What changed in this filing

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Item 1. Financial Statements

2022-08-02 compared with 2022-05-03 · 439 added, 255 removed, 752 unchanged (48% of the section changed)

36 unchanged sentences

97,495 and 97,370 shares issued and outstanding

at April 3, 2022 and December 31, 2021, respectively

at July 3, 2022 and December 31, 2021, respectively

Capital in excess of stated value 128,332 119,690

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Total Liabilities and Equity $ 6,989,510 $ 5,073,235

* The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

See accompanying Notes to Condensed Consolidated Financial Statements

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(Dollars and shares in thousands except per share data)

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Net sales $ 1,913,332 $ 1,382,754 $ 3,684,314 $ 2,736,058

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Selling, general and administrative expenses 178,962 128,807 369,323 274,037

Restructuring/Asset impairment charges 12,142 6,846

Restructuring/Asset impairment charges/(income) 10,563 ( 1,445 ) 22,705 5,401

Loss on divestiture of business — — — 5,516

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Interest income 786 2,719 2,302 3,489

Income before income taxes 148,672 95,294

Provision for income taxes 35,289 24,045

Income before equity in earnings of affiliates 113,383 71,249

Loss from the early extinguishment of debt — 20,184 — 20,184

Income/(Loss) before income taxes 172,638 ( 454,696 ) 321,310 ( 359,402 )

Provision for/(Benefit from) income taxes 44,599 ( 118,151 ) 79,888 ( 94,106 )

Income/(Loss) before equity in earnings of affiliates 128,039 ( 336,545 ) 241,422 ( 265,296 )

Equity in earnings of affiliates, net of tax 3,728 2,306 5,952 3,350

Net income 115,607 72,293

Net income/(loss) 131,767 ( 334,239 ) 247,374 ( 261,946 )

Net (income)/loss attributable to noncontrolling interests ( 95 ) 169 ( 369 ) 172

Net income attributable to Sonoco $ 115,333 $ 72,297

Net income/(loss) attributable to Sonoco $ 131,672 $ ( 334,070 ) $ 247,005 $ ( 261,774 )

Weighted average common shares outstanding:

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Per common share:

Net income attributable to Sonoco:

Net income/(loss) attributable to Sonoco:

Basic $ 1.34 $ ( 3.34 ) $ 2.52 $ ( 2.60 )

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(Dollars in thousands)

Three Months Ended

April 3, 2022 April 4, 2021

Net income $ 115,607 $ 72,293

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Net income/(loss) $ 131,767 $ ( 334,239 ) $ 247,374 $ ( 261,946 )

Other comprehensive (loss)/income:

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Changes in derivative financial instruments, net of tax ( 2,090 ) 3,482 460 4,440

Other comprehensive income/(loss) $ 3,447 $ ( 26,198 )

Other comprehensive (loss)/ income $ ( 74,332 ) $ 438,823 $ ( 70,885 ) $ 412,625

Comprehensive income:

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Net (income)/loss attributable to noncontrolling interests $ ( 95 ) $ 169 $ ( 369 ) $ 172

Other comprehensive (income)/ loss attributable to noncontrolling interests ( 891 ) 520

Other comprehensive loss/(income) attributable to noncontrolling interests $ 524 $ ( 759 ) $ ( 367 ) $ ( 239 )

Comprehensive income attributable to Sonoco $ 57,864 $ 103,994 $ 175,753 $ 150,612

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Shares repurchased ( 5,051 ) ( 85 ) ( 5,051 )

Stock-based compensation 6,372 6,372

Share-based compensation 6,372 6,372

April 4, 2021 $ 1,912,798 100,607 $ 7,175 $ 315,741 $ ( 782,520 ) $ 2,362,003 $ 10,399

Net loss ( 334,239 ) ( 334,070 ) ( 169 )

Other comprehensive income:

Translation gain 12,596 11,837 759

Defined benefit plan adjustment, net of tax 422,745 422,745

Derivative financial instruments, net of tax 3,482 3,482

Other comprehensive income $ 438,823 $ 438,064 $ 759

Dividends ( 45,503 ) ( 45,503 )

Issuance of stock awards 246 41 246

Shares repurchased ( 154,519 ) ( 1,819 ) ( 154,519 )

Share-based compensation 4,827 4,827

July 4, 2021 $ 1,822,433 98,829 $ 7,175 $ 166,295 $ ( 344,456 ) $ 1,982,430 $ 10,989

Total Equity Common Shares Capital in

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Shares repurchased ( 3,410 ) ( 60 ) ( 3,410 )

Stock-based compensation 10,689 10,689

Share-based compensation 10,689 10,689

April 3, 2022 $ 1,918,931 97,492 $ 7,175 $ 120,266 $ ( 356,869 ) $ 2,141,214 $ 7,145

Net income 131,767 131,672 95

Other comprehensive loss

Translation loss ( 70,314 ) ( 69,790 ) ( 524 )

Defined benefit plan adjustment, net of tax ( 1,928 ) ( 1,928 )

Derivative financial instruments, net of tax ( 2,090 ) ( 2,090 )

Other comprehensive loss $ ( 74,332 ) $ ( 73,808 ) $ ( 524 )

Dividends ( 48,041 ) ( 48,041 )

Issuance of stock awards 263 13 263

Shares repurchased ( 574 ) ( 10 ) ( 574 )

Share-based compensation 8,377 8,377

July 3, 2022 $ 1,936,391 97,495 $ 7,175 $ 128,332 $ ( 430,677 ) $ 2,224,845 $ 6,716

See accompanying Notes to Condensed Consolidated Financial Statements

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(Dollars in thousands)

Three Months Ended

April 3, 2022 April 4, 2021

Six Months Ended

July 3, 2022 July 4, 2021

Cash Flows from Operating Activities:

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Adjustments to reconcile net income to net cash provided by operating activities:

Asset impairment 5,511 4,149

Asset impairments 9,683 4,852

Depreciation, depletion and amortization 145,952 121,792

Loss on early extinguishment of debt — 20,184

Share-based compensation expense 19,065 11,199

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Cost of acquisitions, net of cash acquired ( 1,333,769 ) ( 2,353 )

Proceeds from the sale of businesses, net — 86,071

Proceeds from the sale of assets 4,798 7,433

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Net decrease in outstanding checks ( 14,599 ) ( 15,620 )

Proceeds from foreign exchange forward contracts and interest rate swaps — 4,387

Cash dividends ( 91,525 ) ( 90,401 )

Purchase of noncontrolling interest ( 14,474 ) —

Excess cash costs of early extinguishment of debt — ( 20,111 )

Payments for share repurchases ( 3,984 ) ( 159,571 )

1 unchanged sentence

Effects of Exchange Rate Changes on Cash ( 3,596 ) ( 4,588 )

Net (Decrease)/Increase in Cash and Cash Equivalents ( 19,441 ) 22,684

Net Increase/(Decrease) in Cash and Cash Equivalents 4,018 ( 301,319 )

Cash and cash equivalents at beginning of period 170,978 564,848

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In the opinion of the management of Sonoco Products Company (the “Company” or “Sonoco”), the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments, unless otherwise stated) necessary to state fairly the consolidated financial position, results of operations and cash flows for the interim periods reported herein.

Operating results for the three months ended April 3, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three- and six-month periods ended July 3, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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 on Form 10-K for the fiscal year ended December 31, 2021.

With respect to the unaudited condensed consolidated financial information of the Company for the three-month periods ended April 3, 2022 and April 4, 2021 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 3, 2022 appearing herein, states that they did not audit and they do not express an opinion on that unaudited financial information.

With respect to the unaudited condensed consolidated financial information of the Company for the three- and six-month periods ended July 3, 2022 and July 4, 2021 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 August 2, 2022 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.

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New Accounting Pronouncements

In March 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-02, Financial Instruments — Credit Losses (Topic 326), Troubled Debt Restructurings ("TDRs") and Vintage Disclosures.

The amendments in this update eliminate the accounting guidance for TDRs while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

In March 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-02, "Financial Instruments — Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures." The amendments in this update eliminate the accounting guidance for troubled debt restructurings while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

The amendments in this update also require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases.

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In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”).

Under current accounting standards, contract assets and contract liabilities acquired in a business combination are to be recorded at fair value using the

ASC 805 measurement principle.

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." Under current accounting standards, contract assets and contract liabilities acquired in a business combination are to be recorded at fair value using the ASC 805 measurement principle.

ASU 2021-08 requires the acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606:

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There was no impact to the Company’s consolidated financial statements as of the adoption date.

During the three-month period ended April 3, 2022, there have been no other newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a material impact on the Company’s financial statements.

Further, at April 3, 2022, there are no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements.

During the six-month period ended July 3, 2022, there have been no other newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a material impact on the Company’s financial statements.

Further, at July 3, 2022, there are no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements.

SONOCO PRODUCTS COMPANY

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Acquisitions and Divestitures

On January 26, 2022, the Company completed the acquisition of Ball Metalpack Holding, LLC ("Ball Metalpack"), a leading supplier of sustainable metal packaging for food and household products and the largest aerosol can producer in North America, for $ 1,348,589 , net of cash acquired.

Ball Metalpack was a joint venture owned by Platinum Equity ( 51 %) and Ball Corporation ( 49 %).

Ball Metalpack was formed in 2018 and consists of eight manufacturing plants in the United States and a headquarters facility in Broomfield, Colorado.

This acquisition fits the Company's strategy of investing in its core businesses as it complements the Company's largest Consumer Packaging franchise – global rigid paper containers.

In addition, it further expands the Company's sustainable packaging portfolio to include metal packaging.

Final consideration is subject to customary post-closing adjustments for working capital, cash and indebtedness.

The Company's funding of the acquisition was based on an estimate of cash on hand at closing.

The actual cash on hand at January 26, 2022 was $ 6,924 lower than estimated;

accordingly, the Company has recorded a receivable for this amount from the sellers on its Condensed Consolidated Balance Sheet at April 3, 2022.

The post-closing adjustments are expected to be finalized during the second quarter of 2022.

The preliminary fair values of the assets acquired and the liabilities assumed in the Ball Metalpack acquisition are as follows:

On January 26, 2022, the Company completed the acquisition of Ball Metalpack Holding, LLC, renamed Sonoco Metal Packaging ("Metal Packaging"), a leading supplier of sustainable metal packaging for food and household products and the largest aerosol can producer in North America, for $ 1,348,589 , net of cash acquired.

As previously disclosed, final consideration was subject to customary post-closing adjustments for working capital, cash and indebtedness and was finalized in the second quarter of 2022.

The Company received cash from the sellers totaling $ 14,820 , of which $ 6,924 was included in "Other receivables" in the Company's Condensed Consolidated Balance Sheet at April 3, 2022.

Prior to the Company's acquisition of Metal Packaging, Ball Metalpack Holding, LLC was a joint venture formed in 2018 and owned by Platinum Equity ( 51 %) and Ball Corporation ( 49 %).

Metal Packaging consists of eight manufacturing plants in the United States and a headquarters facility in Broomfield, Colorado.

This acquisition fits the Company's strategy of investing in its core businesses as it complements the Company's largest Consumer Packaging franchise, global rigid paper containers, and further expands the Company's sustainable packaging portfolio to include metal packaging.

The Company's initial preliminary fair values of the assets acquired and the liabilities assumed in the Metal Packaging acquisition, as well as revised preliminary fair values reflecting measurement period adjustments made during the second quarter of 2022, are as follows:

Initial Allocation Measurement Period Adjustments Revised Allocation

Trade accounts receivable $ 123,001 $ — $ 123,001

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Goodwill 366,098 ( 10,151 ) 355,947

Other net tangible assets 48,069 ( 196 ) 47,873

Payable to suppliers ( 105,580 ) — ( 105,580 )

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Deferred income taxes ( 52,312 ) 1,805 ( 50,507 )

Other net tangible assets 48,069

Net assets, excluding cash $ 1,341,665

Factors comprising goodwill include increased access to certain markets as well as the value of the assembled workforce.

Approximately 78 % of goodwill is expected to be deductible for income tax purposes.

Ball Metalpack's financial results are included in the Company's Consumer Packaging segment.

The allocation of the purchase price of Ball Metalpack to the tangible and intangible assets acquired and liabilities assumed was based on the Company's preliminary estimates of their fair value, based on information currently available.

Total purchase price, net of cash acquired $ 1,341,665 $ ( 7,896 ) $ 1,333,769

The allocation of the purchase price of Metal Packaging to the tangible and intangible assets acquired and liabilities assumed, as reflected under the heading "Revised Valuation" in the table above, is based on the Company's preliminary estimates of their fair value, based on information currently available.

Management is continuing to finalize its valuation of certain assets and liabilities including, but not limited to:

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deferred income taxes;

and trade accounts receivable, and expects to complete its valuations within one year of the date of acquisition.

trade accounts receivable;

and accrued expenses and other, and expects to complete its valuations within one year of the date of acquisition.

Factors comprising goodwill include increased access to certain markets as well as the value of the assembled workforce.

Approximately 67 % of goodwill is expected to be deductible for income tax purposes.

Metal Packaging's financial results are included in the Company's Consumer Packaging segment.

The Company has accounted for this acquisition as a business combination under the acquisition method and has included the results of operations of the acquired business in the Company's Condensed Consolidated Statements of Income from the date of acquisition.

These results include a $ 25,000 charge related to the amortization of the fair value step-up of finished goods inventory acquired and sold through to customers from the date of acquisition through April 3, 2022.

The following table presents the unaudited financial results for Ball Metalpack from the date of acquisition through the end of the three month period ended April 3, 2022:

SONOCO PRODUCTS COMPANY

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(Dollars and shares in thousands except per share data)

Supplemental Information (unaudited) January 26 to

Ball Metalpack April 3, 2022

Actual net sales $ 171,228

Actual net income $ 14,019

The following table presents the Company’s estimated unaudited pro forma consolidated results for the three month periods ended April 3, 2022 and April 4, 2021, assuming the acquisition of Ball Metalpack had occurred on January 1, 2021.

The following table presents the unaudited financial results for Metal Packaging for the three-month period ended July 3, 2022 and from the date of acquisition through July 3, 2022:

Supplemental Information (unaudited) Three Months Ended January 26 to

Metal Packaging July 3, 2022 July 3, 2022

Net sales $ 291,332 $ 462,550

Net income $ 30,428 $ 44,447

The following table presents the Company’s estimated unaudited pro forma consolidated results for the three- and six-month periods ended July 3, 2022 and July 4, 2021, assuming the acquisition of Metal Packaging had occurred on January 1, 2021.

This unaudited pro forma information is presented for informational purposes only and does not purport to represent the results of operations that would have been achieved if the acquisition had been completed at the beginning of 2021, nor is it necessarily indicative of future consolidated results.

Pro Forma Supplemental Information (unaudited) Three Months Ended

Consolidated April 3, 2022 April 4, 2021

Pro Forma Supplemental Information (unaudited) Three Months Ended Six Months Ended

Consolidated July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Net sales $ 1,913,332 $ 1,573,964 $ 3,733,902 $ 3,123,580

Net income attributable to Sonoco $ 164,881 $ 20,813

Net income/(loss) attributable to Sonoco $ 140,360 $ ( 337,526 ) $ 305,240 $ ( 320,031 )

The unaudited pro forma information above does not project the Company’s expected results for any future period and gives no effect to any future synergistic benefits that may result from the combination or the costs of integrating the acquired operations with those of the Company.

Unaudited pro forma information for the three-month periods ended April 3, 2022 and April 4, 2021 includes adjustments to depreciation, amortization, and income taxes based upon the fair value allocation of the purchase price to Ball Metalpack's tangible and intangible assets acquired and liabilities assumed as though the acquisition had occurred on January 1, 2021.

Unaudited pro forma information for the three and six months ended July 3, 2022 and July 4, 2021 includes adjustments to depreciation, amortization, and income taxes based upon the preliminary fair value allocation of the purchase price to Metal Packaging's tangible and intangible assets acquired and liabilities assumed as though the acquisition had occurred on January 1, 2021.

Interest expense on the additional debt issued by the Company to fund the acquisition and retention bonuses incurred related to the acquisition are also included in the unaudited pro forma information as if the acquisition had occurred on January 1, 2021.

Acquisition-related costs of $ 22,284 and a charge related to fair value adjustments to acquisition-date inventory of $ 25,000 were recognized during the three months ended April 3, 2022.

Acquisition-related costs of $ 4,117 and $ 26,402 and charges related to fair value adjustments to acquisition-date inventory of $ 8,155 and $ 33,155 were recognized during the three- and six-month periods ended July 3, 2022, respectively.

These costs are excluded from 2022 unaudited pro forma net income and are instead reflected in 2021 pro forma net income as though they were incurred on January 1, 2021.

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Acquisition and Divestiture-Related Costs

Acquisition-related costs totaled $ 48,352 during the three months ended April 3, 2022 primarily related to the Ball Metalpack acquisition.

These charges included the partial amortization of the fair value step-up of finished goods inventory of $ 25,000 , included in "Cost of sales" in the Company's Condensed Consolidated Statements of Income, and other acquisition-related charges of $ 23,352 .

These other charges consisted primarily of investment banking fees, representation and warranty insurance premiums, legal and professional fees, and other transaction costs and are included in "Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.

Acquisition- and divestiture-related costs totaled $ 12,281 and $ 60,633 during the three- and six-month periods ended July 3, 2022, respectively, primarily related to the Metal Packaging acquisition.

These costs include charges related

SONOCO PRODUCTS COMPANY

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(Dollars and shares in thousands except per share data)

Acquisition and divestiture-related costs totaled $ 10,025 during the three months ended April 4, 2021.

to fair value adjustments to acquisition-date inventory totaling $ 8,155 and $ 33,155 during the three- and six-month periods ended July 3, 2022, respectively, which are included in "Cost of sales" in the Company's Condensed Consolidated Statements of Income.

Other acquisition-related costs consisting primarily of investment banking fees, representation and warranty insurance premiums, legal and professional fees, and other transaction costs, totaled $ 4,126 and $ 27,478 during the three- and six-month periods ended July 3, 2022, respectively, and are included in "Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.

Acquisition and divestiture-related costs totaled $ 1,462 and $ 11,488 during the three- and six-month periods ended July 4, 2021, respectively.

These costs, consisting primarily of legal and professional fees, are included in “Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.

Shareholders' Equity

Earnings per Share

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

Three Months Ended

April 3, 2022 April 4, 2021

Net income attributable to Sonoco $ 115,333 $ 72,297

Earnings/(loss) per Share

The following table sets forth the computation of basic and diluted earnings/(loss) per share:

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Net income/(loss) attributable to Sonoco $ 131,672 $ ( 334,070 ) $ 247,005 $ ( 261,774 )

Weighted average common shares outstanding:

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Diluted 98,686 100,082 98,621 100,571

Net income attributable to Sonoco per common share:

Net income/(loss) attributable to Sonoco per common share:

Basic $ 1.34 $ ( 3.34 ) $ 2.52 $ ( 2.60 )

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Cash dividends $ 0.49 $ 0.45 $ 0.94 $ 0.90

No adjustments were made to "Net income attributable to Sonoco" in the computations of net income attributable to Sonoco per common share.

No adjustments were made to "Net income/(loss) attributable to Sonoco" in the computations of net income/(loss) attributable to Sonoco per common share.

Anti-dilutive Securities

Potentially dilutive securities are calculated in accordance with the treasury stock method, which assumes the proceeds from the exercise of all dilutive stock appreciation rights ("SARs") are used to repurchase the Company’s common stock.

Certain SARs are not dilutive because either the exercise price is greater than the average market price of the stock during the reporting period or assumed repurchases from proceeds from the exercise of the SARs were antidilutive.

These SARs may become dilutive in the future if the market price of the Company's common stock appreciates.

The average numbers of SARs that were anti-dilutive and, therefore, not included in the computation of diluted earnings per share during the three month periods ended April 3, 2022 and April 4, 2021 were as follows (in thousands):

Three Months Ended

April 3, 2022 April 4, 2021

The average numbers of SARs that were anti-dilutive and, therefore, not included in the computation of diluted earnings per share during the three- and six-month periods ended July 3, 2022 and July 4, 2021 were as follows (in thousands):

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Anti-dilutive stock appreciation rights 374 — 387 214

Stock Repurchases

On April 20, 2021, the Company's Board of Directors (the "Board") authorized the repurchase of the Company's common stock in an aggregate amount of up to $ 350,000 .

Following several repurchase transactions in 2021, a total of $ 137,972 remained available for share repurchases under this authorization as of December 31, 2021.

No shares were purchased under this authorization during the three months ended April 3, 2022.

The Company frequently repurchases shares of its common stock to satisfy employee tax withholding obligations in association with certain share-based compensation awards.

These repurchases, which are not part of a publicly announced plan or program, totaled 60 shares during the three months ended April 3, 2022, at a cost of $ 3,410 , and 85 shares during the three months ended April 4, 2021, at a cost of $ 5,051 .

SONOCO PRODUCTS COMPANY

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(Dollars and shares in thousands except per share data)

Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued unless doing so is anti-dilutive.

Such securities have an anti-dilutive impact in those periods in which a loss is reported.

Diluted net loss per share of common stock for the three- and six-month periods ended July 4, 2021 is the same as basic net loss per share because otherwise dilutive securities are excluded from the computation of diluted net loss per share.

The following table sets forth the potentially dilutive securities excluded from the computation of diluted net loss per share during the three- and six-month periods ended July 4, 2021:

Three Months Ended Six Months Ended

July 4, 2021 July 4, 2021

Dilutive securities excluded due to reported loss 486 469

Stock Repurchases

On April 20, 2021, the Company's Board of Directors (the "Board") authorized the repurchase of the Company's common stock in an aggregate amount of up to $ 350,000 .

Following several repurchase transactions in 2021, a total of $ 137,972 remained available for share repurchases under this authorization as of December 31, 2021.

No shares were purchased under this authorization during the six months ended July 3, 2022.

On May 10, 2021, the Company entered into an accelerated share repurchase agreement ("ASR Agreement") with a financial institution to repurchase outstanding shares of the Company's common stock.

In exchange for an upfront payment of $ 150,000 , which was funded with available cash on hand, the financial institution delivered 1,751 initial shares to the Company, representing 80 % of the expected number of shares to be repurchased during the repurchase period based upon an estimated average repurchase price of $ 68.50 per share.

The initial shares received were retired by the Company.

The final number of shares to be repurchased and retired were based on the Company's volume-weighted average share price during the repurchase period, less a discount and subject to certain adjustments.

The financial institution could have elected to settle all or any part of the transaction at any time between July 9, 2021 and September 11, 2021.

As of July 4, 2021, the unsettled portion of the ASR Agreement represented a forward contract indexed to the Company's own stock which was recognized within shareholders’ equity as "Capital in excess of stated value."

On May 6, 2021, the Company repurchased 54 shares for $ 3,615 from a private stockholder based upon the average closing stock price on that day.

The cost of these share repurchases, as well as those related to the accelerated share agreement mentioned above, was allocated to "Capital in excess of stated value" on the Company's Condensed Consolidated Balance Sheet for the period ended July 4, 2021.

The Company regularly repurchases shares of its common stock to satisfy employee tax withholding obligations in association with certain share-based compensation awards.

These repurchases, which are not part of a publicly announced plan or program, totaled 70 shares during the six months ended July 3, 2022, at a cost of $ 3,984 , and 98 shares during the six months ended July 4, 2021, at a cost of $ 5,956 .

Dividend Declarations

On February 9, 2022, the Board of Directors declared a regular quarterly dividend of $ 0.45 per share.

This dividend was paid on March 10, 2022 to all shareholders of record as of February 23, 2022.

On April 20, 2022, the Board of Directors declared a regular quarterly dividend of $ 0.49 per share.

This dividend is payable on June 10, 2022 to all shareholders of record as of May 10, 2022.

This dividend was paid on June 10, 2022 to all shareholders of record as of May 10, 2022.

On July 20, 2022, the Board of Directors declared a regular quarterly dividend of $ 0.49 per share.

This dividend is payable on September 9, 2022 to all shareholders of record as of August 10, 2022.

Noncontrolling interests

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Prior to March 31, 2022, the Company consolidated 100% of Graffo, with the partner's 33 % share included in “Noncontrolling Interests” within the equity section of the balance sheet.

On March 31, 2022, the Company paid $ 14,474 in cash to acquire the remaining 33 % ownership interest from the three noncontrolling partners, which resulted in a $ 6,116 reduction in noncontrolling interest, a $ 7,080 charge to capital in excess of stated value, and a $ 1,278 reduction to accrued expenses and other on the Company's Condensed Consolidated Balance Sheet as of April 3, 2022.

Restructuring and Asset Impairment

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Restructuring and Asset Impairments

Due to its geographic footprint and the cost-competitive nature of its businesses, the Company is continually seeking the most cost-effective means and structure to serve its customers and to respond to fundamental changes in its markets.

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The amount of these costs can vary significantly from quarter to quarter and from year to year depending upon the scope and location of the restructuring activities.

Following are the total restructuring and asset impairment charges, net of adjustments, recognized during the periods presented:

Three Months Ended

April 3, 2022 April 4, 2021

Restructuring and restructuring-related asset impairment charges $ 5,753 $ 2,697

Following are the total restructuring and asset impairment charges/(income), net of adjustments, recognized during the periods presented:

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Restructuring and restructuring-related asset impairment charges/(income) $ 6,857 $ ( 1,853 ) $ 12,610 $ 844

Other asset impairments 3,706 408 10,095 4,557

Restructuring/Asset Impairment Charges $ 12,142 $ 6,846

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

The table below sets forth restructuring and restructuring-related asset impairment charges by type incurred:

Three Months Ended

April 3, 2022 April 4, 2021

Restructuring/Asset Impairment Charges/(Income) $ 10,563 $ ( 1,445 ) $ 22,705 $ 5,401

The table below sets forth restructuring and restructuring-related asset impairment charges/(income) by type incurred:

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Severance and Termination Benefits $ 2,214 $ 2,438 $ 4,313 $ 3,866

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Other Costs 3,856 1,330 7,065 3,463

Restructuring and restructuring-related asset impairment charges $ 5,753 $ 2,697

The table below sets forth restructuring and restructuring-related asset impairment charges by reportable segment:

Three Months Ended

April 3, 2022 April 4, 2021

Restructuring and restructuring-related asset impairment charges/(income) $ 6,857 $ ( 1,853 ) $ 12,610 $ 844

The table below sets forth restructuring and restructuring-related asset impairment charges/(income) by reportable segment:

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Consumer Packaging $ 2,544 $ 173 $ 4,179 $ 1,258

2 unchanged sentences

Corporate 3,801 ( 9 ) 6,493 5

Restructuring and restructuring-related asset impairment charges $ 5,753 $ 2,697

Restructuring and restructuring-related asset impairment charges are included in “Restructuring/Asset impairment charges” in the Company's Condensed Consolidated Statements of Income.

Restructuring and restructuring-related asset impairment charges/(income) $ 6,857 $ ( 1,853 ) $ 12,610 $ 844

Restructuring and restructuring-related asset impairment charges/(income) are included in “Restructuring/Asset impairment charges/(income)” in the Company's Condensed Consolidated Statements of Income.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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:

7 unchanged sentences

Foreign currency translation ( 83 ) — ( 38 ) ( 121 )

Liability at April 3, 2022

Liability at July 3, 2022

$ 8,123 $ — $ 1,737 $ 9,860

"Severance and Termination Benefits" during the first three months of 2022 includes the cost of severance for approximately 125 employees whose positions were eliminated in conjunction with the Company's ongoing organizational effectiveness efforts.

"Asset Impairment/Disposal of Assets" during the first three months of 2022 consists primarily of asset impairments in the Industrial Paper Packaging segment.

“Other Costs” during the first three months of 2022 consists primarily of costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance.

"Severance and Termination Benefits" during the first six months of 2022 includes the cost of severance for approximately 150 employees whose positions were eliminated in conjunction with the Company's ongoing organizational effectiveness efforts.

"Asset Impairments/Disposal of Assets" during the first six months of 2022 consists primarily of asset impairment charges related to plant closures in the Consumer Packaging and Industrial Paper Packaging segments, partially offset by a gain from the sale of a previously closed facility in our "All Other" group of businesses.

Cash proceeds in the first six months of 2022 relate to the sale of this facility as well as the partial sale of a previously closed operation in Canada, part of the Industrial Paper Packaging segment.

“Other Costs” during the first six months of 2022 consists primarily of consulting services and costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance.

The Company expects to pay the majority of the remaining restructuring reserves by the end of 2022 using cash generated from operations.

1 unchanged sentence

The Company continually evaluates its cost structure, including its manufacturing capacity, and additional restructuring actions are likely to be undertaken.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Other Asset Impairments

The Company recognized other asset impairment charges totaling $ 6,389 and $ 4,149 in the three months ended April 3, 2022 and April 4, 2021, respectively.

The charges in the three months ended April 3, 2022 include $ 5,713 of impairment charges related to the Company's decision to ex it its operations in Russia, part of the Industrial Paper Packaging segment, as a result of the ongoing Russia-Ukraine conflict, and $ 676 of fixed asset impairments in the Company's plastics foods operatio ns, part of the Consumer Packaging segment.

Other asset impairment charges in the first quarter of 2021 consisted of fixed asset impairments totaling $ 1,750 in the Company's plastics foods operations, part of the Consumer Packaging segment, and $ 2,399 in the temperature-assured packaging business, part of the All Other group of businesses.

The Company recognized other asset impairment charges totaling $ 3,706 and $ 10,095 in the three and six months ended July 3, 2022, respectively.

The charges in the three and six months ended July 3, 2022 include net asset impairment charges totaling $ 3,452 and $ 9,165 , respectively, resulting from the Company's decision in the first quarter of 2022 to exit its operations in Russia, consisting of two small tube and core plants in our Industrial Paper Packaging segment, as a result of the ongoing Russia-Ukraine conflict.

These charges incl ude $ 3,747 of cumulative translation adjustment losses that were reclassified from accumulated other comprehensive income upon completion of the Company's exit from Russia on July 1, 2022.

The charges also include $ 254 and $ 930 of fixed asset impairments in the Company's plastics foods operatio ns, part of the Consumer Packaging segment, in the three and six months ended July 3, 2022, respectively.

These assets were determined to be impaired as the value of their projected undiscounted cash flows was no longer sufficient to recover their carrying value.

These impairment charges are included in “Restructuring/Asset impairment charges” in the Company’s Condensed Consolidated Statements of Income.

The Company recognized other asset impairment charges totaling $ 408 and $ 4,557 in the three and six months ended July 4, 2021, respectively.

The year-to-date charges consist of fixed asset impairments totaling $ 2,158 in the Company's plastics foods operations, part of the Consumer Packaging segment, and $ 2,399 in the temperature-assured packaging business, part of the All Other group of businesses.

The assets were impaired as the value of their projected undiscounted cash flows was determined to no longer be sufficient to recover their carrying value.

These impairment charges are included in “Restructuring/Asset impairment charges/(income)” in the Company’s Condensed Consolidated Statements of Income.

SONOCO PRODUCTS COMPANY

2 unchanged sentences

Accumulated Other Comprehensive Loss

The following table summarizes the components of accumulated other comprehensive loss and the changes in the balances of each component of accumulated other comprehensive loss, net of tax as applicable, for the three months ended April 3, 2022 and April 4, 2021:

Items Defined

8 unchanged sentences

Other comprehensive (loss)/income ( 69,975 ) ( 1,737 ) 460 ( 71,252 )

Balance at April 3, 2022

Balance at July 3, 2022

$ ( 339,051 ) $ ( 93,134 ) $ 1,508 $ ( 430,677 )

1 unchanged sentence

$ ( 194,024 ) $ ( 562,747 ) $ ( 71 ) $ ( 756,842 )

Other comprehensive loss before reclassifications ( 32,021 ) 115 998 ( 30,908 )

Amounts reclassified from accumulated other comprehensive loss to net income — 5,270 ( 30 ) 5,240

Other comprehensive (loss)/income before reclassifications ( 20,184 ) 10,888 5,219 ( 4,077 )

Amounts reclassified from accumulated other comprehensive loss to net loss — 417,242 ( 733 ) 416,509

Amounts reclassified from accumulated other comprehensive loss to fixed assets — — ( 46 ) ( 46 )

Other comprehensive (loss)/income ( 20,184 ) 428,130 4,440 412,386

Balance at April 4, 2021

Balance at July 4, 2021

$ ( 214,208 ) $ ( 134,617 ) $ 4,369 $ ( 344,456 )

2 unchanged sentences

(Dollars and shares in thousands except per share data)

The following table summarizes the effects on net income of significant amounts reclassified from each component of accumulated other comprehensive loss for the three month periods ended April 3, 2022 and April 4, 2021:

The following table summarizes the effects on net income of significant amounts reclassified from each component of accumulated other comprehensive loss for the three- and six-month periods ended July 3, 2022 and July 4, 2021:

Amount Reclassified from Accumulated

Other Comprehensive Loss

Three Months Ended

Three Months Ended Six Months Ended

Details about Accumulated Other

Comprehensive

Loss Components April 3,

2022 April 4,

Loss Components July 3,

2021 Affected Line Item in

1 unchanged sentence

Statements of Income

Foreign currency items

Loss on Russia restructuring (a)

$ ( 3,747 ) — $ ( 3,747 ) — Restructuring/Asset impairment charges

Gains/(losses) on cash flow hedges

2 unchanged sentences

Commodity contracts 1,979 646 2,937 575 Cost of sales

$ 3,721 $ 41 Income before income taxes

( 1,067 ) ( 11 ) Provision for income taxes

$ 2,654 $ 30 Net income

1,811 945 3,097 986 Income/(Loss) before income taxes

Income tax impact ( 529 ) ( 241 ) ( 898 ) ( 253 ) Provision for/(Benefit from) income taxes

1,282 704 2,199 733 Net income/(loss)

Defined benefit pension items

Effect of settlement loss (a)

Effect of settlement loss (b)

( 74 ) ( 547,631 ) ( 430 ) ( 547,631 ) Non-operating pension costs

Amortization of defined

benefit pension items (a)

benefit pension items (b)

( 1,255 ) ( 6,432 ) ( 2,426 ) ( 13,333 ) Non-operating pension costs

$ ( 1,527 ) $ ( 6,901 ) Income before income taxes

365 1,631 Provision for income taxes

$ ( 1,162 ) $ ( 5,270 ) Net income

Total reclassifications for the period $ 1,492 $ ( 5,240 ) Net income

( 1,329 ) $ ( 554,063 ) ( 2,856 ) ( 560,964 ) Income/(Loss) before income taxes

Income tax impact 335 142,090 700 143,722 Provision for/(Benefit from) income taxes

( 994 ) $ ( 411,973 ) ( 2,156 ) ( 417,242 ) Net income/(loss)

Total reclassifications for the period $ ( 3,459 ) $ ( 411,269 ) $ ( 3,704 ) $ ( 416,509 ) Net income/(loss)

(a) See Note 5 for additional details.

(b) See Note 11 for additional details.

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(Dollars and shares in thousands except per share data)

The following table summarizes the before and after tax amounts for the various components of other comprehensive income/(loss) for the three-month periods ended April 3, 2022 and April 4, 2021:

The following table summarizes the before and after tax amounts for the various components of other comprehensive income/(loss) for the three-month periods ended July 3, 2022 and July 4, 2021:

Three months ended

April 3, 2022

Three months ended

April 4, 2021

Benefit After Tax

2 unchanged sentences

Foreign currency items:

Net other comprehensive loss from foreign currency items $ ( 185 ) $ — $ ( 185 ) $ ( 32,021 ) $ — $ ( 32,021 )

Other comprehensive (loss)/income before

reclassifications $ ( 73,537 ) $ — $ ( 73,537 ) $ 11,837 $ — $ 11,837

Amounts reclassified from accumulated other

comprehensive loss to net income/(loss) (a)

3,747 — 3,747 — — —

Net other comprehensive (loss)/income from

foreign currency items ( 69,790 ) — ( 69,790 ) — 11,837 — 11,837

Defined benefit pension items:

2 unchanged sentences

Amounts reclassified from accumulated other

comprehensive loss to net income (a)

comprehensive loss to net income/(loss) (b)

1,329 ( 335 ) 994 554,063 ( 142,090 ) 411,973

Net other comprehensive income/(loss) from

Net other comprehensive (loss)/income from

defined benefit pension items ( 2,578 ) 650 ( 1,928 ) 568,276 ( 145,531 ) 422,745

3 unchanged sentences

Amounts reclassified from accumulated other

comprehensive loss to net income ( 3,721 ) 1,067 ( 2,654 ) ( 41 ) 11 ( 30 )

comprehensive loss to net income/(loss) ( 1,811 ) 529 ( 1,282 ) ( 945 ) 241 ( 704 )

Amounts reclassified from accumulated other

4 unchanged sentences

(a) See Note 5 for additional details.

(b) See Note 11 for additional details.

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(Dollars and shares in thousands except per share data)

The following table summarizes the before and after tax amounts for the various components of other comprehensive income/(loss) for the six-month periods ended July 3, 2022 and July 4, 2021:

Six months ended July 3, 2022 Six months ended July 4, 2021

Benefit After Tax

Amount Before Tax

Benefit After Tax

Foreign currency items:

Other comprehensive loss before

reclassifications $ ( 73,722 ) $ — $ ( 73,722 ) $ ( 20,184 ) $ — $ ( 20,184 )

Amounts reclassified from accumulated other

comprehensive loss to net income/(loss) (a)

3,747 — 3,747 — — —

Net other comprehensive loss from

foreign currency items ( 69,975 ) — ( 69,975 ) ( 20,184 ) — ( 20,184 )

Defined benefit pension items:

Other comprehensive (loss)/income before

reclassifications ( 5,183 ) 1,290 ( 3,893 ) 14,364 ( 3,476 ) 10,888

Amounts reclassified from accumulated other

comprehensive loss to net income/(loss) (b)

2,856 ( 700 ) 2,156 560,964 ( 143,722 ) 417,242

Net other comprehensive (loss)/income from

defined benefit pension items ( 2,327 ) 590 ( 1,737 ) 575,328 ( 147,198 ) 428,130

Gains and losses on cash flow hedges:

Other comprehensive income/(loss) before

reclassifications 4,271 ( 1,224 ) 3,047 7,012 ( 1,793 ) 5,219

Amounts reclassified from accumulated other

comprehensive loss to net income/(loss) ( 3,097 ) 898 ( 2,199 ) ( 986 ) 253 ( 733 )

Amounts reclassified from accumulated other

comprehensive loss to fixed assets ( 552 ) 164 ( 388 ) ( 62 ) 16 ( 46 )

Net other comprehensive income/(loss) from

cash flow hedges 622 ( 162 ) 460 5,964 ( 1,524 ) 4,440

Other comprehensive income/(loss) $ ( 71,680 ) $ 428 $ ( 71,252 ) $ 561,108 $ ( 148,722 ) $ 412,386

(a) See Note 5 for additional details.

(b) See Note 11 for additional details.

Goodwill and Other Intangible Assets

A summary of the changes in goodwill for the three months ended April 3, 2022 is as follows:

A summary of the changes in goodwill for the six months ended July 3, 2022 is as follows:

Packaging Industrial Paper Packaging All Other Total

2 unchanged sentences

Foreign currency translation ( 10,377 ) ( 8,918 ) ( 2,795 ) ( 22,090 )

Goodwill at April 3, 2022 $ 937,762 $ 367,023 $ 383,522 $ 1,688,308

Goodwill from 2022 acquisitions relates to the acquisition of Ball Metalpack.

Measurement period adjustments ( 10,151 ) — — ( 10,151 )

Goodwill at July 3, 2022 $ 917,986 $ 358,862 $ 381,510 $ 1,658,358

Goodwill activity reflected under the captions "2022 Acquisitions" and "Measurement period adjustments" relate to the January 26, 2022 acquisition of Metal Packaging.

See Note 3 for additional information.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

The Company assesses goodwill for impairment annually during the third quarter, or from time to time when warranted by the facts and circumstances surrounding individual reporting units or the Company as a whole.

7 unchanged sentences

Assuming COVID-19 infection rates continue to decline, management expects market demand will improve throughout 2022 and that selling price increases and/or cost reductions, including restructuring actions and investments in production efficiency projects, will mitigate the impacts of recent raw material and other cost inflation.

However, should it become apparent that the ongoing post-COVID-19 recovery is likely to be significantly weaker, delayed, or prolonged compared to management’s current expectations, significant negative price/cost relationships will persist over the long-term, or profit margins do not improve as expected, goodwill impairment charges may be possible in the future.

However, should it become apparent that the ongoing post-COVID-19 recovery is likely to be significantly weaker, delayed, or prolonged compared to management’s current expectations, significant negative price/cost relationships will persist over the long-term, profit margins do not improve as expected, or other assumptions change, such as the discount rate, goodwill impairment charges may be possible in the future.

In the annual goodwill impairment analysis completed during the third quarter of 2021, projected future cash flows for the Plastics - Healthcare reporting unit were discounted at 8.3 % and its estimated fair value was determined to exceed its carrying value by approximately 13.3 %.

Based on the discounted cash flow model and holding other valuation assumptions constant, projected operating profits across all future periods would have to be reduced approximately 13.0 %, or the discount rate increased to 9.3 %, in order for the estimated fair value of the reporting unit to fall below carrying value.

Total goodwill associated with this reporting unit was $ 63,681 at April 3, 2022.

During the time subsequent to the annual evaluation, and at April 3, 2022, the Company considered whether any events and/or changes in circumstances had resulted in the likelihood that the goodwill of any of its reporting units may have been impaired.

Total goodwill associated with this reporting unit was $ 62,404 at July 3, 2022.

During the time subsequent to the annual evaluation, and at July 3, 2022, the Company considered whether any events and/or changes in circumstances had resulted in the likelihood that the goodwill of any of its reporting units may have been impaired.

It is management's opinion that no such events and/or changes in circumstances have occurred.

3 unchanged sentences

Other Intangible Assets

A summary of other intangible assets as of April 3, 2022 and December 31, 2021 is as follows:

A summary of other intangible assets as of July 3, 2022 and December 31, 2021 is as follows:

2022 December 31,

14 unchanged sentences

Other Intangible Assets, net $ 733,214 $ 278,143

The acquisition of Ball Metalpack on January 26, 2022 resulted in the addition of $ 498,000 of intangible assets, primarily customer relationships and proprietary technology, which are expected to be amortized over their average useful lives of approximately 13.6 years.

See Note 3 for additional information about the Ball Metalpack acquisition.

The acquisition of Metal Packaging on January 26, 2022 resulted in the addition of $ 498,000 of intangible assets, primarily customer lists and proprietary technology, which are expected to be amortized over their average useful lives of approximately 13.6 years.

See Note 3 for additional information about the Metal Packaging acquisition.

Other Intangible Assets are amortized on a straight-line basis over their respective useful lives, which generally range from three to forty years .

The Company has no intangible assets with indefinite lives.

Aggregate amortization expense was $ 18,800 and $ 12,749 for the three months ended April 3, 2022 and April 4, 2021, respectively, and on an annual basis is expected to total approximately $ 81,400 in 2022, $ 79,700 in 2023, $ 71,000 in 2024, $ 60,500 in 2025 and $ 57,900 in 2026.

Details of the Company's debt at April 3, 2022 and December 31, 2021 are as follows:

Aggregate amortization expense was $ 20,871 and $ 12,111 for the three months ended July 3, 2022 and July 4, 2021, respectively, an d $ 39,671 and $ 24,860 for the six months ended July 3, 2022 and July 4, 2021, respectively.

Amortization expense on other intangible assets is expected to total approximately $ 81,200 in 2022, $ 79,500 in 2023, $ 71,400 in 2024, $ 60,900 in 2025 and $ 57,900 in 2026.

Details of the Company's debt at July 3, 2022 and December 31, 2021 are as follows:

2022 December 31,

18 unchanged sentences

On January 21, 2022, the Company completed a registered public offering of green bonds with an aggregate principal amount of $ 1,200,000 .

The unsecured notes (the "Notes") consisted of the following:

These unsecured notes (the "Notes") consisted of the following:

Principal Amount Issuance Costs and Discounts Net Proceeds Interest Rate Maturity

3 unchanged sentences

Total $ 1,200,000 $ ( 10,141 ) $ 1,189,859

The Notes are the Company’s senior unsecured obligations and rank equal in right of payment to the Company’s other senior unsecured debt from time to time outstanding.

The Notes are senior unsecured obligations and rank equal in right of payment to the Company’s other senior unsecured debt from time to time outstanding.

The indenture governing the Notes contains certain covenants with respect to the Company that, among other things, restrict the entry into additional secured indebtedness, sale and leaseback transactions and certain mergers, consolidations and transfers of all or substantially all of the Company’s assets.

The Company used an amount equal to the net proceeds from the Notes of $ 1,189,859 to partially fund the acquisition of Ball Metalpack.

The Company used an amount equal to the net proceeds from the Notes to partially fund the January 26, 2022 acquisition of Metal Packaging.

Also on January 21, 2022, the Company entered into a $ 300,000 three-year term loan facility (the "Term Loan Facility") with a syndicate of eight banks.

The full $ 300,000 was drawn from this facility on January 26, 2022, and the proceeds used to partially fund the acquisition of Ball Metalpack.

The full $ 300,000 was drawn from this facility on January 26, 2022, and the proceeds used to partially fund the acquisition of Metal Packaging.

Interest is assessed at the Secured Overnight Financing Rate ("SOFR") plus a margin based on a pricing grid that uses the Company’s credit ratings.

1 unchanged sentence

There is no required amortization and repayment can be accelerated at any time without penalty at the Company's discretion.

Borrowings under the Term Loan Facility mature on January 27, 2025.

On April 28, 2021, the Company commenced a cash tender offer to purchase up to $ 300,000 of the $ 600,000 then-outstanding principal amount of its 5.750 % notes due November 2040.

Upon expiration of the tender offer on May 25, 2021, the Company repurchased 10.53 % of its outstanding 5.750 % notes for a total cash cost of $ 81,961 , as shown below:

Principal Amount Tendered Premium and Other Amounts Paid Total

5.750 % notes due November 2040

$ 63,206 $ 18,755 $ 81,961

On April 28, 2021, the Company entered into a reverse treasury lock agreement intended to fix the cash cost to fund approximately $ 100,000 of the maximum $ 300,000 principal amount subject to being tendered.

The settlement of the reverse treasury lock on May 13, 2021 resulted in a loss of $ 1,356 .

In addition, the Company wrote off a proportional share of unamortized bond issuance costs and unamortized original issue discounts associated with the 5.750 % notes.

These non-cash write-offs net to $ 73 , which combined with the hedge loss and premium and other amounts paid, resulted in a pretax loss from the early extinguishment of debt totaling $ 20,184 during each of the three- and six-month periods ended July 4, 2021.

The Company's 150,000 euro-denominated loan, which bore 1 % annual interest, matured on May 25, 2021, and a U.S.

dollar equivalent cash payment of $ 177,780 was made to settle the debt.

On April 7, 2021, the Company entered into two forward contracts to buy a total of 150,000 euros in order to manage foreign currency risk related to the Company's funding of the debt repayment upon maturity.

The Company recognized a gain of $ 4,387 upon the May 21, 2021 maturity of these forward contracts.

The gain is included in "Selling, general and administrative expenses" in the Company's Condensed Consolidated Statements of Income for the three and six months ended July 4, 2021 and the proceeds from the settlement of the contracts and the debt maturity payment are reflected in "Net cash provided/(used) by financing activities" in the Company's Condensed Consolidated Statement of Cash Flows for the six months ended July 4, 2021.

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 covenants currently require the Company to maintain a minimum level of interest coverage and a minimum level of net worth, as defined in the agreements.

As of July 3, 2022, the Company’s interest coverage and net worth were substantially above the minimum levels required under these covenants.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Financial Instruments and Derivatives

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

April 3, 2022 December 31, 2021

July 3, 2022 December 31, 2021

Value Carrying

3 unchanged sentences

Cash Flow Hedges

At April 3, 2022 and December 31, 2021, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows.

These contracts, which have maturities ranging to September 2023, qualify as cash flow hedges under U.S.

At July 3, 2022 and December 31, 2021, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows.

These contracts, which have maturities ranging to December 2024, qualify as cash flow hedges under U.S.

For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Commodity Cash Flow Hedges

Certain derivative contracts entered into to manage the cost of anticipated purchases of natural gas and aluminum have been designated by the Company as cash flow hedges.

At April 3, 2022, these contracts included natural gas swaps covering approximately 1.3 million MMBTUs.

These contracts represented approximately 23 % of anticipated usage in North America for the remainder of 2022.

At July 3, 2022, these contracts included natural gas swaps covering approximately 1.1 million MMBTUs.

These contracts represented approximately 25 % of anticipated usage in North America for the remainder of 2022, and 1 % of anticipated usage in both 2023 and 2024.

The Company also has certain natural gas hedges that it does not treat as cash flow hedges.

See "Non-Designated Derivatives" below for a discussion of these hedges.

At April 3, 2022, the Company had designated swap contracts covering 252 metric tons of aluminum as cash flow hedges.

At July 3, 2022, the Company had designated swap contracts covering 84 metric tons of aluminum as cash flow hedges.

These contracts represented approximately 3 % of anticipated aluminum usage for the remainder of 2022.

The fair value of the Company’s commodity cash flow hedges netted to a gain position of $ 3,865 at April 3, 2022 and a gain position of $ 1,491 at December 31, 2021.

The amount of the gain included in Accumulated Other Comprehensive Income at April 3, 2022 expected to be reclassified to the income statement during the next twelve months is $ 3,865 .

The fair value of the Company’s commodity cash flow hedges netted to a gain position of $ 2,700 and $ 1,491 at July 3, 2022 and December 31, 2021, respectively.

The amount of the gain included in Accumulated Other Comprehensive Income at July 3, 2022 expected to be reclassified to the income statement during the next twelve months is $ 2,696 .

Foreign Currency Cash Flow Hedges

The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales, purchases, and capital spending expected to occur in 2022 and 2023.

The net positions of these contracts at April 3, 2022 were as follows (in thousands):

The net positions of these contracts at July 3, 2022 were as follows (in thousands):

Currency Action Quantity

3 unchanged sentences

Czech koruna purchase 33,398

Euro purchase 10,449

Turkish lira purchase 9,356

Canadian dollar purchase 7,809

Euro purchase 11,543

British pound purchase 1,005

Brazilian real sell ( 6,286 )

Russian ruble sell ( 67,719 )

The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of $ 1,421 and $ 336 at April 3, 2022 and December 31, 2021, respectively.

Gains of $ 1,421 are expected to be reclassified from accumulated other comprehensive loss to the income statement during the next twelve months.

The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of $ 379 and $ 336 at July 3, 2022 and December 31, 2021, respectively.

Gains of $ 379 are expected to be

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

reclassified from accumulated other comprehensive loss to the income statement during the next twelve months.

In addition, the Company has entered into forward contracts to hedge certain foreign currency cash flow transactions related to construction in progress.

As of April 3, 2022 and December 31, 2021, the net position of these contracts was $( 333 ) and $( 457 ), respectively.

During the three months ended April 3, 2022, losses from these hedges totaling $( 432 ) were reclassified from accumulated other comprehensive loss and included in the carrying value of the capitalized expenditures.

As of July 3, 2022 and December 31, 2021, the net position of these contracts was $( 938 ) and $( 457 ), respectively.

During the six months ended July 3, 2022, losses from these hedges totaling $ 657 were reclassified from accumulated other comprehensive loss and included in the carrying value of the capitalized expenditures.

Losses of $ 875 are expected to be reclassified from accumulated other comprehensive loss and included in the carrying value of the related fixed assets acquired during the next twelve months.

2 unchanged sentences

As such, changes in fair value of these non-designated derivatives are recorded directly to income and expense in the periods that they occur.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Foreign Currency Hedges

The Company routinely enters into forward contracts or swaps to economically hedge the currency exposure of intercompany debt and foreign currency denominated receivables and payables.

The net currency positions of these non-designated contracts at April 3, 2022, were as follows (in thousands):

The net currency positions of these non-designated contracts at July 3, 2022, were as follows (in thousands):

Currency Action Quantity

3 unchanged sentences

Turkish lira purchase 36,904

Thai baht purchase 9,251

Canadian dollar purchase 4,026

Thai baht sell ( 12,571 )

Euro purchase 20

Commodity Hedges

The Company has entered into non-designated derivative contracts to manage the cost of anticipated purchases of natural gas.

At April 3, 2022, these contracts consisted of natural gas swaps covering approximately 2.6 million MMBTUs and represented approximately 46 % of anticipated usage in North America for the remainder of 2022.

At July 3, 2022, these contracts consisted of natural gas swaps covering approximately 5.3 million MMBTUs and represented approximately 46 % of anticipated usage in North America for the remainder of 2022, and 27 % and 17 % of anticipated usage in 2023 and 2024, respectively.

Interest Rate Hedges

3 unchanged sentences

The derivatives were settled when the bonds priced on January 11, 2022, with the Compan y recognizing a gain on the settlement of $ 5,201 .

The gain is included in "Selling, general and administrative expenses" on the Company's Condensed Consolidated Statements of Income for the three months ended April 3, 2022.

The fair value of the Company’s non-designated derivatives position was a gain of $ 6,717 and $ 92 at April 3, 2022 and December 31, 2021, respectively.

The following table sets forth the location and fair values of the Company’s derivative instruments at April 3, 2022 and December 31, 2021:

Description Balance Sheet Location April 3, 2022 December 31, 2021

The gain is included in "Selling, general and administrative expenses" on the Company's Condensed Consolidated Statements of Income for the six months ended July 3, 2022.

The fair value of the Company’s non-designated derivatives position was a gain of $ 3,679 and $ 92 at July 3, 2022 and December 31, 2021, respectively.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

The following table sets forth the location and fair values of the Company’s derivative instruments at July 3, 2022 and December 31, 2021:

Description Balance Sheet Location July 3, 2022 December 31, 2021

Derivatives designated as hedging instruments:

Commodity Contracts Prepaid expenses $ 2,822 $ 1,599

Commodity Contracts Other assets $ 5 $ —

Commodity Contracts Accrued expenses and other $ ( 127 ) $ ( 108 )

4 unchanged sentences

Commodity Contracts Prepaid expenses $ 4,688 $ 1,815

Commodity Contracts Other assets $ 197 $ —

Commodity Contracts Accrued expenses and other $ — $ ( 1,132 )

Commodity Contracts Other liabilities $ ( 957 ) $ —

Foreign Exchange Contracts Prepaid expenses $ 26 $ 135

3 unchanged sentences

There are no collateral arrangements or requirements in these agreements.

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the three months ended July 3, 2022 and July 4, 2021, excluding the amount of foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to the carrying value of the capitalized expenditures:

Description Amount of Gain or

(Loss) Recognized

Derivatives Location of Gain

Reclassified from

Accumulated OCI

Into Income Amount of Gain or

(Loss) Reclassified

from Accumulated

OCI Into Income

Derivatives in Cash Flow Hedging Relationships:

Three months ended July 3, 2022

Foreign Exchange Contracts $ ( 1,324 ) Net sales $ 843

Cost of sales $ ( 1,011 )

Commodity Contracts $ 850 Cost of sales $ 1,979

Three months ended July 4, 2021

Foreign Exchange Contracts $ 751 Net sales $ 1,489

Cost of sales $ ( 1,190 )

Commodity Contracts $ 4,847 Cost of sales $ 646

Description Gain or (Loss)

Recognized Location of Gain or (Loss) Recognized in

Income Statement

Derivatives not Designated as Hedging Instruments:

Three months ended July 3, 2022

Commodity Contracts $ 506 Cost of sales

Foreign Exchange Contracts $ ( 1,142 ) Selling, general and administrative

Three months ended July 4, 2021

Commodity Contracts $ 56 Cost of sales

Foreign Exchange Contracts $ 220 Selling, general and administrative

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(Dollars and shares in thousands except per share data)

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the three months ended April 3, 2022 and April 4, 2021, excluding the gains on foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to the carrying value of the capitalized expenditures:

Three months ended July 3, 2022 Three months ended July 4, 2021

Description Revenue Cost of

sales Revenue Cost of

Total amount of income and expense line items presented in the Condensed Consolidated Statements of Income $ 843 $ 968 $ 1,489 $ ( 544 )

Gain or (loss) on cash flow hedging relationships:

Foreign exchange contracts:

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into net income $ 843 $ ( 1,011 ) $ 1,489 $ ( 1,190 )

Commodity contracts:

Amount of gain reclassified from accumulated other comprehensive loss into net income $ — $ 1,979 $ — $ 646

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the six months ended July 3, 2022 and July 4, 2021, excluding the amount of foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to the carrying value of the capitalized expenditures:

Description Amount of Gain or

8 unchanged sentences

Derivatives in Cash Flow Hedging Relationships:

Three months ended April 3, 2022

Six months ended July 3, 2022

Foreign Exchange Contracts $ 88 Net sales $ 1,866

1 unchanged sentence

Commodity Contracts $ 4,183 Cost of sales $ 2,937

Three months ended April 4, 2021

Six months ended July 4, 2021

Foreign Exchange Contracts $ 563 Net sales $ 1,829

5 unchanged sentences

Derivatives not Designated as Hedging Instruments:

Three months ended April 3, 2022

Six months ended July 3, 2022

Commodity Contracts $ 7,498 Cost of sales

Foreign Exchange Contracts $ 201 Selling, general and administrative

Three months ended April 4, 2021

Six months ended July 4, 2021

Commodity Contracts $ 434 Cost of sales

Foreign Exchange Contracts $ ( 405 ) Selling, general and administrative

Three months ended April 3, 2022 Three months ended April 4, 2021

Six months ended July 3, 2022 Six months ended July 4, 2021

Description Revenue Cost of

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Foreign exchange contracts:

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into net income $ 566 $ ( 695 ) $ 340 $ ( 228 )

Amount of gain or (loss) reclassified from accumulated other comprehensive income into net income $ 1,866 $ ( 1,706 ) $ 1,829 $ ( 1418 )

Commodity contracts:

Amount of gain/(loss) reclassified from accumulated other comprehensive loss into net income $ — $ 3,850 $ — $ ( 71 )

Amount of gain or (loss) reclassified from accumulated other comprehensive income into net income $ — $ 2,937 $ — $ 575

SONOCO PRODUCTS COMPANY

10 unchanged sentences

The following table sets forth information regarding the Company’s financial assets and financial liabilities, excluding retirement and postretirement plan assets, measured at fair value on a recurring basis:

Description April 3, 2022 Assets measured

Description July 3, 2022 Assets measured

at NAV Level 1 Level 2 Level 3

18 unchanged sentences

None of the Company’s financial assets or liabilities are measured at fair value using significant unobservable inputs.

There were no transfers in or out of Level 1 or Level 2 fair value measurements during the three-month period ended April 3, 2022.

There were no transfers in or out of Level 1 or Level 2 fair value measurements during the three- and six-month periods ended July 3, 2022.

SONOCO PRODUCTS COMPANY

6 unchanged sentences

The components of net periodic benefit cost include the following:

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Retirement Plans

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Net periodic benefit income $ ( 123 ) $ ( 147 ) $ ( 274 ) $ ( 312 )

The Company made aggregate contributions of $ 6,147 and $ 3,673 to its defined benefit retirement and retiree health and life insurance plans during the three months ended April 3, 2022 and April 4, 2021, respectively.

The Company expects to make additional aggregate contributions of approximately $ 10,000 to its defined benefit retirement and retiree health and life insurance plans over the remainder of 2022.

Settlement Charges

The Company recognized settlement ch arges of $ 356 during the three months ended April 3, 2022.

The Company recognized settlement ch arges of $ 430 and $ 340 during the six months ended July 3, 2022 and July 4, 2021, respectively.

These charges resulted from payments made to certain participants in the Company's non-union Canadian pension plan who elected a lump sum distribution option upon retirement.

Additional settlement charges related to the Canadian pension plans may be recognized over the remainder of 2022 as a result of ongoing lump-sum distributions.

The Company terminated the Sonoco Pension Plan for Inactive Participants (the "Inactive Plan"), a tax-qualified defined benefit plan, effective September 30, 2019, and settled the liabilities of the Inactive Plan in the second quarter of 2021 through a combination of lump-sum payments and the purchase of group annuity contracts.

Non-cash, pre-tax settlement charges totaling $ 547,291 were recognized in the second quarter of 2021 as the lump sum payouts and annuity purchases were made.

Contributions

The Company made aggregate contributions of $ 8,895 and $ 139,687 to its defined benefit retirement and retiree health and life insurance plans during the six months ended July 3, 2022 and July 4, 2021, respectively.

The 2021 contributions include $ 133,000 contributed to the Inactive Plan during the second quarter of 2021 in order for it to be fully funded upon final settlement.

The Company expects to make additional aggregate contributions of approximately $ 6,800 to its defined benefit retirement and retiree health and life insurance plans over the remainder of 2022.

Sonoco Retirement and Savings Plan

1 unchanged sentence

The plan is comprised of both an elective and non-elective component.

The elective component of the plan, which is designed to meet the requirements of Section 401(k) of the Internal Revenue Code, allows participants to set aside a portion of their wages and salaries for retirement and encourages saving by matching a portion of their contributions with contributions from the Company.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

by matching a portion of their contributions with contributions from the Company.

The plan provides for participant contributions of 1 % to 100 % of gross pay.

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The SRC provided for an annual Company contribution equal to 4 % of the participant's eligible pay plus 4 % of eligible pay in excess of the social security wage base to eligible participant accounts.

SRC contributions, which are funded annually in the first quarter, totaled $ 21,948 and $ 22,665 during the quarters ended April 3, 2022 and April 4,

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

2021, respectively.

SRC contributions were funded annually in the first quarter, following the year in which the benefit was earned.

SRC contributions totaled $ 21,948 and $ 22,665 during the six months ended July 3, 2022 and July 4, 2021, respectively.

No additional SRC contributions will occur.

The Company recognized expense related to the SRC of $ 6,335 for the three months ended April 4, 2021.

The Company’s effective tax rates for the three-month periods ended April 3, 2022 and April 4, 2021 were 23.7 % and 25.2 %, respectively.

The Company recognized expense related to the SRC of $ 5,499 and $ 11,834 for the three- and six-month periods ended July 4, 2021.

The Company’s effective tax rates for the three- and six-month periods ended July 3, 2022 were 25.8 % and 24.9 %, respectively, and its rates for the three- and six-month periods ended July 4, 2021 were 26.0 % and 26.2 %, respectively.

The Company's effective tax rates varied from the U.S.

1 unchanged sentence

jurisdictions and the relative amounts earned in those jurisdictions, state income taxes, and discrete tax adjustments that were not consistent year over year.

The primary driver of the lower 2022 rate was the release of valuation allowances on the Company's state net operating loss carryforwards resulting from the increase in projected earnings associated with the Ball Metalpack acquisition.

The lower 2022 rate was primarily driven by the absence of the 2021 pension settlement charge and the 2022 release of valuation allowances on the Company's state net operating loss carryforwards resulting from the increase in projected earnings associated with the Metal Packaging acquisition.

The Company and/or its subsidiaries file federal, state and local income tax returns in the United States and various foreign jurisdictions.

1 unchanged sentence

The Company’s reserve for uncertain tax benefits has increased by $ 1,000 since December 31, 2021 due primarily to an increase in reserves related to existing tax positions.

The Company believes that it is reasonably possible that the amount reserved for unrecognized tax benefits at April 3, 2022 could decrease by approximately $ 160 over the next twelve months.

The Company believes that it is reasonably possible that the amount reserved for unrecognized tax benefits at July 3, 2022 could increase by approximately $ 200 over the next twelve months.

Although the Company’s estimate for the potential outcome for any uncertain tax issue is highly judgmental, management believes that any reasonably foreseeable outcomes related to these matters have been adequately provided for.

6 unchanged sentences

The Company routinely enters into leasing arrangements for real estate (including manufacturing facilities, office space, and warehouses), transportation equipment (automobiles, forklifts, and trailers), and office equipment (copiers and postage machines).

The assessment of the certainty associated with the exercise of various lease renewal, termination, and purchase options included in the Company's lease contracts is at the Company's sole discretion.

Most real estate leases, in particular, include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years.

The assessment of the certainty associated with the exercise of various lease renewal, termination, and purchase options included in the Company's lease contracts is performed after contemplating all the relevant facts and circumstances in accordance with guidance under ASC 842.

Most real estate leases, in particular, include one or more options to renew, with renewal terms that typically extend the lease term in increments from one to five years .

The Company's leases do not have any significant residual value guarantees or restrictive covenants.

1 unchanged sentence

The Company further utilizes a portfolio approach by assigning a “short” rate to contracts with lease terms of 10 years or less and a “long” rate for contracts greater than 10 years.

The Company completed the acquisition of Ball Metalpack on January 26, 2022.

The Company completed the acquisition of Metal Packaging on January 26, 2022.

The acquisition included both operating and finance lease assets and liabilities.

The acquired operating lease liabilities of $ 33,910 had a weighted average remaining lease maturity term and discount rate of 11.0 years and 2.8 %, respectively, and the acquired finance lease liabilities of $ 46,687 had a weighted average remaining lease maturity term and discount rate of 3.8 years and 7.5 %, respectively, as of the date of the acquisition.

The acquired operating lease liabilities of $ 33,910 had a weighted

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(Dollars and shares in thousands except per share data)

The following table sets forth the balance sheet location and aggregate values of the Company’s lease assets and lease liabilities at April 3, 2022 and December 31, 2021:

Classification Balance Sheet Location April 3, 2022 December 31, 2021

average remaining lease maturity term and discount rate of 11.0 years and 2.8 %, respectively, and the acquired finance lease liabilities of $ 46,687 had a weighted average remaining lease maturity term and discount rate of 3.8 years and 7.5 %, respectively, as of the date of the acquisition.

The following table sets forth the balance sheet location and aggregate values of the Company’s lease assets and lease liabilities at July 3, 2022 and December 31, 2021:

Classification Balance Sheet Location July 3, 2022 December 31, 2021

Operating lease assets Right of Use Asset - Operating Leases $ 296,643 $ 268,390

13 unchanged sentences

Because the right of use assets recorded on the balance sheet were determined based upon factors considered at the commencement date of the leases, subsequent changes in the rate or index that were not contemplated in the right of use asset balances recorded on the balance sheet result in variable expenses being incurred when paid during the lease term.

The following table sets forth the components of the Company's total lease cost for the three month periods ended April 3, 2022 and April 4, 2021:

Three Months Ended

Lease Cost April 3, 2022 April 4, 2021

The following table sets forth the components of the Company's total lease cost for the three- and six-month periods ended July 3, 2022 and July 4, 2021:

Three Months Ended Six Months Ended

Lease Cost July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Operating lease cost (a) $ 13,251 $ 11,902 $ 26,048 $ 25,097

10 unchanged sentences

(Dollars and shares in thousands except per share data)

The following table sets forth certain lease-related information for the three months ended April 3, 2022 and April 4, 2021:

Three Months Ended

April 3, 2022 April 4, 2021

The following table sets forth certain lease-related information for the six-month periods ended July 3, 2022 and July 4, 2021:

Six Months Ended

July 3, 2022 July 4, 2021

Cash paid for amounts included in the measurement of lease liabilities:

5 unchanged sentences

Leased assets obtained in exchange for new finance lease liabilities $ 7,511 $ 5,879

Modification to leased assets for increase in operating lease liabilities $ 1,484 $ 3,496

Modification to leased assets for (decrease) increase in operating lease liabilities $ ( 4,139 ) $ 6,845

Modification to leased assets for increase in finance lease liabilities $ 14 $ 9,586

22 unchanged sentences

Contract assets and liabilities are reported in "Other receivables" and "Accrued expenses and other," respectively, on the Company's Condensed Consolidated Balance Sheets.

April 3, 2022 December 31, 2021

July 3, 2022 December 31, 2021

Contract Assets $ 65,377 $ 51,106

Contract Liabilities $ ( 25,631 ) $ ( 18,993 )

Significant changes in the contract assets and liabilities balances during the three months ended April 3, 2022 and the year ended December 31, 2021 were as follows:

April 3, 2022 December 31, 2021

Significant changes in the contract assets and liabilities balances during the six months ended July 3, 2022 and the year ended December 31, 2021 were as follows:

July 3, 2022 December 31, 2021

Asset Contract

19 unchanged sentences

The Company's reportable segments are aligned by product nature as disclosed in Note 15 .

The following tables set forth information about revenue disaggregated by primary geographic regions for the three-month periods ended April 3, 2022 and April 4, 2021.

The following tables set forth information about revenue disaggregated by primary geographic regions for the three-month periods ended July 3, 2022 and July 4, 2021.

The tables also include a reconciliation of disaggregated revenue with reportable segments.

Three months ended April 3, 2022 Consumer Packaging Industrial Paper Packaging All Other Total

Three months ended July 3, 2022 Consumer Packaging Industrial Paper Packaging All Other Total

Primary Geographical Markets:

5 unchanged sentences

Total $ 989,982 $ 727,402 $ 195,948 $ 1,913,332

Three months ended April 4, 2021 Consumer Packaging Industrial Paper Packaging All Other Total

Three months ended July 4, 2021 Consumer Packaging Industrial Paper Packaging All Other Total

Primary Geographical Markets:

5 unchanged sentences

Total $ 597,803 $ 608,532 $ 176,419 $ 1,382,754

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

The following tables set forth information about revenue disaggregated by primary geographic regions for the six-month periods ended July 3, 2022 and July 4, 2021.

The tables also include a reconciliation of disaggregated revenue with reportable segments.

Six months ended July 3, 2022 Consumer

Packaging Industrial

Packaging All Other Total

Primary Geographical Markets:

United States $ 1,445,511 $ 853,965 $ 327,660 $ 2,627,136

Europe 230,080 234,203 46,689 510,972

Canada 59,188 56,481 — 115,669

Asia 49,041 150,422 563 200,026

Other 74,261 131,458 24,792 230,511

Total $ 1,858,081 $ 1,426,529 $ 399,704 $ 3,684,314

Six months ended July 4, 2021 Consumer Packaging Industrial Paper Packaging All Other Total

Primary Geographical Markets:

United States $ 811,373 $ 671,589 $ 316,967 $ 1,799,929

Europe 225,428 200,922 43,339 469,689

Canada 56,336 45,031 — 101,367

Asia 39,528 151,561 520 191,609

Other 47,891 104,826 20,747 173,464

Total $ 1,180,556 $ 1,173,929 $ 381,573 $ 2,736,058

Segment Reporting

The Company's operating and reporting structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other.

The Consumer Packaging segment primarily serves processed and fresh food markets along with other packaging for direct-to-consumer products and includes the following products and services:

round and shaped rigid paper containers;

two- and three-piece steel tinplate cans and aerosol containers;

metal and peelable membrane ends and closures;

The Consumer Packaging segment primarily serves prepared and fresh food markets along with other packaging for consumer products.

The products produced and sold within the Consumer Packaging segment are generally used to package a variety of consumer products and consist primarily of round and shaped rigid paper containers;

steel tinplate cans and aerosol containers;

thermoformed plastic trays and containers;

printed flexible packaging;

and global brand artwork management.

Total assets of the Consumer Packaging segment increased $ 1,666,345 during the first quarter of 2022 due to the acquisition of Ball Metalpack (now Sonoco Metal Packaging).

The Industrial Paper Packaging segment includes the following products and services:

fiber-based tubes, cores, and cones;

fiber-based construction tubes;

and flexible packaging.

Total assets of the Consumer Packaging segment increased $ 1,656,155 upon the acquisition of Metal Packaging on January 26, 2022.

The Industrial Paper Packaging segment serves customers who use its products to package their goods for transport, storage or sale or to produce similar fiber-based products.

The primary products produced and sold within this segment include fiber-based tubes, cones, and cores;

fiber-based protective packaging and components;

wooden, metal and composite wire and cable reels and spools;

and recycled paperboard, corrugating medium, recovered paper and material recycling services.

and recycled paperboard.

Businesses grouped as All Other include healthcare packaging, protective and retail security packaging and industrial plastic products.

6 unchanged sentences

and paper amenities.

Prior to the divestiture of the Company's U.S.

Pr ior to the divestiture of the Company's U.S.

display and packaging business on April 4, 2021, this business, which included point-of-purchase displays, fulfillment operations, and contract packaging, was reported in All Other.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

The following table sets forth net sales, intersegment sales and operating profit for the Company’s reportable segments and All Other.

“Segment operating profit” is defined as the segment’s portion of “Operating profit” excluding restructuring and asset impairment charges, acquisition expenses, interest income and expense, income taxes or certain other items, if any, the exclusion of which the Company believes improves comparability and analysis of the financial performance of the business.

“Segment operating profit” is defined as the segment’s portion of “Operating profit” excluding restructuring and asset impairment charges, acquisition expenses, amortization of acquisition intangibles, changes in last-in, first-out ("LIFO") inventory reserves, losses from the early extinguishment of debt, interest income and expense,

income taxes or certain other items, if any, the exclusion of which the Company believes improves comparability and analysis of the financial performance of the business.

General corporate expenses have been allocated as operating costs to each of the Company’s reportable segments and All Other.

Effective January 1, 2022, the Company changed its measure of segment operating profit to exclude amortization of acquisition intangibles.

Accordingly, prior year's segment operating profit has been revised to conform with the current presentation.

Accordingly, the prior year's segment operating profit has been revised to conform with the current presentation for comparability.

SEGMENT FINANCIAL INFORMATION

Three Months Ended

April 3, 2022 April 4, 2021

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Consumer Packaging $ 989,982 $ 597,804 $ 1,858,081 $ 1,180,556

12 unchanged sentences

All Other 16,529 15,607 31,053 34,364

Restructuring/Asset impairment charges ( 12,142 ) ( 6,846 )

Restructuring/Asset impairment (charges)/income ( 10,563 ) 1,445 ( 22,705 ) ( 5,401 )

Amortization of acquisition intangibles ( 20,871 ) ( 12,111 ) ( 39,671 ) ( 24,860 )

10 unchanged sentences

Since the acquisition, the Company has spent a total of $ 1,883 on remediation of the Spartanburg site.

At April 3, 2022 and December 31, 2021, the Company's accrual for environmental contingencies related to the Spartanburg site totaled $ 5,524 and $ 5,555 , respectively.

At July 3, 2022 and December 31, 2021, the Company's accrual for environmental contingencies related to the Spartanburg site totaled $ 5,517 and $ 5,555 , respectively.

The Company cannot currently estimate its potential liability, damages or range of potential loss, if any, beyond the amounts accrued with respect to this exposure.

1 unchanged sentence

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Other environmental matters

3 unchanged sentences

However, the Company does not believe that the resolution of these matters has a reasonable possibility of having a material adverse effect on the Company's financial statements.

At April 3, 2022 and December 31, 2021, the Company's accrual for these other sites totaled $ 1,739 and $ 1,825 , respectively.

As of April 3, 2022 and December 31, 2021, the Company (and its subsidiaries) had accrued $ 7,263 and $ 7,380 , respectively, related to environmental contingencies.

At July 3, 2022 and December 31, 2021, the Company's accrual for these other sites totaled $ 1,696 and $ 1,825 , respectively.

As of July 3, 2022 and December 31, 2021, the Company (and its subsidiaries) had accrued $ 7,213 and $ 7,380 , respectively, related to environmental contingencies.

These accruals are included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets.

2 unchanged sentences

While the outcome of these matters could differ from management’s expectations, the Company does not believe the resolution of these matters has a reasonable possibility of having a material adverse effect on the Company’s financial statements.

SONOCO PRODUCTS COMPANY

Report of Independent Registered Public Accounting Firm

1 unchanged sentence

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of Sonoco Products Company and its subsidiaries (the “Company”) as of April 3, 2022, and the related condensed consolidated statements of income, comprehensive income, changes in total equity and cash flows for the three-month periods ended April 3, 2022 and April 4, 2021, including the related notes (collectively referred to as the “interim financial statements”).

We have reviewed the accompanying condensed consolidated balance sheet of Sonoco Products Company and its subsidiaries (the “Company”) as of July 3, 2022, and the related condensed consolidated statements of income, comprehensive income, and changes in total equity for the three-month and six-month periods ended July 3, 2022 and July 4, 2021 and the condensed consolidated statements of cash flows for the six-month periods ended July 3, 2022 and July 4, 2021, including the related notes (collectively referred to as the “interim financial statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

11 unchanged sentences

Charlotte, North Carolina

August 2, 2022

SONOCO PRODUCTS COMPANY

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements