UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~July 3, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-11261

~~SONOCO PRODUCTS COMPANY~~Sonoco Products Company

(Exact name of registrant as specified in its charter)


~~Incorporated under the laws~~ of South Carolina						57-0248420
(State or other jurisdiction of incorporation of organization)						(I.R.S. Employer Identification No. ~~57-0248420~~ )

1 N. Second St., Hartsville, South Carolina						29550
(address of principal executive offices)						(Zip Code)

~~1 N. Second St.~~(843) 383-7000

~~Hartsville, South Carolina 29550~~

~~Telephone: 843/383-7000~~(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
No par value common stock	SON	New York Stock Exchange LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~Indicate the~~The number of shares outstanding of ~~each of~~ the ~~issuer’s classes of~~registrant's no par value common stock ~~at October~~as of July 22, ~~2021:~~

~~Common stock, no par value: 98,326,308~~2022 was 97,506,056.

SONOCO PRODUCTS COMPANY

INDEX


PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements:	3

	Condensed Consolidated Balance Sheets - ~~October~~July 3,~~, 2021~~ 2022 (unaudited) and December 31, ~~2020~~2021 (unaudited)	3

	Condensed Consolidated Statements of Income – Three and ~~Nine~~ Six Months Ended ~~October~~July 3, ~~2021~~2022 (unaudited) and ~~September 27, 2020~~July 4 , 2021 (unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income - Three and Six ~~Nine~~Months Ended OJuly ~~ctober~~ 3,~~, 2021~~ 2022 (unaudited) and ~~September 27~~July ~~, 2020~~ 4, 2021 (unaudited)	5

	Condensed Consolidated Statements of Changes in Total Equity – Three and ~~Nine~~Six Months Ended ~~October 3~~July ~~, 2021~~3, 2022 (unaudited) and ~~September 27~~July ~~, 2020~~ 4, 2021 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows – ~~Nine~~Six Months Ended ~~October~~July 3,~~, 2021~~ 2022 (unaudited) and ~~September 27~~July ~~, 2020~~ 4, 2021 (unaudited)	8

	Notes to Condensed Consolidated Financial Statements (unaudited) ~~(unaudited)~~	9

	Report of Independent Registered Public Accounting Firm	3738

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3839

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	59

Item 4.	Controls and Procedures.	59

PART II. OTHER INFORMATION		59

Item 1.	Legal Proceedings.	59

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	60

Item 6.	Exhibits.	61

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(Dollars and shares in thousands)


		October 3, 2021		December 31, 2020*			July 3, 2022		December 31, 2021
Assets	Assets					Assets
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	160,012	$	564,848	Cash and cash equivalents	$	174,996	$	170,978
Trade accounts receivable, net of allowances	Trade accounts receivable, net of allowances	755,638		658,808		Trade accounts receivable, net of allowances	1,025,680		755,609
Other receivables	Other receivables	94,884		103,636		Other receivables	98,735		95,943
Inventories, net:	Inventories, net:					Inventories, net:
Finished and in process	Finished and in process	186,872		167,018		Finished and in process	457,139		199,823
Materials and supplies	Materials and supplies	343,239		283,673		Materials and supplies	517,352		362,290
Prepaid expenses	Prepaid expenses	60,010		52,564		Prepaid expenses	102,582		74,034

		1,600,655		1,830,547			2,376,484		1,658,677
Property, Plant and Equipment, Net	Property, Plant and Equipment, Net	1,232,074		1,244,110		Property, Plant and Equipment, Net	1,628,818		1,297,500
Goodwill	Goodwill	1,323,723		1,389,255		Goodwill	1,658,358		1,324,501
Other Intangible Assets, Net	Other Intangible Assets, Net	281,533		321,934		Other Intangible Assets, Net	733,214		278,143
Deferred Income Taxes	Deferred Income Taxes	38,398		42,479		Deferred Income Taxes	23,026		25,818
Right of Use Asset-Operating Leases	Right of Use Asset-Operating Leases	269,855		296,020		Right of Use Asset-Operating Leases	296,643		268,390
Other Assets	Other Assets	178,912		152,914		Other Assets	272,967		220,206
Total Assets	Total Assets	$	4,925,150	$	5,277,259	Total Assets	$	6,989,510	$	5,073,235
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current Liabilities	Current Liabilities					Current Liabilities
Payable to suppliers	Payable to suppliers	$	686,113	$	536,939	Payable to suppliers	$	938,934	$	721,312
Accrued expenses and other	Accrued expenses and other	366,126		511,489		Accrued expenses and other	386,663		381,350
Notes payable and current portion of long-term debt	Notes payable and current portion of long-term debt	275,799		455,784		Notes payable and current portion of long-term debt	399,025		411,557
Accrued taxes	Accrued taxes	21,203		7,415		Accrued taxes	20,516		11,544

		1,349,241		1,511,627			1,745,138		1,525,763
Long-term Debt, Net of Current Portion	Long-term Debt, Net of Current Portion	1,192,707		1,244,440		Long-term Debt, Net of Current Portion	2,727,916		1,199,106
Noncurrent Operating Lease Liabilities	Noncurrent Operating Lease Liabilities	236,590		262,048		Noncurrent Operating Lease Liabilities	254,520		234,167
Pension and Other Postretirement Benefits	Pension and Other Postretirement Benefits	164,584		171,518		Pension and Other Postretirement Benefits	153,807		158,265
Deferred Income Taxes	Deferred Income Taxes	67,627		86,018		Deferred Income Taxes	130,421		70,482
Other Liabilities	Other Liabilities	53,669		91,080		Other Liabilities	41,317		35,911

Sonoco Shareholders’ Equity	Sonoco Shareholders’ Equity					Sonoco Shareholders’ Equity
Common stock, no par value	Common stock, no par value					Common stock, no par value
Authorized 300,000 shares 98,326 and 100,447 shares issued and outstanding at October 3, 2021 and December 31, 2020, respectively		7,175		7,175
Authorized 300,000 shares 97,495 and 97,370 shares issued and outstanding at July 3, 2022 and December 31, 2021, respectively						Authorized 300,000 shares 97,495 and 97,370 shares issued and outstanding at July 3, 2022 and December 31, 2021, respectively	7,175		7,175
Capital in excess of stated value	Capital in excess of stated value	172,655		314,056		Capital in excess of stated value	128,332		119,690
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(378,910)		(756,842)		Accumulated other comprehensive loss	(430,677)		(359,425)
Retained earnings	Retained earnings	2,049,072		2,335,216		Retained earnings	2,224,845		2,070,005
Total Sonoco Shareholders’ Equity	Total Sonoco Shareholders’ Equity	1,849,992		1,899,605		Total Sonoco Shareholders’ Equity	1,929,675		1,837,445
Noncontrolling Interests	Noncontrolling Interests	10,740		10,923		Noncontrolling Interests	6,716		12,096
Total Equity	Total Equity	1,860,732		1,910,528		Total Equity	1,936,391		1,849,541
Total Liabilities and Equity	Total Liabilities and Equity	$	4,925,150	$	5,277,259	Total Liabilities and Equity	$	6,989,510	$	5,073,235


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

See accompanying Notes to Condensed Consolidated Financial Statements

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars and shares in thousands except per share data)


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Net sales	Net sales	$	1,415,193	$	1,312,314	$	4,151,251	$	3,861,095	Net sales	$	1,913,332	$	1,382,754	$	3,684,314	$	2,736,058
Cost of sales	Cost of sales	1,157,462		1,055,304		3,352,966		3,089,512		Cost of sales	1,526,331		1,120,101		2,925,748		2,195,504
Gross profit	Gross profit	257,731		257,010		798,285		771,583		Gross profit	387,001		262,653		758,566		540,554
Selling, general and administrative expenses	Selling, general and administrative expenses	130,580		126,117		404,617		371,376		Selling, general and administrative expenses	178,962		128,807		369,323		274,037
Restructuring/Asset impairment charges		3,488		24,149		8,889		59,633
Gain/(Loss) on divestiture of businesses		2,849		—		(2,667)		—
Restructuring/Asset impairment charges/(income)										Restructuring/Asset impairment charges/(income)	10,563		(1,445)		22,705		5,401
Loss on divestiture of business										Loss on divestiture of business	—		—		—		5,516
Operating profit	Operating profit	126,512		106,744		382,112		340,574		Operating profit	197,476		135,291		366,538		255,600
Non-operating pension costs	Non-operating pension costs	525		7,453		562,818		22,632		Non-operating pension costs	1,677		555,009		3,002		562,293
Interest expense	Interest expense	14,753		19,377		50,767		55,469		Interest expense	23,947		17,513		44,528		36,014
Interest income	Interest income	534		796		4,023		2,158		Interest income	786		2,719		2,302		3,489
Loss from the early extinguishment of debt	Loss from the early extinguishment of debt	—		—		20,184		—		Loss from the early extinguishment of debt	—		20,184		—		20,184
Income/(Loss) before income taxes	Income/(Loss) before income taxes	111,768		80,710		(247,634)		264,631		Income/(Loss) before income taxes	172,638		(454,696)		321,310		(359,402)
Provision for/(Benefit from) income taxes	Provision for/(Benefit from) income taxes	2,564		(649)		(91,542)		49,337		Provision for/(Benefit from) income taxes	44,599		(118,151)		79,888		(94,106)
Income/(Loss) before equity in earnings of affiliates	Income/(Loss) before equity in earnings of affiliates	109,204		81,359		(156,092)		215,294		Income/(Loss) before equity in earnings of affiliates	128,039		(336,545)		241,422		(265,296)
Equity in earnings of affiliates, net of tax	Equity in earnings of affiliates, net of tax	2,351		1,939		5,701		3,230		Equity in earnings of affiliates, net of tax	3,728		2,306		5,952		3,350
Net income/(loss)	Net income/(loss)	111,555		83,298		(150,391)		218,524		Net income/(loss)	131,767		(334,239)		247,374		(261,946)
Net (income)/loss attributable to noncontrolling interests	Net (income)/loss attributable to noncontrolling interests	(415)		151		(243)		581		Net (income)/loss attributable to noncontrolling interests	(95)		169		(369)		172
Net income/(loss) attributable to Sonoco	Net income/(loss) attributable to Sonoco	$	111,140	$	83,449	$	(150,634)	$	219,105	Net income/(loss) attributable to Sonoco	$	131,672	$	(334,070)	$	247,005	$	(261,774)

Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	98,955		100,974		100,039		100,935		Basic	97,999		100,082		97,961		100,571
Diluted	Diluted	99,425		101,245		100,039		101,155		Diluted	98,686		100,082		98,621		100,571
Per common share:	Per common share:									Per common share:
Net income/(loss) attributable to Sonoco:	Net income/(loss) attributable to Sonoco:									Net income/(loss) attributable to Sonoco:
Basic	Basic	$	1.12	$	0.83	$	(1.51)	$	2.17	Basic	$	1.34	$	(3.34)	$	2.52	$	(2.60)
Diluted	Diluted	$	1.12	$	0.82	$	(1.51)	$	2.17	Diluted	$	1.33	$	(3.34)	$	2.50	$	(2.60)

See accompanying Notes to Condensed Consolidated Financial Statements

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (unaudited)

(Dollars in thousands)


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Net income/(loss)	Net income/(loss)	$	111,555	$	83,298	$	(150,391)	$	218,524	Net income/(loss)	$	131,767	$	(334,239)	$	247,374	$	(261,946)
Other comprehensive (loss)/ income:
Other comprehensive (loss)/income:										Other comprehensive (loss)/income:
Foreign currency translation adjustments	Foreign currency translation adjustments	(37,741)		24,647		(57,686)		(37,701)		Foreign currency translation adjustments	(70,314)		12,596		(69,608)		(19,945)
Changes in defined benefit plans, net of tax	Changes in defined benefit plans, net of tax	1,693		5,280		429,823		15,476		Changes in defined benefit plans, net of tax	(1,928)		422,745		(1,737)		428,130
Changes in derivative financial instruments, net of tax	Changes in derivative financial instruments, net of tax	930		2,285		5,370		(440)		Changes in derivative financial instruments, net of tax	(2,090)		3,482		460		4,440
Other comprehensive (loss)/income		$	(35,118)	$	32,212	$	377,507	$	(22,665)
Other comprehensive (loss)/ income										Other comprehensive (loss)/ income	$	(74,332)	$	438,823	$	(70,885)	$	412,625
Comprehensive income:	Comprehensive income:	76,437		115,510		227,116		195,859		Comprehensive income:	57,435		104,584		176,489		150,679
Net (income)/loss attributable to noncontrolling interests		(415)		151		(243)		581
Other comprehensive loss attributable to noncontrolling interests		664		27		425		2,254
Less: Net (income)/loss attributable to noncontrolling interests										Less: Net (income)/loss attributable to noncontrolling interests	$	(95)	$	169	$	(369)	$	172
Less: Other comprehensive loss/(income) attributable to noncontrolling interests										Less: Other comprehensive loss/(income) attributable to noncontrolling interests	$	524	$	(759)	$	(367)	$	(239)
Comprehensive income attributable to Sonoco	Comprehensive income attributable to Sonoco	$	76,686	$	115,688	$	227,298	$	198,694	Comprehensive income attributable to Sonoco	$	57,864	$	103,994	$	175,753	$	150,612

See accompanying Notes to Condensed Consolidated Financial Statements

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF

CHANGES IN TOTAL EQUITY (unaudited)

(Dollars in thousands)

Total
Equity Common Shares Capital in
Excess of
Stated Value Accumulated
Other
Comprehensive
Loss Retained
Earnings Noncontrolling
Interests
Outstanding Amount
December 31, 2019 $ 1,815,705 100,198 $ 7,175 $ 310,778 $ (816,803) $ 2,301,532 $ 13,023
Net income/(loss) 80,236 80,445 (209)
Other comprehensive income/(loss):
Translation loss (95,212) (93,575) (1,637)
Defined benefit plan adjustment, net of tax 5,780 5,780
Derivative financial instruments, net of tax (4,555) (4,555)
Other comprehensive loss $ (93,987) $ (92,350) $ (1,637)
Dividends (43,339) (43,339)
Issuance of stock awards 376 196 376
Shares repurchased (3,938) (65) (3,938)
Stock-based compensation 597 597
Impact of new accounting pronouncements (209) (209)
March 29, 2020 $ 1,755,441 100,329 $ 7,175 $ 307,813 $ (909,153) $ 2,338,429 $ 11,177
Net income/(loss) 54,990 55,211 $ (221)
Other comprehensive income/(loss):
Translation gain/(loss) 32,864 33,454 (590)
Defined benefit plan adjustment, net of tax 4,416 4,416
Derivative financial instruments, net of tax 1,830 1,830
Other comprehensive income/(loss) $ 39,110 $ 39,700 $ (590)
Dividends (43,451) (43,451)
Issuance of stock awards 287 2 287
Shares repurchased (12) (1) (12)
Stock-based compensation 1,339 1,339
June 28, 2020 $ 1,807,704 100,330 $ 7,175 $ 309,427 $ (869,453) $ 2,350,189 $ 10,366
Net income/(loss) 83,298 83,449 (151)
Other comprehensive income/(loss):
Translation gain/(loss) 24,647 24,674 (27)
Defined benefit plan adjustment, net of tax 5,280 5,280 —
Derivative financial instruments, net of tax 2,285 2,285 —
Other comprehensive income/(loss) $ 32,212 $ 32,239 $ (27)
Dividends (43,366) (43,366)
Issuance of stock awards 256 150 256
Shares repurchased (3,385) (64) (3,385)
Stock-based compensation 4,614 4,614
September 27, 2020 $ 1,881,333 100,416 $ 7,175 $ 310,912 $ (837,214) $ 2,390,272 $ 10,188


	Total Equity		Common Shares			Capital in Excess of Stated Value		Accumulated Other Comprehensive Loss		Retained Earnings		Noncontrolling Interests
			Outstanding	Amount
December 31, 2020	$	1,910,528	100,447	$	7,175	$	314,056	$	(756,842)	$	2,335,216	$	10,923
Net income/(loss)	72,293									72,297		(4)
Other comprehensive income/(loss):
Translation loss	(32,541)							(32,021)				(520)
Defined benefit plan adjustment, net of tax	5,385							5,385
Derivative financial instruments, net of tax	958							958
Other comprehensive loss	$	(26,198)						$	(25,678)			$	(520)
Dividends	(45,510)									(45,510)
Issuance of stock awards	364		245			364
Shares repurchased	(5,051)		(85)			(5,051)
Share-based compensation	6,372					6,372

April 4, 2021	$	1,912,798	100,607	$	7,175	$	315,741	$	(782,520)	$	2,362,003	$	10,399
Net loss	(334,239)									(334,070)		(169)
Other comprehensive income:
Translation gain	12,596							11,837				759
Defined benefit plan adjustment, net of tax	422,745							422,745
Derivative financial instruments, net of tax	3,482							3,482
Other comprehensive income	$	438,823						$	438,064			$	759
Dividends	(45,503)									(45,503)
Issuance of stock awards	246		41			246
Shares repurchased	(154,519)		(1,819)			(154,519)
Share-based compensation	4,827					4,827
July 4, 2021	$	1,822,433	98,829	$	7,175	$	166,295	$	(344,456)	$	1,982,430	$	10,989


		Total Equity		Common Shares			Capital in Excess of Stated Value				Accumulated Other Comprehensive Loss		Retained Earnings			Noncontrolling Interests			Total Equity				Common Shares			Capital in Excess of Stated Value				Accumulated Other Comprehensive Loss				Retained Earnings				Noncontrolling Interests
				Outstanding	Amount										Outstanding							Amount
December 31, 2020		$	1,910,528	100,447	$	7,175			$	314,056			$	(756,842)		$	2,335,216			$	10,923
Net income/(loss)		72,293											72,297			(4)
December 31, 2021																		December 31, 2021	$	1,849,541			97,370	$	7,175			$	119,690			$	(359,425)			$	2,070,005			$	12,096
Net income																		Net income	115,607															115,333				274
Other comprehensive income/(loss):	Other comprehensive income/(loss):																	Other comprehensive income/(loss):
Translation loss		(32,541)									(32,021)					(520)
Defined benefit plan adjustment, net of tax		5,385									5,385
Derivative financial instruments, net of tax		958									958
Other comprehensive loss		$	(26,198)								$	(25,678)				$	(520)
Dividends		(45,510)											(45,510)

Issuance of stock awards		364		245			364
Shares repurchased		(5,051)		(85)			(5,051)
Stock-based compensation		6,372					6,372
April 4, 2021		$	1,912,798	100,607	$	7,175	$	315,741			$	(782,520)	$	2,362,003		$	10,399
Net loss		(334,239)											(334,070)			(169)
Other comprehensive income
Translation gain		12,596									11,837					759
Translation income/(loss)																		Translation income/(loss)	706											(185)								891
Defined benefit plan adjustment, net of tax	Defined benefit plan adjustment, net of tax	422,745									422,745							Defined benefit plan adjustment, net of tax	191											191
Derivative financial instruments, net of tax	Derivative financial instruments, net of tax	3,482									3,482							Derivative financial instruments, net of tax	2,550											2,550
Other comprehensive income	Other comprehensive income	$	438,823								$	438,064				$	759	Other comprehensive income	$	3,447										$	2,556							$	891
Dividends	Dividends	(45,503)											(45,503)					Dividends	(44,124)															(44,124)
Purchase of noncontrolling interest																		Purchase of noncontrolling interest	(13,196)							(7,080)												(6,116)
Issuance of stock awards	Issuance of stock awards	246		41			246											Issuance of stock awards	377				182			377
Shares repurchased	Shares repurchased	(154,519)		(1,819)			(154,519)											Shares repurchased	(3,410)				(60)			(3,410)
Stock-based compensation		4,827					4,827

July 4, 2021		$	1,822,433	98,829	$	7,175	$	166,295			$	(344,456)	$	1,982,430		$	10,989
Share-based compensation																		Share-based compensation	10,689							10,689
April 3, 2022																		April 3, 2022	$	1,918,931			97,492	$	7,175	$	120,266			$	(356,869)			$	2,141,214			$	7,145
Net income	Net income	111,555											111,140			415		Net income	131,767															131,672				95
Other comprehensive loss:
Other comprehensive loss																		Other comprehensive loss
Translation loss	Translation loss	(37,741)									(37,077)					(664)		Translation loss	(70,314)											(69,790)								(524)
Defined benefit plan adjustment, net of tax	Defined benefit plan adjustment, net of tax	1,693									1,693					—		Defined benefit plan adjustment, net of tax	(1,928)											(1,928)
Derivative financial instruments, net of tax	Derivative financial instruments, net of tax	930									930					—		Derivative financial instruments, net of tax	(2,090)											(2,090)
Other comprehensive loss	Other comprehensive loss	(35,118)									(34,454)					(664)		Other comprehensive loss	$	(74,332)										$	(73,808)							$	(524)
Dividends	Dividends	(44,498)											(44,498)					Dividends	(48,041)															(48,041)
Issuance of stock awards	Issuance of stock awards	251		3			251											Issuance of stock awards	263				13			263
Shares repurchased	Shares repurchased	(83)		(506)			(83)											Shares repurchased	(574)				(10)			(574)
Stock-based compensation		6,192					6,192
October 3, 2021		$	1,860,732	98,326	$	7,175	$	172,655			$	(378,910)	$	2,049,072		$	10,740
Share-based compensation																		Share-based compensation	8,377							8,377

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

See accompanying Notes to Condensed Consolidated Financial Statements

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Dollars in thousands)


		Nine Months Ended					Six Months Ended
		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net (loss)/income		$	(150,391)	$	218,524
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Asset impairment		3,490		25,364
Net income						Net income	$	247,374	$	(261,946)
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairments						Asset impairments	9,683		4,852
Depreciation, depletion and amortization	Depreciation, depletion and amortization	181,408		186,602		Depreciation, depletion and amortization	145,952		121,792
Loss on early extinguishment of debt	Loss on early extinguishment of debt	20,184		—		Loss on early extinguishment of debt	—		20,184
Share-based compensation expense	Share-based compensation expense	17,392		6,551		Share-based compensation expense	19,065		11,199
Equity in earnings of affiliates	Equity in earnings of affiliates	(5,701)		(3,230)		Equity in earnings of affiliates	(5,952)		(3,350)
Cash dividends from affiliated companies	Cash dividends from affiliated companies	5,182		4,367		Cash dividends from affiliated companies	4,369		3,930
Net gain on disposition of assets		(2,376)		(3,298)
Net loss/(gain) on disposition of assets						Net loss/(gain) on disposition of assets	(648)		(3,279)
Net loss on divestiture of businesses	Net loss on divestiture of businesses	2,667		—		Net loss on divestiture of businesses	—		5,516
Pension and postretirement plan expense	Pension and postretirement plan expense	583,340		43,146		Pension and postretirement plan expense	4,826		576,297
Pension and postretirement plan contributions	Pension and postretirement plan contributions	(165,280)		(34,795)		Pension and postretirement plan contributions	(30,843)		(162,352)
Net (decrease)/increase in deferred taxes		(164,581)		10,013
Net increase/(decrease) in deferred taxes						Net increase/(decrease) in deferred taxes	12,657		(154,242)
Change in assets and liabilities, net of effects from acquisitions and foreign currency adjustments:	Change in assets and liabilities, net of effects from acquisitions and foreign currency adjustments:					Change in assets and liabilities, net of effects from acquisitions and foreign currency adjustments:
Trade accounts receivable	Trade accounts receivable	(142,699)		(42,102)		Trade accounts receivable	(174,064)		(104,925)
Inventories	Inventories	(95,066)		10,621		Inventories	(232,734)		(61,724)
Payable to suppliers	Payable to suppliers	163,193		15,708		Payable to suppliers	148,319		121,054
Prepaid expenses	Prepaid expenses	(17,756)		(1,857)		Prepaid expenses	(1,539)		(2,581)
Accrued expenses		10,354		40,854
Income taxes payable and other income tax items	Income taxes payable and other income tax items	(8,531)		(17,466)		Income taxes payable and other income tax items	26,447		7,965
Other assets and liabilities		(14,751)		30,499
Accrued expenses and other assets and liabilities						Accrued expenses and other assets and liabilities	11,553		(16,437)
Net cash provided by operating activities	Net cash provided by operating activities	220,078		489,501		Net cash provided by operating activities	184,465		101,953
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(156,592)		(116,667)		Purchases of property, plant and equipment	(148,917)		(99,959)
Cost of acquisitions, net of cash acquired	Cost of acquisitions, net of cash acquired	(3,155)		(49,262)		Cost of acquisitions, net of cash acquired	(1,333,769)		(2,353)
Proceeds from the sale of businesses, net	Proceeds from the sale of businesses, net	91,569		—		Proceeds from the sale of businesses, net	—		86,071
Proceeds from the sale of assets	Proceeds from the sale of assets	10,536		8,240		Proceeds from the sale of assets	4,798		7,433
Other net investing proceeds	Other net investing proceeds	6,776		571		Other net investing proceeds	(2,376)		4,304
Net cash used in investing activities	Net cash used in investing activities	(50,866)		(157,118)		Net cash used in investing activities	(1,480,264)		(4,504)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Proceeds from issuance of debt	Proceeds from issuance of debt	138,382		1,107,127		Proceeds from issuance of debt	1,570,137		18,361
Principal repayment of debt	Principal repayment of debt	(582,838)		(428,966)		Principal repayment of debt	(51,142)		(259,225)
Net change in commercial paper	Net change in commercial paper	202,000		(250,000)		Net change in commercial paper	(91,000)		128,000
Net (decrease)/increase in outstanding checks		(10,736)		8,544
Net decrease in outstanding checks						Net decrease in outstanding checks	(14,599)		(15,620)
Proceeds from foreign exchange forward contracts and interest rate swaps	Proceeds from foreign exchange forward contracts and interest rate swaps	4,387		14,480		Proceeds from foreign exchange forward contracts and interest rate swaps	—		4,387
Payment of contingent consideration		—		(3,000)

Cash dividends	Cash dividends	(134,648)		(129,446)		Cash dividends	(91,525)		(90,401)
Purchase of noncontrolling interest						Purchase of noncontrolling interest	(14,474)		—
Excess cash costs of early extinguishment of debt	Excess cash costs of early extinguishment of debt	(20,111)		—		Excess cash costs of early extinguishment of debt	—		(20,111)
Payments for share repurchases	Payments for share repurchases	(159,654)		(7,335)		Payments for share repurchases	(3,984)		(159,571)

Net cash (used)/provided by financing activities		(563,218)		311,404
Net cash provided/(used) by financing activities						Net cash provided/(used) by financing activities	1,303,413		(394,180)
Effects of Exchange Rate Changes on Cash	Effects of Exchange Rate Changes on Cash	(10,830)		(6,391)		Effects of Exchange Rate Changes on Cash	(3,596)		(4,588)
Net (Decrease)/Increase in Cash and Cash Equivalents		(404,836)		637,396
Net Increase/(Decrease) in Cash and Cash Equivalents						Net Increase/(Decrease) in Cash and Cash Equivalents	4,018		(301,319)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	564,848		145,283		Cash and cash equivalents at beginning of period	170,978		564,848
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	160,012	$	782,679	Cash and cash equivalents at end of period	$	174,996	$	263,529

See accompanying Notes to Condensed Consolidated Financial Statements

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Note 1: Basis of Interim Presentation

In the opinion of the management of Sonoco Products Company (the “Company” or “Sonoco”), the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments, unless otherwise stated) necessary to state fairly the consolidated financial position, results of operations and cash flows for the interim periods reported herein. Operating results for the ~~nine months~~three- and six-month periods ended ~~October~~July 3, ~~2021,~~2022, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

With respect to the unaudited condensed consolidated financial information of the Company for the three- and ~~nine-month~~six-month periods ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020~~July 4, 2021 included in this Form 10-Q, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated ~~November~~August 2, ~~2021~~2022 appearing herein, states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited financial information because that report is not a “report” or a “part” of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

As previously disclosed, the Company changed its operating and reporting structure in January 2021 and, as a result, realigned certain of its reportable segments effective January 1, 2021. The revised structure consists of 2 reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as "All Other." Additional information regarding segment realignment is provided in Note 15 to these Condensed Consolidated Financial Statements. All segment results for prior periods have been recast to conform to the new presentation.

Note 2: New Accounting Pronouncements

In March 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-02, "Financial Instruments — Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." The amendments in this update eliminate the accounting guidance for troubled debt restructurings while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendments in this update also require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases. The Company does not expect this pronouncement to materially affect its consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." Under current accounting standards, contract assets and contract liabilities acquired in a business combination are to be recorded at fair value using the ASC 805 measurement principle. ASU 2021-08 requires the acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606: Revenue from Contracts with Customers as if the acquirer had originated the contracts rather than at fair value. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company elected to early adopt ASU 2021-08 on a prospective basis as of January 1, 2022. The election to use practical expedients allowed under ASU 2021-08 will be applied on an acquisition-by-acquisition basis. There was no impact to the Company’s consolidated financial statements as of the adoption date.

During the ~~nine-month~~six-month period ended ~~October~~July 3, ~~2021,~~2022, there have been no other newly issued ~~nor~~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~~July 3, ~~2021,~~2022, there are no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Note 3: Acquisitions and Divestitures

Acquisitions

On ~~August 3, 2021,~~January 26, 2022, the Company completed the acquisition of ~~Allied~~Ball Metalpack Holding, LLC, renamed Sonoco Metal Packaging ~~Pty Ltd,~~("Metal Packaging"), a ~~privately owned manufacturer~~leading supplier of ~~paper~~sustainable metal packaging for food and ~~related manufacturing equipment, consisting~~household products and the largest aerosol can producer in North America, for $1,348,589, net of ~~a single manufacturing facility~~cash acquired. As previously disclosed, final consideration was subject to customary post-closing adjustments for working capital, cash and indebtedness and was finalized in ~~Sydney, Australia, for total~~the second quarter of 2022. The Company received cash ~~consideration of~~ ~~$802. Allied Packaging's financial results~~ from the ~~date acquired are~~sellers totaling $14,820, of which $6,924 was included in "Other receivables" in the Company's ~~Industrial Paper Packaging segment.~~

~~On March 8, 2021,~~Condensed Consolidated Balance Sheet at April 3, 2022. Prior to the ~~Company completed the~~Company's acquisition of ~~TuboTec,~~Metal Packaging, Ball Metalpack Holding, LLC was a ~~small tube~~joint venture formed in 2018 and owned by Platinum Equity (51%) and Ball Corporation (49%). Metal Packaging consists of 8 manufacturing plants in the United States and a headquarters facility in Broomfield, Colorado. This acquisition fits the Company's strategy of investing in its core ~~operation~~businesses as it complements the Company's largest Consumer Packaging franchise, global rigid paper containers, and further expands the Company's sustainable packaging portfolio to include metal packaging.

The Company's initial preliminary fair values of the assets acquired and the liabilities assumed in ~~Brazil, for total cash consideration~~the Metal Packaging acquisition, as well as revised preliminary fair values reflecting measurement period adjustments made during the second quarter of ~~$841. TuboTec's financial results from~~2022, are as follows:


	Initial Allocation		Measurement Period Adjustments		Revised Allocation
Trade accounts receivable	$	123,001	$	—	$	123,001
Inventories	190,070		575		190,645
Prepaid expenses	44,530		—		44,530
Property, plant and equipment	333,496		(418)		333,078
Right of use asset - operating leases	38,000		—		38,000
Other intangible assets	498,000		—		498,000
Goodwill	366,098		(10,151)		355,947
Other net tangible assets	48,069		(196)		47,873
Payable to suppliers	(105,580)		—		(105,580)
Accrued expenses and other	(25,253)		489		(24,764)
Notes payable and current portion of long-term debt	(46,463)		—		(46,463)
Noncurrent operating lease liabilities	(30,448)		—		(30,448)
Long-term debt	(39,543)		—		(39,543)
Deferred income taxes	(52,312)		1,805		(50,507)
Total purchase price, net of cash acquired	$	1,341,665	$	(7,896)	$	1,333,769

The allocation of the purchase price of Metal Packaging to the tangible and intangible assets acquired and liabilities assumed, as reflected under the heading "Revised Valuation" in the table above, is based on the Company's preliminary estimates of their fair value, based on information currently available. Management is continuing to finalize its valuation of certain assets and liabilities including, but not limited to: inventory; property, plant and equipment; goodwill; other intangible assets; deferred income taxes; trade accounts receivable; and accrued expenses and other, and expects to complete its valuations within one year of the date ~~acquired are included in~~of acquisition.

Factors comprising goodwill include increased access to certain markets as well as the ~~Company's Industrial Paper Packaging segment.~~

~~During~~value of the ~~nine months ended October 3, 2021, the Company reached a final working capital settlement related to the August 3, 2020 acquisition~~assembled workforce. Approximately 67% of Can Packaging, a designer and manufacturer of sustainable paper packaging and related manufacturing equipment, based in Habsheim, France. Under the settlement, the Company made an additional cash payment of $1,512 and recorded a corresponding increase in goodwill. Goodwill for Can Packaging, none of whichgoodwill is expected to be deductible for income tax ~~purposes, consists of increased access to certain markets. Can~~purposes. Metal Packaging's financial results ~~from the date acquired~~ are included in the Company's Consumer Packaging segment.

The ~~valuations~~Company has accounted for this acquisition as a business combination under the acquisition method and has included the results of operations of the ~~assets~~ acquired ~~and liabilities assumed~~business in the ~~2020 acquisitions~~Company's Condensed Consolidated Statements of ~~Can Packaging and a small tube and core operation in Jacksonville, Florida, were finalized in~~Income from the ~~first quarter~~date of ~~2021. No additional measurement period adjustments were subsequently recorded.~~acquisition.

910

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

The ~~Company has accounted~~following table presents the unaudited financial results for ~~its acquisitions as business combinations under~~Metal Packaging for the three-month period ended July 3, 2022 and from the date of acquisition through July 3, 2022:



Supplemental Information (unaudited)	Three Months Ended		January 26 to
Metal Packaging	July 3, 2022		July 3, 2022
Net sales	$	291,332	$	462,550
Net income	$	30,428	$	44,447

The following table presents the Company’s estimated unaudited pro forma consolidated results for the three- and six-month periods ended July 3, 2022 and July 4, 2021, assuming the acquisition ~~method~~ of ~~accounting, in accordance with the business combinations subtopic of the Accounting Standards Codification~~Metal Packaging had occurred on January 1, 2021. This unaudited pro forma information is presented for informational purposes only and ~~has included~~does not purport to represent the results of operations that would have been achieved if the acquisition had been completed at the beginning of 2021, nor is it necessarily indicative of future consolidated results.


Pro Forma Supplemental Information (unaudited)	Three Months Ended				Six Months Ended
Consolidated	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Net sales	$	1,913,332	$	1,573,964	$	3,733,902	$	3,123,580
Net income/(loss) attributable to Sonoco	$	140,360	$	(337,526)	$	305,240	$	(320,031)

The unaudited pro forma information above does not project the Company’s expected results for any future period and gives no effect to any future synergistic benefits that may result from the combination or the costs of integrating the acquired operations with those of the Company. Unaudited pro forma information for the three and six months ended July 3, 2022 and July 4, 2021 includes adjustments to depreciation, amortization, and income taxes based upon the preliminary fair value allocation of the purchase price to Metal Packaging's tangible and intangible assets acquired ~~businesses~~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 ~~Company's Condensed Consolidated Statements~~unaudited pro forma information as if the acquisition had occurred on January 1, 2021. Acquisition-related costs of ~~Income~~$4,117 and $26,402 and charges related to fair value adjustments to acquisition-date inventory of $8,155 and $33,155 were recognized during the three- and six-month periods ended July 3, 2022, respectively. These costs are excluded from ~~their respective dates of acquisition.~~2022 unaudited pro forma net income and are instead reflected in 2021 pro forma net income as though they were incurred on January 1, 2021.

Divestitures

As previously disclosed, the Company completed the sale of its U.S. display and packaging business, part of the ~~"All Other"~~All Other group of businesses, to Hood Container Corporation on April 4, 2021 for $80,000 in cash. This business provided design, manufacturing and fulfillment of point-of-purchase displays, as well as contract packaging services, for consumer product customers and had approximately 450 employees. Its operations included 8 manufacturing and fulfillment facilities and 4 sales and design centers.

The selling price was adjusted at closing for certain transaction expenses and for anticipated differences between targeted levels of working capital and the projected levels at the time of closing. Net cash proceeds of $79,704 were received on April 5, 2021 and the Company recognized a loss on the divestiture of this business of $5,516, before tax, in the first quarter of 2021. During the quarter ended October 3, 2021, the Company finalized the working capital settlement related to this sale. The settlement resulted in additional cash proceeds of $1,971 and the buyer's assumption of certain liabilities totaling $786. As a result, the Company recognized a reduction in the previously reported loss on the sale of this business of $2,757, before tax, in the third quarter of 2021, bringing the total loss on the sale of business to $2,759, before tax.

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

~~Assets and liabilities disposed of in the sales of U.S. Display and Packaging and Wilson Thermoforming included the following:~~
U.S. Display and Packaging Wilson Thermoforming
Trade accounts receivable $ 26,342 $ —
Inventories 8,434 1,805
Property, plant and equipment, net 9,551 550
Right of use asset - operating leases 11,627 147
Goodwill 53,039 1,058
Trade accounts payable (10,735) —
Accrued expenses (2,197) (54)
Operating lease liabilities (12,343) (70)
Other net tangible assets 716 —
Net asset disposal $ 84,434 $ 3,436
Net Proceeds 81,675 3,528
Loss/(Gain) on sale of business $ 2,759 $ (92)

As previously disclosed, the Company completed the divestiture of its European contract packaging business, Sonoco Poland Packaging Services Sp. z.o.o., on November 30, 2020. The selling price of $120,000 was adjusted at closing for certain indebtedness assumed by the buyer and for anticipated differences between targeted levels of working capital and the projected levels at the time of closing. The Company received net cash proceeds at closing of $105,913, with the buyer funding an escrow account with an additional $4,600. In the second quarter of 2021, the Company received $6,366 in additional proceeds from the sale, which included the release of $4,000 from escrow plus a post-closing adjustment of $2,366 for the working capital settlement. The remaining $600 in escrow is expected to be released in the second quarter of 2022, pending any indemnity claims. The receipt of the additional cash proceeds is reflected in "Proceeds from the sale of businesses, net" in the Condensed Consolidated Statement of Cash Flows.

The decision to sell its global display and packaging businesses was part of the Company's efforts to simplify its operating structure to focus on growing its core Consumer and Industrial packaging businesses around the world. These

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars and shares in thousands except per share data)~~

~~(unaudited)~~

sales are not expected to notably affect consolidated operating margin percentages, nor do they represent a strategic shift for the Company that will have a major effect on the entity’s operations and financial results. Consequently, the sales did not meet the criteria for reporting as discontinued operations. The net 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.

Acquisition and Divestiture-Related ~~Transaction~~ Costs

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

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

to fair value adjustments to acquisition-date inventory totaling $8,155 and $33,155 during the three- and six-month periods ended July 3, 2022, respectively, which are included in "Cost of sales" in the Company's Condensed Consolidated Statements of Income. Other acquisition-related costs consisting primarily of investment banking fees, representation and warranty insurance premiums, legal and professional fees, and other transaction costs, totaled $4,126 and $27,478 during the three- and six-month periods ended July 3, 2022, respectively, and are included in "Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.

Acquisition and divestiture-related ~~transaction~~ costs ~~totaling $1,015~~totaled $1,462 and ~~$913 were incurred~~$11,488 during the ~~three months~~three- and six-month periods ended ~~October 3,~~July 4, 2021, ~~and September 27, 2020, respectively, and $12,503 and $2,941 during the nine months ended October 3, 2021 and September 27, 2020,~~ respectively. These costs, consisting primarily of legal and professional fees, are included in “Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.

Note 4: Shareholders' Equity

Earnings/~~(Loss)~~(loss) per Share

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


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Numerator:	Numerator:									Numerator:
Net income/(loss) attributable to Sonoco	Net income/(loss) attributable to Sonoco	$	111,140	$	83,449	$	(150,634)	$	219,105	Net income/(loss) attributable to Sonoco	$	131,672	$	(334,070)	$	247,005	$	(261,774)
Denominator:	Denominator:									Denominator:
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	98,955		100,974		100,039		100,935		Basic	97,999		100,082		97,961		100,571
Dilutive effect of stock-based compensation	Dilutive effect of stock-based compensation	470		271		—		220		Dilutive effect of stock-based compensation	687		—		660		—
Diluted	Diluted	99,425		101,245		100,039		101,155		Diluted	98,686		100,082		98,621		100,571
Net income/(loss) attributable to Sonoco per common share:	Net income/(loss) attributable to Sonoco per common share:									Net income/(loss) attributable to Sonoco per common share:
Basic	Basic	$	1.12	$	0.83	$	(1.51)	$	2.17	Basic	$	1.34	$	(3.34)	$	2.52	$	(2.60)
Diluted	Diluted	$	1.12	$	0.82	$	(1.51)	$	2.17	Diluted	$	1.33	$	(3.34)	$	2.50	$	(2.60)
Cash dividends	Cash dividends	$	0.45	$	0.43	$	1.35	$	1.29	Cash dividends	$	0.49	$	0.45	$	0.94	$	0.90

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

Anti-dilutive Securities

Potentially dilutive securities are calculated in accordance with the treasury stock method, which assumes the proceeds from the exercise of all dilutive stock appreciation rights ~~(SARs)~~("SARs") are used to repurchase the Company’s common stock. Certain SARs are not dilutive because either the exercise price is greater than the average market price of the stock during the reporting period or assumed repurchases from proceeds from the exercise of the SARs were ~~antidilutive.~~anti-dilutive. 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 ~~nine-month~~six-month periods ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020~~July 4, 2021 were as ~~follows:~~
Three Months Ended Nine Months Ended
October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020
Anti-dilutive stock appreciation rights — 752 142 844
follows (in thousands):

Three Months Ended

Six Months Ended

July 3, 2022

July 4, 2021

July 3, 2022

July 4, 2021

Anti-dilutive stock appreciation rights

374

—

387

214

1112

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued unless doing so is anti-dilutive. Such securities have an anti-dilutive impact in those periods in which a loss is reported. Diluted net loss per share of common stock for the ~~nine-month period~~three- and six-month periods ended ~~October 3,~~July 4, 2021 is the same as basic net loss per share because otherwise dilutive securities are excluded from the computation of diluted net loss per share. The following table sets forth the potentially dilutive securities excluded from the computation of diluted net loss per share during the ~~nine-month period~~three- and six-month periods ended ~~October 3,~~July 4, 2021:


						~~Nine Months Ended~~
						~~October 3, 2021~~
~~Dilutive securities excluded due to reported loss~~						~~469~~

Three Months Ended

Six Months Ended

July 4, 2021

Dilutive securities excluded due to reported loss

486

469

Stock Repurchases

On April 20, 2021, the Company's Board of Directors (the "Board") authorized the repurchase of the Company's common stock in an aggregate amount of up to $350,000. Following ~~the~~several repurchase transactions ~~described below,~~in 2021, a total of ~~$196,385 remains~~$137,972 remained available ~~to be used~~ for share repurchases under this authorization as of ~~October~~December 31, 2021. No shares were purchased under this authorization during the six months ended July 3, ~~2021.~~2022.

On May 10, 2021, the Company entered into an accelerated share repurchase agreement ("ASR Agreement") with a financial institution to repurchase outstanding shares of the Company's common stock. In exchange for an upfront payment of $150,000, which was funded with available cash on hand, the financial institution delivered 1,751 initial shares to the Company, representing 80% of the expected number of shares to be repurchased during the repurchase period based upon ~~the closing stock~~an estimated average repurchase price ~~on May 10, 2021~~ of $68.50 per share. The initial shares received were retired by the Company. The final number of shares to be repurchased and retired ~~was~~were based on the Company's volume-weighted average share price during the repurchase period, less a discount and subject to certain ~~adjustments (the "Settlement Price").~~

~~Pursuant to the ASR Agreement, the~~adjustments. The financial institution could have elected to accelerate the settlement of the transaction in 2 tranches. On July 21, 2021, the financial institution transferred 168 additional shares to the Company based upon an effective Settlement Price of $66.52 and a notional value of $50,000,settle all or ~~one third of the total $150,000 prepayment. On July 26, 2021, the financial institution transferred 337 additional shares to the Company upon full settlement of the remaining $100,000 notional value~~any part of the transaction at any time between July 9, 2021 and September 11, 2021. As of July 4, 2021, the ~~final Settlement Price~~unsettled portion of ~~$66.45.~~the ASR Agreement represented a forward contract indexed to the Company's own stock which was recognized within shareholders’ equity as "Capital in excess of stated value."

On May 6, 2021, the Company repurchased ~~approximately~~ 54 shares for $3,615 from a private stockholder based upon the average closing stock price on that day. The cost of these share repurchases, as well as those related to the accelerated share agreement mentioned above, was allocated to "Capital in excess of stated value" on the Company's Condensed Consolidated Balance Sheet ~~as of October 3,~~for the period ended July 4, 2021.

The Company ~~frequently~~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 ~~100~~70 shares during the ~~nine~~six months ended ~~October~~July 3, 2022, at a cost of $3,984, and 98 shares during the six months ended July 4, 2021, at a cost of ~~$6,039, and 130 shares during the nine months ended September 27, 2020, at a cost of $7,335.~~$5,956.

Dividend Declarations

On ~~July 21, 2021,~~April 20, 2022, the Board of Directors declared a regular quarterly dividend of ~~$0.45~~$0.49 per share. This dividend was paid on ~~September~~June 10, ~~2021~~2022 to all shareholders of record as of ~~August~~May 10, ~~2021.~~2022.

On ~~October 19, 2021,~~July 20, 2022, the Board of Directors declared a regular quarterly dividend of ~~$0.45~~$0.49 per share. This dividend is payable on ~~December 10, 2021~~September 9, 2022 to all shareholders of record as of ~~November~~August 10, ~~2021.~~2022.

Noncontrolling interests

In April 2015, the Company acquired a 67% controlling interest in Graffo Paranaense de Embalagens S/A (“Graffo”). 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 3 noncontrolling partners, which resulted in a $6,116 reduction in noncontrolling interest, a $7,080 charge to capital in excess of stated value, and a $1,278 reduction to accrued expenses and other on the Company's Condensed Consolidated Balance Sheet as of July 3, 2022.

1213

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Note 5: Restructuring and Asset ~~Impairment~~Impairments

Due to its geographic footprint and the cost-competitive nature of its businesses, the Company is continually seeking the most cost-effective means and structure to serve its customers and to respond to fundamental changes in its markets. As such, restructuring costs have been, and are expected to be, a recurring component of the Company's operating costs. The amount of these costs can vary significantly from quarter to quarter and from year to year depending upon the scope and location of the restructuring activities.

Following are the total restructuring and asset impairment ~~charges,~~charges/(income), net of adjustments, recognized during the periods presented:
Three Months Ended Nine Months Ended
October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020
Restructuring and restructuring-related asset impairment charges $ 3,204 $ 24,149 $ 4,048 $ 59,633
Other asset impairments 284 — 4,841 —
Restructuring/Asset Impairment Charges $ 3,488 $ 24,149 $ 8,889 $ 59,633



	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Restructuring and restructuring-related asset impairment charges/(income)	$	6,857	$	(1,853)	$	12,610	$	844
Other asset impairments	3,706		408		10,095		4,557
Restructuring/Asset Impairment Charges/(Income)	$	10,563	$	(1,445)	$	22,705	$	5,401

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


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Severance and Termination Benefits	Severance and Termination Benefits	$	3,726	$	4,607	$	7,592	$	29,866	Severance and Termination Benefits	$	2,214	$	2,438	$	4,313	$	3,866
Asset Impairments/(Gains from Disposal of Assets)	Asset Impairments/(Gains from Disposal of Assets)	(1,722)		16,605		(8,207)		25,364		Asset Impairments/(Gains from Disposal of Assets)	787		(5,621)		1,232		(6,485)
Other Costs	Other Costs	1,200		2,937		4,663		4,403		Other Costs	3,856		1,330		7,065		3,463
Restructuring and restructuring-related asset impairment charges		$	3,204	$	24,149	$	4,048	$	59,633
Restructuring and restructuring-related asset impairment charges/(income)										Restructuring and restructuring-related asset impairment charges/(income)	$	6,857	$	(1,853)	$	12,610	$	844

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


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Consumer Packaging	Consumer Packaging	$	2,450	$	16,498	$	3,708	$	20,707	Consumer Packaging	$	2,544	$	173	$	4,179	$	1,258
Industrial Paper Packaging	Industrial Paper Packaging	(1,888)		6,990		(4,827)		30,189		Industrial Paper Packaging	1,007		(4,372)		2,355		(2,939)
All Other	All Other	555		762		3,075		6,727		All Other	(495)		2,355		(417)		2,520
Corporate	Corporate	2,087		(101)		2,092		2,010		Corporate	3,801		(9)		6,493		5
Restructuring and restructuring-related asset impairment charges		$	3,204	$	24,149	$	4,048	$	59,633
Restructuring and restructuring-related asset impairment charges/(income)										Restructuring and restructuring-related asset impairment charges/(income)	$	6,857	$	(1,853)	$	12,610	$	844

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

1314

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

The following table sets forth the activity in the restructuring accrual included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets:
Severance
and
Termination
Benefits Asset
Impairment/
Disposal
of Assets Other
Costs Total
Accrual Activity
Liability at December 31, 2020 $ 15,955 $ — $ 511 $ 16,466
2021 charges/(gains) 7,592 (8,207) 4,663 4,048
Cash receipts/(payments) (14,790) 13,442 (5,059) (6,407)
Asset write downs/disposals — (5,235) 356 (4,879)
Foreign currency translation (294) — 1 (293)
Liability at October 3, 2021 $ 8,463 $ — $ 472 $ 8,935


	Severance and Termination Benefits		Asset Impairments/ Disposal of Assets		Other Costs		Total
Accrual Activity
Liability at December 31, 2021	$	10,917	$	—	$	1,873	$	12,790
2022 charges	4,313		1,232		7,065		12,610

Cash (payments)/receipts	(7,024)		4,076		(7,163)		(10,111)
Asset write downs/disposals	—		(5,308)		—		(5,308)
Foreign currency translation	(83)		—		(38)		(121)
Liability at July 3, 2022	$	8,123	$	—	$	1,737	$	9,860

"Severance and Termination Benefits" during the first ~~nine~~six months of ~~2021~~2022 includes the cost of severance for approximately ~~475~~150 employees whose positions were eliminated in conjunction with the Company's ongoing organizational effectiveness efforts.

"Asset ~~Impairment/~~Impairments/Disposal of Assets" during the first ~~nine~~six months of ~~2021~~2022 consists primarily of ~~gains~~asset impairment charges related to plant closures in the Consumer Packaging and Industrial Paper Packaging segments, partially offset by a gain from the sale of ~~real estate~~a previously closed facility in our "All Other" group of businesses. Cash proceeds in the first six months of 2022 relate to the sale of this facility as well as the partial sale of a previously closed operation in Canada, part of the Industrial Paper Packaging segment, and gains from the sale of other assets impaired in the prior year as a result of consolidations in the Company's plastics foods operations, partially offset by restructuring-related asset impairment charges in the Company's temperature-assured packaging business.segment.

“Other Costs” during the first ~~nine~~six months of ~~2021~~2022 consists primarily of consulting services and costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance.

The Company expects to pay the majority of the remaining restructuring reserves by the end of 2022 using cash generated from operations. The Company also expects to recognize future additional charges totaling approximately ~~$1,800~~$2,300 in connection with previously announced restructuring actions and believes that the majority of these charges will be incurred and paid by the end of ~~2021.~~2022. The Company continually evaluates its cost structure, including its manufacturing capacity, and additional restructuring actions are likely to be undertaken.

Other Asset Impairments

The Company ~~recognized~~recognized other asset impairment charges totaling ~~$284~~$3,706 and ~~$4,841~~$10,095 in the ~~thre~~ethree and ~~nine~~six months ended ~~October~~July 3, 2022, respectively.

The charges in the three and six months ended July 3, 2022 include net asset impairment charges totaling $3,452 and $9,165, respectively, resulting from the Company's decision in the first quarter of 2022 to exit its operations in Russia, consisting of two small tube and core plants in our Industrial Paper Packaging segment, as a result of the ongoing Russia-Ukraine conflict. These charges 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. The charges also include $254 and $930 of fixed asset impairments in the Company's plastics foods operations, part of the Consumer Packaging segment, in the three and six months ended July 3, 2022, respectively. These assets were determined to be impaired as the value of their projected undiscounted cash flows was no longer sufficient to recover their carrying value.

The Company recognized other asset impairment charges totaling $408 and $4,557 in the three and six months ended July 4, 2021, respectively. The year-to-date charges consist of fixed asset impairments totaling ~~$2,442~~$2,158 in the Company's plastics foods operations, part of the Consumer Packaging segment, andand $2,399 in the temperature-assured packaging business, part of the All Other group of businesses. The assets were impaired as the value of their projected undiscounted cash flows was determined to no longer be sufficient to recover their carrying value.

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

1415

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Note 6: 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 ~~nine~~six months ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020:~~July 4, 2021:


		Foreign Currency Items		Defined Benefit Pension Items		Cash Flow Hedges		Accumulated Other Comprehensive Loss			Foreign Currency Items		Defined Benefit Pension Items		Cash Flow Hedges		Accumulated Other Comprehensive Loss

Balance at December 31, 2021										Balance at December 31, 2021	$	(269,076)	$	(91,397)	$	1,048	$	(359,425)
Other comprehensive (loss)/income before reclassifications										Other comprehensive (loss)/income before reclassifications	(73,722)		(3,893)		3,047		(74,568)
Amounts reclassified from accumulated other comprehensive loss to net income										Amounts reclassified from accumulated other comprehensive loss to net income	3,747		2,156		(2,199)		3,704
Amounts reclassified from accumulated other comprehensive loss to fixed assets										Amounts reclassified from accumulated other comprehensive loss to fixed assets	—		—		(388)		(388)
Other comprehensive (loss)/income										Other comprehensive (loss)/income	(69,975)		(1,737)		460		(71,252)

Balance at July 3, 2022										Balance at July 3, 2022	$	(339,051)	$	(93,134)	$	1,508	$	(430,677)

Balance at December 31, 2020	Balance at December 31, 2020	$	(194,024)	$	(562,747)	$	(71)	$	(756,842)	Balance at December 31, 2020	$	(194,024)	$	(562,747)	$	(71)	$	(756,842)
Other comprehensive (loss)/income before reclassifications	Other comprehensive (loss)/income before reclassifications	(57,261)		11,302		7,804		(38,155)		Other comprehensive (loss)/income before reclassifications	(20,184)		10,888		5,219		(4,077)
Amounts reclassified from accumulated other comprehensive loss to net loss	Amounts reclassified from accumulated other comprehensive loss to net loss	—		418,521		(2,403)		416,118		Amounts reclassified from accumulated other comprehensive loss to net loss	—		417,242		(733)		416,509
Amounts reclassified from accumulated other comprehensive loss to fixed assets	Amounts reclassified from accumulated other comprehensive loss to fixed assets	—		—		(31)		(31)		Amounts reclassified from accumulated other comprehensive loss to fixed assets	—		—		(46)		(46)
Other comprehensive (loss)/income	Other comprehensive (loss)/income	(57,261)		429,823		5,370		377,932		Other comprehensive (loss)/income	(20,184)		428,130		4,440		412,386

Balance at October 3, 2021		$	(251,285)	$	(132,924)	$	5,299	$	(378,910)
Balance at July 4, 2021										Balance at July 4, 2021	$	(214,208)	$	(134,617)	$	4,369	$	(344,456)

Balance at December 31, 2019		$	(241,994)	$	(574,413)	$	(396)	$	(816,803)
Other comprehensive loss before reclassifications		(35,447)		(885)		(3,362)		(39,694)
Amounts reclassified from accumulated other comprehensive loss to net income		—		16,361		2,922		19,283

Other comprehensive (loss)/income		(35,447)		15,476		(440)		(20,411)

Balance at September 27, 2020		$	(277,441)	$	(558,937)	$	(836)	$	(837,214)

1516

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

The following table summarizes the effects on net ~~income/(loss)~~income of significant amounts reclassified from each component of accumulated other comprehensive loss for the three- and ~~nine-month~~six-month periods ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020:~~July 4, 2021:


		Amount Reclassified from Accumulated Other Comprehensive Loss										Amount Reclassified from Accumulated Other Comprehensive Loss
		Three Months Ended				Nine Months Ended						Three Months Ended				Six Months Ended
Details about Accumulated Other Comprehensive Loss Components	Details about Accumulated Other Comprehensive Loss Components	October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020		Affected Line Item in the Condensed Consolidated Statements of Income	Details about Accumulated Other Comprehensive Loss Components	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021		Affected Line Item in the Condensed Consolidated Statements of Income
Foreign currency items											Foreign currency items
Loss on Russia restructuring(a)											Loss on Russia restructuring(a)	$	(3,747)	—		$	(3,747)	—		Restructuring/Asset impairment charges
Gains/(losses) on cash flow hedges	Gains/(losses) on cash flow hedges										Gains/(losses) on cash flow hedges
Foreign exchange contracts	Foreign exchange contracts	$	937	$	(1,723)	$	2,766	$	(6,245)	Net sales	Foreign exchange contracts	843		1,489		1,866		1,829		Net sales
Foreign exchange contracts	Foreign exchange contracts	(711)		867		(2,129)		3,744		Cost of sales	Foreign exchange contracts	(1,011)		(1,190)		(1,706)		(1,418)		Cost of sales
Commodity contracts	Commodity contracts	2,051		(792)		2,626		(1,346)		Cost of sales	Commodity contracts	1,979		646		2,937		575		Cost of sales
		$	2,277	$	(1,648)	$	3,263	(3,847)		Income/(Loss) before income taxes		1,811		945		3,097		986		Income/(Loss) before income taxes
		(607)		403		(860)		925		(Benefit from)/Provision for income taxes
Income tax impact											Income tax impact	(529)		(241)		(898)		(253)		Provision for/(Benefit from) income taxes
		$	1,670	$	(1,245)	$	2,403	(2,922)		Net income/ (loss)		1,282		704		2,199		733		Net income/(loss)
Defined benefit pension items	Defined benefit pension items										Defined benefit pension items
Effect of curtailment loss(a)		—		—		—		(31)		Non-operating pension costs
Effect of settlement loss(a)		(21)		—		(547,652)		(661)		Non-operating pension costs
Amortization of defined benefit pension items(a)		(1,640)		(7,103)		(14,973)		(21,185)		Non-operating pension costs
		$	(1,661)	$	(7,103)	$	(562,625)	(21,877)		(Loss)/Income before income taxes
Effect of settlement loss(b)											Effect of settlement loss(b)	(74)		(547,631)		(430)		(547,631)		Non-operating pension costs
Amortization of defined benefit pension items(b)											Amortization of defined benefit pension items(b)	(1,255)		(6,432)		(2,426)		(13,333)		Non-operating pension costs
		382		1,800		144,104		5,516		Provision for/(Benefit from) income taxes		(1,329)		$	(554,063)	(2,856)		(560,964)		Income/(Loss) before income taxes
Income tax impact											Income tax impact	335		142,090		700		143,722		Provision for/(Benefit from) income taxes
		$	(1,279)	$	(5,303)	$	(418,521)	(16,361)		Net (loss)/income		(994)		$	(411,973)	(2,156)		(417,242)		Net income/(loss)
Total reclassifications for the period	Total reclassifications for the period	$	391	$	(6,548)	$	(416,118)	$	(19,283)	Net income/(loss)	Total reclassifications for the period	$	(3,459)	$	(411,269)	$	(3,704)	$	(416,509)	Net income/(loss)

(a)See Note 5 for additional details.

(b) See Note 11 for additional details.

1617

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

The following table summarizes the before and after tax amounts for the various components of other comprehensive income/(loss)~~/income~~ for the three-month periods ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020:~~July 4, 2021:


			Three months ended October 3, 2021						Three months ended September 27, 2020								Three months ended July 3, 2022							Three months ended July 4, 2021
			Before Tax Amount		Tax (Expense) Benefit		After Tax Amount		Before Tax Amount		Tax (Expense) Benefit		After Tax Amount				Before Tax Amount		Tax (Expense) Benefit		After Tax Amount			Before Tax Amount		Tax (Expense) Benefit		After Tax Amount
Foreign currency items:	Foreign currency items:														Foreign currency items:
																Other comprehensive (loss)/income before reclassifications	$	(73,537)	$	—	$	(73,537)		$	11,837	$	—	$	11,837
																Amounts reclassified from accumulated other comprehensive loss to net income/(loss)(a)	3,747		—		3,747			—		—		—
		Net other comprehensive (loss)/income from foreign currency items	$	(37,077)	$	—	$	(37,077)	$	24,674	$	—	$	24,674		Net other comprehensive (loss)/income from foreign currency items	(69,790)		—		(69,790)		—	11,837		—		11,837
Defined benefit pension items:	Defined benefit pension items:														Defined benefit pension items:
		Other comprehensive income/(loss) before reclassifications	559		(145)		414		(31)		8		(23)			Other comprehensive (loss)/income before reclassifications	(3,907)		985		(2,922)			14,213		(3,441)		10,772
		Amounts reclassified from accumulated other comprehensive loss to net income(a)	1,661		(382)		1,279		7,103		(1,800)		5,303			Amounts reclassified from accumulated other comprehensive loss to net income/(loss)(b)	1,329		(335)		994			554,063		(142,090)		411,973
		Net other comprehensive income/(loss) from defined benefit pension items	2,220		(527)		1,693		7,072		(1,792)		5,280			Net other comprehensive (loss)/income from defined benefit pension items	(2,578)		650		(1,928)			568,276		(145,531)		422,745
Gains and losses on cash flow hedges:	Gains and losses on cash flow hedges:														Gains and losses on cash flow hedges:
		Other comprehensive income/(loss) before reclassifications	3,525		(940)		2,585		1,376		(336)		1,040			Other comprehensive income/(loss) before reclassifications	(474)		139		(335)			5,674		(1,452)		4,222
		Amounts reclassified from accumulated other comprehensive loss to net income	(2,277)		607		(1,670)		1,648		(403)		1,245			Amounts reclassified from accumulated other comprehensive loss to net income/(loss)	(1,811)		529		(1,282)			(945)		241		(704)
		Amounts reclassified from accumulated other comprehensive loss to fixed assets	20		(5)		15		—		—		—			Amounts reclassified from accumulated other comprehensive loss to fixed assets	(668)		195		(473)			(49)		13		(36)
		Net other comprehensive income/(loss) from cash flow hedges	1,268		(338)		930		3,024		(739)		2,285			Net other comprehensive income/(loss) from cash flow hedges	(2,953)		863		(2,090)			4,680		(1,198)		3,482
Other comprehensive (loss)/income			$	(33,589)	$	(865)	$	(34,454)	$	34,770	$	(2,531)	$	32,239
Other comprehensive income/(loss)															Other comprehensive income/(loss)		$	(75,321)	$	1,513	$	(73,808)		$	584,793	$	(146,729)	$	438,064

(a) See Note 115 for additional details.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars and shares in thousands except per share data)~~

~~(unaudited)~~

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 3, 2021 and September 27, 2020:

Nine months ended October 3, 2021 Nine months ended September 27, 2020
Before Tax
Amount Tax
(Expense)
Benefit After Tax
Amount Before Tax
Amount Tax
(Expense)
Benefit After Tax
Amount
Foreign currency items:
Net other comprehensive loss from foreign currency items(a)
$ (57,261) — $ (57,261) $ (27,866) (7,581) $ (35,447)
Defined benefit pension items:
Other comprehensive income/(loss) before
reclassifications 14,923 (3,621) 11,302 (1,177) 292 (885)
Amounts reclassified from accumulated other
comprehensive loss to net (loss)/income(b)
562,625 (144,104) 418,521 21,877 (5,516) 16,361
Net other comprehensive income/(loss) from
defined benefit pension items 577,548 (147,725) 429,823 20,700 (5,224) 15,476
Gains and losses on cash flow hedges:
Other comprehensive income/(loss) before
reclassifications 10,536 (2,732) 7,804 (4,345) 983 (3,362)
Amounts reclassified from accumulated other
comprehensive loss to net (loss)/income (3,263) 860 (2,403) 3,847 (925) 2,922
Amounts reclassified from accumulated other
comprehensive loss to fixed assets (42) 11 (31) — — —
Net other comprehensive income/(loss) from
cash flow hedges 7,231 (1,861) 5,370 (498) 58 (440)
Other comprehensive income/(loss): $ 527,518 $ (149,586) $ 377,932 $ (7,664) $ (12,747) $ (20,411)

~~(a)~~ Other comprehensive loss from foreign currency items for the nine-month period ended September 27, 2020 includes the settlement gain and corresponding tax provision related to the termination of a net investment hedge. See Note 9 for more information.

(b) See Note 11 for additional details.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

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


		Six months ended July 3, 2022						Six months ended July 4, 2021
		Before Tax Amount		Tax (Expense) Benefit		After Tax Amount		Before Tax Amount		Tax (Expense) Benefit		After Tax Amount
Foreign currency items:
	Other comprehensive loss before reclassifications	$	(73,722)	$	—	$	(73,722)	$	(20,184)	$	—	$	(20,184)
	Amounts reclassified from accumulated other comprehensive loss to net income/(loss)(a)	3,747		—		3,747		—		—		—
	Net other comprehensive loss from foreign currency items	(69,975)		—		(69,975)		(20,184)		—		(20,184)
Defined benefit pension items:
	Other comprehensive (loss)/income before reclassifications	(5,183)		1,290		(3,893)		14,364		(3,476)		10,888
	Amounts reclassified from accumulated other comprehensive loss to net income/(loss)(b)	2,856		(700)		2,156		560,964		(143,722)		417,242
	Net other comprehensive (loss)/income from defined benefit pension items	(2,327)		590		(1,737)		575,328		(147,198)		428,130
Gains and losses on cash flow hedges:
	Other comprehensive income/(loss) before reclassifications	4,271		(1,224)		3,047		7,012		(1,793)		5,219
	Amounts reclassified from accumulated other comprehensive loss to net income/(loss)	(3,097)		898		(2,199)		(986)		253		(733)
	Amounts reclassified from accumulated other comprehensive loss to fixed assets	(552)		164		(388)		(62)		16		(46)
	Net other comprehensive income/(loss) from cash flow hedges	622		(162)		460		5,964		(1,524)		4,440
Other comprehensive income/(loss)		$	(71,680)	$	428	$	(71,252)	$	561,108	$	(148,722)	$	412,386

(a) See Note 5 for additional details.

(b) See Note 11 for additional details.

Note 7: Goodwill and Other Intangible Assets

Goodwill

During the first quarter of 2021, the Company changed its operating and reporting structure and, as a result, realigned certain of its reportable segments effective January 1, 2021. During the third quarter of 2021, the Company discovered that the effect of this segment realignment was not properly reflected in its goodwill footnote disclosures for the first two quarters of 2021. While the consolidated goodwill presented in the financial statements and the reported changes in activity presented in the notes were correctly stated in the previous filings, the disclosed balances by segment were incorrect. A summary of the changes in goodwill ~~by quarter, as well as the corrected goodwill balances by segment,~~ for the ~~nine~~six months ended ~~October~~July 3, ~~2021~~2022 is as follows:

Consumer
Packaging Industrial Paper Packaging All Other Total
Goodwill at December 31, 2020, as reported $ 592,310 $ 317,958 $ 478,987 $ 1,389,255
Adjustment to correct goodwill by segment (11,066) 51,357 (40,291) —
Goodwill at December 31, 2020, as corrected $ 581,244 $ 369,315 $ 438,696 $ 1,389,255
2021 Acquisitions — — — —
Dispositions — — (53,039) (53,039)
Foreign currency translation (4,536) (4,286) (692) (9,514)
Measurement period adjustments 1,512 — — 1,512
Goodwill at April 4, 2021, as corrected $ 578,220 $ 365,029 $ 384,965 $ 1,328,214
2021 Acquisitions — 917 — 917
Dispositions — — — —
Foreign currency translation 2,471 1,328 470 4,269
Measurement period adjustments — — — —
Goodwill at July 4, 2021, as corrected $ 580,691 $ 367,274 $ 385,435 $ 1,333,400
2021 Acquisitions — — — —
Dispositions (1,058) — — (1,058)
Foreign currency translation (4,744) (2,911) (964) (8,619)
Measurement period adjustments — — — —
Goodwill at October 3, 2021 $ 574,889 $ 364,363 $ 384,471 $ 1,323,723


	Consumer Packaging		Industrial Paper Packaging		All Other		Total
Goodwill at December 31, 2021	$	572,416	$	367,780	$	384,305	$	1,324,501
2022 Acquisitions	366,098		—		—		366,098

Foreign currency translation	(10,377)		(8,918)		(2,795)		(22,090)
Measurement period adjustments	(10,151)		—		—		(10,151)
Goodwill at July 3, 2022	$	917,986	$	358,862	$	381,510	$	1,658,358

Goodwill ~~from 2021 acquisitions relates to~~activity reflected under the ~~acquisition of TuboTec. Measurement~~captions "2022 Acquisitions" and "Measurement period ~~adjustments relate to final working capital settlements made in the first quarter of 2021 for the prior-year acquisition of Can Packaging. Dispositions of goodwill in 2021~~adjustments" relate to the ~~divestiture~~January 26, 2022 acquisition of ~~the Company's U. S. display and packaging business in April 2021 and the divestiture of a small plastics foods thermoforming business in September 2021.~~Metal Packaging. See Note 3 for additional information.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

The Company assesses goodwill for impairment annually during the third quarter, or from time to time when warranted by the facts and circumstances surrounding individual reporting units or the Company as a whole. The Company completed its most recent annual goodwill impairment testing during the third quarter of 2021, and analyzed certain qualitative and quantitative factors in determining whether a goodwill impairment existed. The Company's assessments reflected a number of significant management assumptions and estimates including the Company's forecast of sales growth, gross profit margins, and discount rates. Changes in these assumptions could materially impact the Company's conclusions. Based on its assessments, the Company concluded that there was no impairment of goodwill for any of its reporting units.

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

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars and shares in thousands except per share data)~~

~~(unaudited)~~

Although beginning to benefit from economic recovery, the results of the Plastics –- Healthcare reporting unit have been negatively impacted by end-market weakness due to the COVID-19 pandemic. In addition, the unit is facing near-term headwinds from higher raw material and other cost increases. Assuming COVID-19 infection rates continue to decline, management expects market demand will improve ~~over the coming year~~throughout 2022 and that selling price increases and/or cost reductions, including restructuring actions and investments in production efficiency projects, will mitigate the impacts of recent raw material and other cost inflation. However, should it become apparent that the ongoing post-COVID-19 recovery is likely to be significantly weaker, delayed, or prolonged compared to management’s current expectations, significant negative price/cost relationships will persist over the long-term, or profit margins do not improve as expected, or other assumptions change, such as the discount rate, goodwill impairment charges may be possible in the future.

In ~~its~~the annual goodwill impairment analysis ascompleted during the third quarter of ~~October 3,~~ 2021, projected future cash flows for the Plastics ~~-Healthcare~~- Healthcare reporting unit were discounted at 8.3%~~. Total goodwill associated with this reporting unit was $64,425 at October 3, 2021. In the latest annual impairment test, the~~ and its estimated fair value ~~of the Plastics - Healthcare reporting unit~~ was determined to exceed its carrying value by approximately 13.3%. Based on the discounted cash flow model and holding other valuation assumptions constant, projected operating profits across all future periods would have to be reduced approximately 13.0%, or the discount rate increased to 9.3%, in order for the estimated fair value of the reporting unit to fall below carrying value. Total goodwill associated with this reporting unit was $62,404 at July 3, 2022.

During the time subsequent to the annual evaluation, and at July 3, 2022, the Company considered whether any events and/or changes in circumstances had resulted in the likelihood that the goodwill of any of its reporting units may have been impaired. It is management's opinion that no such events and/or changes in circumstances have occurred.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Other Intangible Assets

A summary of other intangible assets as of ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020~~2021 is as follows:


		October 3, 2021		December 31, 2020			July 3, 2022			December 31, 2021
Other Intangible Assets, gross:	Other Intangible Assets, gross:					Other Intangible Assets, gross:
Patents	Patents	$	29,314	$	29,325	Patents	$	29,307		$	29,315
Customer lists	Customer lists	585,108		622,430		Customer lists	1,048,443			592,195
Trade names	Trade names	32,086		32,088		Trade names	31,837			32,043
Proprietary technology	Proprietary technology	22,870		22,813		Proprietary technology	57,728			22,846
Other	Other	2,808		2,831		Other	2,777			2,807
Total Other Intangible Assets, gross	Total Other Intangible Assets, gross	$	672,186	$	709,487	Total Other Intangible Assets, gross	$	1,170,092		$	679,206

Accumulated Amortization:	Accumulated Amortization:					Accumulated Amortization:
Patents	Patents	$	(15,843)	$	(14,511)	Patents	$	(17,099)		$	(16,275)
Customer lists	Customer lists	(338,039)		(339,159)		Customer lists	(379,576)			(347,274)
Trade names	Trade names	(13,658)		(12,156)		Trade names	(15,042)			(14,106)
Proprietary technology	Proprietary technology	(21,130)		(19,833)		Proprietary technology	(23,117)			(21,394)
Other	Other	(1,983)		(1,894)		Other	(2,044)			(2,014)
Total Accumulated Amortization	Total Accumulated Amortization	$	(390,653)	$	(387,553)	Total Accumulated Amortization	$	(436,878)	-436878000	$	(401,063)
Other Intangible Assets, net	Other Intangible Assets, net	$	281,533	$	321,934	Other Intangible Assets, net	$	733,214		$	278,143

The acquisition of Metal Packaging on January 26, 2022 resulted in the addition of $498,000 of intangible assets, primarily customer lists and proprietary technology, which are expected to be amortized over their average useful lives of approximately 13.6 years. See Note 3 for additional information about the Metal Packaging acquisition.

Other Intangible Assets are amortized on a straight-line basis over their respective useful lives, which generally range from three to forty years. The Company has no intangible assets with indefinite lives.

Aggregate amortization expense was ~~$12,257~~$20,871 and ~~$12,993~~$12,111 for the three months ended ~~October~~July 3, 2022 and July 4, 2021, respectively, and $39,671and ~~September 27, 2020, respectively, and $37,117 and $39,624~~$24,860 for the ~~nine-months~~six months ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020,~~July 4, 2021, respectively. Amortization expense on other intangible assets is expected to total approximately ~~$49,500 in 2021, $45,600~~ $81,200 in 2022, ~~$41,200~~$79,500 in 2023, ~~$34,100~~$71,400 in 2024, $60,900 in 2025 and ~~$24,700~~$57,900 in ~~2025.~~2026.

Note 8: Debt

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


	July 3, 2022		December 31, 2021
Commercial paper	$	258,000	$	349,000
Syndicated term loan due February 2025	299,559		—
1.800% notes due February 2025	397,978		—
2.250% notes due February 2027	297,654		—
2.850% notes due February 2032	495,004		—
3.125% notes due May 2030	595,629		595,342
5.750% notes due November 2040	536,198		536,182
Other foreign denominated debt	42,745		55,432
Finance lease obligations	107,521		60,282

Other debt	96,653		14,425
Total debt	$	3,126,941	$	1,610,663
Less current portion and short-term notes	399,025		411,557
Long-term debt	$	2,727,916	$	1,199,106

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

~~Note 8: Debt~~

~~Details~~On January 21, 2022, the Company completed a registered public offering of green bonds with an aggregate principal amount of $1,200,000. These unsecured notes (the "Notes") consisted of the following:


	Principal Amount		Issuance Costs and Discounts		Net Proceeds		Interest Rate	Maturity

2025 Notes	$	400,000	$	(2,356)	$	397,644	1.800%	February 1, 2025
2027 Notes	300,000		(2,565)		297,435		2.250%	February 1, 2027
2032 Notes	500,000		(5,220)		494,780		2.850%	February 1, 2032
Total	$	1,200,000	$	(10,141)	$	1,189,859

The Notes are senior unsecured obligations and rank equal in right of payment to the Company’s other senior unsecured debt from time to time outstanding. The indenture governing the Notes contains certain covenants with respect to the Company that, among other things, restrict the entry into additional secured indebtedness, sale and leaseback transactions and certain mergers, consolidations and transfers of all or substantially all of the Company’s assets. The Company used an amount equal to the net proceeds from the Notes to partially fund the January 26, 2022 acquisition of Metal Packaging.

Also on January 21, 2022, the Company entered into a $300,000 three-year term loan facility (the "Term Loan Facility") with a syndicate of 8 banks. The full $300,000 was drawn from this facility on January 26, 2022, and the proceeds used to partially fund the acquisition of Metal Packaging. Interest is assessed at the Secured Overnight Financing Rate ("SOFR") plus a margin based on a pricing grid that uses the Company’s credit ratings. The current SOFR margin is 122.5 basis points. There is no required amortization and repayment can be accelerated at any time without penalty at the Company's ~~debt at October 3, 2021 and December 31, 2020 are as follows:~~
October 3,
2021 December 31,
2020
Commercial paper $ 202,000 $ —
1.0% Euro loan due May 2021 — 183,662
9.2% debentures due August 2021 — 4,320
4.375% debentures due November 2021 — 249,741
3.125% debentures due May 2030 595,193 594,687
5.75% debentures due November 2040 536,173 599,279
Other foreign denominated debt 69,625 15,522
Finance lease obligations 51,336 37,943
Other notes 14,179 15,070
Total debt $ 1,468,506 $ 1,700,224
Less current portion and short-term notes 275,799 455,784
Long-term debt $ 1,192,707 $ 1,244,440

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

On April 28, 2021, the Company commenced a cash tender offer to purchase up to $300,000 of the $600,000 ~~outstanding~~then-outstanding principal amount of its ~~5.75%~~5.750% notes due November 2040. Upon expiration of the tender offer on May 25, 2021, the Company repurchased 10.53% of its outstanding ~~5.75%~~5.750% notes for a total cash cost of $81,961, as shown below:

Principal Amount Tendered Premium and Other Amounts Paid Total
Cash
Paid
5.75% debentures due November 2040
$ 63,206 $ 18,755 $ 81,961


	Principal Amount Tendered		Premium and Other Amounts Paid		Total Cash Paid
5.750% notes due November 2040	$	63,206	$	18,755	$	81,961

On April 28, 2021, the Company entered into a reverse treasury lock agreement intended to fix the cash cost to fund approximately $100,000 of the maximum $300,000 principal amount subject to being tendered. The settlement of the reverse treasury lock on May 13, 2021 resulted in a loss of $1,356. In addition, the Company wrote off a proportional share of unamortized bond issuance costs and unamortized original issue discounts associated with the ~~5.75%~~5.750% notes. These non-cash write-offs net to $73, which combined with the hedge loss and premium and other amounts paid, resulted in a pretax loss from the early extinguishment of debt totaling ~~$20,184.~~$20,184 during each of the three- and six-month periods ended July 4, 2021.

The Company's ~~1%,~~ 150,000 euro-denominated ~~debt~~loan, which bore 1% annual interest, matured on May 25, 2021, and a U.S. dollar equivalent cash payment of $177,780 was made to settle the debt. On April 7, 2021, the Company entered into two forward contracts to buy a total of 150,000 euros in order to manage foreign currency risk related to the Company's funding of the debt repayment upon maturity. The Company recognized a gain of $4,387 upon the May 21, 2021 maturity of these forward contracts. The gain is included in "Selling, general and administrative expenses" onin the Company's Condensed Consolidated Statements of Income for the ~~nine~~three and six months ended ~~October 3,~~July 4, 2021 and the proceeds from the settlement of the contracts and the debt maturity payment are reflected in "Net cash provided/(used)~~/provided~~ by financing activities" in the Company's Condensed Consolidated Statement of Cash Flows for the ~~nine~~six months ended ~~October 3,~~July 4, 2021.

On June 30, 2021, the Company entered into a new five-year $750,000, unsecured revolving credit facility which replaced an existing credit facility entered into on July 20, 2017, and reflects substantially the same terms and conditions. Consistent with prior facilities, the new revolving credit facility supports the Company's $500,000 commercial paper program. Based on the pricing grid, the Credit Agreement and Sonoco's current credit ratings, a London Interbank Offering Rate (LIBOR) borrowing has an all-in drawn margin of 125.0 basis points. On September 21, 2021, the Company borrowed $50,000 from the revolving credit facility. These borrowings were repaid in full on October 1, 2021, prior to the end of the third quarter.

On August 1, 2021, the Company repaid its $250,000, 4.375% debentures without penalty ahead of their November 2021 maturity. Also on August 1, 2021, the Company repaid its $4,321, 9.2% debentures upon their maturity.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars and shares in thousands except per share data)~~

~~(unaudited)~~

As of October 3, 2021, the Company has scheduled debt maturities through the next twelve months of $275,799 including $202,000 of outstanding commercial paper. At October 3, 2021, the Company has $160,012 in cash and cash equivalents on hand and $750,000 in committed capacity under its revolving credit facility, of which $548,000 was available for draw down net of outstanding commercial paper balances. The Company believes that these amounts, combined with expected net cash flows from operating activities, provide ample liquidity to cover these debt maturities and other cash flow needs of the Company over the course of the next year.

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~~July 3, ~~2021,~~2022, the Company’s interest coverage and net worth were substantially above the minimum levels required under these covenants.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Note 9: 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.

October 3, 2021 December 31, 2020
Carrying
Amount Fair
Value Carrying
Amount Fair
Value
Long-term debt, net of current portion $ 1,192,707 $ 1,428,316 $ 1,244,440 $ 1,538,132


	July 3, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Long-term debt, net of current portion	$	2,727,916	$	2,569,487	$	1,199,106	$	1,434,711

The carrying value of cash and cash equivalents and short-term debt approximates fair value. The fair value of long-term debt is determined based on recent trade information in the financial markets of the Company’s public debt or is determined by discounting future cash flows using interest rates available to the Company for issues with similar terms and maturities which is considered a Level 2 fair value measurement.

Cash Flow Hedges

At ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows. These contracts, which have maturities ranging to December ~~2022,~~2024, qualify as cash flow hedges under U.S. GAAP. For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item.

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 ~~October~~July 3, ~~2021,~~2022, these contracts included natural gas swaps covering approximately ~~2.9~~1.1 million MMBTUs. These contracts ~~represent~~represented approximately ~~66% and 21%~~25% of anticipated usage in North America for ~~2021~~the remainder of 2022, and ~~2022, respectively.~~1% of anticipated usage in both 2023 and 2024. The Company also has certain natural gas hedges that it does not treat as ~~Cash Flow Hedges.~~cash flow hedges. See ~~Other Derivatives~~"Non-Designated Derivatives" below for a discussion of these hedges. ~~The~~At July 3, 2022, the Company ~~has also~~had designated swap contracts covering ~~904~~84 metric tons of aluminum as cash flow hedges. These contracts ~~represent~~represented approximately ~~53%~~3% of anticipated aluminum usage for the remainder of ~~2021.~~2022. The fair ~~values~~value of the Company’s commodity cash flow hedges netted to a gain position of ~~$7,530~~$2,700 and $1,491 at ~~October~~July 3, ~~2021~~2022 and ~~a loss position of $(647) at~~ December 31, ~~2020.~~2021, respectively. The amount of the gain included in Accumulated Other Comprehensive Income at ~~October~~July 3, ~~2021~~2022 expected to be reclassified to the income statement during the next twelve months is ~~$4,690.~~

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars and shares in thousands except per share data)~~

~~(unaudited)~~

$2,696.

Foreign Currency Cash Flow Hedges

The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales, purchases, and capital spending expected to occur in ~~2021~~2022 and ~~2022.~~2023. The net positions of these contracts at ~~October~~July 3, ~~2021~~2022 were as follows (in thousands):


Currency	Action	Quantity
Colombian peso	purchase	~~5,000,669~~13,591,224
Mexican peso	purchase	~~84,193~~244,790
Polish zloty	purchase	~~21,064~~44,467
Czech koruna	purchase	~~13,119~~33,398
Euro	purchase	~~12,803~~10,449
Turkish lira	purchase	9,356
Canadian dollar	purchase	~~3,368~~7,809
British pound	purchase	~~1,697~~1,005
~~Turkish lira~~Brazilian real	~~purchase~~sell	~~633~~ (6,286)

The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of ~~$131~~$379 and ~~$555~~$336 at ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Gains of ~~$131~~$379 are expected to be

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

reclassified from accumulated other comprehensive loss to the income statement during the next twelve months. In addition, the Company has entered into forward contracts to hedge certain foreign currency cash flow transactions related to construction in progress. As of ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020,~~2021, the net position of these contracts was ~~$(525)~~$(938) and ~~$47,~~$(457), respectively. During the ~~nine~~six months ended ~~October~~July 3, ~~2021, gains~~2022, losses from these hedges totaling ~~$42~~$657 were reclassified from accumulated other comprehensive loss and included in the carrying value of the capitalized expenditures. Losses of ~~$(522)~~$875 are expected to be reclassified from accumulated other comprehensive loss and included in the carrying value of the related fixed assets acquired during the next twelve months.

~~Net Investment Hedge~~Non-Designated Derivatives

~~In January 2020, the~~The Company ~~entered~~routinely enters into ~~a cross-currency swap agreement with a notional amount~~other derivative contracts which are not designated for hedge accounting treatment under ASC 815. As such, changes in fair value of ~~$250,000~~these non-designated derivatives are recorded directly to effectively convert a portion of the Company's fixed-rate, U.S. dollar denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt. The risk management objective was to manage foreign currency risk relating to net investments in certain European subsidiaries denominated in foreign currencies. As a result of significant strengthening of the U.S. dollarincome and ~~a reduction~~expense in the differential between U.S. and European interest rates, the fair market value of the swap position appreciated significantly during the first quarter of 2020. In March 2020, the Company terminated the swap agreement and received a net cash settlement of $14,480. The Company recorded this foreign currency translation gain in "Accumulated other comprehensive loss," net of a tax provision of $7,581.periods that they occur.

~~Other Derivatives~~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 3, 2022, were as follows (in thousands):


Currency	Action	Quantity
Colombian peso	purchase	31,847,040
Indonesian rupiah	purchase	30,335,671
Mexican peso	purchase	388,269
Turkish lira	purchase	36,904
Thai baht	purchase	9,251
Canadian dollar	purchase	4,026
Euro	purchase	20

Commodity Hedges

The Company ~~does not apply hedge accounting treatment under ASC 815~~has entered into non-designated derivative contracts to manage the cost of anticipated purchases of natural gas. At July 3, 2022, these contracts consisted of natural gas swaps covering approximately 5.3 million MMBTUs and represented approximately 46% of anticipated usage in North America for ~~these instruments. As such, changes~~the remainder of 2022, and 27% and 17% of anticipated usage in 2023 and 2024, respectively.

Interest Rate Hedges

Pursuant to the registered public offering of unsecured 2.850% notes with a principal amount of $500,000 maturing on February 1, 2032, the Company entered into treasury lock derivative instruments with 2 banks, with a notional principal amount of $150,000 each on December 29, 2021. These instruments had the risk management objective of reducing exposure to the Company of increases in the underlying Treasury index up to the date of pricing of the notes. The fair value ~~are recorded directly to income~~of the contracts was a net loss position of $(550) at December 31, 2021. 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 ~~expense in~~administrative expenses" on the ~~periods that they occur.~~Company's Condensed Consolidated Statements of Income for the six months ended July 3, 2022.

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

2324

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

The ~~net currency positions of these contracts at October 3, 2021, were as follows (in thousands):~~


~~Currency~~	~~Action~~	~~Quantity~~
~~Indonesian rupiah~~	~~purchase~~	~~30,699,411~~
~~Colombian peso~~	~~purchase~~	~~26,283,009~~
~~Mexican peso~~	~~purchase~~	~~336,655~~
~~Canadian dollar~~	~~purchase~~	~~5,258~~

In addition to the contracts designated as cash flow hedges described above, the Company has entered into other derivative contracts to manage the cost of anticipated purchases of natural gas. At October 3, 2021, these contracts consisted of natural gas swaps covering approximately 1.6 million MMBTUs and represent approximately 21% of anticipated usage in North America for 2022. The Company's designated and non-designated natural gas derivative contracts total approximately 4.5 million MMBTUs and represent approximately 66% and 42% of anticipated natural gas usage in North America for 2021 and 2022, respectively.

~~The fair value of the Company’s other derivatives position was a gain of $3,117 an~~d ~~$599 at October 3, 2021 and December 31, 2020, respectively.~~

~~The~~ following table sets forth the location and fair values of the Company’s derivative instruments at ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020:~~2021:


Description	Description	Balance Sheet Location	October 3, 2021		December 31, 2020		Description	Balance Sheet Location	July 3, 2022		December 31, 2021
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:						Derivatives designated as hedging instruments:
Commodity Contracts	Commodity Contracts	Prepaid expenses	$	4,690	$	867	Commodity Contracts	Prepaid expenses	$	2,822	$	1,599
Commodity Contracts	Commodity Contracts	Other assets	$	2,840	$	—	Commodity Contracts	Other assets	$	5	$	—
Commodity Contracts	Commodity Contracts	Accrued expenses and other	$	—	$	(1,512)	Commodity Contracts	Accrued expenses and other	$	(127)	$	(108)
Commodity Contracts		Other liabilities	$	—	$	(2)

Foreign Exchange Contracts	Foreign Exchange Contracts	Prepaid expenses	$	333	$	997	Foreign Exchange Contracts	Prepaid expenses	$	936	$	848
Foreign Exchange Contracts	Foreign Exchange Contracts	Accrued expenses and other	$	(725)	$	(395)	Foreign Exchange Contracts	Accrued expenses and other	$	(1,432)	$	(969)
Foreign Exchange Contracts	Foreign Exchange Contracts	Other liabilities	$	(2)	$	—	Foreign Exchange Contracts	Other liabilities	$	(63)	$	—
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:						Derivatives not designated as hedging instruments:
Commodity Contracts	Commodity Contracts	Prepaid expenses	$	—	$	484	Commodity Contracts	Prepaid expenses	$	4,688	$	1,815
Commodity Contracts	Commodity Contracts	Other assets	$	2,861	$	—	Commodity Contracts	Other assets	$	197	$	—
Commodity Contracts							Commodity Contracts	Accrued expenses and other	$	—	$	(1,132)
Commodity Contracts							Commodity Contracts	Other liabilities	$	(957)	$	—
Foreign Exchange Contracts	Foreign Exchange Contracts	Prepaid expenses	$	256	$	140	Foreign Exchange Contracts	Prepaid expenses	$	26	$	135

Foreign Exchange Contracts	Foreign Exchange Contracts	Accrued expenses and other	$	—	$	(25)	Foreign Exchange Contracts	Accrued expenses and other	$	(275)	$	(176)

Interest Rate Lock Contract							Interest Rate Lock Contract	Accrued expenses and other	$	—	$	(550)

While certain of the Company’s derivative contract arrangements with its counterparties provide for the ability to settle contracts on a net basis, the Company reports its derivative positions on a gross basis. There are no collateral arrangements or requirements in these agreements.

Pursuant to the May 25, 2021 maturity of the Company's 1%, 150,000 euro-denominated debt discussed in Note 8, the Company entered into two forward contracts on April 7, 2021, to buy a total of 150,000 euros, with the risk management objective of managing foreign currency risk related to the Company's funding of the debt repayment upon maturity. The Company recognized a gain of $4,387 upon the May 21, 2021, maturity of these forward contracts. The gain is included in "Selling, general and administrative expenses" on the Company's Condensed Consolidated Statements of Income for the nine months ended October 3, 2021.

Pursuant to the bond tender discussed in Note 8, the Company entered into a reverse treasury lock agreement on April 28, 2021 with the intent to fix the cash cost to fund approximately $100,000 of the maximum $300,000 principal amount subject to being tendered. The settlement of the reverse treasury lock on May 13, 2021 resulted in a loss of $1,356. The loss is included in "Loss from the early extinguishment of debt" on the Company's Condensed Consolidated Statements of Income for the nine months ended October 3, 2021.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars and shares in thousands except per share data)~~

~~(unaudited)~~

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the three months ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020,~~July 4, 2021, excluding the ~~gains on~~amount of foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to the carrying value of the capitalized expenditures:


Description	Description	Amount of Gain or (Loss) Recognized in OCI on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated OCI Into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI Into Income		Description	Amount of Gain or (Loss) Recognized in OCI on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated OCI Into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI Into Income
Derivatives in Cash Flow Hedging Relationships:	Derivatives in Cash Flow Hedging Relationships:						Derivatives in Cash Flow Hedging Relationships:
Three months ended October 3, 2021
Three months ended July 3, 2022							Three months ended July 3, 2022
Foreign Exchange Contracts	Foreign Exchange Contracts	$	(407)	Net sales	$	937	Foreign Exchange Contracts	$	(1,324)	Net sales	$	843
				Cost of sales	$	(711)				Cost of sales	$	(1,011)
Commodity Contracts	Commodity Contracts	$	4,200	Cost of sales	$	2,051	Commodity Contracts	$	850	Cost of sales	$	1,979
Three months ended September 27, 2020
Three months ended July 4, 2021							Three months ended July 4, 2021
Foreign Exchange Contracts	Foreign Exchange Contracts	$	90	Net sales	$	(1,723)	Foreign Exchange Contracts	$	751	Net sales	$	1,489
				Cost of sales	$	867				Cost of sales	$	(1,190)
Commodity Contracts	Commodity Contracts	$	1,286	Cost of sales	$	(792)	Commodity Contracts	$	4,847	Cost of sales	$	646

Description

Gain or (Loss)
Recognized

Location of Gain or (Loss) Recognized in
Income Statement

Derivatives not Designated as Hedging Instruments:

Three months ended ~~October~~July 3, ~~2021~~2022

Commodity Contracts

~~2,861~~506

Cost of sales

Foreign Exchange Contracts

~~(675)~~(1,142)

Selling, general and administrative

Three months ended ~~September 27, 2020~~July 4, 2021

Commodity Contracts

~~(436)~~56

Cost of sales

Foreign Exchange Contracts

~~486~~220

Selling, general and administrative

Three months ended October 3, 2021 Three months ended September 27, 2020
Description Revenue Cost of
sales Revenue Cost of
sales
Total amount of income and expense line items presented in the Condensed Consolidated Statements of Income $ 937 $ 1,340 $ (1,723) $ 75
The effects of cash flow hedging:
Gain or (loss) on cash flow hedging relationships:
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into net income $ 937 $ (711) $ (1,723) $ 867
Commodity contracts:
Amount of gain reclassified from accumulated other comprehensive loss into net income $ — $ 2,051 $ — $ (792)

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

~~The following tables set forth the effect of the Company’s derivative instruments on financial performance for the nine months ended October 3, 2021~~


	Three months ended July 3, 2022				Three months ended July 4, 2021
Description	Revenue		Cost of sales		Revenue		Cost of sales
Total amount of income and expense line items presented in the Condensed Consolidated Statements of Income	$	843	$	968	$	1,489	$	(544)

Gain or (loss) on cash flow hedging relationships:
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into net income	$	843	$	(1,011)	$	1,489	$	(1,190)

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

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and ~~September 27, 2020, excluding the gains on foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to the carrying value of the capitalized expenditures:~~
Description Amount of Gain or
(Loss) Recognized
in OCI on
Derivatives Location of Gain
or (Loss)
Reclassified from
Accumulated OCI
Into Income Amount of Gain or
(Loss) Reclassified
from Accumulated
OCI Into Income
Derivatives in Cash Flow Hedging Relationships:
Nine months ended October 3, 2021
Foreign Exchange Contracts $ 156 Net sales $ 2,766
Cost of sales $ (2,129)
Commodity Contracts $ 10,801 Cost of sales $ 2,626
Nine months ended September 27, 2020
Foreign Exchange Contracts $ (4,985) Net sales $ (6,245)
Cost of sales $ 3,744
Commodity Contracts $ 640 Cost of sales $ (1,346)
shares in thousands except per share data)

(unaudited)

~~Description~~

Gain or (Loss)
Recognized

Location of Gain or (Loss) Recognized in
Income Statement

~~Derivatives not Designated as Hedging Instruments:~~

~~Nine months ended October 3, 2021~~

~~Commodity Contracts~~

~~3,295~~

~~Cost of sales~~

~~Foreign Exchange Contracts~~

~~(906)~~

~~Selling, general and administrative~~

~~Nine months ended September 27, 2020~~

~~Commodity Contracts~~

~~(252)~~

~~Cost of sales~~

~~Foreign Exchange Contracts~~

~~(3,565)~~

~~Selling, general and administrative~~

Nine months ended October 3, 2021 Nine months ended September 27, 2020
Description Revenue Cost of
sales Revenue Cost of
sales
Total amount of income and expense line items presented in the Condensed Consolidated Statements of Income $ 2,766 $ 497 $ — $ 2,398
The effects of cash flow hedging:
Gain or (loss) on cash flow hedging relationships:
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into net (loss)/income $ 2,766 $ (2,129) $ (6,245) $ 3,744
Commodity contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive loss into net (loss)/income $ — $ 2,626 $ — $ (1,346)

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

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


Description	Amount of Gain or (Loss) Recognized in OCI on Derivatives		Location of Gain or (Loss) Reclassified from Accumulated OCI Into Income	Amount of Gain or (Loss) Reclassified from Accumulated OCI Into Income
Derivatives in Cash Flow Hedging Relationships:
Six months ended July 3, 2022
Foreign Exchange Contracts	$	88	Net sales	$	1,866
			Cost of sales	$	(1,706)
Commodity Contracts	$	4,183	Cost of sales	$	2,937
Six months ended July 4, 2021
Foreign Exchange Contracts	$	563	Net sales	$	1,829
			Cost of sales	$	(1,418)
Commodity Contracts	$	6,601	Cost of sales	$	575

Description

Gain or (Loss)
Recognized

Location of Gain or (Loss) Recognized in
Income Statement

Derivatives not Designated as Hedging Instruments:

Six months ended July 3, 2022

Commodity Contracts

7,498

Cost of sales

Foreign Exchange Contracts

201

Selling, general and administrative

Six months ended July 4, 2021

Commodity Contracts

434

Cost of sales

Foreign Exchange Contracts

(405)

Selling, general and administrative


	Six months ended July 3, 2022				Six months ended July 4, 2021
Description	Revenue		Cost of sales		Revenue		Cost of sales
Total amount of income and expense line items presented in the Condensed Consolidated Statements of Income	$	1,866	$	1,231	$	1,829	$	(843)















Gain or (loss) on cash flow hedging relationships:
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into net income	$	1,866	$	(1,706)	$	1,829	$	(1418)


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

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Note 10: Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:


Level 1 –			Observable inputs such as quoted market prices in active markets;
Level 2 –			Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3 –			Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own ~~assumptions.~~assumptions

Assets that are calculated at Net Asset Value per share (NAV) are not required to be categorized within the fair value hierarchy.

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	Description	October 3, 2021		Assets measured at NAV		Level 1		Level 2		Level 3		Description	July 3, 2022		Assets measured at NAV		Level 1		Level 2		Level 3
Hedge derivatives, net:	Hedge derivatives, net:											Hedge derivatives, net:
Commodity contracts	Commodity contracts	$	7,530	$	—	$	—	$	7,530	$	—	Commodity contracts	$	2,700	$	—	$	—	$	2,700	$	—
Foreign exchange contracts	Foreign exchange contracts	$	(394)	$	—	$	—	$	(394)	$	—	Foreign exchange contracts	$	(559)	$	—	$	—	$	(559)	$	—
Non-hedge derivatives, net:	Non-hedge derivatives, net:											Non-hedge derivatives, net:
Commodity contracts	Commodity contracts	$	2,861	$	—	$	—	$	2,861	$	—	Commodity contracts	$	3,928	$	—	$	—	$	3,928	$	��
Foreign exchange contracts	Foreign exchange contracts	$	256	$	—	$	—	$	256	$	—	Foreign exchange contracts	$	(249)	$	—	$	—	$	(249)	$	—

Description	Description	December 31, 2020		Assets measured at NAV		Level 1		Level 2		Level 3		Description	December 31, 2021		Assets measured at NAV		Level 1		Level 2		Level 3
Hedge derivatives, net:	Hedge derivatives, net:											Hedge derivatives, net:
Commodity contracts	Commodity contracts	$	(647)	$	—	$	—	$	(647)	$	—	Commodity contracts	$	1,491	$	—	$	—	$	1,491	$	—
Foreign exchange contracts	Foreign exchange contracts	$	602	$	—	$	—	$	602	$	—	Foreign exchange contracts	$	(121)	$	—	$	—	$	(121)	$	—
Non-hedge derivatives, net:	Non-hedge derivatives, net:											Non-hedge derivatives, net:
Commodity contracts	Commodity contracts	$	484	$	—	$	—	$	484	$	—	Commodity contracts	$	683	$	—	$	—	$	683	$	—
Foreign exchange contracts	Foreign exchange contracts	$	115	$	—	$	—	$	115	$	—	Foreign exchange contracts	$	(41)	$	—	$	—	$	(41)	$	—
Interest rate lock contract												Interest rate lock contract	$	(550)	$	—	$	—	$	(550)	$	—

As discussed in Note 9, the Company uses derivatives to mitigate the effect of ~~raw material and energy cost~~commodity fluctuations, foreign currency fluctuations and, from time to time, interest rate movements. Fair value measurements for the Company’s derivatives are classified under Level 2 because such measurements are estimated based on observable inputs such as interest rates, yield curves, spot and future commodity prices and spot and future exchange rates.

The Company does not currently have any non-financial assets or liabilities that are recognized or disclosed at fair value on a recurring basis. 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 ~~nine-month~~six-month periods ended ~~October~~July 3, ~~2021.~~2022.

2730

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Note 11: Employee Benefit Plans

Retirement Plans and Retiree Health and Life Insurance Plans

The Company provides non-contributory defined benefit pension plans tofor certain of its employees in the United States, Mexico, Belgium, Germany, Greece, France, and ~~Belgium.~~Turkey. The Company also sponsors contributory defined benefit pension plans covering ~~the majority~~certain of its employees in the United Kingdom, Canada and the ~~Netherlands. In addition, the Company~~Netherlands, and provides postretirement healthcare and life insurance benefits to a limited number of its retirees and their dependents in the United States and Canada, based on certain age and/or service eligibility requirements.

The Company froze participation in its U.S. qualified defined benefit pension plan for newly hired salaried and non-union hourly employees effective December 31, 2003. To replace this benefit, non-union U.S. employees hired on or after January 1, 2004, are provided an annual contribution, called the Sonoco Retirement Contribution (SRC), to their participant accounts in the Sonoco Retirement and Savings Plan. The SRC is equal to 4% of the participant's eligible pay plus 4% of eligible pay in excess of the social security wage base. On February 4, 2009, the U.S. qualified defined benefit pension plan was further amended to freeze plan benefits for all active, non-union participants effective December 31, 2018. Remaining active participants in the U.S. qualified plan became eligible for SRC contributions effective January 1, 2019. In October 2021, the Company's Board of Directors approved a resolution authorizing amendments to the Sonoco Retirement and Savings Plan to eliminate the SRC contribution and increase the Company's match on elective contributions to the Plan from 50% of the first 4% of compensation contributed by participants to 100% of the first 6%. These amendments will be effective January 1, 2022.

The components of net periodic benefit cost include the following:


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Retirement Plans	Retirement Plans									Retirement Plans
Service cost	Service cost	$	968	$	881	$	2,949	$	2,966	Service cost	$	837	$	1,020	$	1,663	$	1,981
Interest cost	Interest cost	2,287		12,785		22,051		38,015		Interest cost	2,671		9,657		5,381		19,764
Expected return on plan assets	Expected return on plan assets	(3,361)		(12,427)		(21,672)		(37,234)		Expected return on plan assets	(2,278)		(8,650)		(5,143)		(18,311)
Amortization of prior service cost	Amortization of prior service cost	226		245		687		742		Amortization of prior service cost	232		235		453		461
Amortization of net actuarial loss	Amortization of net actuarial loss	1,600		7,136		14,849		21,270		Amortization of net actuarial loss	1,181		6,378		2,316		13,249
Effect of curtailment loss		—		—		—		31

Effect of settlement loss	Effect of settlement loss	21		—		547,652		661		Effect of settlement loss	74		547,631		430		547,631
Net periodic benefit cost	Net periodic benefit cost	$	1,741	$	8,620	$	566,516	$	26,451	Net periodic benefit cost	$	2,717	$	556,271	$	5,100	$	564,775

Retiree Health and Life Insurance Plans	Retiree Health and Life Insurance Plans									Retiree Health and Life Insurance Plans
Service cost	Service cost	$	93	$	89	$	282	$	265	Service cost	$	79	$	95	$	161	$	189
Interest cost	Interest cost	49		84		149		249		Interest cost	66		50		130		100
Expected return on plan assets	Expected return on plan assets	(111)		(92)		(335)		(275)		Expected return on plan assets	(110)		(111)		(222)		(224)
Amortization of prior service credit		—		(70)		—		(207)

Amortization of net actuarial gain	Amortization of net actuarial gain	(186)		(208)		(563)		(620)		Amortization of net actuarial gain	(158)		(181)		(343)		(377)
Net periodic benefit income	Net periodic benefit income	$	(155)	$	(197)	$	(467)	$	(588)	Net periodic benefit income	$	(123)	$	(147)	$	(274)	$	(312)

The Company made aggregate contributions of $142,615 and $12,292 to its defined benefit retirement and retiree health and life insurance plans during the nine months ended October 3, 2021 and September 27, 2020, respectively. The Company expects to make additional aggregate contributions of approximately $6,500 to its defined benefit retirement and retiree health and life insurance plans over the remainder of 2021.

~~Plan Termination and~~ Settlement

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

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars and shares in thousands except per share data)~~

~~(unaudited)~~

annuity contracts. In order for the Inactive Plan to be fully funded upon final settlement, the Company contributed $133,000 to the Inactive Plan during the second quarter of 2021. Non-cash, pre-tax settlement charges totaling $547,291 were recognized in the second quarter of 2021 as the lump sum payouts and annuity purchases were made.

~~Settlements and Curtailments~~ Charges

The Company recognized ~~additional~~ settlement ~~cha~~ch~~rges~~arges of ~~$361~~$430 and ~~$661~~$340 during the ~~nine~~six months ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020,~~July 4, 2021, respectively. These charges resulted from payments made to certain participants in the Company's non-union Canadian pension plan who elected a lump sum distribution option upon retirement. Additional settlement charges related to the Canadian pension plans may be recognized over the remainder of ~~2021~~2022 as a result of ongoing lump-sum ~~distributions~~distributions.

The Company terminated the Sonoco Pension Plan for Inactive Participants (the "Inactive Plan"), a tax-qualified defined benefit plan, effective September 30, 2019, and ~~restructuring actions. In addition, curtailment~~settled the liabilities of the Inactive Plan in the second quarter of 2021 through a combination of lump-sum payments and the purchase of group annuity contracts. Non-cash, pre-tax settlement charges totaling ~~$31 related~~$547,291 were recognized in the second quarter of 2021 as the lump sum payouts and annuity purchases were made.

Contributions

The Company made aggregate contributions of $8,895 and $139,687 to its defined benefit retirement and retiree health and life insurance plans during the six months ended July 3, 2022 and July 4, 2021, respectively. The 2021 contributions include $133,000 contributed to the ~~closure of a paper mill in Canada were recognized~~Inactive Plan during the ~~nine months ended September 27, 2020.~~second quarter of 2021 in order for it to be fully funded upon final settlement. The Company expects to make additional aggregate contributions of approximately $6,800 to its defined benefit retirement and retiree health and life insurance plans over the remainder of 2022.

Sonoco Retirement and Savings Plan

The Sonoco Retirement and Savings Plan is a defined contribution retirement plan provided for certain of the Company’s U.S. employees. The plan is comprised of both an elective and non-elective component.

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

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

by matching a portion of their contributions with contributions from the Company. The plan provides for participant contributions of 1% to 100% of gross pay. Effective January 1, 2022, 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.

The non-elective component of the plan, the Sonoco Retirement Contribution ~~(SRC)~~

("SRC"), was eliminated effective January 1, 2022. The SRC provided for an annual Company contribution equal to 4% of the participant's eligible pay plus 4% of eligible pay in excess of the social security wage base to eligible participant accounts. SRC contributions ~~which are~~were funded annually in the first quarter, following the year in which the benefit was earned. SRC contributions totaled $21,948 and $22,665 during the ~~nine~~six months ended ~~October~~July 3, 2022 and July 4, 2021, ~~and $22,503 during the nine months ended September 27, 2020.~~respectively. No additional SRC contributions ~~are expected during the remainder of 2021.~~will occur. The Company recognized expense related to the SRC of ~~$5,456~~$5,499 and ~~$5,589~~$11,834 for the ~~three months~~three- and six-month periods ended ~~October 3, 2021 and September 27, 2020, respectively, and $17,290 and $17,283 for the nine months ended October 3, 2021 and September 27, 2020, respectively.~~July 4, 2021.

Note 12: Income Taxes

The Company’s effective tax rates for the three- and ~~nine-month~~six-month periods ended ~~October~~July 3, ~~2021~~2022 were ~~2.3%~~25.8% and ~~37.0%~~24.9%, respectively, and its ~~effective tax~~ rates for the three- and ~~nine-month~~six-month periods ended ~~September 27, 2020~~July 4, 2021 were ~~(0.8)%~~26.0% and ~~18.6%~~26.2%, respectively. The Company's effective tax rates ~~vary~~varied from the U.S. statutory rate due primarily to ~~a $30,000~~rate differences between U.S. and non-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. The lower 2022 rate was primarily driven by the absence of the 2021 pension settlement charge and the 2022 release of valuation allowances on the Company's state net ~~recognized benefit~~operating loss carryforwards resulting from the increase in projected earnings associated with the amendment of the Company's 2017 U.S. income tax return to report increased utilization of its foreign tax credits in the third quarter of 2021 and a $20,355 write-down of a deferred tax liability related to classifying the Company's European contract packaging business as "held for sale" in the third quarter of 2020. To a lesser extent the Company's effective tax rates vary from the U.S. statutory rate due to state taxes, taxes on operations in international jurisdictions with effective tax rates different than the U.S. statutory rate, the release or build of reserves for uncertain tax positions and various other tax adjustments.

As previously disclosed, in February 2017 the Company received a Notice of Proposed Adjustment (“NOPA”) from the Internal Revenue Service (“IRS”) proposing adjustments to the 2012 and 2013 tax years. In 2018, the Company filed a protest to the proposed deficiency and the matter was referred to the Appeals Division of the IRS. In the second quarter of 2021, the Company paid $5,613 in taxes and interest to settle the dispute.Metal Packaging acquisition.

The Company and/or its subsidiaries file federal, state and local income tax returns in the United States and various foreign jurisdictions. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years prior to 2015.

The Company’s reserve for uncertain tax benefits has increased by ~~approximately $7,300~~$1,000 since December 31, ~~2020~~2021 due primarily to the recording of a reserve related to the benefit associated with the amendment of the Company's 2017 tax return to report increased utilization of its foreign tax credits, partially offset by the release ofan increase in reserves related to ~~the expiration of the statute of limitations for~~existing tax ~~years 2012 and 2013 which were previously extended.~~positions. The Company believes that it is reasonably possible that the amount reserved for unrecognized tax benefits at ~~October~~July 3, ~~2021~~2022 could ~~decrease~~increase by approximately ~~$600~~$200 over the next twelve months. Although the Company’s estimate for the potential outcome for any uncertain tax issue is highly judgmental, management believes that any reasonably foreseeable outcomes related to these matters have been adequately provided for. However, future results may include favorable or unfavorable adjustments to estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments expire. Additionally, the jurisdictions in which earnings or deductions are realized may differ from current estimates. As a result, the Company’s effective tax rate may fluctuate significantly on a quarterly basis. The Company has operations and pays taxes in many countries outside of the U.S. and taxes on those earnings are subject to varying rates. 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)~~

~~(unaudited)~~

Note 13: Leases

The Company routinely enters into leasing arrangements for real estate (including manufacturing facilities, office space, and warehouses), transportation equipment (automobiles, forklifts, and trailers), and office equipment (copiers and postage machines). The assessment of the certainty associated with the exercise of various lease renewal, termination, and purchase options included in the Company's lease contracts is atperformed after contemplating all the ~~Company's sole discretion.~~relevant facts and circumstances in accordance with guidance under ASC 842. Most real estate leases, in particular, include ~~one~~1 or more options to renew, with renewal terms that ~~can~~typically extend the lease term in increments from one to 50five years. The Company's leases do not have any significant residual value guarantees or restrictive covenants.

As the implicit rate in the Company's leases is normally not readily determinable, the Company generally calculates its lease liabilities using discount rates based upon the Company’s incremental secured borrowing rate, which contemplates and reflects a particular geographical region’s interest rate for the leases active within that region of the Company’s global operations. The Company further utilizes a portfolio approach by assigning a “short” rate to contracts with lease terms of 10 years or less and a “long” rate for contracts greater than 10 years.

The Company completed the acquisition of Metal Packaging on January 26, 2022. The acquisition included both operating and finance lease assets and liabilities. The acquired operating lease liabilities of $33,910 had a weighted

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

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

The following table sets forth the balance sheet location and aggregate values of the Company’s lease assets and lease liabilities at ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020:~~2021:


Classification	Classification	Balance Sheet Location	October 3, 2021		December 31, 2020		Classification	Balance Sheet Location	July 3, 2022		December 31, 2021
Lease Assets	Lease Assets						Lease Assets
Operating lease assets	Operating lease assets	Right of Use Asset - Operating Leases	$	269,855	$	296,020	Operating lease assets	Right of Use Asset - Operating Leases	$	296,643	$	268,390
Finance lease assets	Finance lease assets	Other Assets	47,154		36,267		Finance lease assets	Other Assets	108,606		55,826
Total lease assets	Total lease assets		$	317,009	$	332,287	Total lease assets		$	405,249	$	324,216

Lease Liabilities	Lease Liabilities						Lease Liabilities
Current operating lease liabilities	Current operating lease liabilities	Accrued expenses and other	$	44,588	$	52,138	Current operating lease liabilities	Accrued expenses and other	$	48,968	$	45,305
Current finance lease liabilities	Current finance lease liabilities	Notes payable and current portion of debt	6,236		4,663		Current finance lease liabilities	Notes payable and current portion of debt	15,583		6,952
Total current lease liabilities	Total current lease liabilities		$	50,824	$	56,801	Total current lease liabilities		$	64,551	$	52,257

Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	Noncurrent Operating Lease Liabilities	$	236,590	$	262,048	Noncurrent operating lease liabilities	Noncurrent Operating Lease Liabilities	$	254,520	$	234,167
Noncurrent finance lease liabilities	Noncurrent finance lease liabilities	Long-term Debt, Net of Current Portion	45,101		33,280		Noncurrent finance lease liabilities	Long-term Debt, Net of Current Portion	91,938		53,330
Total noncurrent lease liabilities	Total noncurrent lease liabilities		$	281,691	$	295,328	Total noncurrent lease liabilities		$	346,458	$	287,497

Total lease liabilities	Total lease liabilities		$	332,515	$	352,129	Total lease liabilities		$	411,009	$	339,754

Certain of the Company’s leases include variable costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, and also non-lease components that were incurred based upon actual terms rather than contractually fixed amounts. In addition, variable costs are incurred for lease payments that are indexed to a change in rate or index. Because the right of use assets recorded on the balance sheet were determined based upon factors considered at the commencement date of the leases, subsequent changes in the rate or index that were not contemplated in the right of use asset balances recorded on the balance sheet result in variable expenses being incurred when paid during the lease term.

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


		Three Months Ended				Six Months Ended
Lease Cost		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Operating lease cost	(a)	$	13,251	$	11,902	$	26,048	$	25,097
Finance lease cost:
Amortization of lease asset	(a)	3,278		1,332		5,989		2,657
Interest on lease liabilities	(b)	1,281		337		2,247		630
Variable lease cost	(a) (c)	7,167		6,689		14,522		12,773

Total lease cost		$	24,977	$	20,260	$	48,806	$	41,157

(a) Production-related and administrative amounts are included in cost of sales and selling, general and administrative expenses, respectively.

(b) Included in interest expense.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

The following table sets forth ~~the components of the Company's total lease cost for the three- and nine- month periods ended October 3, 2021 and September 27, 2020:~~
Three Months Ended Nine Months Ended
Lease Cost October 3, 2021 September 27, 2020 October 3, 2021 September 27, 2020
Operating lease cost (a) $ 11,623 $ 18,192 $ 36,720 $ 46,903
Finance lease cost:
Amortization of lease asset (a) 1,476 1,061 4,133 5,999
Interest on lease liabilities (b) 367 258 997 721
Variable lease cost (a) (c) 6,796 7,455 19,569 29,316
Total lease cost $ 20,262 $ 26,966 $ 61,419 $ 82,939

~~(a) Production-related and administrative amounts are included in cost of sales and selling, general and administrative expenses, respectively.~~

~~(b) Included in interest expense.~~

~~(c) Also includes short term lease costs, which are deemed immaterial~~.

~~The following table sets forth~~ certain lease-related information for the ~~nine months~~six-month periods ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020:~~July 4, 2021:


		Nine Months Ended					Six Months Ended
		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases	Operating cash flows used by operating leases	$	38,757	$	43,858	Operating cash flows used by operating leases	$	26,295	$	26,620
Operating cash flows used by finance leases	Operating cash flows used by finance leases	$	997	$	721	Operating cash flows used by finance leases	$	2,247	$	630
Financing cash flows used by finance leases	Financing cash flows used by finance leases	$	3,375	$	6,440	Financing cash flows used by finance leases	$	6,019	$	2,156
Noncash investing and financing activities:	Noncash investing and financing activities:					Noncash investing and financing activities:
Leased assets obtained in exchange for new operating lease liabilities	Leased assets obtained in exchange for new operating lease liabilities	$	12,230	$	84,578	Leased assets obtained in exchange for new operating lease liabilities	$	22,046	$	6,705
Leased assets obtained in exchange for new finance lease liabilities	Leased assets obtained in exchange for new finance lease liabilities	$	7,071	$	19,122	Leased assets obtained in exchange for new finance lease liabilities	$	7,511	$	5,879
Modification to leased assets for increase/(decrease) in operating lease liabilities		$	12,059	$	(3,977)
Modification to leased assets for (decrease) increase in operating lease liabilities						Modification to leased assets for (decrease) increase in operating lease liabilities	$	(4,139)	$	6,845
Modification to leased assets for increase in finance lease liabilities	Modification to leased assets for increase in finance lease liabilities	$	9,586	$	19,194	Modification to leased assets for increase in finance lease liabilities	$	14	$	9,586
Termination reclasses to decrease operating lease assets	Termination reclasses to decrease operating lease assets	$	(4,971)	$	(4,232)	Termination reclasses to decrease operating lease assets	$	(3,230)	$	(4,319)
Termination reclasses to decrease operating lease liabilities	Termination reclasses to decrease operating lease liabilities	$	(5,278)	$	(4,611)	Termination reclasses to decrease operating lease liabilities	$	(3,109)	$	(4,336)
Termination reclasses to decrease finance lease assets	Termination reclasses to decrease finance lease assets	$	(33)	$	(19,994)	Termination reclasses to decrease finance lease assets	$	(386)	$	(21)
Termination reclasses to decrease finance lease liabilities	Termination reclasses to decrease finance lease liabilities	$	(40)	$	(20,121)	Termination reclasses to decrease finance lease liabilities	$	(9)	$	(23)

3134

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Note 14: Revenue Recognition

The Company records revenue when control is transferred to the customer, which is either upon shipment or over time in cases where the Company is entitled to payment with margin for products produced that are customer specific without alternative use. The Company recognizes over time revenue under the input method as goods are produced. Revenue that is recognized at a point in time is recognized when the customer obtains control of the goods. Customers obtain control either when goods are delivered to the customer facility, if the Company is responsible for arranging transportation, or when picked up by the customer's designated carrier. The Company commonly enters into Master Supply Arrangements with customers to provide goods and/or services over specific time periods. Customers submit purchase orders with quantities and prices to create a contract for accounting purposes. Shipping and handling expenses are included in "Cost of Sales," and freight charged to customers is included in "Net Sales" in the Company's Condensed Consolidated Statements of Income.

The Company has rebate agreements with certain customers. These rebates are recorded as reductions of revenue and are accrued using sales data and rebate percentages specific to each customer agreement. Accrued customer rebates are included in "Accrued expenses and other" in the Company's Condensed Consolidated Balance Sheets.

Payment terms under the Company's sales arrangements are short term, generally no longer than 120 days. The Company does provide prompt payment discounts to certain customers if invoices are paid within a predetermined period. Prompt payment discounts are treated as a reduction of revenue and are determinable within a short time period following the sale.

The following tables set forth the effects of contract assets and liabilities from contracts with customers. Contract assets and liabilities are reported in "Other receivables" and "Accrued expenses and other," respectively, on the Company's Condensed Consolidated Balance Sheets.


		October 3, 2021		December 31, 2020			July 3, 2022		December 31, 2021

Contract Assets	Contract Assets	$	49,377	$	48,390	Contract Assets	$	65,377	$	51,106
Contract Liabilities	Contract Liabilities	$	(19,148)	$	(16,687)	Contract Liabilities	$	(25,631)	$	(18,993)

Significant changes in the contract assets and liabilities balances during the ~~nine~~six months ended ~~October~~July 3, ~~2021~~2022 and the year ended December 31, ~~2020~~2021 were as follows:


		October 3, 2021				December 31, 2020					July 3, 2022				December 31, 2021
		Contract Asset		Contract Liability		Contract Asset		Contract Liability			Contract Asset		Contract Liability		Contract Asset		Contract Liability
Beginning Balance	Beginning Balance	$	48,390	$	(16,687)	$	56,364	$	(17,047)	Beginning Balance	$	51,106	$	(18,993)	$	48,390	$	(16,687)
Revenue deferred or rebates accrued	Revenue deferred or rebates accrued	—		(28,142)		—		(32,512)		Revenue deferred or rebates accrued	—		(32,207)		—		(36,527)
Recognized as revenue	Recognized as revenue			5,110				9,189		Recognized as revenue			10,656				7,238
Rebates paid to customers	Rebates paid to customers	—		20,571		—		23,683		Rebates paid to customers	—		20,330		—		26,983
Increases due to rights to consideration for customer specific goods produced, but not billed during the period	Increases due to rights to consideration for customer specific goods produced, but not billed during the period	49,377		—		48,390		—		Increases due to rights to consideration for customer specific goods produced, but not billed during the period	57,270		—		51,106		—
Transferred to receivables from contract assets recognized at the beginning of the period	Transferred to receivables from contract assets recognized at the beginning of the period	(48,390)		—		(56,364)		—		Transferred to receivables from contract assets recognized at the beginning of the period	(51,106)		—		(48,390)		—

Acquired as part of a business combination										Acquired as part of a business combination	8,107		(5,417)		—		—
Ending Balance	Ending Balance	$	49,377	$	(19,148)	$	48,390	$	(16,687)	Ending Balance	$	65,377	$	(25,631)	$	51,106	$	(18,993)

Contract assets and liabilities are generally short in duration given the nature of products produced by the Company. Contract assets represent goods produced without alternative use for which the Company is entitled to payment with margin prior to shipment. Upon shipment, the Company is entitled to bill the customer, and therefore amounts included in contract assets will be reduced with the recording of an account receivable as they represent an unconditional right to payment. Contract liabilities represent revenue deferred due to pricing mechanisms utilized by the Company in certain multi-year arrangements, volume rebates, and payments received in advance. For multi-year arrangements with pricing ~~mechanisms, the Company will generally defer revenue during the first half of the arrangement and will release the~~

3235

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

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

The following tables set forth information about revenue disaggregated by primary geographic regions for the three-month periods ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020.~~July 4, 2021. The tables also include a reconciliation of disaggregated revenue with reportable segments.


Three months ended October 3, 2021		Consumer Packaging		Industrial Paper Packaging		All Other		Total
Three months ended July 3, 2022										Three months ended July 3, 2022	Consumer Packaging		Industrial Paper Packaging		All Other		Total
Primary Geographical Markets:	Primary Geographical Markets:									Primary Geographical Markets:
United States	United States	$	408,295	$	370,659	$	145,029	$	923,983	United States	$	791,096	$	436,680	$	161,587	$	1,389,363
Europe	Europe	109,566		99,573		24,033		233,172		Europe	109,910		117,376		22,563		249,849
Canada	Canada	31,612		24,187		—		55,799		Canada	27,980		29,312		—		57,292
Asia	Asia	20,728		81,097		393		102,218		Asia	23,407		76,803		270		100,480
Other	Other	28,768		59,714		11,539		100,021		Other	37,589		67,231		11,528		116,348
Total	Total	$	598,969	$	635,230	$	180,994	$	1,415,193	Total	$	989,982	$	727,402	$	195,948	$	1,913,332


Three months ended September 27, 2020		Consumer Packaging		Industrial Paper Packaging		All Other		Total
Three months ended July 4, 2021										Three months ended July 4, 2021	Consumer Packaging		Industrial Paper Packaging		All Other		Total
Primary Geographical Markets:	Primary Geographical Markets:									Primary Geographical Markets:
United States	United States	$	387,658	$	293,968	$	166,878	$	848,504	United States	$	413,576	$	346,367	$	142,236	$	902,179
Europe	Europe	96,698		78,780		100,418		275,896		Europe	110,248		104,238		21,930		236,416
Canada	Canada	22,131		17,749		—		39,880		Canada	30,193		23,985		—		54,178
Asia	Asia	19,710		61,463		147		81,320		Asia	18,375		78,189		279		96,843
Other	Other	20,011		38,409		8,294		66,714		Other	25,411		55,753		11,974		93,138
Total	Total	$	546,208	$	490,369	$	275,737	$	1,312,314	Total	$	597,803	$	608,532	$	176,419	$	1,382,754

3336

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

The following tables set forth information about revenue disaggregated by primary geographic regions for the ~~nine-month~~six-month periods ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020.~~July 4, 2021. The tables also include a reconciliation of disaggregated revenue with reportable segments.
Nine months ended October 3, 2021 Consumer
Packaging Industrial Paper Packaging All Other Total
Primary Geographical Markets:
  United States $ 1,219,666 $ 1,042,249 $ 461,996 $ 2,723,911
  Europe 334,995 300,495 67,371 702,861
  Canada 87,948 69,218 — 157,166
  Asia 60,256 232,657 914 293,827
  Other 76,660 164,540 32,286 273,486
Total $ 1,779,525 $ 1,809,159 $ 562,567 $ 4,151,251
Nine months ended September 27, 2020 Consumer Packaging Industrial Paper Packaging All Other Total
Primary Geographical Markets:
  United States $ 1,194,067 $ 863,514 $ 470,583 $ 2,528,164
  Europe 276,848 237,599 261,458 775,905
  Canada 74,708 64,322 — 139,030
  Asia 53,993 170,046 535 224,574
  Other 60,327 112,405 20,690 193,422
Total $ 1,659,943 $ 1,447,886 $ 753,266 $ 3,861,095


Six months ended July 3, 2022	Consumer Packaging		Industrial Paper Packaging		All Other		Total
Primary Geographical Markets:
United States	$	1,445,511	$	853,965	$	327,660	$	2,627,136
Europe	230,080		234,203		46,689		510,972
Canada	59,188		56,481		—		115,669
Asia	49,041		150,422		563		200,026
Other	74,261		131,458		24,792		230,511
Total	$	1,858,081	$	1,426,529	$	399,704	$	3,684,314


Six months ended July 4, 2021	Consumer Packaging		Industrial Paper Packaging		All Other		Total
Primary Geographical Markets:
United States	$	811,373	$	671,589	$	316,967	$	1,799,929
Europe	225,428		200,922		43,339		469,689
Canada	56,336		45,031		—		101,367
Asia	39,528		151,561		520		191,609
Other	47,891		104,826		20,747		173,464
Total	$	1,180,556	$	1,173,929	$	381,573	$	2,736,058

Note 15: Segment Reporting

The ~~Company changed its~~Company's operating and reporting ~~structure in January 2021 and, as a result, realigned certain of its reportable segments effective January 1, 2021. The revised~~ structure consists of 2 reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as ~~"All~~All Other."

The Company's former Protective Solutions and Display and Packaging segments have been eliminated and the underlying businesses and their results have been realigned into All Other or, in certain cases, subsumed into the remaining two segments.

The Consumer Packaging segment primarily serves prepared and fresh food markets along with other packaging for ~~direct~~consumer products. The products produced and sold within the Consumer Packaging segment are generally used to package a variety of consumer products and ~~includes the following products and services:~~consist primarily of round and shaped rigid paper containers; ~~metal~~steel tinplate cans and ~~peelable membrane ends and closures;~~aerosol containers; thermoformed plastic trays and containers; pand flexible packaging. ~~rinted flexible packaging; and global brand artwork management.~~Total assets of the Consumer Packaging segment increased $1,656,155 upon the acquisition of Metal Packaging on January 26, 2022.

The Industrial Paper Packaging segment ~~previously called Paper~~serves customers who use its products to package their goods for transport, storage or sale or to produce similar fiber-based products. The primary products produced and ~~Industrial Converted Products, includes the following products:~~sold within this segment include fiber-based tubes, cones, and cores; fiber-based ~~construction tubes; fiber-based~~ protective packaging and components; ~~wooden, metal and composite wire and cable reels and spools;~~reels; and recycled ~~paperboard, corrugating medium, recovered paper and material recycling services.~~paperboard.

Businesses grouped as All Other include healthcare packaging, protective and retail security packaging and industrial plastic products. These businesses include the following products and services: thermoformed rigid plastic trays and devices; custom-engineered molded foam protective packaging and components; temperature-assured packaging; injection molded and extruded containers, spools and parts; retail security packaging, including printed backer cards, thermoformed blisters and ~~heat sealing~~heat-sealing equipment; and paper amenities. ~~Prior~~Prior to the divestiture of the Company's ~~global display and packaging business in two separate transactions, the European contract packaging business on November 30, 2020 and the~~ U.S. display and packaging business on April 4, 2021, ~~these businesses,~~this business, which included point-of-purchase displays, fulfillment operations, and contract packaging, ~~were~~was reported in All Other.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars and shares in thousands except per share data)~~

~~(unaudited)~~

The following table sets forth net sales, intersegment sales and operating profit for the Company’s reportable segments and All Other. “Segment operating profit” is defined as the segment’s portion of “Operating profit” excluding restructuring and asset impairment charges, acquisition expenses, amortization of acquisition intangibles, changes in last-in, first-out ("LIFO") inventory reserves, losses from the early extinguishment of debt, interest income and expense,

income taxes or certain other items, if any, the exclusion of which the Company believes improves comparability and analysis of the financial performance of the business. General corporate expenses have been allocated as operating costs to each of the Company’s reportable segments and All Other. ~~Prior period results have~~Effective January 1, 2022, the Company changed its measure of segment operating profit to exclude amortization of acquisition intangibles. Accordingly, the prior year's segment operating profit has been ~~recast~~revised to conform ~~to current-year presentation.~~

with the current presentation for comparability.

SEGMENT FINANCIAL INFORMATION


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Net sales:	Net sales:									Net sales:
Consumer Packaging	Consumer Packaging	$	598,969	$	546,208	$	1,779,525	$	1,659,943	Consumer Packaging	$	989,982	$	597,804	$	1,858,081	$	1,180,556
Industrial Paper Packaging	Industrial Paper Packaging	635,230		490,369		1,809,159		1,447,886		Industrial Paper Packaging	727,402		608,531		1,426,529		1,173,929
All Other	All Other	180,994		275,737		562,567		753,266		All Other	195,948		176,419		399,704		381,573
Consolidated	Consolidated	$	1,415,193	$	1,312,314	$	4,151,251	$	3,861,095	Consolidated	$	1,913,332	$	1,382,754	$	3,684,314	$	2,736,058
Intersegment sales:	Intersegment sales:									Intersegment sales:
Consumer Packaging	Consumer Packaging	$	1,608	$	919	$	4,460	$	3,179	Consumer Packaging	$	2,116	$	1,199	$	3,526	$	2,852
Industrial Paper Packaging	Industrial Paper Packaging	27,975		24,528		82,571		73,538		Industrial Paper Packaging	33,496		27,700		67,136		54,596
All Other	All Other	2,318		1,814		7,483		5,970		All Other	2,522		2,140		5,223		5,165
Consolidated	Consolidated	$	31,901	$	27,261	$	94,514	$	82,687	Consolidated	$	38,134	$	31,039	$	75,885	$	62,613
Operating profit:	Operating profit:									Operating profit:
Segment operating profit:	Segment operating profit:									Segment operating profit:
Consumer Packaging	Consumer Packaging	$	60,918	$	64,370	$	196,341	$	212,575	Consumer Packaging	$	139,421	$	65,296	$	313,030	$	146,656
Industrial Paper Packaging	Industrial Paper Packaging	53,343		41,035		161,414		133,871		Industrial Paper Packaging	94,201		59,818		166,862		112,117
All Other	All Other	8,169		25,136		32,952		54,563		All Other	16,529		15,607		31,053		34,364
Restructuring/Asset impairment charges		(3,488)		(24,149)		(8,889)		(59,633)
Restructuring/Asset impairment (charges)/income										Restructuring/Asset impairment (charges)/income	(10,563)		1,445		(22,705)		(5,401)
Amortization of acquisition intangibles										Amortization of acquisition intangibles	(20,871)		(12,111)		(39,671)		(24,860)
Other non-base income/(charges), net	Other non-base income/(charges), net	7,570		352		294		(802)		Other non-base income/(charges), net	(21,241)		5,236		(82,031)		(7,276)
Consolidated	Consolidated	$	126,512	$	106,744	$	382,112	$	340,574	Consolidated	$	197,476	$	135,291	$	366,538	$	255,600

Note 16: Commitments and Contingencies

Pursuant to U.S. GAAP, accruals for estimated losses are recorded at the time information becomes available indicating that losses are probable and that the amounts are reasonably estimable. As is the case with other companies in similar industries, the Company faces exposure from actual or potential claims and legal proceedings from a variety of sources. Some of these exposures, as discussed below, have the potential to be material.

Environmental Matters

The Company is subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which it operates.

Spartanburg

In connection with its acquisition of Tegrant in November 2011, the Company identified potential environmental contamination at a site in Spartanburg, South Carolina. The total remediation cost of the Spartanburg site was estimated to be $17,400 at the time of acquisition and an accrual in this amount was recorded on Tegrant’s opening balance sheet. Based on favorable developments at the site, the Company reduced its environmental reserve by $10,000 in the third quarter of 2019 in order to reflect its revised best estimate of what it is likely to pay in order to complete the remediation. Since the acquisition, the Company has spent a total of ~~$1,786~~$1,883 on remediation of the Spartanburg site. At ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company's accrual for environmental contingencies related to the Spartanburg site totaled ~~$5,614~~$5,517 and ~~$5,700,~~$5,555, respectively.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars and shares in thousands except per share data)~~

~~(unaudited)~~

The Company cannot currently estimate its potential liability, damages or range of potential loss, if any, beyond the amounts accrued with respect to this exposure. However, the Company does not believe that the resolution of this matter has a reasonable possibility of having a material adverse effect on the Company's financial statements.

SONOCO PRODUCTS COMPANY

Other environmental matters

The Company has been named as a potentially responsible party at several other environmentally contaminated sites. All of the sites are also the responsibility of other parties. The potential remediation liabilities are shared with such other parties, and, in most cases, the Company’s share, if any, cannot be reasonably estimated at the current time. 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 ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company's accrual for these other sites totaled ~~$1,829~~$1,696 and ~~$2,433,~~$1,825, respectively.

Summary

As of ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company (and its subsidiaries) had accrued ~~$7,443~~$7,213 and ~~$8,133,~~$7,380, respectively, related to environmental contingencies. These accruals are included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets.

Other Legal Matters

In addition to those matters described above, the Company is subject to other various legal proceedings, claims, and litigation arising in the ordinary course of business. While the outcome of these matters could differ from management’s expectations, the Company does not believe the resolution of these matters has a reasonable possibility of having a material adverse effect on the Company’s financial statements.

3639

SONOCO PRODUCTS COMPANY

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Sonoco Products Company,

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of Sonoco Products Company and its subsidiaries (the “Company”) as of ~~October~~July 3, ~~2021,~~2022, and the related condensed consolidated statements of income, comprehensive income, and changes in total equity for the three-month and ~~nine-month~~six-month periods ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020,~~July 4, 2021 and the condensed consolidated statements of cash flows for the ~~nine-month~~six-month periods ended ~~October~~July 3, ~~2021~~2022 and ~~September 27, 2020,~~July 4, 2021, including the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, ~~2020,~~2021, and the related consolidated statements of income, comprehensive income, changes in total equity and of cash flows for the year then ended (not presented herein), and in our report dated February ~~26, 2021,~~28, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2020,~~2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/PricewaterhouseCoopers LLP

Charlotte, North Carolina

~~November~~August 2, ~~2021~~2022

3740

SONOCO PRODUCTS COMPANY


Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Statements included in this Quarterly Report on Form 10-Q that are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended. In addition, the Company and its representatives may from time to time make other oral or written statements that are also “forward-looking statements.” Words such as "aim," "anticipate," "assume," "believe," "can," "committed," "consider," "could," “estimate,” ~~“project,”~~"expect," "forecast," "future," "goal," "guidance," “intend,” ~~“expect,” “believe,” “consider,”~~"may," "might," "objective," "opportunity," "outlook," “plan,” "potential," "project," "seek," "should," “strategy,” ~~“opportunity,” “commitment,” "committed,"~~ “target,~~” “anticipate,” “objective,” “goal,” “guidance,” “outlook,” “forecast,” “future,” “re-envision,” “assume,~~” “will,” “would,~~” “can," “could,” “may,” “might,” “aspires,” “potential,~~” or the negative thereof, and similar expressions identify forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:

•availability and supply of raw materials, and offsetting high raw material costs, including the potential impact of ~~potential~~ changes in tariffs;

•potential impacts of the COVID-19 ~~Coronavirus~~pandemic on the Company's business, operations and financial condition;

•consumer and customer actions in connection with the COVID-19 pandemic;

•improved productivity and cost containment;

•improving margins and leveraging strong cash flow and financial position;

•effects of acquisitions and ~~divestitures;~~divestitures, including the acquisition of Metal Packaging;

•realization of synergies resulting from ~~acquisitions;~~acquisitions, including the acquisition of Metal Packaging;

•costs, timing and effects of restructuring activities;

•adequacy and anticipated amounts and uses of cash flows;

•expected amounts of capital spending;

•refinancing and repayment of debt;

•financial and business strategies and the results expected of them;

•financial results for future periods;

•producing improvements in earnings;

•profitable sales growth and rates of growth;

•~~consumer~~strategic pricing initiatives;

•any projections of the amount, timing or impact of cost savings or restructuring and ~~customer actions in connection with the COVID-19 pandemic;~~other charges and planning structural cost reductions and productivity initiatives;

•statements about supply constraints or logistics challenges;

•market leadership;

•research and development spending;

•expected impact and costs of resolution of legal proceedings;

•extent of, and adequacy of provisions for, environmental ~~liabilities;~~liabilities and sustainability commitments;

•commitments to reduce greenhouse gas emissions;

•~~sustainability commitments;~~

•adequacy of income tax provisions, realization of deferred tax assets, outcomes of uncertain tax issues and tax rates;

•goodwill impairment charges and fair values of reporting units;

•future asset impairment charges and fair values of assets;

•anticipated contributions to pension and postretirement benefit plans, fair values of plan assets, long-term rates of return on plan assets, and projected benefit obligations and payments;

•expected impact of implementation of new accounting pronouncements;

•creation of long-term value and returns for shareholders;

•continued payment of dividends; and

•planned stock repurchases.

Such forward-looking statements are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management. Such information includes, without limitation, discussions as to guidance and other estimates, perceived opportunities, expectations, beliefs, plans, strategies, goals and objectives concerning our future financial and operating performance. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed or forecasted in such forward-looking statements. The risks, uncertainties and assumptions include, without limitation:

SONOCO PRODUCTS COMPANY

•availability and pricing of raw materials, energy and transportation, including the impact of potential changes in tariffs or sanctions and escalating trade wars and the impact of war and other geopolitical tensions (such as the ongoing Russia-Ukraine conflict and economic sanctions related thereto), and the Company's ability to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks;

~~SONOCO PRODUCTS COMPANY~~

•impacts arising as a result of the COVID-19 ~~Coronavirus global~~ pandemic on our results of operations, financial condition, value of assets, liquidity, prospects, growth, and on the industries in which we operate and that we serve, resulting from, without limitation, recent and ongoing financial market volatility, potential governmental actions, changes in consumer behaviors and demand, changes in customer requirements, disruptions ofto the ~~Company’s~~Company's suppliers and supply chain, availability of labor and personnel, necessary modifications to operations and business, and uncertainties about the extent and duration of the pandemic;

•costs of labor;

•work stoppages due to labor disputes;

•success of new product development, introduction and sales;

•success of implementation of new manufacturing technologies and installation of manufacturing equipment, including the startup of new facilities and lines;

•consumer demand for products and changing consumer preferences;

•ability to be the low-cost global leader in customer-preferred packaging solutions within targeted segments;

•competitive pressures, including new product development, industry overcapacity, customer and supplier consolidation, and changes in competitors' pricing for products;

•ability to execute on strategic pricing initiatives;

•financial conditions of customers and suppliers;

•ability to maintain or increase productivity levels, contain or reduce costs, and maintain positive price/cost relationships;

•ability to negotiate or retain contracts with customers, including in segments with concentration of sales volume;

•inventory management strategies of customers;

•timing of introduction of new products or product innovations by customers;

•collection of receivables from customers;

•ability to improve margins and leverage cash flows and financial position;

•ability to manage the mix of business to take advantage of growing markets while reducing cyclical effects of some of the ~~Company’s~~Company's existing businesses on operating results;

•ability to maintain innovative technological market leadership and a reputation for quality;

•ability to attract and retain talented and qualified employees, managers and executives;

•ability to profitably maintain and grow existing domestic and international business and market share;

•ability to expand geographically and win profitable new business;

•ability to identify and successfully close suitable acquisitions at the levels needed to meet growth ~~targets, and~~targets;

•ability to successfully integrate newly acquired businesses, including Metal Packaging, into the ~~Company’s operations;~~Company's operations and realize synergies and other anticipated benefits within the expected time period, or at all;

•the costs, timing and results of restructuring activities;

•availability of credit to us, our customers and suppliers in needed amounts and on reasonable terms;

•effects of our indebtedness on our cash flow and business activities;

•fluctuations in interest rates and our borrowing costs;

•fluctuations in obligations and earnings of pension and postretirement benefit plans;

•accuracy of assumptions underlying projections of benefit plan obligations and payments, valuation of plan assets, and projections of long-term rates of return;

•timing of funding pension and postretirement benefit plan obligations;

•cost of employee and retiree medical, health and life insurance benefits;

•resolution of income tax contingencies;

•foreign currency exchange rate fluctuations, interest rate and commodity price risk and the effectiveness of related ~~hedges;~~hedges or other derivatives;

•changes in U.S. and foreign tariffs, tax rates, ~~and~~ tax laws, regulations and interpretations thereof;

•the adoption of new, or changes in, accounting standards or interpretations;

•challenges and assessments from tax authorities resulting from differences in interpretation of tax laws, including income, sales and use, property, value added, employment, and other taxes;

•accuracy in valuation of deferred tax assets;

SONOCO PRODUCTS COMPANY

•accuracy of assumptions underlying projections related to goodwill impairment testing, and accuracy of ~~management’s~~management's assessment of goodwill impairment;

•accuracy of assumptions underlying fair value measurements, accuracy of ~~management’s~~management's assessments of fair value and fluctuations in fair value;

•ability to maintain effective internal controls over financial reporting;

•liability for and ~~anticipated~~ costs of resolution of litigation, regulatory actions, or other legal proceedings;

•liability for and anticipated costs of environmental remediation actions;

~~SONOCO PRODUCTS COMPANY~~

•effects of environmental laws and regulations;

•operational disruptions at our major facilities;

•failure or disruptions in our information technologies;

•~~failures~~failure of third party transportation providers to deliver our products to our customers or to deliver raw materials to us;

•substantially lower than normal crop yields;

•loss of consumer or investor confidence;

•ability to protect our intellectual property rights;

•changes in laws and regulations relating to packaging for food products and foods packaged therein, other actions and public concerns about products packaged in our containers, or chemicals or substances used in raw materials or in the manufacturing process;

•changing consumer attitudes toward plastic packaging;

•ability to meet sustainability targets and challenges in implementation;

•changing climate, climate change regulations and greenhouse gas effects;

•ability to meet commitments to reduce greenhouse gas emissions;

•actions of domestic or foreign government agencies and changes in laws and regulations affecting the Company and increased costs of compliance;

•international, national and local economic and market conditions and levels of unemployment;

•economic disruptions resulting from war and other geopolitical tensions, including the ongoing Russia-Ukraine conflict and the Company's withdrawal from Russian operations, terrorist activities and natural disasters; and

•accelerating ~~inflation.~~inflation and activities and operations in highly inflationary economies.

More information about the risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed or forecasted in forward-looking statements is provided in the Company's Annual Report on Form 10-K under Item 1A-"Risk Factors" and throughout other sections of that report and in other reports filed with the Securities and Exchange Commission. In light of these various risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

The Company undertakes no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. You are, however, advised to review any further disclosures we make on related subjects, and about new or additional risks, uncertainties and assumptions, in our future filings with the Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K.

4043

SONOCO PRODUCTS COMPANY

COMPANY OVERVIEW

Sonoco is a leading provider of consumer, ~~packaging,~~ industrial, ~~products,~~healthcare and protective packaging, ~~and packaging supply chain services,~~ with ~~over~~approximately 300 locations in 3431 countries.

~~As previously disclosed, Sonoco changed its~~Sonoco's operating and reporting ~~structure in January 2021 and, as a result, realigned certain of its reportable segments effective January 1, 2021. The revised~~ structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as "All Other." The Company's former Protective Solutions and Display and Packaging segments have been eliminated and the underlying businesses and their results have been grouped into All Other or, in certain cases, subsumed into the remaining two segments. Changes to the Consumer Packaging segment include moving the Plastics - Healthcare packaging and industrial plastics business units to All Other. The Industrial Paper Packaging segment, previously called Paper and Industrial Converted Products, remains unchanged except that it now includes the Company's fiber protective packaging business unit which was previously included in the Protective Solutions segment. All Other includes our healthcare and protective packaging businesses, including Plastics - Healthcare, Sonoco ThermoSafe, consumer and automotive molded foam, retail security packaging, and paper amenities. Prior to the divestiture of the Company's ~~global display and packaging operations in two separate transactions, the European contract packaging business on November 30, 2020 and the~~ U.S. display and packaging business on April 4, 2021, ~~these businesses were also~~this business was included in All Other.

Sonoco competes in multiple product categories, with the majority of the Company’s revenues arising from products and services sold to consumer and industrial products companies for use in the packaging of their products for sale or shipment. The Company also manufactures uncoated recycled paperboard for both internal use and open market sale. Each of the Company’s operating units has its own sales staff and maintains direct sales relationships with its customers.

~~COVID-19~~

~~Impact on Operating Results~~

~~Around~~On a consolidated basis, by the ~~world, Sonoco is an essential provider~~end of ~~consumer, industrial and medical packaging. Sonoco associates are deemed “Essential Critical Infrastructure Workers” under~~2021 the ~~guidance~~impacts of the ~~U.S. Department of Homeland Security and have received similar designations by the vast majority of other governmental agencies in the 34 countries where~~COVID-19 pandemic on the Company ~~operates. Many areas around~~had largely dissipated. For most of the ~~world have largely reopened their economies~~Company's business units, second quarter 2022 sales demand equaled or exceeded pre-pandemic levels. The Company has incurred, and expects to continue to incur for the foreseeable future, localized temporary disruptions in its supply chain and customer demand due to localized resurgences of COVID-19. However, absent a future widespread resurgence, or the emergence of a more severe COVID-19 variant of concern, the Company ~~has seen improved demand for many of its products and services. However, a resurgence of the virus could trigger the re-imposition of restrictions on business activity and/or~~does not expect such impacts to have a material negative effect on consumer behavior that alone, or together, could significantly hamper economic activity. Should this occur, management expects it will respond with appropriate changes to active production capacity and cost-management initiatives. An extended period of disruption to our served markets or global supply chains could materially and adversely affect our results of operations, access to sources of liquidity and overall financial condition. In addition, an extended global recession caused by a resurgence of the pandemic would have an adverse impact on the Company's operations ~~and~~or financial ~~condition.~~

As previously reported, beginning in the first quarter of 2020 and through the course of the COVID-19 pandemic to date, the pandemic's impact on the Company's businesses has been mixed. Generally speaking, our consumer-related businesses benefited from higher demand for food packaging as large numbers of consumers chose to eat at home, while our industrial related businesses suffered from the pandemic-induced recession and a slow and halting recovery in many of its markets.

~~Overall sales run rates are expected to be flat or somewhat higher in the fourth quarter of 2021 compared~~ to the third quarter of 2021. While operating profits are expected to continue to face challenges from raw material and non-material inflation and supply chain disruptions, overall the Company expects to benefit from improved price/cost in the fourth quarter. Although demand in the Consumer Packaging segment has declined from levels seen earlier in the pandemic, the Company expects the segment to continue benefiting in the fourth quarter of 2021 from elevated at-home eating trends driven by robust snacking, remote working, and consumers, particularly younger consumers, adopting new cooking habits. Demand for our global Industrial Paper Packaging products has recovered to pre-pandemic levels in most of our global markets and we have opportunities for new product growth, such as our fiber protective post business which is expanding into Poland, Turkey and Mexico. While several of our All Other businesses have been negatively impacted by supply chain interruptions, the Company expects these conditions to improve in the fourth quarter.

~~SONOCO PRODUCTS COMPANY~~

~~Financial Flexibility and Liquidity~~

Sonoco has a strong, investment-grade balance sheet and substantial liquidity available in the form of cash, cash equivalents and revolving credit facilities, as well as the ability to issue commercial paper and to access liquidity in the banking and debt capital markets.

~~Significant actions in the first nine months of 2021 affecting the Company's liquidity position included:~~

•~~On April 5, 2021, the Company received cash proceeds totaling $79.7 million from the sale of its U.S. display and packaging business.~~

•~~On May 10, 2021, the Company paid $150 million in connection with an accelerated share repurchase agreement to repurchase shares of its common stock.~~

•~~On May 25, 2021, the Company repurchased $63.2 million of its outstanding 5.75% notes, due November 2040, for a total cash cost of $82.0 million.~~

•~~On May 25, 2021, upon maturity, the Company paid $177.8 million to retire its 1% Euro loan.~~

•On June 30, 2021, the Company entered into a new five-year $750 million, unsecured revolving credit facility which replaced an existing $500 million facility. Consistent with prior facilities, the new revolving credit facility supports the Company's $500 million commercial paper program.

•~~On August 1, 2021, the Company repaid its $250 million, 4.375% debentures without penalty ahead of their November 2021 maturity.~~

Following these actions, at October 3, 2021, the Company had $160 million in cash on hand and committed capacity of $750 million under its revolving credit facility, of which $548 million was available for draw down net of $202 million of outstanding commercial paper balances. Scheduled debt maturities over the next twelve months total approximately $276 million, including outstanding commercial paper. The Company believes cash on hand and available credit, combined with expected net cash flows generated from operating and investing activities, will provide ample liquidity to cover these and other cash flow needs of the Company over the course of the next twelve months.

~~Health, Safety and Business Continuity~~

The health and safety of Sonoco’s associates, contractors, suppliers and the general public continue to be a top priority. Safety measures include mask requirements for non-vaccinated employees and all visitors, routinely cleaning high-touch surfaces, following social distancing protocols, prohibiting all non-critical business travel, and utilizing remote working arrangements where practical. In addition, Sonoco has proactively engaged local government health agencies and medical providers to provide access to COVID-19 vaccine opportunities when available under local regulations. Sonoco routinely provides emails and leadership communications to keep its associates up to date on Company and health authority information, guidelines, protocols and policies, including those set by the World Health Organization and the U.S. Centers for Disease Control and Prevention.

Our Global Task Force that was activated at the beginning of the pandemic continues to meet to monitor and adjust business continuity plans to ensure our operations are as prepared as possible to be able to continue producing and shipping products to our customers without disruption. Sonoco has a diverse global supply chain and to date has been able to overcome raw material or other supply disruptions as a result of the COVID-19 pandemic.results.

~~Third~~Second Quarter ~~2021~~2022 Compared with ~~Third~~Second Quarter ~~2020~~2021

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Measures calculated and presented in accordance with generally accepted accounting principles are referred to as GAAP financial measures. The following tables reconcile the Company’s non-GAAP financial measures to their most directly comparable GAAP financial measures in the Company’s Condensed Consolidated Statements of Income for each of the periods presented. These non-GAAP financial measures (referred to as “Base”) are the GAAP measures adjusted to exclude amounts (dependent upon the applicable period), including the associated tax effects, relating to restructuring initiatives, asset impairment charges, non-operating pension ~~costs/income, environmental reserve charges/releases,~~costs, acquisition and divestiture-related ~~transaction~~ costs, gains/losses from the divestiture of businesses, ~~excess property~~

~~SONOCO PRODUCTS COMPANY~~

~~insurance recoveries,~~amortization of acquisition intangibles, changes in last-in, first-out ("LIFO") inventory reserves, losses from the early extinguishment of debt, and certain other items, if any, including other income tax-related adjustments and/or events, the exclusion of which the Company believes improves the comparability and analysis of the underlying financial performance of the business. More information about the Company's use of non-GAAP financial measures is provided in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 under Item 7 - "Management's ~~discussion~~Discussion and ~~analysis~~Analysis of ~~financial condition~~Financial Condition and ~~results~~Results of ~~operations,~~Operations," under the heading "Use of ~~non-GAAP financial measures.~~Non-GAAP Financial Measures."

For the three months ended October 3, 2021
Dollars in thousands, except per share data GAAP
Restructuring/Asset Impairments(1)
Other
Adjustments(1)
Base
Operating profit $ 126,512 $ 3,488 $ (7,570) $ 122,430
Non-operating pension costs 525 — (525) —
Interest expense, net 14,219 — — 14,219
Income before income taxes $ 111,768 $ 3,488 $ (7,045) $ 108,211
Provision for income taxes 2,564 312 16,683 19,559
Income before equity in earnings of affiliates $ 109,204 $ 3,176 $ (23,728) $ 88,652
Equity in earnings of affiliates, net of tax 2,351 — — 2,351
Net income $ 111,555 $ 3,176 $ (23,728) $ 91,003
Net loss attributable to noncontrolling interests (415) — — (415)
Net income attributable to Sonoco $ 111,140 $ 3,176 $ (23,728) $ 90,588
Per diluted common share* $ 1.12 $ 0.03 $ (0.24) $ 0.91
*Due to rounding individual items may not sum across

~~(1 )~~ ~~See table in "Results of Operations - Overview" below for details related to the after-tax impact of major components~~

For the three months ended September 27, 2020
Dollars in thousands, except per share data GAAP
Restructuring/Asset Impairments(1)
Other
Adjustments(1)
Base
Operating profit $ 106,744 $ 24,149 $ (352) $ 130,541
Non-operating pension costs 7,453 — (7,453) —
Interest expense, net 18,581 — — 18,581
Income before income taxes $ 80,710 $ 24,149 $ 7,101 $ 111,960
Provision for income taxes (649) 5,668 21,990 27,009
Income before equity in earnings of affiliates $ 81,359 $ 18,481 $ (14,889) $ 84,951
Equity in earnings of affiliates, net of tax 1,939 — — 1,939
Net income $ 83,298 $ 18,481 $ (14,889) $ 86,890
Net loss attributable to noncontrolling interests 151 (9) — 142
Net income attributable to Sonoco $ 83,449 $ 18,472 $ (14,889) $ 87,032
Per diluted common share* $ 0.82 $ 0.18 $ (0.15) $ 0.86
*Due to rounding individual items may not sum across

SONOCO PRODUCTS COMPANY


	For the three months ended July 3, 2022
Dollars in thousands, except per share data	GAAP		Restructuring/Asset Impairments(1)		Amortization of Acquisition Intangibles(2)		Acquisition/Divestiture Related(3)		Other Adjustments(4)		Base
Operating profit	$	197,476	$	10,563	$	20,871	$	12,281	$	8,960	$	250,151
Non-operating pension costs	1,677		—		—		—		(1,677)		—
Interest expense, net	23,161		—		—		—		136		23,297

Income before income taxes	172,638		10,563		20,871		12,281		10,501		226,854
Provision for income taxes	44,599		842		5,160		3,009		3,104		56,714
Income before equity in earnings of affiliates	128,039		9,721		15,711		9,272		7,397		170,140
Equity in earnings of affiliates, net of tax	3,728		—		—		—		—		3,728
Net income	131,767		9,721		15,711		9,272		7,397		173,868
Net (income)/loss attributable to noncontrolling interests	(95)		39		—		—		—		(56)
Net income attributable to Sonoco	131,672		9,760		15,711		9,272		7,397		173,812

Per diluted common share*	$	1.33	$	0.10	$	0.16	$	0.09	$	0.07	$	1.76
*Due to rounding individual items may not sum across

(1) ~~See table~~Restructuring/asset impairment charges are a recurring item as Sonoco’s restructuring programs usually require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in ~~"Results~~the estimates used to recognize the impairment of ~~Operations - Overview" below for details~~assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur. In the second quarter of 2022, the Company recognized additional impairment charges of $3,452 related to its exit from Russia given the ongoing Russia-Ukraine conflict.

(2) Beginning in 2022, the Company redefined base results to exclude amortization of intangible assets related to acquisitions.

(3) Consists of $3,216 of legal, professional, and other service fees related to acquisition and divestiture transactions, whether proposed or consummated, and charges of $6,056 related to expensing the remainder of the inventory fair value adjustments associated with the acquisition of Metal Packaging.

(4) Other Adjustments include after-tax ~~impact~~charges of ~~major components~~

$4,777 related to increases in the Company's LIFO reserve, $1,208 related to non-operating pension costs, and $1,979 of net charges primarily related to certain derivative transactions, partially offset by $567 of favorable discrete tax adjustments.

4345

SONOCO PRODUCTS COMPANY


	For the three months ended July 4, 2021
Dollars in thousands, except per share data	GAAP		Restructuring/Asset Impairments(1)		Amortization of Acquisition Intangibles		Acquisition/Divestiture Related		Other Adjustments(2)		Base
Operating profit	$	135,291	$	(1,445)	$	12,111	$	1,462	$	(6,698)	$	140,721
Non-operating pension costs	555,009		—		—		—		(555,009)		—
Interest expense, net	14,794		—		—		—		2,165		16,959
Loss from the early extinguishment of debt	20,184		—		—		—		(20,184)		—
Income before income taxes	$	(454,696)	$	(1,445)	$	12,111	$	1,462	$	566,330	$	123,762
Provision for income taxes	(118,151)		715		3,000		671		146,268		32,503
Income before equity in earnings of affiliates	$	(336,545)	$	(2,160)	$	9,111	$	791	$	420,062	$	91,259
Equity in earnings of affiliates, net of tax	2,306		—		—		—		—		2,306
Net income	$	(334,239)	$	(2,160)	$	9,111	$	791	$	420,062	$	93,565
Net loss attributable to noncontrolling interests	169		—		—		—		—		169
Net income attributable to Sonoco	$	(334,070)	$	(2,160)	$	9,111	$	791	$	420,062	$	93,734
Diluted weighted average common shares outstanding(3):	100,082								543		100,625
Per diluted common share*	$	(3.34)	$	(0.02)	$	0.09	$	0.01	$	4.17	$	0.93
*Due to rounding individual items may not sum across

(1) Restructuring/asset impairment charges are a recurring item as Sonoco’s restructuring programs usually require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur. In the second quarter of 2021 gains totaling approximately $5,500 were recognized related to the sale of previously closed facilities in the Company's tubes and core business. These were partially offset by net restructuring and asset impairment charges, mostly related to severance and asset write-offs, totaling approximately $4,000.

(2) Includes after tax pension settlement charges of $406,495 associated with the settlement of the Inactive Plan in the second quarter of 2021, other non-operating pension costs of $6,113, losses from the early extinguishment of debt of $14,997, and other net charges totaling $198. These charges were partially offset by a foreign value added tax ("VAT") refund, including applicable interest, of $3,102, a hedge gain related to a euro-denominated loan repayment of $3,318, and the benefit of discrete tax items totaling $1,321.

(3) Due to the magnitude of non-base losses in the second quarter 2021, the Company reported a GAAP net loss attributable to Sonoco. In instances where a company has a net loss, GAAP requires that the company shall not consider any unexercised share awards or other like instruments dilutive for purposes of calculating weighted average shares outstanding. Accordingly, the Company did not consider any unexercised share awards dilutive in calculating weighted average shares outstanding for GAAP purposes in the table above, which resulted in Basic Weighted Average Shares Outstanding and Diluted Weighted Average Common Shares Outstanding being the same. However, the Company also presents base net income attributable to Sonoco, which excludes the net non-base items. In order to maintain consistency in the computation of Base Diluted EPS, unexercised stock instruments that meet GAAP requirements for dilution were considered dilutive to the same extent they would be if GAAP net income attributable to Sonoco were equal to base net income attributable to Sonoco.

RESULTS OF OPERATIONS

The following discussion provides a review of results for the three months ended ~~October~~July 3, ~~2021~~2022 versus the three months ended ~~September 27, 2020.~~July 4, 2021.

OVERVIEW

Net sales for the ~~third~~second quarter of ~~2021~~2022 increased ~~7.8~~ 38.4 percent to ~~$1,415 million,~~$1.91 billion, compared with ~~$1,312 million~~ $1.38 billion in the same period last year. This improvement reflects ~~increases from volume/mix as well as higher selling prices, mostly implemented to offset inflation, a favorable year-over-year impact from foreign exchange,~~strong pricing performance and ~~additional~~ sales added from the ~~August 2020~~January 26, 2022 acquisition of ~~Can Packaging. These positive factors~~ ~~were partially offset by the April 4, 2021 and November 30, 2020 divestitures of the Company's U.S. display and packaging and European contract packaging businesses, respectively.~~

Ball Metalpack Holding, LLC, renamed Sonoco Metal Packaging ("Metal Packaging").

Net ~~income~~income/(loss) attributable to Sonoco for the ~~third~~second quarter of ~~2021~~2022 increased to ~~$111.1~~$131.7 million, or ~~$1.12~~$1.33 per diluted share, compared to ~~$83.4~~$(334.1) million, or ~~$0.82~~$(3.34) per diluted share, for the same period of ~~2020.~~2021. Net income in the current

SONOCO PRODUCTS COMPANY

period benefited primarily from the Company's strategic pricing initiatives, increases from acquisitions and operational improvements. These benefits were partially offset by higher net interest expense in 2022 related to higher borrowings resulting from the funding of the Metal Packaging acquisition in January 2022. Additionally, net income in the current quarter includes net after-tax, non-base ~~income~~charges totaling ~~$20.6~~$42.1 million, while results for the ~~third~~second quarter of ~~2020~~2021 included net after-tax, non-base charges totaling ~~$3.6~~$427.8 million.The net decrease in non-base items was primarily driven by the 2021 settlement and annuitization of the Inactive Plan. These non-base items consisted of the ~~following:~~following, after tax:

Three Months Ended
($ in millions) October 3, 2021 September 27, 2020
Net recognized benefit on 2017 amended U.S. income tax return $ (30.0) $ —
Tax impact of sale of European contract packaging business — (20.4)
Other non-base tax charges 12.1 —
Non-operating pension costs 0.3 6.4
Gain on sale of previously closed facilities (2.2) —
All other net restructuring and asset impairment charges 5.4 18.5
All other net gains, including acquisition and divestiture-related costs (6.2) (0.9)
Total non-base (income)/charges, after tax $ (20.6) $ 3.6


	Three Months Ended
($ in millions)	July 3, 2022		July 4, 2021
Amortization of fair value adjustments to Metal Packaging inventory	$	6.1	$	—
Acquisition and divestiture-related costs	3.2		0.8
Amortization of acquisition intangibles	15.7		9.1
Changes in LIFO inventory reserve	4.8		—
Loss from exiting Russia	3.5		—
All other net restructuring and asset impairment charges	6.3		(2.2)
Pension settlement charges (Inactive Plan)	—		406.5
Other non-operating pension costs	1.2		6.1
Loss from the early extinguishment of debt	—		15.0
Euro derivative gain related to euro loan repayment	—		(3.3)
Refund of foreign VAT and applicable interest	—		(3.1)
Discrete non-base income tax gains	(0.6)		(1.3)
All other non-base charges	1.9		0.2
Total non-base charges, after tax	$	42.1	$	427.8

Adjusted for these items, ~~Base~~base net income attributable to Sonoco ~~(Base~~(base earnings) for the ~~third~~second quarter of ~~2021~~2022 increased ~~4.1~~85.4 percent to ~~$90.6~~$173.8 million, or ~~$0.91~~$1.76 per diluted share, from ~~$87.0~~$93.7 million, or ~~$0.86~~$0.93 per diluted share, in ~~2020. This overall increase reflects a decrease in Base~~2021 and second-quarterbase operating profit ~~which was more than~~increased 77.8 percent to $250.2 million. As noted above, these improvements reflect strong strategic pricing performance and the accretive effects of the January 2022 acquisition of the Metal Packaging business. These year-over-year gains were partially offset by ~~a decrease in Base net interest expense,~~increased compensation and a lower Base effective tax rate. Despite the 7.8 percent increase in net sales, third-quarter Base operating profit was down 6.2 percent from last year's third quarter as a result of a negative price/cost relationship and the divestitures of the Company'benefit costs. ~~s U.S. display and packaging and~~ ~~European contract packaging businesses, net of earnings added from the acquisition of Can Packaging in August 2020~~. ~~These net negative impacts were somewhat offset by solid productivity gains and volume/mix improvements.~~ The ~~Base~~base effective tax rate for the current year’s quarter was ~~lower than~~25.0 percent compared with the prior year's rate of 26.3 percent. The difference is due ~~primarily~~ to the ~~release~~mix of ~~reserves for uncertain~~base earnings by tax ~~positions upon the expiration of the statute of limitations and an increased benefit from tax credits.~~jurisdiction.

OPERATING REVENUE

Net sales for the ~~third~~second quarter of ~~2021~~2022 increased ~~$103~~$531 million, or ~~7.8~~38.4 percent, from the prior-year quarter.

The components of the sales change were:


	($ in millions)
Volume/mix	$	43 (13)
Selling prices	$		~~161~~297
Acquisitions and divestitures, net	$		~~(111)~~290
Foreign currency translation and other, net	$		9 (44)

Total sales increase	$	~~103~~531

Selling price gains were driven by a combination of passing through higher costs and benefits realized by strategic pricing initiatives aimed at capturing more of the value provided by the Company's products. Net sales added by acquisitions and divestitures were driven by the January 26, 2022 acquisition of Metal Packaging.

SONOCO PRODUCTS COMPANY

COSTS AND EXPENSES

Cost of goods sold increased ~~$102.2~~$406.2 million, or ~~9.7~~36.3 percent, in the ~~third~~second quarter of ~~2021~~2022 compared with the same period last year. The increase was driven primarily by ~~material~~ inflation, which also had the impact of increasing the Company's LIFO inventory reserves, and ~~higher volumes which~~costs added by the acquisition of Metal Packaging, including expensing the remainder of acquisition-date fair value adjustments to finished goods inventory as the inventory was sold to customers during the quarter. These year-over-year increases were partially offset by ~~divestitures, net~~the translation impact of ~~acquisitions. Gross~~an overall stronger dollar in the current year. Gross profit was ~~$257.7~~$387.0 million for the three months ended ~~October~~July 3, ~~2021,~~2022, which was ~~$0.7~~$124.3 million higher than the prior-year period. ~~However,~~Additionally, gross profit as a percent of sales ~~decreased~~increased to ~~18.2~~20.2 percent from ~~19.6~~19.0 percent in the prior-year quarter as overall sales price increases ~~were not able to fully recover~~more than offset higher material and other operating ~~costs.~~costs largely due to the Company's strategic pricing initiatives.

GAAP selling, general and administrative ~~expenses~~ ("SG&A") expenses for the quarter increased ~~$4.5~~$50.2 million, or ~~3.5~~38.9 percent, year over ~~year, mitigated by a combination~~year. This increase reflects higher amortization, acquisition, and normal operating SG&A expenses stemming from the Metal Packaging acquisition; higher employee compensation and benefit costs; and the non-recurrence of ~~mark-to-market~~prior-year gains on ~~certain derivatives entered into to manage natural gas costs and life insurance gains. Absent these gains,~~derivatives.

Restructuring/Asset impairment charges/(income) totaled $10.6 million in the increase in SG&A would have been approximately $10 million. This increase was largely driven by a higher, more-normal, level of management incentive expense compared to the prior year's quarter as well as increased spending on strategic information technology activities and general inflation.

~~In the third~~second quarter of 2021, the Company finalized the working capital settlement related to the April 2021 sale of its U.S. display and packaging business. As a result of this settlement, together with the sale of a small plastics foods thermoforming operation, the Company recognized a total gain on divestiture of businesses in the third quarter of 2021 of $2.8 million. Additional information regarding divestitures is provided in Note 3 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

~~Restructuring/Asset impairment charges totaled $3.5 million for the third quarter of 2021~~2022 compared with ~~$24.1~~$(1.4) million in the same period last year. The year-over-year ~~decrease~~increase was the result of ~~lower~~higher restructuring activity in the current year, ~~as well as~~a $3.5 million charge stemming from the Company's decision to exit its operations in Russia, and the non-recurrence of prior-year gains ~~of $2.8 million related to~~from the ~~third quarter 2021 sale~~sales of buildings at previously closed facilities. Additional information regarding restructuring and asset impairment charges is provided in Note 5 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Non-operating pension costs were ~~$6.9~~$553.3 million lower in the ~~third~~second quarter of ~~2021~~2022 compared to the same period last year due to the ~~absence of related costs following the~~ settlement of the ~~liabilities of the Sonoco Pension~~Inactive Plan ~~for Inactive Participants (the "Inactive Plan")~~ in the second quarter of ~~2021.~~2021 and the absence of any costs related to the Inactive Plan in the current year. Additional information regarding non-operating pension costs is provided in Note 11 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

~~GAAP net interest expense for~~Additionally, in the ~~third~~second quarter of 2021 ~~decreased~~the Company executed a cash tender offer pursuant to ~~$14.2 million, compared with $18.6 million during the third quarter of 2020, due primarily to lower average debt balances quarter over quarter.~~

The 2021 third-quarter effective tax rates on GAAP and Base earnings were 2.3 percent and 18.1 percent, respectively, compared with negative 0.8 percent and 24.1 percent, respectively, in the prior year’s quarter. The 2021 GAAP rate was unusually low largely due towhich it retired a ~~$30.0 million net recognized benefit associated with the amendment of the Company’s 2017 U.S. income tax return which resulted in an increased utilization~~portion of its ~~foreign tax credits. In the same period~~5.750% notes due November 2040, recognizing a loss on early extinguishment of 2020, the negative effective tax rate on GAAP earnings was due to a $20.4 million write-down of a deferred tax liability related to the sale of the Company’s European contract packaging business. The Base tax rate for the current year’s quarter was lower due primarily to the release of reserves for uncertain tax positions upon the expiration of the statute of limitations and an increased benefit from tax credits.

~~REPORTABLE SEGMENTS~~

The Company changed its operating and reporting structure in January 2021 and, as a result, realigned certain reportable segments effective January 1, 2021. The revised structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as "All Other." Additional information regarding segment realignment is provided indebt totaling $20.2 million. See Note 158 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form ~~10-Q.~~10-Q for more information.

~~SONOCO PRODUCTS COMPANY~~

GAAP net interest expense for the second quarter of 2022 increased to $23.2 million, compared with $14.8 million during the second quarter of 2021, due primarily to higher average debt balances resulting from the financing transactions used to fund the January 26, 2022 acquisition of Metal Packaging.

The 2022 second-quarter effective GAAP tax rate of 25.8 percent was relatively flat compared to 26.0 percent in the prior year’s quarter.

REPORTABLE SEGMENTS

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 following table recaps net sales attributable to each of the Company’s segments and All Other for the ~~third~~second quarters of ~~2021~~2022 and ~~2020~~2021 ($ in thousands):
Three Months Ended
October 3, 2021 September 27, 2020 %
Change
Net sales:
Consumer Packaging $ 598,969 $ 546,208 9.7 %
Industrial Paper Packaging 635,230 490,369 29.5 %
All Other 180,994 275,737 (34.4) %
Consolidated $ 1,415,193 $ 1,312,314 7.8 %


	Three Months Ended
	July 3, 2022		July 4, 2021		% Change
Net sales:
Consumer Packaging	$	989,982	$	597,804	65.6	%
Industrial Paper Packaging	727,402		608,531		19.5	%
All Other	195,948		176,419		11.1	%
Consolidated	$	1,913,332	$	1,382,754	38.4	%

SONOCO PRODUCTS COMPANY

The following table recaps operating profit attributable to each of the Company’s segments during the ~~third~~second quarters of ~~2021~~2022 and ~~2020~~2021 ($ in thousands):


		Three Months Ended							Three Months Ended
		October 3, 2021		September 27, 2020		% Change			July 3, 2022		July 4, 2021		% Change
Operating profit:	Operating profit:							Operating profit:
Segment operating profit:	Segment operating profit:							Segment operating profit:
Consumer Packaging	Consumer Packaging	$	60,918	$	64,370	(5.4)	%	Consumer Packaging	$	139,421	$	65,296	113.5	%
Industrial Paper Packaging	Industrial Paper Packaging	53,343		41,035		30.0	%	Industrial Paper Packaging	94,201		59,818		57.5	%
All Other	All Other	8,169		25,136		(67.5)	%	All Other	16,529		15,607		5.9	%
Restructuring/Asset impairment charges		(3,488)		(24,149)
Other non-base income, net		7,570		352
Restructuring/Asset impairment (charges)/income								Restructuring/Asset impairment (charges)/income	(10,563)		1,445
Amortization of acquisition intangibles								Amortization of acquisition intangibles	(20,871)		(12,111)
Other non-base charges, net								Other non-base charges, net	(21,241)		5,236
Consolidated	Consolidated	$	126,512	$	106,744	18.5	%	Consolidated	$	197,476	$	135,291	46.0	%

Segment results viewed by Company management to evaluate segment performance do not include restructuring charges or income, asset impairment charges, acquisition and divestiture-related costs, environmental reserve charges or releases, 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. Accordingly, the term “segment operating profit” is a non-GAAP measure and is defined as the segment’s portion of “operating profit” excluding those items. All other general corporate expenses have been allocated as operating costs to ~~each of~~ the Company’s reportable ~~segments.~~segments and All Other. Effective January 1, 2022, the Company changed its measure of segment operating profit to exclude amortization of acquisition intangibles. Accordingly, the prior year's segment operating profit has been revised to conform with the current presentation for comparability.

The following table recaps restructuring/asset impairment charges/(income)~~/charges~~ attributable to each of the Company’s segments during the ~~third~~second quarter of ~~2021~~2022 and ~~2020~~2021 ($ in thousands):


		Three Months Ended					Three Months Ended
		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021
Restructuring/Asset impairment (income)/charges:
Restructuring/Asset impairment charges/(income):						Restructuring/Asset impairment charges/(income):
Consumer Packaging	Consumer Packaging	$	2,734	$	16,498	Consumer Packaging	$	2,798	$	581
Industrial Paper Packaging	Industrial Paper Packaging	(1,888)		6,990		Industrial Paper Packaging	4,459		(4,372)
All Other	All Other	555		762		All Other	(495)		2,355
Corporate	Corporate	2,087		(101)		Corporate	3,801		(9)
Consolidated	Consolidated	$	3,488	$	24,149	Consolidated	$	10,563	$	(1,445)

Consumer Packaging

~~Sonoco’s Consumer~~The Consumer Packaging segment primarily serves prepared and fresh food markets along with other packaging for ~~direct~~consumer products. The products produced and sold within this segment are generally used to package a variety of consumer products and ~~includes the following products and services:~~consist primarily of round and shaped rigid paper ~~containers; metal~~containers, steel tinplate cans and ~~peelable membrane ends and closures;~~aerosol containers; thermoformed plastic trays and containers; p~~rinted~~and flexible ~~packaging; and global brand artwork management.~~packaging.

~~SONOCO PRODUCTS COMPANY~~

Segment sales increased ~~9.7~~approximately 66 percent compared to the prior year's quarter due primarily to ~~higher selling prices, mostly implemented to help offset inflation, sales added from~~ the ~~prior-year Can~~acquisition of Metal Packaging ~~acquisition~~ and ~~a positive mix of business.~~ strong pricing. Overall, segment volume/mix was essentially flat during the second quarter of 2022. Global rigid paper containers volume/mix increased approximately 1 percent as gains in Asia, Latin America and Europe more than offset slightly lower volume in North America, which was impacted by ongoing supply chain issues affecting certain of our North American customers. Flexible packaging volume improved ~~about 1~~approximately 4 percent during the second quarter as solid gains in flexible packaging sales were offset by modest declines in the segment's other businesses. Flexible packaging's volume/mix improvement was driven by strong snack food market sales as well as a rebound in confectionery markets. Global rigid paper container's volume/mix declined slightly in the third quarter as North American food packaging volumes continued to normalize to pre-pandemic levels. In the plastics - food business, increased volume/mix for containers in prepared foodsof 2022, which was more than offset by an unfavorable mix of business. Demand for rigid plastic food containers declined as increased volume/mix from prepared food markets was more than offset by volume declines infrom fresh ~~food packaging.~~berry markets that were impacted by inclement weather and plant consolidations.

SONOCO PRODUCTS COMPANY

Segment operating profit ~~declined 5.4~~increased 114 percent ~~compared to~~ with the ~~prior year's quarter as a negative~~main driver being the Metal Packaging acquisition, along with favorable price/~~cost relationship stemming from both raw material~~cost, including the benefits of strategic pricing initiatives, and ~~non-material inflation was only partially offset by strong~~ productivity ~~improvements.~~improvements. As a result, segment operating margin ~~declined~~ improved to ~~10.2~~14 percent in the quarter from ~~11.8~~11 percent in the ~~2020~~2021 period.

Assuming consumers continue to revert towards pre-COVID-19 eating habits and traveling patterns, the Company expects there will be a mixed impact on this segment over the next few quarters with lower demand for packaged food and household goods by stay-at-home consumers being partially offset by a year-over-year increase in convenience and travel-related product categories. Despite demand in certain categories continuing to run at higher than pre-pandemic levels, overall segment sales volume is expected to decline seasonally in the fourth quarter. In addition, higher resin and other costs are expected to drive continued price/cost pressure on operating profit.

Industrial Paper Packaging

The Industrial Paper Packaging segment ~~includes the following products:~~serves a variety of customers who use its products to package their goods for transport, storage or sale or to produce similar fiber-based ~~packaging~~products. The primary products produced and sold within this segment include fiber-based tubes, cones, and cores; fiber-based ~~construction tubes; fiber-based~~ protective packaging and components; ~~wooden, metal and composite wire and cable reels and spools;~~reels; and recycled ~~paperboard, corrugating medium, recovered paper and material recycling services.~~paperboard.

Segment sales increased ~~29.5~~20 percent from the prior year's quarter largely due to ~~higher selling prices implemented to~~strong pricing performance, modestly offset ~~raw material~~by the negative impacts of foreign exchange and ~~non-material inflation, while~~lower volume/mix. Volume/mix ~~improved by~~declined approximately ~~5 percent. Global~~2 percent in the second quarter as tube and core volume/mix ~~increased~~gains in North America and Latin America were more than offset by ~~approximately 7 percent as demand returned to pre-pandemic levels. In addition,~~volume declines in global paper, ~~volume/mix improved approximately 3 percent as both internal converting~~fiber protective packaging and ~~trade markets saw increased demand over the prior-year period.~~tube, core and cone operations in Europe and Asia.

Segment operating profit increased ~~30.0~~57 percent from the prior year's quarter, ~~primarily~~ driven by a positive ~~volume/mix and related productivity gains. Segment operating margin~~price/cost impact, including the benefits of strategic pricing initiatives,which was ~~unchanged at 8.4 percent.~~

~~Assuming elements of the economy hit particularly hard~~somewhat offset by the COVID-19 pandemic continue to recover, over the next few quarters the Company expects to see both sequential and year-over-year volume increases in many of our paper and industrial converted products markets. Overall, the businesses in this segment were able to recover escalating costs in the third quarter. While average recycled fiber prices are expected to be slightly higher in the fourth quarter than in the third quarter, the Company expects recycled fiber prices to trend down in the fourth quarter. Partly due to this trend, the segment is expected to be able to recover these and other costs through contractual pass-through arrangements or non-contract price adjustments.lower volume/mix. As a result, ~~the Company expects the~~ segment operating profit margin improved to ~~benefit~~ 13 percent in the ~~fourth~~current year's quarter from ~~a modestly positive price/cost relationship.~~ 10 percent in the prior year.

All Other

Businesses grouped as All Other include healthcare packaging, protective and retail security packaging and industrial plastic products. These businesses include the following products and services: thermoformed rigid plastic trays and devices; custom-engineered molded foam protective packaging and components; temperature-assured packaging; injection molded and extruded containers, spools and parts; retail security packaging, including printed backer cards, thermoformed blisters and ~~heat sealing~~heat-sealing equipment; and paper amenities. ~~Reported in All Other,~~Prior to the ~~Company sold its global display and packaging business in two separate transactions,~~divestiture of the ~~European contract packaging business on November 30, 2020 and the~~Company's U.S. display and packaging business on April 4, ~~2021. These businesses comprised the Company's~~2021, this business, which included point-of-purchase displays, fulfillment operations, and contract packaging, ~~operations.~~was reported in All Other.

Sales for All Other ~~declined 34.4~~improved 11 percent from the prior year's quarter due primarily to strong pricing performance. Volume/mix for the businesses in All Other was essentially flat as growth in industrial plastics was offset by slight declines in retail security and temperature-assured packaging.

All Other operating profit improved 5.9 percent from the prior year's quarter due primarily to ~~the impact of the global display~~positive price/cost performance and ~~packaging divestitures. Excluding the impact of the divestitures, volume/mix increased sales by approximately 8~~favorable productivity. Operating margin declined slightly to 8.4 percent ~~driven by strong gains in industrial plastics and temperature-assured packaging, which more than offset lower demand~~ in the ~~retail security and healthcare packaging units.~~

~~All Other operating profit declined 67.5~~quarter from 8.8 percent ~~from the prior year's quarter due primarily to the impact of the global display and packaging divestitures along with a negative price/cost relationship stemming mostly from rising resin prices.~~in 2021.

4750

SONOCO PRODUCTS COMPANY

~~Operating margin declined to 4.5 percent in the quarter from 9.1 percent in 2020 largely due to unrecovered cost increases.~~

With the April 4, 2021 sale of the Company's U.S. display and packaging business and the November 2020 sale of the Company's European contract packaging business, the Company has completely exited its global display and packaging business. These divestitures will continue to negatively impact year-over-year comparisons of operating results through the first quarter of 2022.

The Company expects the temperature-assured business to continue producing solid results in the remainder of 2021, with operating profit exceeding the prior year, largely driven by sales of packaging critical for pharmaceutical transport, including flu and COVID-19 vaccines. The businesses that serve automotive and appliance markets are expected to continue to rebound from prior-year levels, which were significantly depressed by the COVID-19 pandemic. However, this demand rebound is expected to be somewhat restricted by supply chain issues. Finally, the Company's plastics business serving the healthcare industry is expected to show improved fourth-quarter results year over year as its served markets return to a more normalized demand for elective surgeries. However, results for the Company's industrial plastics operations, which benefited in the third quarter from both a COVID rebound and normal seasonal strength, are expected to decline sequentially in the fourth quarter due to seasonality and price/cost headwinds, but still exceed prior-year COVID-depressed results.

~~Nine~~Six Months Ended ~~October~~July 3, ~~2021~~2022 Compared with ~~Nine~~Six Months Ended ~~September 27, 2020~~July 4, 2021

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

The following tables reconcile the Company’s non-GAAP financial measures to their most directly comparable GAAP financial measures in the Company’s Condensed Consolidated Statements of Income for each of the periods presented.
For the nine months ended October 3, 2021
Dollars in thousands, except per share data GAAP
Restructuring/Asset Impairments(1)
Other
Adjustments(1)
Base
Operating profit $ 382,112 $ 8,889 $ (294) $ 390,707
Non-operating pension costs 562,818 — (562,818) —
Interest expense, net 46,744 — 2,165 48,909
Loss from the early extinguishment of debt 20,184 — (20,184) —
(Loss)/income before income taxes $ (247,634) $ 8,889 $ 580,543 $ 341,798
(Benefit from)/Provision for income taxes (91,542) 2,653 169,255 80,366
(Loss)/income before equity in earnings of affiliates $ (156,092) $ 6,236 $ 411,288 $ 261,432
Equity in earnings of affiliates, net of tax 5,701 5,701
Net (loss)/income $ (150,391) $ 6,236 $ 411,288 $ 267,133
Net loss attributable to noncontrolling interests (243) (243)
Net (loss)/income attributable to Sonoco $ (150,634) $ 6,236 $ 411,288 $ 266,890
Diluted Weighted average common shares outstanding(2):
100,039 468 100,507
Per diluted common share* $ (1.51) $ 0.06 $ 4.09 $ 2.66
*Due to rounding individual items may not sum across


	For the six months ended July 3, 2022
Dollars in thousands, except per share data	GAAP		Restructuring/Asset Impairments(1)		Amortization of Acquisition Intangibles(2)		Acquisition/Divestiture Related(3)		Other Adjustments(4)		Base
Operating profit	$	366,538	$	22,705	$	39,671	$	60,633	$	21,398	$	510,945
Non-operating pension costs	3,002		—		—		—		(3,002)		—
Interest expense, net	42,226		—		—		—		136		42,362

Income before income taxes	$	321,310	$	22,705	$	39,671	$	60,633	$	24,264	$	468,583
Provision for income taxes	79,888		2,477		9,790		14,764		10,842		117,761
Income before equity in earnings of affiliates	$	241,422	$	20,228	$	29,881	$	45,869	$	13,422	$	350,822
Equity in earnings of affiliates, net of tax	5,952		—		—		—		—		5,952
Net income	$	247,374	$	20,228	$	29,881	$	45,869	$	13,422	$	356,774
Net (income) attributable to noncontrolling interests	(369)		100		—		—		—		(269)
Net income attributable to Sonoco	$	247,005	$	20,328	$	29,881	$	45,869	$	13,422	$	356,505

Per diluted common share*	$	2.50	$	0.21	$	0.30	$	0.47	$	0.14	$	3.61

*Due to rounding individual items may not sum across

~~(1 )~~ ~~See table~~(1) Restructuring/asset impairment charges are a recurring item as Sonoco’s restructuring programs usually require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in ~~"Results~~the estimates used to recognize the impairment of ~~Operations - Overview" below for details~~assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur. In the first half of 2022, the Company recognized charges of $9,165 related to the Company's decision to exit its operations in Russia given the ongoing Russia-Ukraine conflict.

(2) Beginning in 2022, the Company redefined base results to exclude amortization of intangible assets related to acquisitions.

(3) Consists of legal, professional, and other service fees related to acquisition and divestiture transactions, whether proposed or consummated totaling $21,155, and charges related to inventory fair value adjustments associated with Metal Packaging totaling $24,714.

(4) Other Adjustments include after-tax ~~impact~~charges of ~~major components.~~$18,994 related to increases in the Company's LIFO reserve and non-operating pension charges of $2,150, partially offset by net gains related to certain derivative transactions totaling $3,081 and discrete tax adjustments totaling $4,641. Discrete tax adjustments during the six-month period ended July 3, 2022 include the release of valuation allowances on foreign tax credit carryforwards and state net operating losses.

SONOCO PRODUCTS COMPANY


	For the six months ended July 4, 2021
Dollars in thousands, except per share data	GAAP		Restructuring/Asset Impairments(1)		Amortization of Acquisition Intangibles		Acquisition/Divestiture Related		Other Adjustments(2)		Base
Operating profit	$	255,600	$	5,401	$	24,860	$	11,488	$	(4,212)	$	293,137
Non-operating pension costs	562,293		—		—		—		(562,293)		—
Interest expense, net	32,525		—		—		—		2,165		34,690
Loss from the early extinguishment of debt	20,184		—		—		—		(20,184)		—
Income before income taxes	$	(359,402)	$	5,401	$	24,860	$	11,488	$	576,100	$	258,447
Provision for income taxes	(94,106)		2,341		6,158		2,794		149,778		66,965
Income before equity in earnings of affiliates	$	(265,296)	$	3,060	$	18,702	$	8,694	$	426,322	$	191,482
Equity in earnings of affiliates, net of tax	3,350		—		—		—		—		3,350
Net income	$	(261,946)	$	3,060	$	18,702	$	8,694	$	426,322	$	194,832
Net (income) attributable to noncontrolling interests	172		—		—		—		—		172
Net income attributable to Sonoco	$	(261,774)	$	3,060	$	18,702	$	8,694	$	426,322	$	195,004
Diluted Weighted average common shares outstanding(3):	100,571								498		101,069
Per diluted common share*	$	(2.60)	$	0.03	$	0.19	$	0.09	$	4.22	$	1.93

*Due to rounding individual items may not sum across

(1) Restructuring/Asset impairment charges are a recurring item as Sonoco’s restructuring programs usually require several years to fully implement and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur. In the first six months of 2021 net restructuring and asset impairment charges, mostly related to consulting charges, severance, and asset impairment charges, totaled approximately $3,060.

(2) Includes after tax pension settlement charges of $406,495 associated with the settlement of the Inactive Plan in the second quarter of 2021, other non-operating pension costs of $11,500, losses from the early extinguishment of debt of $14,997, a loss from the sale of business of $3,310, and other net charges totaling $644. These charges were partially offset by a VAT refund, including applicable interest, of $3,102, a hedge gain related to a euro-denominated loan repayment of $3,318, the benefit of discrete tax items totaling $1,437, and insurance gains of $2,767.

~~(2 )~~(3) Due to the magnitude of ~~certain expenses considered by management to be~~ non-base ~~and included~~losses in ~~Other Adjustments.~~the second quarter 2021, the Company reported a ~~year-to-date~~ GAAP ~~Net Loss Attributable~~net loss attributable to Sonoco. In instances where a company has a net loss, ~~including potential common shares in~~GAAP requires that the ~~denominator of a diluted earnings per-share computation will have an antidilutive effect on the per-share loss. GAAP therefore requires the exclusion of~~company shall not consider any unexercised share awards or other like instruments dilutive for purposes of calculating weighted average shares outstanding. Accordingly, the Company did not ~~include~~consider any unexercised share awards ~~or other like instruments~~dilutive in calculating weighted average shares outstanding for GAAP purposes in the table above, which resulted in Basic Weighted Average ~~Common~~ Shares Outstanding and Diluted Weighted Average Common Shares Outstanding being the same. However, the Company also presents ~~Base Net Income Attributable~~base net income attributable to Sonoco, which excludes the net non-base items. In order to maintain consistency ~~and comparability~~in the computation of Base Diluted EPS, ~~dilutive~~ unexercised ~~share awards~~stock instruments that meet GAAP requirements for dilution were ~~included in the calculation~~considered dilutive to the same extent they would ~~have been had~~be if GAAP ~~Net Income Attributable~~net income attributable to Sonoco ~~been~~were equal to ~~Base Net Income Attributable~~base net income attributable to Sonoco.

~~SONOCO PRODUCTS COMPANY~~

For the nine months ended September 27, 2020
Dollars in thousands, except per share data GAAP
Restructuring/Asset Impairments(1)
Other
Adjustments(1)
Base
Operating profit $ 340,574 $ 59,633 $ 802 $ 401,009
Non-operating pension costs 22,632 — (22,632) —
Interest expense, net 53,311 — — 53,311
Income before income taxes $ 264,631 $ 59,633 $ 23,434 $ 347,698
Provision for income taxes 49,337 15,021 24,673 89,031
Income before equity in earnings of affiliates $ 215,294 $ 44,612 $ (1,239) $ 258,667
Equity in earnings of affiliates, net of tax 3,230 — — 3,230
Net income $ 218,524 $ 44,612 $ (1,239) $ 261,897
Net loss attributable to noncontrolling interests 581 (26) — 555
Net income attributable to Sonoco $ 219,105 $ 44,586 $ (1,239) $ 262,452
Per diluted common share* $ 2.17 $ 0.44 $ (0.01) $ 2.59
*Due to rounding individual items may not sum across

~~(1)~~ ~~See table in "Results of Operations - Overview" below for details related to the after-tax impact of major components.~~

RESULTS OF OPERATIONS

The following discussion provides a review of results for the ~~nine~~six months ended ~~October~~July 3, ~~2021~~2022 compared with the ~~nine~~six months ended ~~September 27, 2020.~~July 4, 2021.

OVERVIEW

Net sales for the first ~~nine~~six months of ~~2021~~2022 increased ~~7.5~~34.7 percent to ~~$4,151~~$3,684.3 million,, compared with ~~$3,861~~$2,736.1 million in ~~the~~the same period last year. ~~The increase~~This improvement reflects ~~volume/mix benefits stemming~~increases from strong pricing performance and sales added from the ~~pandemic recovery, higher selling prices mostly implemented to recover rising raw material and other operating costs, and a positive impact from foreign currency translation.~~January 26, 2022 acquisition of Metal Packaging. These benefits were ~~somewhat~~partially offset by the ~~net~~negative impact of foreign currency translation and the ~~global~~April 2021 U.S. display and packaging ~~divestitures, less additions from the Can Packagingacquisition.~~divestiture.

Net income/(loss)~~/income~~ attributable to Sonoco for the first ~~nine~~six months of ~~2021~~ ~~decreased~~2022 increased to ~~$(150.6)~~$247.0 million, or ~~$(1.51)~~$2.50 per diluted share, compared to ~~$219.1~~$(261.8) million, or ~~$2.17~~$(2.60) per diluted share, reported for the same period of ~~2020.~~ 2021. GAAP net income

SONOCO PRODUCTS COMPANY

for the first six months of 2022 includes after-tax, non-base charges totaling $109.5 million. GAAP net loss for the first ~~nine~~six months of 2021 includes after-tax non-base charges totaling $456.8 million~~$417.5 million.~~ ~~GAAP net income for the first nine months of 2020 includes non-base charges totaling~~ ~~$43.3 million.~~. The major components of these non-base amounts are shown below:

Nine Months Ended
($ in millions) October 3, 2021 September 27, 2020
Non-operating pension settlement charges $ 406.5 $ —
Net recognized benefit on 2017 amended U.S. income tax return (30.0) —
Tax impact of sale of European contract packaging business — (20.4)
Loss on early extinguishment of debt 15.0 —
Other non-base tax charges 11.9
Other non-operating pension costs 11.8 17.8
Gain on sale of previously closed facilities (7.2) —
Euro derivative gain related to Euro loan repayment (3.3) —
Refund of foreign VAT and applicable interest (3.1) —
All other net restructuring and asset impairment charges 13.4 44.6
Acquisition and divestiture-related costs 9.5 2.4
All other net gains (7.0) (1.1)
Total non-base charges, after tax $ 417.5 $ 43.3


	Six Months Ended
($ in millions)	July 3, 2022		July 4, 2021
Amortization of acquisition intangibles	$	29.9	$	18.7
Amortization of fair value adjustments to Metal Packaging inventory	24.7		—
Acquisition and divestiture-related costs	21.2		8.7
Changes in LIFO inventory reserve	19.0		—
Loss from exiting Russia	9.2		—
All other net restructuring and asset impairment charges	11.1		3.1
Pension settlement charges (Inactive Plan)	—		406.5
Other non-operating pension costs	2.1		11.5
Loss from the early extinguishment of debt	—		15.0
Discrete non-base income tax gains	(4.6)		(1.4)
Refund of foreign VAT and applicable interest	—		(3.1)
Euro derivative gain related to euro loan repayment	—		(3.3)
All other non-base gains	(3.1)		1.1
Total non-base charges, after tax	$	109.5	$	456.8

~~SONOCO PRODUCTS COMPANY~~

Adjusted for these items, Base earnings for the ~~nine-month~~six-month period ending ~~October~~July 3, ~~2021~~2022 increased ~~1.7~~82.8 percent to ~~$266.9~~$356.5 million, or ~~$2.66~~$3.61 per diluted share, from ~~$262.5~~$195.0 million, or ~~$2.59~~$1.93 per diluted share, in the same period in ~~2020.~~2021.

The increase in Base earnings of ~~$4.4~~$161.5 million is largely attributable to a lower Base effective tax rate and lower Base net interest expense which more than compensated for a decline in Base Operating Profit. The decline in Base Operating Profit was driven by an overall negative price/cost impact and the loss of operating profitstrong pricing performance, earnings from the ~~divestitures of the Company's global display~~Metal Packaging acquisition, and ~~packaging businesses, net of the acquisition of Can Packaging. The negative impacts in the 2021 period~~productivity improvements. These gains were partially offset by ~~volume/mix increases, which were aided by~~ the ~~COVID-19 pandemic recovery,~~2021 divestiture of the Company's U.S. display and ~~productivity gains.~~packaging business and increased compensation and benefit costs.

OPERATING REVENUE

Net sales for the first ~~nine~~six months of ~~2021~~2022 increased ~~$290~~$948 million from the same period in ~~2020.~~2021.

The components of the sales change were:


	($ in millions)
Volume/mix	$	~~181~~13
Selling prices	~~300~~573
Acquisitions and divestitures, net	~~(248)~~431
Foreign currency translation and other, net	57 (69)

Total sales increase	$	~~290~~948

COSTS AND EXPENSES

Cost of goods sold increased ~~$263.5~~$730.2 million, or ~~8.5~~33.3 percent, while the Company's gross profit margin percentage ~~declined slightly~~increased to ~~19.2~~20.6 percent for the first ~~nine~~six months of ~~2021,~~2022, compared to ~~20.0~~19.8 percent in the prior-year period. The increase ~~in cost~~was driven primarily by inflation, which also had the impact of increasing the Company's LIFO inventory reserves, and costs added by the acquisition of Metal Packaging, including expensing the acquisition-date fair value adjustments to finished goods ~~sold was the result of an increase in volume as well as inflation in the cost of certain raw materials and other operating expenses.~~inventory. Gross profit margin ~~declined~~improved due to ~~the negative~~positive price/cost relationship ~~resulting from the year-to-date increase in old corrugated containers costs, resin prices,~~ and ~~other operating cost inflation. The negative price/cost impact was partially offset by~~ productivity improvements.

SONOCO PRODUCTS COMPANY

GAAP SG&A costs for the first ~~nine~~six months of ~~2021~~2022 increased ~~$33.2~~$95.3 million, or ~~9.0~~34.8 percent, year over year. The year-over-year increase was largely driven by ~~a higher, more-normal, level of management incentive expense compared to the prior year's quarter,~~ higher acquisition and divestiture transaction costs, ~~as well as higher medical costs as employees returned to normalized levels~~increased amortization of ~~healthcare benefit utilization after the prior year's pandemic-induced suspension~~ of ~~routine care~~acquisition intangibles, increased compensation and other ~~elective procedures. Higher property insurance expense~~benefit costs, and ~~spending on strategic information technology activities also contributed to the increase. These items were partially offset by current-year~~absence of non-recurring gains on hedges entered into to mitigate foreign currency risk related to the repayment of a Euro-denominated loan, mark-to-market gains on certain derivatives entered into to manage natural gas price exposure,from 2021 life insurance gains and a second quarter 2021 foreign VAT refund.

~~Restructuring~~Net restructuring costs and asset impairment charges ~~net~~ totaled~~to $8.9~~ $22.7 million in the first ~~nine~~six months of ~~2021,~~2022, compared with ~~$59.6~~$5.4 million of net charges in the same period last year. The year-over-year ~~decrease~~increase was driven by ~~lower~~higher year-over-year restructuring activity ~~and~~in the current year, including a $9.2 million impairment charge resulting from the Company's exit from its Russian operations. Prior year restructuring costs were offset by gains recorded in 2021 for the sale of buildings at previously closed facilities. Additional information regarding restructuring and asset impairment charges is provided in Note 5 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Non-operating pension costs ~~increased $540.2~~decreased $559.3 million year over year due to the $547.3 million non-cash settlement charge recognized in the second quarter of 2021 upon settling the liabilities associated with the ~~Sonoco Pension Plan for~~ Inactive ~~Participants.~~Plan. Additional information regarding pension settlement charges is provided in Note 11 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Additionally, in the second quarter of 2021 the Company executed a cash tender offer inpursuant to which it retired a portion of its ~~5.75%~~5.750% notes due November 2040, recognizing a loss on early extinguishment of debt totaling $20.2 million. See Note 8 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

~~SONOCO PRODUCTS COMPANY~~

GAAP net interest expense for the first ~~nine~~six months of ~~2021~~2022 ~~decreased~~increased to ~~$46.7~~$42.2 million, compared with ~~$53.3~~$32.5 million during the first ~~nine~~six months of ~~2020.~~2021. The ~~decrease~~increase was primarily due to ~~lower~~higher debt balances ~~and additional interest income~~ related to ~~a foreign VAT refund.~~the financing transactions used to fund the Metal Packaging acquisition in January 2022.

The effective tax ~~rate~~rates on ~~the~~ GAAP ~~loss~~ and Base earnings in the first ~~nine~~six months of ~~2021 was 37.0~~2022 were 24.9 percent and ~~23.5~~25.1 percent, respectively, compared with ~~18.6~~26.2 percent and ~~25.6~~25.9 percent for the GAAP loss and Base earnings, respectively, in the prior-year period. The ~~higher effective tax~~decrease in the 2022 GAAP rate was largely driven by the absence of the 2021 pension settlement charge and the 2022 release of valuation allowances on the ~~GAAP~~Company's state net operating loss ~~in 2021 was primarily due to the $30.0 million net recognized benefit associated with the previously mentioned amendment of the Company's 2017 U.S. income tax return.~~carryforwards. The ~~effective tax~~base rate ~~on Base earnings for the first nine months of 2021~~ was lower than in the ~~same period last~~prior year ~~primarily~~ due largely to an increase in the ~~release~~amount of ~~a reserve for uncertain tax positions.~~the U.S. research and development credit recognized in the current year's period.

SONOCO PRODUCTS COMPANY

REPORTABLE SEGMENTS

The following table recaps net sales attributable to each of the Company's segments during the first ~~nine~~six months of ~~2021~~2022 and ~~2020~~2021 ($ in thousands):

Nine Months Ended
October 3, 2021 September 27, 2020 % Change
Net sales:
Consumer Packaging $ 1,779,525 $ 1,659,943 7.2 %
Industrial Paper Packaging 1,809,159 1,447,886 25.0 %
All Other 562,567 753,266 (25.3) %
Consolidated $ 4,151,251 $ 3,861,095 7.5 %


	Six Months Ended
	July 3, 2022		July 4, 2021		% Change
Net sales:
Consumer Packaging	$	1,858,081	$	1,180,556	57.4	%
Industrial Paper Packaging	1,426,529		1,173,929		21.5	%
All Other	399,704		381,573		4.8	%
Consolidated	$	3,684,314	$	2,736,058	34.7	%

The following table recaps operating ~~profits~~profit attributable to each of the Company's segments during the first ~~nine~~six months of ~~2021~~2022 and ~~2020~~2021 ($ in thousands):


		Nine Months Ended							Six Months Ended
		October 3, 2021		September 27, 2020		% Change			July 3, 2022		July 4, 2021		% Change
Operating profit:	Operating profit:							Operating profit:
Segment operating profit:	Segment operating profit:							Segment operating profit:
Consumer Packaging	Consumer Packaging	$	196,341	$	212,575	(7.6)	%	Consumer Packaging	$	313,030	$	146,656	113.4	%
Industrial Paper Packaging	Industrial Paper Packaging	161,414		133,871		20.6	%	Industrial Paper Packaging	166,862		112,117		48.8	%
All Other	All Other	32,952		54,563		(39.6)	%	All Other	31,053		34,364		(9.6)	%
Restructuring/Asset impairment charges	Restructuring/Asset impairment charges	(8,889)		(59,633)				Restructuring/Asset impairment charges	(22,705)		(5,401)
Amortization of acquisition intangibles								Amortization of acquisition intangibles	(39,671)		(24,860)
Other non-base charges, net	Other non-base charges, net	294		(802)				Other non-base charges, net	(82,031)		(7,276)
Consolidated	Consolidated	$	382,112	$	340,574	12.2	%	Consolidated	$	366,538	$	255,600	43.4	%

Segment results viewed by Company management to evaluate segment performance do not include restructuring charges and income, asset impairment charges, acquisition and divestiture-related charges, 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. Accordingly, the term “segment operating profit” is a non-GAAP measure and is defined as the segment’s portion of “operating profit” excluding those items. All other general corporate expenses have been allocated as operating costs to each of the Company’s reportable segments.

~~SONOCO PRODUCTS COMPANY~~

Effective January 1, 2022, the Company changed its measure of segment operating profit to exclude amortization of acquisition intangibles. Accordingly, the prior year's segment operating profit has been revised to conform with the current presentation for comparability.

The following table recaps restructuring/asset impairment charges/(income)~~/charges~~ attributable to each of the Company’s segments during the first ~~nine~~six months of ~~2021~~2022 and ~~2020~~2021 ($ in thousands):


		Nine Months Ended					Six Months Ended
		October 3, 2021		September 27, 2020			July 3, 2022		July 4, 2021
Restructuring/Asset impairment charges:
Restructuring/Asset impairment charges/(income):						Restructuring/Asset impairment charges/(income):
Consumer Packaging	Consumer Packaging	$	6,150	$	20,707	Consumer Packaging	$	5,109	$	3,416
Industrial Paper Packaging	Industrial Paper Packaging	(4,827)		30,189		Industrial Paper Packaging	11,520		(2,939)
All Other	All Other	5,474		6,727		All Other	(417)		4,919
Corporate	Corporate	2,092		2,010		Corporate	6,493		5
Consolidated	Consolidated	$	8,889	$	59,633	Consolidated	$	22,705	$	5,401

Consumer Packaging

Segment sales increased ~~7.2~~57.4 percent year to date compared to the prior-year period driven by increased selling prices, largely implemented to recover ~~cost inflation,~~increased raw material and other operating costs, sales added by the acquisition of ~~Can~~Metal Packaging, and a modest increase in ~~volume, and a positive impact from foreign currency translation.~~volume.

SONOCO PRODUCTS COMPANY

Year-to-date segment operating profit ~~decreased 7.6~~increased 113.4 percent driven by ~~a negative~~the Metal Packaging acquisition along with favorable price/~~cost impact as businesses in~~cost, including the ~~segment were not able to completely pass along rapidly rising material~~benefits of strategic pricing initiatives, and ~~other costs. Additionally, rising wage and other benefit costs offset~~ productivity ~~gains in the first nine months of 2021.~~gains. As a result, segment operating profit margin ~~decreased 177~~increased 442 basis points to ~~11.0 percent.~~ 16.8 percent.

Industrial Paper Packaging

Segment sales increased ~~25.0~~21.5 percent year to date versus the prior-year period due to increased selling prices, largely implemented to recover increased raw material and other operating costs, partially offset by a ~~positive~~negative volume/mix impact ~~driven by a global rebound in demand,~~ and a ~~positive~~negative impact from foreign currency translation.

Segment operating profit increased ~~20.6~~48.8 percent from the prior-year period driven by ~~broad increases in volume/mix and strong productivity improvements.~~price/cost gains, including the benefits of strategic pricing initiatives. These gains were partially offset by somewhat lower volume and a negative ~~price/cost relationship largely due to a year-to-date increase in recycled fiber costs that could not be fully recovered through selling price adjustments.~~impact from foreign exchange. As a result, segment operating margins ~~were down 32~~were up 215 basis points to ~~8.9 percent.~~11.7 percent.

All Other

Sales for All Other ~~declined 25.3~~increased 4.8 percent year to date due primarily to increased selling prices, which were implemented to recover increased costs, and increased volume. These gains were reduced by the ~~global~~ impact of the 2021 U.S. display and packaging ~~divestitures. Exclusive of the sales from those businesses in the prior year,~~divestiture. Excluding that divestiture, volume/mix for businesses grouped in All Other improved approximately 134.3 percent, driven primarily by demand improvements in several businesses, most notably ~~our molded-foam,~~ plastics industrial and temperature-assured businesses.

All Other operating profit declined ~~39.6~~9.6 percent year to date due to the impact of the ~~global~~divested display and packaging ~~divestitures~~business and a negative ~~price/cost relationship stemming~~impact from ~~higher raw material costs.~~ foreign exchange. These were partially offset by a positive ~~volume/mix and productivity improvements.~~price/cost relationship. Segment operating margin declined to ~~5.9~~7.8 percent year to date from ~~7.2~~9.0 percent in ~~2020.~~

With the April 4, 2021 sale of the Company's U.S. display and packaging business and the November 2020 sale of the Company's European contract packaging business, the Company has completely exited its global display and packaging business. These divestitures will negatively impact year-over-year comparisons of operating results through the first quarter of 2022.

2021.

~~SONOCO PRODUCTS COMPANY~~

OTHER ITEMS

Critical Accounting Policies and Estimates

Goodwill impairment evaluation

The Company assesses its goodwill for impairment annually and from time to time when warranted by the facts and circumstances surrounding individual reporting units or the Company as a whole. If the fair value of a reporting unit exceeds the carrying value of the reporting unit's assets, including goodwill, there is no impairment. If the carrying value of a reporting unit exceeds the fair value of that reporting unit, an impairment charge to goodwill is recognized for the excess. The Company's reporting units are the same as, or one level below, its operating segments, as determined in accordance with ASC 350.

The Company completed its most recent annual goodwill impairment testing during the third quarter of 2021. For testing purposes, the Company performed an assessment of each reporting unit using either a qualitative evaluation or a quantitative test. ~~The~~There have been no changes to the Company's annual qualitative ~~evaluations considered factors such as the macroeconomic environment, Company stock price~~ and ~~market capitalization movement, current-year operating performance as compared to prior projections, business strategy changes, and significant customer wins and losses. The~~ quantitative tests, ~~described further below, relied~~or underlying assumptions, from what is disclosed in its Annual Report on the current outlook of reporting unit management for future operating results and took into consideration, among other things, the expected impact of the COVID-19 pandemic on future operations, specific business unit risk, the countries in which the reporting units operate, and implied fair values based on comparable trading multiples.

When performing a quantitative analysis, the Company estimates the fair value of its reporting units using a discounted cash flow model based on projections of future years’ operating results and associated cash flows. The Company's assessments reflected a number of significant management assumptions and estimates including the Company's forecast of sales growth, contribution margins, selling, general and administrative expenses, and discount rates, which are validated by observed comparable trading and transaction multiples. The Company’s model discounts projected future cash flows, forecasted over a seven-year period, with an estimated residual growth rate. The Company’s projections incorporate management’s estimates of the most-likely expected future results. Projected future cash flows are discounted to present value using a discount rate that management believes is appropriateForm 10-K for the ~~reporting unit.~~year ended December 31, 2021, which was filed with the Securities and Exchange Commission on February 28, 2022.

The Company’s assessments, whether qualitative or quantitative, incorporate management’s expectations for the future, including forecasted growth rates and/or margin improvements. Therefore, should there be changes in the relevant facts and circumstances and/or expectations, management’s conclusions regarding goodwill impairment may change as well. Management’s projections related to revenue growth and/or margin improvements are based on a combination of factors, including expectations for volume growth with existing customers and customer retention, product expansion, changes in price/cost relationships, productivity gains, fixed cost leverage, and stability or improvement in general economic conditions.

In considering the level of uncertainty regarding the potential for goodwill impairment, management has concluded that any such impairment would, in most cases, likely be the result of adverse changes in more than one assumption. Management considers the assumptions used to be its best estimates across a range of possible outcomes based on available evidence at the time of the assessment. Other than in Plastics - Healthcare, which is discussed below, there is no specific singular event or single change in circumstances management has identified that it believes could reasonably result in a change to expected future results in any of its reporting units sufficient to result in goodwill impairment. In

management’s opinion, a change of such magnitude would more likely be the result of changes to some combination of the factors identified above, a general deterioration in competitive position, introduction of a superior technology, significant unexpected changes in customer preferences, an inability to pass through significant raw material cost increases, and other such items as identified in "Item 1A. Risk Factors" on pages ~~10-20~~9-19 of the Company's ~~2020~~2021 Annual Report on Form 10-K.

SONOCO PRODUCTS COMPANY

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

~~SONOCO PRODUCTS COMPANY~~

Although beginning to benefit from the economic recovery, the results of the Plastics –- Healthcare reporting unit have been negatively impacted by end-market weakness due to the COVID-19 pandemic. In addition, the unit is facing near-term headwinds from higher raw material and other cost increases. Assuming COVID-19 infection rates continue to decline, management expects market demand will improve over the coming year and that selling price increases and/or cost reductions, including restructuring actions and investments in production efficiency projects, will mitigate the impacts of recent raw material and other cost inflation. However, should it become apparent that the ongoing ~~post-COVID-19~~post-

COVID-19 recovery is likely to be significantly weaker, delayed, or prolonged compared to management’s current expectations, significant negative price/cost relationships will persist over the long-term, or profit margins do not improve as expected, or other assumptions change, such as the discount rate, goodwill impairment charges may be possible in the future. Total goodwill associated with the Plastics – Healthcare reporting unit was ~~approximately $64~~$62.4 million at ~~October~~July 3, ~~2021.~~2022. Based on the most-recent annual impairment test, the estimated fair value of the Plastics – Healthcare reporting unit exceeded its carrying value by 13.3%.

Sensitivity Analysis

In its 2021 annual goodwill impairment analysis, projected future cash flows for the Plastics - Healthcare reporting unit were discounted at 8.3%. Based on the discounted cash flow model and holding other valuation assumptions constant, projected operating profits across all future periods would have to be reduced approximately 13.0%, or the discount rate increased to 9.3%, in order for the estimated fair value of the reporting unit to fall below carrying value.

~~Pension Plan Termination~~Other Asset Impairments - Russia

~~As disclosed in previous filings, the Company terminated the Inactive Plan, a tax-qualified defined benefit plan, effective September 30, 2019.~~ The Company settled the liabilities of the Inactive Plan in the second quarter of 2021 through a combination of lump-sum payments and purchases of group annuity contracts. In order for the Inactive Plan to be fully funded upon final settlement, the Company made contributionsrecognized asset impairment charges totaling ~~$133.0~~$9.2 million during the ~~second quarter~~six months ended July 3, 2022 as a result of ~~2021.~~ exiting its operations in Russia due to the ongoing Russia-Ukraine conflict. The ~~Company realized a cash tax benefit~~impairment charges included $3.7 million of cumulative currency translation adjustment losses that were reclassified from accumulated other comprehensive income upon completion of the Company's exit from Russia on July 1, 2022. The impairment charges are reflected in "Restructuring/Asset impairment charges/(income)" in the Company's Condensed Consolidated Statements of Income for the six months ended July 3, 2022. These operations consisted of two small tube and core plants in our Industrial Paper Packaging segment with approximately 70 employees and annual sales in 2021 of approximately $38 million in 2020 from the anticipated contributions to the Inactive Plan. Non-cash, pre-tax settlement charges totaling $547.3 million were recognized in the second quarter of 2021 as the lump sum payouts were made and group annuity contracts were purchased.$21 million.

Financial Position, Liquidity and Capital Resources

~~Operating cash flows totaled $220.1~~Cash generated from operations for the first six months of 2022 was $184.5 million, compared with $102.0 million in the ~~nine months ended October 3, 2021, compared with $489.5 million during the~~ same period ~~last year, a decrease~~ of ~~$269.4~~2021, an increase of $82.5 million. ~~The decrease reflects higher~~While GAAP net income increased by $509.3 million, this was partially offset by the year-over-year change in non-cash after-tax pension ~~contributions~~and post-retirement plan expense of ~~$130.5~~$415.8 million, which was primarily driven by the ~~result~~settlement of ~~fully funding~~one of the ~~Inactive Plan~~ ~~as part of settling the plan's liabilities~~Company's U.S. pension plans in the second quarter of 2021. ~~Additionally,~~ ~~net~~However, the pension settlement resulted in significantly higher 2021 cash contributions to the Company's pension plans of $162.4 million compared to $30.8 million in 2022. Net working capital ~~used $58.8~~was a use of $258.5 million ~~more~~of cash in the first ~~nine~~six months of ~~2021~~2022, compared towith a use of $45.6 million in the same period last year. ~~This increased use~~While current-year inflation was ~~driven by~~ ~~inflation~~a key driver of that increase, seasonal inventory build in the ~~current year and a more pronounced increase in~~Company's newly-acquired Metal Packaging business ~~activity in~~also contributed to the ~~third quarter of 2021 as compared to last year's third quarter. T~~hechange. The Company continues to actively manage all components of net working capital in an effort to minimize the impact on cash ~~utilization.~~utilization while also supporting the needs of our customers and mitigating stock-out risk.

Changes in accrued expenses and other assets and liabilities provided ~~$10.4~~$11.6 million ~~of operating cash flow~~ in the ~~nine~~six months ended ~~October~~July 3, ~~2021~~2022 compared with ~~$40.9~~using $16.4 million in the same period last year. The ~~lower~~$28.0 million increased provision of operating cash flow was largely driven by higher interest accruals stemming from debt issued in connection with the Metal Packaging acquisition and higher year-over-year management incentive accruals.

Investing activities used $1.48 billion of cash in the current year is primarily due to the deferral of certain FICA remittances in the prior year pursuant to the CARES Act and the payment of a portion of those previously deferred remittances in the third quarter of 2021. Income taxes payable, deferred taxes, and other income tax items consumed $165.7 million more cash in the first ~~nine~~six months of 2021 than the first nine months of the prior year mostly related to the non-cash reduction of income tax expense of $140.8 million recorded in relation to the previously disclosed final settlement of the Inactive Plan's pension liabilities.

~~Cash used in investing activities was $50.9 million in the nine months ended October 3, 2021,~~2022, compared with ~~$157.1~~ $4.5 million in the same period last ~~year, a lower~~year. The higher year-over-year use of cash was primarily attributable to acquisition spending, which increased $1.3 billion from the prior year due to the acquisition of ~~$106.3 million.~~Metal Packaging on January 26, 2022. Net capital expenditures during the first six months of 2022 were $144.1 million, $51.6 million higher than the same period last year. While spending continued for Project Horizon, the modernization of the Company's Hartsville paper mill complex which began in 2020, the year-over-year increase was largely driven by increased strategic investments in growth and

SONOCO PRODUCTS COMPANY

productivity projects in the Consumer Packaging segment. Capital spending for the remainder of 2022 is expected to be approximately $180.9 million, bringing total 2022 net capital spending to approximately $325 million, compared to $242.9 million in 2021. Proceeds from the sale of businesses added ~~$91.6~~$86.1 million of cash in the first ~~nine~~six months of 2021 as the Company received cash from the sale of its U.S. display and packaging business as well as from the ~~sale of a small plastics foods thermoforming operation in North Carolina,~~working capital settlement and ~~the~~ release of ~~cash from~~ escrow from the ~~November~~ 2020 sale of its European contract packaging business. Acquisition spending was $46.1 million lower year over year. Acquisition activity in the nine months ended October 3, 2021 totaled $3.2 million and reflects the Company's acquisitions of two small international businesses in its Industrial Paper Packaging segment and the final working capital settlement for the 2020 acquisition of Can Packaging. This activity was less than the net $49.3 million spent in the first nine months of 2020, primarily for the purchase of Can Packaging. Proceeds from the sale of assets provided $10.5 million in the nine months ended October 3, 2021, compared to $8.2 million in the same period last year. The proceeds in both years stemmed from the sale of buildings and equipment associated with previously closed facilities. Capital spending during the first nine months of 2021 was $156.6 million, $39.9 million higher than the same period last year. The increase is attributable to spending on "Project Horizon," a $115

~~SONOCO PRODUCTS COMPANY~~

million project to transform the corrugated medium paper machine in Hartsville, South Carolina, into a low-cost, state-of-the-art uncoated recycled paperboard machine and to optimize materials handling systems and storage facilities. Total spending on this project is expected to be approximately $75 million in 2021. Capital spending for the remainder of 2021 is expected to be approximately $90 million, bringing total capital spending in 2021 to approximately $250 million, compared to $194.1 million in 2020. Other net investing proceeds, primarily insurance proceeds received in 2021, were ~~$6.2~~$6.7 million ~~higher~~lower year over year.

Financing activities ~~used $563.2 million~~provided $1.30 billion of cash in the ~~nine~~six months ended ~~October~~July 3, ~~2021,~~2022, while ~~they provided $311.4~~using $394.2 million ~~of cash~~ in the ~~same~~corresponding prior-year period, ~~last year,~~ a year-over-year ~~difference~~increase of ~~$874.6 million. In the prior~~$1.7 billion. The increase was driven by higher net debt proceeds/repayments, which provided $1.5 billion more cash year over year. Current-year borrowings include $1.19 billion of net proceeds from the issuance of ~~debt provided~~unsecured notes and $300 million of proceeds from the Term Loan Facility, which were used primarily to fund the Metal Packaging acquisition. The Company used cash of ~~$428.2~~$14.5 million ~~reflecting actions initiated by the Company~~to purchase a noncontrolling interest in the first ~~nine months~~quarter of 2020 to mitigate liquidity risks due to uncertainty regarding the potential impacts of the COVID-19 pandemic on credit markets, banks and the global economy. The year-over-year change in net debt proceeds/repayments decreased cash by $670.6 million year over year. The first nine months of 2021 reflect net debt repayments of $242.5 million, including the repayments of the Company's 4.375% bonds, 9.2% bonds, euro-denominated bonds, and a partial tender of its 5.75% bonds, partially offset by additional commercial paper borrowings. The debt tender resulted in additional cash costs of $20.1 million, primarily premiums paid to participating bondholders. The year-over-year decrease in outstanding checks of $19.3 million resulted primarily from the timing of the last accounts payable check runs in December 2020 and December 2019. The Company paid cash dividends of $134.6 million during the nine months ended October 3, 2021, an increase of $5.2 million over the same period last year.2022. Cash used to repurchase the Company's common stock was ~~$152.3~~$4.0 million ~~higher year over year as~~in the first six months of 2022 compared to $159.6 million in the same period last year. The year-over-year decrease of $155.6 million was primarily the result of ~~share repurchases completed under~~ an accelerated share repurchase ~~agreement~~ executed in the ~~second quarter~~prior year pursuant to an authorization approved by the Company's Board of Directors in April 2021.

Cash and ~~cash~~cash equivalents t~~otaled $160.0~~totaled $175.0 million and ~~$564.8~~$171.0 million at ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021, respectively. Of these totals, approximately ~~$141.5~~$144.3 million and ~~$170.8~~$154.4 million, respectively, were held outside of the United States by the Company’s foreign subsidiaries. ~~Cas~~hCash held outside of the United States is available to meet local liquidity needs, or for capital expenditures, acquisitions, and other offshore growth opportunities. Reflecting the financing actions described above, the Company believes it has ample domestic liquidity from a combination of cash on hand, ~~generation of~~expected future operating cash flow, and access to bank and capital markets borrowings. The Company has generally considered its foreign unremitted earnings to be indefinitely invested outside the United States and currently has no plans to repatriate such earnings, other than excess cash balances that can be repatriated at minimal tax cost. Accordingly, the Company is not providing for taxes on these amounts for financial reporting purposes. Computation of the potential deferred tax liability associated with unremitted earnings considered to be indefinitely reinvested is not practicable.

The Company uses a notional pooling arrangement with an international bank to help manage global liquidity requirements. Under this pooling arrangement, the Company and its participating subsidiaries may maintain either a cash deposit or borrowing position through local currency accounts with the bank, so long as the aggregate position of the global pool is a notionally calculated net cash deposit. Because itthe bank maintains a security interest in the cash deposits, and has the right to offset the cash deposits against the borrowings, the bank provides the Company and its participating subsidiaries favorable interest terms on both.

During the ~~nine~~six months ended ~~October~~July 3, ~~2021,~~2022, the Company reported a net decrease in cash and cash equivalents of ~~$10.8~~$3.6 million due to currency translation adjustments resulting from a stronger U.S. dollar relative to ~~most~~certain foreign ~~currencies.~~currencies in which cash and cash equivalents were held.

~~On April 28, 2021, the~~The Company ~~commenced~~operates a ~~cash tender offer to purchase up to $300~~$500 million of the $600 million outstanding principal amount of its 5.75% notes due November 2040. Upon expiration of the tender on May 25, 2021, the Company repurchased $63.2 million of its outstanding 5.75% notes forcommercial paper program, supported by a ~~total cash cost of $82.0 million.~~

~~On June 30, 2021, the Company entered into a new five-year~~ $750 million unsecured revolving credit facility ~~which replaced an existing credit facility entered into on July 20, 2017, and reflects substantially the same terms and conditions. Consistent~~ with ~~prior facilities, the new revolving credit facility supports the Company's $500 million commercial paper program.~~a syndicate of eight banks. The revolving credit facility ~~is with a syndicate of banks and~~ is committed through June 2026. If circumstances were to prevent the Company from issuing commercial paper, it has the contractual right to draw funds on the underlying revolving credit facility.

On ~~August 1, 2021,~~January 21, 2022, the Company ~~repaid its $250~~completed a registered public offering of green bonds with an aggregate principal amount of $1.20 billion. The unsecured notes (the "Notes") consisted of the following (dollars in thousands):


	Principal Amount		Issuance Costs and Discounts		Net Proceeds		Interest Rate	Maturity

2025 Notes	$	400,000	$	(2,356)	$	397,644	1.800%	February 1, 2025
2027 Notes	300,000		(2,565)		297,435		2.250%	February 1, 2027
2032 Notes	500,000		(5,220)		494,780		2.850%	February 1, 2032
Total	$	1,200,000	$	(10,141)	$	1,189,859

SONOCO PRODUCTS COMPANY

Also on January 21, 2022, the Company entered into a $300 million ~~4.375% debentures~~term loan facility (the "Term Loan Facility") with a syndicate of eight banks. The full $300 million was drawn from this facility on January 26, 2022, and the proceeds used to partially fund the Metal Packaging acquisition. Interest is assessed at the SOFR plus a margin based on a pricing grid that uses the Company's credit ratings. The current SOFR margin is 122.5 basis points. There is no required amortization and repayment can be accelerated at any time without penalty ~~ahead of their November 2021 maturity. Also~~at the Company's discretion. Borrowings under the Term Loan Facility mature on ~~August 1, 2021, the Company repaid its $4 million, 9.2% debentures upon their maturity.~~January 27, 2025.

At ~~October~~July 3, ~~2021,~~2022, the Company had scheduled debt maturities of approximately ~~$276~~$399 million over the next twelve months, including ~~$202~~$258 million of outstanding commercial paper balances. Also at ~~October~~July 3, ~~2021,~~2022, the Company had ~~$160~~$175 million in cash and cash equivalents on hand and $750 million in committed capacity under its revolving credit

~~SONOCO PRODUCTS COMPANY~~

facility, of which ~~$548~~$492 million was available for draw down net of outstanding commercial paper balances. The Company believes these amounts, combined with expected net cash flows generated from operating and investing activities, will provide ample liquidity to cover these debt maturities and other cash flow needs of the Company over the course of the next twelve months.

The Company continually explores strategic acquisition opportunities which may result in the use of cash. Given the nature of the acquisition process, the timing and amounts of such expenditures are not always predictable. The Company expects that any acquisitions requiring funding in excess of cash on hand would be financed using available borrowing capacity.

On April 4, 2021, the Company completed the sale of its U.S. display and packaging business to Hood Container Corporation for net cash proceeds totaling $79.7 million. The proceeds from the sale were received on April 5, 2021. During the quarter ended October 3, 2021, the Company finalized the working capital settlement related to this sale. The settlement resulted in additional cash proceeds of $2.0 million. The proceeds were used for general corporate purposes.

On April 20, 2021, the Company's Board of Directors authorized the repurchase of the Company's common stock in an aggregate amount of up to $350 million. The new authorization replaced the previous authorization dated February 10, 2016. Under the authorization, which has no expiration date, the Company may choose to purchase shares in the open market from individual holders through privately negotiated transactions, an accelerated share repurchase program, a combination of these methods, or otherwise. The timing and amount of the repurchases, if any, will depend upon several factors, including market and business conditions and the nature of other investment opportunities. Common stock repurchases, including with respect to any share repurchase program, may be limited, suspended or discontinued at any time without prior notice.

~~On May 6, 2021, the Company repurchased 53.5 thousand shares for $3.6 million from a private stockholder based upon the average stock price on that day.~~

On May 10, 2021, the Company entered into an accelerated share repurchase agreement ("ASR Agreement") with a financial institution to repurchase shares of common stock. In exchange for an upfront payment of $150 million, which was funded using available cash on hand, the financial institution delivered approximately 1.8 million of initial shares to the Company. These initial shares represented 80% of the expected number of shares to be repurchased during the repurchase period based upon the closing stock price on May 10, 2021 of $68.50 per share. The initial shares received were retired by the Company. The final number of shares repurchased and retired was based on the Company's volume-weighted average share price during the repurchase period, less a discount and subject to certain adjustments (the "Settlement Price").

In July 2021, pursuant to the ASR Agreement, the financial institution elected to fully accelerate settlement of the share repurchase agreement. Accordingly, 504.7 thousand additional shares were transferred to the Company based upon an overall effective Settlement Price of $66.47 and were retired.

As discussed in "Other Items - Pension Plan Termination," the Inactive Plan was terminated effective September 30, 2019. The Company settled the liabilities under the Inactive Plan during the second quarter of 2021 through a combination of lump-sum payments and annuity purchases, making additional contributions to the Inactive Plan totaling approximately $133 million during the second quarter of 2021 in order to be fully funded at the time the liabilities were settled.

The Company anticipates making additional contributions to its other pension and postretirement plans of ~~approximately $6.5~~approximately $7 million during the remainder of ~~2021,~~2022, which would result in total contributions to these plans of approximately ~~$39~~$38 million in ~~2021.~~2022. Future funding requirements beyond the current year will vary depending largely on actual investment returns, future actuarial assumptions, and legislative actions.

~~SONOCO PRODUCTS COMPANY~~

Fair Value Measurements, Foreign Exchange Exposure and Risk Management

Certain assets and liabilities are reported in the Company’s financial statements at fair value, the fluctuation of which can impact the Company’s financial position and results of operations. Items reported by the Company at fair value on a recurring basis include derivative contracts and pension and deferred compensation related assets. The valuation of the vast majority of these items is based either on quoted prices in active and accessible markets or on other observable inputs.

As a result of operating globally, the Company is exposed to changes in foreign exchange rates. The exposure is well diversified, as the Company’s operations are located throughout the world, and the Company generally sells in the same countries where it produces with both revenue and costs transacted in the local currency. The Company monitors these exposures and ~~may use~~from time to time uses traditional currency swaps and forward exchange contracts to hedge a portion of forecasted transactions that are denominated in foreign currencies, foreign currency assets and liabilities or net investment in foreign subsidiaries. The Company’s foreign operations are exposed to political, geopolitical and cultural risks, but the risks are mitigated by diversification and the relative stability of the countries in which the Company has significant operations.

Due to the highly inflationary economy in Venezuela, the Company considers the U.S. dollar to be the functional currency of its Venezuelan operations and uses the official exchange rate when remeasuring the financial results of those operations. Economic conditions in Venezuela have worsened considerably over the past several years and there is no indication that conditions are ~~due~~likely to improve in the foreseeable future. Further deterioration could result in the recognition of an impairment charge or a deconsolidation of the Company's Venezuelan subsidiary. At ~~October~~July 3, ~~2021,~~2022, the carrying value of the Company's net investment in its Venezuelan operations was approximately $2.0 million. In addition, at ~~October~~July 3, ~~2021,~~2022, the Company's Accumulated Other Comprehensive Loss included a cumulative translation loss of $3.8 million related to its Venezuelan operations which would need to be reclassified to net income in the event of a complete exit of the business or a deconsolidation of the Venezuelan operations.

~~The~~During the first quarter of 2022, the three-year cumulative rate of inflation in Turkey rose above 100 percent, the threshold at which it is deemed to be a highly inflationary economy under U.S. GAAP. Accordingly, effective as of the beginning of the second quarter of 2022, the Company ~~has~~ considers the U.S. dollar to be the functional currency of its

SONOCO PRODUCTS COMPANY

operations in Turkey and has remeasured monetary assets and liabilities denominated in Turkish lira to U.S. dollars with changes recorded through earnings. The impact of applying highly inflationary accounting to Turkey in the ~~United Kingdom and elsewhere~~second quarter of 2022 was a pretax charge of approximately $1.8 million (approximately $1.4 million after tax). The magnitude of future earnings impacts is uncertain as such impacts are dependent upon unpredictable further movements in ~~Europe that had~~ the ~~potential~~Turkish lira relative to ~~be impacted by~~ the ~~exit~~U.S. dollar. In addition to remeasurement-related charges, significant deterioration in the Turkish economy could result in the recognition of the U.K. from the European Union (Brexit) at the end of January 2020 and the new E.U.-U.K. Trade and Cooperation Agreement which went into effect December 31, 2020. Our U.K. operations developed contingency plans regarding potential customs clearance issues, tariffs and other uncertainties resulting from Brexit and the new agreement with the European Union. Although it is difficult to predict all of the possible future impacts to our supply chain or in our customers' downstream markets, the operational impacts subsequent to Brexit have been minor. The Company has evaluated the future potential operational impacts and uncertainties of Brexit and continues to believe that the likelihood of a material impact on our future results of operations is low. Although there are some cross-border sales made out of and into the U.K., most of whatimpairment charges. However, the Company ~~produces~~believes its exposure is limited to its net investment in the U.K. is also sold in the U.K. and the same is true for continental Europe. In some cases, companies that have been importing from Europe into the U.K. are now seeking local sources, which has actually been positive for our U.K. operations. Sales in our U.K. operations totaledTurkey of approximately ~~$127~~$17.0 million ~~for the full year 2020 and approximately $106 million in the first nine months~~as of ~~2021.~~July 3, 2022.

The Company routinely enters into derivative currency contracts to fix the exchange rate on certain anticipated foreign currency cash flows. The total market value of these instruments was a net unfavorable position of ~~$0.4~~$0.6 million at ~~October~~July 3, ~~2021~~2022 and a net ~~favorable~~unfavorable position of ~~$0.6~~$0.1 million at December 31, ~~2020.~~2021. These contracts qualify as cash flow hedges and have maturities ranging to ~~July 2022.~~September 2023. In addition, at ~~October~~July 3, ~~2021,~~2022, the Company had various currency contracts outstanding to fix the exchange rate on certain foreign currency assets and liabilities. Although placed as an economic hedge, the Company does not apply hedge accounting to these contracts, the fair value of which was not material at ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020.~~2021.

The Company routinely enters into derivative commodity contracts to fix the cost of a portion of anticipated raw materials and energy-related purchases. The total net fair market value of these instruments was a favorable position of ~~$10.4~~$6.6 million at ~~October~~July 3, ~~2021~~2022 and ~~an unfavorable~~a favorable position of ~~$0.2~~$2.2 million at December 31, ~~2020.~~2021. Natural gas and aluminum hedge contracts covering an equivalent of ~~4.5~~6.4 million MMBTUs and ~~904~~84 metric tons, respectively, were outstanding at ~~October~~July 3, ~~2021.~~2022. These contracts, some of which are designated as cash ~~flow~~flow hedges, have maturities ranging to December ~~2022.~~2024.

~~The Company's 1%, 150~~Pursuant to the registered public offering of unsecured 2.850% notes with a principal amount of $500.0 million ~~euro-denominated debt matured~~maturing on ~~May 25, 2021. On April 7, 2021,~~February 1, 2032, the Company entered into treasury lock derivative instruments with two ~~forward contracts to buy~~banks, with a ~~total~~notional principal amount of ~~150~~$150.0 million ~~euros. The~~each on December 29, 2021. These instruments had the risk management objective of ~~the forward contracts was to manage foreign currency risk related~~reducing exposure to the ~~Company's funding~~Company of increases in the underlying Treasury index up to the date of pricing of the ~~debt repayment upon maturity.~~notes. The derivatives were settled when the bonds priced on January 11, 2022, with the Company ~~recognized~~recognizing a gain ~~of $4,387 upon the May 21, 2021 maturity of these forward contracts. The gain is~~

~~SONOCO PRODUCTS COMPANY~~

~~included in "Selling, general and administrative expenses"~~ on the ~~Company's Condensed Consolidated Statements~~settlement of ~~Income for~~$5.2 million.

During the ~~three and nine months ended October 3, 2021.~~

At ~~October 3, 2021,~~first quarter of 2022, the U.S. dollar ~~had~~ strengthened against ~~most of~~the euro, the British pound, the Canadian dollar, the Brazilian real, and the Mexican peso, the functional currencies in which a majority of the Company's foreign ~~operations compared to December 31, 2020, resulting~~investments are held. The net impact of these changes resulted in a net translation loss of $73.7 million being recorded in "Accumulated other comprehensive loss" for the ~~nine~~six months ended ~~October~~July 3, ~~2021 of $57.3 million being recorded in~~ ~~"Accumulated other comprehensive loss."~~2022.

Restructuring and Impairment

Information regarding restructuring charges and restructuring-related asset impairment charges is provided in Note 5 to the Company’s Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.

New Accounting Pronouncements

Information regarding new accounting pronouncements is provided in Note 2 to the Company’s Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.

5860

SONOCO PRODUCTS COMPANY


Item 3.			Quantitative and Qualitative Disclosures About Market Risk.

Information about the Company’s exposure to market risk is discussed under Part I, Item 2 in this report and was disclosed in its Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, which was filed with the Securities and Exchange Commission on February ~~26, 2021.~~28, 2022. There have been no other material quantitative or qualitative changes in market risk exposure since the date of that filing.


Item 4.			Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision, and with the participation, of our management, including our Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we conducted an evaluation pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, ("the Exchange Act") of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on this evaluation, our CEO and CFO concluded that such controls and procedures, as of ~~October~~July 3, ~~2021,~~2022, the end of the period covered by this Quarterly Report on Form 10-Q, were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. For this purpose, disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information that is required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

In response to the COVID-19 pandemic, we have required certain employees, some of whom are involved in the operation of our internal controls over financial reporting, to work from home. Despite this change, thereThere have been no changes in the Company’s internal control over financial reporting occurring during the quarter ended ~~October~~July 3, ~~2021,~~2022, that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting. ~~We are continually monitoring and assessing the COVID-19 pandemic on our internal controls to minimize any impact it may have on their design and operating effectiveness.~~

PART II. OTHER INFORMATION


Item 1.			Legal Proceedings.

Information with respect to legal proceedings and other exposures appears in Part I - Item 3 - “Legal Proceedings” and Part II - Item 8 - “Financial Statements and Supplementary Data” (Note 16 - “Commitments and Contingencies”) in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, and in Part I - Item 1 - “Financial Statements” (Note 16 - “Commitments and Contingencies”) of this report.

Environmental Matters

The Company has been named as a potentially responsible party ~~(PRP)~~("PRP") at several environmentally contaminated sites not owned by the Company. All of the sites are also the responsibility of other parties. The Company's liability, if any, is shared with such other parties, but the Company's share has not been finally determined in most cases. In some cases, the Company has cost-sharing arrangements with other PRPs with respect to a particular site. Such agreements relate to the sharing of legal defense costs or cleanup costs, or both. The Company has assumed, for purposes of estimating amounts to be accrued, that the other parties to such cost-sharing agreements will perform as agreed. It appears that final resolution of some of the sites is years away, and actual costs to be incurred for these environmental matters in future periods is likely to vary from current estimates because of the inherent uncertainties in evaluating environmental exposures. Accordingly, the ultimate cost to the Company with respect to such sites, beyond what has been accrued at ~~October~~July 3, ~~2021,~~2022, cannot be determined. As of ~~October~~July 3, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had accrued ~~$7.4~~$7.2 million and ~~$8.1~~$7.4 million, respectively, related to environmental contingencies. The Company periodically reevaluates the assumptions used in determining the appropriate reserves for environmental matters as additional information becomes available and, when warranted, makes appropriate adjustments.

Other legal matters

Additional information regarding legal proceedings is provided in Note 16 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

5961

SONOCO PRODUCTS COMPANY


Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES

Period
Total Number of
Shares Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs1
Maximum
Number or Approximate Dollar Value of Shares
that May Yet be
Purchased under the
Plans or Programs1
7/5/21 - 8/8/21 504,739 2 $ 66.47 2 504,739 2 $ 196,385,005
8/9/21 - 9/5/21 — $ — — $ 196,385,005
9/6/21 - 10/3/21 — $ — — $ 196,385,005
Total 504,739 $ 66.47 504,739 $ 196,385,005


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1	Maximum Number or Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs1
4/4/22 - 5/8/22	—	$	—	—	$	137,971,853
5/9/22 - 6/5/22	—	$	—	—	$	137,971,853
6/6/22 - 7/3/22	—	$	—	—	$	137,971,853
Total	—	$	—	—	$	137,971,853


1			On April 20, 2021, the Company's Board of Directors authorized the repurchase of the Company's common stock in an aggregate amount of up to $350.0 million. ~~As of October 3,~~Following several repurchase transactions in 2021, a total of ~~$196.4~~approximately $138.0 million ~~remains~~remained available for share repurchases at December 31, 2021. No shares were repurchased under this ~~authorization.~~authorization during the six-month period ended July 3, 2022.

2			On May 10, 2021, the Company entered into an accelerated share repurchase agreement ("ASR Agreement") with a financial institution to repurchase shares of the Company's common stock. In exchange for an upfront payment of $150.0 million, the financial institution delivered 1,751,825 of initial shares to the Company. These initial shares represented 80% of the expected number of shares to be repurchased during the repurchase period based upon the closing stock price on May 10, 2021 of $68.50 per share. The initial shares received were retired by the Company. The final number of shares repurchased and retired was based on the Company's volume-weighted average share price during the repurchase period, less a discount and subject to certain adjustments (the "Settlement Price"). In July 2021, pursuant to the ASR Agreement, the financial institution elected to fully accelerate settlement of the share repurchase agreement. Accordingly, 504,739 additional shares were transferred to the Company based upon an overall effective Settlement Price of $66.47 and were retired.

6062

~~SONOCO PRODUCTS COMPANY~~


Item 6.			Exhibits.


			Exhibit Index
3.1			Restated Articles of Incorporation, as amended ~~through~~ April ~~23, 2021~~21, 2022 (incorporated by reference to Exhibit 3.1 to the Registrant's Form ~~8-K/A,~~8-K filed April ~~27, 2021)~~22, 2022)
3.2			By-Laws of Sonoco Products Company, as amended ~~April 21, 2021~~July 20, 2022 (incorporated by reference to Exhibit 3.2 to the Registrant's Form 8-K, filed ~~April~~July 26, ~~2021)~~2022)
10.1			~~Amendment to the Sonoco Savings~~Separation Agreement dated June 13, 2022, by and ~~Retirement Plan~~
~~10.2~~			~~Amendment to the Omnibus Benefit Restoration Plan of~~between Julie C. Albrecht and Sonoco Products Company
15			Letter re: unaudited interim financial information
31			Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(a)
32			Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(b)
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~SONOCO PRODUCTS COMPANY~~

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SONOCO PRODUCTS COMPANY

(Registrant)

Date:

~~November~~August 2, ~~2021~~2022

By:

/s/ ~~Julie C. Albrecht~~Robert R. Dillard

~~Julie C. Albrecht~~Robert R. Dillard

~~Vice President and~~ Chief Financial Officer

(principal financial officer)

/s/ James W. Kirkland

James W. Kirkland

Corporate Controller

(principal accounting officer)


	U.S. Display and Packaging		Wilson Thermoforming
Trade accounts receivable	$	26,342	$	—
Inventories	8,434		1,805
Property, plant and equipment, net	9,551		550
Right of use asset - operating leases	11,627		147
Goodwill	53,039		1,058
Trade accounts payable	(10,735)		—
Accrued expenses	(2,197)		(54)
Operating lease liabilities	(12,343)		(70)
Other net tangible assets	716		—
Net asset disposal	$	84,434	$	3,436
Net Proceeds	81,675		3,528
Loss/(Gain) on sale of business	$	2,759	$	(92)


	Severance and Termination Benefits		Asset Impairment/ Disposal of Assets		Other Costs		Total
Accrual Activity
Liability at December 31, 2020	$	15,955	$	—	$	511	$	16,466
2021 charges/(gains)	7,592		(8,207)		4,663		4,048

Cash receipts/(payments)	(14,790)		13,442		(5,059)		(6,407)
Asset write downs/disposals	—		(5,235)		356		(4,879)
Foreign currency translation	(294)		—		1		(293)
Liability at October 3, 2021	$	8,463	$	—	$	472	$	8,935


		Nine months ended October 3, 2021						Nine months ended September 27, 2020
		Before Tax Amount		Tax (Expense) Benefit		After Tax Amount		Before Tax Amount		Tax (Expense) Benefit		After Tax Amount
Foreign currency items:
	Net other comprehensive loss from foreign currency items(a)	$	(57,261)	—		$	(57,261)	$	(27,866)	(7,581)		$	(35,447)
Defined benefit pension items:
	Other comprehensive income/(loss) before reclassifications	14,923		(3,621)		11,302		(1,177)		292		(885)
	Amounts reclassified from accumulated other comprehensive loss to net (loss)/income(b)	562,625		(144,104)		418,521		21,877		(5,516)		16,361
	Net other comprehensive income/(loss) from defined benefit pension items	577,548		(147,725)		429,823		20,700		(5,224)		15,476
Gains and losses on cash flow hedges:
	Other comprehensive income/(loss) before reclassifications	10,536		(2,732)		7,804		(4,345)		983		(3,362)
	Amounts reclassified from accumulated other comprehensive loss to net (loss)/income	(3,263)		860		(2,403)		3,847		(925)		2,922
	Amounts reclassified from accumulated other comprehensive loss to fixed assets	(42)		11		(31)		—		—		—
	Net other comprehensive income/(loss) from cash flow hedges	7,231		(1,861)		5,370		(498)		58		(440)
Other comprehensive income/(loss):		$	527,518	$	(149,586)	$	377,932	$	(7,664)	$	(12,747)	$	(20,411)


	For the nine months ended October 3, 2021
Dollars in thousands, except per share data	GAAP		Restructuring/Asset Impairments(1)		Other Adjustments(1)		Base
Operating profit	$	382,112	$	8,889	$	(294)	$	390,707
Non-operating pension costs	562,818		—		(562,818)		—
Interest expense, net	46,744		—		2,165		48,909
Loss from the early extinguishment of debt	20,184		—		(20,184)		—
(Loss)/income before income taxes	$	(247,634)	$	8,889	$	580,543	$	341,798
(Benefit from)/Provision for income taxes	(91,542)		2,653		169,255		80,366
(Loss)/income before equity in earnings of affiliates	$	(156,092)	$	6,236	$	411,288	$	261,432
Equity in earnings of affiliates, net of tax	5,701						5,701
Net (loss)/income	$	(150,391)	$	6,236	$	411,288	$	267,133
Net loss attributable to noncontrolling interests	(243)						(243)
Net (loss)/income attributable to Sonoco	$	(150,634)	$	6,236	$	411,288	$	266,890
Diluted Weighted average common shares outstanding(2):	100,039				468		100,507
Per diluted common share*	$	(1.51)	$	0.06	$	4.09	$	2.66

*Due to rounding individual items may not sum across