6.2		6.4		(3	)%
Capital spending		1.8		1.5		20	%

The increase in sales was due primarily to higher contract service revenue, partly as a result of the acquisition of the packaging services operations in Hemel Hempstead, England. This increase in revenue was partially offset by price decreases in the folding carton operations. Domestic sales were $123.7 million in 2002, up 36% from 2001, and international sales were $60.8 million in 2002, up 57% from 2001.

Earnings in this segment decreased slightly as price declines and increased pension and postretirement expense more than offset productivity initiatives that yielded year-over-year savings, higher contract service revenue and the impact of acquisitions.

Capital spending in this segment was relatively insignificant. Depreciation, depletion and amortization expense in this segment was $2.9 million in 2002, compared with $2.8 million in 2001.

All Other Sonoco – Results are presented below:

($ in millions)	2002		2001		% Change
Trade sales	$	269.9	$	291.7		(7	)%
Operating profit		25.2		31.9		(21	)%
Capital spending		5.9		6.4		(8	)%

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The decrease in sales was due primarily to decreased volume in the Company’s cable and wire reels business and molded plastics operations. Domestic sales were $222.1 million in 2002, down 8% from 2001, and international sales were $47.8 million in 2002, down 7% from 2001.

Earnings in All Other Sonoco decreased as volume declines and increased pension and postretirement expense more than offset productivity initiatives that yielded year-over-year savings.

Capital spending in All Other Sonoco was relatively insignificant. Depreciation, depletion and amortization expense in this segment was $13.3 million in 2002, compared with $15.9 million in 2001.

Quarterly Report on Form 10-Q for the quarter ended March 28, 2004

The Company has updated certain notes, which contain segment specific information, in its Condensed Consolidated Financial Statements as of March 28, 2004 and for the three-month periods ended March 28, 2004 and March 30, 2003. These financial statements are provided in Exhibit 99.2. All of the changes relate solely to the presentation of segment specific disclosures on a basis consistent with the revised reporting structure and had no impact on the condensed consolidated balance sheets, statements of income or statements of cash flows.

The following notes were updated to reflect the revised segment structure:

Note 4 –	Restructuring Programs
Note 6 –	Goodwill and Intangible Assets
Note 11 –	Financial Reporting for Business Segments

The Company has also revised the following sections of Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of its Quarterly Report on Form 10-Q for the quarter ended March 28, 2004 to reflect the changes in the Company’s segment disclosures:

              Results of Operations

• Operating Segments

              Restructuring and Impairment

The sections of Item 2 that have been revised are set forth below.

Results of Operations

     Operating Segments

The Company reports results in three segments, Consumer Packaging, Engineered Carriers and Paper and Packaging Services. All Other Sonoco represents the activities and businesses of the Company’s consolidated subsidiaries that do not meet the aggregation criteria outlined in FAS 131 and therefore cannot be combined with other operating segments into a reportable segment. Operating profit at the segmental level is defined as “Income before interest and income taxes” on the Company’s Condensed Consolidated Statements of Income adjusted for restructuring charges, which are not allocated to the reportable segments. General corporate expenses, with the exception of restructuring charges, interest and income taxes, have been allocated as operating costs to each of the Company’s reportable segments and All Other Sonoco. See Note 11 to the Company’s Condensed Consolidated Financial Statements for more information on operating segments.

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Consumer Packaging Segment

The Consumer Packaging segment includes the following products: round and shaped rigid packaging, both composite and plastic; printed flexible packaging; and metal and plastic ends and closures.

Net sales of the Consumer Packaging segment for the first quarter of 2004 totaled approximately $256 million, compared to approximately $252 million in the first quarter of 2003. This increase was due primarily to favorable foreign exchange rates and higher selling prices, offset in part by decreased volume associated with rigid paper and plastics and flexible packaging.

Operating profit, as defined above, for the Consumer Packaging segment in the first quarter of 2004 was approximately $18 million, down from approximately $21 million for the same period in 2003. Lower volume and a change in product and customer mix negatively impacted operating profit, but was partially offset by reduced costs related to on-going productivity initiatives and savings resulting from the Company’s restructuring activities that were initiated in 2003. In addition, product start-up costs, primarily associated with the Company’s new multi-line steel easy-open closure operation in Brazil, negatively impacted operating profit.

Engineered Carriers and Paper Segment

The Engineered Carriers and Paper segment includes the following products: high-performance paper and composite engineered carriers; paperboard; and, fiber-based construction tubes and forms.

Net sales of the Engineered Carriers and Paper segment for the first quarter of 2004 totaled approximately $313 million, compared to approximately $294 million in the first quarter of 2003. This increase was due primarily to favorable foreign exchange rates and higher selling prices, offset in part by decreased volume associated primarily with the Company’s paper operations.

Operating profit, as defined above, for the Engineered Carriers and Paper segment in the first quarter of 2004 was approximately $21 million, down from approximately $25 million for the same period in 2003. Operating profit was negatively impacted by lower volume, a negative price/cost relationship, and approximately $5 million related to charges associated with an unfavorable legal judgment that was entered against the Company in 2004. The negative price/cost relationship resulted primarily from higher prices for old corrugated containers (OCC), the Company’s primary raw material. These unfavorable impacts were partially offset by reduced costs related to on-going productivity initiatives and savings resulting from the Company’s restructuring activities that were initiated in 2003. Operating profit was also positively impacted by the favorable impact of foreign exchange rates.

Packaging Services Segment

The Packaging Services segment provides the following services: packaging fulfillment; product handling; brand management; and, supply chain management. This segment also includes the production of folding cartons.

Net sales of the Packaging Services segment for the first quarter of 2004 totaled approximately $53 million, compared to approximately $45 million in the first quarter of 2003. This increase was due to higher contract service revenue and the impact of favorable foreign exchange rates.

Operating profit, as defined above, for the Packaging Services segment was approximately $5 million in the first quarter of 2004, compared to approximately $2 million for the same period in 2003. This increase resulted as on-going productivity initiatives along with higher contract service revenue more than offset slight price declines and the effect of inflation.

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All Other Sonoco

All Other Sonoco includes the following products: wooden, metal and composite reels for wire and cable packaging; molded plastics; custom designed protective packaging; adhesives; machinery manufacturing; and specialty packaging.

Net sales of All Other Sonoco for the first quarter of 2004 totaled approximately $72 million, compared to approximately $65 million in the first quarter of 2003. This increase was primarily due to increased volume and the impact of favorable foreign exchange rates.

Operating profit, as defined above, for All Other Sonoco was approximately $7 million in the first quarter of 2004, compared to approximately $5 million for the same period in 2003. This increase resulted as the impact of volume increases along with on-going productivity initiatives and savings resulting from the Company’s restructuring activities that were initiated in 2003 more than offset the effect of inflation.

Restructuring and Impairment

In August 2003, the Company announced general plans to reduce its overall cost structure by $54 million pretax by realigning and centralizing a number of staff functions and eliminating excess plant capacity. Pursuant to these plans, the Company has initiated or completed 13 plant closings and has terminated approximately 740 employees. As of March 28, 2004, the Company had incurred cumulative charges, net of adjustments, of approximately $53.2 million pretax associated with these activities. The Company expects to recognize an additional cost of approximately $9.5 million pretax in the future associated with these charges. As part of the target to reduce its cost structure by $54 million, the Company also expects to announce throughout the remainder of 2004 the closing of an additional five to ten plants in furtherance of these plans. The costs associated with these future plant closings have not yet been determined. The Company expects to pay the remaining restructuring costs, with the exception of ongoing pension subsidies and certain building lease termination expenses, by the end of the first quarter of 2005, using cash generated from operations.

During the first quarter of 2004, the Company recognized restructuring charges of $1.3 million ($0.9 million after tax), primarily associated with previously announced plant closings, three of which were in the Engineered Carriers and Paper segment, one of which was in the Consumer Packaging segment and one of which was in All Other Sonoco. These restructuring charges, net of adjustments, consisted primarily of severance and termination benefits of $0.6 million, asset impairment charges of $0.2 million and other exit costs of $0.5 million.

During the first quarter of 2003, the Company recognized restructuring charges, net of adjustments of $1.1 million ($0.7 million after tax) related to previously announced restructuring plans that were completed prior to December 31, 2003. These charges were primarily associated with severance costs in Europe in the Engineered Carriers and Paper segment as well as lease termination and restoration costs associated with prior plant closings in the Consumer Packaging segment. Additionally, the Company’s High Density Film business, which was divested in December 2003, incurred restructuring charges of approximately $0.2 million ($0.1 million after tax) in the first quarter of 2003.

Quarterly Report on Form 10-Q for the quarter ended June 27, 2004

The Company has updated certain notes, which contain segment specific information, in its Condensed Consolidated Financial Statements as of June 27, 2004 and for the three-month and six-month periods ended June 27, 2004 and June 29, 2003. These financial statements are provided in Exhibit 99.3. All of the changes relate solely to the presentation of segment specific disclosures on a basis consistent with the revised reporting structure and had no impact on the condensed consolidated balance sheets, statements of income or statements of cash flows.

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The following notes were updated to reflect the revised segment structure:

Note 2 –	Acquisitions/ Joint Ventures
Note 5 –	Restructuring Programs
Note 7 –	Goodwill and Intangible Assets
Note 13 –	Financial Reporting for Business Segments

The Company has also revised the following sections of Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of its Quarterly Report on Form 10-Q for the quarter ended June 27, 2004 to reflect the changes in the Company’s segment disclosures:

              Results of Operations

• Second Quarter 2004 Compared with Second Quarter 2003

- Company Overview

- Reportable Segments

• June 2004 Year-to-Date Compared with June 2003 Year-to-Date

- Company Overview

- Reportable Segments

• Restructuring and Impairment

The sections of Item 2 that have been revised are set forth below.

Second Quarter 2004 Compared with Second Quarter 2003

     Company Overview

Net sales for the second quarter of 2004 were $764 million, compared with $685 million for the second quarter of 2003. This increase was primarily due to increased volumes in most of the Company’s businesses and the impact of acquisitions, which favorably impacted net sales by approximately $32 million and $17 million, respectively. Company-wide volumes during the second quarter of 2004, which includes the impact of the Company’s acquisitions, the most significant of which was CorrFlex, were up approximately 6% as compared to the same period in 2003. Higher average prices increased net sales by approximately $11 million, and the favorable impact of foreign exchange rates increased net sales by approximately $16 million as the dollar weakened against foreign currencies.

Income before income taxes totaled approximately $50 million in the second quarter of 2004, compared with approximately $34 million for the same period in 2003. This increase resulted primarily from reduced costs related to on-going productivity initiatives and savings resulting from the Company’s restructuring activities that were initiated in 2003, partly offset by higher wages and the impact of inflation. Income before income taxes was also favorably impacted by volume increases and $3 million related to a reduction in net interest expense, which decreased from approximately $13 million in the second quarter of 2003 to $10 million in the second quarter of 2004 primarily as a result of lower average interest rates and lower average debt levels. These favorable impacts were partially offset by a slightly negative price/cost relationship and product start-up costs, primarily associated with the Company’s new multi-line steel easy-open closure operation in Brazil. Income before income taxes included charges in connection with the Company’s previously announced restructuring actions of approximately $6 million for the second quarter of 2004 and $8 million for the second quarter of 2003, which were not allocated to the reportable segments. Restructuring charges for the second quarter of 2004 consisted primarily of severance charges.

The effective tax rate for the second quarter of 2004 was 35.5%, compared with 42.4% for the second quarter of 2003, which includes the impact of certain non-deductible foreign restructuring charges.

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     Reportable Segments

The Company reports results in three segments, Consumer Packaging, Engineered Carriers and Paper and Packaging Services. All Other Sonoco represents the activities and businesses of the Company’s consolidated subsidiaries that do not meet the aggregation criteria outlined in FAS 131 and therefore cannot be combined with other operating segments into a reportable segment. Operating profit at the segmental level is defined as “Income before interest and income taxes” on the Company’s Condensed Consolidated Statements of Income adjusted for restructuring charges, which are not allocated to the reportable segments. General corporate expenses, with the exception of restructuring charges, interest and income taxes, have been allocated as operating costs to each of the Company’s reportable segments and All Other Sonoco. See Note 13 to the Company’s Condensed Consolidated Financial Statements for more information on reportable segments.

Consumer Packaging Segment

The Consumer Packaging segment includes the following products: round and shaped rigid packaging, both composite and plastic; printed flexible packaging; and metal and plastic ends and closures.

Net sales of the Consumer Packaging segment for the second quarter of 2004 totaled approximately $273 million, compared with approximately $254 million in the second quarter of 2003. This increase was due primarily to higher volumes, including the impact of acquisitions, a favorable impact of foreign exchange rates, and higher selling prices.

Operating profit, as defined above, for the Consumer Packaging segment in the second quarter of 2004 was approximately $18 million, down from approximately $21 million for the same period in 2003. This decrease was largely due to a negative price/cost relationship, which resulted primarily from increased steel prices, and product start-up costs primarily associated with the Company’s new multi-line steel easy-open closure operation in Brazil. These costs were partly offset by reduced costs related to on-going productivity initiatives and savings resulting from the Company’s restructuring activities that were initiated in 2003.

Engineered Carriers and Paper Segment

The Engineered Carriers and Paper segment includes the following products: high-performance paper and composite engineered carriers; paperboard; and, fiber-based construction tubes and forms.

Net sales of the Engineered Carriers and Paper segment for the second quarter of 2004 totaled approximately $342 million, compared with approximately $318 million in the second quarter of 2003. This increase was due primarily to higher volumes, increased selling prices and the favorable impact of foreign exchange rates.

Operating profit, as defined above, for the Engineered Carriers and Paper segment in the second quarter of 2004 was approximately $35 million, up from approximately $27 million for the same period in 2003. Operating profit was favorably impacted by reduced costs, which were related to on-going productivity initiatives and savings resulting from the Company’s restructuring activities that were initiated in 2003, as well as volume increases, partially offset by rising wage costs and inflation and a slightly negative price/cost relationship, which resulted primarily from higher prices for old corrugated containers (OCC), the Company’s primary raw material.

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Packaging Services Segment

The Packaging Services segment provides the following services: packaging fulfillment; product handling; brand management; and supply chain management. This segment also includes the production of folding cartons.

Net sales of the Packaging Services segment for the second quarter of 2004 totaled approximately $70 million, compared to approximately $45 million in the second quarter of 2003. This increase was due to the impact of the CorrFlex acquisition along with higher contract service revenue and the impact of favorable foreign exchange rates.

Operating profit, as defined above, for the Packaging Services segment was approximately $5 million in the second quarter of 2004, compared to approximately $2 million for the same period in 2003. This increase resulted as on-going productivity initiatives along with higher contract service revenue and the impact of the CorrFlex acquisition more than offset slight price declines and the effects of inflation.

All Other Sonoco

All Other Sonoco includes the following products: wooden, metal and composite reels for wire and cable packaging; molded plastics; custom designed protective packaging; adhesives; machinery manufacturing; and specialty packaging.

Net sales of All Other Sonoco for the second quarter of 2004 totaled approximately $78 million, compared to approximately $67 million in the second quarter of 2003. This increase was primarily due to increased volume and selling price increases, primarily in the wire and cable business as it passed on material price increases.

Operating profit, as defined above, for All Other Sonoco was approximately $9 million in the second quarter of 2004, compared to approximately $6 million for the same period in 2003. This increase resulted as a favorable price/cost relationship along with savings resulting from the Company’s restructuring activities that were initiated in 2003 more than offset the effects of inflation.

June 2004 Year-to-Date Compared with June 2003 Year-to-Date

     Company Overview

Net sales for the first six months of 2004 were $1,459 million, compared with $1,341 million for the first six months of 2003. This increase was primarily due to the favorable impact of foreign exchange rates of approximately $46 million as the dollar weakened against foreign currencies and higher average selling prices of approximately $16 million. Higher volumes in most of the Company’s businesses and the impact of acquisitions increased net sales by approximately $31 million and $23 million, respectively. Company-wide volumes, including the impact of acquisitions, during the first six months of 2004 were up approximately 2%, compared with the same period in 2003.

Income before income taxes totaled approximately $91 million in first six months of 2004, compared with approximately $74 million for the same period in 2003. This increase resulted primarily from reduced costs associated with on-going productivity initiatives and savings resulting from the Company’s restructuring activities that were initiated in 2003, partially offset by increased wage costs and inflation. Also contributing to this increase were higher volumes, the favorable impact of foreign exchange rates and a reduction in net interest expense, which decreased by approximately $7 million from $26 million in the first six months of 2003 to $19 million in the first six months of 2004 primarily as a result of lower average interest rates and lower average debt levels. These favorable impacts were partially offset by a negative price/cost relationship and product start-up costs, primarily associated with the Company’s new multi-line steel easy-open closure operation in Brazil. Income before income taxes for the first six months of 2004 was also negatively impacted by a charge of approximately $5 million associated with an unfavorable legal judgment that was entered against the Company. See Note 14 to the Company’s Condensed Consolidated Financial Statements for more information on litigation. Income before income taxes included charges in connection with the Company’s previously announced restructuring actions of approximately $7 million pretax for the first six months of 2004 and approximately $9 million for the first six months of 2003, which were not allocated to the reportable segments. Restructuring charges for the first six months of 2004 consisted primarily of severance charges.

19

The effective tax rate for the first six months of 2004 was 25.5%, compared with 38.9% for the first six months of 2003. This decrease was primarily due to the reversal in the first quarter of 2004 of previously accrued taxes totaling $9 million as a result of the Internal Revenue Service closing its examination of the Company’s tax returns for years 1999 through 2001.

     Reportable Segments

Consumer Packaging Segment

Net sales of the Consumer Packaging segment for the first six months of 2004 totaled approximately $529 million, compared with approximately $507 million in the first six months of 2003. This increase was due primarily to higher volumes, including the impact of acquisitions, a favorable impact of foreign exchange rates and higher selling prices.

Operating profit, as defined above, for the Consumer Packaging segment in the first six months of 2004 was approximately $36 million, down from approximately $42 million for the same period in 2003. This decrease resulted primarily from a negative price/cost relationship, which resulted largely from increased steel prices and product start-up costs, which were primarily associated with the Company’s new multi-line steel easy-open closure operation in Brazil. This decrease was partly offset by reduced costs related to on-going productivity initiatives and savings that resulted from the Company’s restructuring activities, which were initiated in 2003.

Engineered Carriers and Paper Segment

Net sales of the Engineered Carriers and Paper segment for the first six months of 2004 totaled approximately $656 million, compared with approximately $612 million in the first six months of 2003. This increase was due primarily to the favorable impact of foreign exchange rates, higher volumes, including the impact of acquisitions, and increased selling prices.

Operating profit, as defined above, for the Engineered Carriers and Paper segment in the first six months of 2004 was approximately $56 million, up from approximately $52 million for the same period in 2003. Operating profit was favorably impacted by reduced costs related to on-going productivity initiatives and savings resulting from the Company’s restructuring activities that were initiated in 2003 and the favorable impact of foreign exchange rates. Operating profit was negatively impacted by a slightly negative price/cost relationship as well as a charge of approximately $5 million associated with an unfavorable legal judgment that was entered against the Company. See Note 14 to the Company’s Condensed Consolidated Financial Statements for more information on litigation.

Packaging Services Segment

Net sales of the Packaging Services segment for the first six months of 2004 totaled approximately $123 million, compared to approximately $90 million in the same period of 2003. This increase was due to higher contract service revenue along with the impact of the CorrFlex acquisition and favorable foreign exchange rates.

Operating profit, as defined above, for the Packaging Services segment was approximately $10 million in the first six months of 2004, compared to approximately $4 million for the same period in 2003. This increase resulted as on-going productivity initiatives along with higher contract service revenue and the impact of the CorrFlex acquisition more than offset the effects of inflation.

20

All Other Sonoco

Net sales of All Other Sonoco for the first six months of 2004 totaled approximately $151 million, compared to approximately $132 million in the first six months of 2003. This increase was primarily due to increased volume, higher prices, and the favorable impact of foreign exchange rates.

Operating profit, as defined above, for All Other Sonoco was approximately $16 million in the first six months of 2004, compared to approximately $11 million for the same period in 2003. This increase resulted as the impact of a favorable price/cost relationship, along with on-going productivity initiatives and savings that resulted from the Company’s restructuring activities that were initiated in 2003 more than offset the effects of inflation.

Restructuring and Impairment

In August 2003, the Company announced general plans to reduce its overall cost structure by $54 million pretax by realigning and centralizing a number of staff functions and eliminating excess plant capacity. Pursuant to these plans, the Company has initiated or completed 12 plant closings and has terminated approximately 850 employees. As of June 27, 2004, the Company had incurred cumulative charges, net of adjustments, of approximately $60.1 million pretax associated with these activities. The Company expects to recognize an additional cost of approximately $4.0 million pretax in the future associated with these charges, which is comprised of approximately $2.1 million in severance and termination benefits, $0.3 million in asset impairment charges and $1.6 million in other exit costs. Of this amount, approximately $3.1 million is related to the Engineered Carriers and Paper segment and approximately $0.9 million is related to the Consumer Packaging segment. As part of the target to reduce its cost structure by $54 million, the Company also expects to announce throughout the remainder of 2004 the closing of approximately five additional plants in furtherance of these plans. The costs associated with these future plant closings have not yet been determined. The Company expects to pay the remaining restructuring costs, with the exception of ongoing pension subsidies and certain building lease termination expenses, by the end of the second quarter of 2005, using cash generated from operations. In conjunction with the Company’s review of its restructuring accrual in the second quarter of 2004, it was determined that one of the plants that had originally been identified to be closed pursuant to these plans would not be closed due to changes in certain factors. In response to this determination, the Company reduced its restructuring accrual for the Consumer Packaging segment, which resulted in negative charges, net of adjustments, in both the three and six months ended June 27, 2004.

During the three months ended June 27, 2004, the Company recognized restructuring charges, net of adjustments, of $5.8 million ($3.7 million after tax), primarily associated with previously announced plant closings. These restructuring charges, net of adjustments, consisted of severance and termination benefits of $3.6 million, asset impairment charges of $1.5 million and other exit costs of $0.7 million.

During the three months ended June 29, 2003, the Company recognized restructuring charges, net of adjustments, of $7.8 million ($7.9 million after tax) related to previously announced restructuring plans. These restructuring charges, net of adjustments, consisted of severance and termination benefits of $7.0 million, asset impairment charges of $0.7 million and other exit costs of $0.1 million.

During the first six months of 2004, the Company recognized restructuring charges, net of adjustments, of $7.1 million ($4.6 million after tax), primarily associated with previously announced plant closings, six of which were in the Engineered Carriers and Paper segment, three of which were in the Consumer Packaging segment and one of which was in All Other Sonoco. These restructuring charges, net of adjustments, consisted primarily of severance and termination benefits of $4.2 million, asset impairment charges of $1.7 million and other exit costs of $1.2 million.

21

During the first six months of 2003, the Company recognized restructuring charges, net of adjustments, of $9.0 million ($8.6 million after tax) related to previously announced restructuring plans. These charges were primarily associated with severance costs in Europe in the Engineered Carriers and Paper segment as well as lease termination and restoration costs associated with prior plant closings in the Consumer Packaging segment. These restructuring charges, net of adjustments, consisted of severance and termination benefits of $7.7 million, asset impairment charges of $0.7 million and other exit costs of $0.6 million. Additionally, the Company’s High Density Film business, which was divested in December 2003, incurred restructuring charges of approximately $0.2 million ($0.1 million after tax) in the first quarter of 2003.

Quarterly Financial Information by Segment

As a matter of convenience to investors and others in the financial community, the Company has provided a schedule, which has been derived from the financial statements, that summarizes sales and operating profit under the newly defined segment structure on a quarterly basis for fiscal years 2002, 2003 and through the second quarter of 2004. This schedule is provided in Exhibit 99.4.

Forward-Looking Statements

This current report on Form 8-K includes “forward-looking statements” within the meaning of the securities laws. All statements 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 and Exchange Act of 1934, as amended. The words “estimate,” “project,” “intend,” “expect,” “believe,” “plan,” “anticipate,” “objective,” “goal,” “guidance,” 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, adequacy of provisions for environmental liabilities, financial strategies and the results expected from them, and producing improvements in earnings.

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: 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; fluctuations of obligations and earnings of pension and postretirement benefit plans; ability to maintain market share; pricing pressures and demand for products; continued strength of our paperboard-based engineered carriers and composite can operations; anticipated results of restructuring activities; resolution of income tax contingencies; ability to successfully integrate newly acquired businesses into the Company’s operations; currency stability and the rate of growth in foreign markets; use of financial instruments to hedge foreign exchange, interest rate and commodity price risk; actions of government agencies; loss of consumer confidence; and economic disruptions resulting from terrorist activities.

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Section 9. Financial Statements and Exhibits

               Item 9.01 Financial Statements and Exhibits.

(c)	Exhibit 15.1 –	Letter re: unaudited interim financial information – for the quarter ended March 28, 2004
	Exhibit 15.2 –	Letter re: unaudited interim financial information – for the quarter ended June 27, 2004
	Exhibit 23 –	Consent of Independent Accountants
	Exhibit 99.1 –	Registrant’s Consolidated Financial Statements as of December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001
	Exhibit 99.2 –	Registrant’s Condensed Consolidated Financial Statements as of March 28, 2004 and for the three-month periods ended March 28, 2004 and March 30, 2003
	Exhibit 99.3 –	Registrant’s Condensed Consolidated Financial Statements as of June 27, 2004 and for the three-month and six-month periods ended June 27, 2004 and June 29, 2003
	Exhibit 99.4 –	Quarterly Segment Financial Information Schedule

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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 hereunto duly authorized.

	SONOCO PRODUCTS COMPANY
Date: October 14, 2004	By: /s/ C.J. Hupfer
	C.J. Hupfer
	Vice President and Chief Financial Officer

25

EXHIBIT INDEX

15.1	Letter re: unaudited interim financial information – for the quarter ended March 28, 2004
15.2	Letter re: unaudited interim financial information – for the quarter ended June 27, 2004
23	Consent of Independent Accountants
99.1	Registrant’s Consolidated Financial Statements as of December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001
99.2	Registrant’s Condensed Consolidated Financial Statements as of March 28, 2004 and for the three-month periods ended March 28, 2004 and March 30, 2003
99.3	Registrant’s Condensed Consolidated Financial Statements as of June 27, 2004 and for the three-month and six-month periods ended June 27, 2004 and June 29, 2003
99.4	Quarterly Segment Financial Information Schedule

26

EX-15.1

                                                                    EXHIBIT 15.1

October 14, 2004

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Commissioners:

We are aware that our report dated May 4, 2004, except for Note 11 as to which
the date is September 30, 2004, on our review of interim financial information
of Sonoco Products Company for the period ended March 28, 2004 and included in
an 8-K filed by the Company on October 14, 2004 is incorporated by reference in
its Registration Statements on Forms S-8 (File No. 33-45594; File No. 33-60039;
File No. 333-12657; File No. 333-69929; File No. 333-100799; and File No.
333-100798).

Yours very truly,

/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP

EX-15.2

                                                                    EXHIBIT 15.2

October 14, 2004

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Commissioners:

We are aware that our report dated July 28, 2004, except for Note 13 as to which
the date is September 30, 2004, on our review of interim financial information
of Sonoco Products Company for the period ended June 27, 2004 and included in an
8-K filed by the Company on October 14, 2004 is incorporated by reference in its
Registration Statements on Forms S-8 (File No. 33-45594; File No. 33-60039;
File No. 333-12657; File No. 333-69929; File No. 333-100799; and File No.
333-100798).

Yours very truly,

/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP

EX-23

                                                                      EXHIBIT 23

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 of Sonoco Products Company (File No. 33-45594; File No.
33-60039; File No. 333-12657; File No. 333-69929; File No. 333-100799; and File
No. 333-100798) of our report dated January 28, 2004, except for Note 17 as to
which the date is September 30, 2004, relating to the financial statements of
Sonoco Products Company, which appears in this Form 8-K.

                                                  /s/ PricewaterhouseCoopers LLP
                                                  ------------------------------
                                                  PricewaterhouseCoopers LLP

Charlotte, North Carolina
October 14, 2004

EX-99.1

                                                                    EXHIBIT 99.1

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of Sonoco Products Company:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, changes in shareholders' equity and cash
flows present fairly, in all material respects, the consolidated financial
position of Sonoco Products Company at December 31, 2003 and 2002, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2003 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As discussed in Note 8 to these consolidated financial statements, the Company
changed its method of accounting for goodwill in 2002 in accordance with
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets.

/s/PricewaterhouseCoopers LLP
- -----------------------------

PricewaterhouseCoopers LLP

Charlotte, North Carolina
January 28, 2004, except for
Note 17 as to which the
date is September 30, 2004



CONSOLIDATED BALANCE SHEETS
SONOCO PRODUCTS COMPANY AND SUBSIDIARIES



(Dollars and shares in thousands)
At December 31                                                                                2003            2002
- --------------                                                                            ------------    ------------
                                                                                                    
ASSETS
CURRENT ASSETS
     Cash and cash equivalents                                                            $     84,854    $     31,405
     Trade accounts receivable, net of allowances of $8,199 in 2003 and $8,335 in 2002         320,676         314,429
     Other receivables                                                                          33,066          32,724
     Inventories
         Finished and in process                                                               109,080         118,512
         Materials and supplies                                                                143,116         126,042
Prepaid expenses                                                                                33,751          23,726
Deferred income taxes                                                                           30,722          16,429
                                                                                          ------------    ------------
                                                                                               755,265         663,267
PROPERTY, PLANT AND EQUIPMENT, NET                                                             923,569         975,368
GOODWILL                                                                                       383,954         359,418
OTHER ASSETS                                                                                   457,845         438,386
                                                                                          ------------    ------------
     Total Assets                                                                         $  2,520,633    $  2,436,439
                                                                                          ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
     Payable to suppliers                                                                 $    239,300    $    248,640
     Accrued expenses and other                                                                188,092         144,801
     Accrued wages and other compensation                                                       23,250          25,016
     Notes payable and current portion of long-term debt                                       201,367         134,500
     Taxes on income                                                                            27,585           5,639
                                                                                          ------------    ------------
                                                                                               679,594         558,596
LONG-TERM DEBT                                                                                 473,220         699,346
PENSION AND OTHER POSTRETIREMENT BENEFITS                                                      137,494         121,176
DEFERRED INCOME TAXES AND OTHER                                                                216,165         189,896
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
     Serial preferred stock, no par value
         Authorized 30,000 shares
         0 shares issued and outstanding as of December 31, 2003 and 2002
     Common shares, no par value
         Authorized 300,000 shares
         97,217 and 96,640 shares outstanding of which 96,969 and 96,380
              are issued as of December 31, 2003 and 2002, respectively                          7,175           7,175
     Capital in excess of stated value                                                         337,136         324,295
     Accumulated other comprehensive loss                                                     (136,091)       (212,164)
     Retained earnings                                                                         805,940         748,119
                                                                                          ------------    ------------
         Total Shareholders' Equity                                                          1,014,160         867,425
                                                                                          ------------    ------------
     Total Liabilities and Shareholders' Equity                                           $  2,520,633    $  2,436,439
                                                                                          ============    ============


The Notes beginning on page 5 are an integral part of these financial
statements.

                                       1


CONSOLIDATED STATEMENTS OF INCOME
SONOCO PRODUCTS COMPANY AND SUBSIDIARIES



(Dollars and shares in thousands except per share data)
Years ended December 31                                                2003            2002          2001
- -----------------------                                            ------------    ------------   ------------
                                                                                         
Net sales                                                          $  2,758,326    $  2,701,419   $  2,464,445
Cost of sales                                                         2,259,887       2,178,778      1,953,595
Selling, general and administrative expenses                            289,839         276,579        251,279
Other expense, net                                                       50,056          10,409         51,175
                                                                   ------------    ------------   ------------
Income before interest and taxes                                        158,544         235,653        208,396
Interest expense                                                         52,399          54,196         52,217
Interest income                                                          (2,188)         (1,649)        (3,800)
                                                                   ------------    ------------   ------------
Income before income taxes                                              108,333         183,106        159,979
Provision for income taxes                                               37,698          65,075         77,269
                                                                   ------------    ------------   ------------
Income before equity in earnings of affiliates/minority interest
     in subsidiaries                                                     70,635         118,031         82,710
Equity in earnings (loss) of affiliates/minority interest in
     subsidiaries                                                         7,543           7,437         (1,214)
                                                                   ------------    ------------   ------------
Income from continuing operations                                        78,178         125,468         81,496
Income from discontinued operations, net of income tax                   60,771           9,848         10,113
                                                                   ------------    ------------   ------------
Net income                                                         $    138,949    $    135,316   $     91,609
                                                                   ============    ============   ============

Average common shares outstanding:

     Basic                                                               96,819          96,373         95,370
     Assuming exercise of options                                           310             805            437
     Diluted                                                             97,129          97,178         95,807
                                                                   ------------    ------------   ------------

Per common share
Net income

     Basic                                                         $       1.44    $       1.40   $        .96
     Diluted                                                       $       1.43    $       1.39   $        .96
Cash dividends - common                                            $        .84    $        .83   $        .80
                                                                   ============    ============   ============


The Notes beginning on page 5 are an integral part of these financial
statements.

                                       2


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
SONOCO PRODUCTS COMPANY AND SUBSIDIARIES



                                                                                               Accumulated
                                                       Common Shares           Capital in         Other
(Dollars and shares             Comprehensive   ---------------------------    Excess of      Comprehensive     Retained
in thousands)                   Income (Loss)   Outstanding         Amount    Stated Value        Loss          Earnings
- -------------                   -------------   -----------        --------   ------------    -------------    ----------
                                                                                             
JANUARY 1, 2001                                      95,006        $  7,175   $    289,657    $   (172,403)    $  677,042
Net income                       $    91,609                                                                       91,609
  Other comprehensive
     income (loss):
        Translation loss              (8,827)
        Minimum pension
        liability adjustment,
        net of tax                   (15,914)
     Other                              (825)
                                 -----------
  Other comprehensive loss           (25,566)                                                      (25,566)
                                 -----------
Comprehensive income             $    66,043
                                 ===========
Cash dividends                                                                                                    (76,080)
Exercise of stock options                               800                         14,043
Shares repurchased                                      (93)                        (2,055)
Other                                                                                  700
- --------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2001                                    95,713           7,175        302,345        (197,969)       692,571
Net income                       $   135,316                                                                      135,316
  Other comprehensive
     income (loss):
        Translation gain              15,833
        Minimum pension
        liability adjustment,
        net of tax                   (30,921)
     Other                               893
                                 -----------
  Other comprehensive loss           (14,195)                                                      (14,195)
                                 -----------
Comprehensive income             $   121,121
                                 ===========
Cash dividends                                                                                                    (79,768)
Exercise of stock options                               927                         21,618
Other                                                                                  332
- --------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2002                                    96,640           7,175        324,295        (212,164)       748,119
Net income                       $   138,949                                                                      138,949
  Other comprehensive
     income (loss):
        Translation gain              77,903
        Minimum pension
        liability adjustment,
        net of tax                    (3,403)
     Other                             1,573
                                 -----------
  Other comprehensive income          76,073                                                        76,073
                                 -----------
Comprehensive income             $   215,022
                                 ===========
Cash dividends                                                                                                    (81,128)
Exercise of stock options                               577                          8,752
Other                                                                                4,089
- --------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2003                                    97,217        $  7,175   $    337,136    $   (136,091)    $  805,940
==========================================================================================================================


The Notes beginning on page 5 are an integral part of these financial
statements.

                                       3


CONSOLIDATED STATEMENTS OF CASH FLOWS
SONOCO PRODUCTS COMPANY AND SUBSIDIARIES



(Dollars in thousands)
Years ended December 31                                                         2003                 2002                 2001
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                             
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                  $    138,949         $    135,316         $     91,609
Adjustments to reconcile net income to net cash provided
     by operating activities
         Restructuring reserve (noncash)                                           8,381                  360               16,919
         Depreciation, depletion and amortization                                163,234              159,256              158,574
         Equity in (earnings) loss of affiliates/minority interest
              in subsidiaries                                                     (7,543)              (7,437)               1,214
         Cash dividends from affiliated companies                                 11,327                3,626                7,925
         Loss on disposition of assets                                             1,228                  100                7,116
         Gain on sale of High Density Film business                              (49,433)                  --                   --
         Deferred taxes                                                           11,175               27,956               22,005
         Change in assets and liabilities, net of effects from
              acquisitions, dispositions, assets held for sale and
              foreign currency adjustments
                  Receivables                                                      5,324              (22,214)              57,255
                  Inventories                                                    (10,117)              19,307               23,438
                  Prepaid expenses                                                (7,955)               8,281               (2,870)
                  Payables and taxes                                              70,727               49,788              (20,301)
                  Other assets and liabilities                                    (3,459)            (102,894)               1,457
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                        331,838              271,445              364,341
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment                                       (113,574)            (123,959)            (101,983)
Cost of acquisitions, exclusive of cash                                           (6,232)              (8,500)            (273,187)
Proceeds from the sale of assets                                                   2,709                8,036                6,902
Proceeds from sale of High Density Film business                                  81,177                   --                   --
Investments in affiliates                                                             --                   --               (3,600)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities                                            (35,920)            (124,423)            (371,868)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt                                                    20,715               11,620              259,224
Principal repayment of debt                                                     (120,287)              (9,991)             (24,476)
Net (decrease) increase in commercial paper borrowings                           (65,500)             (92,500)            (174,000)
Net (decrease) increase in bank overdrafts                                        (8,075)              (2,924)              11,560
Cash dividends - common                                                          (81,128)             (79,768)             (76,080)
Common shares acquired                                                                --                   --               (2,055)
Common shares issued                                                               8,752               21,618               14,043
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash (used) provided by financing activities                                (245,523)            (151,945)               8,216
EFFECTS OF EXCHANGE RATE CHANGES ON CASH                                           3,054                  198                  222
- -----------------------------------------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                  53,449               (4,725)                 911
Cash and cash equivalents at beginning of year                                    31,405               36,130               35,219
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                                    $     84,854         $     31,405         $     36,130
- -----------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW DISCLOSURES
         Interest paid                                                      $     50,079         $     44,823         $     50,551
         Income taxes paid, net of refunds                                  $     27,182         $     44,682         $     49,035
         Value of stock issued for acquisition                              $      2,700         $         --         $         --
===================================================================================================================================


The Notes beginning on page 5 are an integral part of these financial
statements.

                                       4


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

The following notes are an integral part of the Consolidated Financial
Statements. The accounting principles followed by the Company appear in bold
type.

1.    BASIS OF PRESENTATION

THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE ACCOUNTS OF SONOCO AND ITS
MAJORITY-OWNED SUBSIDIARIES (THE COMPANY OR SONOCO) AFTER ELIMINATION OF
INTERCOMPANY ACCOUNTS AND TRANSACTIONS. INVESTMENTS IN AFFILIATED COMPANIES IN
WHICH THE COMPANY OWNS 20% TO 50% AND IS ABLE TO EXERCISE SIGNIFICANT INFLUENCE,
BUT NOT CONTROL, ARE ACCOUNTED FOR BY THE EQUITY METHOD OF ACCOUNTING (EQUITY
INVESTMENTS). INCOME APPLICABLE TO EQUITY INVESTMENTS IS REFLECTED AS "EQUITY IN
EARNINGS (LOSS) OF AFFILIATES/MINORITY INTEREST IN SUBSIDIARIES" IN THE
CONSOLIDATED STATEMENTS OF INCOME. Investments related to equity in affiliates
are included in "Other Assets" in the Company's Consolidated Balance Sheets and
totaled $100,427 and $90,866 for the years ended December 31, 2003 and 2002,
respectively.

THE PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH ACCOUNTING PRINCIPLES
GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA REQUIRES MANAGEMENT TO MAKE
ESTIMATES AND ASSUMPTIONS THAT AFFECT THE REPORTED AMOUNT OF ASSETS AND
LIABILITIES AT THE DATE OF THE FINANCIAL STATEMENTS AND THE REPORTED AMOUNTS OF
REVENUES AND EXPENSES DURING THE REPORTING PERIOD. ACTUAL RESULTS COULD DIFFER
FROM THOSE ESTIMATES.

THE COMPANY RECORDS REVENUE WHEN TITLE AND RISK OF OWNERSHIP PASS TO THE
CUSTOMER AND WHEN PERSUASIVE EVIDENCE OF AN ARRANGEMENT EXISTS, DELIVERY HAS
OCCURRED OR SERVICES HAVE BEEN RENDERED, THE SELLER'S PRICE TO THE BUYER IS
FIXED OR DETERMINABLE, AND WHEN COLLECTIBILITY IS REASONABLY ASSURED.

Certain prior year amounts in the Consolidated Balance Sheets at December 31,
2002 have been reclassified to conform to the current year presentation.
Additionally, during 2003, the Company reclassified shipping and handling costs
related to third party shipments from "Net sales" to "Cost of sales" on the
Consolidated Statements of Income for all years. These reclassifications
increased net sales and cost of sales by the same amount, and therefore, did not
affect reported net income.

During the fourth quarter of 2003, the Company completed the sale of its High
Density Film business to Hilex Poly Co., LLC, Los Angeles, Calif. Operating
results of this business have been presented for all years as "Income from
discontinued operations, net of income taxes" in the Company's Consolidated
Statements of Income. Items related to the Consolidated Statements of Income
have been restated to reflect the reclassification of the High Density Film
business as discontinued operations.

2.    ACQUISITIONS/DISPOSITIONS/JOINT VENTURES

The Company completed four acquisitions during 2003, with an aggregate cost of
approximately $11,077 in cash, assumption of debt, relief of notes receivable
and issuance of common stock. In connection with these acquisitions, the Company
recorded fair value of identified intangibles of $3,150, goodwill of $2,897 and
other net tangible assets of $5,030. Acquisitions in the Company's Engineered
Carriers and Paper segment included an engineered carriers manufacturer in
Australia and a recovered paper operation in Savannah, Ga. The Company also
acquired certain assets of a wooden reel manufacturer in Canada and the United
States, which are classified as components of All Other Sonoco. In addition, the
Company increased its ownership interest in a manufacturer of rotogravure
cylinders in Charlotte, N.C., in the Company's Consumer Packaging segment.

Pro forma information is not provided for 2003 acquisitions, as the impact of
these acquisitions is immaterial to the results of the Company.

During 2003, the Company decided to divest itself of the High Density Film
business in order to redirect the value of those assets to primary growth
vehicles that will enhance the opportunity to increase total returns to

                                       5


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

shareholders and significantly reduce the Company's exposure to highly cyclical
resin markets. In December 2003, the Company completed this divestiture by
selling the business to Hilex Poly Co., LLC, of Los Angeles, Calif., for a price
of approximately $119,100, including approximately $81,100 in cash, subject to
final determination of net working capital; $28,000 in subordinated notes
bearing a 4.95% interest rate maturing in 10 years; and, a $10,000 nonvoting
cumulative preferred instrument yielding 10%. This transaction resulted in a
gain of $63,112 ($49,433 after tax). Operating results of this business have
been presented for all periods as "Income from discontinued operations, net of
income tax" in the Company's Consolidated Statements of Income.

The Company completed three acquisitions during 2002, with an aggregate cost of
approximately $8,500 in cash. In connection with these acquisitions, the Company
recorded fair value of identified intangibles of $6,025, goodwill of $1,725 and
other net tangible assets of $750. Acquisitions in the Company's Engineered
Carriers and Paper segment included certain assets from Republic Paperboard
Company, LLC, and the related Republic Resource Control, LLC. The Company also
acquired Texas Reel Company's plywood reel operations in Sherman, Texas and
Coonrod Reel Company's nailed wooden reel operation in Bonham, Texas, both of
which are classified as components of All Other Sonoco.

The Company completed 10 acquisitions during 2001, with an aggregate cost of
approximately $273,000 in cash. In connection with these acquisitions, the
Company recorded approximate fair value of identified intangibles of $27,000,
goodwill of $138,000, and other net tangible assets of $108,000. Acquisitions in
the Company's Engineered Carriers and Paper segment included a lightweight
paperboard company with operations in DePere, Wis., and Menasha, Wis.; a
paper-based textile tube converting facility in Kaiping, China; a paper-based
core and tube operation in the United Kingdom; a paper-based core and tube
facility in Sint-Denijs, Belgium; an engineered carriers operation in
Cartersville, Ga.; and a paper mill in Hutchinson, Kan. Acquisitions in the
Company's Consumer Packaging segment included a steel easy-open closure
operation headquartered in North Canton, Ohio. The Company also acquired a
manufacturer of paper-based tubes, cores and composite cans headquartered in
Neenah, Wis. Approximately 80% of this operation is included in the Engineered
Carriers and Paper segment and 20% in the Consumer Packaging segment.
Acquisitions in the Company's Packaging Services segment included assets of a
packaging services operation in Hemel Hempstead, England, U.K. The Company also
acquired a plywood reel operation in Helenwood, Tenn., which is classified as a
component of All Other Sonoco.

The Company has accounted for all of its acquisitions as purchases and,
accordingly, has included their results of operations in consolidated net income
from the date of acquisition.

3.    RESTRUCTURING PROGRAMS

Effective January 1, 2003, the Company adopted Financial Accounting Standards
No. 146, 'Accounting for Costs Associated with Exit or Disposal Activities' (FAS
146), which nullifies Emerging Issues Task Force Issue No. 94-3 (Issue 94-3),
'Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring).' FAS
146 requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. Under Issue 94-3, a
liability for an exit cost, as defined in Issue 94-3, was recognized at the date
of an entity's commitment to an exit plan. The provisions of FAS 146 are
effective for exit or disposal activities that are initiated after December 31,
2002. The adoption of FAS 146 did not have a material effect on the Company's
financial statements except for the timing of the recognition of costs
associated with exit or disposal activities.

Due to the sale of the High Density Film business in December 2003,
restructuring charges have been restated to exclude any costs incurred by the
High Density Film business, as such charges have been included in "Income from
discontinued operations, net of income taxes" on the Consolidated Statements of
Income.

                                       6


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

During 2003, the Company recognized restructuring charges, net of adjustments,
of $50,056 ($35,329 after tax). Of these charges, $31,413 was attributed to the
Engineered Carriers and Paper segment, $9,469 was related to the Consumer
Packaging segment, $335 was attributed to the Packaging Services segment, $1,806
was related to All Other Sonoco and $7,033 was associated with Corporate. None
of these charges has been allocated to the segments' operating results. These
restructuring charges, net of adjustments, consisted of severance and
termination benefits of $37,733, asset impairment charges of $8,381 and other
exit costs of $3,942, primarily associated with lease termination and other
miscellaneous plant closing costs. The Company expects to recognize an
additional cost of approximately $16,000 pretax in the future associated with
these 2003 actions. The Company also expects to announce, in 2004, the closing
of an additional five to ten plants. The costs associated with the future plant
closings have not yet been determined. Remaining charges associated with the
2003 activities will be recorded in future periods in accordance with the
guidelines of FAS 146.

During 2003, the Company also recorded restructuring charges of $1,455 after tax
related to affiliates/minority interest in subsidiaries. The restructuring
charges are included in "Equity in earnings (loss) of affiliates/minority
interest in subsidiaries" in the Company's Consolidated Statements of Income.

During 2002, the Company recognized restructuring charges, net of adjustments,
of $10,409 ($6,663 after tax). Additionally, the Company's High Density Film
business, which was divested in 2003, incurred restructuring charges of $2,238
pretax ($1,432 after tax). The 2002 restructuring charges, including the High
Density Film business charges, were primarily related to three U.S. plant
closings in the Consumer Packaging segment, one U.S. plant closing in the
Engineered Carriers and Paper segment, one plant closing in All Other Sonoco and
severance costs associated with plant consolidations in Europe. These
restructuring charges, net of adjustments, consisted of severance and
termination benefits of $10,532, asset impairment charges of $360, and other
exit costs of $1,755, consisting of building lease termination charges and other
miscellaneous costs.

During 2001, the Company recognized restructuring charges, net of adjustments,
of $51,402 ($35,241 after tax). Additionally, the Company's High Density Film
business, which was divested in 2003, incurred restructuring charges of $2,149
pretax ($1,375 aftertax). The 2001 restructuring charges, including the High
Density Film business charges, consisted of severance and termination benefits
of $27,265, asset impairment charges of $16,919 and other exit costs of $9,367
(consisting of building lease termination charges of $7,715 and other
miscellaneous charges of $1,652).

Affiliates of the Company accounted for under the equity method of accounting
recorded restructuring charges of $9,986 ($6,591 after tax) during 2001. These
charges included the closing of two plant locations and other miscellaneous
restructuring activities and are included in "Equity in earnings (loss) of
affiliates/minority interest in subsidiaries" in the Consolidated Statements of
Income.

The 2003, 2002 and 2001 restructuring plans included a global reduction of
approximately 880 salaried positions (approximately 510 in the United States)
and approximately 1,330 hourly positions (approximately 990 in the United
States), and the closure of 29 plant locations. As of December 31, 2003, 23
plant locations have been closed, and approximately 1,960 employees have been
terminated (approximately 820 salaried and 1,140 hourly).

The following table sets forth the activity in the restructuring accrual
included in "Accrued expenses and other" on the Consolidated Balance Sheets.
Restructuring charges are included in "Other expense, net" in the Consolidated
Statements of Income. In accordance with the agreement of sale for the High
Density Film business, the liability associated with the restructuring has been
retained by the Company and is, therefore, included in the table below:

                                       7


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries



                                                             Severance and                    Other
                                                              Termination        Asset        Exit
                                                                Benefits      Impairment      Costs        Total
                                                             -------------    ----------    ---------    ----------
                                                                                             
Liability, December 31, 2000                                 $       1,100    $       --    $      --    $    1,100
                                                             -------------    ----------    ---------    ----------
2001 Charges                                                        30,614        17,889       13,682        62,185
Cash payments                                                      (14,431)           --       (3,143)      (17,574)
Asset impairment (noncash)                                              --       (16,919)          --       (16,919)
Reclassifications to pension liability                              (5,180)           --           --        (5,180)
Adjustments                                                         (3,349)         (970)      (4,315)       (8,634)
                                                             -------------    ----------    ---------    ----------
Liability, December 31, 2001                                         8,754            --        6,224        14,978
                                                             -------------    ----------    ---------    ----------
2002 Charges                                                        11,032           383        1,885        13,300
Cash payments                                                       (6,848)           --       (2,765)       (9,613)
Asset impairment (noncash)                                              --          (360)          --          (360)
Reclassifications to pension liability                              (3,276)           --           --        (3,276)
Adjustments                                                           (500)          (23)        (130)         (653)
                                                             -------------    ----------    ---------    ----------
Liability, December 31, 2002                                         9,162            --        5,214        14,376
                                                             -------------    ----------    ---------    ----------
2003 Charges                                                        40,526         8,709        3,142        52,377
Cash payments                                                      (21,953)           --       (2,970)      (24,923)
Asset impairment (noncash)                                              --        (8,381)          --        (8,381)
Reclassifications to pension liability                             (10,234)           --           --       (10,234)
Adjustments                                                         (2,793)         (328)       1,000        (2,121)
                                                             -------------    ----------    ---------    ----------
Liability, December 31, 2003                                 $      14,708            --    $   6,386    $   21,094
                                                             =============    ==========    =========    ==========


The Company expects to pay the remaining restructuring costs, with the exception
of ongoing pension subsidies and certain building lease termination expenses, by
the end of 2004, using cash generated from operations.

During 2003, the Engineered Carriers and Paper segment recognized writeoffs of
impaired equipment and facilities held for disposal of $5,212 and $1,409,
respectively, attributed to the closing of four plant locations. Additionally,
the Consumer Packaging segment recognized writeoffs of impaired equipment of
$1,760 related to the closing of one plant location. Impaired assets were
written down to the lower of carrying amount or fair value, less estimated costs
to sell, if applicable.

During 2002, the Company recognized writeoffs of impaired equipment in the
Engineered Carriers and Paper segment of $299 attributed to the closing of a
plant location. Additionally, the Company recognized net writeoffs of impaired
equipment in the Consumer Packaging segment and All Other Sonoco of $(692) and
$753, respectively, related to adjustments to previously recorded impaired
equipment charges.

Asset impairment charges included in the 2001 restructuring charges resulted
from the writeoff/down of assets associated with 13 plant location closings and
nine other plant locations impacted by the restructuring. Impaired assets were
written down to the lower of carrying amount or fair value, less estimated costs
to sell, if applicable. The Engineered Carriers and Paper segment recognized
writeoffs/downs of impaired facilities and equipment of $4,294 and
writeoff/downs of facilities and equipment held for sale of $997. The Consumer
Packaging segment recognized writeoffs/downs of impaired facilities and
equipment of $9,091. All Other Sonoco recognized writeoffs/downs of impaired
facilities and equipment of $2,320 and writeoff/downs of facilities and
equipment held for sale of $217.

The effect of suspending depreciation on assets held for disposition was not
material to the Consolidated Statements of Income for the years ended December
31, 2003, 2002 and 2001.

                                       8


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

4.    DISCONTINUED OPERATIONS

The financial statements for prior years have been restated to report the
revenues and expenses of the components of the Company that were disposed of
separately as discontinued operations. Income from discontinued operations for
2003, 2002 and 2001 represents the results of operations of the Company's High
Density Film business, which was sold in December 2003. See Note 2 for a
discussion of this disposition.

The following table sets forth the operating results for the business unit,
which was previously reported in the Company's Consumer Packaging segment:



                                                   2003             2002             2001
                                              -------------     -------------    ------------
                                                                        
Net Sales                                     $     198,759     $     191,950    $    217,742
Operating income before
     income taxes                                    17,758            15,504          15,802
Gain on sale                                         63,112
Income tax expense                                  (20,099)           (5,656)         (5,689)
                                              -------------     -------------    ------------
Income from discontinued
    operations                                $      60,771     $       9,848    $     10,113
Income from discontinued
    operations - per diluted share            $         .63     $         .10    $        .11
                                              =============     =============    ============


No interest expense or income was allocated to this business unit.

The Company has no material continuing involvement in the management or
operations of the divested business.

5.    CASH AND CASH EQUIVALENTS

Cash equivalents are composed of highly liquid investments with an original
maturity of three months or less and are recorded at market. At December 31,
2003 and 2002, outstanding checks in excess of bank deposits totaling $20,433
and $30,033, respectively, were included in "Payable to suppliers" on the
Consolidated Balance Sheets. In addition, outstanding payroll checks of $2,415
and $890 in 2003 and 2002, respectively, were included in "Accrued wages and
other compensation" on the Consolidated Balance Sheets.

6.    INVENTORIES

Inventories are stated at the lower of cost or market. The last-in, first-out
(LIFO) method was used to determine costs of approximately 26% of total
inventories at December 31, 2003 and 2002. The remaining inventories are
determined on the first-in, first-out (FIFO) method.

If the FIFO method of accounting had been used for all inventories, total
inventory would have been higher by $10,462 in 2003 and $10,284 in 2002.

7.    PROPERTY, PLANT AND EQUIPMENT

Plant assets represent the original cost of land, buildings and equipment, less
depreciation, computed under the straight-line method, over the estimated useful
life of the asset, and are reviewed for impairment whenever events indicate the
carrying value may not be recoverable.

Equipment lives range from three to 11 years, buildings from 15 to 40 years.

Timber resources are stated at cost. Depletion is charged to operations based on
the number of units of timber cut during the year.

                                       9


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

Depreciation and depletion expense amounted to $148,843 in 2003, $143,215 in
2002 and $132,814 in 2001. Depreciation expense amounted to $9,696 for 2003,
$13,333 for 2002, and $13,865 for 2001 for the High Density Film business which
have been reclassified as discontinued operations. Details at December 31 are as
follows:



                                                               2003                  2002
                                                           -------------         ------------
                                                                           
Land                                                       $      46,432         $     44,285
Timber resources                                                  36,392               35,672
Buildings                                                        345,296              335,450
Machinery and equipment                                        1,806,181            1,833,141
Construction in progress                                          57,248               62,722
                                                           -------------         ------------
                                                               2,291,549            2,311,270
                                                           -------------         ------------
Accumulated depreciation and depletion                        (1,367,980)          (1,335,902)
                                                           -------------         ------------
Property, plant and equipment, net                         $     923,569         $    975,368
                                                           =============         ============


Estimated costs for completion of authorized capital additions under
construction totaled approximately $58,349 at December 31, 2003.

Certain properties and equipment are leased under noncancelable operating
leases. Future minimum rentals under noncancelable operating leases with terms
of more than one year are as follows: 2004 - $24,100, 2005 - $19,500, 2006 -
$15,000, 2007 - $12,700, 2008 - $9,700, and 2009 and thereafter - $22,300. Total
rental expense under operating leases was approximately $34,000 in 2003, $31,700
in 2002 and $36,510 in 2001.

Research and development costs charged to expense were $14,225 in 2003, $13,018
in 2002 and $11,851 in 2001.

8.    GOODWILL AND INTANGIBLE ASSETS

GOODWILL

During the first quarter of 2002, the Company adopted Statement of Financial
Accounting Standards No. 142 'Goodwill and Other Intangible Assets' (FAS 142).
Under FAS 142, purchased goodwill and intangible assets with indefinite lives
are not amortized, but instead tested for impairment at least annually. The
Company completed its transitional goodwill impairment testing required by FAS
142 during the second quarter of 2002 and its annual goodwill impairment testing
required by FAS 142 during the third quarter of 2002 and 2003. Based on this
impairment testing, no adjustment to the recorded goodwill balance was
necessary.

The following table sets forth the reconciliation of net income and earnings per
share information for the years ended December 31, 2003, 2002 and 2001, adjusted
for the non-amortization provisions of FAS 142:



                                               2003         2002          2001
                                            ----------    ---------   ----------
                                                             
Reported net income                         $  138,949    $ 135,316   $   91,609
                                            ----------    ---------   ----------
Add: Goodwill amortization, after tax                                      9,094
Adjusted net income                         $  138,949    $ 135,316   $  100,703
                                            ==========    =========   ==========




                                              2003         2002     2001
                                             ------       ------   ------
                                                          
Reported basic earnings per share            $ 1.44       $ 1.40   $  .96
Adjusted basic earnings per share              1.44         1.40     1.06
Reported diluted earnings per share            1.43         1.39      .96
Adjusted diluted earnings per share            1.43         1.39     1.05


                                       10


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

The changes in the carrying amount of goodwill for the year ended December 31,
2003, are as follows:



                                      Engineered
                                       Carriers     Consumer    Packaging
                                      and Paper    Packaging    Services    All Other
                                       Segment      Segment      Segment     Sonoco       Total
                                      ----------   ----------   ---------   ---------   ---------
                                                                         
Balance as of January 1, 2003         $  141,343   $  151,353   $   1,139   $  65,583   $ 359,418
   Goodwill purchase
     price adjustments                       (37)        (168)         --          --        (205)
   Goodwill on 2003 acquisitions           1,284        1,602          --          11       2,897
   Foreign currency translation            8,879       12,589         124         252      21,844
                                      ----------   ----------   ---------   ---------   ---------
Balance as of December 31, 2003       $  151,469   $  165,376   $   1,263   $  65,846   $ 383,954
                                      ==========   ==========   =========   =========   =========


INTANGIBLE ASSETS



                                                                        2003         2002
                                                                      ---------    ---------
                                                                             
Amortizable intangibles - Gross cost
       Patents                                                        $   3,268    $   3,268
       Customer lists                                                    38,223       37,025
       Land use rights                                                    5,873        5,873
       Supply agreements                                                  5,261        4,261
       Other                                                              6,404        3,185
                                                                      ---------    ---------
Total gross cost                                                         59,029       53,612
Accumulated amortization
       Patents                                                           (2,564)   $  (2,285)
       Customer lists                                                    (4,630)   $  (2,354)
       Land use rights                                                   (1,963)   $  (1,782)
       Supply agreements                                                 (3,715)   $  (2,609)
       Other                                                             (2,756)   $  (1,744)
                                                                      ---------    ---------
Total accumulated amortization                                          (15,628)   $ (10,774)
Net amortizable intangibles                                           $  43,401    $  42,838
                                                                      =========    =========


The approximate amortization expense for the next five years is $3,800 in 2004,
$3,800 in 2005, $3,500 in 2006, $3,200 in 2007, and $3,000 in 2008.

As discussed in Note 2, the Company recorded $3,150 of identifiable intangibles
mainly related to non-compete agreements in connection with 2003 acquisitions.
These agreements will be amortized over a five-year period and will have no
residual value at the end of the amortization period. The Company recorded
$6,025 of identifiable intangible assets related to the fair value of customer
lists in connection with a 2002 acquisition. These customer lists will be
amortized over a period of 15 years and will have no residual value at the end
of the amortization period.

The Company has no identified intangibles with indefinite lives. Intangible
assets are included in "Other Assets" on the Company's Consolidated Balance
Sheets.


                                       11


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries


9.    DEBT

Debt at December 31 was as follows:




                                                                              2003         2002
                                                                           ----------   ----------
                                                                                  
Commercial paper, average rate of 1.76% in 2002                            $       --   $   65,500
6.5% debentures due November 2013                                             248,861      248,745
7.0% debentures due November 2004                                             149,681      149,977
6.75% debentures due November 2010                                             99,880       99,863
5.875% debentures due November 2003                                                --       99,945
9.2% debentures due August 2021                                                41,305       41,305
6.125% IRBs due June 2025                                                      34,627       34,603
6.0% IRBs due April 2026                                                       34,297       34,265
Foreign denominated debt, average rate of 6.0% in 2003 and 8.9% in 2002        49,875       40,363
Other notes                                                                    16,061       19,280
                                                                           ----------   ----------
Total debt                                                                    674,587      833,846
Less current portion and short-term notes                                     201,367      134,500
                                                                           ----------   ----------
Long-term debt                                                             $  473,220   $  699,346
                                                                           ==========   ==========


The Company has authorized a commercial paper program totaling $450,000 and has
fully committed bank lines of credit supporting the program by a like amount.
These bank lines expire in 2004, but may be extended by the Company into 2005
under a term-out option. Accordingly, commercial paper borrowings are classified
as long-term debt. It is management's intent to indefinitely maintain line of
credit agreements supporting the commercial paper program. Additionally, the
Company has $150,000 of 7.0% bonds maturing in 2004. The bonds are expected to
be refinanced with floating rate debt.

Certain of the Company's debt agreements impose restrictions with respect to the
maintenance of financial ratios and the disposition of assets. The most
restrictive covenant currently requires that net worth at the end of each fiscal
quarter be greater than $758,900, increased by 25% of net income after March 30,
2003, and decreased by stock purchases after July 9, 2003. Based on this
calculation, the Company was $229,000 above the minimum level of $786,000,
required under this covenant as of December 31, 2003. On November 1, 2002, the
Company amended its U.S. commercial paper backup credit agreement to exclude
from the above net worth covenant any charge to shareholders' equity arising
from minimum pension liability adjustments for its U.S. defined benefit pension
plan. At December 31, 2003, no such charge existed for U.S. plans.

In addition to the committed availability under the commercial paper program,
unused short-term lines of credit for general Company purposes at December 31,
2003, were approximately $101,990, with interest at mutually agreed-upon rates.

The approximate principal requirements of debt maturing in the next five years
are: 2004 - $201,367, 2005 - $2,653, 2006 - $1,550, 2007 - $1,421, and 2008 -
$865.

10.   FINANCIAL INSTRUMENTS

The following table sets forth the carrying amounts and fair values of the
Company's significant financial instruments where the carrying amount differs
from the fair value.



                                       December 31, 2003                 December 31, 2002
                                   ---------------------------       ---------------------------
                                    Carrying           Fair           Carrying          Fair
                                   Amount of         Value of         Amount of        Value of
                                   Liability        Liability         Liability       Liability
                                   ---------        ---------         ---------       ---------
                                                                          
Long-term debt                     $  473,220       $  526,693       $  699,346       $  772,071
                                   ==========       ==========       ==========       ==========


                                       12


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

The fair value of cash and cash equivalents, short-term debt and long-term
variable-rate debt approximates fair value. The fair value of long-term debt is
based on quoted market prices or by discounting future cash flows using interest
rates available to the Company for issues with similar terms and average
maturities.

The Company records derivatives based on Financial Accounting Standards No. 133,
'Accounting for Derivative Instruments and Hedging Activities' (FAS 133), and
related amendments. This Statement requires that all derivatives be recognized
as assets or liabilities in the balance sheet and measured at fair value.
Changes in the fair value of derivatives are recognized in either net income or
in other comprehensive income, depending on the designated purpose of the
derivative.

The Company uses derivatives from time to time to manage the cost of certain raw
materials, to mitigate exposure to foreign currency fluctuation and to manage
its exposure to fixed and variable interest rates within acceptable limits. The
Company purchases commodities such as recovered paper, metal 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. The Company may enter into commodity futures or swaps to
reduce the effect of price fluctuation. In addition, the Company may use foreign
currency forward contracts and other risk management instruments to manage
exposure to changes in foreign currency cash flows and the translation of
monetary assets and liabilities on the Company's financial statements. The
Company uses published market prices or estimated values based on current price
quotes and a discounted cash flow model to estimate the fair market value of the
derivatives.

In 2003, the Company entered into certain cash flow hedges to mitigate exposure
to commodity and foreign exchange risks in 2003, out through mid-2006. The fair
market value of these derivatives as of December 31, 2003 was $1,641 on a tax
adjusted basis and will be reclassified to earnings in the same periods the
forecast purchases or payments affect earnings. Based on the current amount of
the derivative loss in other comprehensive income, $857 after tax will be
reclassified to income in 2004. 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 its Consolidated Statements of Income for
the years ended December 31, 2003 and 2002.

11.   INVESTMENT IN LIFE INSURANCE

Prior to 2002, corporate-owned life insurance (COLI) policies were used by the
Company to aid in the financing of employee benefits and were recorded net of
policy loans in "Other Assets" on the Consolidated Balance Sheets. The net
pretax cost of COLI, including interest expense and excluding 2001 policy
surrender charges of $7,026, was $1,397 in 2001 and is included in "Selling,
general and administrative expenses" in the Company's Consolidated Statements of
Income. The related COLI interest expense was $3,043 in 2001. Legislation was
enacted in 1996 that began phasing out the tax deductibility of this interest.
Accordingly, no deduction was taken in 2001 for interest on policy loans. In
April 2001, the Company surrendered its COLI policies as a result of a
settlement with the IRS over deductibility of COLI loan interest. The surrender
of these policies resulted in additional income taxes of $11,295 and other costs
of $7,026 in 2001. Other costs are included in "Other expense, net" in the
Company's 2001 Consolidated Statements of Income.

12.   STOCK PLANS

The Company has stock option plans under which common shares are reserved for
sale to certain employees and nonemployee directors. Options granted under the
plans were at the market value of the shares at the date of grant. Options are
generally exercisable one year after the date of grant and expire 10 years after
the date of grant. There were 4,413,407 shares reserved for future grants at
December 31, 2003.


                                       13


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

On December 31, 1998, the Company granted special one-time Centennial stock
options of 100 shares to substantially all of its employees. These options are
exercisable at the closing price of the shares on December 31, 1998, and expire
after six years. A total of 890,900 options granted under the Centennial Share
Program were outstanding at December 31, 2003.

A summary of the status of the Company's stock option plans is presented below:

                                           Option         Weighted-
                                           Shares       Average Price
                                           ------       -------------
2001
Outstanding at beginning of year          9,955,843       $   24.31
Granted                                   1,748,603       $   23.83
Exercised                                  (832,498)      $   17.16
Canceled                                   (381,976)      $   28.81
Outstanding at end of year               10,489,972       $   24.63
Options exercisable at end of year        8,712,119       $   24.87
                                         ----------       ---------
2002
Granted                                   1,511,474       $   25.25
Exercised                                  (945,321)      $   19.14
Canceled                                   (180,499)      $   29.21
Outstanding at end of year               10,875,626       $   25.12
Options exercisable at end of year        9,415,202       $   25.10
                                         ----------       ---------
2003
Granted                                   1,419,694       $   21.19
Exercised                                  (438,470)      $   20.96
Canceled                                   (518,209)      $   24.59
Outstanding at end of year               11,338,641       $   24.81
Options exercisable at end of year        9,943,286       $   25.32
                                         ==========       =========

The weighted-average fair value of options granted was $4.85, $6.62 and $6.43 in
2003, 2002 and 2001, respectively.

The following tables summarize information about stock options outstanding and
stock options exercisable at December 31, 2003:

                                 Options Outstanding
                   ------------------------------------------------
                                        Weighted-         Weighted-
                                        Average            Average
   Range of            Number          Remaining          Exercise
Exercise Prices     Outstanding     Contractual Life       Price
- ---------------     -----------     ----------------      ---------

$17.25 - $22.88       3,521,091        5.8 years          $   20.25
$23.06 - $24.95       3,238,017        4.7 years          $   24.08
$25.00 - $37.10       4,579,533        5.0 years          $   28.84
                     ----------
$17.25 - $37.10      11,338,641        5.2 years          $   24.81
===============      ==========        =========          =========

                                            Options Exercisable
                                            -------------------
    Range of                           Number        Weighted-Average
Exercise Prices                     Outstanding       Exercise Price
- ---------------                     -----------      ----------------

$17.25 - $22.88                      2,131,693           $ 19.66
$23.06 - $24.95                      3,232,060           $ 24.08
$25.00 - $37.10                      4,579,533           $ 28.84
                                     ---------
$17.25 - $37.10                      9,943,286           $ 25.32
===============                      =========           =======

                                       14


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

As of December 31, 2002 and 2001, the Company granted awards in the form of
contingent share units to certain of its executives.

The 2002 awards vest over five years with accelerated vesting of three years if
performance targets are met. The performance vesting of the awards, which can
range from 56,434 to 169,300 shares, is tied to growth in earnings and improved
capital effectiveness over a three-year period. The 2001 awards vest over three
years and can range from 75,336 to 301,344 shares dependent on growth in
earnings and improved capital effectiveness. Under the 2001 plan, none of the
stock units will vest if the minimum objectives are not achieved, and as of
December 31, 2003, no stock units under this plan were expected to vest. No such
awards were granted for 2003.

Since 1994, the Company has granted one-time awards of contingent shares to
certain of the Company's executives. These awards vest over a five-year period
with one-third vesting on the third, fourth and fifth anniversaries of the
grant. An executive must be actively employed by the Company on the vesting date
for shares to be issued. Once vested, these awards do not expire. As of December
31, 2003, a total of 359,116 contingent shares granted under this plan remain
outstanding, 247,456 of which are vested.

As permitted by Statement of Financial Accounting Standards No. 123, 'Accounting
for Stock-based Compensation' (FAS 123), the Company has chosen to continue to
account for stock-based compensation using the intrinsic value method prescribed
in Accounting Principles Board (APB) Opinion No. 25, 'Accounting for Stock
Issued to Employees,' and its related interpretations. Accordingly, compensation
cost for stock options is measured as the excess, if any, of the quoted market
price of the Company's stock at the date of the grant over the amount an
employee must pay to acquire the stock. Compensation cost for performance stock
options is recorded based on the quoted market price of the Company's stock at
the end of the period.

The following table illustrates the effect on net income and earnings per share
if the Company had applied the fair value recognition provisions of FAS 123 to
stock-based employee compensation.



                                                                2003          2002        2001
                                                             ----------    ---------    ---------
                                                                               
Net income, as reported                                      $  138,949    $ 135,316    $  91,609
   Add: Stock-based employee compensation cost,
         net of related tax effects included in net
         income, as reported                                        869          199          468
   Deduct: Total stock-based employee compensation
         expense determined under fair value based
         method for all awards, net of related tax effects       (5,889)      (6,622)      (7,410)
                                                             ----------    ---------    ---------
Pro forma net income                                         $  133,929    $ 128,893    $  84,667
Earnings per share:
   Basic - as reported                                       $     1.44    $    1.40    $     .96
   Basic - pro forma                                         $     1.38    $    1.34    $     .89
   Diluted - as reported                                     $     1.43    $    1.39    $     .96
   Diluted - pro forma                                       $     1.38    $    1.33    $     .88
                                                             ==========    =========    =========



                                       15


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

The fair value of each option grant is estimated on the date of the grant using
the binomial option pricing model with the following assumptions:

                                          2003           2002           2001
                                       ---------      ---------      ---------

Expected dividend yield                      3.6%           3.4%           3.2%
Expected stock price volatility             31.8%          34.9%          35.4%
Risk-free interest rate                      3.0%           4.3%           4.9%
Expected life of options               4.5 years      4.2 years      4.0 years
                                       =========      =========      =========

13.   EMPLOYEE BENEFIT PLANS

RETIREMENT PLANS AND RETIREE HEALTH AND LIFE INSURANCE PLANS

The Company provides non-contributory defined benefit pension plans for
substantially all of its United States and certain of its Mexico employees, as
well as postretirement healthcare and life insurance benefits to the majority of
its retirees and their eligible dependents in the United States and Canada.
Effective January 1, 2004, the Company switched to a defined contribution plan
for all new U.S. employees. The Company also sponsors contributory pension plans
covering the majority of its employees in the United Kingdom and Canada.

The Company uses a December 31 measurement date for its plans.

The components of net periodic benefit cost include the following:



                                                         2003             2002              2001
                                                      ----------       ----------        ----------
                                                                                
RETIREMENT PLANS
Service cost                                          $   20,209       $   18,296        $   15,054
Interest cost                                             51,767           48,210            44,523
Expected return on plan assets                           (55,290)         (59,443)          (62,748)
Amortization of net translation (asset) obligation           576              552              (302)
Amortization of prior service cost                         1,665            1,674             1,576
Amortization of net actuarial (gain) loss                 22,223            8,674               504
Special termination benefit cost                          10,234            3,276             5,180
Acquisitions                                                  --               --                48
Other                                                         70               --                --
Effect of curtailment                                        611               --                --
                                                      ----------       ----------        ----------
Net periodic benefit cost                             $   52,065       $   21,239        $    3,835
                                                      ==========       ==========        ==========

RETIREE HEALTH AND LIFE INSURANCE PLANS
Service cost                                          $    4,360       $    4,177        $    3,746
Interest cost                                             11,558           11,559             9,438
Expected return on plan assets                            (3,650)          (5,552)           (6,248)
Amortization of prior service cost                        (6,581)          (6,990)           (5,949)
Amortization of net actuarial loss                         9,026            7,693             4,139
Special termination benefit cost                          (1,096)              --                --
                                                      ----------       ----------        ----------
Net periodic benefit cost                             $   13,617       $   10,887        $    5,126
                                                      ==========       ==========        ==========



                                       16


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

The following tables set forth the plans' obligations and assets at December 31:



                                                                                                  Retiree Health and
                                                            Retirement Plans                     Life Insurance Plans
                                                        2003               2002                2003                2002
                                                    ------------        ------------       ------------        ------------
                                                                                                   
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at January 1                     $    782,287        $    678,822       $    175,005        $    161,251
Service cost                                              20,209              18,296              4,360               4,177
Interest cost                                             51,767              48,210             11,558              11,559
Plan participant contributions                             1,074               1,049              2,294               1,469
Plan amendments                                              398               1,798                 --              (8,544)
Actuarial loss                                            63,690              62,032             12,111              21,906
Benefits paid                                            (47,721)            (44,342)           (17,157)            (16,822)
Impact of foreign exchange rates                          24,860              13,146                149                   9
Special termination benefit cost                          10,234               3,276                 --                  --
Effect of curtailment                                     (3,702)                 --             (1,957)                 --
Other                                                      7,987                  --                 --                  --
                                                    ------------        ------------       ------------        ------------
Benefit obligation at December 31                   $    911,083        $    782,287       $    186,363        $    175,005
                                                    ------------        ------------       ------------        ------------

CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1              $    648,672        $    629,188       $     50,576        $     62,214
Actual return on plan assets                             144,679             (59,682)            11,733              (5,775)
Company contributions                                     29,907             115,082              2,836               9,728
Plan participant contributions                             1,074               1,049              2,294               1,469
Benefits paid                                            (47,721)            (44,342)           (17,157)            (16,822)
Impact of foreign exchange rates                          17,967               9,236                 --                  --
Expenses paid                                             (4,108)                 --               (201)                 --
Other                                                         --              (1,859)                --                (238)
                                                    ------------        ------------       ------------        ------------
Fair value of plan assets at
     December 31                                    $    790,470        $    648,672       $     50,081        $     50,576
                                                    ------------        ------------       ------------        ------------
RECONCILIATION OF FUNDED STATUS,
     DECEMBER 31
Funded status of plan                               $   (120,613)       $   (133,615)      $   (136,282)       $   (124,429)
Unrecognized net actuarial loss                          303,880             342,887            106,833             113,586
Unrecognized prior service cost                            7,927               9,820            (14,937)            (22,557)
Unrecognized net transition obligation                     6,740               6,421                 --                  --
                                                    ------------        ------------       ------------        ------------
Net amount recognized                               $    197,934        $    225,513       $    (44,386)       $    (33,400)
                                                    ============        ============       ============        ============




                                                                             Retirement Plans
                                                                          2003             2002
                                                                        ----------       ---------
                                                                                   
TOTAL RECOGNIZED AMOUNTS IN THE
CONSOLIDATED BALANCE SHEETS
Prepaid benefit cost included in Other Assets                           $  229,784       $ 244,240
Accrued benefit liability                                                 (118,136)        (98,432)
Intangible asset                                                             7,148           6,734
Accumulated other comprehensive loss                                        79,138          72,971
                                                                        ----------       ---------
Net amount recognized                                                   $  197,934       $ 225,513
                                                                        ==========       =========


The accumulated benefit obligation for all defined benefit plans was $853,443
and $736,268 at December 31, 2003 and 2002, respectively.

The projected benefit obligation (PBO), accumulated benefit obligation (ABO) and
fair value of plan assets for pension plans with accumulated benefit obligations
in excess of plan assets were, $290,077, $277,999 and $158,953, respectively, as
of December 31, 2003, and $237,330, $227,417 and $127,982, respectively, as of
December 31, 2002.

                                       17


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

Assumptions

The following tables set forth the major actuarial assumptions used in
determining the PBO, ABO and net periodic cost.



Weighted-average assumptions used
to determine benefit obligations
at December 31                                                             U.S.           Foreign Plans
- ---------------------------------                                          ----           -------------
                                                                                    
RETIREMENT PLANS AND RETIREE HEALTH
AND LIFE INSURANCE PLANS:
Discount Rate
2003                                                                       6.25%           5.00-6.50%
2002                                                                       6.75%           5.50-7.00%
Rate of Compensation Increase
2003                                                                       4.60%           1.50-4.00%
2002                                                                       4.10%           1.50-5.00%




Weighted-average assumptions used
to determine net periodic benefit cost for
years ended December 31                                                    U.S.           Foreign Plans
- ------------------------------------------                                 ----           -------------
                                                                                    
RETIREMENT PLANS AND RETIREE HEALTH
AND LIFE INSURANCE PLANS:
Discount Rate
2003                                                                       6.75%            5.00-7.00%
2002                                                                       7.25%            5.50-7.00%
2001                                                                       7.50%            6.45-7.00%
Expected Long-term Rate of Return
2003                                                                       8.75%            5.50-8.50%
2002                                                                       9.50%            5.50-8.50%
2001                                                                       9.50%            8.00-8.50%
Rate of Compensation Increase
2003                                                                       4.60%            1.50-5.00%
2002                                                                       4.10%            1.50-5.00%
2001                                                                       4.10%            3.50-5.00%


The expected long-term rate of return assumption is based on the Company's
historical plan return performance over the past 12 years.


                                       18


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

RETIREE HEALTH AND LIFE INSURANCE PLANS

The U.S. Retiree Health and Life Insurance Plan makes up 99% of the Retiree
Health liability. Therefore, the following information relates to the U.S. plan
only.

Healthcare Cost Trend Rate
2003                                                                   11.0%
2002                                                                   12.0%
Ultimate Trend Rate
2003                                                                    6.0%
2002                                                                    6.0%
Year at which the Rate Reaches
the Ultimate Trend Rate
2003                                                                   2008
2002                                                                   2008

Increasing the assumed trend rate for healthcare costs by one percentage point
would increase the accumulated postretirement benefit obligation (APBO) and
total service and interest cost component approximately $2,751 and $174,
respectively. Decreasing the assumed trend rate for healthcare costs by one
percentage point would decrease the APBO and total service and interest cost
component approximately $2,431 and $154, respectively. Based on amendments to
the U.S. plan approved in 2002, cost increases borne by the Company are limited
to the Urban CPI.

Retirement Plan Assets

The following table sets forth the weighted-average asset allocations of the
Company's retirement plans at December 31, 2003 and 2002, by asset category.

Asset Category                               U.S.            UK          Canada
- --------------                               ----            --          ------

Equity securities
             2003                            68.2%           71.5%        58.0%
             2002                            63.3%           69.9%        58.0%
Debt securities
             2003                            31.8%           23.1%        42.0%
             2002                            35.9%           24.4%        42.0%
Real estate
             2003                             0.0%            4.0%         0.0%
             2002                             0.0%            4.3%         0.0%
Other
             2003                             0.0%            1.4%         0.0%
             2002                             0.8%            1.4%         0.0%
             ----                             ---             ---          ---
Total
             2003                           100.0%          100.0%       100.0%
             2002                           100.0%          100.0%       100.0%

The Company employs a total return investment approach whereby a mix of equities
and fixed income investments are used to maximize the long-term return of plan
assets for a prudent level of risk. Other assets such as real estate, private
equity and hedge funds may be used judiciously to enhance long-term returns
while improving portfolio diversification. Risk tolerance is established through
careful consideration of plan liabilities, plan funded status and corporate
financial condition. Investment risk is measured and monitored on an ongoing
basis through quarterly investment portfolio reviews, annual liability
measurements and periodic asset/liability studies.

U.S. Defined Benefit Plan

The equity investments are diversified across U.S. and non-U.S. stocks, as well
as growth, value, and small and large capitalizations. In January 2004, a core
real estate investment of 5% was established by liquidating a portion of the
equity and debt securities. The current target allocation for the investment
portfolio is Equity Securities - 65%, Debt Securities - 30%, Real Estate - 5%
and Other - 0%.


                                       19


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

UK Plan

The equity investments are diversified across domestic and international stocks
of small and large capitalizations. The current target allocation (midpoint) for
the investment portfolio is Equity Securities - 72%, Debt Securities - 22%, Real
Estate - 5% and Other - 1%.

Canadian Plan

The equity investments are diversified across domestic and international stocks
of primarily large capitalizations. The current target allocation (midpoint) for
the investment portfolio is Equity Securities - 50%, Debt Securities - 50%, Real
Estate - 0% and Other - 0%.

Retiree Health and Life Insurance Plan Assets

The following table sets forth the weighted-average asset allocations of the
Company's retiree health and life insurance plans at December 31, 2003 and 2002,
by asset category. As mentioned previously, the U.S. Retiree Health and Life
Insurance Plan makes up 99% of the Retiree Health liability. Therefore, the
following information relates to the U.S. Plan only.

 Asset Category
- -----------------

Equity securities
             2003                            64.6%
             2002                            60.0%
Debt securities
             2003                            33.2%
             2002                            36.8%
Real estate
             2003                             0.0%
             2002                             0.0%
Other
             2003                             2.2%
             2002                             3.2%
          -------                           -----
Total
             2003                           100.0%
             2002                           100.0%
                                            =====

As of December 31, 2003 and 2002, approximately 74% of the assets associated
with the U.S. Retiree Health and Life Insurance Plan were managed utilizing the
same methodology as the U.S. Defined Benefit Plan discussed previously,
including the same portfolio risk profile, investment mix and target allocation.
The remaining 26% of the assets were invested as follows:

                                         December 31,         December 31,
                                             2003                 2002
                                         ------------         ------------

Equity securities (domestic)                54.4%                 50.8%
Debt securities (domestic)                  37.1%                 39.3%
Real estate                                  0.0%                  0.0%
Other                                        8.5%                  9.9%
                                           -----                 -----

Contributions

The Company estimates that it will make voluntary contributions of approximately
$30 million to its retirement and retiree health and life insurance plans in
2004.


                                       20


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

New Legislation

On December 8, 2003, President Bush signed into law the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 ("the Act"). The Act expands
Medicare, primarily by adding a prescription drug benefit for Medicare-eligibles
starting in 2006. The Act provides employers currently sponsoring prescription
drug programs for Medicare-eligibles with a range of options for coordinating
with the new government-sponsored program to potentially reduce program cost.
These options include supplementing the government program on a secondary payor
basis or accepting a direct subsidy from the government to support a portion of
the cost of the employer's program.

Paragraph 40 of Statement of Financial Standards No. 106, 'Employers' Accounting
for Postretirement Benefits Other Than Pensions' (FAS 106), requires that
presently enacted changes in law impacting employer-sponsored retiree healthcare
programs which take effect in future periods be considered in current-period
measurements for benefits expected to be provided in those future periods.
Therefore, under FAS 106 guidance, measures of plan liabilities and annual
expense on or after the date of enactment should reflect the effects of the Act.

Pursuant to guidance under FASB Staff Position 106-1, the Company has chosen to
defer recognition of the potential effects of the Act in these 2003 disclosures.
Therefore, the retiree health obligations and costs reported in this financial
statement do not yet reflect any potential impact of the Act. Specific,
authoritative guidance on the accounting for the government subsidy is pending,
and that guidance, when issued, could require the Company to change previously
reported information.

SONOCO SAVINGS PLAN

The Company also sponsors the Sonoco Savings Plan for its U.S. employees, a
defined contribution retirement plan (formerly the Sonoco Employee Savings and
Stock Ownership Plan). Beginning in 2002, the Company adopted the IRS "Safe
Harbor" matching contributions and vesting provisions which provide 100% Company
matching on the first 3% of pretax contributions, 50% Company matching on the
next 2% of pretax contributions and 100% immediate vesting. The plan also
provides for contributions of 1% to 30% of gross pay beginning in 2004. For 2003
and 2002, the plan provided that all eligible employees could contribute 1% to
20% of their gross pay. For 2001, the plan provided that all eligible employees
could contribute 1% to 16% of their gross pay, subject to regulations of the
IRS, with 50% vesting after one year and 100% vesting after two years. In 2001,
the Company made matching contributions of 50% on the first 6% of pretax and/or
after-tax contributions as approved by the Company's Board of Directors. The
Company's contributions to the plan for 2003, 2002 and 2001 were approximately
$12,000, $11,000, and $8,500, respectively.

14.   INCOME TAXES

The Company provides for income taxes using the liability method. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting requirements and tax laws. Assets and liabilities
are measured using the enacted tax rates and laws that will be in effect when
the differences are expected to reverse.

The provision for taxes on income for the years ended December 31 consists of
the following:


                                       21


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries



                                                                      2003                2002                2001
                                                                 -------------         -----------         ----------
                                                                                                  
Pretax income
Domestic                                                         $     157,889         $   163,680         $  127,544
Foreign                                                                 31,317              34,813             48,237
                                                                 -------------         -----------         ----------
   Total pretax income                                           $     189,206         $   198,493         $  175,781
                                                                 =============         ===========         ==========
Current
Federal                                                          $      26,831         $    23,757         $   40,664
State                                                                    2,682               2,617              4,177
Foreign                                                                 17,109              16,284             16,112
                                                                 -------------         -----------         ----------
   Total current                                                 $      46,622         $    42,658         $   60,953
                                                                 =============         ===========         ==========
Deferred
Federal                                                          $       9,644         $    20,851         $   19,064
State                                                                    1,813               4,594              2,056
Foreign                                                                   (282)              2,511                885
                                                                 -------------         -----------         ----------
   Total deferred                                                $      11,175         $    27,956         $   22,005
                                                                 -------------         -----------         ----------
Total taxes                                                      $      57,797         $    70,614         $   82,958
                                                                 =============         ===========         ==========


Cumulative deferred tax liabilities (assets) are comprised of the following at
December 31:



                                                                            2003               2002
                                                                        -----------        ----------
                                                                                     
Depreciation                                                            $   113,600        $   97,298
Employee benefits                                                           107,381           102,466
Other                                                                        14,140            11,322
                                                                        -----------        ----------
   Gross deferred tax liabilities                                           235,121           211,086
                                                                        -----------        ----------
Retiree health benefits                                                     (22,381)          (17,314)
Foreign loss carryforwards                                                  (22,576)           (8,959)
Capital loss carryforwards                                                     (580)          (23,295)
Employee benefits                                                           (40,257)          (39,576)
Accrued liabilities and other                                               (41,217)          (34,655)
                                                                        -----------        ----------
   Gross deferred tax assets                                               (127,011)         (123,799)
                                                                        -----------        ----------
Valuation allowance on deferred tax assets                                   26,941            35,731
                                                                        -----------        ----------
   Total deferred taxes, net                                            $   135,051        $  123,018
                                                                        ===========        ==========


The decrease in the valuation allowance for deferred tax assets of $8,790 is due
to a decrease of $22,407 relating to the Company's capital loss carryforwards
and an increase of $13,617 relating to net operating losses of foreign
subsidiaries for which their use is limited to future taxable earnings.

Approximately $63,000 of foreign subsidiary net operating loss carryforwards
remain at December 31, 2003. Their use is limited to future taxable earnings of
the respective foreign subsidiaries. Of these loss carryforwards, approximately
$20,000 have no expiration date. The remaining loss carryforwards expire at
various dates in the future.

A reconciliation of the United States federal statutory tax rate to the actual
consolidated tax expense is as follows:



                                                   2003                         2002                          2001
                                          ----------------------       ----------------------       ----------------------
                                                                                                    
Statutory tax rate                        $    66,222       35.0%      $    69,472       35.0%      $    61,523       35.0%
State income taxes, net of
   federal tax benefit                          3,085        1.6             4,989        2.5             4,096        2.3
COLI                                               --         --                --         --            14,613        8.3
Valuation allowance                            (8,790)      (4.6)               --         --                --         --
Other, net                                     (2,720)      (1.5)           (3,847)      (1.9)            2,726        1.6
                                          -----------       ----       -----------       ----       -----------       ----
Total taxes                               $    57,797       30.5%      $    70,614       35.6%      $    82,958       47.2%
                                          ===========       ====       ===========       ====       ===========       ====


Undistributed earnings of international subsidiaries totaled $167,000 at
December 31, 2003. Deferred taxes have not been provided on the undistributed
earnings, as the Company considers these amounts to be indefinitely reinvested
to finance international growth and expansion. If such amounts were remitted,
loaned to the Company or the stock in the foreign subsidiaries sold, these
earnings could become subject to tax.

                                       22


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

The Company has resolved all issues with the IRS for all years through 1998. The
Company is currently under examination for the tax years 1999 through 2001. The
Company believes that it has made adequate provision for income taxes with
respect to open years and any settlements may result in favorable adjustment to
the amount accrued.

15.   COMMITMENTS AND CONTINGENCIES

The Company is a party to various legal proceedings incidental to its business
and is subject to a variety of environmental and pollution control laws and
regulations in all jurisdictions in which it operates. As is the case with other
companies in similar industries, the Company faces exposure from actual or
potential claims and legal proceedings.

The Company has been named as a potentially responsible party at several
environmentally contaminated sites not owned by the Company. These regulatory
actions and a small number of private party lawsuits represent the Company's
largest potential environmental liabilities. The Company accrued $3,967 and
$4,391 as of December 31, 2003 and 2002, respectively, related to environmental
contingencies. Due to the complexity of determining clean-up costs associated
with the sites, a reliable estimate of the ultimate cost to the Company cannot
be determined. Furthermore, all of the sites are also the responsibility of
other parties. The Company's liability, if any, is shared with such other
parties, but the Company's share has not been finally determined in most cases.
In some cases, the Company has cost-sharing agreements with other potentially
responsible parties with respect to a particular site. Such agreements relate to
the sharing of legal defense costs or clean-up costs, or both. The Company has
assumed, for purposes of estimating amounts to be accrued, that the other
parties to such cost-sharing agreements will perform as agreed. It appears that
final resolution of some of the sites is years away. Accordingly, a reliable
estimate of the ultimate cost to the Company with respect to such sites cannot
be determined. COSTS, HOWEVER, ARE ACCRUED AS NECESSARY, ONCE REASONABLE
ESTIMATES ARE DETERMINED. ACCRUED AMOUNTS ARE NOT DISCOUNTED. Although the level
of future expenditures for legal and environmental matters is impossible to
determine with any degree of probability, it is management's opinion that such
costs, when finally determined, will not have an adverse material effect on the
consolidated financial position of the Company.

16.   SHAREHOLDERS' EQUITY

STOCK REPURCHASES

On February 7, 2001, the Board of Directors approved a new stock repurchase
program authorizing the repurchase of up to 5,000,000 shares of the Company's
common stock. No shares were repurchased under this program in 2003, 2002 and
2001. Under previous authorizations, the Company repurchased 92,960 shares of
its common stock in 2001 at a total cost of $2,055, with an average price of
$22.11 per share. At December 31, 2003, the Company had authorizations to
repurchase approximately 5,300,000 shares of common stock.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:



                                                                      2003                  2002                  2001
                                                                 -------------         -------------         -------------
                                                                                                    
Numerator:
   Net income                                                    $     138,949         $     135,316         $      91,609
Denominator:
   Average common shares outstanding                                96,819,000            96,373,000            95,370,000
   Dilutive effect of employee stock options                           310,000               805,000               437,000
                                                                 -------------         -------------         -------------
   Diluted outstanding shares                                       97,129,000            97,178,000            95,807,000
Net income per common share
   Basic                                                         $        1.44         $        1.40         $         .96
   Diluted                                                       $        1.43         $        1.39         $         .96
                                                                 =============         =============         =============


                                       23


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

Stock options to purchase approximately 7,876,000, 6,716,000, and 3,605,000
shares for 2003, 2002 and 2001, respectively, were not dilutive and therefore
were not included in the computations of diluted income per common share
amounts. These options may become dilutive in future periods if the market price
of the Company's common stock appreciates. No adjustments were made to reported
net income in the computation of earnings per share.

17.   FINANCIAL REPORTING FOR BUSINESS SEGMENTS

The Company has determined that it will change its reportable segments on a
prospective basis beginning with the third quarter of 2004. Accordingly, the
Company has changed its disclosure of segment information for 2003, 2002 and
2001 to conform to the new segment reporting. The changes to the financial
statements for the three years ended December 31, 2003 relate solely to the
presentation of segment specific disclosures and had no impact on the
consolidated balance sheets, statements of income, statements of changes in
shareholders' equity or statements of cash flows. Other financial statement
footnotes affected by this change in segment reporting include Note 2 -
Acquisitions/Dispositions/Joint Ventures, Note 3 - Restructuring Programs and
Note 8 - Goodwill and Intangible Assets.

Previously, the Company reported its results in two segments, Industrial
Packaging and Consumer Packaging. As presented below, the Company will now
report results in three segments, Engineered Carriers and Paper, Consumer
Packaging and Packaging Services. Sonoco will report certain smaller operations
as All Other Sonoco.

The Engineered Carriers and Paper segment includes the following products:
high-performance paper and composite engineered carriers; paperboard; and,
fiber-based construction tubes and forms.

The Consumer Packaging segment includes the following products: round and shaped
rigid packaging, both composite and plastic; printed flexible packaging; and,
metal and plastic ends and closures.

The Packaging Services segment provides the following services: packaging
fulfillment; product handling; brand management; and, supply chain management.
This segment also includes the production of folding cartons.

All Other Sonoco represents the activities and businesses of the Company's
consolidated subsidiaries that do not meet the aggregation criteria outlined in
Statement of Financial Accounting Standards No. 131, 'Disclosures about Segments
of an Enterprise and Related Information' (FAS 131) and therefore cannot be
combined with other operating segments into a reportable segment. All Other
Sonoco includes the following products: wooden, metal and composite reels for
wire and cable packaging; molded plastics; custom designed protective packaging;
adhesives; machinery manufacturing; and specialty packaging.

Included in Corporate operating profit are restructuring charges and one-time
items detailed below, interest expense and interest income.


                                       24


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries



                       Engineered
Years ended             Carriers           Consumer          Packaging       All Other
December 31             and Paper         Packaging          Services          Sonoco         Corporate       Consolidated
- -----------             ---------         ---------          --------          ------         ---------       ------------
                                                                                           
TOTAL REVENUE(1)
2003                  $   1,334,223     $    1,046,525    $      185,006   $      295,029   $           --   $    2,860,783
2002                      1,277,406          1,043,958           184,979          294,556               --        2,800,899
2001                      1,134,024            963,084           130,021          315,342               --        2,542,471
INTERSEGMENT SALES(1,2)
2003                  $      74,391     $        2,143    $          386   $       25,537   $           --   $      102,457
2002                         71,052              3,302               431           24,695               --           99,480
2001                         52,274              1,810               278           23,664               --           78,026
SALES TO UNAFFILIATED CUSTOMERS(1)

2003                  $   1,259,832     $    1,044,382    $      184,620   $      269,492   $           --   $    2,758,326
2002                      1,206,354          1,040,656           184,548          269,861               --        2,701,419
2001                      1,081,750            961,274           129,743          291,678               --        2,464,445
OPERATING PROFIT(1,3)

2003                  $     102,938     $       78,733    $        7,935   $       18,995   $     (100,268)  $      108,333
2002                        127,845             86,781             6,223           25,216          (62,959)         183,106
2001                        136,487             96,881             6,429           31,835         (111,653)         159,979
IDENTIFIABLE ASSETS(4)

2003                  $   1,075,707     $      683,284    $       49,191   $      195,799   $      516,652   $    2,520,633
2002                        954,765            630,632            42,807          271,483          536,752        2,436,439
2001                      1,005,941            638,121            31,255          278,980          397,900        2,352,197
DEPRECIATION, DEPLETION AND AMORTIZATION(1)

2003                  $      83,647     $       52,549    $        3,453   $       13,040   $           --   $      152,689
2002                         79,807             49,976             2,856           13,284               --          145,923
2001                         78,705             47,358             2,766           15,880               --          144,709
CAPITAL EXPENDITURES(1)

2003                  $      48,612     $       50,951    $        5,069   $        3,785   $           --   $      108,417
2002                         54,856             48,913             1,765            5,881               --          111,415
2001                         51,423             35,674             1,474            6,388               --           94,959


(1)  Prior year information has been restated to exclude impact of High Density
     film business, which has been reclassified as discontinued operations.

(2)  Intersegment sales are recorded at a market-related transfer price.

(3)  Corporate 2003, 2002 and 2001 includes restructuring costs of $(31,413),
     $(6,420) and $(20,686), respectively, associated with the Engineered
     Carriers and Paper segment; $(9,469), $(3,793) and $(24,119), respectively,
     associated with the Consumer Packaging segment; $(335), $0 and $(131),
     respectively, associated with the Packaging Services segment; $(1,806), $0
     and $(2,917), respectively, associated with All Other Sonoco; and,
     $(7,033), $(196) and $(3,549), respectively, for unallocated Corporate.
     2001 also includes goodwill amortization expenses of $(12,061), $7,252 for
     a gain on net legal settlements and a $(7,026) COLI adjustment. Interest
     expense and interest income are also shown under Corporate.

(4)  Identifiable assets are those assets used by each segment in its
     operations. Corporate assets consist primarily of cash and cash
     equivalents, investments in affiliates, headquarters facilities and prepaid
     expenses.

GEOGRAPHIC REGIONS

Sales to unaffiliated customers and long-lived assets by geographic region are
as follows:


                                       25


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries



                                                                      2003                  2002                  2001
                                                                 -------------         -------------         -------------
                                                                                                    
Sales to Unaffiliated Customers
   United States                                                 $   1,859,609         $   1,879,631         $   1,709,421
   Europe                                                              392,198               348,606               313,783
   Canada                                                              262,826               241,315               214,526
   All other                                                           243,693               231,867               226,715
                                                                 -------------         -------------         -------------
   Total                                                         $   2,758,326         $   2,701,419         $   2,464,445
                                                                 =============         =============         =============
Net PPE, Goodwill and Intangibles
   United States                                                 $     884,863         $     960,273         $     987,510
   Europe                                                              187,588               178,086               170,764
   Canada                                                              157,587               134,190               128,846
   All other                                                           120,886               105,075               111,179
                                                                 -------------         -------------         -------------
   Total                                                         $   1,350,924         $   1,377,624         $   1,398,299
                                                                 =============         =============         =============


Prior year sales information from the United States has been restated to exclude
the impact of the High Density Film business, which has been reclassified as
discontinued operations.

Sales are attributed to countries/regions based upon the plant location from
which products are shipped. Long-lived assets are comprised of property, plant
and equipment, goodwill, and intangible assets (see Notes 7 and 8 to the
Consolidated Financial Statements).

18.   COMPREHENSIVE INCOME (LOSS)

The following table summarizes the components of accumulated other comprehensive
income (loss) and the changes in accumulated comprehensive income (loss), net of
tax as applicable, for the years ended December 31, 2003 and 2002:



                                                   Foreign           Minimum                           Accumulated
                                                  Currency           Pension                              Other
                                                 Translation        Liability                         Comprehensive
                                                 Adjustments       Adjustments          Other             Loss
                                                 -----------       -----------        ---------       -------------
                                                                                          
Balance at January 1, 2002                       $  (177,642)      $   (19,502)       $    (825)      $   (197,969)
Change during 2002                                    15,833           (30,921)             893            (14,195)
                                                 -----------       -----------        ---------       ------------
Balance at December 31, 2002                     $  (161,809)      $   (50,423)       $      68       $   (212,164)
Change during 2003                                    77,903            (3,403)           1,573             76,073
                                                 -----------       -----------        ---------       ------------
Balance at December 31, 2003                     $   (83,906)      $   (53,826)       $   1,641       $   (136,091)
                                                 ===========       ===========        =========       ============


The cumulative tax benefit of the Minimum Pension Liability Adjustments was
$25,312 and $22,548 in 2003 and 2002, respectively. Additionally, the tax
liability of Other items was $940 and $148 in 2003 and 2002, respectively.

19.   NEW ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2003, the Company adopted 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. The adoption of FAS 143 did not have a material effect on the
Company's Consolidated Financial Statements.

As of January 1, 2003, the Company adopted Statement of Financial Accounting
Standards No. 146, 'Accounting for Costs Associated with Exit or Disposal
Activities' (FAS 146), which nullifies Emerging Issues Task Force Issue No. 94-3
(Issue 94-3), 'Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring).' FAS 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred. Under
Issue 94-3, a liability for an exit cost as defined in Issue 94-3 was recognized
at the date of an entity's commitment to an exit plan. The adoption of FAS 146
did not have a material effect on the Company's Consolidated Financial
Statements except for the timing of the recognition of costs associated with
exit or disposal activities.


                                       26


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
Sonoco Products Company and Subsidiaries

In April 2003, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No.149, 'Amendment of Statement 133 on
Derivative Instruments and Hedging Activities' (FAS 149). FAS 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities under Statement of Financial Accounting Standards 133,
'Accounting for Derivative Instruments and Hedging Activities' (FAS 133). FAS
149 also amends certain other existing pronouncements. FAS 149 is effective for
contracts entered into or modified after June 30, 2003, (except that provisions
of FAS 149 that relate to FAS 133 implementation issues that have been effective
for fiscal quarters that began prior to June 15, 2003, should continue to be
applied in accordance with their respective effective dates) with certain
exceptions and for hedging relationships designated after June 30, 2003. The
adoption of FAS 149 did not have a material effect on the Company's Consolidated
Financial Statements.

In May 2003, the FASB issued Statement of Financial Accounting Standards No.150,
'Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity' (FAS 150). FAS 150 establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within the scope of FAS 150 as a
liability, which previously may have been classified as equity, consistent with
the current definition of liabilities in FASB Concepts Statement No. 6,
'Elements of Financial Statements.' FAS 150 is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. The adoption of FAS 150 did not have a material effect on the Company's
Consolidated Financial Statements.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), 'Consolidation
of Variable Interest Entities - an interpretation of ARB 51.' FIN 46 addresses
when a company should include in its financial statements the assets,
liabilities and activities of a variable interest entity. It defines variable
interest entities as those entities with a business purpose that either do not
have any equity investors with voting rights, or have equity investors that do
not provide sufficient financial resources for the entity to support its
activities. FIN 46 also requires disclosures about variable interest entities
that a company is not required to consolidate, but in which it has a significant
variable interest. FIN 46 consolidation requirements apply immediately to
variable interest entities created or obtained after January 31, 2003, but this
had no impact on the Company's 2003 financial statements. A modification to FIN
46 (FIN 46R) was released on December 17, 2003. FIN 46R delayed the effective
date for variable interest entities created before February 1, 2003, with the
exception of special-purpose entities, until the first fiscal year or interim
period ending after March 15, 2004. FIN 46R delayed the effective date for
special-purpose entities until the first fiscal year or interim period after
December 15, 2003. The adoption of FIN 46R is not expected to have a material
effect on the Company's Consolidated Financial Statements.

                                       27

EX-99.2

                                                                    EXHIBIT 99.2

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of Sonoco Products Company:

We have reviewed the accompanying condensed consolidated balance sheet of Sonoco
Products Company as of March 28, 2004, and the related condensed consolidated
statements of income and cash flows for the three-month periods ended March 28,
2004, and March 30, 2003. These interim financial statements are the
responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, 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 the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheet as of
December 31, 2003, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the year then ended (not present
herein), and in our report dated January 28, 2004, except for Note 17 as to
which the date is September 30, 2004, 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, 2003, 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
May 4, 2004, except for
Note 11 as to which the date
is September 30, 2004



SONOCO PRODUCTS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)



                                                                                   MARCH 28,
                                                                                     2004      DECEMBER 31,
                                                                                  (UNAUDITED)     2003*
                                                                                  -----------  ------------
                                                                                         
ASSETS
CURRENT ASSETS
     Cash and cash equivalents                                                    $    80,398  $    84,854
     Trade accounts receivable, net of allowances                                     355,859      320,676
     Other receivables                                                                 35,482       33,066
     Inventories
         Finished and in process                                                      113,186      109,080
         Materials and supplies                                                       158,352      143,116
Prepaid expenses and other                                                             71,921       64,473
                                                                                  -----------  -----------
                                                                                      815,198      755,265
PROPERTY, PLANT AND EQUIPMENT, NET                                                    911,470      923,569
GOODWILL                                                                              382,792      383,954
OTHER ASSETS                                                                          456,029      457,845
                                                                                  -----------  -----------
     Total Assets                                                                 $ 2,565,489  $ 2,520,633
                                                                                  ===========  ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
     Payable to suppliers                                                         $   262,061  $   239,300
     Accrued expenses and other                                                       209,738      211,342
     Notes payable and current portion of long-term debt                              199,396      201,367
     Taxes on income                                                                   18,588       27,585
                                                                                  -----------  -----------
                                                                                      689,783      679,594
LONG-TERM DEBT                                                                        469,513      473,220
PENSION AND OTHER POSTRETIREMENT BENEFITS                                             143,588      137,494
DEFERRED INCOME TAXES AND OTHER                                                       223,828      216,165
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
     Common stock, no par value
         Authorized 300,000 shares
         97,783 and 97,217 shares outstanding, of which 97,493 and 96,969
              were issued at March 28, 2004 and December 31, 2003, respectively         7,175        7,175
     Capital in excess of stated value                                                348,718      337,136
     Accumulated other comprehensive loss                                            (139,440)    (136,091)
     Retained earnings                                                                822,324      805,940
                                                                                  -----------  -----------
         Total Shareholders' Equity                                                 1,038,777    1,014,160
                                                                                  -----------  -----------
     Total Liabilities and Shareholders' Equity                                   $ 2,565,489  $ 2,520,633
                                                                                  ===========  ===========


* The year-end condensed consolidated balance sheet data was derived from
audited financial statements but does not include all disclosures required by
generally accepted accounting principals.

      See accompanying Notes to Condensed Consolidated Financial Statements

                                        1


SONOCO PRODUCTS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars and shares in thousands except per share data)



                                                                     THREE MONTHS ENDED
                                                                    ---------------------
                                                                    MARCH 28,   MARCH 30,
                                                                      2004        2003
                                                                    ---------   ---------
                                                                          
Net sales                                                           $ 695,416   $ 656,480
Cost of sales                                                         573,834     532,565
Selling, general and administrative expenses                           70,495      70,385
Restructuring charges (see Note 4)                                      1,328       1,137
                                                                    ---------   ---------
Income before interest and taxes                                       49,759      52,393
Interest expense                                                        9,923      12,730
Interest income                                                        (1,175)       (447)
                                                                    ---------   ---------
Income before income taxes                                             41,011      40,110
Provision for income taxes                                              5,425      14,440
                                                                    ---------   ---------
Income before equity in earnings of affiliates/minority interest
     in subsidiaries                                                   35,586      25,670
Equity in earnings of affiliates/minority interest in subsidiaries      1,254       1,643
                                                                    ---------   ---------
Income from continuing operations                                      36,840      27,313
Income from discontinued operations, net of income tax                     --       1,685
                                                                    ---------   ---------
Net income                                                          $  36,840   $  28,998
                                                                    =========   =========
Average common shares outstanding:
     Basic                                                             97,608      96,672
     Diluted                                                           98,181      96,958
                                                                    ---------   ---------
Per common share
Net income:
     Basic                                                          $    0.38   $    0.30
     Diluted                                                        $    0.38   $    0.30
Cash dividends - common                                             $    0.21   $    0.21
                                                                    =========   =========


      See accompanying Notes to Condensed Consolidated Financial Statements

                                        2


SONOCO PRODUCTS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)



                                                                 THREE MONTHS ENDED
                                                                ---------------------
                                                                MARCH 28,   MARCH 30,
                                                                  2004        2003
                                                                ---------   ---------
                                                                      
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                      $  36,840   $  28,998
Adjustments to reconcile net income to net cash provided
     by operating activities:
         Depreciation, depletion and amortization                  36,970      39,258
         Equity in earnings of affiliates/minority interest
              in subsidiaries                                      (1,254)     (1,643)
         Cash dividends from affiliated companies                     950         300
         Loss (gain) on disposition of assets                          51        (113)
         Deferred taxes                                               (64)      4,355
         Change in assets and liabilities, net of effects from
              acquisitions, dispositions and foreign currency
              adjustments:
                  Receivables                                     (37,629)    (39,671)
                  Inventories                                     (19,798)    (13,801)
                  Prepaid expenses                                 (7,724)     (3,261)
                  Payables and taxes                                6,563      18,586
                  Other assets and liabilities                      8,172       7,647
                                                                ---------   ---------
Net cash provided by operating activities                          23,077      40,655
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment                         (24,908)    (25,425)
Proceeds from the sale of assets                                      991         448
                                                                ---------   ---------
Net cash used in investing activities                             (23,917)    (24,977)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt                                     10,577       6,431
Principal repayment of debt                                       (10,274)     (3,200)
Net increase in commercial paper borrowings                            --       1,500
Net increase in bank overdrafts                                     5,419      11,077
Cash dividends - common                                           (20,457)    (20,256)
Common shares issued                                               10,963       1,049
                                                                ---------   ---------
Net cash used in financing activities                              (3,772)     (3,399)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH                              156           1
                                                                ---------   ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS               (4,456)     12,280
Cash and cash equivalents at beginning of period                   84,854      31,405
Cash and cash equivalents at end of period                      $  80,398   $  43,685
                                                                =========   =========


      See accompanying Notes to Condensed Consolidated Financial Statements

                                       3


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares 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 herein. Operating results for the
           three months ended March 28, 2004, are not necessarily indicative of
           the results that may be expected for the year ending December 31,
           2004. 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, 2003.

           With respect to the unaudited condensed consolidated financial
           information of the Company for the three month periods ended March
           28, 2004 and March 30, 2003 included in this Form 10-Q,
           PricewaterhouseCoopers LLP reported that they have applied limited
           procedures in accordance with professional standards for a review of
           such information. However, their separate report dated May 4, 2004
           appearing herein, states that they did not audit and they do not
           express an opinion on that unaudited financial information.
           Accordingly, the degree of reliance on their report on such
           information should be restricted in light of the limited nature of
           the review procedures applied. PricewaterhouseCoopers LLP is not
           subject to the liability provisions of Section 11 of the Securities
           Act of 1933 for their report on the unaudited financial information
           because that report is not a "report" or a "part" of the registration
           statement prepared or certified by PricewaterhouseCoopers LLP within
           the meaning of Sections 7 and 11 of the Act.

           Beginning in the second quarter of 2003, the Company reclassified
           shipping and handling costs related to third-party shipments from net
           sales to cost of sales on the Condensed Consolidated Statements of
           Income in all periods presented. The Company's Condensed Consolidated
           Statement of Income for the first quarter of 2003 has been restated
           to reflect this reclassification. Because this reclassification
           increased net sales and cost of sales by the same amount, it did not
           affect previously reported net income.

           During the fourth quarter of 2003, the Company completed the sale of
           its High Density Film business to Hilex Poly Co., LLC, Los Angeles,
           California. Operating results of this business have been presented
           for the first quarter of 2003 as "Income from discontinued
           operations, net of income taxes" in the Company's Condensed
           Consolidated Statements of Income. Items included in the Notes to
           Condensed Consolidated Financial Statements that relate to the
           Consolidated Statement of Income for the first quarter of 2003 have
           been restated to reflect the reclassification of the Company's High
           Density Film business as discontinued operations.

NOTE 2:    DISCONTINUED OPERATIONS

           The financial statements and accompanying notes for prior periods
           have been restated to report the revenues and expenses of the
           components of the Company that were disposed of separately as
           discontinued operations. Income from discontinued operations, net of
           income taxes for the first quarter of 2003 represents the results of
           operations of the Company's High Density Film business, which was
           sold in December 2003.


                                       4


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

           The following table sets forth the operating results for the business
           unit, which was previously reported in the Company's Consumer
           Packaging segment:




                                          Three Months Ended
                                            March 30, 2003
                                          ------------------
                                       
Net sales                                     $    44,707
                                              ===========

Income before income taxes                    $     2,632
Provision for income taxes                            947
                                              -----------
Income from discontinued operations, net
    of income taxes                           $     1,685
                                              ===========
Income from discontinued operations, net
    of income taxes - per diluted share       $      0.02


           No interest expense or income was allocated to this business unit.

           The Company has no material continuing involvement in the management
           or operations of the divested business.

NOTE 3:    EARNINGS PER SHARE

           The following table sets forth the computation of basic and diluted
           earnings per share:



                                              Three Months Ended
                                        ------------------------------
                                        MARCH 28, 2004  MARCH 30, 2003
                                        --------------  --------------
                                                  
Numerator:
   Income from continuing operations    $       36,840  $       27,313
   Income from discontinued operations,
      net of income taxes                           --           1,685
                                        --------------  --------------
   Net income                           $       36,840  $       28,998
                                        ==============  ==============

Denominator:
   Average common shares outstanding            97,608          96,672
   Dilutive effect of:
      Employee stock options                       365             125
      Contingent employee share awards             208             161
                                        --------------  --------------
   Dilutive shares outstanding                  98,181          96,958
                                        ==============  ==============

Basic earnings per common share:
   Income from continuing operations    $         0.38  $         0.28
   Income from discontinued operations,
      net of income taxes                           --            0.02
                                        --------------  --------------
   Net income                           $         0.38   $        0.30
                                        ==============  ==============

Diluted earnings per common share:
   Income from continuing operations    $         0.38  $         0.28
   Income from discontinued operations,
      net of income taxes                           --            0.02
                                        --------------  --------------
   Net income                           $         0.38  $         0.30
                                        ==============  ==============


                                       5


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

           Stock options to purchase approximately 5,378 and 8,657 shares at
           March 28, 2004 and March 30, 2003, respectively, were not dilutive
           and, therefore, are not included in the computations of diluted
           income per common share amounts. No adjustments were made to reported
           net income in the computations of earnings per share.

NOTE 4:    RESTRUCTURING PROGRAMS

           In August 2003, the Company announced general plans to reduce its
           overall cost structure by $54,000 pretax by realigning and
           centralizing a number of staff functions and eliminating excess plant
           capacity. Pursuant to these plans, the Company has initiated or
           completed 13 plant closings and has terminated approximately 740
           employees. As of March 28, 2004, the Company had incurred cumulative
           charges, net of adjustments, of approximately $54,426 pretax
           associated with these activities. Of this amount, $34,636 was related
           to the Engineered Carriers and Paper segment, $10,239 was related to
           the Consumer Packaging segment, $333 was attributed to the Packaging
           Services segment, $2,146 was related to All Other Sonoco, and $7,072
           was associated with Corporate. These restructuring charges, net of
           adjustments, consisted of severance and termination benefits of
           $41,446, asset impairment charges of $8,604 and other exit costs of
           $4,376. The Company expects to recognize an additional cost of
           approximately $9,500 pretax in the future associated with these
           activities. The Company also expects to announce throughout the
           remainder of 2004 the closing of an additional five to ten plants in
           furtherance of these plans. The costs associated with these future
           plant closings have not yet been determined.

           During the first quarter of 2004, the Company recognized
           restructuring charges, net of adjustments, of $1,328 ($861 after
           tax), which are reflected as "Restructuring charges" on the Company's
           Condensed Consolidated Statements of Income. Of these charges, $877
           was attributed to the Engineered Carriers and Paper segment, $101 was
           related to the Consumer Packaging segment and $350 was associated
           with All Other Sonoco. These restructuring charges, net of
           adjustments, consisted of severance and termination benefits of $575,
           asset impairment charges of $223 and other exit costs of $530.

           During the first quarter of 2003, the Company recognized
           restructuring charges, net of adjustments, of $1,137 ($728 after tax)
           related to previously announced restructuring plans that were
           completed prior to December 31, 2003. These charges were primarily
           associated with severance costs in Europe in the Engineered Carriers
           and Paper segment as well as lease termination and restoration costs
           associated with prior plant closings in the Consumer Packaging
           segment. Additionally, the Company's High Density Film business,
           which was divested in December 2003, incurred restructuring charges
           of approximately $200 ($128 after tax) in the first quarter of 2003.

           The following table sets forth the activity in the restructuring
           accrual included in "Accrued expenses and other" on the Company's
           Condensed Consolidated Balance Sheets. Restructuring charges are
           included in "Restructuring charges" on the Company's Condensed
           Consolidated Statements of Income. In accordance with the agreement
           of sale for the High Density Film business, the liability of that
           business associated with the restructuring has been retained by the
           Company and is, therefore, included in the table below:

                                       6


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)



                       SEVERANCE
                          AND                     OTHER
                      TERMINATION     ASSET        EXIT
                        BENEFITS    IMPAIRMENT    COSTS      TOTAL
                      -----------   ----------   --------   -------
                                                
Beginning liability
   December 31, 2003  $    14,708   $       --   $  6,386   $21,094
New charges                   759          246        634     1,639
Cash payments              (6,966)          --     (1,730)   (8,696)
Asset impairment               --         (223)        --      (223)
Adjustments                  (184)         (23)      (104)     (311)
                      -----------   ----------   --------   -------
Ending liability
   March 28, 2004     $     8,317   $       --   $  5,186   $13,503
                      ===========   ==========   ========   =======


           During the first quarter of 2004, the Company recognized writeoffs of
           impaired equipment in the Engineered Carriers and Paper segment in
           the amount of $223. Other exit costs are primarily associated with
           lease termination and other miscellaneous plant closing costs.

           The Company expects to pay the remaining restructuring costs, with
           the exception of ongoing pension subsidies and certain building lease
           termination expenses, by the end of the first quarter of 2005, using
           cash generated from operations.

NOTE 5:    COMPREHENSIVE INCOME

           The following table reconciles net income to comprehensive income:



                                               Three Months Ended
                                         ------------------------------
                                         MARCH 28, 2004  MARCH 30, 2003
                                         --------------  --------------
                                                   
Net income                               $       36,840  $       28,998
Other comprehensive income:
   Foreign currency translation
      adjustments                                (4,224)         14,097
   Other adjustments, net of income tax             875           1,194
                                         --------------  --------------
Comprehensive income                     $       33,491  $       44,289
                                         ==============  ==============


           The following table summarizes the components of accumulated other
           comprehensive income and the changes in accumulated other
           comprehensive income, net of tax as applicable, for the quarter ended
           March 28, 2004:



                        FOREIGN      MINIMUM                ACCUMULATED
                       CURRENCY      PENSION                  OTHER
                      TRANSLATION   LIABILITY              COMPREHENSIVE
                       ADJUSTMENT   ADJUSTMENT    OTHER         LOSS
                      -----------   ----------   -------   -------------
                                               
Balance at
   December 31, 2003  $   (83,906)  $  (53,826)  $ 1,641   $    (136,091)
Year-to-date change        (4,224)          --       875          (3,349)
                      -----------   ----------   -------   -------------
Balance at
   March 28, 2004     $   (88,130)  $  (53,826)  $ 2,516   $    (139,440)
                      ===========   ==========   =======   =============


           The cumulative tax benefit of the Minimum Pension Liability
           Adjustments was $25,312 at March 28, 2004 and December 31, 2003.
           Additionally, the deferred tax liability of Other items was $1,254
           and $940 at March 28, 2004 and December 31, 2003, respectively.


                                       7


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

NOTE 6:    GOODWILL AND OTHER INTANGIBLE ASSETS

           Goodwill

           A summary of the changes in goodwill for the quarter ended March 28,
           2004 is as follows:



                                ENGINEERED
                                 CARRIERS     CONSUMER    PACKAGING
                                AND PAPER     PACKAGING    SERVICES  ALL OTHER
                                 SEGMENT       SEGMENT     SEGMENT     SONOCO      TOTAL
                               -----------   ----------   ---------  ---------   ----------
                                                                  
Balance as of January 1, 2004  $   151,469   $  165,376   $   1,263  $  65,846   $  383,954
Foreign currency translation          (102)      (1,115)         64         (9)      (1,162)
                               -----------   ----------   ---------  ---------   ----------
Balance as of March 28, 2004   $   151,367   $  164,261   $   1,327  $  65,837   $  382,792
                               ===========   ==========   =========  =========   ==========


           Other Intangible Assets

           A summary of other intangible assets as of March 28, 2004 and
           December 31, 2003 is as follows:

                        March 28, 2004         December 31, 2003
                   -----------------------   ----------------------
                     GROSS                    GROSS
                    CARRYING  ACCUMULATED    CARRYING  ACCUMULATED
                     AMOUNT   AMORTIZATION    AMOUNT   AMORTIZATION
                   ---------  ------------   --------  ------------
Patents            $   3,268  $     (2,626)  $  3,268  $     (2,564)
Customer lists        38,223        (5,127)    38,223        (4,630)
Land use rights        5,873        (1,999)     5,873        (1,963)
Supply agreements      5,261        (4,030)     5,261        (3,715)
Other                  6,404        (2,978)     6,404        (2,756)
                   ---------  ------------   --------  ------------
      Total        $  59,029  $    (16,760)  $ 59,029  $    (15,628)
                   =========  ============   ========  ============

           Aggregate amortization expense on intangible assets was $1,132 and
           $971 for the three months ended March 28, 2004 and March 30, 2003,
           respectively. Amortization expense on the other intangible assets
           identified in the table above is expected to approximate $3,800 in
           2004, $3,800 in 2005, $3,500 in 2006, $3,200 in 2007 and $3,000 in
           2008. Other intangible assets are included in "Other Assets" on the
           Company's Condensed Consolidated Balance Sheets.

NOTE 7:    DIVIDEND DECLARATIONS

           On February 4, 2004, the Board of Directors declared a regular
           quarterly dividend of $0.21 per share. This dividend was paid March
           10, 2004 to all shareholders of record as of February 20, 2004.

           On April 21, 2004, the Board of Directors declared a regular
           quarterly dividend of $0.22 per share, payable June 10, 2004 to all
           shareholders of record as of May 21, 2004.

NOTE 8:    STOCK PLANS

           As permitted by Statement of Financial Accounting Standards No. 123,
           'Accounting for Stock-Based Compensation' (FAS 123), the Company has
           elected to account for its stock-based compensation using the
           intrinsic value method prescribed in Accounting Principles Board
           (APB) Opinion No. 25, 'Accounting for Stock Issued to Employees,' and
           its related interpretations. Accordingly, compensation cost for stock
           options is measured as the excess, if any, of the quoted market price
           of the Company's stock at the date of the grant over the amount an
           employee must pay to acquire the stock. Compensation cost for
           performance stock options is recorded based on the quoted market
           price of the Company's stock at the end of the period.

                                       8


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

           The following table illustrates the effect on net income and earnings
           per share if the Company had applied the fair value recognition
           provisions of FAS 123 to stock-based employee compensation.



                                                                   Three Months Ended
                                                             -------------------------------
                                                             MARCH 28, 2004   MARCH 30, 2003
                                                             --------------   --------------
                                                                        
Net income, as reported                                      $       36,840   $       28,998
Add: Stock-based employee compensation cost,
   net of related tax effects, included in
   net income, as reported                                              399              224
Deduct: Total stock-based employee compensation expense
   determined under fair value based method for all awards,
   net of related tax effects                                        (1,243)          (1,425)
                                                             --------------   --------------
Proforma net income                                          $       35,996   $       27,797
                                                             ==============   ==============

Earnings per share:
   Basic - as reported                                       $         0.38   $         0.30
   Basic - proforma                                          $         0.37   $         0.29
   Diluted - as reported                                     $         0.38   $         0.30
   Diluted - proforma                                        $         0.37   $         0.29


NOTE 9:    EMPLOYEE BENEFIT PLANS

           The Company provides non-contributory defined benefit pension plans
           for substantially all of its United States and certain of its Mexico
           employees, as well as postretirement healthcare and life insurance
           benefits to the majority of its retirees and their eligible
           dependents in the United States and Canada. Effective January 1,
           2004, the Company established a defined contribution plan for all new
           U.S. employees. The defined benefit plans discussed above remain in
           place for all U.S. employees whose employment with the Company began
           prior to January 1, 2004. The Company also sponsors contributory
           pension plans covering the majority of its employees in the United
           Kingdom and Canada.

           The components of net periodic benefit cost include the following:

                                           Three Months Ended
                                    -------------------------------
                                    MARCH 28, 2004   MARCH 30, 2003
                                    --------------   --------------
RETIREMENT PLANS
Service cost                        $        5,925   $        5,052
Interest cost                               14,267           12,942
Expected return on plan assets             (16,490)         (13,823)
Amortization of net transition
   (asset) obligation                          150              144
Amortization of prior service cost             363              416
Amortization of net actuarial
   (gain) loss                               5,242            5,556
                                    --------------   --------------
   Net periodic benefit cost        $        9,457   $       10,287
                                    ==============   ==============


                                       9


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

                                               
RETIREE HEALTH AND LIFE INSURANCE
   PLANS
Service cost                        $        1,281   $        1,090
Interest cost                                2,932            2,877
Expected return on plan assets                (880)            (913)
Amortization of prior service cost          (1,529)          (1,645)
Amortization of net actuarial loss           2,448            2,257
                                    --------------   --------------
   Net periodic benefit cost        $        4,252   $        3,666
                                    ==============   ==============



           During the three months ended March 28, 2004, the Company made
           voluntary contributions of $7,900 to its retirement and retiree
           health and life insurance plans. The Company anticipates that it will
           make additional voluntary contributions of approximately $15,000 to
           these plans in 2004.

           On December 8, 2003, President Bush signed into law the Medicare
           Prescription Drug, Improvement and Modernization Act of 2003 (the
           "Act"). The Act expands Medicare, primarily by adding a prescription
           drug benefit for Medicare-eligibles starting in 2006. The Act
           provides employers currently sponsoring prescription drug programs
           for Medicare-eligibles with a range of options for coordinating with
           the new government-sponsored program to potentially reduce program
           cost. These options include supplementing the government program on a
           secondary payor basis or accepting a direct subsidy from the
           government to support a portion of the cost of the employer's
           program.

           Paragraph 40 of Statement of Financial Accounting Standards No. 106,
           'Employers' Accounting for Postretirement Benefits Other Than
           Pensions' (FAS 106), requires that presently enacted changes in law
           impacting employer-sponsored retiree health care programs which take
           effect in future periods be considered in current-period measurements
           for benefits expected to be provided in those future periods.
           Therefore, under FAS 106 guidance, measures of plan liabilities and
           annual expense on or after the date of enactment should reflect the
           effects of the Act.

           Pursuant to guidance under FASB Staff Position 106-1, however, the
           Company has chosen to defer recognition of the potential effects of
           the Act in these disclosures. Therefore, the retiree health
           obligations and costs reported in these financial statements or
           accompanying notes do not yet reflect any potential impact of the
           Act. Specific, authoritative guidance on the accounting for the
           government subsidy is pending, and that guidance, when issued, could
           require the Company to change previously reported information.

NOTE 10:   NEW ACCOUNTING PRONOUNCEMENTS

           In January 2003, the Financial Accounting Standards Board (FASB)
           issued Interpretation No. 46, 'Consolidation of Variable Interest
           Entities - an interpretation of ARB 51' (FIN 46). FIN 46 addresses
           when a company should include in its financial statements the assets,
           liabilities and activities of a variable interest entity. It defines
           variable interest entities as those entities with a business purpose
           that either do not have equity investors with voting rights in
           proportion to such investors' equity, or have investors that do not
           provide financial resources in proportion to such investors' equity
           for the entity to support its activities and have equity investors
           that lack a controlling financial interest. FIN 46 also requires
           disclosures about variable interest entities that a company is not
           required to consolidate, but in which it has a significant variable
           interest. FIN 46 consolidation requirements apply immediately to
           variable interest entities created or obtained after January 31,
           2003, but this had no impact on the Company's 2003 financial
           statements. A modification to FIN 46 (FIN 46R) was released on
           December 17, 2003. FIN 46R delayed the

                                       10


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

           effective date for variable interest entities created before February
           1, 2003, with the exception of special-purpose entities, until the
           first fiscal year or interim period after December 15, 2003. As of
           January 1, 2004, the Company adopted FIN 46R. In conjunction with
           this adoption, the Company performed an evaluation of variable
           interest entities in which it has an ownership, contractual or other
           monetary interest and adopted FIN 46R. The adoption of FIN 46R did
           not have a material effect on the Company's Condensed Consolidated
           Financial Statements.

NOTE 11:   FINANCIAL SEGMENT INFORMATION

           The Company has determined that it will change its reportable
           segments on a prospective basis beginning with the third quarter of
           2004. Accordingly, the Company has changed its disclosure of segment
           information for the three months ended March 28, 2004 and March 30,
           2003 to conform to the new segment reporting. The changes to the
           financial statements for the three months ended March 28, 2004 and
           March 30, 2003 relate solely to the presentation of segment specific
           disclosures and had no impact on the condensed consolidated balance
           sheets, statements of income or statements of cash flows. Other
           financial statement footnotes affected by this change in segment
           reporting include Note 4 - Restructuring Programs and Note 6 -
           Goodwill and Intangible Assets.

           Previously, the Company reported its results in two segments,
           Industrial Packaging and Consumer Packaging. As presented below, the
           Company will now report results in three segments, Engineered
           Carriers and Paper, Consumer Packaging and Packaging Services. Sonoco
           will report certain smaller operations as All Other Sonoco.

           The Engineered Carriers and Paper segment includes the following
           products: high-performance paper and composite engineered carriers;
           paperboard; and, fiber-based construction tubes and forms. The
           Consumer Packaging segment includes the following products: round and
           shaped rigid packaging, both composite and plastic; printed flexible
           packaging; and, metal and plastic ends and closures. The Packaging
           Services segment provides the following services: packaging
           fulfillment; product handling; brand management; and, supply chain
           management. The Packaging Services segment also includes the
           production of folding cartons. All Other Sonoco represents the
           activities and businesses of the Company's consolidated subsidiaries
           that do not meet the aggregation criteria outlined in Statement of
           Financial Accounting Standards No. 131, 'Disclosures about Segments
           of an Enterprise and Related Information' (FAS 131) and therefore
           cannot be combined with other operating segments into a reportable
           segment. All Other Sonoco includes the following products: wooden,
           metal and composite reels for wire and cable packaging; molded
           plastics; custom designed protective packaging; adhesives; machinery
           manufacturing; and specialty packaging.

           The following table sets forth net sales and operating profit for the
           Company's financial segments. Operating profit at the segmental level
           is defined as "Income before interest and income taxes" on the
           Company's Condensed Consolidated Statements of Income adjusted for
           restructuring charges, which are not allocated to the financial
           segments.


                                       11


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

                    FINANCIAL SEGMENT INFORMATION (Unaudited)



                                                 Three Months Ended
                                          -------------------------------
                                          MARCH 28, 2004   MARCH 30, 2003
                                          --------------   --------------
                                                     
Net Sales:
   Engineered Carriers and Paper          $      313,488   $      293,849
   Consumer Packaging                            256,405          252,368
   Packaging Services                             53,073           45,331
   All Other Sonoco                               72,450           64,932
                                          --------------   --------------
   Consolidated                           $      695,416   $      656,480
                                          ==============   ==============

Income before income taxes:
   Engineered Carriers and Paper -
     Operating Profit                     $       20,747   $       25,126
   Consumer Packaging - Operating Profit          17,853           21,346
   Packaging Services - Operating Profit           5,486            2,201
   All Other Sonoco - Operating Profit             7,001            4,857
   Restructuring charges                          (1,328)          (1,137)
   Interest, net                                  (8,748)         (12,283)
                                          --------------   --------------
   Consolidated                           $       41,011   $       40,110
                                          ==============   ==============


           Prior year information has been restated to exclude the impact of the
           Company's High Density Film business, which has been reclassified as
           discontinued operations on the Condensed Consolidated Statements of
           Income.

NOTE 12:   COMMITMENTS AND CONTINGENCIES

           The Company is a party to various legal proceedings incidental to its
           business and is subject to a variety of environmental and pollution
           control laws and regulations in all jurisdictions in which it
           operates. As is the case with other companies in similar industries,
           the Company faces exposure from actual or potential claims and legal
           proceedings. The Company cannot currently determine the final outcome
           of the proceedings described below or the ultimate amount of
           potential losses. Pursuant to Statement of Financial Accounting
           Standards No. 5, 'Accounting for Contingencies' (FAS 5), management
           records accruals for estimated losses at the time that information
           becomes available indicating that losses are probable and that the
           amounts are reasonably estimable. Accrued amounts are not discounted.
           Although the level of future expenditures for legal and environmental
           matters is impossible to determine with any degree of probability, it
           is management's opinion that such costs, when finally determined,
           will not have an adverse material effect on the consolidated
           financial position of the Company.

           Sonoco-U.S. Paper Lawsuit

           On April 30, 2004, the Company announced that the U.S. District Court
           for the Southern District of Ohio had entered a judgment against its
           subsidiary, Sonoco-U.S. Paper, and the Company in the amount of
           $3,750 in a case involving alleged trade secrets of the plaintiff.
           Although not covered by the judgment, the plaintiff may also make
           claim for certain litigation expenses. While the Company is currently
           considering what legal steps to take with respect to this judgment,
           during the first quarter of 2004, it accrued approximately $5,500
           related to this legal proceeding.

           Environmental Matters

           The Company has been named as a potentially responsible party at
           several environmentally contaminated sites not owned by the Company.
           These regulatory actions and a small number of private party lawsuits
           represent the Company's largest potential environmental liabilities.
           As of March 28, 2004 and December 31, 2003, the Company had accrued
           $3,909 and $3,967, respectively, related to environmental
           contingencies. Due to the complexity of determining clean-up costs
           associated with the sites, a reliable estimate of the ultimate cost
           to the Company cannot be determined. Furthermore, all of the sites
           are also the responsibility of other parties. The Company's

                                       12


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

           liability, if any, is shared with such other parties, but the
           Company's share has not been finally determined in most cases. In
           some cases, the Company has cost-sharing agreements with other
           potentially responsible parties with respect to a particular site.
           Such agreements relate to the sharing of legal defense costs or
           clean-up costs, or both. The Company has assumed, for purposes of
           estimating amounts to be accrued, that the other parties to such
           cost-sharing agreements will perform as agreed. It appears that final
           resolution of some of the sites is years away. Accordingly, a
           reliable estimate of the ultimate cost to the Company with respect to
           such sites cannot be determined.

NOTE 13:   SUBSEQUENT EVENTS

           European Joint Venture

           On April 19, 2004, the Company announced that it had signed a
           definitive agreement with Ahlstrom Corporation, Helsinki, Finland
           ("Ahlstrom") to combine each of the companies' respective European
           paper-based tube/core and coreboard operations into a joint venture
           that will operate under the name Sonoco-Alcore S.a.r.l. The Company,
           which will contribute to the joint venture ownership positions in 25
           tube and core plants and six paper mills, will hold a 64.5% interest
           in the joint venture. Ahlstrom, a leader in high-performance
           fiber-based materials serving niche markets worldwide, will
           contribute 15 tube and core plants and one paper mill to the joint
           venture and will hold a 35.5% interest in it. Total sales in 2003 for
           the properties being contributed by the Company and Ahlstrom to this
           joint venture were approximately $235,000 and $102,000, respectively.
           This joint venture is expected to be finalized by the end of the
           third quarter of 2004.

           Following an initial two and one-half year standstill period and
           subject to certain conditions, Ahlstrom will have the right to
           require (through a put option arrangement) the Company to buy the
           shares not owned by the Company at any time over the next three and
           one-half years. During the seventh year, the Company will have the
           right to purchase the shares (through a call option arrangement). The
           price of the share purchase will be determined using a formula
           related to an earnings multiple at the time such shares might be put
           or called.

           In a separate but related transaction, the Company has signed an
           agreement to purchase 100% of Ahlstrom's Chinese paper tube/core
           operation in Shouguang to serve the rapidly growing Chinese market
           for paper mill cores. This operation will not be part of the joint
           venture.

           Acquisition of CorrFlex Graphics

           On April 29, 2004, the Company announced that it had signed a
           definitive agreement to acquire CorrFlex Graphics, LLC ("CorrFlex")
           for an all-cash purchase price of approximately $250,000. CorrFlex,
           which is privately held, is one of the nation's largest
           point-of-purchase display companies. The acquisition is expected to
           be moderately accretive in the first year and is expected to generate
           sales on an annualized basis of approximately $200,000 for 2004. The
           acquisition will be known as Sonoco CorrFlex and is expected to close
           by the end of the second quarter of 2004.

                                       13

EX-99.3

                                                                    EXHIBIT 99.3

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of Sonoco Products Company:

We have reviewed the accompanying condensed consolidated balance sheet of Sonoco
Products Company as of June 27, 2004, and the related condensed consolidated
statements of income for the three-month and six-month periods ended June 27,
2004, and June 29, 2003 and the condensed consolidated statements of cash flows
for the six-month periods ended June 27, 2004 and June 29, 2003. These interim
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, 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 the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheet as of
December 31, 2003, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the year then ended (not present
herein), and in our report dated January 28, 2004, except for Note 17 as to
which the date is September 30, 2004, 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, 2003, 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
July 28, 2004, except for
Note 13 as to which the date
is September 30, 2004



SONOCO PRODUCTS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)



                                                                                  JUNE 27,
                                                                                    2004      DECEMBER 31,
                                                                                (UNAUDITED)      2003*
                                                                                -----------   ------------
                                                                                        
ASSETS
CURRENT ASSETS
     Cash and cash equivalents                                                  $    65,249   $     84,854
     Trade accounts receivable, net of allowances                                   387,407        320,676
     Other receivables                                                               39,974         33,066
     Inventories
         Finished and in process                                                    112,253        109,080
         Materials and supplies                                                     172,487        143,116
Prepaid expenses and other                                                           79,421         64,473
                                                                                -----------   ------------
                                                                                    856,791        755,265
PROPERTY, PLANT AND EQUIPMENT, NET                                                  942,536        923,569
GOODWILL                                                                            538,055        383,954
OTHER ASSETS                                                                        492,963        457,845
                                                                                -----------   ------------
     Total Assets                                                               $ 2,830,345   $  2,520,633
                                                                                ===========   ============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
     Payable to suppliers                                                       $   257,148   $    239,300
     Accrued expenses and other                                                     219,915        211,342
     Notes payable and current portion of long-term debt                            206,358        201,367
     Taxes on income                                                                  8,255         27,585
                                                                                -----------   ------------
                                                                                    691,676        679,594
LONG-TERM DEBT                                                                      733,892        473,220
PENSION AND OTHER POSTRETIREMENT BENEFITS                                           147,830        137,494
DEFERRED INCOME TAXES AND OTHER                                                     212,556        216,165
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
     Common stock, no par value
         Authorized 300,000 shares
         97,986 and 97,217 shares outstanding, of which 97,695 and 96,969
              were issued at June 27, 2004 and December 31, 2003, respectively        7,175          7,175
     Capital in excess of stated value                                              353,726        337,136
     Accumulated other comprehensive loss                                          (152,319)      (136,091)
     Retained earnings                                                              835,809        805,940
                                                                                -----------   ------------
         Total Shareholders' Equity                                               1,044,391      1,014,160
                                                                                -----------   ------------
     Total Liabilities and Shareholders' Equity                                 $ 2,830,345   $  2,520,633
                                                                                ===========   ============


* The year-end condensed consolidated balance sheet data was derived from
audited financial statements but does not include all disclosures required by
generally accepted accounting principals.

      See accompanying Notes to Condensed Consolidated Financial Statements

                                        1


SONOCO PRODUCTS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars and shares in thousands except per share data)



                                                           THREE MONTHS ENDED         SIX MONTHS ENDED
                                                         ----------------------   -------------------------
                                                          JUNE 27,    JUNE 29,      JUNE 27,      JUNE 29,
                                                           2004         2003          2004         2003
                                                         ---------   ----------   -----------   -----------
                                                                                    
Net sales                                                $ 763,902   $  684,567   $ 1,459,318   $ 1,341,047
Cost of sales                                              620,753      560,805     1,194,587     1,093,370
Selling, general and administrative expenses                76,969       68,299       147,464       138,684
Restructuring charges (see Note 5)                           5,768        7,828         7,096         8,965
                                                         ---------   ----------   -----------   -----------
Income before interest and taxes                            60,412       47,635       110,171       100,028
Interest expense                                            11,518       13,979        21,441        26,709
Interest income                                             (1,196)        (509)       (2,371)         (956)
                                                         ---------   ----------   -----------   -----------
Income before income taxes                                  50,090       34,165        91,101        74,275
Provision for income taxes                                  17,795       14,476        23,220        28,916
                                                         ---------   ----------   -----------   -----------
Income before equity in earnings of affiliates/minority
     interest in subsidiaries                               32,295       19,689        67,881        45,359
Equity in earnings (loss) of affiliates/minority
     interest in subsidiaries                                2,660        1,681         3,914         3,324
                                                         ---------   ----------   -----------   -----------
Income from continuing operations                           34,955       21,370        71,795        48,683
Income from discontinued operations, net of income tax          --        1,463            --         3,148
                                                         ---------   ----------   -----------   -----------
Net income                                               $  34,955   $   22,833   $    71,795   $    51,831
                                                         =========   ==========   ===========   ===========

Average common shares outstanding:
     Basic                                                  97,890       96,696        97,754        96,684
     Diluted                                                98,691       96,956        98,441        96,957
                                                         ---------   ----------   -----------   -----------
Per common share
     Basic:
         From continuing operations                      $    0.36   $     0.22   $      0.73   $      0.51
         From discontinued operations                    $       -   $     0.02   $         -   $      0.03
                                                         ---------   ----------   -----------   -----------
         Net income                                      $    0.36   $     0.24   $      0.73   $      0.54
     Diluted:
         From continuing operations                      $    0.35   $     0.22   $      0.73   $      0.50
         From discontinued operations                    $       -   $     0.02   $         -   $      0.03
                                                         ---------   ----------   -----------   -----------
         Net income                                      $    0.35   $     0.24   $      0.73   $      0.53
Cash dividends - common                                  $    0.22   $     0.21   $      0.43   $      0.42
                                                         =========   ==========   ===========   ===========


      See accompanying Notes to Condensed Consolidated Financial Statements

                                       2


SONOCO PRODUCTS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)



                                                                   SIX MONTHS ENDED
                                                                ----------------------
                                                                 JUNE 27,     JUNE 29,
                                                                   2004        2003
                                                                ----------   ---------
                                                                       
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                      $   71,795   $  51,831
Adjustments to reconcile net income to net cash provided
     by operating activities:
         Restructuring reserve (noncash)                             1,698         729
         Depreciation, depletion and amortization                   73,280      79,149
         Equity in earnings of affiliates/minority interest
              in subsidiaries                                       (3,914)     (3,324)
         Cash dividends from affiliated companies                    1,650       1,325
         Loss (gain) on disposition of assets                        2,179        (502)
         Deferred taxes                                              1,256       5,587
         Change in assets and liabilities, net of effects from
              acquisitions, dispositions and foreign currency
              adjustments:
                  Receivables                                      (48,662)    (43,846)
                  Inventories                                      (29,218)    (29,002)
                  Prepaid expenses                                 (14,425)    (12,476)
                  Payables and taxes                                   864       8,783
                  Other assets and liabilities                      (1,977)     26,196
                                                                ----------   ---------
Net cash provided by operating activities                           54,526      84,450
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment                          (53,540)    (52,787)
Cost of acquisitions, exclusive of cash acquired                  (259,981)     (1,275)
Proceeds from the sale of assets                                     3,315       1,372
                                                                ----------   ---------
Net cash used in investing activities                             (310,206)    (52,690)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt                                     169,141      20,938
Principal repayment of debt                                        (12,935)    (10,199)
Net increase in commercial paper borrowings                        108,000      (1,500)
Net increase in bank overdrafts                                        157      10,469
Cash dividends - common                                            (41,926)    (40,514)
Common shares issued                                                14,855       1,070
                                                                ----------   ---------
Net cash provided by (used in) financing activities                237,292     (19,736)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH                            (1,217)        552
                                                                ----------   ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS               (19,605)     12,576
Cash and cash equivalents at beginning of period                    84,854      31,405
Cash and cash equivalents at end of period                      $   65,249   $  43,981
                                                                ==========   =========


      See accompanying Notes to Condensed Consolidated Financial Statements

                                       3


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares 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 herein. Operating results for the
           three and six months ended June 27, 2004 are not necessarily
           indicative of the results that may be expected for the year ending
           December 31, 2004. 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, 2003.

           With respect to the unaudited condensed consolidated financial
           information of the Company for the three and six month periods ended
           June 27, 2004 and June 29, 2003 included in this Form 10-Q,
           PricewaterhouseCoopers LLP reported that they have applied limited
           procedures in accordance with professional standards for a review of
           such information. However, their separate report dated July 28, 2004
           appearing herein, states that they did not audit and they do not
           express an opinion on that unaudited financial information.
           Accordingly, the degree of reliance on their report on such
           information should be restricted in light of the limited nature of
           the review procedures applied. PricewaterhouseCoopers LLP is not
           subject to the liability provisions of Section 11 of the Securities
           Act of 1933 for their report on the unaudited financial information
           because that report is not a "report" or a "part" of the registration
           statement prepared or certified by PricewaterhouseCoopers LLP within
           the meaning of Sections 7 and 11 of the Act.

           During the fourth quarter of 2003, the Company completed the sale of
           its High Density Film business to Hilex Poly Co., LLC, Los Angeles,
           California. Operating results of this business have been presented
           for the three and six months ended June 29, 2003 as "Income from
           discontinued operations, net of income taxes" in the Company's
           Condensed Consolidated Statements of Income. Items included in the
           Notes to Condensed Consolidated Financial Statements that relate to
           the Consolidated Statement of Income for the three and six months
           ended June 29, 2003 have been restated to reflect the
           reclassification of the Company's High Density Film business as
           discontinued operations.

NOTE 2:    ACQUISITIONS/JOINT VENTURES

           Acquisition of CorrFlex Graphics, LLC

           On May 28, 2004, the Company completed its purchase of CorrFlex
           Graphics, LLC ("CorrFlex") for an all-cash purchase price of
           approximately $250,000. CorrFlex, a privately held company, is one of
           the nation's largest point-of-purchase display companies. The
           acquired business, which is known as Sonoco CorrFlex, LLC, is
           reflected in the Packaging Services segment beginning in June of
           2004.

           The unaudited proforma combined historical results, as if CorrFlex
           had been acquired at the beginning of fiscal 2003 and 2004 are
           estimated to be:



                       Three Months Ended       Six Months Ended
                      ---------------------  ----------------------
                       JUNE 27,   JUNE 29,    JUNE 27,    JUNE 29,
                        2004       2003        2004        2003
                      ---------  ----------  ----------  ----------
                                             
Net sales             $ 792,651  $  721,250  $1,531,190  $1,423,598
Net income            $  36,614  $   22,963  $   75,942  $   54,446
                      =========  ==========  ==========  ==========
Diluted earnings per
      common share    $    0.37  $     0.24  $     0.77  $     0.56
                      =========  ==========  ==========  ==========


                                       4


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

           The proforma results include amortization of intangibles and interest
           expense on debt assumed to finance the purchase. The proforma results
           are not necessarily indicative of what actually would have occurred
           if the acquisition had been completed as of the beginning of each
           period presented, nor are they necessarily indicative of future
           consolidated results.

           European Joint Venture

           On April 19, 2004, the Company announced that it had signed a
           definitive agreement with Ahlstrom Corporation, Helsinki, Finland
           ("Ahlstrom") to combine each of the companies' respective European
           paper-based tube/core and coreboard operations into a joint venture
           that will operate under the name Sonoco-Alcore S.a.r.l. The Company,
           which will contribute to the joint venture ownership positions in 25
           tube and core plants and six paper mills, will hold a 64.5% interest
           in the joint venture. Ahlstrom, a leader in high-performance
           fiber-based materials serving niche markets worldwide, will
           contribute 15 tube and core plants and one paper mill to the joint
           venture and will hold a 35.5% interest in it. The Company is
           currently awaiting regulatory approval by the European Union and
           expects to finalize this joint venture by the end of 2004.

NOTE 3:    DISCONTINUED OPERATIONS

           The financial statements and accompanying notes for prior periods
           have been restated to report the revenues and expenses of the
           components of the Company that were disposed of separately as
           discontinued operations. Income from discontinued operations, net of
           income taxes for the three and six months ended June 29, 2003
           represents the results of operations of the Company's High Density
           Film business unit, which was sold in December 2003.

           The following table sets forth the operating results for the High
           Density Film business unit, which was previously reported in the
           Company's Consumer Packaging segment:



                                             THREE MONTHS ENDED  SIX MONTHS ENDED
                                                JUNE 29, 2003      JUNE 29, 2003
                                             ------------------  ----------------
                                                           
Net sales                                      $       47,859     $       92,566
                                               ==============     ==============

Income before income taxes                     $        2,286     $        4,918
Provision for income taxes                                823              1,770
                                               --------------     --------------
Income from discontinued operations, net of
    income taxes                               $        1,463     $        3,148
                                               ==============     ==============
Income from discontinued operations, net of
    income taxes - per diluted share           $         0.02     $         0.03
                                               ==============     ==============


           No interest expense or income was allocated to this business unit.

           The Company has no continuing involvement in the management or
           operations of the divested business.

                                       5


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

NOTE 4:    EARNINGS PER SHARE

           The following table sets forth the computation of basic and diluted
           earnings per share:


                                        Three Months Ended   Six Months Ended
                                        ------------------  ------------------
                                        JUNE 27,  JUNE 29,  JUNE 27,  JUNE 29,
                                          2004      2003      2004      2003
                                        --------  --------  --------  --------
                                                          
Numerator:
   Income from continuing operations    $ 34,955  $ 21,370  $ 71,795  $ 48,683
   Income from discontinued
     operations, net of income taxes          --     1,463        --     3,148
                                        --------  --------  --------  --------
   Net income                           $ 34,955  $ 22,833  $ 71,795  $ 51,831
                                        ========  ========  ========  ========

Denominator:
   Average common shares outstanding      97,890    96,696    97,754    96,684
   Dilutive effect of:
      Employee stock options                 515       201       440       163
      Contingent employee share awards       286        59       247       110
                                        --------  --------  --------  --------
   Dilutive shares outstanding            98,691    96,956    98,441    96,957
                                        ========  ========  ========  ========

Basic earnings per common share:
   Income from continuing operations    $   0.36  $   0.22  $   0.73  $   0.51
   Income from discontinued
     operations, net of income taxes          --      0.02        --      0.03
                                        --------  --------  --------  --------
   Net income                           $   0.36  $   0.24  $   0.73  $   0.54
                                        ========  ========  ========  ========

Diluted earnings per common share:
   Income from continuing operations    $   0.35  $   0.22  $   0.73  $   0.50
   Income from discontinued
     operations, net of income taxes          --      0.02        --      0.03
                                        --------  --------  --------  --------
   Net income                           $   0.35  $   0.24  $   0.73  $   0.53
                                        ========  ========  ========  ========


           Stock options to purchase approximately 4,487 and 8,120 shares at
           June 27, 2004 and June 29, 2003, respectively, were not dilutive and,
           therefore, are not included in the computations of diluted income per
           common share amounts. No adjustments were made to reported net income
           in the computations of earnings per share.

NOTE 5:    RESTRUCTURING PROGRAMS

           In August 2003, the Company announced general plans to reduce its
           overall cost structure by $54,000 pretax by realigning and
           centralizing a number of staff functions and eliminating excess plant
           capacity. Pursuant to these plans, the Company has initiated or
           completed 12 plant closings and has terminated approximately 850
           employees. As of June 27, 2004, the Company had incurred cumulative
           charges, net of adjustments, of approximately $60,978 pretax
           associated with these activities. Of this amount, $40,149 was related
           to the Engineered Carriers and Paper segment, $10,688 was related to
           the Consumer Packaging segment, $333 was attributed to the Packaging
           Services segment, $2,736 was related to All Other Sonoco, and $7,072
           was associated with Corporate. These restructuring charges, net of
           adjustments, consisted of severance and termination benefits of
           $45,431, asset impairment charges of $9,994 and other exit costs of
           $5,553. The Company expects to recognize an additional cost of
           approximately $4,000 pretax in the future associated with these
           activities, which is comprised of approximately $2,100 in severance
           and termination benefits, $300 in asset impairment charges and $1,600
           in other exit costs. Of this amount, approximately $3,100 is related
           to the Engineered Carriers and Paper segment and

                                       6


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

           approximately $900 is related to the Consumer Packaging segment. The
           Company also expects to announce throughout the remainder of 2004 the
           closing of approximately five additional plants in furtherance of
           these plans. The costs associated with these future plant closings
           have not yet been determined. In conjunction with the Company's
           review of its restructuring accrual in the second quarter of 2004, it
           was determined that one of the plants that had originally been
           identified to be closed pursuant to these plans would not be closed
           due to changes in certain factors. In response to this determination,
           the Company reduced its restructuring accrual for the Consumer
           Packaging segment, which resulted in negative charges, net of
           adjustments, in both the three and six months ended June 27, 2004.

           During the three months ended June 27, 2004, the Company recognized
           restructuring charges, net of adjustments, of $5,768 ($3,720 after
           tax), which are reflected as "Restructuring charges" on the Company's
           Condensed Consolidated Statements of Income. Of these charges, $5,624
           was attributed to the Engineered Carriers and Paper segment, ($446)
           was related to the Consumer Packaging segment and $590 was associated
           with All Other Sonoco. These restructuring charges, net of
           adjustments, consisted of severance and termination benefits of
           $3,649, asset impairment charges of $1,475 and other exit costs of
           $644.

           During the three months ended June 29, 2003, the Company recognized
           restructuring charges, net of adjustments, of $7,828 ($7,894 after
           tax) related to previously announced restructuring plans, $7,522 of
           which was attributed to the Engineered Carriers and Paper segment and
           $306 of which was associated with All Other Sonoco. These
           restructuring charges, net of adjustments, consisted of severance and
           termination benefits of $7,041, asset impairment charges of $729 and
           other exit costs of $58.

           During the six months ended June 27, 2004, the Company recognized
           restructuring charges, net of adjustments, of $7,096 ($4,577 after
           tax). Of these charges, $6,501 was attributed to the Engineered
           Carriers and Paper segment, ($345) was related to the Consumer
           Packaging segment and $940 was associated with All Other Sonoco.
           These restructuring charges, net of adjustments, consisted of
           severance and termination benefits of $4,224, asset impairment
           charges of $1,698 and other exit costs of $1,174.

           During the six months ended June 29, 2003, the Company recognized
           restructuring charges, net of adjustments, of $8,965 ($8,622 after
           tax) related to previously announced restructuring plans. Of these
           charges, $8,159 was attributed to the Engineered Carriers and Paper
           segment, $500 was related to the Consumer Packaging segment and $306
           was associated with All Other Sonoco. These restructuring charges,
           net of adjustments, consisted of severance and termination benefits
           of $7,678, asset impairment charges of $729 and other exit costs of
           $558. Additionally, the Company's High Density Film business, which
           was divested in December 2003, incurred restructuring charges of
           approximately $200 ($128 after tax) in the six months ended June 29,
           2003.

           The following table sets forth the activity in the restructuring
           accrual included in "Accrued expenses and other" on the Company's
           Condensed Consolidated Balance Sheets. Restructuring charges are
           included in "Restructuring charges" on the Company's Condensed
           Consolidated Statements of Income. In accordance with the agreement
           of sale for the High Density Film business, the liability of that
           business associated with the restructuring has been retained by the
           Company and is, therefore, included in the table below:

                                       7


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)



                      SEVERANCE
                          AND                     OTHER
                      TERMINATION      ASSET      EXIT
                       BENEFITS     IMPAIRMENT    COSTS      TOTAL
                      -----------   ----------   -------   ---------
                                               
Beginning liability
   December 31, 2003  $    14,708   $       --   $ 6,386   $  21,094
New charges                 4,783        1,732     1,869       8,384
Cash payments             (11,500)          --    (3,325)    (14,825)
Asset impairment               --       (1,698)       --      (1,698)
Adjustments                  (559)         (34)     (695)     (1,288)
                      -----------   ----------   -------   ---------
Ending liability
   June 27, 2004      $     7,432   $       --   $ 4,235   $  11,667
                      ===========   ==========   =======   =========


           During the six months ended June 27, 2004, the Company recognized
           writeoffs of impaired equipment and facilities in the Engineered
           Carriers and Paper segment in the amount of $945 and $240,
           respectively. Also during the six months ended June 27, 2004, the
           Company recognized writeoffs of impaired equipment and facilities in
           All Other Sonoco in the amount of $113 and $400, respectively. Other
           exit costs are primarily associated with lease termination and other
           miscellaneous plant closing costs.

           The Company expects to pay the remaining restructuring costs, with
           the exception of ongoing pension subsidies and certain building lease
           termination expenses, by the end of the second quarter of 2005, using
           cash generated from operations.

NOTE 6:    COMPREHENSIVE INCOME

           The following table reconciles net income to comprehensive income:



                                 Three Months Ended     Six Months Ended
                                 -------------------   -------------------
                                 JUNE 27,   JUNE 29,   JUNE 27,   JUNE 29,
                                  2004        2003       2004       2003
                                 --------   --------   --------   --------
                                                      
Net income                       $ 34,955   $ 22,833   $ 71,795   $ 51,831
Other comprehensive income:
   Foreign currency translation
     adjustments                  (13,948)    37,487    (18,172)    51,584
   Other adjustments, net of
     income tax                     1,069       (228)     1,944        966
                                 --------   --------   --------   --------
Comprehensive income             $ 22,076   $ 60,092   $ 55,567   $104,381
                                 ========   ========   ========   ========


           The following table summarizes the components of accumulated other
           comprehensive income and the changes in accumulated other
           comprehensive income, net of tax as applicable, for the six months
           ended June 27, 2004:



                        FOREIGN      MINIMUM               ACCUMULATED
                       CURRENCY      PENSION                   OTHER
                      TRANSLATION   LIABILITY              COMPREHENSIVE
                       ADJUSTMENT   ADJUSTMENT     OTHER       LOSS
                      -----------   ----------   --------  -------------
                                               
Balance at
   December 31, 2003  $   (83,906)  $  (53,826)  $  1,641  $    (136,091)
Year-to-date change       (18,172)          --      1,944        (16,228)
                      -----------   ----------   --------  -------------
Balance at
   June 27, 2004      $  (102,078)  $  (53,826)  $  3,585  $    (152,319)
                      ===========   ==========   ========  =============


                                       8


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

           The cumulative tax benefit of the Minimum Pension Liability
           Adjustments was $25,312 at June 27, 2004 and December 31, 2003.
           Additionally, the deferred tax liability associated with Other items
           was $2,067 and $940 at June 27, 2004 and December 31, 2003,
           respectively.

NOTE 7:    GOODWILL AND OTHER INTANGIBLE ASSETS

           Goodwill

           A summary of the changes in goodwill for the six months ended June
           27, 2004 is as follows:



                               ENGINEERED
                                CARRIERS     CONSUMER   PACKAGING
                               AND PAPER    PACKAGING    SERVICES  ALL OTHER
                                SEGMENT      SEGMENT     SEGMENT     SONOCO     TOTAL
                               ----------   ---------   ---------  ---------  ---------
                                                               
Balance as of January 1, 2004  $  151,469   $ 165,376   $   1,263  $  65,846  $ 383,954
2004 Acquisitions                     813       2,284     155,417         --    158,514
Foreign currency translation       (1,558)     (2,855)         42        (42)    (4,413)
                               ----------   ---------   ---------  ---------  ---------
Balance as of June 27, 2004    $  150,724   $ 164,805   $ 156,722  $  65,804  $ 538,055
                               ==========   =========   =========  =========  =========


           Other Intangible Assets

           A summary of other intangible assets as of June 27, 2004 and December
           31, 2003 is as follows:



                        June 27, 2004         December 31, 2003
                   ----------------------   ----------------------
                     GROSS                   GROSS
                   CARRYING   ACCUMULATED   CARRYING   ACCUMULATED
                    AMOUNT   AMORTIZATION    AMOUNT   AMORTIZATION
                   --------  ------------   --------  ------------
                                          
Patents            $  3,268  $     (2,691)  $  3,268  $     (2,564)
Customer lists       68,223        (5,969)    38,223        (4,630)
Land use rights       5,873        (2,035)     5,873        (1,963)
Supply agreements     5,261        (4,356)     5,261        (3,715)
Other                 6,404        (3,208)     6,404        (2,756)
                   --------  ------------   --------  ------------
      Total        $ 89,029  $    (18,259)  $ 59,029  $    (15,628)
                   ========  ============   ========  ============


           Aggregate amortization expense on intangible assets was $1,499 and
           $1,058 for the three months ended June 27, 2004 and June 29, 2003,
           respectively and $2,631 and $2,029 for the six months ended June 27,
           2004 and June 29, 2003, respectively. Amortization expense on the
           other intangible assets identified in the table above is expected to
           approximate $5,400 in 2004, $5,700 in 2005, $5,500 in 2006, $5,100 in
           2007 and $5,000 in 2008. Other intangible assets are included in
           "Other Assets" on the Company's Condensed Consolidated Balance
           Sheets.

           Intangible assets acquired in conjunction with the Company's purchase
           of CorrFlex (see Note 2) consisted of customer lists. The Company has
           allocated $30,000 of the purchase price to these intangible assets,
           which have a weighted average amortization period of 15 years. The
           estimated fair values of these assets are based on the Company's
           current purchase price allocation, which has been prepared on a
           preliminary basis, and are subject to change upon its finalization.

                                       9

                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

NOTE 8:    DEBT

           In June 2004, the Company made a private placement of $150 million
           5.625% notes due in 2016. Under the terms of the sale of the notes,
           the Company is required to take appropriate steps to offer to
           exchange other notes with the same terms that have been registered
           with the SEC for the private placement notes or, in some
           circumstances, register the private placement notes with the SEC. If
           the Company does not take the necessary actions in connection with
           the exchange offer, or registration of the private placement notes if
           required, by specified deadlines, it will become obligated to pay
           additional interest to the holders of the private placement notes up
           to a maximum of 1% per annum.

           During the second quarter of 2004, the Company entered into a $150
           million swap against the newly issued $150 million notes. During the
           first quarter of 2004, the Company entered into a $100 million swap
           against a portion of the $250 million 6.5% notes maturing in 2013.
           Consistent with the treatment of all of the Company's interest rate
           swaps, these contracts qualified as fair value hedges under Statement
           of Financial Accounting Standards No. 133, 'Accounting for Derivative
           Instruments and Hedging Activities' (FAS 133) and swapped fixed
           interest for floating.

           In July 2004, the Company terminated its $450 million backstop credit
           line and entered into a new $350 million backstop credit line for
           commercial paper issuance. The new credit agreement matures in July
           2009.

NOTE 9:    DIVIDEND DECLARATIONS

           On April 21, 2004, the Board of Directors declared a regular
           quarterly dividend of $0.22 per share. This dividend was paid June
           10, 2004 to all shareholders of record as of May 21, 2004.

           On July 21, 2004, the Board of Directors declared a regular quarterly
           dividend of $0.22 per share, payable September 10, 2004 to all
           shareholders of record as of August 20, 2004.

NOTE 10:   STOCK PLANS

           As permitted by Statement of Financial Accounting Standards No. 123,
           'Accounting for Stock-Based Compensation' (FAS 123), the Company has
           elected to account for its stock-based compensation using the
           intrinsic value method prescribed in Accounting Principles Board
           (APB) Opinion No. 25, 'Accounting for Stock Issued to Employees,' and
           its related interpretations. Accordingly, compensation cost for stock
           options is measured as the excess, if any, of the quoted market price
           of the Company's stock at the date of the grant over the amount an
           employee must pay to acquire the stock. Compensation cost for
           performance stock options is recorded based on the quoted market
           price of the Company's stock at the end of the period.

           The following table illustrates the effect on net income and earnings
           per share if the Company had applied the fair value recognition
           provisions of FAS 123 to stock-based employee compensation.

                                       10


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)



                                               Three Months Ended    Six Months Ended
                                              -------------------   -------------------
                                              JUNE 27,   JUNE 29,   JUNE 27,   JUNE 29,
                                                2004       2003       2004       2003
                                              --------   --------   --------   --------
                                                                   
Net income, as reported                       $ 34,955   $ 22,833   $ 71,795   $ 51,831
Add: Stock-based employee compensation cost,
   net of related tax effects, included in
   net income, as reported                         459        280        858        504
Deduct: Total stock-based employee
   compensation expense determined under
   fair value based method for all awards,
   net of related tax effects                   (1,591)    (1,425)    (2,834)    (2,850)
                                              --------   --------   --------   --------
Proforma net income                           $ 33,823   $ 21,688   $ 69,819   $ 49,485
                                              ========   ========   ========   ========

Earnings per share:
   Basic - as reported                        $   0.36   $   0.24   $   0.73   $   0.54
   Basic - proforma                           $   0.35   $   0.22   $   0.71   $   0.51
   Diluted - as reported                      $   0.35   $   0.24   $   0.73   $   0.53
   Diluted - proforma                         $   0.34   $   0.22   $   0.71   $   0.51


NOTE 11:   EMPLOYEE BENEFIT PLANS

           The Company provides non-contributory defined benefit pension plans
           for substantially all of its United States and certain of its Mexico
           employees, as well as postretirement healthcare and life insurance
           benefits to the majority of its retirees and their eligible
           dependents in the United States and Canada. Effective January 1,
           2004, the Company established a defined contribution plan for all new
           U.S. employees. The defined benefit plans discussed above remain in
           place for all U.S. employees whose employment with the Company began
           prior to January 1, 2004. The Company also sponsors contributory
           pension plans covering the majority of its employees in the United
           Kingdom and Canada.

           The components of net periodic benefit cost include the following:



                                     Three Months Ended    Six Months Ended
                                    -------------------   -------------------
                                    JUNE 27,   JUNE 29,   JUNE 27,   JUNE 29,
                                      2004       2003       2004       2003
                                    --------   --------   --------   --------
                                                         
DEFINED BENEFIT PLANS
Service cost                        $  5,929   $  5,052   $ 11,854   $ 10,104
Interest cost                         14,314     12,942     28,581     25,884
Expected return on plan assets       (16,534)   (13,823)   (33,024)   (27,646)
Amortization of net transition
   (asset) obligation                    144        144        294        288
Amortization of prior service cost       365        416        728        832
Amortization of net actuarial
   (gain) loss                         5,262      5,556     10,504     11,112
                                    --------   --------   --------   --------
   Net periodic benefit cost        $  9,480   $ 10,287   $ 18,937   $ 20,574
                                    ========   ========   ========   ========
RETIREE HEALTH AND LIFE INSURANCE
   PLANS
Service cost                        $  1,281   $  1,090   $  2,562   $  2,180
Interest cost                          2,932      2,877      5,864      5,754
Expected return on plan assets          (880)      (913)    (1,760)    (1,826)
Amortization of prior service cost    (1,529)    (1,645)    (3,058)    (3,290)
Amortization of net actuarial loss     2,448      2,257      4,896      4,514
                                    --------   --------   --------   --------
   Net periodic benefit cost        $  4,252   $  3,666   $  8,504   $  7,332
                                    ========   ========   ========   ========


                                       11


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)


           During the six months ended June 27, 2004, the Company made voluntary
           contributions of approximately $15,000 to its defined benefit and
           retiree health and life insurance plans. The Company anticipates that
           it will make additional voluntary contributions of approximately
           $5,000 to these plans in 2004.

           On December 8, 2003, President Bush signed into law the Medicare
           Prescription Drug, Improvement and Modernization Act of 2003 (the
           "Act"). The Act expands Medicare, primarily by adding a prescription
           drug benefit for Medicare-eligibles starting in 2006. The Act
           provides employers currently sponsoring prescription drug programs
           for Medicare-eligibles with a range of options for coordinating with
           the new government-sponsored program to potentially reduce program
           cost. These options include supplementing the government program on a
           secondary payor basis or accepting a direct subsidy from the
           government to support a portion of the cost of the employer's
           program.

           Paragraph 40 of Statement of Financial Accounting Standards No. 106,
           'Employers' Accounting for Postretirement Benefits Other Than
           Pensions' (FAS 106), requires that presently enacted changes in law
           impacting employer-sponsored retiree health care programs which take
           effect in future periods be considered in current-period measurements
           for benefits expected to be provided in those future periods.
           Therefore, under FAS 106 guidance, measures of plan liabilities and
           annual expense on or after the date of enactment should reflect the
           effects of the Act.

           Pursuant to guidance under FASB Staff Position 106-1 (FSP 106-1),
           however, the Company has chosen to defer recognition of the potential
           effects of the Act in these disclosures. Therefore, the retiree
           health obligations and costs reported in these financial statements
           or accompanying notes do not yet reflect any potential impact of the
           Act. On May 19, 2004, the Financial Accounting Standards Board (FASB)
           issued FASB Staff Position 106-2, 'Accounting and Disclosure
           Requirements Related to the Medicare Prescription Drug, Improvement
           and Modernization Act of 2003' (FSP 106-2), which requires measures
           of the accumulated postretirement benefit obligation and net periodic
           postretirement benefit costs to reflect the effects of the Act. FSP
           106-2 supersedes FSP 106-1 and is effective for interim or annual
           reporting periods beginning after June 15, 2004. Due to the fact that
           certain authoritative guidance related to the determination of
           actuarial equivalency is not yet available, the Company is currently
           unable to determine the impact of its implementation of FSP 106-2 and
           the Act on its Condensed Consolidated Financial Statements.

NOTE 12:   NEW ACCOUNTING PRONOUNCEMENTS

           In January 2003, the FASB issued Interpretation No. 46,
           'Consolidation of Variable Interest Entities - an interpretation of
           ARB 51' (FIN 46). FIN 46 addresses when a company should include in
           its financial statements the assets, liabilities and activities of a
           variable interest entity. It defines variable interest entities as
           those entities with a business purpose that either do not have equity
           investors with voting rights in proportion to such investors' equity,
           or have investors that do not provide financial resources in
           proportion to such investors' equity for the entity to support its
           activities and have equity investors that lack a controlling
           financial interest. FIN 46 also requires disclosures about variable
           interest entities that a company is not required to consolidate, but
           in which it has a significant variable interest. FIN 46 consolidation
           requirements apply immediately to variable interest entities created
           or obtained after January 31, 2003, but this had no impact on the
           Company's 2003 financial statements. A modification to FIN 46 (FIN
           46R) was released on December 17, 2003. FIN 46R delayed the effective
           date for variable interest entities created before February 1, 2003,
           with the exception of special-purpose entities, until the first
           fiscal year or interim period after December 15, 2003. As of January
           1, 2004, the Company adopted FIN 46R. In conjunction with this
           adoption, the Company performed an evaluation of variable interest
           entities in

                                       12


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

           which it has an ownership, contractual or other monetary interest.
           The adoption of FIN 46R did not have a material effect on the
           Company's Condensed Consolidated Financial Statements.

           In March 2004, the Emerging Issues Task Force ("EITF") reached a
           consensus in EITF Issue 03-01, 'The Meaning of Other-Than-Temporary
           Impairment and its Application to Certain Investments'. EITF 03-01
           provides guidance on other-than-temporary impairment models for
           marketable debt and equity securities accounted for under Statement
           of Financial Accounting Standards No. 115, 'Accounting for Certain
           Investments in Debt and Equity Securities,' (FAS 115) and Statement
           of Financial Accounting Standards No. 124, 'Accounting for Certain
           Investments Held by Not-for-Profit Organizations,' (FAS 124) and
           non-marketable equity securities accounted for under the cost method.
           The EITF developed a basic three-step model to evaluate whether an
           investment is other-than-temporarily impaired. The provisions of EITF
           03-01 will be effective for the Company's third quarter of 2004 and
           will be applied prospectively to all current and future investments.
           Quantitative and qualitative disclosures for investments accounted
           for under FAS 115 are effective for the Company's fiscal year ending
           2004. The implementation of this EITF consensus is not expected to
           have a material effect on the Company's Condensed Consolidated
           Financial Statements.

           On May 19, 2004, the FASB issued FASB Staff Position 106-2,
           'Accounting and Disclosure Requirements Related to the Medicare
           Prescription Drug, Improvement and Modernization Act of 2003' (FSP
           106-2), which requires measures of the accumulated postretirement
           benefit obligation and net periodic postretirement benefit costs to
           reflect the effects of the Medicare Prescription Drug, Improvement
           and Modernization Act of 2003 (the "Act"). FSP 106-2 supersedes FSP
           106-1 and is effective for interim or annual reporting periods
           beginning after June 15, 2004. Due to the fact that certain
           authoritative guidance related to the determination of actuarial
           equivalency is not yet available, the Company is currently unable to
           determine the impact of its implementation of FSP 106-2 and the Act
           on its Condensed Consolidated Financial Statements. See Note 11 for
           further discussion of the Act.

NOTE 13:   FINANCIAL SEGMENT INFORMATION

           The Company has determined that it will change its reportable
           segments on a prospective basis beginning with the third quarter of
           2004. Accordingly, the Company has changed its disclosure of segment
           information for the three and six months ended June 27, 2004 and June
           29, 2003 to conform to the new segment reporting. The changes to the
           financial statements for the three and six months ended June 27, 2004
           and June 29, 2003 relate solely to the presentation of segment
           specific disclosures and had no impact on the condensed consolidated
           balance sheets, statements of income or statements of cash flows.
           Other financial statement footnotes affected by this change in
           segment reporting include Note 2 - Acquisitions/Joint Ventures, Note
           5 - Restructuring Programs and Note 7 - Goodwill and Intangible
           Assets.

           Previously, the Company reported its results in two segments,
           Industrial Packaging and Consumer Packaging. As presented below, the
           Company will now report results in three segments, Engineered
           Carriers and Paper, Consumer Packaging and Packaging Services. Sonoco
           will report certain smaller operations as All Other Sonoco.

           The Engineered Carriers and Paper segment includes the following
           products: high-performance paper and composite engineered carriers;
           paperboard; and, fiber-based construction tubes and forms. The
           Consumer Packaging segment includes the following products: round and
           shaped rigid packaging, both composite and plastic; printed flexible
           packaging; and, metal and plastic ends and closures The

                                       13


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

           Packaging Services segment provides the following services: packaging
           fulfillment; product handling; brand management; and, supply chain
           management. The Packaging Services segment also includes the
           production of folding cartons. All Other Sonoco represents the
           activities and businesses of the Company's consolidated subsidiaries
           that do not meet the aggregation criteria outlined in Statement of
           Financial Accounting Standards No. 131, 'Disclosures about Segments
           of an Enterprise and Related Information' (FAS 131) and therefore
           cannot be combined with other operating segments into a reportable
           segment. All Other Sonoco includes the following products: wooden,
           metal and composite reels for wire and cable packaging; molded
           plastics; custom designed protective packaging; adhesives; machinery
           manufacturing; and specialty packaging.

           The following table sets forth net sales and operating profit for the
           Company's reportable segments. Operating profit at the segmental
           level is defined as "Income before interest and income taxes" on the
           Company's Condensed Consolidated Statements of Income adjusted for
           restructuring charges, which are not allocated to the financial
           segments.

                    FINANCIAL SEGMENT INFORMATION (Unaudited)

                                Three Months Ended      Six Months Ended
                               -------------------   -----------------------
                               JUNE 27,   JUNE 29,    JUNE 27,     JUNE 29,
                                 2004       2003        2004        2003
                               --------   --------   ----------   ----------
Net Sales:
  Engineered Carriers
     and Paper                 $342,392   $318,021   $  655,880   $  611,870
  Consumer Packaging            272,744    254,216      529,149      506,584
  Packaging Services             70,303     44,965      123,376       90,296
  All Other Sonoco               78,463     67,365      150,913      132,297
                               --------   --------   ----------   ----------
  Consolidated                 $763,902   $684,567   $1,459,318   $1,341,047
                               ========   ========   ==========   ==========

Income before income taxes:
  Engineered Carriers and
     Paper - Operating Profit  $ 34,952   $ 26,815   $   55,699   $   51,941
  Consumer Packaging -
     Operating Profit            17,743     20,939       35,596       42,285
  Packaging Services -
     Operating Profit             4,932      1,596       10,418        3,797
  All Other Sonoco -
     Operating Profit             8,553      6,113       15,554       10,970
  Restructuring charges          (5,768)    (7,828)      (7,096)      (8,965)
  Interest, net                 (10,322)   (13,470)     (19,070)     (25,753)
                               --------   --------   ----------   ----------
  Consolidated                 $ 50,090   $ 34,165   $   91,101   $   74,275
                               ========   ========   ==========   ==========

           2003 information has been restated to exclude the impact of the
           Company's High Density Film business, which has been reclassified as
           discontinued operations on the Condensed Consolidated Statements of
           Income.

           Total identifiable assets, which represent those assets used by each
           reportable segment in its operations, for the Packaging Services
           segment, were materially impacted by the Company's acquisition of
           CorrFlex. At June 27, 2004, total identifiable assets for the
           Packaging Services segment were approximately $327,461, compared to
           $49,191 at December 31, 2003.

                                       14


                             SONOCO PRODUCTS COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             (Dollars and shares in thousands except per share data)
                                   (unaudited)

NOTE 14:   COMMITMENTS AND CONTINGENCIES

           The Company is a party to various legal proceedings incidental to its
           business and is subject to a variety of environmental and pollution
           control laws and regulations in all jurisdictions in which it
           operates. As is the case with other companies in similar industries,
           the Company faces exposure from actual or potential claims and legal
           proceedings. The Company cannot currently determine the final outcome
           of the proceedings described below or the ultimate amount of
           potential losses. Pursuant to Statement of Financial Accounting
           Standards No. 5, 'Accounting for Contingencies' (FAS 5), management
           records accruals for estimated losses at the time that information
           becomes available indicating that losses are probable and that the
           amounts are reasonably estimable. Accrued amounts are not discounted.
           Although the level of future expenditures for legal and environmental
           matters is impossible to determine with any degree of probability, it
           is management's opinion that such costs, when finally determined,
           will not have an adverse material effect on the consolidated
           financial position of the Company.

           Sonoco-U.S. Paper Lawsuit

           On April 30, 2004, the Company announced that the U.S. District Court
           for the Southern District of Ohio had entered a judgment against its
           subsidiary, Sonoco-U.S. Paper, and the Company in the amount of
           $3,750 in a case involving alleged trade secrets of the plaintiff.
           Although not covered by the judgment, the plaintiff has also made
           claims for certain litigation expenses. The Company accrued
           approximately $5,500 related to this legal proceeding for the first
           quarter of 2004.

           Environmental Matters

           The Company has been named as a potentially responsible party at
           several environmentally contaminated sites not owned by the Company.
           These regulatory actions and a small number of private party lawsuits
           represent the Company's largest potential environmental liabilities.
           As of June 27, 2004 and December 31, 2003, the Company had accrued
           $4,286 and $3,967, respectively, related to environmental
           contingencies. Due to the complexity of determining clean-up costs
           associated with the sites, a reliable estimate of the ultimate cost
           to the Company cannot be determined. Furthermore, all of the sites
           are also the responsibility of other parties. The Company's
           liability, if any, is shared with such other parties, but the
           Company's share has not been finally determined in most cases. In
           some cases, the Company has cost-sharing agreements with other
           potentially responsible parties with respect to a particular site.
           Such agreements relate to the sharing of legal defense costs or
           clean-up costs, or both. The Company has assumed, for purposes of
           estimating amounts to be accrued, that the other parties to such
           cost-sharing agreements will perform as agreed. It appears that final
           resolution of some of the sites is years away. Accordingly, a
           reliable estimate of the ultimate cost to the Company with respect to
           such sites cannot be determined.

                                       15

EX-99.4

                                                                               .
                                                                               .
                                                                               .

                                                                    EXHIBIT 99.4

                    QUARTERLY SEGMENT FINANCIAL INFORMATION
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)



                                                          1ST QTR         2ND QTR         3RD QTR         4TH QTR        TOTAL YR
                                                        -----------     -----------     -----------     -----------     -----------
                                                                                                         
2002
NET SALES:
    Engineered Carriers and Paper                       $   271,888     $   311,231     $   309,718     $   313,517     $ 1,206,354
    Consumer Packaging                                      244,736         259,758         263,781         272,381       1,040,656
    Packaging Services                                       44,364          43,734          46,932          49,518         184,548
    All Other Sonoco                                         69,095          69,902          66,367          64,497         269,861
                                                        -----------     -----------     -----------     -----------     -----------
    CONSOLIDATED                                        $   630,083     $   684,625     $   686,798     $   699,913     $ 2,701,419
                                                        ===========     ===========     ===========     ===========     ===========

INCOME BEFORE INCOME TAXES:
    Engineered Carriers and Paper - Operating Profit    $    29,202     $    36,941     $    30,740     $    30,962     $   127,845
    Consumer Packaging - Operating Profit                    22,731          22,638          21,077          20,335          86,781
    Packaging Services - Operating Profit                     1,513           1,495           1,607           1,608           6,223
    All Other Sonoco - Operating Profit                       7,618           5,804           6,240           5,554          25,216
    Restructuring Charges                                    (1,439)            300          (6,327)         (2,943)        (10,409)
    Interest, Net                                           (13,080)        (12,896)        (13,655)        (12,919)        (52,550)
                                                        -----------     -----------     -----------     -----------     -----------
    CONSOLIDATED                                        $    46,545     $    54,282     $    39,682     $    42,597     $   183,106
                                                        ===========     ===========     ===========     ===========     ===========

2003
NET SALES:
    Engineered Carriers and Paper                       $   293,849     $   318,021     $   315,244     $   332,718     $ 1,259,832
    Consumer Packaging                                      252,368         254,216         258,619         279,179       1,044,382
    Packaging Services                                       45,331          44,965          47,543          46,781         184,620
    All Other Sonoco                                         64,932          67,365          65,909          71,286         269,492
                                                        -----------     -----------     -----------     -----------     -----------
    CONSOLIDATED                                        $   656,480     $   684,567     $   687,315     $   729,964     $ 2,758,326
                                                        ===========     ===========     ===========     ===========     ===========

INCOME BEFORE INCOME TAXES:
    Engineered Carriers and Paper - Operating Profit    $    25,126     $    26,815     $    24,904     $    26,093     $   102,938
    Consumer Packaging - Operating Profit                    21,346          20,939          17,929          18,519          78,733
    Packaging Services - Operating Profit                     2,201           1,596           2,429           1,709           7,935
    All Other Sonoco - Operating Profit                       4,857           6,113           3,544           4,481          18,995
    Restructuring Charges                                    (1,137)         (7,828)        (24,171)        (16,921)        (50,057)
    Interest, Net                                           (12,283)        (13,470)        (12,511)        (11,947)        (50,211)
                                                        -----------     -----------     -----------     -----------     -----------
    CONSOLIDATED                                        $    40,110     $    34,165     $    12,124     $    21,934     $   108,333
                                                        ===========     ===========     ===========     ===========     ===========

2004
NET SALES:
    Engineered Carriers and Paper                       $   313,488     $   342,392                                     $   655,880
    Consumer Packaging                                      256,405         272,744                                         529,149
    Packaging Services                                       53,073          70,303                                         123,376
    All Other Sonoco                                         72,450          78,463                                         150,913
                                                        -----------     -----------                                     -----------
    CONSOLIDATED                                        $   695,416     $   763,902                                     $ 1,459,318
                                                        ===========     ===========                                     ===========

INCOME BEFORE INCOME TAXES:
    Engineered Carriers and Paper - Operating Profit    $    20,747     $    34,952                                     $    55,699
    Consumer Packaging - Operating Profit                    17,853          17,743                                          35,596
    Packaging Services - Operating Profit                     5,486           4,932                                          10,418
    All Other Sonoco - Operating Profit                       7,001           8,553                                          15,554
    Restructuring Charges                                    (1,328)         (5,768)                                         (7,096)
    Interest, Net                                            (8,748)        (10,322)                                        (19,070)
                                                        -----------     -----------                                     -----------
    CONSOLIDATED                                        $    41,011     $    50,090                                     $    91,101
                                                        ===========     ===========                                     ===========