What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-02 compared with 2023-05-03 · 361 added, 199 removed, 759 unchanged (42% of the section changed)

37 unchanged sentences

97,956 and 97,645 shares issued and outstanding

at April 2, 2023 and December 31, 2022 , respectively

at July 2, 2023 and December 31, 2022 , respectively

Capital in excess of stated value 145,841 140,539

10 unchanged sentences

(Dollars and shares in thousands except per share data)

Three Months Ended

April 2, 2023 April 3, 2022

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Net sales $ 1,705,290 $ 1,913,332 $ 3,435,073 $ 3,684,314

13 unchanged sentences

Net income 114,749 131,767 263,013 247,374

Net loss/(income) attributable to noncontrolling interests 55 ( 274 )

Net income attributable to noncontrolling interests ( 100 ) ( 95 ) ( 45 ) ( 369 )

Net income attributable to Sonoco $ 114,649 $ 131,672 $ 262,968 $ 247,005

11 unchanged sentences

(Dollars in thousands)

Three Months Ended

April 2, 2023 April 3, 2022

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Net income $ 114,749 $ 131,767 $ 263,013 $ 247,374

Other comprehensive income:

Other comprehensive income/(loss):

Foreign currency translation adjustments 21,690 ( 70,314 ) 53,498 ( 69,608 )

1 unchanged sentence

Changes in derivative financial instruments, net of tax 1,428 ( 2,090 ) 3,942 460

Other comprehensive income $ 35,238 $ 3,447

Other comprehensive income/(loss) 21,355 ( 74,332 ) 56,593 ( 70,885 )

Comprehensive income:

136,104 57,435 319,606 176,489

Net loss/(income) attributable to noncontrolling interests 55 ( 274 )

Other comprehensive income attributable to noncontrolling interests ( 239 ) ( 891 )

Net income attributable to noncontrolling interests ( 100 ) ( 95 ) ( 45 ) ( 369 )

Other comprehensive loss/(income) attributable to noncontrolling interests 298 524 59 ( 367 )

Comprehensive income attributable to Sonoco $ 136,302 $ 57,864 $ 319,620 $ 175,753

4 unchanged sentences

(Dollars and shares in thousands)

Equity Common Shares Capital in

Total Equity Common Shares Capital in

Stated Value Accumulated

4 unchanged sentences

December 31, 2022 $ 2,072,797 97,645 $ 7,175 $ 140,539 $ ( 430,083 ) $ 2,348,183 $ 6,983

Net income/(loss) 148,264 148,319 ( 55 )

Other comprehensive income:

Translation income 31,808 31,569 239

Defined benefit plan adjustment, net of tax 916 916

Derivative financial instruments, net of tax 2,514 2,514

Other comprehensive income $ 35,238 $ 34,999 $ 239

Dividends ( 48,203 ) ( 48,203 )

Issuance of stock awards 472 485 472

Shares repurchased ( 10,576 ) ( 175 ) ( 10,576 )

Share-based compensation 7,573 7,573

April 2, 2023 $ 2,205,565 97,955 $ 7,175 $ 138,008 $ ( 395,084 ) $ 2,448,299 $ 7,167

Net income 114,749 114,649 100

Other comprehensive income/(loss)

Translation gain/(loss) 706 ( 185 ) 891

Translation income/(loss) 21,690 21,988 ( 298 )

Defined benefit plan adjustment, net of tax ( 1,763 ) ( 1,763 )

Derivative financial instruments, net of tax 1,428 1,428

Other comprehensive loss $ 3,447 $ 2,556 $ 891

Other comprehensive income/(loss) $ 21,355 $ 21,653 $ ( 298 )

Dividends ( 50,180 ) ( 50,180 )

2 unchanged sentences

Share-based compensation 7,637 7,637

Purchase of noncontrolling interest ( 13,196 ) ( 7,080 ) ( 6,116 )

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

Total Equity Common Shares Capital in

July 2, 2023 $ 2,299,322 97,956 $ 7,175 $ 145,841 $ ( 373,431 ) $ 2,512,768 $ 6,969

Equity Common Shares Capital in

Stated Value Accumulated

4 unchanged sentences

December 31, 2021 $ 1,849,541 97,370 $ 7,175 $ 119,690 $ ( 359,425 ) $ 2,070,005 $ 12,096

Net income/(loss) 148,264 148,319 ( 55 )

Other comprehensive income:

Translation gain 31,808 31,569 239

Net income 115,607 115,333 274

Other comprehensive income/(loss):

Translation income/(loss) 706 ( 185 ) 891

Defined benefit plan adjustment, net of tax 191 191

Derivative financial instruments, net of tax 2,550 2,550

Other comprehensive income $ 35,238 $ 34,999 $ 239

Other comprehensive loss $ 3,447 $ 2,556 $ 891

Dividends ( 44,124 ) ( 44,124 )

2 unchanged sentences

Share-based compensation 10,689 10,689

Purchase of noncontrolling interest ( 13,196 ) ( 7,080 ) ( 6,116 )

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 (unaudited)

2 unchanged sentences

(Dollars in thousands)

Three Months Ended

April 2, 2023 April 3, 2022

Six Months Ended

July 2, 2023 July 3, 2022

Cash Flows from Operating Activities:

6 unchanged sentences

Cash dividends from affiliated companies 6,450 4,369

Net (gain)/loss on disposition of assets ( 60,615 ) 190

Net gain on disposition of assets ( 60,111 ) ( 648 )

Net gain on divestiture of business ( 18,436 ) —

21 unchanged sentences

Net change in commercial paper — ( 91,000 )

Net increase (decrease) in outstanding checks 2,670 ( 15,759 )

Net decrease in outstanding checks ( 441 ) ( 14,599 )

Cash dividends ( 97,689 ) ( 91,525 )

3 unchanged sentences

Effects of Exchange Rate Changes on Cash 8,596 ( 3,596 )

Net Decrease in Cash and Cash Equivalents ( 17,787 ) ( 19,441 )

Net Increase in Cash and Cash Equivalents 91,778 4,018

Cash and cash equivalents at beginning of period 227,438 170,978

7 unchanged sentences

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.

Certain amounts within “Cash Flows from Operating Activities” in the Condensed Consolidated Statements of Cash Flows for the three-month period ended April 3, 2022 have been reclassified to conform to the current year presentation .

Operating results for the three-month period ended April 2, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Certain amounts within “Cash Flows from Operating Activities” in the Condensed Consolidated Statements of Cash Flows for the six-month period ended July 3, 2022 have been reclassified to conform to the current year presentation .

Operating results for the three- and six-month periods ended July 2, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

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, 2022.

5 unchanged sentences

The Company adopted this standard in the first quarter of 2023, with the exception of the amendment on rollforward information, which will be adopted in the first quarter of 2024.

The adoption of the new standard did not have a material effect on the consolidated financial statements.

During the three-month period ended April 2, 2023, 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 2, 2023, there are no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements.

The adoption of the new standard did not have a material effect on the condensed consolidated financial statements.

During the six-month period ended July 2, 2023, 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 2, 2023, there are no other pronouncements pending adoption that are expected to have a material impact on the Company’s condensed consolidated financial statements.

Acquisitions and Divestitures

16 unchanged sentences

Skjern’s financial results are included in the Company’s Industrial Paper Packaging segment.

The Company's initial fair value estimates of the assets acquired and the liabilities assumed in the Skjern acquisition, as well as updated preliminary fair value allocations reflecting adjustments made during the measurement period, are as follows:

The Company’s initial fair value estimates of the assets acquired and the liabilities assumed in the Skjern acquisition, as well as updated preliminary fair value allocations reflecting adjustments made during the measurement period to date, are as follows:

Initial Estimate Measurement Period Adjustments Preliminary Allocation

19 unchanged sentences

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.

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.

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.

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 .

As of July 2, 2023, the remaining deferred payment obligation of $ 1,451 was recognized in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheet and is expected to be paid by the year ended December 31, 2028.

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.

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(Dollars and shares in thousands except per share data)

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.

During the three-month period ended April 2, 2023, the Company finalized its valuations of the assets and liabilities assumed in the acquisition of Metal Packaging.

As a result, the following measurement period adjustments were made to the previously disclosed provisional fair values of assets acquired and liabilities assumed:

Measurement Period Adjustments Three Months Ended April 2, 2023

Measurement Period Adjustments Six Months Ended July 2, 2023

Inventories $ ( 73 )

6 unchanged sentences

The following table presents the unaudited financial results for Metal Packaging from the prior year date of acquisition through the end of the reporting period ending April 3, 2022:

Supplemental Information (unaudited) January 26 to

Metal Packaging April 3, 2022

The following table presents the unaudited financial results for Metal Packaging from the prior year date of acquisition through the end of the reporting period ending 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-month period ended April 3, 2022, 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 six-month periods ended July 3, 2022, 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

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

Consolidated July 3, 2022 July 3, 2022

Net sales $ 1,913,322 $ 3,733,902

1 unchanged sentence

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 period ended April 3, 2022 includes adjustments to depreciation, amortization, and income taxes based upon the final 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 six-month periods ended July 3, 2022 includes adjustments to depreciation, amortization, and income taxes based upon the final 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 were recognized during the three-month period ended April 3, 2022 and charges related to fair value adjustments to acquisition-date inventory of $ 25,000 were recognized during the three-month period ended April 3, 2022.

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

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(Dollars and shares in thousands except per share data)

Divestiture of Business

Metal Packaging acquisition-related costs of $ 53 and $ 1,153 were recognized during the three- and six-month periods ended July 2, 2023, respectively.

Metal Packaging acquisition-related costs of $ 4,117 and $ 26,402 were recognized during the three- and six-month periods ended July 3, 2022, respectively, 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 as though the acquisition had occurred on January 1, 2021.

Divestiture of Businesses

On July 1, 2023, the Company completed the sale of its U.S.

BulkSak businesses, consisting of the manufacturing and distribution of flexible intermediate bulk containers, plastic and fiber pallets, and custom fit liners, to U.S.

BulkSak Holdings, LLC for a total cash selling price of $ 20,808 .

Cash proceeds totaling $ 16,808 were received on July 3, 2023, after the end of the reporting period, with the remainder held in escrow.

As the proceeds were not received as of the end of the accounting period, they are reflected as receivables on the Company’s Condensed Consolidated Balance Sheet as of July 2, 2023 with the current portion of $ 18,808 in “Other receivables” and the non-current portion of $ 2,000 in “Other assets.” Cash proceeds of $ 4,000 will be held in escrow to be released to the Company within 18 months from the date of the sale, pursuant to working capital adjustments and the settlement of any indemnity claims.

As a result of this divestiture, the Company wrote off net assets totaling $ 13,437 , including $ 3,333 of allocated goodwill, and recognized an initial pretax gain of $ 7,371 during the six-month period ended July 2, 2023, which is included in “Gain on divestiture of business and other assets” in the Company’s Condensed Consolidated Statements of Income.

Also on July 1, 2023, the Company agreed to the sale of its Mexico BulkSak business for a total cash selling price of $ 1,500 .

The sale of Mexico BulkSak will close at a later date upon the satisfactory completion of certain buyer and seller commitments.

On January 26, 2023, the Company completed the sale of its Sonoco Sustainability Solutions (“S3”) business, a provider of customized waste and recycling management programs and part of the Company’s Industrial Paper Packaging segment, to Northstar Recycling Co.

1 unchanged sentence

An additional $ 1,500 of proceeds are being held in escrow and will be released to the Company, pursuant to any indemnification claims, 20 months following the date of the divestiture.

These escrow proceeds are included in “Other Assets” in the Company’s Condensed Consolidated Balance Sheets as of April 2, 2023.

The Company wrote off net assets totaling $ 4,274 as part of the divestiture of the business, including $ 3,042 of allocated goodwill, and recognized a pretax gain of $ 11,065 during the three-month period ended April 2, 2023, which is included in “Gain on divestiture of business and other assets” in the Company’s Condensed Consolidated Statements of Income.

These escrow proceeds are included in “Other assets” in the Company’s Condensed Consolidated Balance Sheets as of July 2, 2023.

The Company wrote off net assets totaling $ 4,274 as part of the divestiture of the business, including $ 3,042 of allocated goodwill, and recognized a pretax gain of $ 11,065 during the six-month period ended July 2, 2023, which is included in “Gain on divestiture of business and other assets” in the Company’s Condensed Consolidated Statements of Income.

The Company is also entitled to receive additional proceeds of $ 3,200 in the second quarter of 2024 if certain conditions are met.

2 unchanged sentences

This investment is being accounted for under the measurement alternative (i.e., cost less impairment, adjusted for any qualifying observable price changes).

The sales of the S3 and BulkSak businesses did not represent a strategic shift for the Company or have a major effect on its operations or financial results.

Consequently, these sales did not meet the criteria for reporting as

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

discontinued operations.

The cash proceeds from the S3 sale were used for general corporate purposes, as will the proceeds from the BulkSak sale.

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.

4 unchanged sentences

Acquisition and Divestiture-Related Costs

Acquisition- and divestiture-related costs totaled $ 5,188 during the three-month period ended April 2, 2023.

Acquisition- and divestiture-related costs totaled $ 4,532 and $ 9,720 during the three- and six-month periods ended July 2, 2023, respectively.

These costs include legal and professional fees, investment banking fees, and other transaction costs that are included in “Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.

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

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 .

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

These charges, which primarily related to the acquisition of Metal Packaging, included the partial amortization of the fair value step-up of finished goods inventory of $ 8,155 and $ 33,155 , respectively, included in “Cost of sales” in the Company’s Condensed Consolidated Statements of Income, and other acquisition-related charges of $ 4,126 and $ 27,478 , respectively.

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.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Shareholders’ Equity

1 unchanged sentence

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

Three Months Ended

April 2, 2023 April 3, 2022

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Net income attributable to Sonoco $ 114,649 $ 131,672 $ 262,968 $ 247,005

8 unchanged sentences

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

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Anti-dilutive Securities

2 unchanged sentences

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 2, 2023 and April 3, 2022 were as follows (in thousands):

Three Months Ended

April 2, 2023 April 3, 2022

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 2, 2023 and July 3, 2022 were as follows (in thousands):

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Anti-dilutive stock appreciation rights 341 374 342 387

2 unchanged sentences

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 repurchased under this authorization during the year ended December 31, 2022 or the three-month period ended April 2, 2023.

No shares were repurchased under this authorization during the year ended December 31, 2022 or the six-month period ended July 2, 2023.

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 175 shares during the three-month period ended April 2, 2023, at a cost of $ 10,576 , and 60 shares during the three-month period ended April 3, 2022, at a cost of $ 3,410 .

These repurchases, which are not part of a publicly announced plan or program, totaled 175 shares during the six-month period ended July 2, 2023, at a cost of $ 10,602 , and 70 shares during the six-month period ended July 3, 2022, at a cost of $ 3,984 .

Dividend Declarations

On February 8, 2023, the Board of Directors declared a regular quarterly dividend of $ 0.49 per share.

On February 8, 2023, the Board declared a regular quarterly dividend of $ 0.49 per share.

This dividend was paid on March 10, 2023 to all shareholders of record as of February 22, 2023.

On April 19, 2023, the Board of Directors declared a regular quarterly dividend of $ 0.51 per share.

This dividend is payable on June 9, 2023 to all shareholders of record as of May 10, 2023.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

On April 19, 2023, the Board declared a regular quarterly dividend of $ 0.51 per share.

This dividend was paid on June 9, 2023 to all shareholders of record as of May 10, 2023.

On July 19, 2023, the Board declared a regular quarterly dividend of $ 0.51 per share.

This dividend is payable on September 8, 2023 to all shareholders of record as of August 10, 2023.

Noncontrolling interests

3 unchanged sentences

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.

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

As such, restructuring costs have been, and are expected to be, a recurring component of the Company’s operating costs.

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.

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

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

April 2, 2023 April 3, 2022

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Restructuring and restructuring-related asset impairment charges $ 6,057 $ 6,857 $ 34,871 $ 12,610

2 unchanged sentences

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

Three Months Ended

April 2, 2023 April 3, 2022

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Severance and termination benefits $ 4,118 $ 2,214 $ 9,634 $ 4,313

3 unchanged sentences

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

Three Months Ended

April 2, 2023 April 3, 2022

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Consumer Packaging $ 1,928 $ 2,544 $ 3,504 $ 4,179

4 unchanged sentences

Restructuring and restructuring-related asset impairment charges are included in “Restructuring/Asset impairment charges” 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:

8 unchanged sentences

Foreign currency translation 13 — 9 22

Liability at April 2, 2023

Liability at July 2, 2023

$ 10,721 $ — $ 2,506 $ 13,227

“Severance and Termination Benefits” during the first three months of 2023 includes the cost of severance for approximately 159 employees whose positions were eliminated in conjunction with the Company's ongoing organizational effectiveness efforts and severance related to the closure of the Company's paper mill in Hutchinson, Kansas, part of the Industrial Paper Packaging segment.

“Asset Impairments/Disposal of Assets” during the first three months of 2023 consists primarily of asset impairment charges related to the closure of the Company's paper mill in Hutchinson, Kansas.

“Other Costs” during the first three months of 2023 consists primarily of consulting services, costs related to the closure of the Hutchinson, Kansas paper mill, and the cost of earlier plant closures, including equipment removal, utilities, plant security, property taxes and insurance.

“Severance and Termination Benefits” during the first six months of 2023 includes the cost of severance for approximately 240 employees whose positions were eliminated in conjunction with the Company’s ongoing organizational effectiveness efforts, severance related to the closure of the Company’s paper mill in Hutchinson, Kansas, part of the Industrial Paper Packaging segment, and severance related to the closures of several smaller operations.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

“Asset Impairments/Disposal of Assets” during the first six months of 2023 consists primarily of asset impairment charges related to the closure of the Company’s paper mill in Hutchinson, Kansas.

“Other Costs” during the first six months of 2023 consists primarily of consulting services, costs related to the closure of the Hutchinson, Kansas paper mill, and the cost of earlier 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 2023 using cash generated from operations.

2 unchanged sentences

Other Asset Impairments

Total other asset impairment charges of $ 6,389 were incurred during the three months ended April 3, 2022, which includes $ 5,713 of impairment charges related to the Company's decision to exit 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 operations, part of the Consumer Packaging segment.

Other asset impairment charges recognized during the three- and six-month periods ended July 3, 2022 include net asset impairment charges totaling $ 3,452 and $ 9,165 , respectively, resulting from the Company’s exit from its operations in Russia as a result of the ongoing Russia-Ukraine conflict.

These operations consisted of two small tube and core plants in the Company’s Industrial Paper Packaging segment.

The charges include $ 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.

Fixed asset impairments totaling $ 254 and $ 930 , respectively, were recognized in the three- and six-month periods ended July 3, 2022, in the Company’s plastics foods operations, part of the Consumer Packaging segment.

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.

4 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-month periods ended April 2, 2023 and April 3, 2022:

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- and six-month periods ended July 2, 2023 and July 3, 2022:

Items Defined

7 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss to fixed assets — — 309 309

Other comprehensive income 31,569 916 2,514 34,999

Balance at April 2, 2023

Other comprehensive income/(loss) 53,557 ( 847 ) 3,942 56,652

Balance at July 2, 2023

$ ( 284,759 ) $ ( 91,820 ) $ 3,148 $ ( 373,431 )

2 unchanged sentences

Other comprehensive (loss)/income before reclassifications ( 73,722 ) ( 3,893 ) 3,047 ( 74,568 )

Amounts reclassified from accumulated other comprehensive loss to net loss — 1,162 ( 2,654 ) ( 1,492 )

Amounts reclassified from accumulated other comprehensive loss to net income 3,747 2,156 ( 2,199 ) 3,704

Amounts reclassified from accumulated other comprehensive loss to fixed assets — — ( 388 ) ( 388 )

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 )

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 2, 2023 and April 3, 2022:

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 2, 2023 and July 3, 2022:

Amount Reclassified from Accumulated

Other Comprehensive Loss

Three Months Ended

Three Months Ended Six Months Ended

Details about Accumulated Other

Comprehensive

Loss Components April 2,

2023 April 3,

Loss Components July 2,

2022 Affected Line Item in

1 unchanged sentence

Statements of Income

Foreign currency items

Loss on Russia exit (a)

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

Gains/(losses) on cash flow hedges

Foreign exchange contracts $ 1,062 $ 566 Net sales

Foreign exchange contracts ( 454 ) ( 695 ) Cost of sales

Commodity contracts ( 32 ) 3,850 Cost of sales

Foreign exchange contracts (b)

2,515 843 3,577 1,866 Net sales

Foreign exchange contracts (b)

( 918 ) ( 1,011 ) ( 1,372 ) ( 1,706 ) Cost of sales

Commodity contracts (b)

— 1,979 ( 32 ) 2,937 Cost of sales

1,597 1,811 2,173 3,097 Income before income taxes

2 unchanged sentences

Defined benefit pension items

Effect of settlement loss (a)

Effect of settlement loss (c)

( 63 ) ( 74 ) ( 749 ) ( 430 ) Non-operating pension costs

Amortization of defined

benefit pension items (a)

benefit pension items (c)

( 1,132 ) ( 1,255 ) ( 2,203 ) ( 2,426 ) Non-operating pension costs

4 unchanged sentences

(a) See Note 5 for additional details.

(b) See Note 9 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 (loss)/income for the three-month periods ended April 2, 2023 and April 3, 2022:

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 2, 2023 and July 3, 2022:

Three Months Ended

April 2, 2023

Three Months Ended

April 3, 2022

Benefit After Tax

3 unchanged sentences

Net other comprehensive income/(loss) from foreign currency items $ 21,988 $ — $ 21,988 $ ( 73,537 ) $ — $ ( 73,537 )

Amounts reclassified from accumulated other

comprehensive loss to net income (a)

— — — 3,747 — 3,747

Net other comprehensive loss/(income) from

foreign currency items 21,988 — 21,988 ( 69,790 ) — ( 69,790 )

Defined benefit pension items:

2 unchanged sentences

Amounts reclassified from accumulated other

comprehensive loss to net income (a)

comprehensive loss to net income (b)

1,195 ( 302 ) 893 1,329 ( 335 ) 994

Net other comprehensive income/(loss) from

Net other comprehensive (loss)/income from

defined benefit pension items ( 2,494 ) 731 ( 1,763 ) ( 2,578 ) 650 ( 1,928 )

3 unchanged sentences

Amounts reclassified from accumulated other

comprehensive loss to net income (b)

comprehensive loss to net income (c)

( 1,597 ) 292 ( 1,305 ) ( 1,811 ) 529 ( 1,282 )

6 unchanged sentences

(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 2, 2023 and July 3, 2022:

Six Months Ended July 2, 2023 Six Months Ended July 3, 2022

Benefit After Tax

Amount Before Tax

Benefit After Tax

Foreign currency items:

Other comprehensive income/(loss) before

reclassifications $ 53,557 $ — $ 53,557 $ ( 73,722 ) $ — $ ( 73,722 )

Amounts reclassified from accumulated other

comprehensive loss to net income (a)

— — — 3,747 — 3,747

Net other comprehensive income/(loss) from

foreign currency items 53,557 — 53,557 ( 69,975 ) — ( 69,975 )

Defined benefit pension items:

Other comprehensive (loss)/income before

reclassifications ( 4,449 ) 1,400 ( 3,049 ) ( 5,183 ) 1,290 ( 3,893 )

Amounts reclassified from accumulated other

comprehensive loss to net income (b)

2,952 ( 750 ) 2,202 2,856 ( 700 ) 2,156

Net other comprehensive (loss)/income from

defined benefit pension items ( 1,497 ) 650 ( 847 ) ( 2,327 ) 590 ( 1,737 )

Gains and losses on cash flow hedges:

Other comprehensive income/(loss) before

reclassifications 6,880 ( 1,502 ) 5,378 4,271 ( 1,224 ) 3,047

Amounts reclassified from accumulated other

comprehensive loss to net income (c)

( 2,173 ) 437 ( 1,736 ) ( 3,097 ) 898 ( 2,199 )

Amounts reclassified from accumulated other

comprehensive loss to fixed assets 401 ( 101 ) 300 ( 552 ) 164 ( 388 )

Net other comprehensive income/(loss) from

cash flow hedges 5,108 ( 1,166 ) 3,942 622 ( 162 ) 460

Other comprehensive income/(loss) $ 57,168 $ ( 516 ) $ 56,652 $ ( 71,680 ) $ 428 $ ( 71,252 )

(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-month period ended April 2, 2023 is as follows:

A summary of the changes in goodwill for the six-month period ended July 2, 2023 is as follows:

Packaging Industrial Paper Packaging All Other Total

Goodwill at December 31, 2022 $ 898,625 $ 394,826 $ 381,860 $ 1,675,311

Dispositions — ( 3,042 ) — ( 3,042 )

Divestitures — ( 6,375 ) — ( 6,375 )

Foreign currency translation 4,008 8,582 1,451 14,041

Measurement period adjustments 439 ( 1,447 ) — ( 1,008 )

Goodwill at April 2, 2023 $ 901,209 $ 395,857 $ 382,481 $ 1,679,547

Goodwill activity reflected under the caption “Dispositions” relates to the sale of the Company's S3 business on January 25, 2023.

Goodwill activity reflected under the caption “Measurement period adjustments” relates to the prior year acquisitions of Metal Packaging and Skjern.

Goodwill at July 2, 2023 $ 903,072 $ 395,586 $ 383,311 $ 1,681,969

Goodwill activity reflected under the caption “Divestitures” relates to the sales of the Company’s S3 business on January 25, 2023 and the BulkSak business on July 1, 2023.

Goodwill activity reflected under the caption “Measurement

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

period adjustments” relates to the prior year acquisitions of Metal Packaging and Skjern.

See Note 3 for additional information.

5 unchanged sentences

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.

At April 2, 2023, the t otal goodwill associated with the Plastics - Healthcare reporting uni t was $ 62,963 and the tot al goodwill associated with the Protexic reporting unit w as $ 29,051 .

During the time subsequent to the annual evaluation, and at April 2, 2023, 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.

At July 2, 2023, the t otal goodwill associated with the Plastics - Healthcare reporting uni t was $ 63,689 and the tot al goodwill associated with the Protexic reporting unit w as $ 29,051 .

During the time subsequent to the annual evaluation, and at July 2, 2023, 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 April 2, 2023 and December 31, 2022 is as follows:

A summary of other intangible assets as of July 2, 2023 and December 31, 2022 is as follows:

2023 December 31,

14 unchanged sentences

Other Intangible Assets, net $ 694,762 $ 741,598

Other intangible assets, primarily customer lists, with a net book value of $ 2,704 were written off as a result of the divestiture of the BulkSak business on July 1, 2023.

See Note 3 for additional information.

Other intangible assets are amortized using the straight-line method over their respective useful lives when management has determined that the straight-line method approximates the pattern of consumption of the respective intangible assets or in relation to the asset’s specific pattern of consumption if management has determined that the straight-line method does not provide a fair approximation of the consumption of benefits.

These lives generally range from three to forty years .

The Company has no intangible assets with indefinite lives.

Aggregate amortization expense was $ 21,164 and $ 18,800 for the three-month periods ended April 2, 2023 and April 3, 2022, respectively.

Aggregate amortization expense was $ 20,539 and $ 20,871 for the three-month periods ended July 2, 2023 and July 3, 2022, respectively, and $ 41,703 and $ 39,671 for the six-month periods ended July 2, 2023 and July 3, 2022, respectively.

Amortization expense on other intangible assets is expected to total approximately $ 80,930 in 2023, $ 72,400 in 2024, $ 63,700 in 2025, $ 61,100 in 2026 and $ 59,700 in 2027.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Supply Chain Financing

5 unchanged sentences

The Company does not enter into any agreements with suppliers regarding their participation in the SCF Programs.

The following table sets forth the balance sheet location and values of the Company’s SCF Program obligations at April 2, 2023 and December 31, 2022:

Balance Sheet Line Item April 2, 2023 December 31, 2022

The following table sets forth the balance sheet location and values of the Company’s SCF Program obligations at July 2, 2023 and December 31, 2022:

Balance Sheet Line Item July 2, 2023 December 31, 2022

Payable to suppliers (a)

1 unchanged sentence

Notes payable and current portion of long-term debt (b)

$ 1,350 $ 63,448

(a) The payment of these obligations is included in net cash provided by operating activities in the Company's Consolidated Statements of Cash Flows.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(b) The payment of these obligations is included in net cash used in financing activities in the Company's Consolidated Statements of Cash Flows .

(a) The payment of these obligations is included in net cash provided by operating activities in the Company’s Condensed Consolidated Statements of Cash Flows.

(b) The payment of these obligations is included in net cash used in financing activities in the Company’s Condensed Consolidated Statements of Cash Flows .

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 2, 2023 December 31, 2022

July 2, 2023 December 31, 2022

Value Carrying

3 unchanged sentences

Cash Flow Hedges

At April 2, 2023 and December 31, 2022, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows.

At July 2, 2023 and December 31, 2022, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows.

These contracts, w hich 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.

Cash flows from derivative financial instruments designated as cash flow hedges are classified as cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows.

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 2, 2023, these contracts included natural gas swaps covering approximately 0.1 million metric million British thermal units (“MMBTUs”).

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

At July 2, 2023, these contracts included natural gas swaps covering approximately 0.1 million metric million British thermal units (“MMBTUs”).

These contracts represented approximately 1 % o f anticipated usage in North America for 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 2, 2023, the Company has also designated swap contracts covering 715 metric tons of aluminum as cash flow hedges.

The fair value of the Company’s commodity cash flow hedges netted to a loss position of $( 218 ) and $( 172 ) at April 2, 2023 and December 31, 2022, respectively.

The amount of the loss included in accumulated other comprehensive loss at April 2, 2023 expected to be reclassified to the income statement during the next twelve months is $( 178 ).

At July 2, 2023 , the Company has also designated swap contracts covering 447 metric tons of aluminum as cash flow hedges.

The fair value of the Company’s commodity cash flow hedges netted to a loss position of $( 287 ) and $( 172 ) at July 2, 2023 and December 31, 2022, respectively.

The amount of the loss included in accumulated other comprehensive loss at July 2, 2023 expected to be reclassified to the income statement during the next twelve months is $( 263 ).

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 2023 and 2024.

The net positions of these contracts at April 2, 2023 were as follows (in thousands):

The net positions of these contracts at July 2, 2023 were as follows (in thousands):

Currency Action Quantity

8 unchanged sentences

British pound purchase 3,116

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of $ 2,560 and a loss position of $( 299 ) at April 2, 2023 and December 31, 2022, respectively.

The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of $ 4,525 and a loss position of $( 299 ) at July 2, 2023 and December 31, 2022, respectively.

Gains of $ 4,525 are expected to be reclassified from accumulated other comprehensive income 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 2, 2023 and December 31, 2022, the net position of these contracts was $( 16 ) and $( 564 ), respectively.

During the three-month period ended April 2, 2023, losses from these hedges of $( 401 ) were reclassified from accumulated other comprehensive loss and included in the carrying value of the capitalized expenditures.

Losses of $( 22 ) 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.

As of July 2, 2023 and December 31, 2022, the net position of these contracts was $ 0 and $( 564 ), respectively.

During the six-month period ended July 2, 2023, losses from these hedges totaling $( 401 ) were reclassified from accumulated other comprehensive loss into the carrying value of the capitalized expenditures.

As of July 2, 2023, no amounts are expected to be reclassified from accumulated other comprehensive loss into the carrying value of the related fixed assets during the next twelve months.

Non-Designated Derivatives

The Company routinely enters into other derivative contracts which are not designated for hedge accounting treatment under ASC 815.

The Company routinely enters into other derivative contracts which are not designated for hedge accounting treatment under Accounting Standards Codification (“ASC”) 815.

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

Cash flows from derivative financial instruments not designated as hedges are classified as cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows.

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 2, 2023, were as follows (in thousands):

The net currency positions of these non-designated contracts at July 2, 2023, were as follows (in thousands):

Currency Action Quantity

4 unchanged sentences

Canadian dollar purchase 6,420

Euro purchase 3

Commodity Hedges

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

At April 2, 2023, these contracts consisted of natural gas swaps covering approximately 8.3 million MMBTUs and represented approximately 78 % and 54 % of anticipated usage for 2023 and 2024, respectively.

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

At July 2, 2023, these contracts consisted of natural gas swaps covering approximately 6.9 million MMBTUs and represented approximately 77 % and 54 % of anticipated usage for 2023 and 2024, respectively.

Interest Rate Hedges

2 unchanged sentences

The derivatives were settled when the bonds priced on January 11, 2022, with the Company 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 t he three-month period ended April 3, 2022.

The fair value of the Company’s non-designated derivatives position was a loss of $( 14,691 ) and $( 8,692 ) at April 2, 2023 and December 31, 2022, 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 April 2, 2023 and December 31, 2022:

Description Balance Sheet Location April 2, 2023 December 31, 2022

The gain is included in “Selling, general and administrative expenses” on the Company’s Condensed Consolidated Statements of Income for t he six-month period ended July 3, 2022.

The fair value of the Company’s non-designated derivatives position was a loss of $( 11,068 ) and $( 8,692 ) at July 2, 2023 and December 31, 2022, respectively.

The following table sets forth the location and fair values of the Company’s derivative instruments at July 2, 2023 and December 31, 2022:

Description Balance Sheet Location July 2, 2023 December 31, 2022

Derivatives designated as hedging instruments:

15 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-month periods ended April 2, 2023 and April 3, 2022, 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 July 2, 2023 and July 3, 2022, 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-month period ended April 2, 2023

Three-month period ended July 2, 2023

Foreign Exchange Contracts $ 3,413 Net sales $ 2,515

1 unchanged sentence

Commodity Contracts $ ( 69 ) Cost of sales $ —

Three-month period ended April 3, 2022

Three-month period ended July 3, 2022

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

5 unchanged sentences

Derivatives not Designated as Hedging Instruments:

Three-month period ended April 2, 2023

Three-month period ended July 2, 2023

Commodity Contracts $ ( 1,809 ) Cost of sales

Foreign Exchange Contracts $ 1,935 Selling, general and administrative

Three-month period ended April 3, 2022

Three-month period ended July 3, 2022

Commodity Contracts $ 506 Cost of sales

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

Three-month period ended July 2, 2023 Three-month period ended July 3, 2022

Description Revenue Cost of

sales Revenue Cost of

Total amount of income and expense line items presented in the Condensed Consolidated Statements of Income $ 2,515 $ ( 918 ) $ 843 $ 968

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 $ 2,515 $ ( 918 ) $ 843 $ ( 1,011 )

Commodity contracts:

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

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(Dollars and shares in thousands except per share data)

Three-month period ended April 2, 2023 Three-month period ended April 3, 2022

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the six months ended July 2, 2023 and July 3, 2022, 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:

Six-month period ended July 2, 2023

Foreign Exchange Contracts $ 7,026 Net sales $ 3,577

Cost of sales $ ( 1,372 )

Commodity Contracts $ ( 146 ) Cost of sales $ ( 32 )

Six-month period ended July 3, 2022

Foreign Exchange Contracts $ 88 Net sales $ 1,866

Cost of sales $ ( 1,706 )

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

Description Gain or (Loss)

Recognized Location of Gain or (Loss) Recognized in

Income Statement

Derivatives not Designated as Hedging Instruments:

Six-month period ended July 2, 2023

Commodity Contracts $ ( 11,517 ) Cost of sales

Foreign Exchange Contracts $ 4,072 Selling, general and administrative

Six-month period ended July 3, 2022

Commodity Contracts $ 7,498 Cost of sales

Foreign Exchange Contracts $ 201 Selling, general and administrative

Six-month period ended July 2, 2023 Six-month period ended July 3, 2022

Description Revenue Cost of

3 unchanged sentences

Foreign exchange contracts:

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into net income $ 1,062 $ ( 454 ) $ 566 $ ( 695 )

Amount of gain/(loss) reclassified from accumulated other comprehensive income into net income $ 3,577 $ ( 1,372 ) $ 1,866 $ ( 1,706 )

Commodity contracts:

Amount of gain reclassified from accumulated other comprehensive loss into net income $ — $ ( 32 ) $ — $ 3,850

Amount of gain reclassified from accumulated other comprehensive income into net income $ — $ ( 32 ) $ — $ 2,937

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 2, 2023 Assets measured

Description July 2, 2023 Assets measured

at NAV Level 1 Level 2 Level 3

17 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 2, 2023.

The Company measures certain non-financial assets and non-financial liabilities at fair value on a recurring basis.

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 2, 2023.

The Company measures certain non-financial assets and non-financial liabilities at fair value on a non-recurring basis.

See Note 3 for a discussion of assets acquired and liabilities assumed in acquisitions and Note 5 for a discussion of asset impairments associated with restructuring activities.

The fair value of assets determined based on third-party appraisals and classified as Level 3 measurements due to the use of significant unobservable inputs was not material at April 2, 2023 or December 31, 2022.

The fair value of assets determined based on third-party appraisals and classified as Level 3 measurements due to the use of significant unobservable inputs was not material at July 2, 2023 or December 31, 2022.

SONOCO PRODUCTS COMPANY

6 unchanged sentences

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

Three Months Ended

April 2, 2023 April 3, 2022

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Retirement Plans

13 unchanged sentences

Settlement Charges

The Company recognized settlement ch arges of $ 686 and $ 356 during the three-month periods ended April 2, 2023 and April 3, 2022, respectively.

The Company recognized settlement ch arges of $ 749 and $ 430 during the six-month periods ended July 2, 2023 and July 3, 2022, 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.

1 unchanged sentence

Contributions

The Company made aggregate contributions of $ 4,931 and $ 6,147 to its defined benefit retirement and retiree health and life insurance plans during the three-month periods ended April 2, 2023 and April 3, 2022, respectively.

The Company made aggregate contributions of $ 7,456 and $ 8,895 to its defined benefit retirement and retiree health and life insurance plans during the six-month periods ended July 2, 2023 and July 3, 2022, respectively.

The Company expects to make additional aggregate contributions of approximately $ 7,000 to its defined benefit retirement and retiree health and life insurance plans over the remainder of 2023.

10 unchanged sentences

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.

The Company made SRC contributions totaling $ 21,948 during the three-month period ended April 3, 2022 related to the 2021 fiscal year.

The Company made SRC contributions totaling $ 21,948 during the six-month period ended July 3, 2022 related to the 2021 fiscal year.

No additional SRC contributions will occur.

The Company’s effective tax rates for the three-month periods ended April 2, 2023 and April 3, 2022 were 24.3 % and 23.7 %, respectively.

The Company’s effective tax rates for the three- and six-month periods ended July 2, 2023 were 26.8 % and 25.4 %, respectively, and its rates for the three- and six-month periods ended July 3, 2022 were 25.8 % and 24.9 %, 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 higher 2023 rate was primarily driven by the absence of a first quarter 2022 deferred tax benefit related to 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 $ 1,494 since December 31, 2022 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 2, 2023 could increase by approximately $ 260 over the next twelve months.

The Company believes that it is reasonably possible that the amount reserved for unrecognized tax benefits at July 2, 2023 could increase by approximately $ 860 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 performed after contemplating all the relevant facts and circumstances in accordance with guidance under ASC 842 - Leases.

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 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 - “Leases.” Most of the Company’s 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 Metal Packaging on January 26, 2022, which included the acquisition of $ 33,910 in operating lease liabilities and $ 46,687 in finance lease liabilities as of the date of acquisition.

On January 26, 2022, the Company completed the acquisition of Metal Packaging, which included the acquisition of $ 33,910 in operating lease liabilities and $ 46,687 in finance lease liabilities as of the date of acquisition.

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 2, 2023 and December 31, 2022:

Classification Balance Sheet Location April 2, 2023 December 31, 2022

The following table sets forth the balance sheet location and aggregate values of the Company’s lease assets and lease liabilities at July 2, 2023 and December 31, 2022:

Classification Balance Sheet Location July 2, 2023 December 31, 2022

Operating lease assets Right of Use Asset - Operating Leases $ 287,154 $ 296,781

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 2, 2023 and April 3, 2022:

Three Months Ended

Lease Cost April 2, 2023 April 3, 2022

The following table sets forth the components of the Company’s total lease cost for the three- and six-month periods ended July 2, 2023 and July 3, 2022:

Three Months Ended Six Months Ended

Lease Cost July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Operating lease cost (a) $ 13,891 $ 13,251 $ 27,302 $ 26,048

10 unchanged sentences

(Dollars and shares in thousands except per share data)

The following table sets forth certain lease-related information for the three-month periods ended April 2, 2023 and April 3, 2022:

Three Months Ended

April 2, 2023 April 3, 2022

The following table sets forth certain lease-related information for the six-month periods ended July 2, 2023 and July 3, 2022:

Six Months Ended

July 2, 2023 July 3, 2022

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

5 unchanged sentences

Leased assets obtained in exchange for new finance lease liabilities $ 4,333 $ 7,511

Modification to leased assets for increase in operating lease liabilities $ 3,957 $ 1,484

Modification to leased assets for increase/(decrease) in operating lease liabilities $ 1,173 $ ( 4,139 )

Modification to leased assets for increase in finance lease liabilities $ 6 $ 14

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 2, 2023 December 31, 2022

July 2, 2023 December 31, 2022

Contract Assets $ 62,225 $ 56,008

Contract Liabilities $ ( 22,448 ) $ ( 22,423 )

Significant changes in the contract assets and liabilities balances during the three-month period ended April 2, 2023 and the year ended December 31, 2022 were as follows:

April 2, 2023 December 31, 2022

Significant changes in the contract assets and liabilities balances during the six-month period ended July 2, 2023 and the year ended December 31, 2022 were as follows:

July 2, 2023 December 31, 2022

Asset Contract

17 unchanged sentences

Contract assets and liabilities are generally short in duration given the nature of products produced by the Company.

The following tables set forth information about revenue disaggregated by primary geographic regions for the three-month periods ended April 2, 2023 and April 3, 2022.

The following tables set forth information about revenue disaggregated by primary geographic regions for the three-month periods ended July 2, 2023 and July 3, 2022.

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

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

Three-month period ended April 2, 2023 Consumer Packaging Industrial Paper Packaging All Other Total

Three-month period ended July 2, 2023 Consumer Packaging Industrial Paper Packaging All Other Total

Primary Geographical Markets:

5 unchanged sentences

Total $ 923,605 $ 585,143 $ 196,542 $ 1,705,290

Three-month period ended April 3, 2022 Consumer Packaging Industrial Paper Packaging All Other Total

Three-month period 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

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 2, 2023 and July 3, 2022.

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

Six-month period ended July 2, 2023 Consumer

Packaging Industrial

Packaging All Other Total

Primary Geographical Markets:

United States $ 1,404,758 $ 700,713 $ 330,221 $ 2,435,692

Europe 230,139 208,970 44,593 483,702

Canada 60,591 51,163 — 111,754

Asia 48,602 114,619 694 163,915

Other 88,793 125,533 25,684 240,010

Total $ 1,832,883 $ 1,200,998 $ 401,192 $ 3,435,073

Six-month period ended July 3, 2022 Consumer Packaging Industrial Paper 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

Segment Reporting

8 unchanged sentences

The primary products produced with the All Other group of businesses consist of a variety of packaging materials, including plastic, paper, foam, and various other specialty materials.

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

Segment operating profit is the measure of segment profit or loss reported to the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance in accordance with ASC 280 “Segment Reporting,” as prescribed by the FASB.

Segment operating profit viewed by the Company’s management to evaluate segment performance does not include restructuring/asset impairment charges, amortization of acquisition intangibles, acquisition/divestiture-related costs, changes in LIFO inventory reserves, gains/losses from the sale of businesses, or certain other items, if any, the exclusion of which the Company believes improves the comparability and analysis of the ongoing operating performance of the business.

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

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(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 group of businesses.

“Segment operating profit” is defined as the segment’s portion of operating profit excluding restructuring/asset impairment charges, acquisition/divestiture-related expenses, amortization of acquisition intangibles, changes in last-in, first-out (“LIFO”) inventory reserves, gains/losses from the divestiture of businesses or other assets, and 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.

SEGMENT FINANCIAL INFORMATION

Three Months Ended

April 2, 2023 April 3, 2022

Three Months Ended Six Months Ended

July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022

Consumer Packaging $ 923,605 $ 989,982 $ 1,832,883 $ 1,858,081

13 unchanged sentences

Amortization of acquisition intangibles ( 20,539 ) ( 20,871 ) ( 41,703 ) ( 39,671 )

Other non-GAAP income/(charges), net 66,205 ( 60,790 )

Other income/(charges), net 3,515 ( 21,241 ) 69,721 ( 82,031 )

Operating profit $ 187,859 $ 197,476 $ 417,507 $ 366,538

8 unchanged sentences

Since the acquisition, the Company has spent a total of $ 2,053 on remediation of the Spartanburg site.

At April 2, 2023 and December 31, 2022, the Company's accrual for environmental contingencies related to the Spartanburg site totaled $ 5,395 and $ 5,425 , respectively.

At July 2, 2023 and December 31, 2022, the Company’s accrual for environmental contingencies related to the Spartanburg site totaled $ 5,347 and $ 5,425 , 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.

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

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 2, 2023 and December 31, 2022, the Company's accrual for these other sites totaled $ 1,790 and $ 1,840 , respectively.

As of April 2, 2023 and December 31, 2022, the Company (and its subsidiaries) had accrued $ 7,185 and $ 7,265 , respectively, related to environmental contingencies.

At July 2, 2023 and December 31, 2022, the Company’s accrual for these other sites totaled $ 1,772 and $ 1,840 , respectively.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

As of July 2, 2023 and December 31, 2022, the Company (and its subsidiaries) had accrued $ 7,120 and $ 7,265 , respectively, related to environmental contingencies.

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

4 unchanged sentences

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