What changed in this filing

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Item 1. Financial Statements

2022-11-02 compared with 2022-08-02 · 291 added, 246 removed, 945 unchanged (36% of the section changed)

36 unchanged sentences

97,512 and 97,370 shares issued and outstanding

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

at October 2, 2022 and December 31, 2021, respectively

Capital in excess of stated value 134,917 119,690

10 unchanged sentences

(Dollars and shares in thousands except per share data)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Net sales $ 1,890,216 $ 1,415,193 $ 5,574,530 $ 4,151,251

2 unchanged sentences

Selling, general and administrative expenses 164,552 130,580 533,875 404,617

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

Loss on divestiture of business — — — 5,516

Restructuring/Asset impairment charges 20,652 3,488 43,357 8,889

Gain/(loss) on divestiture of business — 2,849 — ( 2,667 )

Operating profit 181,942 126,512 548,480 382,112

22 unchanged sentences

(Dollars in thousands)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Net income/(loss) $ 122,502 $ 111,555 $ 369,876 $ ( 150,391 )

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40,139 76,437 216,628 227,116

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

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

Net income attributable to noncontrolling interests ( 273 ) ( 415 ) ( 642 ) ( 243 )

Other comprehensive loss attributable to noncontrolling interests 515 664 148 425

Comprehensive income attributable to Sonoco $ 40,381 $ 76,686 $ 216,134 $ 227,298

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

Net income 111,555 111,140 415

Other comprehensive income/(loss):

Translation loss ( 37,741 ) ( 37,077 ) ( 664 )

Defined benefit plan adjustment, net of tax 1,693 1,693 —

Derivative financial instruments, net of tax 930 930 —

Other comprehensive loss $ ( 35,118 ) $ ( 34,454 ) $ ( 664 )

Dividends ( 44,498 ) ( 44,498 )

Issuance of stock awards 251 3 251

Shares repurchased ( 83 ) ( 506 ) ( 83 )

Share-based compensation 6,192 6,192

October 3, 2021 $ 1,860,732 98,326 $ 7,175 $ 172,655 $ ( 378,910 ) $ 2,049,072 $ 10,740

Total Equity Common Shares Capital in

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

Net income 122,502 122,229 273

Other comprehensive income/(loss):

Translation loss ( 81,972 ) ( 81,457 ) ( 515 )

Defined benefit plan adjustment, net of tax 861 861 —

Derivative financial instruments, net of tax ( 1,252 ) ( 1,252 ) —

Other comprehensive loss ( 82,363 ) ( 81,848 ) ( 515 )

Dividends ( 48,034 ) ( 48,034 )

Issuance of stock awards 270 18 270

Shares repurchased ( 72 ) ( 1 ) ( 72 )

Share-based compensation 6,387 6,387

October 2, 2022 $ 1,935,081 97,512 $ 7,175 $ 134,917 $ ( 512,525 ) $ 2,299,040 $ 6,474

See accompanying Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(Dollars in thousands)

Six Months Ended

July 3, 2022 July 4, 2021

Nine Months Ended

October 2, 2022 October 3, 2021

Cash Flows from Operating Activities:

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Cash dividends from affiliated companies 6,076 5,182

Net loss/(gain) on disposition of assets ( 648 ) ( 3,279 )

Net gain on disposition of assets ( 178 ) ( 2,376 )

Net loss on divestiture of businesses — 2,667

1 unchanged sentence

Pension and postretirement plan contributions ( 33,548 ) ( 165,280 )

Net increase/(decrease) in deferred taxes 12,657 ( 154,242 )

Decrease in net deferred tax liabilities ( 1,745 ) ( 164,581 )

Change in assets and liabilities, net of effects from acquisitions and foreign currency adjustments:

11 unchanged sentences

Proceeds from the sale of assets 6,040 10,536

Other net investing proceeds ( 2,376 ) 4,304

Other net investing activity ( 1,976 ) 6,776

Net cash used in investing activities ( 1,570,412 ) ( 50,866 )

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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- 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.

Certain amounts within “Cash Flows from Operating Activities” in the Condensed Consolidated Statements of Cash Flows for the nine months ended October 3, 2021, have been reclassified to conform to the current year presentation .

Operating results for the three- and nine-month periods ended October 2, 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- 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.

With respect to the unaudited condensed consolidated financial information of the Company for the three- and nine-month periods ended October 2, 2022 and October 3, 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 November 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 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.

In September 2022, the Financial Accounting Standards Board ( “ FASB ” ) issued Accounting Standards Update ( “ ASU ” ) 2022-04 “ Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

” The amendments in this update require that a buyer in a supplier finance program disclose qualitative and quantitative information about its supplier finance programs in each annual reporting period, including a description of key payment terms, and a rollforward of the outstanding obligation as of the end of the annual period.

The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

The Company does not plan to elect early adoption of this update and does not expect this pronouncement to materially affect its consolidated financial statements.

In March 2022, the FASB issued 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." 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 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.

During the nine-month period ended October 2, 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 October 2, 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 September 23, 2022, the Company entered into a definitive agreement to acquire S.P.

Holding, Skjern A/S (“Skjern”), a privately owned manufacturer of paper based in Skjern, Denmark.

The estimated $ 88,000 (purchase price subject to foreign currency fluctuations) all-cash transaction is expected to be completed in the fourth quarter of 2022, subject to customary closing conditions.

Skjern produces high-grade paperboard from 100% recycled paper for rigid paper containers, tubes and cores, and other applications.

The acquisition is expected to expand production capacity for the Company’s converting operations and customers throughout Europe.

On August 31, 2022, the Company completed the acquisition of Nordeste Tubetes and NE Tubetes (collectively “Nordeste”), two small tube and core operations in Brazil.

Total consideration for the two businesses was $ 6,518 , including cash paid at closing of $ 3,933 , and deferred payments totaling $ 2,585 expected to be paid over the next six years.

Goodwill for Nordeste, all of which is expected to be deductible for income tax purposes, consists of increased access to certain markets and existing customer relationships.

Nordeste's financial results from the date acquired are included in the Company's Industrial Paper Packaging segment.

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.

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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:

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 adjustments made during the measurement period, are as follows:

Initial Allocation Measurement Period Adjustments Revised Allocation

Trade accounts receivable $ 113,850 $ — $ 113,850

Other receivables 14,569 — 14,569

Inventories 190,070 556 190,626

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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.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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 Allocation” 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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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.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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:

The following table presents the unaudited financial results for Metal Packaging for the three-month period ended October 2, 2022 and from the date of acquisition through October 2, 2022:

Supplemental Information (unaudited) Three Months Ended January 26 to

Metal Packaging July 3, 2022 July 3, 2022

Metal Packaging October 2, 2022 October 2, 2022

Net sales $ 335,468 $ 798,018

Net income $ 16,769 $ 61,216

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.

The following table presents the Company’s estimated unaudited pro forma consolidated results for the three- and nine-month periods ended October 2, 2022 and October 3, 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 Six Months Ended

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

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

Consolidated October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Net sales $ 1,890,216 $ 1,643,726 $ 5,624,118 $ 4,767,306

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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 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.

Unaudited pro forma information for the three- and nine-month periods ended October 2, 2022 and October 3, 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 $ 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.

Acquisition-related costs of $ 793 and $ 27,195 were recognized during the three- and nine-month periods ended October 2, 2022, respectively, and charges related to fair value adjustments to acquisition-date inventory of $ 33,155 were recognized during the nine-month period ended October 2, 2022.

These costs are excluded from 2022 unaudited pro forma net income and are instead reflected in 2021 pro forma net income as though the acquisition had occurred on January 1, 2021.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

As previously disclosed, the Company completed the sale of its U.S.

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As a result, the Company recognized a reduction in the previously reported loss on the sale of this business of $ 2,757 , before tax, in the third quarter of 2021, bringing the total loss on the sale of business to $ 2,759 , before tax.

On September 30, 2021, the Company completed the sale of its plastics foods thermoforming business in Wilson, North Carolina (“Wilson Thermoforming”) to Placon for net cash proceeds of $ 3,528 , resulting in the recognition of a pre-tax gain on the sale of $ 92 .

The Company continually assesses its operational footprint as well as its overall portfolio of businesses and may consider the divestiture of plants and/or business units it considers to be suboptimal or nonstrategic.

Acquisition and Divestiture-Related Costs

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

Acquisition- and divestiture-related costs totaled $ 2,022 and $ 62,655 during the three- and nine-month periods ended October 2, 2022, respectively, primarily related to the Metal Packaging acquisition.

These costs include legal and professional fees, investment banking fees, representation and warranty insurance premiums, and other transaction costs, totaling $ 2,022 and $ 29,500 during the three- and nine-month periods ended October 2, 2022, respectively, that are included in “Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.

The costs for the nine-month period ended October 2, 2022 also include fair value adjustments to acquisition-date inventory totaling $ 33,155 , that are included in “Cost of sales” in the Company's Condensed Consolidated Statements of Income.

Acquisition and divestiture-related costs totaled $ 1,015 and $ 12,503 during the three- and nine-month periods ended October 3, 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.

SONOCO PRODUCTS COMPANY

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(Dollars and shares in thousands except per share data)

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

1 unchanged sentence

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Net income/(loss) attributable to Sonoco $ 122,229 $ 111,140 $ 369,234 $ ( 150,634 )

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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- 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

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 nine-month periods ended October 2, 2022 and October 3, 2021 were as follows (in thousands):

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Anti-dilutive stock appreciation rights 366 — 380 142

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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

Diluted net loss per share of common stock for the nine-month period ended October 3, 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 nine-month period ended October 3, 2021:

Nine Months Ended

October 3, 2021

Dilutive securities excluded due to reported loss 469

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Stock Repurchases

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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.

No shares were purchased under this authorization during the nine months ended October 2, 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.

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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."

The final number of shares 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.

Pursuant to the ASR agreement, the financial institution elected to accelerate the settlement of the transaction in two tranches.

On July 21, 2021, the financial institution transferred 168 additional shares to the Company based upon an effective settlement price of $ 66.52 and a notional value of $ 50,000 , or one third of the total $ 150,000 prepayment.

On July 26, 2021, the financial institution transferred 337 additional shares to the Company upon full settlement of the remaining $ 100,000 notional value of the transaction at the final settlement price of $ 66.45 .

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.

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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 .

These repurchases, which are not part of a publicly announced plan or program, totaled 71 shares during the nine months ended October 2, 2022, at a cost of $ 4,056 , and 100 shares during the nine months ended October 3, 2021, at a cost of $ 6,039 .

Dividend Declarations

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

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.

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

On October 18, 2022, the Board of Directors declared a regular quarterly dividend of $ 0.49 per share.

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

Noncontrolling interests

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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 July 3, 2022.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Restructuring and Asset Impairments

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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/(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

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Restructuring and restructuring-related asset impairment charges $ 20,652 $ 3,204 $ 33,262 $ 4,048

Other asset impairments — 284 10,095 4,841

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

Restructuring/Asset Impairment Charges $ 20,652 $ 3,488 $ 43,357 $ 8,889

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Severance and Termination Benefits $ 9,265 $ 3,726 $ 13,578 $ 7,592

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Other Costs 8,086 1,200 15,151 4,663

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

Restructuring and restructuring-related asset impairment charges $ 20,652 $ 3,204 $ 33,262 $ 4,048

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Consumer Packaging $ 4,350 $ 2,450 $ 8,529 $ 3,708

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Corporate 8,610 2,087 15,103 2,092

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)

Restructuring and restructuring-related asset impairment charges $ 20,652 $ 3,204 $ 33,262 $ 4,048

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

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:

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Cash (payments)/receipts ( 9,966 ) 4,751 ( 13,983 ) ( 19,198 )

Asset write downs/disposals — ( 5,308 ) — ( 5,308 )

Asset writedowns/disposals — ( 9,284 ) — ( 9,284 )

Foreign currency translation ( 229 ) — ( 41 ) ( 270 )

Liability at July 3, 2022

Liability at October 2, 2022

$ 14,300 $ — $ 3,000 $ 17,300

"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.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

“Severance and Termination Benefits” during the first nine months of 2022 includes the cost of severance for approximately 180 employees whose positions were eliminated in conjunction with the Company's ongoing organizational effectiveness efforts.

“Asset Impairments/Disposal of Assets” during the first nine months of 2022 consists primarily of asset impairment charges related to plant closures and the shutdown of operations in the Consumer Packaging and Industrial Paper Packaging segments.

These charges were partially offset by gains from the sale of previously impaired assets and closed facilities in the “All Other” group of businesses.

Cash proceeds in the first nine months of 2022 relate to the sales of these assets and facilities 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 nine 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.

2 unchanged sentences

Other Asset Impairments

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.

The Company recognized other asset impairment charges totaling $ 10,095 in the nine-month period ended October 2, 2022.

As a result of the Company exiting its operations in Russia, consisting of two small tube and core plants in the Industrial Paper Packaging segment, other asset impairment charges of $ 9,165 were recognized in the nine-month period ended October 2, 2022.

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

Total other asset impairment charges in the nine-month period ended October 2, 2022 also include $ 930 of fixed asset impairments in the Company's plastics foods operations, part of the Consumer Packaging segment.

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.

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

The Company recognized other asset impairment charges totaling $ 284 and $ 4,841 in the three- and nine-month periods ended October 3, 2021, respectively.

The year-to-date charges consist of fixed asset impairments totaling $ 2,442 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.

These impairment charges are included in “Restructuring/Asset impairment charges” 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 six months ended July 3, 2022 and July 4, 2021:

Items Defined

8 unchanged sentences

Other comprehensive (loss)/income ( 151,432 ) ( 876 ) ( 792 ) ( 153,100 )

Balance at July 3, 2022

Balance at October 2, 2022

$ ( 420,508 ) $ ( 92,273 ) $ 256 $ ( 512,525 )

5 unchanged sentences

Other comprehensive (loss)/income ( 57,261 ) 429,823 5,370 377,932

Balance at July 4, 2021

Balance at October 3, 2021

$ ( 251,285 ) $ ( 132,924 ) $ 5,299 $ ( 378,910 )

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- and six-month periods ended July 3, 2022 and July 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 nine-month periods ended October 2, 2022 and October 3, 2021:

Amount Reclassified from Accumulated

Other Comprehensive Loss

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

Details about Accumulated Other

Comprehensive

Loss Components July 3,

Loss Components October 2,

2022 October 3,

2021 October 2,

2022 October 3,

2021 Affected Line Item in

26 unchanged sentences

(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 July 3, 2022 and July 4, 2021:

The following table summarizes the before and after tax amounts for the various components of other comprehensive (loss)/income for the three-month periods ended October 2, 2022 and October 3, 2021:

Three months ended

October 2, 2022

Three months ended

October 3, 2021

Benefit After Tax

2 unchanged sentences

Foreign currency items:

Other comprehensive (loss)/income before

Other comprehensive loss before

reclassifications $ ( 81,457 ) $ — $ ( 81,457 ) $ ( 37,077 ) $ — $ ( 37,077 )

Amounts reclassified from accumulated other

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

3,747 — 3,747 — — —

Net other comprehensive (loss)/income from

comprehensive loss to net income (a)

Net other comprehensive loss from

foreign currency items ( 81,457 ) — ( 81,457 ) — ( 37,077 ) — ( 37,077 )

3 unchanged sentences

Amounts reclassified from accumulated other

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

comprehensive loss to net income (b)

1,229 ( 313 ) 916 1,661 ( 382 ) 1,279

Net other comprehensive (loss)/income from

Net other comprehensive income/(loss) from

defined benefit pension items 1,155 ( 294 ) 861 2,220 ( 527 ) 1,693

3 unchanged sentences

Amounts reclassified from accumulated other

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

comprehensive loss to net income (c)

( 2,560 ) 473 ( 2,087 ) ( 2,277 ) 607 ( 1,670 )

Amounts reclassified from accumulated other

comprehensive loss to fixed assets ( 312 ) 58 ( 254 ) 20 ( 5 ) 15

Net other comprehensive income/(loss) from

Net other comprehensive (loss)/ income from

cash flow hedges ( 1,536 ) 284 ( 1,252 ) 1,268 ( 338 ) 930

Other comprehensive income/(loss) $ ( 75,321 ) $ 1,513 $ ( 73,808 ) $ 584,793 $ ( 146,729 ) $ 438,064

Other comprehensive (loss)/income $ ( 81,838 ) $ ( 10 ) $ ( 81,848 ) $ ( 33,589 ) $ ( 865 ) $ ( 34,454 )

(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

The following table summarizes the before and after tax amounts for the various components of other comprehensive (loss)/income for the nine-month periods ended October 2, 2022 and October 3, 2021:

Nine-month period ended October 2, 2022 Nine-month period ended October 3, 2021

Benefit After Tax

21 unchanged sentences

Amounts reclassified from accumulated other

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

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

( 5,657 ) 1,371 ( 4,286 ) ( 3,263 ) 860 ( 2,403 )

Amounts reclassified from accumulated other

comprehensive loss to fixed assets ( 864 ) 222 ( 642 ) ( 42 ) 11 ( 31 )

Net other comprehensive income/(loss) from

Net other comprehensive (loss)/income from

cash flow hedges ( 914 ) 122 ( 792 ) 7,231 ( 1,861 ) 5,370

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

Other comprehensive (loss)/ income $ ( 153,518 ) $ 418 $ ( 153,100 ) $ 527,518 $ ( 149,586 ) $ 377,932

(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 six months ended July 3, 2022 is as follows:

A summary of the changes in goodwill for the nine-month period ended October 2, 2022 is as follows:

Packaging Industrial Paper Packaging All Other Total

3 unchanged sentences

Measurement period adjustments ( 9,187 ) — — ( 9,187 )

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.

Goodwill at October 2, 2022 $ 907,326 $ 355,610 $ 379,012 $ 1,641,948

Goodwill activity reflected under the captions “2022 Acquisitions” and “Measurement period adjustments” relate to the January 26, 2022 acquisition of Metal Packaging and the August 31, 2022 acquisition of Nordeste.

See Note 3 for additional information.

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Based on its assessments, the Company concluded that there was no impairment of goodwill for any of its reporting units.

Although no reporting units failed the annual impairment test, in management’s opinion the goodwill of the Plastics - Healthcare reporting unit is at risk of impairment in the near term if the reporting unit's operations do not perform in line with management's expectations, or if there is a negative change in the long-term outlook for the business or in other factors such as the discount rate.

Although beginning to benefit from economic recovery, the results of the Plastics - Healthcare reporting unit have been negatively impacted by end-market weakness due to the COVID-19 pandemic.

In addition, the unit is facing near-term headwinds from higher raw material and other cost increases.

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, 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.

Although no reporting units failed the annual impairment test, in management’s opinion the goodwill balances of the Plastics - Healthcare and Protexic reporting units are at risk of impairment in the near term if each reporting unit's operations do not perform in line with management's expectations, or if there is a negative change in the long-term outlook for the business or in other factors such as the discount rate.

In the annual goodwill impairment analysis completed during the third quarter of 2022, projected future cash flows for the Plastics - Healthcare reporting unit were discounted at 9.8 % and its estimated fair value was determined to exceed its carrying value by approximately 18.0 %.

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 $ 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.

Based on the discounted cash flow model and holding other valuation assumptions constant, the discount rate would have to be increased to 11.0 % in order for the estimated fair value of the reporting unit to fall below carrying value.

Total goodwill associated with this reporting unit was $ 60,710 at October 2, 2022.

In the annual goodwill impairment analysis completed during the third quarter of 2022, projected future cash flows for the Protexic reporting unit were discounted at 9.5 % and its estimated fair value was determined to exceed its carrying value by approximately 18.3 %.

Based on the discounted cash flow model and holding other valuation assumptions constant, the discount rate would have to be increased to 11.5 % in order for the estimated fair value of the reporting unit to fall below carrying value.

Total goodwill associated with this reporting unit was $ 29,051 at October 2, 2022.

During the time subsequent to the annual evaluation, and at October 2, 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.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Other Intangible Assets

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

A summary of other intangible assets as of October 2, 2022 and December 31, 2021 is as follows:

2022 December 31,

16 unchanged sentences

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

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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 $ 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.

Aggregate amortization expense was $ 20,690 and $ 12,257 for the three-month periods ended October 2, 2022 and October 3, 2021, respectively, and $ 60,361 and $ 37,117 for the nine-month periods ended October 2, 2022 and October 3, 2021, respectively.

Amortization expense on other intangible assets is expected to total approximately $ 80,800 in 2022, $ 79,100 in 2023, $ 71,700 in 2024, $ 61,100 in 2025 and $ 57,800 in 2026.

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

Details of the Company's debt at October 2, 2022 and December 31, 2021 are as follows:

2022 December 31,

14 unchanged sentences

Long-term debt $ 2,723,101 $ 1,199,106

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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

16 unchanged sentences

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:

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Principal Amount Tendered Premium and Other Amounts Paid Total

4 unchanged sentences

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.

These non-cash writeoffs 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 the second quarter of 2021.

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

2 unchanged sentences

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.

The gain is included in “Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income for the nine-month period ended October 3, 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 nine months ended October 3, 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)

As of October 2, 2022, the Company’s interest coverage and net worth were substantially above the minimum levels required under these covenants.

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.

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

Value Carrying

3 unchanged sentences

Cash Flow Hedges

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.

At October 2, 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 July 3, 2022, these contracts included natural gas swaps covering approximately 1.1 million MMBTUs.

At October 2, 2022, these contracts included natural gas swaps covering approximately 600,000 MMBTUs.

These contracts represented approximately 24 % of anticipated usage in North America for the remainder of 2022 and 1 % of anticipated usage in both 2023 and 2024.

1 unchanged sentence

See “Non-Designated Derivatives” below for a discussion of these 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 $ 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 .

The fair value of the Company’s commodity cash flow hedges netted to a gain position of $ 1,892 and $ 1,491 at October 2, 2022 and December 31, 2021, respectively.

The amount of the gain included in Accumulated Other Comprehensive Income at October 2, 2022 expected to be reclassified to the income statement during the next twelve months is $ 1,881 .

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 July 3, 2022 were as follows (in thousands):

The net positions of these contracts at October 2, 2022 were as follows (in thousands):

Currency Action Quantity

7 unchanged sentences

British pound purchase 819

Brazilian real sell ( 6,286 )

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.

The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a loss position of $( 36 ) and a gain position of $ 336 at October 2, 2022 and December 31, 2021, respectively.

Losses of $( 36 ) are expected to be 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 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.

As of October 2, 2022 and December 31, 2021, the net position of these contracts was $( 1,476 ) and $( 457 ), respectively.

During the nine-month period ended October 2, 2022, losses from these hedges totaling $ 864 were reclassified from accumulated other comprehensive loss and included in the carrying value of the capitalized expenditures.

Losses of $ 1,476 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.

4 unchanged sentences

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 July 3, 2022, were as follows (in thousands):

The net currency positions of these non-designated contracts at October 2, 2022, were as follows (in thousands):

Currency Action Quantity

3 unchanged sentences

Turkish lira purchase 44,125

Thai baht purchase 9,251

Canadian dollar purchase 9,568

Euro purchase 20

Thai baht sell ( 11,143 )

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Commodity Hedges

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

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.

At October 2, 2022, these contracts consisted of natural gas swaps covering approximately 8.2 million MMBTUs and represented approximately 47 % of anticipated usage in North America for the remainder of 2022 and 69 % 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 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

The gain is included in “ Selling, general and administrative expenses ” on the Company's Condensed Consolidated Statements of Income for the nine-month period ended October 2, 2022.

The fair value of the Company’s non-designated derivatives position was a gain of $ 2,369 and $ 92 at October 2, 2022 and December 31, 2021, respectively.

The following table sets forth the location and fair values of the Company’s derivative instruments at October 2, 2022 and December 31, 2021:

Description Balance Sheet Location October 2, 2022 December 31, 2021

Derivatives designated as hedging instruments:

2 unchanged sentences

Commodity Contracts Accrued expenses and other $ ( 25 ) $ ( 108 )

Commodity Contracts Other liabilities $ ( 11 ) $ —

Foreign Exchange Contracts Prepaid expenses $ 3,098 $ 848

Foreign Exchange Contracts Accrued expenses and other $ ( 4,610 ) $ ( 969 )

Foreign Exchange Contracts Other liabilities $ ( 63 ) $ —

Derivatives not designated as hedging instruments:

8 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:

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 three-month periods ended October 2, 2022 and October 3, 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 July 3, 2022

Three-month period ended October 2, 2022

Foreign Exchange Contracts $ ( 290 ) Net sales $ 559

1 unchanged sentence

Commodity Contracts $ 1,626 Cost of sales $ 2,434

Three months ended July 4, 2021

Three-month period ended October 3, 2021

Foreign Exchange Contracts $ ( 407 ) Net sales $ 937

5 unchanged sentences

Derivatives not Designated as Hedging Instruments:

Three months ended July 3, 2022

Three-month period ended October 2, 2022

Commodity Contracts $ 2,574 Cost of sales

Foreign Exchange Contracts $ ( 484 ) Selling, general and administrative

Three months ended July 4, 2021

Three-month period ended October 3, 2021

Commodity Contracts $ 2,861 Cost of sales

Foreign Exchange Contracts $ ( 675 ) Selling, general and administrative

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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

Three-month period ended October 2, 2022 Three-month period ended October 3, 2021

Description Revenue Cost of

9 unchanged sentences

(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:

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the nine months ended October 2, 2022 and October 3, 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:

Six months ended July 3, 2022

Nine-month period ended October 2, 2022

Foreign Exchange Contracts $ ( 202 ) Net sales $ 2,425

1 unchanged sentence

Commodity Contracts $ 5,809 Cost of sales $ 5,371

Six months ended July 4, 2021

Nine-month period ended October 3, 2021

Foreign Exchange Contracts $ 156 Net sales $ 2,766

5 unchanged sentences

Derivatives not Designated as Hedging Instruments:

Six months ended July 3, 2022

Nine-month period ended October 2, 2022

Commodity Contracts $ 10,072 Cost of sales

Foreign Exchange Contracts $ ( 283 ) Selling, general and administrative

Six months ended July 4, 2021

Nine-month period ended October 3, 2021

Commodity Contracts $ 3,295 Cost of sales

Foreign Exchange Contracts $ ( 906 ) Selling, general and administrative

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

Nine-month period ended October 2, 2022 Nine-month period ended October 3, 2021

Description Revenue Cost of

3 unchanged sentences

Foreign exchange contracts:

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

Amount of gain/(loss) reclassified from accumulated other comprehensive income into net income $ 2,425 $ ( 2,139 ) $ 2,766 $ ( 2,129 )

Commodity contracts:

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

Amount of gain reclassified from accumulated other comprehensive income into net income $ — $ 5,371 $ — $ 2,626

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 July 3, 2022 Assets measured

Description October 2, 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- and six-month periods ended July 3, 2022.

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

SONOCO PRODUCTS COMPANY

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The Company also sponsors contributory defined benefit pension plans covering certain of its employees in the United Kingdom, Canada and the Netherlands, and provides postretirement healthcare and life insurance benefits to a limited number of its retirees and their dependents in the United States and Canada, based on certain age and/or service eligibility requirements.

The components of net periodic benefit cost include the following:

Three Months Ended Six Months Ended

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

The components of net periodic benefit cost/(income) include the following:

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Retirement Plans

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Settlement Charges

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

The Company recognized settlement ch arges of $ 430 and $ 361 during the nine-month periods ended October 2, 2022 and October 3, 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.

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, resulting in the recognition of non-cash, pre-tax settlement charges totaling $ 547,291 in the second quarter of 2021.

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 Company made aggregate contributio ns of $ 11,600 and $ 142,615 to its defined benefit retirement and retiree health and life insurance plans during the nine-month periods ended October 2, 2022 and October 3, 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.

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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.

SRC contributions totaled $ 21,948 and $ 22,665 during the nine-month periods ended October 2, 2022 and October 3, 2021, respectively.

No additional SRC contributions will occur.

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 recognized expense related to the SRC of $ 5,456 and $ 17,290 for the three- and nine-month periods ended October 3, 2021, respectively.

The Company’s effective tax rates for the three- and nine-month periods ended October 2, 2022 were 23.7 % and 24.5 %, respectively, and its rates for the three- and nine-month periods ended October 3, 2021 were 2.3 % and 37.0 %, respectively.

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

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

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 higher 2022 rate was primarily driven by the absence of the 2021 benefit associated with the amendment of the Company’s 2017 tax return to report increased utilization of its foreign tax credits.

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

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The Company’s reserve for uncertain tax benefits has increased by $ 1,614 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 July 3, 2022 could increase by approximately $ 200 over the next twelve months.

The Company believes that it is reasonably possible that the amount reserved for unrecognized tax benefits at October 2, 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.

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

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

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

SONOCO PRODUCTS COMPANY

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(Dollars and shares in thousands except per share data)

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

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 October 2, 2022 and December 31, 2021:

Classification Balance Sheet Location October 2, 2022 December 31, 2021

Operating lease assets Right of Use Asset - Operating Leases $ 296,838 $ 268,390

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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- 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

The following table sets forth the components of the Company’s total lease cost for the three- and nine-month periods ended October 2, 2022 and October 3, 2021:

Three Months Ended Nine Months Ended

Lease Cost October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Operating lease cost (a) $ 12,863 $ 11,623 $ 38,679 $ 36,720

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Variable lease cost (a) (c) 7,894 6,796 22,416 19,569

Impairment charges (d) 61 — 293 —

Total lease cost $ 25,221 $ 20,262 $ 74,027 $ 61,419

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(d) Impairment charges are included in “Restructuring/Asset impairment charges” in the Company’s

Consolidated Statements of Income.

See Note 5 for more information.

SONOCO PRODUCTS COMPANY

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(Dollars and shares in thousands except per share data)

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

The following table sets forth certain lease-related information for the nine-month periods ended October 2, 2022 and October 3, 2021:

Nine Months Ended

October 2, 2022 October 3, 2021

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

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Leased assets obtained in exchange for new finance lease liabilities $ 8,224 $ 7,071

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

Modification to leased assets for increase in operating lease liabilities $ 2,258 $ 12,059

Modification to leased assets for (decrease)/increase in finance lease liabilities $ ( 642 ) $ 9,586

Termination reclasses to decrease operating lease assets $ ( 4,133 ) $ ( 4,971 )

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

July 3, 2022 December 31, 2021

October 2, 2022 December 31, 2021

Contract Assets $ 67,254 $ 51,106

Contract Liabilities $ ( 28,427 ) $ ( 18,993 )

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

Significant changes in the contract assets and liabilities balances during the nine-month period ended October 2, 2022 and the year ended December 31, 2021 were as follows:

October 2, 2022 December 31, 2021

Asset Contract

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Beginning Balance $ 51,106 $ ( 18,993 ) $ 48,390 $ ( 16,687 )

Acquired as part of a business combination 8,107 ( 5,588 ) — —

Revenue deferred or rebates accrued — ( 47,303 ) — ( 36,527 )

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Increases due to rights to consideration for customer specific goods produced, but not billed during the period 67,254 — 51,106 —

Transferred to receivables from contract assets recognized at the beginning of the period ( 51,106 ) — ( 48,390 ) —

Acquired as part of a business combination 8,107 ( 5,417 ) — —

Transferred to receivables from contract assets recognized at the beginning of the period and acquired as part of business combinations ( 59,213 ) — ( 48,390 ) —

Ending Balance $ 67,254 $ ( 28,427 ) $ 51,106 $ ( 18,993 )

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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 July 3, 2022 and July 4, 2021.

The following tables set forth information about revenue disaggregated by primary geographic regions for the three-month periods ended October 2, 2022 and October 3, 2021.

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

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

Three-month period ended October 2, 2022 Consumer Packaging Industrial Paper Packaging All Other Total

Primary Geographical Markets:

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Total $ 1,030,549 $ 661,452 $ 198,215 $ 1,890,216

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

Three-month period ended October 3, 2021 Consumer Packaging Industrial Paper Packaging All Other Total

Primary Geographical Markets:

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(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 following tables set forth information about revenue disaggregated by primary geographic regions for the nine-month periods ended October 2, 2022 and October 3, 2021.

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

Six months ended July 3, 2022 Consumer

Nine-month period ended October 2, 2022 Consumer

Packaging Industrial

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Total $ 2,888,630 $ 2,087,981 $ 597,919 $ 5,574,530

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

Nine-month period ended October 3, 2021 Consumer Packaging Industrial Paper Packaging All Other Total

Primary Geographical Markets:

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and flexible packaging.

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

Total assets of the Consumer Packaging segment increased by $ 1,661,573 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.

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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.

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.

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SEGMENT FINANCIAL INFORMATION

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Consumer Packaging $ 1,030,549 $ 598,969 $ 2,888,630 $ 1,779,525

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All Other 198,215 180,994 597,919 562,567

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

Net sales $ 1,890,216 $ 1,415,193 $ 5,574,530 $ 4,151,251

Intersegment sales:

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All Other 2,532 2,318 7,755 7,483

Consolidated $ 38,134 $ 31,039 $ 75,885 $ 62,613

Intersegment sales $ 38,131 $ 31,901 $ 114,016 $ 94,514

Operating profit:

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All Other 15,373 12,895 46,426 47,259

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

Segment operating profit 225,091 134,687 736,036 427,824

Restructuring/Asset impairment charges ( 20,652 ) ( 3,488 ) ( 43,357 ) ( 8,889 )

Amortization of acquisition intangibles ( 20,690 ) ( 12,257 ) ( 60,361 ) ( 37,117 )

Other non-base income/(charges), net ( 21,241 ) 5,236 ( 82,031 ) ( 7,276 )

Consolidated $ 197,476 $ 135,291 $ 366,538 $ 255,600

Other non-base (charges)/income, net ( 1,807 ) 7,570 ( 83,838 ) 294

Operating profit 181,942 126,512 548,480 382,112

Commitments and Contingencies

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Since the acquisition, the Company has spent a total of $ 1,943 on remediation of the Spartanburg site.

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.

At October 2, 2022 and December 31, 2021, the Company's accrual for environmental contingencies related to the Spartanburg site totaled $ 5,458 and $ 5,555 , respectively.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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.

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

SONOCO PRODUCTS COMPANY

Other environmental matters

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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 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.

At October 2, 2022 and December 31, 2021, the Company's accrual for these other sites totaled $ 1,604 and $ 1,825 , respectively.

As of October 2, 2022 and December 31, 2021, the Company (and its subsidiaries) had accrued $ 7,062 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.

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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

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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 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”).

We have reviewed the accompanying condensed consolidated balance sheet of Sonoco Products Company and its subsidiaries (the “Company”) as of October 2, 2022, and the related condensed consolidated statements of income, comprehensive income, and changes in total equity for the three-month and nine-month periods ended October 2, 2022 and October 3, 2021 and the condensed consolidated statements of cash flows for the nine-month periods ended October 2, 2022 and October 3, 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.

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Charlotte, North Carolina

August 2, 2022

November 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