What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-02 · 419 added, 269 removed, 851 unchanged (45% of the section changed)

37 unchanged sentences

97,956 and 97,645 shares issued and outstanding

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

at October 1, 2023 and December 31, 2022 , respectively

Capital in excess of stated value 152,148 140,539

10 unchanged sentences

(Dollars and shares in thousands except per share data)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Net sales $ 1,710,419 $ 1,890,216 $ 5,145,492 $ 5,574,530

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Restructuring/Asset impairment charges 18,110 20,652 52,981 43,357

Gain on divestiture of business and other assets 7,371 — 79,381 —

(Loss)/Gain on divestiture of business and other assets ( 537 ) — 78,844 —

Operating profit 162,937 181,942 580,444 548,480

Other income, net 36,943 — 36,943 —

Non-operating pension costs 3,424 1,249 10,424 4,251

20 unchanged sentences

(Dollars in thousands)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Net income $ 131,058 $ 122,502 $ 394,071 $ 369,876

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Changes in derivative financial instruments, net of tax ( 1,724 ) ( 1,252 ) 2,218 ( 792 )

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

Other comprehensive (loss)/income ( 47,347 ) ( 82,363 ) 9,246 ( 153,248 )

Comprehensive income:

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Net income attributable to noncontrolling interests ( 309 ) ( 273 ) ( 354 ) ( 642 )

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

Other comprehensive loss attributable to noncontrolling interests 668 515 727 148

Comprehensive income attributable to Sonoco $ 84,070 $ 40,381 $ 403,690 $ 216,134

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

Net income 131,058 130,749 309

Other comprehensive income/(loss):

Translation loss ( 49,024 ) ( 48,356 ) ( 668 )

Defined benefit plan adjustment, net of tax 3,401 3,401

Derivative financial instruments, net of tax ( 1,724 ) ( 1,724 )

Other comprehensive loss $ ( 47,347 ) $ ( 46,679 ) $ ( 668 )

Dividends ( 50,185 ) ( 50,185 )

Issuance of stock awards 397 — 397

Shares repurchased ( 3 ) — ( 3 )

Share-based compensation 5,913 5,913

October 1, 2023 $ 2,339,155 97,956 $ 7,175 $ 152,148 $ ( 420,110 ) $ 2,593,332 $ 6,610

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 (unaudited)

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(Dollars in thousands)

Six Months Ended

July 2, 2023 July 3, 2022

Nine Months Ended

October 1, 2023 October 2, 2022

Cash Flows from Operating Activities:

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Net gain on disposition of assets ( 59,050 ) ( 178 )

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

Net gain on divestiture of business and other assets ( 54,842 ) —

Pension and postretirement plan expense 12,679 6,951

20 unchanged sentences

Net change in commercial paper — ( 64,000 )

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

Net increase/(decrease) in outstanding checks 1,925 ( 16,509 )

Cash dividends ( 147,477 ) ( 139,289 )

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Cash and cash equivalents at end of period $ 257,940 $ 182,238

Certain prior year amounts reported within net cash provided by operating activities have been revised to conform with the current presentation.

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

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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.

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.

Operating results for the three- and nine-month periods ended October 1, 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.

On September 8, 2023, the Company completed its previously announced acquisition of the remaining 65 % interest in RTS Packaging, LLC (“RTS Packaging”), from joint venture partner WestRock Company (“WestRock”).

This acquisition has been accounted for as a business combination resulting in the consolidation of RTS Packaging.

Prior to September 8, 2023, the Company reported its 35 % interest in the RTS Packaging joint venture using the equity method of accounting.

See Note 3 for additional information.

New Accounting Pronouncements

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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.

During the nine-month period ended October 1, 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 October 1, 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

As previously disclosed, on November 9, 2022, the Company entered into a definitive agreement to purchase the remaining equity interest in RTS Packaging, LLC (“RTS”), from joint venture partner WestRock Company (“WestRock”) and one WestRock paper mill in Chattanooga, Tennessee, for $ 330,000 in cash, subject to customary pricing adjustments.

In January 2023, both the Company and WestRock received a request for additional information and documentary material from the Antitrust Division of the U.S.

Department of Justice.

The Company anticipates completing the transaction in the second half of 2023, subject to the satisfaction or waiver of the closing conditions contained in the purchase agreement, including the expiration or early termination of waiting periods or extensions thereof under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Upon completion of the transaction, the Company will own 100 % of RTS, which is currently operated as a joint venture between Sonoco ( 35 % ownership interest) and WestRock ( 65 % ownership interest).

The RTS joint venture was formed in 1997 and combined the former protective packaging operations of WestRock and the Company to market solid fiber partitions from recycled paperboard to glass container manufacturers and producers of wine, liquor, food, and pharmaceuticals.

The transaction will give the Company full ownership of fourteen converting operations, including ten in the United States, two in Mexico, and two in South America and one paper mill in the United States.

Upon completion of the transaction, approximately 1,100 individuals will become employees of the Company.

The Company expects to fund the acquisition with new borrowings from lenders and cash on hand .

On September 8, 2023, the Company completed the acquisition of the remaining 65 % interest in RTS Packaging from joint venture partner WestRock and the acquisition of a paper mill in Chattanooga, Tennessee (“Chattanooga Mill”) from WestRock for net cash consideration of $ 313,362 , subject to customary working capital adjustments.

Prior to completing the acquisitions, the Company held a 35 % ownership interest in the RTS Packaging joint venture which was formed in 1997 and combined the former protective packaging operations of WestRock and Sonoco to market recycled paperboard to glass container manufacturers and producers of wine, liquor, food, and pharmaceuticals.

With the acquisitions of RTS Packaging and the Chattanooga Mill, the Company added approximately 1,100 employees and fourteen converting operations, including ten in the United States, two in Mexico, and two in South America and one paper mill in the United States.

The Company funded the acquisitions with borrowings under a new term loan credit facility (See Note 9 for more information) and cash on hand.

The financial results of RTS Packaging and the Chattanooga Mill are included in the Company’s Industrial Paper Packaging segment.

On September 8, 2023, the fair value of the Company’s 35 % interest in RTS Packaging was determined to be $ 59,472 based on the cash consideration exchanged for acquiring the remaining 65 % equity interest in RTS Packaging adjusted for the deemed payment of a control premium, and the carrying value of the 35 % interest was $ 8,654 .

The Company recognized a net gain of $ 44,029 resulting from this remeasurement to fair value and the reclassification of certain amounts related to the Company’s 35 % interest out of “Accumulated other comprehensive loss,” including foreign

SONOCO PRODUCTS COMPANY

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(Dollars and shares in thousands except per share data)

currency translation losses of $ 2,033 and losses related to defined benefit pension plans of $ 4,756 .

The net gain from such remeasurement and reclassification was recorded in “Other income, net” in the Company’s Condensed Consolidated Statements of Income for the period ended October 1, 2023.

The Company also recognized a loss of $ 7,086 on the settlement of a contract associated with the Chattanooga Mill.

The contract was determined to have unfavorable terms given market conditions at the time of the acquisition.

This loss is reflected in “Other income, net” in the Company’s Condensed Consolidated Statements of Income for the period ended October 1, 2023.

This loss, along with the settlement of a note receivable from RTS Packaging held by the Company on the acquisition date, are reflected as components of purchase consideration transferred in connection with these acquisitions.

The following table provides a summary of the purchase consideration (as defined under Accounting Standards Codification (“ASC”) 805) transferred for the acquisitions of RTS Packaging and the Chattanooga Mill:

Purchase Consideration

Cash consideration, net of cash acquired $ 313,362

Fair value of previously held interest in RTS Packaging 59,472

Settlement of preexisting relationships ( 1,479 )

Purchase consideration transferred $ 371,355

The provisional fair values of the assets acquired and liabilities assumed in connection with the acquisitions of RTS Packaging and the Chattanooga Mill in total are as follows:

Initial Allocation

Trade accounts receivable $ 17,488

Inventories 20,209

Prepaid expenses 2,720

Property, plant and equipment 73,483

Right of use asset - operating leases 34,604

Other intangible assets 199,560

Goodwill 92,657

Other net tangible assets 2,465

Payable to suppliers ( 7,320 )

Accrued expenses and other ( 15,167 )

Notes payable and current portion of long-term debt ( 24 )

Noncurrent operating lease liabilities ( 29,905 )

Long-term debt ( 1,942 )

Deferred income taxes ( 3,419 )

Other long-term liabilities ( 14,054 )

Net assets acquired $ 371,355

The initial allocation of the purchase price of RTS Packaging and the Chattanooga Mill to the tangible and intangible assets acquired and liabilities assumed, as reflected in the table above, is based on the Company’s preliminary allocations of their fair values, based on information currently available.

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

property, plant and equipment;

other intangible assets;

and deferred income taxes, and expects to complete its valuations within one year of the date of acquisition.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Goodwill for RTS Packaging and the Chattanooga Mill, of which $ 81,435 is expected to be deductible for income tax purposes, consists of increased manufacturing capacity, access to certain markets, and the capability to support marquee customers in growing markets.

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

The Company does not believe that these acquisitions were material to the periods presented and are therefore not subject to the ASC 805 requirement to provide supplemental pro-forma financial information.

Accordingly, this information is not presented herein.

On November 15, 2022, the Company completed the acquisition of S.P.

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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.

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)

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.

Management completed its final valuation of the acquired assets in the third quarter of 2023, and total consideration for the two businesses was $ 6,419 .

Tangible assets totaled $ 1,374 , intangible assets totaled $ 3,031 , and Goodwill totaled $ 2,014 .

The Company paid $ 3,933 at closing and recorded a deferred payment obligation totaling $ 2,486 , which is expected to be paid by the end of 2028, in “Other liabilities” on the Company’s Condensed Consolidated Balance Sheets.

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.

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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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 Six Months Ended July 2, 2023

As a result, the following measurement period adjustments were made to the previously disclosed provisional fair values of assets acquired and liabilities assumed during the nine-month period ended October 1, 2023:

Measurement Period Adjustments Nine Months Ended October 1, 2023

Inventories $ ( 73 )

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Additional cash consideration $ —

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

Approximately 81 % of the goodwill is expected to be deductible for income tax purposes.

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

The 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:

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

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 ended 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, 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, 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 3, 2022

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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

Consolidated October 2, 2022 October 2, 2022

Net sales $ 1,890,216 $ 5,624,118

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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-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.

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

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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.

Metal Packaging acquisition-related costs of $ 310 and $ 1,463 were recognized during the three- and nine-month periods ended October 1, 2023, respectively.

Metal Packaging 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 as though the acquisition had occurred on January 1, 2021.

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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.

BulkSak business, which consisted of the manufacturing and distribution of flexible intermediate bulk containers, plastic and fiber pallets, and custom fit liners and was a part of the Company’s Industrial Paper Packaging segment, to U.S.

BulkSak Holdings, LLC.

The cash selling price, as adjusted for working capital, was $ 20,271 with cash proceeds totaling $ 16,808 received on July 3, 2023 and the remaining $ 3,463 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.

In September 2023, the Company agreed to a working capital adjustment with the buyers that reduced the amount to be released from escrow by $ 537 with a corresponding reduction in the previously recognized gain.

This reduction is reflected in “(Loss)/Gain on divestiture of business and other assets” in the Company’s Condensed Consolidated Statements of Income.

As a result of the U.S.

BulkSak divestiture, the Company wrote off net assets totaling $ 13,437 , including $ 3,333 of allocated goodwill, and recognized a pretax gain of $ 6,834 during the nine-month period ended October 1, 2023, which is included in “(Loss)/Gain on divestiture of business and other assets” in the Company’s Condensed Consolidated Statements of Income.

The escrow balance is reflected as a receivable on the Company’s Condensed Consolidated Balance Sheets as of October 1, 2023 with the current portion of $ 1,463 in “Other receivables” and the non-current portion of $ 2,000 in “Other assets.”

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.

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

Although the transaction has not yet closed, the Company received cash proceeds of $ 500 on July 3, 2023 and has deferred recognition of the resulting gain pending the completion of the transaction.

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.

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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 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.

These escrow proceeds are included in “Other assets” in the Company’s Condensed Consolidated Balance Sheets as of October 1, 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 nine-month period ended October 1, 2023, which is included in “(Loss)/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.

This contingent consideration will be recognized as additional gain on the sale at the point the contingencies are resolved.

In addition, the Company purchased a 2.7 % equity interest in Northstar for $ 5,000 .

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

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(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.

In addition, the Company purchased a 2.7 % equity interest in Northstar for $ 5,000 .

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 U.S.

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 discontinued operations.

The cash proceeds from the sales were used for general corporate purposes.

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.

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Accordingly, on March 29, 2023, the Company sold its timberland properties, approximately 55,000 acres, to Manulife Investment Management for net cash proceeds of $ 70,802 .

The Company disposed of assets with a net book value of $ 9,857 as part of the sale, and recognized a pretax gain from the sale of these assets of $ 60,945 during the three months 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.

Acquisition and Divestiture-Related Costs

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 $ 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.

The Company disposed of assets with a net book value of $ 9,857 as part of the sale, and recognized a pretax gain from the sale of these assets of $ 60,945 during the nine-month period ended October 1, 2023, which is included in “(Loss)/Gain on divestiture of business and other assets” in the Company’s Condensed Consolidated Statements of Income.

Acquisition, Integration, and Divestiture-Related Costs

Acquisition, integration, and divestiture-related costs totaled $ 12,472 and $ 22,192 during the three- and nine-month periods ended October 1, 2023, respectively.

These costs included $ 7,525 and $ 17,245 during the three- and nine-month periods ended October 1, 2023, respectively, for legal and professional fees, investment banking fees, and other transaction costs that are included in “Selling, general and administrative expenses,” and $ 4,947 of amortization of the fair value step-up of inventory, which is included in “Cost of sales” in the Company’s Condensed Consolidated Statements of Income.

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.

The costs for the nine-month period ended October 2, 2022, included the partial amortization of the fair value step-up of finished goods inventory of $ 33,155 , included in “Cost of sales” in the Company’s Condensed Consolidated Statements of Income, and other acquisition-related charges of $ 2,022 and $ 29,500 , 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

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Net income attributable to Sonoco $ 130,749 $ 122,229 $ 393,717 $ 369,234

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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

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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 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

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 1, 2023 and October 2, 2022 were as follows (in thousands):

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Anti-dilutive stock appreciation rights 338 366 341 380

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 six-month period ended July 2, 2023.

No shares were repurchased under this authorization during the year ended December 31, 2022 or the nine-month period ended October 1, 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 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 .

These repurchases, which are not part of a publicly announced plan or program, totaled 175 shares during the nine-month period ended October 1, 2023, at a cost of $ 10,605 , and 71 shares during the nine-month period ended October 2, 2022, at a cost of $ 4,056 .

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Dividend Declarations

5 unchanged sentences

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

On October 17, 2023, the Board declared a regular quarterly dividend of $ 0.51 per share.

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

Noncontrolling Interests

1 unchanged sentence

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

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

Restructuring and Asset Impairments

2 unchanged sentences

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 Six Months Ended

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Restructuring and restructuring-related asset impairment charges $ 18,110 $ 20,652 $ 52,981 $ 33,262

Other asset impairments — — — 10,095

Restructuring and asset impairment charges $ 6,057 $ 10,563 $ 34,871 $ 22,705

Restructuring/Asset impairment charges $ 18,110 $ 20,652 $ 52,981 $ 43,357

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Severance and termination benefits $ 9,736 $ 9,265 $ 19,370 $ 13,578

3 unchanged sentences

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

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Consumer Packaging $ 8,288 $ 4,350 $ 11,792 $ 8,529

14 unchanged sentences

Foreign currency translation ( 81 ) — 9 ( 72 )

Liability at July 2, 2023

Liability at October 1, 2023

$ 14,414 $ — $ 2,599 $ 17,013

“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.

“Severance and Termination Benefits” during the first nine months of 2023 includes the cost of severance for approximately 300 employees whose positions were eliminated in conjunction with the Company’s ongoing organizational effectiveness efforts and severance related to the following plant closures:

paper mills in Hutchinson, Kansas and Indonesia, part of the Industrial Paper Packaging segment;

a metal packaging facility and a perimeter-of-the-store facility in the United States, both part of the Consumer Packaging segment;

medical plastics facilities in the United States and United Kingdom, part of the All Other group of businesses;

and severance related to the closures of several smaller operations.

“Asset Impairments/Disposal of Assets” during the first nine months of 2023 consists primarily of asset impairment charges related to the closure of paper mills in Hutchinson, Kansas and Indonesia, a metal packaging facility and a perimeter-of-the-store facility in the United States, and medical plastics facilities in the United States and United Kingdom.

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(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.

“Other Costs” during the first nine 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

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.

Other asset impairment charges recognized during the nine-month period ended October 2, 2022 include net asset impairment charges totaling $ 9,165 , 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.

Fixed asset impairments totaling $ 930 , were recognized in the nine-month period ended October 2, 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- and six-month periods ended July 2, 2023 and July 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 nine-month periods ended October 1, 2023 and October 2, 2022:

Items Defined

6 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss to net income 2,033 6,599 ( 3,193 ) 5,439

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

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

Balance at July 2, 2023

Amounts reclassified from accumulated other comprehensive loss to property, plant, and equipment — — 300 300

Other comprehensive income 5,201 2,554 2,218 9,973

Balance at October 1, 2023

$ ( 333,115 ) $ ( 88,419 ) $ 1,424 $ ( 420,110 )

3 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss to net income 3,747 3,072 ( 4,286 ) 2,533

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 July 3, 2022

Amounts reclassified from accumulated other comprehensive loss to property, plant, and equipment — — ( 642 ) ( 642 )

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

Balance at October 2, 2022

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

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 2, 2023 and July 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 nine-month periods ended October 1, 2023 and October 2, 2022:

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 2,

Loss Components October 1,

2023 October 2,

2022 October 1,

2023 October 2,

2022 Affected Line Item in

4 unchanged sentences

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

Loss on RTS Packaging investment (b)

( 2,033 ) — ( 2,033 ) — Other income, net

( 2,033 ) — ( 2,033 ) ( 3,747 )

Gains/(losses) on cash flow hedges

Foreign exchange contracts (b)

Foreign exchange contracts (c)

3,195 559 6,772 2,425 Net sales

Foreign exchange contracts (b)

Foreign exchange contracts (c)

( 1,180 ) ( 433 ) ( 2,552 ) ( 2,139 ) Cost of sales

Commodity contracts (b)

Commodity contracts (c)

— 2,434 ( 32 ) 5,371 Cost of sales

3 unchanged sentences

Defined benefit pension items

Effect of settlement loss (c)

Pension-related loss upon purchase of remaining interest in RTS Packaging joint venture (b)

( 4,756 ) — ( 4,756 ) — Other income, net

Effect of settlement loss (d)

( 16 ) — ( 765 ) ( 430 ) Non-operating pension costs

Amortization of defined

benefit pension items (c)

Amortization of defined benefit pension items (d)

( 1,103 ) ( 1,229 ) ( 3,306 ) ( 3,655 ) Non-operating pension costs

6 unchanged sentences

(d) See Note 12 for additional details.

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(Dollars and shares in thousands except per share data)

The following table summarizes the before and after tax amounts for the various components of other comprehensive income/(loss) for the three-month periods ended July 2, 2023 and July 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 October 1, 2023 and October 2, 2022:

Three Months Ended

October 1, 2023

Three Months Ended

October 2, 2022

Benefit After Tax

2 unchanged sentences

Foreign currency items:

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)

Net other comprehensive loss from foreign currency items $ ( 50,389 ) $ — $ ( 50,389 ) $ ( 81,457 ) $ — $ ( 81,457 )

Amounts reclassified from accumulated other comprehensive loss to net income (a)

2,033 — 2,033 — — —

Net other comprehensive loss/(income) from

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

Net other comprehensive loss from foreign currency items ( 48,356 ) — ( 48,356 ) ( 81,457 ) — ( 81,457 )

Defined benefit pension items:

Other comprehensive (loss)/income before

reclassifications ( 3,689 ) 1,033 ( 2,656 ) ( 3,907 ) 985 ( 2,922 )

Amounts reclassified from accumulated other

comprehensive loss to net income (b)

Other comprehensive (loss)/income before reclassifications ( 1,137 ) 141 ( 996 ) ( 74 ) 19 ( 55 )

Amounts reclassified from accumulated other comprehensive loss to net income (a)(b)

5,875 ( 1,478 ) 4,397 1,229 ( 313 ) 916

Net other comprehensive (loss)/income from

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

Net other comprehensive income/(loss) from defined benefit pension items 4,738 ( 1,337 ) 3,401 1,155 ( 294 ) 861

Gains and losses on cash flow hedges:

Other comprehensive income/(loss) before

reclassifications 3,344 ( 611 ) 2,733 ( 474 ) 139 ( 335 )

Amounts reclassified from accumulated other

comprehensive loss to net income (c)

Other comprehensive (loss)/income before reclassifications ( 369 ) 102 ( 267 ) 1,336 ( 247 ) 1,089

Amounts reclassified from accumulated other comprehensive loss to net income (c)

( 2,015 ) 558 ( 1,457 ) ( 2,560 ) 473 ( 2,087 )

Amounts reclassified from accumulated other

comprehensive loss to fixed assets — — — ( 668 ) 195 ( 473 )

Net other comprehensive income/(loss) from

cash flow hedges 1,747 ( 319 ) 1,428 ( 2,953 ) 863 ( 2,090 )

Other comprehensive income/ (loss) $ 21,241 $ 412 $ 21,653 $ ( 75,321 ) $ 1,513 $ ( 73,808 )

(a) See Note 5 for additional details.

Amounts reclassified from accumulated other comprehensive loss to property, plant and equipment — — — ( 312 ) 58 ( 254 )

Net other comprehensive (loss)/income from cash flow hedges ( 2,384 ) 660 ( 1,724 ) ( 1,536 ) 284 ( 1,252 )

Other comprehensive loss $ ( 46,002 ) $ ( 677 ) $ ( 46,679 ) $ ( 81,838 ) $ ( 10 ) $ ( 81,848 )

(a) See Note 3 for more information on the acquisition of the remaining 65 % interest in the RTS Packaging joint venture.

(b) See Note 12 for additional details.

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

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

The following table summarizes the before and after tax amounts for the various components of other comprehensive income/(loss) for the nine-month periods ended October 1, 2023 and October 2, 2022:

Nine Months Ended October 1, 2023 Nine Months Ended October 2, 2022

Benefit After Tax

2 unchanged sentences

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)

Net other comprehensive income/(loss) from foreign currency items $ 3,168 $ — $ 3,168 $ ( 155,179 ) $ — $ ( 155,179 )

Amounts reclassified from accumulated other comprehensive loss to net income (a)(b)

2,033 — 2,033 3,747 — 3,747

Net other comprehensive income/(loss) from

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

Net other comprehensive income/(loss) from foreign currency items 5,201 — 5,201 ( 151,432 ) — ( 151,432 )

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)

Other comprehensive (loss)/income before reclassifications ( 5,586 ) 1,541 ( 4,045 ) ( 5,257 ) 1,309 ( 3,948 )

Amounts reclassified from accumulated other comprehensive loss to net income (a)(c)

8,827 ( 2,228 ) 6,599 4,085 ( 1,013 ) 3,072

Net other comprehensive (loss)/income from

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

Net other comprehensive income/(loss) from defined benefit pension items 3,241 ( 687 ) 2,554 ( 1,172 ) 296 ( 876 )

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)

Other comprehensive income/(loss) before reclassifications 6,511 ( 1,400 ) 5,111 5,607 ( 1,471 ) 4,136

Amounts reclassified from accumulated other comprehensive loss to net income (d)

( 4,188 ) 995 ( 3,193 ) ( 5,657 ) 1,371 ( 4,286 )

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

Amounts reclassified from accumulated other comprehensive loss to property, plant and equipment 401 ( 101 ) 300 ( 864 ) 222 ( 642 )

Net other comprehensive income/(loss) from cash flow hedges 2,724 ( 506 ) 2,218 ( 914 ) 122 ( 792 )

Other comprehensive income/(loss) $ 11,166 $ ( 1,193 ) $ 9,973 $ ( 153,518 ) $ 418 $ ( 153,100 )

(a) See Note 5 for additional details.

(b) See Note 11 for additional details.

(a) See Note 3 for more information on the 2023 acquisition of the remaining 65 % interest in the RTS Packaging joint venture.

(b) See Note 5 for more information on the 2022 loss on the exit from Russia.

(d) See Note 10 for additional details.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Goodwill and Other Intangible Assets

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

A summary of the changes in goodwill for the nine-month period ended October 1, 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

Acquisitions — 92,657 — 92,657

Divestitures — ( 6,375 ) — ( 6,375 )

1 unchanged sentence

Measurement period adjustments 439 ( 468 ) — ( 29 )

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.

Goodwill at October 1, 2023 $ 898,042 $ 482,543 $ 381,826 $ 1,762,411

Goodwill activity reflected under the caption “Acquisitions” relates to the September 8, 2023 acquisitions of the remaining interest in RTS Packaging and the Chattanooga Mill.

Goodwill activity reflected under the caption “Divestitures” relates to the sales of the Company’s S3 business on January 26, 2023 and the U.S.

BulkSak business on July 1, 2023.

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

See Note 3 for additional information.

4 unchanged sentences

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 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 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.

Although no reporting units failed the annual impairment test, in management’s opinion the goodwill balance of the Plastics-Medical reporting unit, previously known as Plastics-Healthcare, 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.

At October 1, 2023, the total goodwill associated with the Plastics-Medical reporting unit was $ 62,627 .

In the annual goodwill impairment analysis completed during the third quarter of 2023, projected future cash flows for the Plastics-Medical reporting unit were discounted at 12.0 % and its estimated fair value was determined to exceed its carrying value by approximately 29.9 %.

Based on the discounted cash flow model and holding other valuation assumptions constant, the discount rate would have to be increased t o 14.5 % in order for the estimated fair value of the reporting unit to fall below carrying value.

During the time subsequent to the annual evaluation, and at October 1, 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 July 2, 2023 and December 31, 2022 is as follows:

A summary of other intangible assets as of October 1, 2023 and December 31, 2022 is as follows:

2023 December 31,

14 unchanged sentences

Other Intangible Assets, net $ 873,518 $ 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.

The acquisitions of the remaining interest in RTS Packaging and the Chattanooga Mill on September 8, 2023 resulted in the addition of $ 199,560 of intangible assets, primarily related to customer lists.

These intangibles will be amortized over an average useful life of 17.5 years.

The fair value of intangible assets associated with these acquisitions was determined using an income valuation approach.

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 U.S.

BulkSak business on July 1, 2023.

See Note 3 for additional information.

2 unchanged sentences

The Company has no intangible assets with indefinite lives.

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.

Aggregate amortization expense was $ 21,379 and $ 20,690 for the three-month periods ended October 1, 2023 and October 2, 2022, respectively, and $ 63,082 and $ 60,361 for the nine-month periods ended October 1, 2023 and October 2, 2022, respectively.

Amortization expense on other intangible assets is expected to total approximately $ 85,000 in 2023, $ 84,200 in 2024, $ 75,700 in 2025, $ 73,200 in 2026 and $ 70,200 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 July 2, 2023 and December 31, 2022:

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

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

The following table sets forth the balance sheet location and values of the Company’s SCF Program obligations at October 1, 2023 and December 31, 2022:

Balance Sheet Line Item October 1, 2023 December 31, 2022

Payable to suppliers (a)

3 unchanged sentences

(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 .

Details of the Company’s debt at October 1, 2023 and December 31, 2022 are as follows:

2023 December 31, 2022

Syndicated term loan due December 2023 $ — $ 399,246

Syndicated term loan due January 2025 — 299,644

Syndicated term loan due August 2028 795,457 —

1.800 % notes due February 2025

398,955 398,369

2.250 % notes due February 2027

298,293 297,910

2.850 % notes due February 2032

495,655 495,264

3.125 % notes due May 2030

596,338 595,911

5.750 % notes due November 2040

536,238 536,214

Other foreign denominated debt 22,830 20,668

Finance lease obligations 96,054 102,920

Other debt 14,913 76,077

Total debt $ 3,254,733 $ 3,222,223

Less current portion and short-term notes 42,279 502,440

Long-term debt $ 3,212,454 $ 2,719,783

On August 7, 2023, the Company entered into a credit agreement with a consortium of Farm Credit System institutions and CoBank, ACB, as Administrative Agent (the “Term Loan Agreement”).

The Term Loan Agreement provides the Company with the ability to borrow up to $ 900,000 on an unsecured basis (the “Term Loan Facility”).

A total of $ 600,000 was drawn from the Term Loan Facility on August 7, 2023 and used to repay the syndicated term loans that were due in December 2023 and January 2025, and to make certain capital expenditures and to reimburse the Company for certain capital expenditures it had made in its operation of waste disposal facilities in rural areas .

An additional $ 270,000 was drawn from the T erm Loan Facility on September 8, 2023 and used to partially fund the acquisitions of the remaining interest in RTS Packaging and the Chattanooga Mill (see Note 3 for more information).

Borrowings under the Term Loan Facility, net of any prepayments, will become payable in full on August 7, 2028.

As of October 1, 2023, the Company has repaid a total of $ 70,000 of the amounts drawn under the Term Loan Facility.

Borrowings under the Term Loan Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, (i) the forward-looking Secured Overnight Financing Rate term rate (“Term SOFR” and such borrowings, “Term SOFR Loans”), (ii) a base rate set forth in the Term Loan Agreement, or (iii) a combination thereof, plus, in each case, an applicable margin calculated based on the Company’s credit ratings and, in the of case of Term SOFR Loans, a SOFR Adjustment (as defined in the Term Loan Agreement) of 0.1 %.

The Company has designated its borrowings under the Term Loan Facility as Term SOFR Loans.

The margin currently applicable to Term SOFR Loans based on the Company’s credit ratings, together with the SOFR Adjustment, is 1.90 %.

If Term SOFR ceases to be available, the benchmark rate shall switch to Daily Simple SOFR (as defined in the Term Loan Agreement).

There is no required amortization under the Term Loan Facility, and voluntary prepayments are permissible without penalty, subject to certain conditions pertaining to minimum notice and minimum prepayment and reduction amounts as described in the Term Loan Agreement.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

The Term Loan Agreement contains various customary representations and warranties and affirmative and negative covenants, as more fully described in the Term Loan Agreement.

The Term Loan Agreement also contains various customary events of default (subject to grace periods, as applicable) including, among others:

nonpayment of principal, interest or fees;

breach of covenant;

payment default on, or acceleration under, certain other material indebtedness;

inaccuracy of the representations or warranties in any material respect;

bankruptcy or insolvency;

inability to pay debts;

certain unsatisfied judgments;

certain ERISA-related events;

the invalidity or unenforceability of the Term Loan Agreement or certain other documents executed in connection therewith;

and the occurrence of a change of control.

The Company entered into a five -year , $ 750,000 unsecured revolving credit facility on June 30, 2021.

On August 7, 2023, the Company increased the commitments under this facility by $ 150,000 to an aggregate amount of $ 900,000 .

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 October 1, 2023, 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 2, 2023 December 31, 2022

October 1, 2023 December 31, 2022

Value Carrying

3 unchanged sentences

Cash Flow Hedges

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.

At October 1, 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.

1 unchanged sentence

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 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.

At October 1, 2023, these contracts included natural gas swaps covering approximately 0.08 million metric million British thermal units (“MMBTUs”).

These contracts represented approximatel y 0.9 % 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 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 ).

At October 1, 2023 , the Company has also designated swap contracts covering 179 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 $( 147 ) and $( 172 ) at October 1, 2023 and December 31, 2022, respectively.

The amount of the loss included in accumulated other comprehensive loss at October 1, 2023 expected to be reclassified to the income statement during the next twelve months is $( 137 ).

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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

The net positions of these contracts at October 1, 2023 were as follows (in thousands):

Currency Action Quantity

8 unchanged sentences

British pound purchase 1,131

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.

The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of $ 1,844 and a loss position of $( 299 ) at October 1, 2023 and December 31, 2022, respectively.

Gains of $ 1,844 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 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.

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

As of October 1, 2023 and December 31, 2022, the net position of these contracts was $ 0 and $( 564 ), respectively.

During the nine-month period ended October 1, 2023, losses from these hedges totaling $( 401 ) were reclassified from accumulated other comprehensive loss into the carrying value of the capitalized expenditures.

As of October 1, 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 Accounting Standards Codification (“ASC”) 815.

The Company routinely enters into other derivative contracts which are not designated for hedge accounting treatment under 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 July 2, 2023, were as follows (in thousands):

The net currency positions of these non-designated contracts at October 1, 2023, were as follows (in thousands):

Currency Action Quantity

4 unchanged sentences

Canadian dollar purchase 11,548

Euro purchase 3

British pound purchase 2,784

Polish zloty purchase 8,526

Commodity Hedges

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.

At October 1, 2023, these contracts consisted of natural gas swaps covering approximately 5.5 million MMBTUs and represented approximately 76 % and 55 % of anticipated usage for 2023 and 2024, respectively.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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 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

The gain is included in “Selling, general and administrative expenses” on the Company’s Condensed Consolidated Statements of Income for t he nine-month period ended October 2, 2022 .

The fair value of the Company’s non-designated derivatives position was a loss of $( 6,844 ) and $( 8,692 ) at October 1, 2023 and December 31, 2022, respectively.

The following table sets forth the location and fair values of the Company’s derivative instruments at October 1, 2023 and December 31, 2022:

Description Balance Sheet Location October 1, 2023 December 31, 2022

Derivatives designated as hedging instruments:

4 unchanged sentences

Foreign Exchange Contracts Prepaid expenses $ 2,848 $ 1,251

Foreign Exchange Contracts Other assets $ — $ —

Foreign Exchange Contracts Accrued expenses and other $ ( 1,004 ) $ ( 2,114 )

11 unchanged sentences

(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:

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the three-month periods ended October 1, 2023 and October 2, 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 July 2, 2023

Three-month period ended October 1, 2023

Foreign Exchange Contracts $ ( 509 ) Net sales $ 3,195

1 unchanged sentence

Commodity Contracts $ 140 Cost of sales $ —

Three-month period ended July 3, 2022

Three-month period ended October 2, 2022

Foreign Exchange Contracts $ ( 290 ) Net sales $ 559

5 unchanged sentences

Derivatives not Designated as Hedging Instruments:

Three-month period ended July 2, 2023

Three-month period ended October 1, 2023

Commodity Contracts $ ( 2,118 ) Cost of sales

Foreign Exchange Contracts $ 579 Selling, general and administrative

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

Three-month period ended October 1, 2023 Three-month period ended October 2, 2022

Description Revenue Cost of

9 unchanged sentences

(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 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:

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the nine months ended October 1, 2023 and October 2, 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:

Six-month period ended July 2, 2023

Nine-month period ended October 1, 2023

Foreign Exchange Contracts $ 6,517 Net sales $ 6,772

1 unchanged sentence

Commodity Contracts $ ( 6 ) Cost of sales $ ( 32 )

Six-month period ended July 3, 2022

Nine-month period ended October 2, 2022

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

5 unchanged sentences

Derivatives not Designated as Hedging Instruments:

Six-month period ended July 2, 2023

Nine-month period ended October 1, 2023

Commodity Contracts $ ( 13,635 ) Cost of sales

Foreign Exchange Contracts $ 4,651 Selling, general and administrative

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

Nine-month period ended October 1, 2023 Nine-month period ended October 2, 2022

Description Revenue Cost of

18 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 2, 2023 Assets measured

Description October 1, 2023 Assets measured

at NAV Level 1 Level 2 Level 3

13 unchanged sentences

Foreign exchange contracts $ ( 54 ) $ — $ — $ ( 54 ) $ —

Interest rate lock contract $ — $ — $ — $ — $ —

As discussed in Note 10, the Company uses derivatives to mitigate the effect of commodity fluctuations, foreign currency fluctuations and, from time to time, interest rate movements.

1 unchanged sentence

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 2, 2023.

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 1, 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 July 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 October 1, 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 Six Months Ended

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Retirement Plans

13 unchanged sentences

Settlement Charges

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

The Company recognized settlement ch arges of $ 765 and $ 430 during the nine-month periods ended October 1, 2023 and October 2, 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 $ 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 made aggregate contributions of $ 10,311 and $ 11,600 to its defined benefit retirement and retiree health and life insurance plans during the nine-month periods ended October 1, 2023 and October 2, 2022, respectively.

The Company expects to make additional aggregate contributions of approximately $ 4,400 to its defined benefit retirement and retiree health and life insurance plans over the remainder of 2023.

RTS Packaging Pension Plan

On September 8, 2023, the Company completed the acquisition of the remaining 65 % ownership interest of the RTS Packaging joint venture, which included the assumption of the RTS Packaging Pension plan (the “RTS Plan”).

At the time of the acquisition, the RTS Plan had a projected benefit obligation of $ 43,547 and plan assets of $ 33,109 .

The resulting unfunded pension obligation of $ 10,438 was recorded in “Pension and Other Postretirement Benefits” on the Company’s Condensed Consolidated Balance Sheets as of October 1, 2023.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Since the formation of the original joint venture, the Company had recognized its 35 % share of actuarial gains and losses related to the RTS Plan in “Accumulated other comprehensive loss.” Upon the acquisition of the remaining 65 % interest in RTS Packaging, a pre-tax loss of $ 4,756 ($ 3,543 after tax) was reclassified out of “Accumulated other comprehensive loss” into earnings.

The pre-tax loss is reflected in “Other income, net” in the Company’s Condensed Consolidated Statements of Income for the three- and nine-month periods ended October 1, 2023.

Sonoco Retirement and Savings Plan

4 unchanged sentences

Effective December 31, 2021, the Company’s match on elective contributions to the plan increased from 50 % of the first 4 % of compensation contributed by participants to 100 % of the first 6 % as a result of changes to the plan, described below.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

The non-elective component of the plan, the Sonoco Retirement Contribution (“SRC”), was eliminated effective December 31, 2021.

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 six-month period ended July 3, 2022 related to the 2021 fiscal year.

The Company made SRC contributions totaling $ 21,948 during the nine-month period ended October 2, 2022 related to the 2021 fiscal year.

No additional SRC contributions will occur.

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 for the three- and nine-month periods ended October 1, 2023 were 23.6 % and 24.8 %, respectively, and its rates for the three- and nine-month periods ended October 2, 2022 were 23.7 % and 24.5 %, respectively.

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

statutory rate due primarily to rate differences between U.S.

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

jurisdictions and the relative amounts earned in those jurisdictions, state income taxes, and discrete tax adjustments.

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 $ 2,613 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 July 2, 2023 could increase by approximately $ 860 over the next twelve months.

The Company believes that it is reasonably possible that the amount reserved for unrecognized tax benefits at October 1, 2023 could increase by approximately $ 878 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.

5 unchanged sentences

The Company is not dependent upon the favorable benefit of any one jurisdiction to an extent that the loss of such benefit would have a material effect on the Company’s overall effective tax rate.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

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).

3 unchanged sentences

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.

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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 July 2, 2023 and December 31, 2022:

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

The Company completed the acquisitions of the remaining interest in RTS Packaging and the Chattanooga Mill on September 8, 2023.

The acquisition included operating lease liabilities of $ 34,604 .

For additional information about this acquisition, see Note 3.

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

The following table sets forth the balance sheet location and aggregate values of the Company’s lease assets and lease liabilities at October 1, 2023 and December 31, 2022:

Classification Balance Sheet Location October 1, 2023 December 31, 2022

Operating lease assets Right of Use Asset - Operating Leases $ 311,642 $ 296,781

9 unchanged sentences

Total lease liabilities $ 413,247 $ 406,220

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

Certain of the Company’s leases include variable costs.

2 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- 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

The following table sets forth the components of the Company’s total lease cost for the three- and nine-month periods ended October 1, 2023 and October 2, 2022:

Three Months Ended Nine Months Ended

Lease Cost October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Operating lease cost (a) $ 14,075 $ 12,863 $ 41,377 $ 38,679

3 unchanged sentences

Variable lease cost (a) (c) 9,525 7,894 30,198 22,416

Impairment charges (d) — 61 — 293

Total lease cost $ 28,214 $ 25,221 $ 85,281 $ 74,027

2 unchanged sentences

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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 2, 2023 and July 3, 2022:

Six Months Ended

July 2, 2023 July 3, 2022

The following table sets forth certain lease-related information for the nine-month periods ended October 1, 2023 and October 2, 2022:

Nine Months Ended

October 1, 2023 October 2, 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 $ 5,783 $ 8,224

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

Modification to leased assets for increase in operating lease liabilities $ 2,357 $ 2,258

Modification to leased assets for increase/(decrease) in finance lease liabilities $ 12 $ ( 642 )

Termination reclasses to decrease operating lease assets $ ( 3,334 ) $ ( 4,133 )

21 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.

July 2, 2023 December 31, 2022

October 1, 2023 December 31, 2022

Contract Assets $ 59,782 $ 56,008

Contract Liabilities $ ( 32,481 ) $ ( 22,423 )

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

Significant changes in the contract assets and liabilities balances during the nine-month period ended October 1, 2023 and the year ended December 31, 2022 were as follows:

October 1, 2023 December 31, 2022

Asset Contract

15 unchanged sentences

Contract liabilities represent revenue deferred due to pricing mechanisms utilized by the Company in certain multi-year arrangements, volume rebates, and receipts of advance payments.

For multi-year arrangements with pricing mechanisms, the Company will generally defer revenue during the first half of the arrangement and will release the deferral over the back half of the contract term.

For multi-year arrangements with pricing mechanisms, the Company will generally defer revenue during the first half of the arrangement and will release the deferral over the second half of the contract term.

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 July 2, 2023 and July 3, 2022.

The following tables set forth information about revenue disaggregated by primary geographic regions for the three-month periods ended October 1, 2023 and October 2, 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 16 .

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

Three-month period ended October 1, 2023 Consumer Packaging Industrial Paper Packaging All Other Total

Primary Geographical Markets:

5 unchanged sentences

Total $ 938,407 $ 580,035 $ 191,977 $ 1,710,419

Three-month period 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:

8 unchanged sentences

(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 following tables set forth information about revenue disaggregated by primary geographic regions for the nine-month periods ended October 1, 2023 and October 2, 2022.

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

Six-month period ended July 2, 2023 Consumer

Nine-month period ended October 1, 2023 Consumer

Packaging Industrial

7 unchanged sentences

Total $ 2,771,290 $ 1,781,033 $ 593,169 $ 5,145,492

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

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

Primary Geographical Markets:

7 unchanged sentences

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

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

The products produced and sold within the Consumer Packaging segment consist primarily of round and shaped rigid paper, steel and plastic containers;

metal and peelable membrane ends, closures, and components;

4 unchanged sentences

and uncoated recycled paperboard.

Total assets of the Industrial Paper Packaging segment increased $ 364,566 during the third quarter of 2023 due to the acquisitions of the remaining interest in RTS Packaging and the Chattanooga Mill.

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.

1 unchanged sentence

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.

Segment operating profit viewed by the Company’s management to evaluate segment performance does not include the following:

restructuring/asset impairment charges;

amortization of acquisition intangibles;

acquisition, integration and divestiture-related costs;

changes in last-in, first-out inventory reserves;

gains/losses from the sale of businesses or other assets;

or certain other items, if any, the exclusion of which the Company believes improves the comparability and

SONOCO PRODUCTS COMPANY

1 unchanged sentence

(Dollars and shares in thousands except per share data)

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.

SEGMENT FINANCIAL INFORMATION

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

October 1, 2023 October 2, 2022 October 1, 2023 October 2, 2022

Consumer Packaging $ 938,407 $ 1,030,549 $ 2,771,290 $ 2,888,630

13 unchanged sentences

Amortization of acquisition intangibles ( 21,379 ) ( 20,690 ) ( 63,082 ) ( 60,361 )

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

Other operating income/(charges), net

( 10,120 ) ( 1,807 ) 59,602 ( 83,838 )

Operating profit $ 162,937 $ 181,942 $ 580,444 $ 548,480

8 unchanged sentences

Since the acquisition, the Company has spent a total of $ 2,105 on remediation of the Spartanburg site.

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.

At October 1, 2023 and December 31, 2022, the Company’s accrual for environmental contingencies related to the Spartanburg site totaled $ 5,295 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 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.

At October 1, 2023 and December 31, 2022, the Company’s accrual for these other sites totaled $ 1,666 and $ 1,840 , respectively.

As of October 1, 2023 and December 31, 2022, the Company (and its subsidiaries) had accrued $ 6,960 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