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 ~~July 3, 2022~~April 2, 2023


☐			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

(Exact name of registrant as specified in its charter)


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

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

(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~~“emerging growth ~~company"~~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 ☒

The number of shares outstanding of the registrant's no par value common stock as of ~~July 22, 2022~~April 21, 2023 was ~~97,506,056.~~97,955,689.

SONOCO PRODUCTS COMPANY

INDEX


PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements:	3

	Condensed Consolidated Balance Sheets - ~~July~~– April 2 , 202 3 ~~2022~~ (unaudited) and December 31, ~~2021~~202 2 (unaudited)	3

	Condensed Consolidated Statements of Income – Three ~~and Six~~ Months Ended ~~July 3, 2022~~April 2, 2023 (unaudited) and ~~July 4~~April 3 , ~~2021~~202 2 (unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income -– Three ~~and Six~~ Months Ended ~~July~~April 2, 202 3 ~~2022~~ (unaudited) and ~~July~~April ~~4, 2021~~3, 202 2 (unaudited)	5

	Condensed Consolidated Statements of Changes in Total Equity – Three ~~and Six~~Months Ended ~~July~~April 2 , 202 3 ~~2022~~ (unaudited) and ~~July~~April ~~4, 2021~~3 , 202 2 (unaudited)	6

	Condensed Consolidated Statements of Cash Flows – ~~Six~~Three Months Ended ~~July~~April 2, 202 3 ~~2022~~ (unaudited) and ~~July~~April ~~4, 2021~~3, 202 2 (unaudited)	87

	Notes to Condensed Consolidated Financial Statements (unaudited)	98

	~~Report of Independent Registered Public Accounting Firm~~	38

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3933

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	5947

Item 4.	Controls and Procedures.	5947

PART II. OTHER INFORMATION		5947

Item 1.	Legal Proceedings.	5947

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

Item 6.	Exhibits.	6148

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(Dollars and shares in thousands)


		July 3, 2022		December 31, 2021			April 2, 2023		December 31, 2022*
Assets	Assets					Assets
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	174,996	$	170,978	Cash and cash equivalents	$	209,651	$	227,438
Trade accounts receivable, net of allowances	Trade accounts receivable, net of allowances	1,025,680		755,609		Trade accounts receivable, net of allowances	903,424		862,712
Other receivables	Other receivables	98,735		95,943		Other receivables	89,554		99,492
Inventories, net:	Inventories, net:					Inventories, net:
Finished and in process	Finished and in process	457,139		199,823		Finished and in process	472,641		453,981
Materials and supplies	Materials and supplies	517,352		362,290		Materials and supplies	610,364		641,577
Prepaid expenses	Prepaid expenses	102,582		74,034		Prepaid expenses	76,693		76,054

		2,376,484		1,658,677			2,362,327		2,361,254
Property, Plant and Equipment, Net	Property, Plant and Equipment, Net	1,628,818		1,297,500		Property, Plant and Equipment, Net	1,717,615		1,710,399
Goodwill	Goodwill	1,658,358		1,324,501		Goodwill	1,679,547		1,675,311
Other Intangible Assets, Net	Other Intangible Assets, Net	733,214		278,143		Other Intangible Assets, Net	717,784		741,598
Deferred Income Taxes	Deferred Income Taxes	23,026		25,818		Deferred Income Taxes	47,867		29,878
Right of Use Asset-Operating Leases	Right of Use Asset-Operating Leases	296,643		268,390		Right of Use Asset-Operating Leases	289,017		296,781
Other Assets	Other Assets	272,967		220,206		Other Assets	247,277		237,719
Total Assets	Total Assets	$	6,989,510	$	5,073,235	Total Assets	$	7,061,434	$	7,052,940
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current Liabilities	Current Liabilities					Current Liabilities
Payable to suppliers	Payable to suppliers	$	938,934	$	721,312	Payable to suppliers	$	746,118	$	818,885
Accrued expenses and other	Accrued expenses and other	386,663		381,350		Accrued expenses and other	382,560		405,671
Notes payable and current portion of long-term debt	Notes payable and current portion of long-term debt	399,025		411,557		Notes payable and current portion of long-term debt	447,601		502,440
Accrued taxes	Accrued taxes	20,516		11,544		Accrued taxes	33,211		16,905

		1,745,138		1,525,763			1,609,490		1,743,901
Long-term Debt, Net of Current Portion	Long-term Debt, Net of Current Portion	2,727,916		1,199,106		Long-term Debt, Net of Current Portion	2,717,891		2,719,783
Noncurrent Operating Lease Liabilities	Noncurrent Operating Lease Liabilities	254,520		234,167		Noncurrent Operating Lease Liabilities	243,714		250,994
Pension and Other Postretirement Benefits	Pension and Other Postretirement Benefits	153,807		158,265		Pension and Other Postretirement Benefits	118,163		120,084
Deferred Income Taxes	Deferred Income Taxes	130,421		70,482		Deferred Income Taxes	127,674		107,293
Other Liabilities	Other Liabilities	41,317		35,911		Other Liabilities	38,937		38,088

Commitments and Contingencies						Commitments and Contingencies

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 97,495 and 97,370 shares issued and outstanding at July 3, 2022 and December 31, 2021, respectively		7,175		7,175
Authorized 300,000 shares 97,955 and 97,645 shares issued and outstanding at April 2, 2023 and December 31, 2022, respectively						Authorized 300,000 shares 97,955 and 97,645 shares issued and outstanding at April 2, 2023 and December 31, 2022, respectively	7,175		7,175
Capital in excess of stated value	Capital in excess of stated value	128,332		119,690		Capital in excess of stated value	138,008		140,539
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(430,677)		(359,425)		Accumulated other comprehensive loss	(395,084)		(430,083)
Retained earnings	Retained earnings	2,224,845		2,070,005		Retained earnings	2,448,299		2,348,183
Total Sonoco Shareholders’ Equity	Total Sonoco Shareholders’ Equity	1,929,675		1,837,445		Total Sonoco Shareholders’ Equity	2,198,398		2,065,814
Noncontrolling Interests	Noncontrolling Interests	6,716		12,096		Noncontrolling Interests	7,167		6,983
Total Equity	Total Equity	1,936,391		1,849,541		Total Equity	2,205,565		2,072,797
Total Liabilities and Equity	Total Liabilities and Equity	$	6,989,510	$	5,073,235	Total Liabilities and Equity	$	7,061,434	$	7,052,940

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 (the ~~"United States"~~“United States” or ~~"U.S."~~“U.S.”).

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars and shares in thousands except per share data)


		Three Months Ended				Six Months Ended					Three Months Ended
		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021				April 2, 2023		April 3, 2022
Net sales	Net sales	$	1,913,332	$	1,382,754	$	3,684,314	$	2,736,058	Net sales		$	1,729,783	$	1,770,982
Cost of sales	Cost of sales	1,526,331		1,120,101		2,925,748		2,195,504		Cost of sales		1,355,355		1,399,417
Gross profit	Gross profit	387,001		262,653		758,566		540,554		Gross profit		374,428		371,565
Selling, general and administrative expenses	Selling, general and administrative expenses	178,962		128,807		369,323		274,037		Selling, general and administrative expenses		187,976		190,362
Restructuring/Asset impairment charges/(income)		10,563		(1,445)		22,705		5,401
Loss on divestiture of business		—		—		—		5,516
Restructuring/Asset impairment charges										Restructuring/Asset impairment charges		28,814		12,142
Gain on divestiture of business and other assets										Gain on divestiture of business and other assets		72,010		—
Operating profit	Operating profit	197,476		135,291		366,538		255,600		Operating profit		229,648		169,061
Non-operating pension costs	Non-operating pension costs	1,677		555,009		3,002		562,293		Non-operating pension costs		3,658		1,324
Interest expense	Interest expense	23,947		17,513		44,528		36,014		Interest expense		34,232		20,581
Interest income	Interest income	786		2,719		2,302		3,489		Interest income		1,562		1,516
Loss from the early extinguishment of debt		—		20,184		—		20,184
Income/(Loss) before income taxes		172,638		(454,696)		321,310		(359,402)
Provision for/(Benefit from) income taxes		44,599		(118,151)		79,888		(94,106)
Income/(Loss) before equity in earnings of affiliates		128,039		(336,545)		241,422		(265,296)

Income before income taxes										Income before income taxes		193,320		148,672
Provision for income taxes										Provision for income taxes		46,912		35,289
Income before equity in earnings of affiliates										Income before equity in earnings of affiliates		146,408		113,383
Equity in earnings of affiliates, net of tax	Equity in earnings of affiliates, net of tax	3,728		2,306		5,952		3,350		Equity in earnings of affiliates, net of tax		1,856		2,224
Net income/(loss)		131,767		(334,239)		247,374		(261,946)
Net (income)/loss attributable to noncontrolling interests		(95)		169		(369)		172
Net income/(loss) attributable to Sonoco		$	131,672	$	(334,070)	$	247,005	$	(261,774)
Net income										Net income		148,264		115,607
Net loss/(income) attributable to noncontrolling interests										Net loss/(income) attributable to noncontrolling interests		55		(274)
Net income attributable to Sonoco										Net income attributable to Sonoco		$	148,319	$	115,333

Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	97,999		100,082		97,961		100,571		Basic		98,167		97,924
Diluted	Diluted	98,686		100,082		98,621		100,571		Diluted		98,615		98,554
Per common share:	Per common share:									Per common share:
Net income/(loss) attributable to Sonoco:
Net income attributable to Sonoco:										Net income attributable to Sonoco:
Basic	Basic	$	1.34	$	(3.34)	$	2.52	$	(2.60)	Basic		$	1.51	$	1.18
Diluted	Diluted	$	1.33	$	(3.34)	$	2.50	$	(2.60)	Diluted		$	1.50	$	1.17

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (unaudited)

(Dollars in thousands)


		Three Months Ended				Six Months Ended					Three Months Ended
		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021			April 2, 2023		April 3, 2022
Net income/(loss)		$	131,767	$	(334,239)	$	247,374	$	(261,946)
Other comprehensive (loss)/income:
Net income										Net income	$	148,264	$	115,607
Other comprehensive income:										Other comprehensive income:
Foreign currency translation adjustments	Foreign currency translation adjustments	(70,314)		12,596		(69,608)		(19,945)		Foreign currency translation adjustments	31,808		706
Changes in defined benefit plans, net of tax	Changes in defined benefit plans, net of tax	(1,928)		422,745		(1,737)		428,130		Changes in defined benefit plans, net of tax	916		191
Changes in derivative financial instruments, net of tax	Changes in derivative financial instruments, net of tax	(2,090)		3,482		460		4,440		Changes in derivative financial instruments, net of tax	2,514		2,550
Other comprehensive (loss)/ income		$	(74,332)	$	438,823	$	(70,885)	$	412,625
Other comprehensive income										Other comprehensive income	$	35,238	$	3,447
Comprehensive income:	Comprehensive income:	57,435		104,584		176,489		150,679		Comprehensive income:	183,502		119,054
Less: Net (income)/loss attributable to noncontrolling interests		$	(95)	$	169	$	(369)	$	172
Less: Other comprehensive loss/(income) attributable to noncontrolling interests		$	524	$	(759)	$	(367)	$	(239)
Less: Net loss/(income) attributable to noncontrolling interests										Less: Net loss/(income) attributable to noncontrolling interests	55		(274)
Less: Other comprehensive income attributable to noncontrolling interests										Less: Other comprehensive income attributable to noncontrolling interests	(239)		(891)
Comprehensive income attributable to Sonoco	Comprehensive income attributable to Sonoco	$	57,864	$	103,994	$	175,753	$	150,612	Comprehensive income attributable to Sonoco	$	183,318	$	117,889

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF

CHANGES IN TOTAL EQUITY (unaudited)

(Dollars and shares in thousands)


		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)
Translation gain/(loss)																		Translation gain/(loss)	706											(185)								891
Defined benefit plan adjustment, net of tax	Defined benefit plan adjustment, net of tax	5,385									5,385							Defined benefit plan adjustment, net of tax	191											191
Derivative financial instruments, net of tax	Derivative financial instruments, net of tax	958									958							Derivative financial instruments, net of tax	2,550											2,550
Other comprehensive loss	Other comprehensive loss	$	(26,198)								$	(25,678)				$	(520)	Other comprehensive loss	$	3,447										$	2,556							$	891
Dividends	Dividends	(45,510)											(45,510)					Dividends	(44,124)															(44,124)
Issuance of stock awards	Issuance of stock awards	364		245			364											Issuance of stock awards	377				182			377
Shares repurchased	Shares repurchased	(5,051)		(85)			(5,051)											Shares repurchased	(3,410)				(60)			(3,410)
Share-based compensation	Share-based compensation	6,372					6,372											Share-based compensation	10,689							10,689
Purchase of noncontrolling interest																		Purchase of noncontrolling interest	(13,196)							(7,080)												(6,116)

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


		Total Equity		Common Shares			Capital in 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, 2021		$	1,849,541	97,370	$	7,175			$	119,690			$	(359,425)		$	2,070,005			$	12,096
Net income		115,607											115,333			274
Other comprehensive income/(loss):
Translation income/(loss)		706									(185)					891
December 31, 2022																		December 31, 2022	$	2,072,797			97,645	$	7,175			$	140,539			$	(430,083)			$	2,348,183			$	6,983
Net income/(loss)																		Net income/(loss)	148,264															148,319				(55)
Other comprehensive income:																		Other comprehensive income:
Translation gain																		Translation gain	31,808											31,569								239
Defined benefit plan adjustment, net of tax	Defined benefit plan adjustment, net of tax	191									191							Defined benefit plan adjustment, net of tax	916											916
Derivative financial instruments, net of tax	Derivative financial instruments, net of tax	2,550									2,550							Derivative financial instruments, net of tax	2,514											2,514
Other comprehensive income	Other comprehensive income	$	3,447								$	2,556				$	891	Other comprehensive income	$	35,238										$	34,999							$	239
Dividends	Dividends	(44,124)											(44,124)					Dividends	(48,203)															(48,203)
Purchase of noncontrolling interest		(13,196)					(7,080)									(6,116)

Issuance of stock awards	Issuance of stock awards	377		182			377											Issuance of stock awards	472				485			472
Shares repurchased	Shares repurchased	(3,410)		(60)			(3,410)											Shares repurchased	(10,576)				(175)			(10,576)
Share-based compensation	Share-based compensation	10,689					10,689											Share-based compensation	7,573							7,573
April 3, 2022		$	1,918,931	97,492	$	7,175	$	120,266			$	(356,869)	$	2,141,214		$	7,145
Net income		131,767											131,672			95
Other comprehensive loss
Translation loss		(70,314)									(69,790)					(524)
Defined benefit plan adjustment, net of tax		(1,928)									(1,928)
Derivative financial instruments, net of tax		(2,090)									(2,090)
Other comprehensive loss		$	(74,332)								$	(73,808)				$	(524)
Dividends		(48,041)											(48,041)
Issuance of stock awards		263		13			263
Shares repurchased		(574)		(10)			(574)
Share-based compensation		8,377					8,377

July 3, 2022		$	1,936,391	97,495	$	7,175	$	128,332			$	(430,677)	$	2,224,845		$	6,716
April 2, 2023																		April 2, 2023	$	2,205,565			97,955	$	7,175	$	138,008			$	(395,084)			$	2,448,299			$	7,167

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Dollars in thousands)


		Six Months Ended					Three Months Ended
		July 3, 2022		July 4, 2021			April 2, 2023		April 3, 2022
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	247,374	$	(261,946)	Net income	$	148,264	$	115,607
Adjustments to reconcile net income to net cash provided by operating activities:	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		Asset impairments	18,616		5,511
Depreciation, depletion and amortization	Depreciation, depletion and amortization	145,952		121,792		Depreciation, depletion and amortization	82,137		73,315
Loss on early extinguishment of debt		—		20,184

Share-based compensation expense	Share-based compensation expense	19,065		11,199		Share-based compensation expense	7,573		10,689
Equity in earnings of affiliates		(5,952)		(3,350)
Equity in earnings of affiliates, net						Equity in earnings of affiliates, net	(1,856)		(2,224)
Cash dividends from affiliated companies	Cash dividends from affiliated companies	4,369		3,930		Cash dividends from affiliated companies	1,875		350
Net loss/(gain) on disposition of assets		(648)		(3,279)
Net loss on divestiture of businesses		—		5,516
Net (gain)/loss on disposition of assets						Net (gain)/loss on disposition of assets	(60,615)		190
Net gain on divestiture of business						Net gain on divestiture of business	(11,065)		—
Pension and postretirement plan expense	Pension and postretirement plan expense	4,826		576,297		Pension and postretirement plan expense	4,408		2,232
Pension and postretirement plan contributions	Pension and postretirement plan contributions	(30,843)		(162,352)		Pension and postretirement plan contributions	(4,931)		(28,095)
Net increase/(decrease) in deferred taxes		12,657		(154,242)
Increase in net deferred tax liabilities						Increase in net deferred tax liabilities	1,588		4,613
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	(174,064)		(104,925)		Trade accounts receivable	(33,485)		(129,670)
Inventories	Inventories	(232,734)		(61,724)		Inventories	13,549		(116,169)
Payable to suppliers	Payable to suppliers	148,319		121,054		Payable to suppliers	(71,553)		60,356
Prepaid expenses	Prepaid expenses	(1,539)		(2,581)		Prepaid expenses	350		(6,954)
Income taxes payable and other income tax items	Income taxes payable and other income tax items	26,447		7,965		Income taxes payable and other income tax items	22,030		13,786
Accrued expenses and other assets and liabilities	Accrued expenses and other assets and liabilities	11,553		(16,437)		Accrued expenses and other assets and liabilities	(18,883)		(2,477)
Net cash provided by operating activities	Net cash provided by operating activities	184,465		101,953		Net cash provided by operating activities	98,002		1,060
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	(148,917)		(99,959)		Purchases of property, plant and equipment	(83,401)		(67,507)
Cost of acquisitions, net of cash acquired	Cost of acquisitions, net of cash acquired	(1,333,769)		(2,353)		Cost of acquisitions, net of cash acquired	—		(1,348,589)
Proceeds from the sale of businesses, net		—		86,071
Proceeds from the sale of assets		4,798		7,433
Other net investing proceeds		(2,376)		4,304
Proceeds from the sale of business, net						Proceeds from the sale of business, net	13,839		—
Proceeds from the sale of assets, net						Proceeds from the sale of assets, net	71,405		183
Other net investing activities						Other net investing activities	(4,810)		145
Net cash used in investing activities	Net cash used in investing activities	(1,480,264)		(4,504)		Net cash used in investing activities	(2,967)		(1,415,768)
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	1,570,137		18,361		Proceeds from issuance of debt	9,621		1,530,145
Principal repayment of debt	Principal repayment of debt	(51,142)		(259,225)		Principal repayment of debt	(84,162)		(33,117)
Net change in commercial paper	Net change in commercial paper	(91,000)		128,000		Net change in commercial paper	12,000		(27,000)
Net decrease in outstanding checks		(14,599)		(15,620)
Proceeds from foreign exchange forward contracts and interest rate swaps		—		4,387
Net increase (decrease) in outstanding checks						Net increase (decrease) in outstanding checks	2,670		(15,759)

Cash dividends	Cash dividends	(91,525)		(90,401)		Cash dividends	(47,731)		(43,747)
Purchase of noncontrolling interest	Purchase of noncontrolling interest	(14,474)		—		Purchase of noncontrolling interest	—		(14,474)
Excess cash costs of early extinguishment of debt		—		(20,111)

Payments for share repurchases	Payments for share repurchases	(3,984)		(159,571)		Payments for share repurchases	(10,576)		(3,410)

Net cash provided/(used) by financing activities		1,303,413		(394,180)
Net cash (used in)/provided by financing activities						Net cash (used in)/provided by financing activities	(118,178)		1,392,638
Effects of Exchange Rate Changes on Cash	Effects of Exchange Rate Changes on Cash	(3,596)		(4,588)		Effects of Exchange Rate Changes on Cash	5,356		2,629
Net Increase/(Decrease) in Cash and Cash Equivalents		4,018		(301,319)
Net Decrease in Cash and Cash Equivalents						Net Decrease in Cash and Cash Equivalents	(17,787)		(19,441)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	170,978		564,848		Cash and cash equivalents at beginning of period	227,438		170,978
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	174,996	$	263,529	Cash and cash equivalents at end of period	$	209,651	$	151,537

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

See accompanying Notes to Condensed Consolidated Financial Statements (unaudited)

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. Certain amounts within “Cash Flows from Operating Activities” in the Condensed Consolidated Statements of Cash Flows for the three-month period ended April 3, 2022 have been reclassified to conform to the current year presentation. Operating results for the ~~three- and six-month periods~~three-month period ended ~~July 3, 2022,~~April 2, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022.~~2023. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~

With respect to the unaudited condensed consolidated financial information of the Company for the three- and six-month periods ended July 3, 2022 and July 4, 2021 included in this Form 10-Q, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated August 2, 2022 appearing herein, states that they did not audit and they do not express an opinion on that unaudited financial information. 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.

2022.

Note 2: New Accounting Pronouncements

In ~~March~~September 2022, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued Accounting Standards Update ~~("ASU"~~(“ASU”) ~~2022-02, "Financial Instruments — Credit Losses (Topic 326)~~2022-04 “Liabilities—Supplier Finance Programs (Subtopic 405-50): ~~Troubled Debt Restructurings and Vintage Disclosures."~~Disclosure of Supplier Finance Program Obligations.” The amendments in this ~~update eliminate~~ASU require that a buyer in a supplier finance program disclose qualitative and quantitative information about its supplier finance programs in each annual reporting period, including a description of key payment terms, amounts outstanding, and a rollforward of 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.outstanding obligation. In each interim reporting period, the amount outstanding requires disclosure. The amendments ~~in this update also require that an entity disclose current-period gross writeoffs by year of origination~~are effective 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,~~fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for 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 2021-08amendment on rollforward information, which is effective for fiscal years beginning after December 15, ~~2022, with early adoption permitted.~~2023. The Company ~~elected to early adopt ASU 2021-08~~adopted this standard in the first quarter of 2023, with the exception of the amendment on ~~a prospective basis as of January 1, 2022. The election to use practical expedients allowed under ASU 2021-08~~rollforward information, which will be ~~applied~~adopted in the first quarter of 2024. The adoption of the new standard did not have a material effect on ~~an acquisition-by-acquisition basis. There was no impact to~~ the ~~Company’s~~ consolidated financial ~~statements as of the adoption date.~~statements.

During the ~~six-month~~three-month period ended ~~July 3, 2022,~~April 2, 2023, there have been no other newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a material impact on the Company’s financial statements. Further, at ~~July 3, 2022,~~April 2, 2023, there are no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements.

~~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

As previously disclosed, on November 9, 2022, the Company entered into a definitive agreement to purchase the remaining equity interest in RTS Packaging, LLC (“RTS”), from joint venture partner WestRock Company (“WestRock”) and one WestRock paper mill in Chattanooga, Tennessee, for $330,000 in cash, subject to customary pricing adjustments. In January 2023, both the Company and WestRock received a request for additional information and documentary material from the Antitrust Division of the U.S. Department of Justice. The Company anticipates completing the transaction in the second half of 2023, subject to the satisfaction or waiver of the closing conditions contained in the purchase agreement, including the expiration or early termination of waiting periods or extensions thereof under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Upon completion of the transaction, the Company will own 100% of RTS, which is currently operated as a joint venture between Sonoco (35% ownership interest) and WestRock (65% ownership interest). The RTS joint venture was formed in 1997 and combined the former protective packaging operations of WestRock and the Company to market solid fiber partitions from recycled paperboard to glass container manufacturers and producers of wine, liquor, food, and pharmaceuticals. The transaction will give the Company full ownership of fourteen converting operations, including ten in the United States, two in Mexico, and two in South America and one paper mill in the United States. Upon completion of the transaction, approximately 1,100 individuals will become employees of the Company. The Company expects to fund the acquisition with new borrowings from lenders and cash on hand.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

On November 15, 2022, the Company completed the acquisition of S.P. Holding, Skjern A/S (“Skjern”), a privately owned manufacturer of paper based in Skjern, Denmark for $88,647, net of cash acquired. Skjern produces high-grade paperboard from recycled paper for rigid paper containers, tubes and cores, and other applications. Goodwill for Skjern, none of which is expected to be deductible for income tax purposes, consists of increased access to certain markets and existing customer relationships. Skjern's financial results are included in the Company's Industrial Paper Packaging segment.

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


	Initial Estimate		Measurement Period Adjustments		Preliminary Allocation
Trade accounts receivable	$	8,055	$	—	$	8,055
Other receivables	193		—		193
Inventories	2,595		14		2,609
Prepaid expenses	349		—		349
Property, plant and equipment	24,334		4,921		29,255
Right of use asset - operating leases	28		—		28
Other intangible assets	42,818		(3,488)		39,330
Goodwill	29,059		(1,447)		27,612

Payable to suppliers	(3,466)		—		(3,466)
Accrued expenses and other	(1,173)		—		(1,173)
Taxes payable	(576)		—		(576)

Noncurrent operating lease liabilities	(20)		—		(20)

Deferred income taxes	(13,549)		—		(13,549)
Total purchase price, net of cash acquired	$	88,647	$	—	$	88,647

The allocation of the purchase price of Skjern to the tangible and intangible assets acquired and liabilities assumed, as reflected under the heading “Preliminary Allocation” in the table above, is based on the Company's preliminary allocations 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; and deferred income taxes, and expects to complete its valuations within one year of the date of acquisition.

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

On January 26, 2022, the Company completed the acquisition of Ball Metalpack Holding, LLC, renamed Sonoco Metal Packaging ("(“Metal ~~Packaging"~~Packaging”), a leading supplier of sustainable metal packaging for food and household products and the largest aerosol can producer in North America, for $1,348,589, net of cash acquired. As previously disclosed, final consideration was subject to customary post-closing adjustments for working capital, cash and indebtedness and was finalized in the second quarter of 2022. The Company received cash from the sellers totaling $14,820, of which $6,924 was included in "Other receivables" in the Company's Condensed Consolidated Balance Sheet at April 3, 2022. Prior to the Company's acquisition of Metal Packaging, Ball Metalpack Holding, LLC was a joint venture formed in 2018 and owned by Platinum Equity (51%) and Ball Corporation (49%). Metal Packaging consists of 8eight manufacturing plants in the United States and a headquarters facility in Broomfield, Colorado. ~~This acquisition fits~~

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

During the ~~Company's strategy of investing in~~three-month period ended April 2, 2023, the Company finalized its core businesses as it complements the Company's largest Consumer Packaging franchise, global rigid paper containers, and further expands the Company's sustainable packaging portfolio to include metal packaging.

~~The Company's initial preliminary fair values~~valuations of the assets ~~acquired~~ and ~~the~~ liabilities assumed in the acquisition of Metal ~~Packaging acquisition, as well as revised preliminary fair values reflecting~~Packaging. As a result, the following measurement period adjustments were made ~~during the second quarter of 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~~previously disclosed provisional fair values of 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 of acquisition.assumed:


Measurement Period Adjustments	Three Months Ended April 2, 2023
Inventories	$	(73)
Property, plant and equipment	(247)
Goodwill	439
Accrued expenses and other	(119)
Additional cash consideration	$	—

Factors comprising goodwill include increased access to certain markets as well as the value of the assembled workforce. Approximately ~~67%~~81% of the goodwill is expected to be deductible for income tax purposes. Metal Packaging's financial results are included in the Company's Consumer Packaging segment.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

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



Supplemental Information (unaudited)	January 26 to
Metal Packaging	April 3, 2022
Net sales	$	171,228
Net income	$	14,019

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

Pro Forma Supplemental Information (unaudited) Three Months Ended 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)


Pro Forma Supplemental Information (unaudited)	Three Months Ended
Consolidated	April 3, 2022
Net sales	$	1,820,570
Net income attributable to Sonoco	$	164,881

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~~three-month period ended ~~July~~April 3, 2022 ~~and July 4, 2021~~ includes adjustments to depreciation, amortization, and income taxes based upon the ~~preliminary~~final fair value allocation of the purchase price to Metal Packaging's tangible and intangible assets acquired and liabilities assumed as though the acquisition had occurred on January 1, 2021. Interest expense on the additional debt issued by the Company to fund the acquisition and retention bonuses incurred related to the acquisition are also included in the unaudited pro forma information as if the acquisition had occurred on January 1, 2021.

Acquisition-related costs of ~~$4,117 and $26,402~~$22,284 were recognized during the three-month period ended April 3, 2022 and charges related to fair value adjustments to acquisition-date inventory of ~~$8,155 and $33,155~~$25,000 were recognized during the ~~three- and six-month periods~~three-month period ended ~~July~~April 3, ~~2022, respectively.~~2022. These costs are excluded from 2022 unaudited pro forma net income ~~and are instead reflected in 2021 pro forma net income~~ as though ~~they were incurred~~the acquisition had occurred on January 1, 2021.

~~Divestitures~~

SONOCO PRODUCTS COMPANY

~~As previously disclosed,~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

Divestiture of Business

On January 26, 2023, the Company completed the sale of its ~~U.S. display~~Sonoco Sustainability Solutions (“S3”) business, a provider of customized waste and ~~packaging business,~~recycling management programs and part of the ~~All Other group of businesses,~~Company's Industrial Paper Packaging segment, to ~~Hood Container Corporation on April 4, 2021~~Northstar Recycling Co. (“Northstar”), 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. Nettotal cash proceeds of ~~$79,704 were received on April 5, 2021~~$13,839. An additional $1,500 of proceeds are being held in escrow and will be released to the Company, ~~recognized a loss on~~pursuant to any indemnification claims, 20 months following the date of the divestiture. These escrow proceeds are included in “Other Assets” in the Company’s Condensed Consolidated Balance Sheets as of April 2, 2023. The Company wrote off net assets totaling $4,274 as part of the divestiture of ~~this~~the business, including $3,042 of ~~$5,516, before tax,~~allocated goodwill, and recognized a pretax gain of $11,065 during the three-month period ended April 2, 2023, which is included in “Gain on divestiture of business and other assets” in the ~~first~~Company’s Condensed Consolidated Statements of Income. The Company is also entitled to receive additional proceeds of $3,200 in the second 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~~2024 if certain conditions are met. This contingent consideration will be recognized as 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~~gain on the sale ~~of this business of $2,757, before tax,~~at the point the contingencies are resolved.

In addition, the Company purchased a 2.7% equity interest in Northstar for $5,000. This investment is being accounted for under the ~~third quarter of 2021, bringing the total loss on the sale of business to $2,759, before tax.~~measurement alternative (i.e., cost less impairment, adjusted for any qualifying observable price changes).

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.

Sale of Assets

With the completion of Project Horizon, the Company's project to convert the corrugated medium machine in Hartsville, South Carolina, to produce uncoated recycled paperboard, the Company now produces paper exclusively from recycled fibers and no longer requires natural tree fiber for production. Accordingly, on March 29, 2023, the Company sold its timberland properties, approximately 55,000 acres, to Manulife Investment Management for net cash proceeds of $70,802. The Company disposed of assets with a net book value of $9,857 as part of the sale, and recognized a pretax gain from the sale of these assets of $60,945 during the three months ended April 2, 2023, which is included in “Gain on divestiture of business and other assets” in the Company’s Condensed Consolidated Statements of Income.

Acquisition and Divestiture-Related Costs

Acquisition- and divestiture-related costs totaled ~~$12,281 and $60,633~~$5,188 during the ~~three-~~three-month period ended April 2, 2023. These costs include legal and ~~six-month periods~~professional fees, investment banking fees, and other transaction costs that are included in “Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.

Acquisition-related costs totaled $48,352 during the three months ended ~~July~~April 3, 2022 ~~respectively,~~ primarily related to the acquisition of Metal ~~Packaging acquisition.~~Packaging. These charges included the partial amortization of the fair value step-up of finished goods inventory of $25,000, included in “Cost of sales” in the Company's Condensed Consolidated Statements of Income, and other acquisition-related charges of $23,352. These other charges consisted primarily of investment banking fees, representation and warranty insurance premiums, legal and professional fees, and other transaction costs ~~include charges related~~and are included in “Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(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 costs totaled $1,462 and $11,488 during the three- and six-month periods ended July 4, 2021, respectively. These costs, consisting primarily of legal and professional fees, are included in “Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income.

Note 4: Shareholders' Equity

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

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


		Three Months Ended				Six Months Ended					Three Months Ended
		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021			April 2, 2023		April 3, 2022
Numerator:	Numerator:									Numerator:
Net income/(loss) attributable to Sonoco		$	131,672	$	(334,070)	$	247,005	$	(261,774)
Net income attributable to Sonoco										Net income attributable to Sonoco	$	148,319	$	115,333
Denominator:	Denominator:									Denominator:
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	97,999		100,082		97,961		100,571		Basic	98,167		97,924
Dilutive effect of stock-based compensation		687		—		660		—
Dilutive effect of share-based compensation										Dilutive effect of share-based compensation	448		630
Diluted	Diluted	98,686		100,082		98,621		100,571		Diluted	98,615		98,554
Net income/(loss) attributable to Sonoco per common share:
Net income attributable to Sonoco per common share:										Net income attributable to Sonoco per common share:
Basic	Basic	$	1.34	$	(3.34)	$	2.52	$	(2.60)	Basic	$	1.51	$	1.18
Diluted	Diluted	$	1.33	$	(3.34)	$	2.50	$	(2.60)	Diluted	$	1.50	$	1.17
Cash dividends	Cash dividends	$	0.49	$	0.45	$	0.94	$	0.90	Cash dividends	$	0.49	$	0.45

No adjustments were made to ~~"Net income/(loss)~~“Net income attributable to ~~Sonoco"~~Sonoco” in the computations of net ~~income/(loss)~~income 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 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 six-month~~three-month periods ended ~~July~~April 2, 2023 and April 3, 2022 ~~and July 4, 2021~~ were as follows (in thousands):

Three Months Ended Six Months Ended
July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021
Anti-dilutive stock appreciation rights 374 — 387 214

~~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 three- and six-month periods ended July 4, 2021 is the same as basic net loss per share because otherwise dilutive securities are excluded from the computation of diluted net loss per share. The following table sets forth the potentially dilutive securities excluded from the computation of diluted net loss per share during the three- and six-month periods ended July 4, 2021:

Three Months Ended Six Months Ended
July 4, 2021 July 4, 2021
Dilutive securities excluded due to reported loss 486 469

Three Months Ended

April 2, 2023

April 3, 2022

Anti-dilutive stock appreciation rights

343

401

Stock Repurchases

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

~~On May 10, 2021,~~December 31, 2022 or the Company entered into an accelerated share repurchase agreement ("ASR Agreement") with a financial institution to repurchase outstanding shares of the Company's common stock. In exchange for an upfront payment of $150,000, which was funded with available cash on hand, the financial institution delivered 1,751 initial shares to the Company, representing 80% of the expected number of shares to be repurchased during the repurchase period based upon an estimated average repurchase price of $68.50 per share. The initial shares received were retired by the Company. The final number of shares to be repurchased and retired were based on the Company's volume-weighted average share price during the repurchase period, less a discount and subject to certain adjustments. The financial institution could have elected to settle all or any part of the transaction at any time between July 9, 2021 and September 11, 2021. As of July 4, 2021, the unsettled portion of the ASR Agreement represented a forward contract indexed to the Company's own stock which was recognized within shareholders’ equity as "Capital in excess of stated value."

On May 6, 2021, the Company repurchased 54 shares for $3,615 from a private stockholder based upon the average closing stock price on that day. The cost of these share repurchases, as well as those related to the accelerated share agreement mentioned above, was allocated to "Capital in excess of stated value" on the Company's Condensed Consolidated Balance Sheet for thethree-month period ended ~~July 4, 2021.~~April 2, 2023.

The Company regularly repurchases shares of its common stock to satisfy employee tax withholding obligations in association with certain share-based compensation awards. These repurchases, which are not part of a publicly announced plan or program, totaled 70175 shares during the ~~six months~~three-month period ended ~~July~~April 2, 2023, at a cost of $10,576, and 60 shares during the three-month period ended April 3, 2022, at a cost of ~~$3,984, and 98 shares during the six months ended July 4, 2021, at a cost of $5,956.~~$3,410.

Dividend Declarations

On ~~April 20, 2022,~~February 8, 2023, the Board of Directors declared a regular quarterly dividend of $0.49 per share. This dividend was paid on ~~June~~March 10, ~~2022~~2023 to all shareholders of record as of ~~May 10, 2022.~~February 22, 2023.

On ~~July 20, 2022,~~April 19, 2023, the Board of Directors declared a regular quarterly dividend of ~~$0.49~~$0.51 per share. This dividend is payable on ~~September~~June 9, ~~2022~~2023 to all shareholders of record as of ~~August~~May 10, ~~2022.~~2023.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

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 3three 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~~April 3, 2022.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

Note 5: Restructuring and Asset Impairments

Due to its geographic footprint and the cost-competitive nature of its businesses, the Company is continually seeking the most cost-effective means and structure to serve its customers and to respond to fundamental changes in its markets. 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/(income),~~charges, net of adjustments, recognized during the periods presented:

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



	Three Months Ended
	April 2, 2023		April 3, 2022
Restructuring and restructuring-related asset impairment charges	$	28,814	$	5,753
Other asset impairments	—		6,389
Restructuring and asset impairment charges	$	28,814	$	12,142

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

Three Months Ended Six Months Ended
July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021
Severance and Termination Benefits $ 2,214 $ 2,438 $ 4,313 $ 3,866
Asset Impairments/(Gains from Disposal of Assets) 787 (5,621) 1,232 (6,485)
Other Costs 3,856 1,330 7,065 3,463
Restructuring and restructuring-related asset impairment charges/(income) $ 6,857 $ (1,853) $ 12,610 $ 844



	Three Months Ended
	April 2, 2023		April 3, 2022
Severance and termination benefits	$	5,516	$	2,099
Asset impairments	19,193		445
Other costs	4,105		3,209
Restructuring and restructuring-related asset impairment charges	$	28,814	$	5,753

The table below sets forth restructuring and restructuring-related asset impairment ~~charges/(income)~~charges by reportable segment:
Three Months Ended Six Months Ended
July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021
Consumer Packaging $ 2,544 $ 173 $ 4,179 $ 1,258
Industrial Paper Packaging 1,007 (4,372) 2,355 (2,939)
All Other (495) 2,355 (417) 2,520
Corporate 3,801 (9) 6,493 5
Restructuring and restructuring-related asset impairment charges/(income) $ 6,857 $ (1,853) $ 12,610 $ 844



	Three Months Ended
	April 2, 2023		April 3, 2022
Consumer Packaging	$	1,576	$	1,635
Industrial Paper Packaging	24,544		1,348
All Other	1,157		78
Corporate	1,537		2,692
Restructuring and restructuring-related asset impairment charges	$	28,814	$	5,753

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

1413

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
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		Asset Impairments/ Disposal of Assets		Other Costs		Total
Accrual Activity
Liability at December 31, 2022	$	14,677	$	—	$	1,392	$	16,069
2023 charges	5,516		19,193		4,105		28,814

Cash payments	(6,380)		(166)		(2,378)		(8,924)
Asset writedowns/disposals	—		(19,027)		—		(19,027)
Foreign currency translation	14		—		11		25
Liability at April 2, 2023	$	13,827	$	—	$	3,130	$	16,957

"“Severance and Termination ~~Benefits"~~Benefits” during the first ~~six~~three months of ~~2022~~2023 includes the cost of severance for approximately ~~150~~159 employees whose positions were eliminated in conjunction with the Company's ongoing organizational effectiveness ~~efforts.~~efforts and severance related to the closure of the Company's paper mill in Hutchinson, Kansas, part of the Industrial Paper Packaging segment.

"“Asset Impairments/Disposal of ~~Assets"~~Assets” during the first ~~six~~three months of ~~2022~~2023 consists primarily of asset impairment charges related to ~~plant closures in~~ the Consumer Packaging and Industrial Paper Packaging segments, partially offset by a gain from the sale of a previously closed facility in our "All Other" group of businesses. Cash proceeds in the first six months of 2022 relate to the sale of this facility as well as the partial sale of a previously closed operation in Canada, partclosure of the ~~Industrial Paper Packaging segment.~~Company's paper mill in Hutchinson, Kansas.

“Other Costs” during the first ~~six~~three months of ~~2022~~2023 consists primarily of consulting services, ~~and~~ costs related to the closure of the Hutchinson, Kansas paper mill, and the cost of earlier plant closures, including equipment removal, utilities, plant security, property taxes and insurance.

The Company expects to pay the majority of the remaining restructuring reserves by the end of ~~2022~~2023 using cash generated from operations. The Company also expects to recognize future additional charges totaling approximately ~~$2,300~~$5,200 in connection with previously announced restructuring actions and believes that the majority of these charges will be incurred and paid by the end of ~~2022.~~2023. 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~~Total other asset impairment charges ~~totaling $3,706 and $10,095 in~~of $6,389 were incurred during the three ~~and six~~ months ended ~~July~~April 3, 2022, ~~respectively.~~

~~The charges in the three and six months ended July 3, 2022 include net asset~~which includes $5,713 of impairment charges ~~totaling $3,452 and $9,165, respectively, resulting from~~related to the Company's decision ~~in the first quarter of 2022~~ to exit its operations in Russia, ~~consisting~~part of ~~two small tube and core plants in our~~the Industrial Paper Packaging segment, as a result of the ongoing Russia-Ukraine ~~conflict. These charges incl~~ude $3,747 of cumulative translation adjustment losses that were reclassified from accumulated other comprehensive income upon completion of the Company's exit from Russia on July 1, 2022. The charges also include $254conflict, and ~~$930~~$676 of fixed asset impairments ~~in the Company's plastics foods operatio~~ns, part of the Consumer Packaging segment, in the three and six months ended July 3, 2022, respectively. These assets were determined to be impaired as the value of their projected undiscounted cash flows was no longer sufficient to recover their carrying value.

The Company recognized other asset impairment charges totaling $408 and $4,557 in the three and six months ended July 4, 2021, respectively. The year-to-date charges consist of fixed asset impairments totaling $2,158 in the Company's plastics foods operations, part of the Consumer Packaging ~~segment, and $2,399 in the temperature-assured packaging business, part of the All Other group of businesses.~~ segment.

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

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

1514

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 ~~six months~~three-month periods ended ~~July~~April 2, 2023 and April 3, ~~2022 and July 4, 2021:~~2022:


		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		$	(269,076)	$	(91,397)	$	1,048	$	(359,425)
Other comprehensive (loss)/income before reclassifications		(73,722)		(3,893)		3,047		(74,568)
Balance at December 31, 2022										Balance at December 31, 2022	$	(338,316)	$	(90,973)	$	(794)	$	(430,083)
Other comprehensive income/(loss) before reclassifications										Other comprehensive income/(loss) before reclassifications	31,569		(393)		2,645		33,821
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 net income	—		1,309		(431)		878
Amounts reclassified from accumulated other comprehensive loss to fixed assets	Amounts reclassified from accumulated other comprehensive loss to fixed assets	—		—		(388)		(388)		Amounts reclassified from accumulated other comprehensive loss to fixed assets	—		—		300		300
Other comprehensive (loss)/income		(69,975)		(1,737)		460		(71,252)
Other comprehensive income										Other comprehensive income	31,569		916		2,514		34,999

Balance at July 3, 2022		$	(339,051)	$	(93,134)	$	1,508	$	(430,677)
Balance at April 2, 2023										Balance at April 2, 2023	$	(306,747)	$	(90,057)	$	1,720	$	(395,084)

Balance at December 31, 2020		$	(194,024)	$	(562,747)	$	(71)	$	(756,842)
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	(20,184)		10,888		5,219		(4,077)		Other comprehensive (loss)/income before reclassifications	(185)		(971)		5,119		3,963
Amounts reclassified from accumulated other comprehensive loss to net loss	Amounts reclassified from accumulated other comprehensive loss to net loss	—		417,242		(733)		416,509		Amounts reclassified from accumulated other comprehensive loss to net loss	—		1,162		(2,654)		(1,492)
Amounts reclassified from accumulated other comprehensive loss to fixed assets	Amounts reclassified from accumulated other comprehensive loss to fixed assets	—		—		(46)		(46)		Amounts reclassified from accumulated other comprehensive loss to fixed assets	—		—		85		85
Other comprehensive (loss)/income	Other comprehensive (loss)/income	(20,184)		428,130		4,440		412,386		Other comprehensive (loss)/income	(185)		191		2,550		2,556

Balance at July 4, 2021		$	(214,208)	$	(134,617)	$	4,369	$	(344,456)
Balance at April 3, 2022										Balance at April 3, 2022	$	(269,261)	$	(91,206)	$	3,598	$	(356,869)

1615

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 of significant amounts reclassified from each component of accumulated other comprehensive loss for the ~~three- and six-month~~three-month periods ended ~~July~~April 2, 2023 and April 3, ~~2022 and July 4, 2021:~~2022:


		Amount Reclassified from Accumulated Other Comprehensive Loss										Amount Reclassified from Accumulated Other Comprehensive Loss
		Three Months Ended				Six Months Ended						Three Months Ended
Details about Accumulated Other Comprehensive Loss Components	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	Details about Accumulated Other Comprehensive Loss Components	April 2, 2023		April 3, 2022		Affected Line Item in the Condensed Consolidated Statements of Income
Foreign currency items
Loss on Russia restructuring(a)		$	(3,747)	—		$	(3,747)	—		Restructuring/Asset impairment charges

Gains/(losses) on cash flow hedges	Gains/(losses) on cash flow hedges										Gains/(losses) on cash flow hedges
Foreign exchange contracts	Foreign exchange contracts	843		1,489		1,866		1,829		Net sales	Foreign exchange contracts	$	1,062	$	566	Net sales
Foreign exchange contracts	Foreign exchange contracts	(1,011)		(1,190)		(1,706)		(1,418)		Cost of sales	Foreign exchange contracts	(454)		(695)		Cost of sales
Commodity contracts	Commodity contracts	1,979		646		2,937		575		Cost of sales	Commodity contracts	(32)		3,850		Cost of sales
		1,811		945		3,097		986		Income/(Loss) before income taxes		576		3,721		Income before income taxes
Income tax impact	Income tax impact	(529)		(241)		(898)		(253)		Provision for/(Benefit from) income taxes	Income tax impact	(145)		(1,067)		Provision for income taxes
		1,282		704		2,199		733		Net income/(loss)		431		2,654		Net income
Defined benefit pension items	Defined benefit pension items										Defined benefit pension items

Effect of settlement loss~~(b)~~(a)	Effect of settlement loss~~(b)~~(a)	(74)		(547,631)		(430)		(547,631)		Non-operating pension costs	Effect of settlement loss~~(b)~~(a)	(686)		(356)		Non-operating pension costs
Amortization of defined benefit pension items~~(b)~~(a)	Amortization of defined benefit pension items~~(b)~~(a)	(1,255)		(6,432)		(2,426)		(13,333)		Non-operating pension costs	Amortization of defined benefit pension items~~(b)~~(a)	(1,071)		(1,171)		Non-operating pension costs
		(1,329)		$	(554,063)	(2,856)		(560,964)		Income/(Loss) before income taxes		(1,757)		(1,527)		Income before income taxes
Income tax impact	Income tax impact	335		142,090		700		143,722		Provision for/(Benefit from) income taxes	Income tax impact	448		365		Provision for income taxes
		(994)		$	(411,973)	(2,156)		(417,242)		Net income/(loss)		(1,309)		(1,162)		Net income
Total reclassifications for the period	Total reclassifications for the period	$	(3,459)	$	(411,269)	$	(3,704)	$	(416,509)	Net income/(loss)	Total reclassifications for the period	$	(878)	$	1,492	Net income

(a)~~See Note 5 for additional details.~~

~~(b)~~ See Note 11 for additional details.

1716

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 ~~July~~April 2, 2023 and April 3, ~~2022 and July 4, 2021:~~2022:


			Three months ended July 3, 2022							Three months ended July 4, 2021								Three months ended April 2, 2023						Three months ended April 3, 2022
			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		Net other comprehensive income/(loss) from foreign currency items	$	31,569	$	—	$	31,569	$	(185)	$	—	$	(185)
		Amounts reclassified from accumulated other comprehensive loss to net income/(loss)(a)	3,747		—		3,747			—		—		—
		Net other comprehensive (loss)/income from foreign currency items	(69,790)		—		(69,790)		—	11,837		—		11,837
Defined benefit pension items:	Defined benefit pension items:															Defined benefit pension items:
		Other comprehensive (loss)/income before reclassifications	(3,907)		985		(2,922)			14,213		(3,441)		10,772			Other comprehensive (loss)/income before reclassifications	(760)		367		(393)		(1,276)		305		(971)
		Amounts reclassified from accumulated other comprehensive loss to net income/(loss)(b)	1,329		(335)		994			554,063		(142,090)		411,973			Amounts reclassified from accumulated other comprehensive loss to net income(a)	1,757		(448)		1,309		1,527		(365)		1,162
		Net other comprehensive (loss)/income from defined benefit pension items	(2,578)		650		(1,928)			568,276		(145,531)		422,745			Net other comprehensive income/(loss) from defined benefit pension items	997		(81)		916		251		(60)		191
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	(474)		139		(335)			5,674		(1,452)		4,222			Other comprehensive income/(loss) before reclassifications	3,536		(891)		2,645		7,179		(2,060)		5,119
		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 net income(b)	(576)		145		(431)		(3,721)		1,067		(2,654)
		Amounts reclassified from accumulated other comprehensive loss to fixed assets	(668)		195		(473)			(49)		13		(36)			Amounts reclassified from accumulated other comprehensive loss to fixed assets	401		(101)		300		117		(32)		85
		Net other comprehensive income/(loss) from cash flow hedges	(2,953)		863		(2,090)			4,680		(1,198)		3,482			Net other comprehensive income/(loss) from cash flow hedges	3,361		(847)		2,514		3,575		(1,025)		2,550
Other comprehensive income/(loss)			$	(75,321)	$	1,513	$	(73,808)		$	584,793	$	(146,729)	$	438,064
Other comprehensive income/ (loss)																Other comprehensive income/ (loss)		$	35,927	$	(928)	$	34,999	$	3,641	$	(1,085)	$	2,556

(a) See Note 511 for additional details.

(b) See Note 119 for additional details.

1817

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

A summary of the changes in goodwill for the ~~six months~~three-month period ended ~~July 3, 2022~~April 2, 2023 is as follows:

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


	Consumer Packaging		Industrial Paper Packaging		All Other		Total
Goodwill at December 31, 2022	$	898,625	$	394,826	$	381,860	$	1,675,311

Dispositions	—		(3,042)		—		(3,042)
Foreign currency translation	2,145		5,520		621		8,286
Measurement period adjustments	439		(1,447)		—		(1,008)
Goodwill at April 2, 2023	$	901,209	$	395,857	$	382,481	$	1,679,547

Goodwill activity reflected under the ~~captions "2022 Acquisitions" and "Measurement period adjustments" relate~~caption “Dispositions” relates to the sale of the Company's S3 business on January ~~26, 2022 acquisition~~25, 2023. Goodwill activity reflected under the caption “Measurement period adjustments” relates to the prior year acquisitions of Metal ~~Packaging.~~Packaging and Skjern. 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,~~2022 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 balances of the Plastics - Healthcare and Protexic reporting ~~unit is~~units are at risk of impairment in the near term if ~~the~~each reporting unit's operations do not perform in line with management's expectations, or if there is a negative change in the long-term outlook for the business or in other factors such as the discount rate.

~~Although beginning to benefit from economic recovery,~~ At April 2, 2023, the ~~results of~~total goodwill associated with the Plastics - Healthcare reporting ~~unit have been negatively impacted by end-market weakness due to~~unit was $62,963 and the COVID-19 pandemic. In addition, the unit is facing near-term headwinds from higher raw material and other cost increases. Assuming COVID-19 infection rates continue to decline, management expects market demand will improve throughout 2022 and that selling price increases and/or cost reductions, including restructuring actions and investments in production efficiency projects, will mitigate the impacts of recent raw material and other cost inflation. However, should it become apparent that the ongoing post-COVID-19 recovery is likely to be significantly weaker, delayed, or prolonged compared to management’s current expectations, significant negative price/cost relationships will persist over the long-term, profit margins do not improve as expected, or other assumptions change, such as the discount rate, goodwill impairment charges may be possible in the future.

In the annual goodwill impairment analysis completed during the third quarter of 2021, projected future cash flows for the Plastics - Healthcare reporting unit were discounted at 8.3% and its estimated fair value was determined to exceed its carrying value by approximately 13.3%. Based on the discounted cash flow model and holding other valuation assumptions constant, projected operating profits across all future periods would have to be reduced approximately 13.0%, or the discount rate increased to 9.3%, in order for the estimated fair value of the reporting unit to fall below carrying value. Totaltotal goodwill associated with ~~this~~the Protexic reporting unit ~~was $62,404 at July 3, 2022.~~was $29,051.

During the time subsequent to the annual evaluation, and at ~~July 3, 2022,~~April 2, 2023, the Company considered whether any events and/or changes in circumstances had resulted in the likelihood that the goodwill of any of its reporting units may have been impaired. It is management's opinion that no such events and/or changes in circumstances have occurred.

2018

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 ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021~~2022 is as follows:


		July 3, 2022			December 31, 2021			April 2, 2023		December 31, 2022
Other Intangible Assets, gross:	Other Intangible Assets, gross:						Other Intangible Assets, gross:
Patents	Patents	$	29,307		$	29,315	Patents	$	29,301	$	29,303
Customer lists	Customer lists	1,048,443			592,195		Customer lists	1,093,534		1,092,232
Trade names	Trade names	31,837			32,043		Trade names	32,940		34,220
Proprietary technology	Proprietary technology	57,728			22,846		Proprietary technology	56,851		57,720
Other	Other	2,777			2,807		Other	6,276		6,721
Total Other Intangible Assets, gross	Total Other Intangible Assets, gross	$	1,170,092		$	679,206	Total Other Intangible Assets, gross	$	1,218,902	$	1,220,196

Accumulated Amortization:	Accumulated Amortization:						Accumulated Amortization:
Patents	Patents	$	(17,099)		$	(16,275)	Patents	$	(18,296)	$	(17,889)
Customer lists	Customer lists	(379,576)			(347,274)		Customer lists	(438,067)		(417,034)
Trade names	Trade names	(15,042)			(14,106)		Trade names	(16,568)		(15,892)
Proprietary technology	Proprietary technology	(23,117)			(21,394)		Proprietary technology	(25,709)		(25,113)
Other	Other	(2,044)			(2,014)		Other	(2,478)		(2,670)
Total Accumulated Amortization	Total Accumulated Amortization	$	(436,878)	-436878000	$	(401,063)	Total Accumulated Amortization	$	(501,118)	$	(478,598)
Other Intangible Assets, net	Other Intangible Assets, net	$	733,214		$	278,143	Other Intangible Assets, net	$	717,784	$	741,598

~~The acquisition of Metal Packaging on January 26, 2022 resulted in the addition of $498,000 of~~

Other 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~~using the straight-line ~~basis~~method over their respective useful lives ~~which~~when management has determined that the straight-line method approximates the pattern of consumption of the respective intangible assets. These lives generally range from three to forty years. The Company has no intangible assets with indefinite lives.

Aggregate amortization expense was ~~$20,871~~$21,164 and ~~$12,111~~$18,800 for the ~~three months~~three-month periods ended ~~July~~April 2, 2023 and April 3, 2022, ~~and July 4, 2021, respectively, and $39,671~~ ~~and $24,860 for the six months ended July 3, 2022 and July 4, 2021,~~ respectively. Amortization expense on other intangible assets is expected to total approximately ~~$81,200 in 2022, $79,500~~ $81,900 in 2023, ~~$71,400~~$74,000 in 2024, ~~$60,900~~$64,900 in 2025, $61,600 in 2026 and ~~$57,900~~$60,100 in ~~2026.~~

2027.

Note 8: ~~Debt~~Supply Chain Financing

~~Details~~The Company facilitates voluntary supply chain financing programs (the “SCF Programs”) to provide certain of its suppliers with the opportunity to sell receivables due from the Company to the participating financial institutions in the programs. Such sales are conducted at the sole discretion of both the suppliers and the financial institutions on a nonrecourse basis at a rate that leverages the Company's credit rating and thus might be more beneficial to the supplier. No guarantees are provided by the Company or any of its subsidiaries under the SCF Programs. The Company's responsibility under the agreements is limited to making payment to the financial institutions for confirmed invoices based on the terms originally negotiated with its suppliers. Both the Company and the financial institutions have the right to terminate the SCF Programs by providing 30 days prior written notice to the other party. The Company does not enter into any agreements with suppliers regarding their participation in the SCF Programs.

The following table sets forth the balance sheet location and values of the ~~Company's debt~~Company’s SCF Program obligations at ~~July 3, 2022~~April 2, 2023 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
2022:


Balance Sheet Line Item	April 2, 2023		December 31, 2022
Payable to suppliers(a)	$	51,884	$	52,415
Notes payable and current portion of long-term debt(b)	$	1,350	$	63,448

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

2119

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

~~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

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

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

Principal Amount Tendered Premium and Other Amounts Paid Total
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 5.750% notes. These non-cash write-offs net to $73, which combined with the hedge loss and premium and other amounts paid, resulted in a pretax loss from the early extinguishment of debt totaling $20,184 during each of the three- and six-month periods ended July 4, 2021.

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

Certain of the Company’s debt agreements impose restrictions with respect to the maintenance of financial ratios and the disposition of assets. The most restrictive covenants currently require the Company to maintain a minimum level of interest coverage and a minimum level of net worth, as defined in the agreements. As of July 3, 2022, the Company’s interest coverage and net worth were substantially above the minimum levels required under these covenants.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(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.

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


	April 2, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Long-term debt, net of current portion	$	2,717,891	$	2,551,610	$	2,719,783	$	2,477,884

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 ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows. These contracts, ~~which~~which have maturities ranging to December 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 ~~July 3, 2022,~~April 2, 2023, these contracts included natural gas swaps covering approximately ~~1.1~~0.1 million ~~MMBTUs.~~metric million British thermal units (“MMBTUs”). These contracts represented approximately ~~25%~~1% of anticipated usage in North America for ~~the remainder of 2022, and 1% of anticipated usage in~~ both 2023 and 2024. The Company also has certain natural gas hedges that it does not treat as cash flow hedges. See ~~"Non-Designated Derivatives"~~“Non-Designated Derivatives” below for a discussion of these hedges. At ~~July 3, 2022,~~April 2, 2023, the Company ~~had~~has also designated swap contracts covering 84715 metric tons of aluminum as cash flow hedges. ~~These contracts represented approximately 3% of anticipated aluminum usage for the remainder of 2022.~~ The fair value of the Company’s commodity cash flow hedges netted to a ~~gain~~loss position of ~~$2,700~~$(218) and ~~$1,491~~$(172) at ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, respectively. The amount of the ~~gain~~loss included in ~~Accumulated Other Comprehensive Income~~accumulated other comprehensive loss at ~~July 3, 2022~~April 2, 2023 expected to be reclassified to the income statement during the next twelve months is ~~$2,696.~~$(178).

Foreign Currency Cash Flow Hedges

The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales, purchases, and capital spending expected to occur in ~~2022~~2023 and ~~2023.~~2024. The net positions of these contracts at ~~July 3, 2022~~April 2, 2023 were as follows (in thousands):


Currency	Action	Quantity
Colombian peso	purchase	~~13,591,224~~23,959,866
Mexican peso	purchase	~~244,790~~419,558
Polish zloty	purchase	~~44,467~~93,474
Czech koruna	purchase	~~33,398~~60,331
Canadian dollar	purchase	18,828
Euro	purchase	~~10,449~~9,974
Turkish lira	purchase	~~9,356~~7,478
~~Canadian dollar~~Brazilian real	purchase	~~7,809~~5,202
British pound	purchase	~~1,005~~
~~Brazilian real~~	~~sell~~	~~(6,286)~~4,701

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

2320

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

The fair value of foreign currency cash flow hedges related to forecasted sales and purchases netted to a gain position of $2,560 and a loss position of $(299) at April 2, 2023 and December 31, 2022, respectively. Gains of $2,560 are expected to be reclassified from accumulated other comprehensive ~~loss~~income to the income statement during the next twelve months. In addition, the Company has entered into forward contracts to hedge certain foreign currency cash flow transactions related to construction in progress. As of ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, the net position of these contracts was ~~$(938)~~$(16) and ~~$(457)~~$(564), respectively. During the ~~six months~~three-month period ended ~~July 3, 2022,~~April 2, 2023, losses from these hedges ~~totaling $657~~of $(401) were reclassified from accumulated other comprehensive loss and included in the carrying value of the capitalized expenditures. Losses of ~~$875~~$(22) are expected to be reclassified from accumulated other comprehensive loss and included in the carrying value of the related fixed assets acquired during the next twelve months.

Non-Designated Derivatives

The Company routinely enters into other derivative contracts which are not designated for hedge accounting treatment under ASC 815. As such, changes in fair value of these non-designated derivatives are recorded directly to income and expense in the periods that they occur.

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


Currency	Action	Quantity
Indonesian rupiah	purchase	23,069,325
Colombian peso	purchase	~~31,847,040~~
~~Indonesian rupiah~~	~~purchase~~	~~30,335,671~~20,729,300
Mexican peso	purchase	~~388,269~~563,953
Turkish lira	purchase	~~36,904~~
~~Thai baht~~	~~purchase~~	~~9,251~~11,394
Canadian dollar	purchase	~~4,026~~8,104
~~Euro~~	~~purchase~~	20

Commodity Hedges

The Company has entered into non-designated derivative contracts to manage the cost of anticipated purchases of natural gas. At ~~July 3, 2022,~~April 2, 2023, these contracts consisted of natural gas swaps covering approximately ~~5.3~~8.3 million MMBTUs and represented approximately ~~46%~~78% and 54% of anticipated usage ~~in North America~~ for ~~the remainder of 2022, and 27% and 17% of anticipated usage in~~ 2023 and 2024, respectively.

Interest Rate Hedges

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 2two 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 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 ~~Compan~~yCompany recognizing a gain on the settlement of $5,201. The gain is included in ~~"Selling,~~“Selling, general and administrative ~~expenses"~~expenses” on the Company's Condensed Consolidated Statements of Income for ~~the six months~~the three-month period ended ~~July~~April 3, 2022.

The fair value of the Company’s non-designated derivatives position was a ~~gain~~loss of ~~$3,679~~$(14,691) and ~~$92~~$(8,692) at ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, respectively.

2421

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 location and fair values of the Company’s derivative instruments at ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021:~~2022:


Description	Description	Balance Sheet Location	July 3, 2022		December 31, 2021		Description	Balance Sheet Location	April 2, 2023		December 31, 2022
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:						Derivatives designated as hedging instruments:
Commodity Contracts	Commodity Contracts	Prepaid expenses	$	2,822	$	1,599	Commodity Contracts	Prepaid expenses	$	11	$	10
Commodity Contracts	Commodity Contracts	Other assets	$	5	$	—	Commodity Contracts	Other assets	$	—	$	8
Commodity Contracts	Commodity Contracts	Accrued expenses and other	$	(127)	$	(108)	Commodity Contracts	Accrued expenses and other	$	(189)	$	(155)

Commodity Contracts							Commodity Contracts	Other liabilities	$	(39)	$	(35)
Foreign Exchange Contracts	Foreign Exchange Contracts	Prepaid expenses	$	936	$	848	Foreign Exchange Contracts	Prepaid expenses	$	5,176	$	1,251
Foreign Exchange Contracts	Foreign Exchange Contracts	Accrued expenses and other	$	(1,432)	$	(969)	Foreign Exchange Contracts	Other assets	$	6	$	—
Foreign Exchange Contracts	Foreign Exchange Contracts	Other liabilities	$	(63)	$	—	Foreign Exchange Contracts	Accrued expenses and other	$	(2,637)	$	(2,114)

Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:						Derivatives not designated as hedging instruments:
Commodity Contracts	Commodity Contracts	Prepaid expenses	$	4,688	$	1,815	Commodity Contracts	Prepaid expenses	$	13	$	5
Commodity Contracts	Commodity Contracts	Other assets	$	197	$	—	Commodity Contracts	Other assets	$	85	$	251
Commodity Contracts	Commodity Contracts	Accrued expenses and other	$	—	$	(1,132)	Commodity Contracts	Accrued expenses and other	$	(13,456)	$	(8,599)
Commodity Contracts	Commodity Contracts	Other liabilities	$	(957)	$	—	Commodity Contracts	Other liabilities	$	(1,389)	$	(295)
Foreign Exchange Contracts	Foreign Exchange Contracts	Prepaid expenses	$	26	$	135	Foreign Exchange Contracts	Prepaid expenses	$	109	$	115

Foreign Exchange Contracts	Foreign Exchange Contracts	Accrued expenses and other	$	(275)	$	(176)	Foreign Exchange Contracts	Accrued expenses and other	$	(54)	$	(169)
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.

The following tables set forth the effect of the Company’s derivative instruments on financial performance for the ~~three months~~three-month periods ended ~~July~~April 2, 2023 and April 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	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 July 3, 2022
Three-month period ended April 2, 2023							Three-month period ended April 2, 2023
Foreign Exchange Contracts	Foreign Exchange Contracts	$	(1,324)	Net sales	$	843	Foreign Exchange Contracts	$	3,613	Net sales	$	1,062
				Cost of sales	$	(1,011)				Cost of sales	$	(454)
Commodity Contracts	Commodity Contracts	$	850	Cost of sales	$	1,979	Commodity Contracts	$	(77)	Cost of sales	$	(32)
Three months ended July 4, 2021
Three-month period ended April 3, 2022							Three-month period ended April 3, 2022
Foreign Exchange Contracts	Foreign Exchange Contracts	$	751	Net sales	$	1,489	Foreign Exchange Contracts	$	955	Net sales	$	566
				Cost of sales	$	(1,190)				Cost of sales	$	(695)
Commodity Contracts	Commodity Contracts	$	4,847	Cost of sales	$	646	Commodity Contracts	$	6,224	Cost of sales	$	3,850

Description

Gain or (Loss)
Recognized

Location of Gain or (Loss) Recognized in
Income Statement

Derivatives not Designated as Hedging Instruments:

~~Three months~~Three-month period ended ~~July 3, 2022~~April 2, 2023

Commodity Contracts

~~506~~ (9,708)

Cost of sales

Foreign Exchange Contracts

~~(1,142)~~2,137

Selling, general and administrative

~~Three months~~Three-month period ended ~~July 4, 2021~~April 3, 2022

Commodity Contracts

566,992

Cost of sales

Foreign Exchange Contracts

~~220~~1,343

Selling, general and administrative

2522

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

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 shares in thousands except per share data)~~

~~(unaudited)~~


	Three-month period ended April 2, 2023				Three-month period ended April 3, 2022
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	$	1,062	$	(486)	$	566	$	3,155

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	$	1,062	$	(454)	$	566	$	(695)

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

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

2823

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	July 3, 2022		Assets measured at NAV		Level 1		Level 2		Level 3		Description	April 2, 2023		Assets measured at NAV		Level 1		Level 2		Level 3
Hedge derivatives, net:	Hedge derivatives, net:											Hedge derivatives, net:
Commodity contracts	Commodity contracts	$	2,700	$	—	$	—	$	2,700	$	—	Commodity contracts	$	(217)	$	—	$	—	$	(217)	$	—
Foreign exchange contracts	Foreign exchange contracts	$	(559)	$	—	$	—	$	(559)	$	—	Foreign exchange contracts	$	2,545	$	—	$	—	$	2,545	$	—
Non-hedge derivatives, net:	Non-hedge derivatives, net:											Non-hedge derivatives, net:
Commodity contracts	Commodity contracts	$	3,928	$	—	$	—	$	3,928	$	��	Commodity contracts	$	(14,747)	$	—	$	—	$	(14,747)	$	—
Foreign exchange contracts	Foreign exchange contracts	$	(249)	$	—	$	—	$	(249)	$	—	Foreign exchange contracts	$	55	$	—	$	—	$	55	$	—

Description	Description	December 31, 2021		Assets measured at NAV		Level 1		Level 2		Level 3		Description	December 31, 2022		Assets measured at NAV		Level 1		Level 2		Level 3
Hedge derivatives, net:	Hedge derivatives, net:											Hedge derivatives, net:
Commodity contracts	Commodity contracts	$	1,491	$	—	$	—	$	1,491	$	—	Commodity contracts	$	(172)	$	—	$	—	$	(172)	$	—
Foreign exchange contracts	Foreign exchange contracts	$	(121)	$	—	$	—	$	(121)	$	—	Foreign exchange contracts	$	(863)	$	—	$	—	$	(863)	$	—
Non-hedge derivatives, net:	Non-hedge derivatives, net:											Non-hedge derivatives, net:
Commodity contracts	Commodity contracts	$	683	$	—	$	—	$	683	$	—	Commodity contracts	$	(8,638)	$	—	$	—	$	(8,638)	$	—
Foreign exchange contracts	Foreign exchange contracts	$	(41)	$	—	$	—	$	(41)	$	—	Foreign exchange contracts	$	(54)	$	—	$	—	$	(54)	$	—
Interest rate lock contract	Interest rate lock contract	$	(550)	$	—	$	—	$	(550)	$	—	Interest rate lock contract	$	—	$	—	$	—	$	—	$	—

As discussed in Note 9, the Company uses derivatives to mitigate the effect of 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-~~three-month period ended April 2, 2023.

The Company measures certain non-financial assets and ~~six-month periods ended July~~non-financial liabilities at fair value on a recurring basis. See Note 3 for a discussion of assets acquired and liabilities assumed in acquisitions and Note 5 for a discussion of asset impairments associated with restructuring activities. The fair value of assets determined based on third-party appraisals and classified as Level 3 measurements due to the use of significant unobservable inputs was not material at April 2, 2023 or December 31, 2022.

3024

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

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


		Three Months Ended				Six Months Ended					Three Months Ended
		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021			April 2, 2023		April 3, 2022
Retirement Plans	Retirement Plans									Retirement Plans
Service cost	Service cost	$	837	$	1,020	$	1,663	$	1,981	Service cost	$	687	$	826
Interest cost	Interest cost	2,671		9,657		5,381		19,764		Interest cost	4,294		2,710
Expected return on plan assets	Expected return on plan assets	(2,278)		(8,650)		(5,143)		(18,311)		Expected return on plan assets	(2,444)		(2,865)
Amortization of prior service cost	Amortization of prior service cost	232		235		453		461		Amortization of prior service cost	219		221
Amortization of net actuarial loss	Amortization of net actuarial loss	1,181		6,378		2,316		13,249		Amortization of net actuarial loss	1,045		1,135

Effect of settlement loss	Effect of settlement loss	74		547,631		430		547,631		Effect of settlement loss	686		356
Net periodic benefit cost	Net periodic benefit cost	$	2,717	$	556,271	$	5,100	$	564,775	Net periodic benefit cost	$	4,487	$	2,383

Retiree Health and Life Insurance Plans	Retiree Health and Life Insurance Plans									Retiree Health and Life Insurance Plans
Service cost	Service cost	$	79	$	95	$	161	$	189	Service cost	$	62	$	82
Interest cost	Interest cost	66		50		130		100		Interest cost	130		64
Expected return on plan assets	Expected return on plan assets	(110)		(111)		(222)		(224)		Expected return on plan assets	(79)		(112)

Amortization of net actuarial gain	Amortization of net actuarial gain	(158)		(181)		(343)		(377)		Amortization of net actuarial gain	(193)		(185)
Net periodic benefit income	Net periodic benefit income	$	(123)	$	(147)	$	(274)	$	(312)	Net periodic benefit income	$	(80)	$	(151)

Settlement Charges

The Company recognized settlement charges of ~~$430~~$686 and ~~$340~~$356 during the ~~six months~~three-month periods ended ~~July~~April 2, 2023 and April 3, 2022, ~~and July 4, 2021,~~ respectively. These charges resulted from payments made to certain participants in the Company's non-union Canadian pension plan who elected a lump sum distribution option upon retirement. Additional settlement charges related to the Canadian pension plans may be recognized over the remainder of ~~2022~~2023 as a result of ongoing lump-sum distributions.

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

Contributions

The Company made aggregate contributions of ~~$8,895~~$4,931 and ~~$139,687~~$6,147 to its defined benefit retirement and retiree health and life insurance plans during the ~~six months~~three-month periods ended ~~July~~April 2, 2023 and April 3, 2022, ~~and July 4, 2021,~~ respectively. ~~The 2021 contributions include $133,000 contributed to the Inactive Plan during the second quarter of 2021 in order for it to be fully funded upon final settlement.~~ The Company expects to make additional aggregate contributions of approximately ~~$6,800~~$10,300 to its defined benefit retirement and retiree health and life insurance plans over the remainder of ~~2022.~~2023.

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

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

The non-elective component of the plan, the Sonoco Retirement Contribution ~~("SRC"~~(“SRC”), was eliminated effective ~~January 1, 2022.~~December 31, 2021. The SRC provided for an annual Company contribution equal to 4% of the participant's eligible pay plus 4% of eligible pay in excess of the social security wage base to eligible participant accounts. The Company made SRC contributions ~~were funded annually in the first quarter, following the year in which the benefit was earned. SRC contributions totaled~~totaling $21,948 ~~and $22,665~~ during the ~~six months~~three-month period ended ~~July~~April 3, 2022 ~~and July 4,~~related to the 2021 ~~respectively.~~fiscal year. No additional SRC contributions will occur. ~~The Company recognized expense related to the SRC of $5,499 and $11,834 for the three- and six-month periods ended July 4, 2021.~~

Note 12: Income Taxes

The Company’s effective tax rates for the ~~three- and six-month~~three-month periods ended ~~July~~April 2, 2023 and April 3, 2022 were ~~25.8%~~24.3% and ~~24.9%, respectively, and its rates for the three- and six-month periods ended July 4, 2021 were 26.0% and 26.2%~~23.7%, respectively. The Company's effective tax rates varied from the U.S. statutory rate due primarily to 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~~higher 2023 rate was primarily driven by the absence of ~~the 2021 pension settlement charge and the~~a first quarter 2022 ~~release of valuation allowances on the Company's state net operating loss carryforwards resulting from the increase in projected earnings associated with~~deferred tax benefit related to the Metal Packaging acquisition.

The Company and/or its subsidiaries file federal, state and local income tax returns in the United States and various foreign jurisdictions. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years prior to ~~2015.~~2017.

The Company’s reserve for uncertain tax benefits has increased by ~~$1,000~~$798 since December 31, ~~2021~~2022 due primarily to an increase in reserves related to existing tax positions. The Company believes that it is reasonably possible that the amount reserved for unrecognized tax benefits at ~~July 3, 2022~~April 2, 2023 could increase by approximately ~~$200~~$260 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.

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 performed after contemplating all the relevant facts and circumstances in accordance with guidance under ASC ~~842.~~842 - Leases. Most real estate leases, in particular, include 1one or more options to renew, with renewal terms that typically extend the lease term in increments from one to five years. The Company's leases do not have any significant residual value guarantees or restrictive covenants.

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~~2022, which included the acquisition ~~included both operating and finance lease assets and liabilities. The acquired~~of $33,910 in operating lease liabilities and $46,687 in finance lease liabilities as of ~~$33,910 had a weighted~~the date of acquisition.

3226

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 ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021:~~2022:


Classification	Classification	Balance Sheet Location	July 3, 2022		December 31, 2021		Classification	Balance Sheet Location	April 2, 2023		December 31, 2022
Lease Assets	Lease Assets						Lease Assets
Operating lease assets	Operating lease assets	Right of Use Asset - Operating Leases	$	296,643	$	268,390	Operating lease assets	Right of Use Asset - Operating Leases	$	289,017	$	296,781
Finance lease assets	Finance lease assets	Other Assets	108,606		55,826		Finance lease assets	Other Assets	102,216		103,467
Total lease assets	Total lease assets		$	405,249	$	324,216	Total lease assets		$	391,233	$	400,248

Lease Liabilities	Lease Liabilities						Lease Liabilities
Current operating lease liabilities	Current operating lease liabilities	Accrued expenses and other	$	48,968	$	45,305	Current operating lease liabilities	Accrued expenses and other	$	51,537	$	52,306
Current finance lease liabilities	Current finance lease liabilities	Notes payable and current portion of debt	15,583		6,952		Current finance lease liabilities	Notes payable and current portion of debt	19,606		19,015
Total current lease liabilities	Total current lease liabilities		$	64,551	$	52,257	Total current lease liabilities		$	71,143	$	71,321

Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	Noncurrent Operating Lease Liabilities	$	254,520	$	234,167	Noncurrent operating lease liabilities	Noncurrent Operating Lease Liabilities	$	243,714	$	250,994
Noncurrent finance lease liabilities	Noncurrent finance lease liabilities	Long-term Debt, Net of Current Portion	91,938		53,330		Noncurrent finance lease liabilities	Long-term Debt, Net of Current Portion	81,732		83,905
Total noncurrent lease liabilities	Total noncurrent lease liabilities		$	346,458	$	287,497	Total noncurrent lease liabilities		$	325,446	$	334,899

Total lease liabilities	Total lease liabilities		$	411,009	$	339,754	Total lease liabilities		$	396,589	$	406,220

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~~Company’s total lease cost for the ~~three- and six-month~~three-month periods ended ~~July~~April 2, 2023 and April 3, ~~2022 and July 4, 2021:~~2022:
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


		Three Months Ended
Lease Cost		April 2, 2023		April 3, 2022
Operating lease cost	(a)	$	13,411	$	12,797
Finance lease cost:
Amortization of lease asset	(a)	3,270		2,711
Interest on lease liabilities	(b)	1,194		966
Variable lease cost	(a) (c)	9,378		7,355

Total lease cost		$	27,253	$	23,829

(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 certain lease-related information for the ~~six-month~~three-month periods ended ~~July~~April 2, 2023 and April 3, ~~2022 and July 4, 2021:~~2022:


		Six Months Ended					Three Months Ended
		July 3, 2022		July 4, 2021			April 2, 2023		April 3, 2022
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	$	26,295	$	26,620	Operating cash flows used by operating leases	$	13,561	$	13,152
Operating cash flows used by finance leases	Operating cash flows used by finance leases	$	2,247	$	630	Operating cash flows used by finance leases	$	1,194	$	966
Financing cash flows used by finance leases	Financing cash flows used by finance leases	$	6,019	$	2,156	Financing cash flows used by finance leases	$	4,581	$	2,643
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	$	22,046	$	6,705	Leased assets obtained in exchange for new operating lease liabilities	$	6,513	$	19,520
Leased assets obtained in exchange for new finance lease liabilities	Leased assets obtained in exchange for new finance lease liabilities	$	7,511	$	5,879	Leased assets obtained in exchange for new finance lease liabilities	$	2,805	$	5,910
Modification to leased assets for (decrease) increase in operating lease liabilities		$	(4,139)	$	6,845
Modification to leased assets for increase in operating lease liabilities						Modification to leased assets for increase in operating lease liabilities	$	3,957	$	1,484
Modification to leased assets for increase in finance lease liabilities	Modification to leased assets for increase in finance lease liabilities	$	14	$	9,586	Modification to leased assets for increase in finance lease liabilities	$	—	$	290
Termination reclasses to decrease operating lease assets	Termination reclasses to decrease operating lease assets	$	(3,230)	$	(4,319)	Termination reclasses to decrease operating lease assets	$	(2,029)	$	(1,913)
Termination reclasses to decrease operating lease liabilities	Termination reclasses to decrease operating lease liabilities	$	(3,109)	$	(4,336)	Termination reclasses to decrease operating lease liabilities	$	(2,090)	$	(1,828)
Termination reclasses to decrease finance lease assets	Termination reclasses to decrease finance lease assets	$	(386)	$	(21)	Termination reclasses to decrease finance lease assets	$	(962)	$	—
Termination reclasses to decrease finance lease liabilities	Termination reclasses to decrease finance lease liabilities	$	(9)	$	(23)	Termination reclasses to decrease finance lease liabilities	$	(12)	$	—

3428

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~~“Cost of Sales,"” and freight charged to customers is included in ~~"Net Sales"~~“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~~“Accrued expenses and ~~other"~~other” in the ~~Company's~~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 estimated revenue and are determinable within a short time period following the sale.

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


		July 3, 2022		December 31, 2021			April 2, 2023		December 31, 2022

Contract Assets	Contract Assets	$	65,377	$	51,106	Contract Assets	$	60,047	$	56,008
Contract Liabilities	Contract Liabilities	$	(25,631)	$	(18,993)	Contract Liabilities	$	(23,538)	$	(22,423)

Significant changes in the contract assets and liabilities balances during the ~~six months~~three-month period ended ~~July 3, 2022~~April 2, 2023 and the year ended December 31, ~~2021~~2022 were as follows:


		July 3, 2022				December 31, 2021					April 2, 2023				December 31, 2022
		Contract Asset		Contract Liability		Contract Asset		Contract Liability			Contract Asset		Contract Liability		Contract Asset		Contract Liability
Beginning Balance	Beginning Balance	$	51,106	$	(18,993)	$	48,390	$	(16,687)	Beginning Balance	$	56,008	$	(22,423)	$	51,106	$	(18,993)
Acquired as part of a business combination										Acquired as part of a business combination	—		—		8,107		(5,418)
Revenue deferred or rebates accrued	Revenue deferred or rebates accrued	—		(32,207)		—		(36,527)		Revenue deferred or rebates accrued	—		(14,142)		—		(57,510)
Recognized as revenue	Recognized as revenue			10,656				7,238		Recognized as revenue			3,128				18,201
Rebates paid to customers	Rebates paid to customers	—		20,330		—		26,983		Rebates paid to customers	—		9,899		—		41,297
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	57,270		—		51,106		—		Increases due to rights to consideration for customer specific goods produced, but not billed during the period	60,047		—		56,008		—
Transferred to receivables from contract assets recognized at the beginning of the period		(51,106)		—		(48,390)		—
Transferred to receivables from contract assets recognized at the beginning of the period and acquired as part of business combinations										Transferred to receivables from contract assets recognized at the beginning of the period and acquired as part of business combinations	(56,008)		—		(59,213)		—

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

Ending Balance	Ending Balance	$	65,377	$	(25,631)	$	51,106	$	(18,993)	Ending Balance	$	60,047	$	(23,538)	$	56,008	$	(22,423)

~~Contract assets~~

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and ~~liabilities are generally short~~shares in ~~duration given the nature of products produced by the Company.~~ thousands except per share data)

(unaudited)

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.~~receipts of advance payments. For multi-year arrangements with pricing

~~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~~Contract assets and liabilities are ~~aligned~~generally short in duration given the nature of products produced by ~~product nature as disclosed~~ in ~~Note 15~~.the Company.

The following tables set forth information about revenue disaggregated by primary geographic regions for the three-month periods ended ~~July~~April 2, 2023 and April 3, ~~2022 and July 4, 2021.~~2022. The tables also include a reconciliation of disaggregated revenue with reportable segments. The Company’s reportable segments are aligned by product nature as disclosed
Three months ended July 3, 2022 Consumer Packaging Industrial Paper Packaging All Other Total
Primary Geographical Markets:
  United States $ 791,096 $ 436,680 $ 161,587 $ 1,389,363
  Europe 109,910 117,376 22,563 249,849
  Canada 27,980 29,312 — 57,292
  Asia 23,407 76,803 270 100,480
  Other 37,589 67,231 11,528 116,348
Total $ 989,982 $ 727,402 $ 195,948 $ 1,913,332
in Note 15.


Three-month period ended April 2, 2023	Consumer Packaging		Industrial Paper Packaging		All Other		Total
Primary Geographical Markets:
United States	$	696,098	$	360,780	$	168,820	$	1,225,698
Europe	114,606		107,808		22,285		244,699
Canada	28,803		26,952		—		55,755
Asia	24,136		58,831		330		83,297
Other	45,635		61,484		13,215		120,334
Total	$	909,278	$	615,855	$	204,650	$	1,729,783


Three months ended July 4, 2021		Consumer Packaging		Industrial Paper Packaging		All Other		Total
Three-month period ended April 3, 2022										Three-month period ended April 3, 2022	Consumer Packaging		Industrial Paper Packaging		All Other		Total
Primary Geographical Markets:	Primary Geographical Markets:									Primary Geographical Markets:
United States	United States	$	413,576	$	346,367	$	142,236	$	902,179	United States	$	654,414	$	417,286	$	166,074	$	1,237,774
Europe	Europe	110,248		104,238		21,930		236,416		Europe	120,170		116,827		24,125		261,122
Canada	Canada	30,193		23,985		—		54,178		Canada	31,208		27,170		—		58,378
Asia	Asia	18,375		78,189		279		96,843		Asia	25,634		73,619		292		99,545
Other	Other	25,411		55,753		11,974		93,138		Other	36,672		64,227		13,264		114,163
Total	Total	$	597,803	$	608,532	$	176,419	$	1,382,754	Total	$	868,098	$	699,129	$	203,755	$	1,770,982

~~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 six-month periods ended July 3, 2022 and July 4, 2021. The tables also include a reconciliation of disaggregated revenue with reportable segments.
Six months ended July 3, 2022 Consumer
Packaging Industrial
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's~~Company’s operating and reporting structure consists of 2two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other.

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

~~The Industrial Paper Packaging segment serves customers who use its products to package their goods for transport, storage or sale or to produce similar fiber-based products.~~ The primary products produced and sold within ~~this~~the Industrial Paper Packaging segment include paperboard ~~fiber-based~~ tubes, cones, and cores; ~~fiber-based~~paper-based protective ~~packaging~~packaging; and ~~components; reels; and~~uncoated recycled paperboard.

~~Businesses grouped as~~The primary products produced with the All Other ~~include healthcare~~group of businesses consist of a variety of packaging ~~protective~~materials, including plastic, paper, foam, and ~~retail security packaging~~various other specialty materials.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars 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 equipment; and paper amenities. Prior to the divestiture of the Company's U.S. display and packaging business on April 4, 2021, this business, which included point-of-purchase displays, fulfillment operations, and contract packaging, was reportedshares in ~~All Other.~~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.~~Other group of businesses. “Segment operating profit” is defined as the segment’s portion of ~~“Operating profit”~~operating profit excluding ~~restructuring and~~ restructuring/asset impairment charges, ~~acquisition~~acquisition/divestiture-related expenses, amortization of acquisition intangibles, changes in last-in, first-out ~~("LIFO"~~(“LIFO”) inventory reserves, gains/losses from the ~~early extinguishment~~divestiture of ~~debt, interest income~~businesses or other assets, and ~~expense,~~

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

SEGMENT FINANCIAL INFORMATION


		Three Months Ended				Six Months Ended					Three Months Ended
		July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021				April 2, 2023		April 3, 2022
Net sales:	Net sales:									Net sales:
Consumer Packaging	Consumer Packaging	$	989,982	$	597,804	$	1,858,081	$	1,180,556	Consumer Packaging		$	909,278	$	868,098
Industrial Paper Packaging	Industrial Paper Packaging	727,402		608,531		1,426,529		1,173,929		Industrial Paper Packaging		615,855		699,129
All Other	All Other	195,948		176,419		399,704		381,573		All Other		204,650		203,755
Consolidated		$	1,913,332	$	1,382,754	$	3,684,314	$	2,736,058
Net sales										Net sales		$	1,729,783	$	1,770,982
Intersegment sales:	Intersegment sales:									Intersegment sales:
Consumer Packaging	Consumer Packaging	$	2,116	$	1,199	$	3,526	$	2,852	Consumer Packaging		$	2,055	$	1,411
Industrial Paper Packaging	Industrial Paper Packaging	33,496		27,700		67,136		54,596		Industrial Paper Packaging		38,720		33,638
All Other	All Other	2,522		2,140		5,223		5,165		All Other		3,272		2,701
Consolidated		$	38,134	$	31,039	$	75,885	$	62,613
Intersegment sales										Intersegment sales		$	44,047	$	37,750
Operating profit:	Operating profit:									Operating profit:
Segment operating profit:
Consumer Packaging	Consumer Packaging	$	139,421	$	65,296	$	313,030	$	146,656	Consumer Packaging		$	91,821	$	173,609
Industrial Paper Packaging	Industrial Paper Packaging	94,201		59,818		166,862		112,117		Industrial Paper Packaging		94,367		72,660
All Other	All Other	16,529		15,607		31,053		34,364		All Other		27,233		14,524
Restructuring/Asset impairment (charges)/income		(10,563)		1,445		(22,705)		(5,401)
Corporate										Corporate
Restructuring/Asset impairment charges										Restructuring/Asset impairment charges		(28,814)		(12,142)
Amortization of acquisition intangibles	Amortization of acquisition intangibles	(20,871)		(12,111)		(39,671)		(24,860)		Amortization of acquisition intangibles		(21,164)		(18,800)
Other non-base income/(charges), net		(21,241)		5,236		(82,031)		(7,276)
Consolidated		$	197,476	$	135,291	$	366,538	$	255,600
Other non-GAAP income/(charges), net										Other non-GAAP income/(charges), net		66,205		(60,790)
Operating profit										Operating profit		$	229,648	$	169,061

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. Since the acquisition, the Company has spent a total of ~~$1,883~~$2,005 on remediation of the Spartanburg site. At ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, the Company's accrual for environmental contingencies related to the Spartanburg site totaled ~~$5,517~~$5,395 and ~~$5,555,~~$5,425, respectively.

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

3831

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands except per share data)

(unaudited)

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 ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, the Company's accrual for these other sites totaled ~~$1,696~~$1,790 and ~~$1,825,~~$1,840, respectively.

Summary

As of ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, the Company (and its subsidiaries) had accrued ~~$7,213~~$7,185 and ~~$7,380,~~$7,265, 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.

3932

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

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, 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 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, 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~~

~~August 2, 2022~~

~~SONOCO PRODUCTS COMPANY~~


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

FORWARD LOOKING STATEMENTS

Statements included in this Quarterly Report on Form 10-Q that are not historical in nature, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, 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,"~~“anticipate,” “aspires,” “assume,” “believe,” “can,” “committed,” “consider,” “could,” “envision,” “estimate,” ~~"expect," "forecast," "future," "goal," "guidance,"~~“expect,” “forecast,” “future,” “goal,” “guidance,” “intend,” ~~"may," "might," "objective," "opportunity," "outlook,"~~“may,” “might,” “objective,” “opportunity,” “outlook,” “plan,” ~~"potential," "project,"~~“potential,” “project,” "seek," ~~"should,"~~“re-envision,” “strategy,” “target,” “will,” “would,” 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 energy, and offsetting high raw material and energy costs, including the potential impact of changes in tariffs;

•the effects of economic downturns, inflation, volatility and other macroeconomic factors on the Company and its industry;

•the resiliency of the Company's operating model;

•reduced supply chain and labor disruptions and benefits to the Company therefrom;

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

•consumer and customer actions in connection with the COVID-19 ~~pandemic;~~pandemic, inflation, and the Russia-Ukraine military conflict;

•improved productivity and cost ~~containment;~~containment, including cost savings from the Company's investments;

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

•effects and timing of, and anticipated synergies and gains resulting from our pending and completed acquisitions and divestitures, including the ~~acquisition~~Company's acquisitions of Ball Metalpack Holding, LLC (“Ball Metalpack”), renamed Sonoco Metal ~~Packaging;~~

•~~realization~~Packaging (“Metal Packaging”), S.P. Holding, Skjern A/S (“Skjern”), RTS Packaging, LLC ("RTS”), and the Company's sale of ~~synergies resulting from acquisitions, including~~its Sonoco Sustainability Solutions (“S3”) business and the ~~acquisition~~sale of ~~Metal Packaging;~~South Carolina timberland properties;

•costs, timing and effects of restructuring and portfolio simplification activities;

•adequacy and anticipated amounts and uses of cash flows;

•capital allocation, including expected amounts of capital ~~spending;~~spending and expected annualized cost savings and other benefits therefrom;

•the Company's capital structure, including the incurrence of debt and the refinancing and repayment of debt;

•financial and business strategies and the results expected of ~~them;~~them, including with respect to strategic pricing initiatives, capital deployment and commercial, operational and supply chain excellence;

•financial results and profitability for future periods;

•producing improvements in earnings;

•profitable sales growth and rates of growth;

•~~strategic pricing initiatives;~~

•~~any projections of the amount, timing or impact of cost savings or restructuring~~market opportunities and ~~other charges and planning structural cost reductions and productivity initiatives;~~

•~~statements about supply constraints or logistics challenges;~~anticipated growth thereof;

•market leadership;

•~~research and development spending;~~

•expected impact and costs of resolution of legal proceedings;

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

•commitments to reduce greenhouse gas emissions;

•the Company's human capital management strategy

•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.

SONOCO PRODUCTS COMPANY

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~~Such 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~~military conflict between Russia and Ukraine and economic sanctions related thereto), and the ~~Company's~~Company’s ability to pass raw material, energy and transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks;

•impacts arising as a result of the COVID-19 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 to 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'~~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 and execute on the Company's portfolio simplification strategy 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;

•ability to successfully integrate newly acquired businesses ~~including Metal Packaging,~~ into the ~~Company's~~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;

SONOCO PRODUCTS COMPANY

•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 or other derivatives;~~hedges;

•changes in U.S. and foreign tariffs, tax rates, 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 disclosure controls and internal controls, ~~over~~including with regard to financial reporting;

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

•liability for and anticipated costs of environmental remediation actions;

•effects of environmental laws and regulations;

•operational disruptions at our major facilities;

•failure or disruptions in our information technologies;

•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;~~emissions and to meet environmental, social, and governance (“ESG”) goals and other sustainability commitments;

•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~~(such as the ongoing ~~Russia-Ukraine~~military conflict between Russia and ~~the Company's withdrawal from Russian operations,~~Ukraine), terrorist activities and natural disasters; and

•accelerating inflation and the 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"~~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~~Quarterly Report on Form 10-Q 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.~~otherwise, except as may be required by law. 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.

4335

SONOCO PRODUCTS COMPANY

COMPANY OVERVIEW

Sonoco is a leading provider of consumer packaging, industrial ~~healthcare~~products, and protective packaging with approximately ~~300~~310 locations in ~~31 countries.~~

~~Sonoco's~~32 countries as of April 2, 2023. 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. Prior to the divestiture of the Company's U.S. display and packaging business on April 4, 2021, 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.

~~On a consolidated basis, by~~Sonoco’s strategy is to increase its long-term profitability and return capital to shareholders. Over the ~~end~~past several years, the Company has simplified our business portfolio around fewer, bigger businesses which has reduced operating complexity and improved agility. The Company is focused on efficient capital deployment into these larger, core business units to improve economic returns and improve integration effectiveness and speed for acquired strategic assets. In parallel, Sonoco continues to work on commercial, operational, and supply chain excellence programs to shift the mix of ~~2021~~our business towards higher-valued products, improve the ~~impacts~~contracting process to better capture input costs and the value of the ~~COVID-19 pandemic on the Company had largely dissipated. For most of the Company's business units, second quarter 2022 sales demand equaled or exceeded pre-pandemic levels. The Company has incurred,~~services provided, 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 does not expect such impacts to have a material negative effect on the Company's operations or financial results.increase overall productivity.

~~Second~~First Quarter ~~2022~~2023 Compared with ~~Second~~First Quarter ~~2021~~2022

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

~~Measures calculated~~To assess and ~~presented~~communicate the financial performance of the Company, Sonoco's management uses, both internally and externally, certain financial performance measures that are not in ~~accordance~~conformity 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.principles. These ~~non-GAAP~~“non-GAAP” financial measures (referred to as ~~“Base”~~“Adjusted”) ~~are~~reflect adjustments to the Company's GAAP ~~measures adjusted~~results to exclude amounts, ~~(dependent upon the applicable period),~~ including the associated tax effects, relating ~~to restructuring initiatives,~~ to:

•restructuring/asset impairment charges ~~non-operating pension costs, acquisition and~~ 1;

•acquisition/divestiture-related ~~costs, gains/~~costs;

•gains or losses from the divestiture of businesses ~~amortization of acquisition intangibles, changes in last-in, first-out ("LIFO") inventory reserves,~~ or other assets;

•losses from the early extinguishment of ~~debt,~~debt;

•non-operating pension costs;

•amortization expense on acquisition intangibles;

•changes in last-in, first-out (“LIFO”) inventory reserves;

•certain income tax events and ~~certain~~ adjustments; and

•other items, if ~~any, including other income tax-related adjustments and/or events, the exclusion of which the Company believes improves the comparability~~any.

1 Restructuring 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, 2021 under Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations," under the heading "Use of Non-GAAP Financial Measures."

~~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) Restructuring/~~restructuring-related asset impairment charges are a recurring item as ~~Sonoco’s~~the Company’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.

The Company's management believes the exclusion of these amounts improves the period-to-period comparability and analysis of the underlying financial performance of the business. Non-GAAP figures previously identified by the term “Base” are now identified using the term “Adjusted,” for example, “Adjusted Operating Profit” and “Adjusted Net Income.” 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, 2022, under Item 7 - “Management's Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Use of Non-GAAP Financial Measures.”

In addition to the ~~second quarter of 2022,~~“Adjusted” results described above, the Company ~~recognized additional~~also uses Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA is defined as net income excluding the following: interest expense; interest income; provision for income taxes; depreciation, depletion and amortization expense; non-operating pension costs; net income/(loss) attributable to noncontrolling interests; restructuring/asset impairment ~~charges~~charges; changes in LIFO inventory reserves; gains/losses from the divestiture 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,~~businesses or other assets; acquisition/divestiture-related costs; derivative (gains)/losses; and other ~~service fees related~~non-GAAP adjustments, if any, that may arise from time to ~~acquisition~~time. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net sales.

The Company's non-GAAP financial measures are not calculated in accordance with, nor are they an alternative for, measures conforming to generally accepted accounting principles and ~~divestiture transactions, whether proposed~~may be different from non-GAAP financial

SONOCO PRODUCTS COMPANY

measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or ~~consummated,~~principles. Sonoco continues to provide all information required by GAAP, but it believes that evaluating its ongoing operating results may not be as useful if an investor or other user is limited to reviewing only GAAP financial measures. The Company consistently applies its non-GAAP performance measures presented herein and ~~charges~~uses them for internal planning and forecasting purposes, to evaluate its ongoing operations, and to evaluate the ultimate performance of ~~$6,056 related to expensing the remainder~~management and each business unit against plans/forecasts, including evaluation of the ~~inventory fair value adjustments~~Chief Executive Officer's performance by the Board of Directors. In addition, these same non-GAAP financial measures are used in determining incentive compensation for the entire management team and in providing earnings guidance to the investing community. Sonoco management does not, nor does it suggest that investors should, consider these non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

The Company presents these non-GAAP financial measures to provide users information to evaluate Sonoco’s operating results in a manner similar to how management evaluates business performance. Material limitations associated with the ~~acquisition~~use of ~~Metal Packaging.~~such measures are that they do not reflect all period costs included in operating expenses and may not be comparable with similarly named financial measures of other companies. Furthermore, the calculations of these non-GAAP financial measures are based on subjective determinations of management regarding the nature and classification of events and circumstances that the investor may find material and view differently. To compensate for these limitations, management believes that it is useful in understanding and analyzing the results of the business to review both GAAP information which includes all of the items impacting financial results and the non-GAAP financial measures that exclude certain elements, as described above. Whenever reviewing a non-GAAP financial measure, readers are encouraged to review the related reconciliation to fully understand how it differs from the related GAAP measure.

~~(4) Other Adjustments include after-tax charges of $4,777 related~~The following tables reconcile the Company's non-GAAP financial measures to ~~increases~~their most directly comparable GAAP financial measures in the Company's ~~LIFO reserve, $1,208 related~~Condensed Consolidated Statements of Income for each of the periods presented in conjunction with management's analysis of the Company's results of operations.

Adjusted Operating Profit, Adjusted Income Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Net Income Attributable to ~~non-operating pension costs,~~Sonoco, and ~~$1,979 of net charges primarily related to certain derivative transactions, partially offset by $567 of favorable discrete tax adjustments.~~Adjusted Diluted Earnings Per Share (“EPS”)


	For the three-month period ended April 2, 2023
Dollars in thousands, except per share data	Operating Profit		Income Before Income Taxes		Provision for Income Taxes		Net Income Attributable to Sonoco		Diluted EPS
As Reported	$	229,648	$	193,320	$	46,912	$	148,319	$	1.50
Acquisition/Divestiture-related costs	5,188		5,188		1,280		3,908		0.04
LIFO reserve change	(5,425)		(5,425)		(1,354)		(4,071)		(0.04)
Amortization of acquisition intangibles	21,164		21,164		5,127		16,037		0.16
Restructuring/Asset impairment charges	28,814		28,814		6,634		22,014		0.22
Gain on divestiture of business and sale of other assets	(72,010)		(72,010)		(17,122)		(54,888)		(0.55)
Non-operating pension costs	—		3,658		909		2,749		0.03
Derivative losses	6,085		6,085		1,518		4,567		0.05
Other adjustments	(43)		(43)		955		(997)		(0.01)
Total adjustments	$	(16,227)	$	(12,569)	$	(2,053)	$	(10,681)	$	(0.10)
Adjusted	$	213,421	$	180,751	$	44,859	$	137,638	$	1.40

4537

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


	For the three-month period ended April 3, 2022
Dollars in thousands, except per share data	Operating Profit		Income Before Income Taxes		Provision for Income Taxes		Net Income Attributable to Sonoco		Diluted EPS
As Reported	$	169,061	$	148,672	$	35,289	$	115,333	$	1.17
Acquisition/Divestiture-related costs	48,352		48,352		11,756		36,596		0.37
LIFO reserve change	19,050		19,050		4,833		14,217		0.14
Amortization of acquisition intangibles	18,800		18,800		4,630		14,170		0.14
Restructuring/Asset impairment charges	12,142		12,142		1,635		10,568		0.11

Non-operating pension costs	—		1,324		383		942		0.01
Derivative gains	(6,596)		(6,596)		(1,673)		(4,923)		(0.05)
Other adjustments	(16)		(16)		4,194		(4,212)		(0.04)
Total adjustments	$	91,732	$	93,056	$	25,758	$	67,358	$	0.68
Adjusted	$	260,793	$	241,728	$	61,047	$	182,691	$	1.85

~~(1) Restructuring/asset impairment charges are a recurring item as Sonoco’s restructuring programs usually require several years to fully implement~~

Adjusted EBITDA and ~~the~~Adjusted EBITDA Margin


	Three Months Ended
Dollars in thousands	April 2, 2023			April 3, 2022

Net income attributable to Sonoco	$	148,319		$	115,333
Adjustments
Interest expense	34,232			20,581
Interest income	(1,562)			(1,516)
Provision for income taxes	46,912			35,289
Depreciation, depletion, and amortization	82,137			73,315
Non-operating pension costs	3,658			1,324
Net (loss)/income attributable to noncontrolling interests	(55)			274
Restructuring/Asset impairment charges	28,814			12,142
Changes in LIFO inventory reserves	(5,425)			19,050
Gain from divestiture of business and sale of other assets	(72,010)			—
Acquisition/Divestiture related costs	5,188			48,352
Derivative losses/(gains)	6,085			(6,596)
Other non-GAAP adjustments	(43)			(16)
Adjusted EBITDA	$	276,250		$	317,532

Net Sales	$	1,729,783		$	1,770,982
Adjusted EBITDA Margin	16.0		%	17.9		%

The Company does not calculate net income by segment; therefore, Adjusted EBITDA by Segment 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~~reconciled to the ~~varying levels~~closest GAAP measure of ~~restructuring activity and~~segment profitability, Segment Operating Profit, which is another method to achieve the ~~inherent imprecision in~~same result. Segment Operating Profit is the ~~estimates used to recognize the impairment~~measure 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 relatedsegment profit or loss reported 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 dilutivechief operating decision maker 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 dilutivemaking decisions about allocating resources 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~~segments and assessing their performance in accordance with Accounting Standards Codification 280 “Segment Reporting,” as prescribed by the ~~three months ended July 3, 2022 versus the three months ended July 4, 2021.~~

~~OVERVIEW~~

~~Net sales for the second quarter of 2022 increased~~ ~~38.4 percent to $1.91 billion, compared with~~ ~~$1.38 billion~~ in the same period last year. This improvement reflects strong pricing performance and sales added from the January 26, 2022 acquisition of Ball Metalpack Holding, LLC, renamed Sonoco Metal Packaging ("Metal Packaging").

Net income/(loss) attributable to Sonoco for the second quarter of 2022 increased to $131.7 million, or $1.33 per diluted share, compared to $(334.1) million, or $(3.34) per diluted share, for the same period of 2021. Net income in the currentFinancial Accounting Standards Board.

4638

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 charges totaling $42.1 million, while results for the second quarter of 2021 included net after-tax, non-base charges totaling $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, after tax:~~

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 net income attributable to Sonoco (base earnings) for the second quarter of 2022 increased 85.4 percent to $173.8 million, or $1.76 per diluted share, from $93.7 million, or $0.93 per diluted share, in 2021 and second-quarterbase operating profit 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 increased compensation and benefit costs.~~ The base effective tax rate for the current year’s quarter was 25.0 percent compared with the prior year's rate of 26.3 percent. The difference is due to the mix of base earnings by tax jurisdiction.

~~OPERATING REVENUE~~

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

~~The components of the sales change were:~~


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

~~Total sales increase~~	$	~~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 $406.2 million, or 36.3 percent, in the second quarter of 2022 compared with the same period last year. The increase 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 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 the translation impact of an overall stronger dollar in the current year. Gross profit was $387.0 million for the three months ended July 3, 2022, which was $124.3 million higher than the prior-year period. Additionally, gross profit as a percent of sales increased to 20.2 percent from 19.0 percent in the prior-year quarter as overall sales price increases more than offset higher material and other operating costs largely due to the Company's strategic pricing initiatives.

~~GAAP selling, general and administrative ("SG&A") expenses for the quarter increased $50.2 million, or 38.9 percent, year over 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 prior-year gains on derivatives.~~

~~Restructuring/Asset impairment charges/(income) totaled $10.6 million~~ in the second quarter of 2022 compared with $(1.4) million in the same period last year. The year-over-year increase was the result of higher restructuring activity in the current year, 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 from the 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 $553.3 million lower in the second quarter of 2022 compared to the same period last year due to the settlement of the Inactive Plan in the second quarter of 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.

Additionally, in the second quarter of 2021 the Company executed a cash tender offer pursuant to which it retired a portion of its 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.

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 second quarters of 2022 and 2021 (~~$ in thousands~~):

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 second quarters of 2022 and 2021 ($ in thousands~~):
Three Months Ended
July 3, 2022 July 4, 2021 %
Change
Operating profit:
Segment operating profit:
Consumer Packaging $ 139,421 $ 65,296 113.5 %
Industrial Paper Packaging 94,201 59,818 57.5 %
All Other 16,529 15,607 5.9 %
Restructuring/Asset impairment (charges)/income (10,563) 1,445
Amortization of acquisition intangibles (20,871) (12,111)
Other non-base charges, net (21,241) 5,236
Consolidated $ 197,476 $ 135,291 46.0 %

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


Segment Adjusted EBITDA and All Other Adjusted EBITDA Reconciliation
For the Three Months Ended April 2, 2023
Dollars in thousands	Consumer Packaging segment			Industrial Paper Packaging segment			All Other			Corporate		Total
Segment and Total Operating Profit	$	91,821		$	94,367		$	27,233		$	16,227	$	229,648
Adjustments:
Depreciation, depletion and amortization1	30,038			24,878			6,057			21,164		82,137
Equity in earnings of affiliates, net of tax	75			1,781			—			—		1,856
Restructuring/Asset impairment charges2	—			—			—			28,814		28,814
Changes in LIFO inventory reserves3	—			—			—			(5,425)		(5,425)
Acquisition/Divestiture-related costs4	—			—			—			5,188		5,188
Gain from divestiture of business and other assets5	—			—			—			(72,010)		(72,010)
Derivative losses6	—			—			—			6,085		6,085
Other non-GAAP adjustments	—			—			—			(43)		(43)
Segment Adjusted EBITDA	$	121,934		$	121,026		$	33,290		$	—	$	276,250

Net Sales	$	909,278		$	615,855		$	204,650
Segment Operating Profit Margin	10.1		%	15.3		%	13.3		%
Segment Adjusted EBITDA Margin	13.4		%	19.7		%	16.3		%

~~The following table recaps~~1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $14,427, the Industrial Paper Packaging segment of $2,934, and All Other of $3,803.

2 Included in Corporate are restructuring/asset impairment ~~charges/(income) attributable to each of~~charges associated with the ~~Company’s segments during the second quarter of 2022 and 2021 ($ in thousands~~):
Three Months Ended
July 3, 2022 July 4, 2021
Restructuring/Asset impairment charges/(income):
Consumer Packaging $ 2,798 $ 581
Industrial Paper Packaging 4,459 (4,372)
All Other (495) 2,355
Corporate 3,801 (9)
Consolidated $ 10,563 $ (1,445)

~~Consumer Packaging~~

~~The~~ Consumer Packaging segment ~~primarily serves prepared~~of $1,576, the Industrial Paper Packaging segment of $24,544, and ~~fresh food markets along~~All Other of $1,157.

3 Included in Corporate are changes in LIFO inventory reserves associated with ~~other packaging for consumer products. The products produced~~the Consumer Packaging segment of $6,102 and ~~sold within this~~the Industrial Paper Packaging segment ~~are generally used to package a variety~~ of ~~consumer products and consist primarily of round and shaped rigid paper containers, steel tinplate cans and aerosol containers; thermoformed plastic trays and containers; and flexible packaging.~~$(677).

~~Segment sales increased approximately 66 percent compared to~~4 Included in Corporate are Acquisition/Divestiture-related costs associated with the ~~prior year's quarter due primarily to~~Consumer Packaging segment of $779 and the ~~acquisition~~Industrial Paper Packaging segment of ~~Metal~~$289.

5 Gains from the divestiture of business and other assets includes the sale of the Company's timberlands ($60,946) and the sale of its S3 business ($11,064), both of which are associated with the Industrial Paper Packaging segment.

6 Included in Corporate are losses on certain derivatives associated with the Consumer Packaging segment of $874, the Industrial Paper Packaging segment of $3,912, and ~~strong pricing.~~ ~~Overall, segment volume/mix was essentially flat during the second quarter~~All Other 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 approximately 4 percent during the second quarter of 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 from fresh berry markets that were impacted by inclement weather and plant consolidations.$1,242.

4939

SONOCO PRODUCTS COMPANY


Segment Adjusted EBITDA and All Other Adjusted EBITDA Reconciliation
For the Three Months Ended April 3, 2022
Dollars in thousands	Consumer Packaging segment			Industrial Paper Packaging segment			All Other			Corporate		Total
Segment and Total Operating Profit	$	173,609		$	72,660		$	14,524		$	(91,732)	$	169,061
Adjustments:
Depreciation, depletion, and amortization1	25,736			22,624			6,155			18,800		73,315
Equity in earnings of affiliates, net of tax	(38)			2,262			—			—		2,224
Restructuring/Asset impairment charges2	—			—			—			12,142		12,142
Changes in LIFO inventory reserves3	—			—			—			19,050		19,050
Acquisition/Divestiture related costs4	—			—			—			48,352		48,352
Derivative gains5	—			—			—			(6,596)		(6,596)
Other non-GAAP adjustments	—			—			—			(16)		(16)
Segment Adjusted EBITDA	$	199,307		$	97,546		$	20,679		$	—	$	317,532

Net Sales	$	868,098		$	699,129		$	203,755
Segment Operating Profit Margin	20.0		%	10.4		%	7.1		%
Segment Adjusted EBITDA Margin	23.0		%	14.0		%	10.1		%

~~Segment operating profit~~

1 ~~increased 114 percent~~Included in Corporate is the amortization of acquisition intangibles associated with the ~~main driver being~~Consumer Packaging segment of $12,189, the ~~Metal Packaging acquisition, along with favorable price/cost, including the benefits of strategic pricing initiatives,~~ ~~and productivity improvements. As a result, segment operating margin~~ ~~improved to~~ 14 ~~percent in the quarter from 11 percent in the 2021 period.~~

~~Industrial Paper Packaging~~

~~The~~ Industrial Paper Packaging segment ~~serves a variety~~ of ~~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~~$2,087, and ~~sold within this segment include fiber-based tubes, cones, and cores; fiber-based protective packaging and components; reels; and recycled paperboard.~~

~~Segment sales~~ ~~increased 20 percent~~ ~~from the prior year's quarter largely due to strong pricing performance, modestly offset by the negative impacts~~All Other of foreign exchange and lower volume/mix. Volume/mix declined approximately 2 percent in the second quarter as tube and core volume/mix gains in North America and Latin America were more than offset by volume declines in global paper, fiber protective packaging and tube, core and cone operations in Europe and Asia.$4,524.

~~Segment operating profit~~ ~~increased 57 percent~~2 ~~from the prior year's quarter, driven by a positive price/cost impact,~~ ~~including the benefits of strategic pricing initiatives,which was somewhat offset by lower volume/mix. As a result, segment operating profit margin improved to~~ ~~13 percent~~Included in ~~the current year's quarter from~~ ~~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 equipment; and paper amenities. Prior to the divestiture of the Company's U.S. display and packaging business on April 4, 2021, this business, which included point-of-purchase displays, fulfillment operations, and contract packaging, was reported in All Other.

~~Sales for All Other~~ ~~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 positive price/cost performance and favorable productivity. Operating margin~~ ~~declined slightly to 8.4 percent in the quarter from 8.8 percent in~~ ~~2021.~~

~~SONOCO PRODUCTS COMPANY~~

~~Six Months Ended July 3, 2022 Compared with Six Months Ended 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 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) Restructuring/~~Corporate are 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 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 charges of $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~~Consumer Packaging segment of $2,311, the ~~Inactive Plan~~Industrial Paper Packaging segment of $7,061, and All Other of $78.

3 Included in Corporate are changes in LIFO inventory reserves associated with the ~~second quarter~~Consumer Packaging segment of ~~2021, other non-operating pension costs~~$20,092 and the Industrial Paper Packaging segment 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 $2,767$(1,042).

~~(3) Due to~~4 Included in Corporate are Acquisition/Divestiture-related costs are charges associated with the ~~magnitude~~Consumer Packaging segment of ~~non-base losses in~~$26,694 and 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 purposesIndustrial Paper Packaging segment 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.$1,057.

5 Included in Corporate are gains on certain derivatives associated with the Consumer Packaging segment of $(956), the Industrial Paper Packaging segment of $(4,281), and All Other of $(1,359).

RESULTS OF OPERATIONS

The following discussion provides a review of results for the ~~six months~~three-month period ended ~~July~~April 2, 2023 versus the three-month period ended April 3, ~~2022 compared with the six months ended July 4, 2021.~~2022.

OVERVIEW

Net sales for the first ~~six months~~quarter of ~~2022~~2023 declined by ~~increased 34.7 percent~~$41.2 million or2.3%, to ~~$3,684.3 million,~~$1.73 billion, compared ~~with $2,736.1 million~~to $1.77 billion in thethe same period last year. ~~This improvement reflects increases from strong pricing performance~~The decline was attributable to lower overall volume/mix, including acquisitions, of $116.4 million, and ~~sales added~~unfavorable foreign currency translation and other net costs totaling $22.9 million, partially offset by higher selling prices of $98.1 million.

Net income attributable to Sonoco for the first quarter of 2023 increased to $148.3 million, or $1.50 per diluted share, compared to $115.3 million, or $1.17 per diluted share, for the same period of 2022. Net income in the current period continued to benefit primarily from the ~~January 26, 2022 acquisition of Metal Packaging.~~Company’s strategic pricing actions in the Industrial Paper Packaging segment and improving manufacturing productivity. These benefits were partially offset by ~~the negative impact of foreign currency translation~~higher net interest expense and ~~the April 2021 U.S. display~~lower overall volume and ~~packaging divestiture.~~mix.

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

5240

SONOCO PRODUCTS COMPANY

Excluding the non-GAAP adjustments shown above, Adjusted Net Income (“Adjusted Earnings”) for the first ~~six months~~quarter of ~~2022 includes after-tax, non-base charges totaling $109.5~~2023 was $137.6 million. ~~GAAP net loss for the first six months of 2021 includes after-tax non-base charges totaling $456.8 million~~. ~~The major components of these non-base amounts are shown below:~~

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

~~Adjusted for these items, Base earnings for the six-month period ending July 3, 2022~~ ~~increased 82.8 percent to $356.5 million, or $3.61~~ ($1.40 per diluted ~~share, from $195.0~~share), compared with $182.7 million ~~or $1.93~~($1.85 per diluted ~~share, in~~share), during the same period in ~~2021.~~2022. GAAP O

perating Profit for the first quarterof 2023 was $229.6 million, an increase of 35.8% from the $169.1 million reported in the first-quarter of 2022. The increase in ~~Base earnings~~GAAP Operating Profit was primarily the result of ~~$161.5 million is~~ ~~largely attributable to strong pricing performance, earnings~~gains from the ~~Metal Packaging acquisition, and productivity improvements. These gains were partially offset by the 2021~~ divestiture of the ~~Company's U.S. display and packaging~~S3 business and ~~increased compensation and benefit costs.~~sale of the Company's timberland properties. Adjusted O

~~OPERATING REVENUE~~

~~Net sales~~perating Profit for the first ~~six months of 2022~~quarter ~~increased $948~~of 2023 was $213.4 million, a decrease of 18.2% from the $260.8 million reported in ~~from~~ the same period in ~~2021.~~

2022. The ~~components~~declines in Adjusted Earnings and Adjusted Operating Profit were due to an unfavorable metal price overlap in the Metal Packaging business resulting from the consumption of higher-cost inventories during the ~~sales change were:~~


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

~~Total sales increase~~	$	~~948~~

~~Selling price gains were driven by a combination~~first quarter of ~~passing through higher costs~~2023, as well as lower overall volume 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.mix.

COSTS AND EXPENSES

Cost of goods sold ~~increased $730.2~~ decreased by $44.1 million, or ~~33.3 percent, w~~3.1%, ~~hile the Company's gross profit margin percentage~~ ~~increased to 20.6 percent~~ ~~for~~in the first ~~six months~~quarter of ~~2022,~~2023 compared ~~to 19.8 percent in~~with the ~~prior-year period.~~ same period last year. The ~~increase~~decrease was driven primarily by ~~inflation,~~lower volumes and lower input costs.

Gross profit was $374.4 million for the three-month period ended April 2, 2023, which ~~also had~~was $2.9 million higher than the prior-year period. The increase in gross margin was driven by strategic pricing actions and the full-quarter impact of ~~increasing~~ the ~~Company's LIFO inventory reserves, and costs added by the acquisition of~~ Metal Packaging ~~including expensing~~acquisition, which offset volume declines. Additionally, gross profit as a percent of sales increased to 21.6% from 21.0% in the ~~acquisition-date fair value adjustments to finished goods inventory. Gross profit margin improved~~prior-year quarter due to ~~positive price/cost relationship~~these factors.

Selling, general and ~~productivity improvements.~~

~~SONOCO PRODUCTS COMPANY~~

~~GAAP SG&A~~administrative costs ~~for~~decreased by $2.4 million, or 1.3%, in the first ~~six months~~quarter of ~~2022~~ ~~increased $95.3 million, or 34.8 percent,~~ ~~year over year.~~ ~~The year-over-year increase was largely driven by~~2023 compared with the same period last h~~igher~~year. The decrease was due to lower acquisition ~~and divestiture transaction~~ costs ~~increased amortization of~~related to the Metal Packaging acquisition, ~~intangibles, increased compensation and other benefit costs, and absence of non-recurring gains from 2021 life insurance gains and a second quarter 2021 foreign VAT refund.~~which more than offset inflation increases.

~~Net restructuring costs and asset~~Restructuring/Asset impairment charges totaled ~~$22.7~~$28.8 million inin the first ~~six months~~quarter of ~~2022,~~2023, compared with ~~$5.4~~$12.1 million ~~of net charges in~~during the same period last year. ~~The year-over-year increase~~ ~~was driven by~~ ~~higher~~ year-over-year restructuring activity 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~~
~~decreased $559.3~~

Gain on divestiture of business and other assets of $72.0 million ~~year over year due to the $547.3 million non-cash settlement charge recognized~~ in the ~~second~~first quarter of ~~2021 upon settling~~2023 reflects gains from the ~~liabilities associated with~~divestiture of the ~~Inactive Plan. Additional information regarding pension settlement charges is provided in Note 11 to~~Company's S3 business and the ~~Company’s Condensed Consolidated Financial Statements included in Part I, Item 1~~sale of ~~this Quarterly Report on Form 10-Q.~~the Company's timberland properties.

~~GAAP net~~Net interest expense for the first ~~six months~~quarter of ~~2022~~2023 increased to ~~$42.2~~$32.7 million, c~~ompared~~compared with ~~$32.5~~$19.1 million during the first ~~six months~~quarter of ~~2021.~~2022. The increase ~~was~~is primarily due to higher year-over-year average debt balances ~~related to~~resulting from the term loan executed in December 2022 and the prior year financing ~~transactions used to fund~~of the Metal Packaging acquisition, ~~in January 2022.~~as well as the impact of higher interest rates on the Company's variable rate debt.

The effective tax rates on GAAP and ~~Base earnings~~Adjusted Earnings in the first ~~six months~~quarter of ~~2022~~2023 were ~~24.9 percent~~24.3% and ~~25.1 percent,~~24.8%, respectively, compared with ~~26.2 percent~~23.7% and ~~25.9 percent for the GAAP loss and Base earnings,~~25.3%, respectively, in the ~~prior-year period.~~prior year’s quarter. The increase in the GAAP effective tax rate is primarily attributable to the absence of a tax benefit received in the first quarter of 2022 associated with the acquisition of Metal Packaging. The decrease in the ~~2022 GAAP~~tax rate on Adjusted Earnings was ~~largely driven by~~due to a variety of small variances, mostly related to items discrete to the ~~absence of the 2021 pension settlement charge and the 2022 release of valuation allowances on the Company's state net operating loss carryforwards. The base rate was lower than~~period in ~~the prior year due largely to an increase in the amount of the U.S. research and development credit recognized in the current year's period.~~

which they occurred.

REPORTABLE SEGMENTS

As previously disclosed, 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 summarizes net sales attributable to each of the Company’s segments and All Other for the first quarters of 2023 and 2022:


	Three Months Ended
($ in thousands)	April 2, 2023		April 3, 2022		% Change
Net sales:
Consumer Packaging	$	909,278	$	868,098	4.7	%
Industrial Paper Packaging	615,855		699,129		(11.9)	%
All Other	204,650		203,755		0.4	%
Net sales	$	1,729,783	$	1,770,982	(2.3)	%

SONOCO PRODUCTS COMPANY

~~REPORTABLE SEGMENTS~~

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

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~~summarizes operating profit ~~attributable to each of the Company's segments during the first six months of 2022 and 2021 ($ in thousands~~):
Six Months Ended
July 3, 2022 July 4, 2021 % Change
Operating profit:
Segment operating profit:
Consumer Packaging $ 313,030 $ 146,656 113.4 %
Industrial Paper Packaging 166,862 112,117 48.8 %
All Other 31,053 34,364 (9.6) %
Restructuring/Asset impairment charges (22,705) (5,401)
Amortization of acquisition intangibles (39,671) (24,860)
Other non-base charges, net (82,031) (7,276)
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. 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)~~ attributable to each of the Company’s segments during the first ~~six months~~quarters of ~~2022~~2023 and ~~2021 (~~2022:


	Three Months Ended
($ in thousands)	April 2, 2023		April 3, 2022		% Change
Operating profit:
Consumer Packaging	$	91,821	$	173,609	(47.1)	%
Industrial Paper Packaging	94,367		72,660		29.9	%
All Other	27,233		14,524		87.5	%
Corporate
Restructuring/Asset impairment charges	(28,814)		(12,142)
Amortization of acquisition intangibles	(21,164)		(18,800)
Other non-GAAP charges, net	66,205		(60,790)
Operating profit	$	229,648	$	169,061	35.8	%

The following table summarizes Adjusted EBITDA attributable to each of the Company’s segments during the first quarters of 2023 and 2022:


	Three Months Ended
($ in thousands)	April 2, 2023		April 3, 2022		% Change
Adjusted EBITDA:
Consumer Packaging	$	121,934	$	199,307	(38.8)	%
Industrial Paper Packaging	121,026		97,546		24.1	%
All Other	33,290		20,679		61.0	%
Adjusted EBITDA	$	276,250	$	317,532	(13.0)	%

~~$ in thousands~~

):The following table summarizes restructuring/asset impairment charges attributable to each of the Company’s segments during the first quarters of 2023 and 2022:


		Six Months Ended					Three Months Ended
		July 3, 2022		July 4, 2021
Restructuring/Asset impairment charges/(income):
($ in thousands)						($ in thousands)	April 2, 2023		April 3, 2022
Restructuring/Asset impairment charges:						Restructuring/Asset impairment charges:
Consumer Packaging	Consumer Packaging	$	5,109	$	3,416	Consumer Packaging	$	1,576	$	2,311
Industrial Paper Packaging	Industrial Paper Packaging	11,520		(2,939)		Industrial Paper Packaging	24,544		7,061
All Other	All Other	(417)		4,919		All Other	1,157		78
Corporate	Corporate	6,493		5		Corporate	1,537		2,692
Consolidated		$	22,705	$	5,401
Restructuring/Asset impairment charges						Restructuring/Asset impairment charges	$	28,814	$	12,142

Consumer Packaging

The products produced and sold within the Consumer Packaging segment are generally used to package a variety of consumer products and consist primarily of round and shaped rigid paper, steel and plastic containers; metal and peelable membrane ends, closures, and components; thermoformed plastic trays; and high-barrier flexible packaging. These products primarily serve the consumer staples market, focused on food, beverage, household, and personal products.

Segment sales increased ~~57.4 percent~~ ~~year to date~~approximately 4.7% compared to the ~~prior-year~~prior year’s quarter due to continued strong strategic pricing performance and acquisitions. Volume and mix were lower as compared to the prior year due to softer demand in metal packaging (aerosol) and rigid plastic food packaging.

Segment operating profit declined 47.1% in the first quarter of 2023 compared to the same period ~~driven by increased selling prices,~~last year. The decline was largely ~~implemented~~due to an unfavorable metal price overlap in metal packaging resulting from the consumption of higher-cost inventories during the first quarter of 2023, as well as volume declines in both metal aerosols and rigid plastics food packaging. As a result, segment operating margin declined to ~~recover increased raw material and other operating costs, sales added by~~10.1% during the ~~acquisition~~quarter from 20.0% for the same period in 2022. The impact of ~~Metal Packaging, and a modest increase~~the unfavorable metal price overlap is expected to lessen beginning in ~~volume.~~the second quarter as the higher cost metal inventories are consumed.

5542

SONOCO PRODUCTS COMPANY

~~Year-to-date~~Consumer Packaging segment operating profit and Adjusted EBITDA decreased by ~~increased 113.4 percent~~47.1% ~~driven~~and 38.8%, respectively, due to the previously discussed unfavorable metal price overlap and volume declines in metal aerosols and rigid plastics food packaging, which were partially offset by positive manufacturing productivity.

Industrial Paper Packaging

The primary products produced and sold within the ~~Metal~~Industrial Paper Packaging ~~acquisition~~ segment include goods produced from recycled fiber including paperboard~~along with favorable price/cos~~ tubes, cones, and cores; paper-based protective packaging; and uncoated recycled paperboard ~~t, including~~for high-end applications such as folding cartons, can board and laminated structures. Products across this segment support multiple end markets in industrials (construction and building products, and industrial distribution), consumer staples (food and beverage, food distribution, household and personal products), and consumer discretionary (home building, appliances, apparel, and home furnishings), as well as various other end markets.

Segment sales decreased 11.9% from the ~~benefits~~prior year's quarter due to continued volume and mix declines across a variety of end markets as well as declines due to divestitures and the exit from the corrugated medium market.

Segment operating profit increased 29.9% from the prior year’s quarter, primarily due to strategic pricing ~~initiatives,~~actions which were partially offset by lower volume and mix ~~and productivity gains.~~. As a result, segment operating profit margin ~~increased 442~~ ~~basis points~~improved to ~~16.8 percent~~. 15.3% in the current year's quarter from 10.4% in the prior year.

Industrial Paper Packaging

~~Segment sales~~ ~~increased 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 negative volume/mix impact and a negative impact from foreign currency translation.

~~Segment~~ segment operating profit ~~increased 48.8 percent~~and Adjusted EBITDA improved 29.9% and 24.1%, respectively, primarily due ~~from the prior-year period driven by price/cost gains,~~ ~~including~~to the benefits of strategic pricing ~~initiatives~~actions and lower material costs, which more than offset lower volumes. ~~. These gains~~Segment operating profit margin improved to 15.3% in the first quarter of 2023 from 10.4% in the same period last year.

All Other

The primary products produced with the All Other group of businesses consist of a variety of packaging materials including plastic, paper, foam, and various other specialty materials serving a wide variety of end markets including consumer staples, consumer discretionary, industrial and pharmaceuticals.

Sales for All Other improved 0.4% from the prior year’s quarter due to strategic pricing actions, which were partially offset by ~~somewhat lower~~ volume and ~~a negative impact from foreign exchange.~~mix declines.

All Other operating profit improved 87.5% in the first quarter of 2023 compared to the same period last year, primarily due to strategic pricing performance and strong productivity. As a result, ~~segment~~ operating ~~margins were up 215 basis points~~margin increased to ~~11.7 percent~~.

~~All Other~~

~~Sales for~~13.3% in the current year's quarter from 7.1% in the prior year's quarter. All Other ~~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~~Adjusted EBITDA improved by ~~the impact of the 2021 U.S.~~ ~~display and packaging divestiture. Excluding that divestiture, volume/mix for businesses grouped in All Other improved approximately~~ ~~4.3 percent, driven primarily by demand improvements in several businesses, most notably plastics industrial and temperature-assured businesses.~~

~~All Other operating profit~~ ~~declined 9.6 percent year to date~~61.0% due to the ~~impact of the divested display and packaging business and a negative impact from foreign exchange.~~ ~~These were partially offset by a positive price/cost relationship. Segment operating margin~~ ~~declined to 7.8 percent year to date from 9.0 percent in 2021.~~

~~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. There have been no changes to the Company's annual qualitative and quantitative tests, or underlying assumptions, from what is disclosed in its Annual Report on Form 10-K for the 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.

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 9-19 of the Company's 2021 Annual Report on Form 10-K.

~~SONOCO PRODUCTS COMPANY~~

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

Although beginning to benefit from 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 recovery is likely to be significantly weaker, delayed, or prolonged compared to management’s current expectations, significant negative price/cost relationships will persist over the long-term, profit margins do not improve as expected, or other assumptions change, such as the discount rate, goodwill impairment charges may be possible in the future. Total goodwill associated with the Plastics – Healthcare reporting unit was $62.4 million at July 3, 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.

~~Other Asset Impairments - Russia~~

The Company recognized asset impairment charges totaling $9.2 million during the six months ended July 3, 2022 as a result of exiting its operations in Russia due to the ongoing Russia-Ukraine conflict. ~~The impairment charges included $3.7 million of cumulative currency translation adjustment losses that were reclassified from accumulated other comprehensi~~ve 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 w~~ith approximately 70 employees and annual sales in 2021 of approximately $21 million.~~previously mentioned reasons.

Financial Position, Liquidity and Capital Resources

Cash generated from operations for the first ~~six~~three months of ~~2022~~2023 was ~~$184.5~~$98.0 million, compared with ~~$102.0~~$1.1 million in the same period of ~~2021,~~2022, an increase of ~~$82.5~~$96.9 million. ~~While~~ GAAP net income increased by ~~$509.3~~$32.7 million ~~this was partially offset by~~year over year, reflecting the ~~year-over-year change in~~ non-cash ~~after-tax pension and post-retirement plan expense of $415.8 million, which was primarily driven by~~gains from the ~~settlement of one~~sales of the Company's ~~U.S. pension plans in~~S3 business and timberland properties during the ~~second~~first quarter of ~~2021. 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.~~2023. Net working capital ~~was a use of $258.5~~used $91.5 million of cash in the first ~~six~~three months of ~~2022,~~2023, compared with ~~a use of $45.6~~$185.5 million in the same period of 2022, for a year-over-year decrease in the use of cash of $94.0 million. Beginning in the first quarter of 2022, inventory levels increased to mitigate supply chain uncertainty caused by lack of availability and shipment delays. While inventories at April 2, 2023 were higher than at April 3, 2022, they decreased during the first quarter of 2023 and increased during the same period last year. ~~While current-year inflation~~Conversely, changes in accounts payable effectively offset the changes in inventory, as we worked to right-size inventory and the cost of inputs declined, most notably for steel and old corrugated containers. Lastly, while accounts receivable increased during the first quarter of 2023, the increase was ~~a key driver~~much smaller than experienced during the first quarter of ~~that increase, seasonal inventory build in the Company's newly-acquired Metal Packaging business also contributed to the change.~~2022, when growing volumes and higher selling prices increased accounts receivable significantly. The Company continues to actively manage all components of net working capital in an effort to minimize the impact on cash utilization while also supporting the needs of our ~~customers and mitigating stock-out risk.~~customers. Cash contributions to the Company's retirement plans were $4.9 million in the first quarter of 2023, compared with $28.1 million in the same period last year. The contributions in the prior year included the final Sonoco Retirement Contribution (“SRC”), the non-elective component of the Sonoco Savings Plan. The SRC was terminated as of December 31, 2021.

Changes in accrued expenses and other assets and liabilities ~~provided $11.6~~used $18.9 million in the ~~six months~~three-month period ended ~~July 3, 2022~~April 2, 2023, compared with using ~~$16.4~~$2.5 million in the same period last year. The ~~$28.0~~$16.4 million ~~increased provision~~additional use of ~~operating~~ cash ~~flow~~ was largely driven by the higher ~~interest accruals stemming from debt issued in connection with the Metal Packaging acquisition and higher year-over-year~~year over year payout of management incentive ~~accruals.~~compensation.

Investing activities used ~~$1.48 billion~~$3.0 million of cash in the first ~~six~~three months of ~~2022,~~2023, compared with ~~$4.5~~ $1,415.8 million in the same period last year. The ~~higher~~lower 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~~ Metal Packaging acquisition on January 26, ~~2022. Net capital~~2022 for a total of $1,348.6 million. Capital expenditures during the first ~~six~~three months of ~~2022~~2023 were ~~$144.1~~ $83.4

SONOCO PRODUCTS COMPANY

million,~~, $51.6~~ $15.9 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~~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~~segment and 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.~~Industrial Packaging segment, including spend on Project Horizon. Proceeds from the sale of businesses added ~~$86.1~~$13.8 million of cash in the first ~~six~~three months of ~~2021~~2023 as the Company received cash from the sale of its ~~U.S. display~~S3 business and ~~packaging business as well as~~proceeds from the ~~working capital settlement and release~~sale of ~~escrow~~assets were $71.2 million higher year over year, primarily due to proceeds from the ~~2020~~ sale of ~~its European contract packaging business.~~the Company's timber lands in March 2023. Other net investing ~~proceeds, primarily insurance proceeds received in 2021, were $6.7~~activities used $5.0 million ~~lower~~more cash year over ~~year.~~year, primarily as a result of the Company's purchase of a 2.7% equity interest in Northstar during the three-month period ended April 2, 2023. Net capital spending for 2023 is expected to be approximately $305 million, compared to $319 million in 2022.

Financing activities ~~provided $1.30 billion~~used $118.2 million of cash in the ~~six months~~three-month period ended ~~July 3, 2022,~~April 2, 2023, while ~~using $394.2~~providing $1,392.6 million in the corresponding prior-year period, a year-over-year ~~increase~~decrease of ~~$1.7~~$(1.5) billion. The ~~increase~~decrease was largely driven by higher ~~net~~ debt ~~proceeds/repayments, which provided $1.5 billion more cash~~proceeds in the prior year ~~over year. Current-year borrowings include $1.19~~used primarily to fund the Metal Packaging acquisition. These included $1.2 billion of net proceeds from the issuance of unsecured notes and $300 million of proceeds from ~~the Term Loan Facility, which were used primarily to fund the Metal Packaging acquisition.~~a three-year term loan facility. The Company used cash of $14.5 million to purchase a noncontrolling interest in Graffo in the first quarter of 2022. Cash used to repurchase the Company's common stock to satisfy employee tax withholding obligations in association with the exercise of certain share-based compensation awards was ~~$4.0~~$10.6 million in the ~~first six months of 2022~~three-month period ended April 2, 2023, compared to ~~$159.6~~$3.4 million in the same period last year. The year-over-year decrease of $155.6 million was primarily the result of an accelerated share repurchase executed in the prior year pursuant to an authorization approved by the Company's Board of Directors in April 2021.

~~Cash and cas~~The C~~h equivalents totaled $175.0 million and $171.0 million at July 3, 2022~~ompany's cash balances are held in numerous locations throughout the world. At April 2, 2023 and December 31, ~~2021, respectively. Of these totals,~~2022, approximately ~~$144.3~~$190.5 million and ~~$154.4~~$170.1 million, respectively, of the Company's reported cash and cash equivalents balances of $209.7 million and $227.4 million, respectively, were held outside of the United States by ~~the Company’s~~its foreign subsidiaries. Cash 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,~~As the Company ~~believes it~~ has ~~ample~~maintained sufficient domestic liquidity ~~from~~through a combination of ~~cash on hand, expected future~~ operating cash flow generation and access to bank and capital ~~markets borrowings. The Company~~market borrowings, management 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, as of April 2, 2023 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 ~~the bank~~it 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 six months ended July 3, 2022, the Company reported a net decrease in cash and cash equivalents of $3.6 milliondue to currency translation adjustments resulting from a stronger U.S. dollar relative to certain foreign currencies in which cash and cash equivalents were held.~~

The Company operates a $500 million commercial paper program, supported by a $750 million unsecured revolving credit facility with a syndicate of ~~eight~~ banks. The revolving credit facility is committed through June 2026. ~~If circumstances were to prevent the~~The Company ~~from issuing commercial paper, it~~ has the contractual right to draw funds directly on the underlying revolving credit ~~facility.~~facility, which could possibly occur if there were a disruption in the commercial paper market.

~~On January 21, 2022,~~Recent events in the banking sector have caused the Company ~~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):~~

~~The Notes are senior unsecured obligations~~to review 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~~assess risk with respect to our banking partners, including the ~~Company~~syndicate of nine banks that ~~among other things, restrict the entry into additional secured indebtedness, sale~~participate in our term loan facilities and ~~leaseback transactions~~revolving credit facilities. All of our banks are considered Large Financial Institutions and ~~certain mergers, consolidations~~subject to higher reporting and ~~transfers of all or substantially all~~stress testing requirements, and six of the ~~Company’s assets.~~nine banks are considered Globally Systemically Important Banks (“GSIB”) and subject to the highest stress testing and capital requirements. All of the banks that participate in our term loans and the $750 million revolving credit facility which backstops our commercial paper program are of the highest credit. The Company ~~used an amount equal~~generally does not hold cash deposits with banks in excess of operational needs, and our operating balances across the world are held in a well-diversified group of international banks.

During the three-month period ended April 2, 2023, the Company reported a net increase in cash and cash equivalents of $5.4 milliondue to ~~the net proceeds~~currency translation adjustments resulting from ~~the Notes~~a weaker U.S. dollar relative to ~~partially fund the Metal Packaging acquisition.~~

~~SONOCO PRODUCTS COMPANY~~

Also on January 21, 2022, the Company entered into a $300 million 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,certain foreign currencies in which cash 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 at the Company's discretion. Borrowings under the Term Loan Facility mature on January 27, 2025.cash equivalents were held.

At ~~July 3, 2022,~~April 2, 2023, the Company had scheduled debt maturities of approximately ~~$399~~$448 million over the next twelve months, including ~~$258~~$12 million of outstanding commercial paper balances. Also at ~~July 3, 2022,~~April 2, 2023, the Company had ~~$175~~approximately $210 million in cash and cash equivalents on hand and $750 million in committed capacity under its revolving credit facility, of which ~~$492~~$738 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

SONOCO PRODUCTS COMPANY

investing activities, ~~will~~ provide ample liquidity to cover these debt maturities and other cash flow needs of the Company over the ~~course~~remainder of ~~the next twelve months.~~2023 and beyond.

Certain of the Company’s debt agreements impose restrictions with respect to the maintenance of financial ratios and the disposition of assets. The most restrictive covenants currently require the Company to maintain a minimum level of interest coverage and a minimum level of net worth, as defined in the agreements. As of ~~July 3, 2022,~~April 2, 2023, the Company’s interest coverage and net worth were substantially above the minimum levels required under these covenants.

During the three-month period ended April 2, 2023, the Company received net cash proceeds totaling approximately $13.8 million and $70.8 million from the sales of its S3 business and timberland properties, respectively. The Company used these proceeds for general Corporate purposes.

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.

The Company anticipates making additional contributions to its other pension and postretirement plans of approximately $7$10 million during the remainder of ~~2022,~~2023, which would result in total contributions to these plans of approximately ~~$38~~$15 million in ~~2022.~~2023. Future funding requirements beyond the current year will vary depending largely on actual investment returns, future actuarial assumptions, and legislative actions.

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~~facilities 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 ~~from time~~foreign currency forward contracts and other risk management instruments to ~~time uses traditional~~manage exposure to changes in foreign currency ~~swaps~~cash flows and ~~forward exchange contracts to hedge~~the translation of monetary assets and liabilities on the Company's condensed consolidated financial statements by hedging a portion of forecasted transactions that are denominated in foreign currencies, foreign currency assets and liabilities, or its net investment in foreign subsidiaries. The Company’s foreign operations are exposed to political, geopolitical, and cultural risks, but ~~the~~these 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 isare no ~~indication~~indications that conditions are 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 ~~July 3, 2022,~~April 2, 2023, the carrying value of the Company's net investment in its Venezuelan operations was approximately ~~$2.0~~$2.1 million. In addition, at ~~July 3, 2022,~~April 2, 2023, the Company's ~~Accumulated Other Comprehensive Loss~~“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.

~~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~~has been deemed to be a highly inflationary economy under U.S. ~~GAAP. Accordingly, effective as of~~GAAP since the ~~beginning of the second~~first quarter of ~~2022,~~2022. Accordingly, the Company 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 inhas not been significant to the ~~second quarter of 2022 was a pretax charge of approximately $1.8 million (approximately $1.4 million after tax).~~Company's earnings. The magnitude of future earnings impacts, however, is uncertain as such impacts are dependent upon unpredictable ~~further~~ movements in the Turkish lira relative to the U.S. dollar. In addition to remeasurement-related charges, significant deterioration in the Turkish economy could result in the recognition of future impairment charges. However, the Company believes its exposure is limited to its net investment in Turkey ofwhich was approximately ~~$17.0~~$17.7 million as of ~~July 3, 2022.~~April 2, 2023.

SONOCO PRODUCTS COMPANY

The Company is a purchaser of various raw material inputs such as recovered paper, energy, steel, aluminum, and plastic resin. The Company generally does not engage in significant hedging activities for these purchases other than for energy and, from time to time, aluminum, because there is usually a high correlation between the primary input costs and the ultimate selling price of its products. Inputs are generally purchased at market or at fixed prices that are established with individual suppliers as part of the purchase process for quantities expected to be consumed in the ordinary course of business. On occasion, where the correlation between selling price and input price is less direct, the Company may enter into derivative contracts such as futures or swaps to manage the effect of price fluctuations. In addition, the Company may occasionally use traditional, unleveraged interest-rate swaps to manage its mix of fixed and variable rate debt and control its exposure to interest rate movements within select ranges.

At April 2, 2023, the Company had derivative contracts outstanding to hedge the prices on a portion of anticipated natural gas and aluminum purchases. These contracts, some of which qualify as cash flow hedges, include natural gas swaps totaling approximately 8.4 million metric million British thermal units (“MMBTUs”) and aluminum swaps totaling 715 metric tons. These contracts have various maturity dates ranging through December 2024. The total fair market value of these instruments resulted in a net loss position of $15.0 million and $8.8 million at April 2, 2023 and December 31, 2022, respectively.

The Company routinely enters into derivative currency contracts to ~~fix~~ mitigate the risk of unfavorable fluctuations in the exchange rate on certain anticipated foreign currency cash flows. ~~The total market value of these instruments was a net unfavorable position of $0.6 million at July 3, 2022 and a net unfavorable position of $0.1 million at December 31, 2021.~~ These contracts qualify as cash flow hedges and have ~~maturities~~various maturity dates ranging ~~to September 2023.~~ through May 2024. The total market value of these instruments resulted in a net gain position of $2.6 million at April 2, 2023 and a net loss position of $0.9 million at December 31, 2022.

In addition, ~~at July 3, 2022,~~ the Company had various currency contracts ~~outstanding~~ to ~~fix~~mitigate the risk of unfavorable fluctuations in the exchange rate on certain foreign currency assets and ~~liabilities. Although placed~~liabilities as ~~an economic hedge, the Company does not apply hedge accounting to these contracts, the fair value of which was not material at July 3, 2022 and December 31, 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 ~~$6.6 million~~ April 2, 2023at July 3, 2022 and a favorable position of $2.2 million at December 31, 2021. Natural gas and aluminum hedge contracts covering an equivalent of 6.4 million MMBTUs and 84 metric tons, respectively, were outstanding at July 3, 2022. These contracts, some of which are designated as cash fl~~ow hedges, have maturities ranging to December 2024.~~

Pursuant to the registered public offering of unsecured 2.850% notes with a principal amount of $500.0 million maturing on February 1, 2032, the Company entered into treasury lock derivative instruments with two banks, with a notional principal amount of $150.0 million 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 derivatives were settled when the bonds priced on January 11, 2022, with the Company recognizing a gain on the settlement of $5.2 million.

. During the first ~~quarter~~three months of ~~2022,~~2023, the U.S. dollar ~~strengthened~~weakened against the euro, the British pound, the Brazilian real, the Canadian dollar, ~~the Brazilian real,~~ and the Mexican peso, which are the functional currencies in which a majority of the Company's foreign investments are held. The net impact of ~~these~~these changes ~~resulted~~resulted in a ~~net~~ translation ~~loss~~gain of ~~$73.7~~$31.6 million being recorded in ~~"Accumulated~~“Accumulated other comprehensive ~~loss" for~~loss” during the ~~six months~~three-month period ended ~~July 3, 2022.~~April 2, 2023.

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.

6046

SONOCO PRODUCTS COMPANY

OTHER ITEMS

Critical Accounting Policies and Estimates

See Part II, Item 7, "Critical Accounting Policies and Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2022.


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~~Quarterly Report on Form 10-Q and was disclosed in its Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, which was filed with the Securities and Exchange Commission on February 28, ~~2022.~~2023. 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"~~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 ~~July 3, 2022,~~April 2, 2023, 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

There have been no changes in the Company’s internal control over financial reporting occurring during the quarter ended ~~July 3, 2022,~~April 2, 2023, that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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, ~~2021,~~2022, and in Part I - Item 1 - “Financial Statements” (Note 16 - “Commitments and Contingencies”) of this ~~report.~~Quarterly Report on Form 10-Q.

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~~Company’s liability, if any, is shared with such other parties, but the ~~Company's~~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 ~~July 3, 2022,~~April 2, 2023, cannot be determined. As of ~~July 3, 2022~~April 2, 2023 and December 31, ~~2021,~~2022, the Company had accrued $7.2 million and ~~$7.4~~$7.3 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~~Legal Matters

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

6147

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~~

~~Programs~~1

~~Maximum~~

~~Number or Approximate Dollar Value of Shares~~

~~that May Yet be~~

~~Purchased under the~~

~~Plans or Programs~~1

~~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. Following several repurchase transactions in 2021, a total of approximately $138.0 million remained available for share repurchases at December 31, 2021. No shares were repurchased under this authorization during the six-month period ended July 3, 2022.


Item 6.			Exhibits.


			Exhibit Index
3.1			Restated Articles of Incorporation, as amended April 21, 2022 (incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K filed April 22, 2022)
3.2			By-Laws of Sonoco Products Company, as amended July 20, 2022 (incorporated by reference to Exhibit 3.2 to the Registrant's Form 8-K, filed July 26, 2022)
~~10.1~~			~~Separation Agreement dated June 13, 2022, by and 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~~Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

SONOCO PRODUCTS COMPANY

(Registrant)

Date:

~~August 2, 2022~~May 3, 2023

By:

/s/ Robert R. Dillard

Robert R. Dillard

Chief Financial Officer

(principal financial officer)

/s/ ~~James W. Kirkland~~Aditya Gandhi

~~James W. Kirkland~~Aditya Gandhi

~~Corporate Controller~~Chief Accounting Officer

(principal accounting officer)


	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


		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


	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


	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


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


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


	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


	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


	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


	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


	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