UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-K

☒
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2017

2021

or

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

For the transition period from to

Commission FileNo. Number: 001-11261

SONOCO PRODUCTS COMPANY

Incorporated under the laws

SONOCO PRODUCTS COMPANY
(Exact name of registrant as specified in its charter)
South Carolina

(State or other jurisdiction of incorporation or organization)

I.R.S.57-0248420 (I.R.S. Employer Identification

No. 57-0248420

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

1 N. Second St.

Hartsville, SC 29550

Telephone:843/ (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 stockSONNew York Stock Exchange LLC

Securities registered pursuant to Section 12(g) of the Act:    None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒

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 and posted to its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form10-K.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, 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 Rule12b-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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The aggregate market value of voting common stock held by nonaffiliates of the registrant (based on the New York Stock Exchange closing price) on July 2, 2017,2021, which was the last business day of the registrant’s most recently completed second fiscal quarter, was $5,025,108,611. Registrant does not (and did not at July 2, 2017) have anynon-voting common stock outstanding.

$6,541,267,123.

As of February 16, 2018,18, 2022, there were 99,487,36297,452,785 shares of no par value common stock outstanding.

Documents Incorporated by Reference

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the annual meeting of shareholders to be held on April 18, 2018,20, 2022, which statement shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates, are incorporated by reference in Part III.



TABLEOFCONTENTS

Page
Part IPage
Item 1.
4
Item 1A.
9
Item 1B.
19
Item 2.
19
Item 3.
19
Item 4.
19
Part III
Item 1.Business5
Item 1A.Risk Factors9
Item 1B.Unresolved Staff Comments16
Item 2.Properties16
Item 3.Legal Proceedings16
Item 4.Mine Safety Disclosures16
Part II
Item 5.17
20
Item 6.
Selected Financial Data21
18
Item 7.18
21
Item 7A.
35
Item 8.
35
Item 9.
36
Item 9A.
36
Item 9B.
36
Item 9C.
36
Part III
Item 10.
37
Item 11.
37
Item 12.
37
Item 13.38
37
Item 14.38
37
Part IV
Item 15.39
38
Item 16.
Form10-K Summary38
39

2




SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

PRODUCTS COMPANY

SONOCOPRODUCTSCOMPANY

Forward-looking statements

Statements included in this Annual Report on Form10-K 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 settlements 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 "anticipate," "aspires," "assume," "believe," "can," "committed," "commitment," "consider," "could," "envision," “estimate,” “project,”"expect," "forecast," "future," "goal," "guidance," “intend,” “expect,” “believe,” “consider,”"may," "might," "objective," "opportunity," "outlook," “plan,” "potential," "project," "re-envision," “strategy,” “opportunity,” “commitment,” “target,” “anticipate,” “objective,” “goal,” “guidance,” “outlook,” “forecast,” “future,”“re-envision,” “assume,” “will,” “would,” “can,” “could,” “may,” “might,” “aspires,” “potential,” or the negative thereof, and similar expressions identify forward-looking statements. Forward-looking statements in this Annual Report on Form 10-K include, but are not limited to, statements regarding:


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

•potential impacts of the COVID-19 pandemic on the Company's business, operations and financial condition;
•consumer and customer actions in connection with the COVID-19 pandemic;
•improved productivity and cost containment;

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

•effects of acquisitions and dispositions;

divestitures, including the Company's acquisition of Ball Metalpack Holding, LLC ("Ball Metalpack");

•realization of synergies resulting from acquisitions;

acquisitions, including the acquisition of Ball Metalpack;

•costs, timing and effects of restructuring activities;

•adequacy and anticipated amounts and uses of cash flows;

•expected amounts of capital spending;

•refinancing and repayment of debt;

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

•  plans with respect to repatriation ofoff-shore earnings;

•financial results for future periods;

•producing improvements in earnings;

•profitable sales growth and rates of growth;

•market leadership;

•research and development spending;

•expected impact and costs of resolution of legal proceedings;

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

liabilities and sustainability commitments;

•commitments to reduce greenhouse gas emissions;
•adequacy of income tax provisions, realization of deferred tax assets, outcomes of uncertain tax issues and tax rates;

•goodwill impairment charges and fair values of reporting units;

•future asset impairment charges and fair values of assets;

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

•expected impact of implementation of new accounting pronouncements;

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

•continued payment of dividends; and

•planned stock repurchases.


Such forward-looking statements are based on current expectations, estimates and projections about our industry, management’smanagement'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. TheSuch risks, uncertainties and assumptions include, without limitation:


•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 Company’simpact of war and other geopolitical tensions (such as the ongoing military conflict between Russia and Ukraine and economic sanctions related thereto), and the Company's ability to pass raw material, energy and

transportation price increases and surcharges through to customers or otherwise manage these commodity pricing risks;

•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 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 thelow-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;

•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;
2 FORM 10-K SONOCO 2021 ANNUAL REPORT

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

•  continued strength of our paperboard-based tubes and cores and composite can operations;

•ability to manage the mix of business to take advantage of growing markets while reducing cyclical effects of some of the Company’sCompany'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, andtargets;
•ability to successfully integrate newly acquired businesses, including Ball Metalpack, into the Company’s operations;

Company's operations and realize synergies and other anticipated benefits within the expected time period, or at all;

•the costs, timing and results of restructuring activities;

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

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

•fluctuations in interest rates and our borrowing costs;

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

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

•timing of funding pension and postretirement benefit plan obligations;
•cost of employee and retiree medical, health and life insurance benefits;

•resolution of income tax contingencies;

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

•changes in U.S. and foreign tariffs, tax rates, and tax laws, regulations and interpretations thereof;
•the adoption of new, or changes in, accounting standards or interpretations;
•challenges and implementation thereof;

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;

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

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

•ability to maintain effective internal controls over financial reporting;

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

•liability for and anticipated costs of environmental remediation actions;

•effects of environmental laws and regulations;

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K    3

•operational disruptions at our major facilities;

•failure or disruptions in our information technologies;

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

•substantially lower than normal crop yields;

•loss of consumer or investor confidence;

•ability to protect our intellectual property rights;

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

•changing consumer attitudes toward plastic packaging;
•ability to meet sustainability targets and challenges in implementation;
•changing climate, climate change regulations and greenhouse gas effects;

•ability to meet commitments to reduce greenhouse gas emissions;
•actions of domestic or foreign government agencies and other 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; and

•economic disruptions resulting from war and other geopolitical tensions (such as the ongoing military conflict between Russia and Ukraine), terrorist activities and natural disasters.

disasters; and

•accelerating inflation.

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 pro-

videdprovided in the Company’sthis Annual Report on Form10-K under Item 1A—“Risk Factors”1A - "Risk Factors" and throughout other sections of thatthis 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 Annual Report on Form10-K 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 Forms10-K,10-Q 10-K, 10-Q and8-K.

References to our website address

References to our website address and domain names throughout this Annual Report on Form10-K are for informational purposes only, or to fulfill specific disclosure requirements of the Securities and Exchange Commission’s rules or the New York Stock Exchange Listing Standards. These references are not intended to, and do not, incorporate the contents of our websites by reference into this Annual Report on Form10-K.

3 FORM 10-K SONOCO 2021 ANNUAL REPORT

PART I
 

4SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

PARTI

Item 1. Business

(a) General developmentDevelopment of businessBusiness –

The

Sonoco Products Company ("Sonoco," "the Company," "we," "us," or "our") is a South Carolina corporation originally founded in Hartsville, South Carolina, in 1899 as the Southern Novelty Company. At its beginnings in 1899, a team of 12 people worked from a rented warehouse in Hartsville, South Carolina. The Company’s first product was a cone-shaped paper yarn carrier used for winding and transporting yarn. Since most of the textile cones of that day were wooden, paper cones were a novelty. The Company soon became the leading producer of cones in the United States. The Southern Novelty Company continued to diversify its product line and add new operations around the country. In 1923, the Southern Novelty Company name was subsequently changed to Sonoco Products Company, (“or "Sonoco," using the Company” or “Sonoco”). first two letters from each word of its original name.
Sonoco is now a multi-billion dollar global manufacturer of a variety of consumer, industrial, protective, and consumerhealthcare packaging products. The Company has approximately 300 locations in 32 countries, serving some of the world’s best-known brands in some 85 nations. Sonoco is committed to creating sustainable products, services and programs for our customers, employees and communities that support our corporate purpose: Better Packaging. Better Life. Our goal is to bring more to packaging than just the package by offering integrated packaging solutions that help define brand personalities, creating unique customer experiences, and enhancing the quality of products. We seek to help our customers solve their packaging challenges by connecting insights to innovation and developing customized solutions that are tailored to the customer’s goals and objectives.
Sonoco changed its financial reporting structure effective January 1, 2021, to reflect the way it manages its operations, evaluates performance and allocates resources. The revised structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other.
The former Protective Solutions and Display and Packaging segments were eliminated and the underlying businesses and their results were realigned into All Other or, in certain cases, subsumed into the remaining two reportable segments. The Company divested its global display and packaging business in two separate transactions: the European contract packaging business on November 30, 2020 and the U.S. display and packaging business on April 4, 2021. Prior to the divestitures, these businesses were reported in All Other. Information about products and services of these segments and the markets they serve is discussed below under “Description of business.” Segment financial information for prior periods has been recast to conform to the current-year presentation.
On January 26, 2022, Sonoco completed the acquisition of Ball Metalpack Holding, LLC ("Ball Metalpack"), a providerleading supplier of sustainable metal packaging services,for food and household products and the largest aerosol can manufacturer in North America, for an aggregate purchase price of $1.35 billion in cash, subject to customary adjustments, including for working capital, cash and indebtedness.
(c) Description of Business –
Segment Reporting
As noted above, the Company currently reports its financial results in two reportable segments – Consumer Packaging and Industrial Paper Packaging, with 298 locations in 33 countries.

Informationall remaining businesses reported as All Other. Further information about the Company’s acquisitions, dispositions, joint ventures and restructuring activitiesreportable segments is provided in Notes 3 and 4Note 18 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form10-K.

(b) Financial information about segments –

The Company reports its financial results We anticipate that the operations of Ball Metalpack will be included in four reportable segments –the Consumer Packaging Paper and Industrial Converted Products, Display and Packaging, and Protective Solutions. Information about the Company’s reportable segments is providedsegment in Note 16 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form10-K.

(c) Narrative description of business –

Products and Services – The following discussion outlines the principal products produced and services provided by the Company.

future periods.

Consumer Packaging

The Consumer Packaging segment accounted for approximately 42%, 43% and 43%41% of the Company’s consolidated net sales in the years ended December 31, 2017, 20162021, 2020 and 2015,2019, respectively. The operations in this segment consistconsisted of 8083 plants throughout the world.world as of December 31, 2021. The products, services and markets of the Consumer Packaging segment, areprior to the Ball Metalpack acquisition, were as follows:

Products and ServicesMarkets
Round composite cans,and shaped rigid paperboard containers,paper containers; fiber and plastic caulk/adhesive tubes, aluminum, steeltubes; metal and peelable membrane easy-open closures for compositeends and metal cans;closures; thermoformed rigid plastic trays cups and bowls; injection molded containers, spools and parts;containers; high-barrier flexible and forming plastic packaging films modified atmosphere packaging, lidding films,and printed flexible packaging,packaging; rotogravure cylinder engraving,engraving; and global brand management.artwork management

Snacks,Stacked chips, snacks, nuts, cookies, crackers, other hard-baked goods, desserts, candy, gum, frozen concentrate, powdered and liquid beverages, powdered infant formula, coffee, refrigerated dough, frozen foods and entrees, processed foods, fresh fruit,fruits, vegetables,fresh-cut produce, salads, fresh-baked goods, eggs, seafood, poultry, soup, pasta, dairy, sauces, dips, condiments, pet food, meats, cheeses.and cheeses

This

Within the Consumer Packaging segment, included blow-molded plastic bottles and jars for most of 2016. However, on November 7, 2016, the Company completed the sale of its rigid plastics blow molding operations.

In 2017, Sonoco’s rigid packaging – paper-based products – waspaper containers are the Company’s second largest revenue-producing group of products and services, representing approximately 22%24% of consolidated net sales in the year ended December 31, 2017.2021. This group comprised 23% 25% and 21% of consolidated net sales in 20162020 and 2015,2019, respectively.

Display andIndustrial Paper Packaging

The Display andIndustrial Paper Packaging segment, previously called "Paper and Industrial Converted Products," accounted for approximately 10%44%, 11%38% and 12%39% of the Company’s consolidated net sales in the years ended December 31, 2017, 20162021, 2020 and 2015, respectively. The operations in this segment consist of 24 plants around the world including the United States, Poland, Mexico and Brazil. The products, services and markets of the Display and Packaging segment are as follows:

Products and ServicesMarkets
Point-of-purchase displays; custom packaging; retail packaging, including printed backer cards, thermoformed blisters and heat sealing equipment; fulfillment; primary package filling; supply chain management; paperboard specialtiesAutomotive, beverages, candy, electronics, personal care, baby care, food, cosmetics, fragrances, hosiery, office supplies, toys, home and garden, medical,over-the-counter drugs, sporting goods, hospitality industry, advertising

Paper and Industrial Converted Products

The Paper and Industrial Converted Products segment accounted for approximately 37%, 35% and 35% of the Company’s consolidated net sales in the years ended December 31, 2017, 2016 and 2015,2019, respectively. This segment servesserved its markets through 164178 plants on five continents.continents as of December 31, 2021. Sonoco’s paper operations provide the primary raw material for the Company’s fiber-based packaging. Sonoco uses approximately 62%46% of the paper it manufactures, and the remainder is sold to third parties. This vertical integration strategy iswas supported by 1923 paper mills with 2831 paper machines and 2423 recycling facilities throughout the world.world as of December 31, 2021. In 2017,2021, Sonoco had the capacity to manufacture approximately 1.72.2 million tons of recycled paperboard. The products,

4 FORM 10-K SONOCO 2021 ANNUAL REPORT

services and markets of the Industrial Paper and Industrial Converted Products segmentPackaging are as follows:

Products and ServicesMarkets
Recycled paperboard, chipboard, tubeboard, lightweight corestock, boxboard, linerboard, corrugating medium, edgeboard, specialty grades;paper grades, and adhesives; paperboard tubes and cores, molded plugs, and reels; paper-based cones and pallets; paper-based protective packaging; collection, processing and recycling of old corrugated containers, paper, plastics, metal, glass and other recyclable materialsmaterials; and flexible intermediate bulk containers and bulk bagsConverted paperboard products, spiral winders, beverage insulators, construction, film, flowable products,plastic films, metal, paper mills, shipping and storage, tape and label,labels, textiles, wire and cable, adhesives, appliances, heating and air conditioning, office furnishings, fitness equipment, promotional and palletized distribution, municipal, residential, customers’ manufacturing and distribution facilities and fiber protective packaging

In 2017,2021, Sonoco’s tubes and cores products were the Company’s second largest revenue-producing group of products, representing approximately 22%21% of consolidated net sales in the year ended December 31, 2017.2021. This group comprised 22% and 21%comprised 19% of consolidated net sales in 2016both 2020 and 2015, respectively.

2019.
All Other

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K    5

Protective Solutions

The Protective Solutions segmentbusinesses grouped as All Other accounted for approximately 11%14%, 11%19%, and 10%20% of the Company’s consolidated net sales in the years ended December 31, 2017, 20162021, 2020 and 2015,2019, respectively. The operations in this segment consisted of 35 plants throughout the world as of December 31, 2021. Prior to their divestitures in 2020 and 2021, the Company's global display and packaging businesses, which included point-of-purchase displays, fulfillment operations, and contract packaging, were reported in All Other. The products, services and markets of the Protective Solutions segmentbusinesses grouped as All Other are as follows:

Products and ServicesMarkets

Custom-engineered, paperboard-basedThermoformed rigid plastics trays and expandeddevices, custom-engineered, molded foam protective packaging and components; temperature-assured

packaging; retail security packaging,

including printed backer cards, thermoformed blisters and heat sealing equipment; injection molded and extruded containers, spools and parts; and paper amenities		Consumer electronics,Medical devices, pharmaceuticals, electronics; automotive, appliances, medical devices, temperature-sensitive pharmaceuticals and food, heatingfood; miscellaneous foods and air conditioning,beverages, personal care, cosmetics, fragrances, hosiery, office furnishings, fitness equipment, promotionalsupplies, home and palletized distributiongarden, over-the-counter drugs, sporting goods, hospitality industry

Other Aspects of the Company's Business
Product Distribution – Each of the Company’s operating units has its own sales staff, and maintains direct sales relationships with its customers. For those customers that buy from more than one business unit, the Company often assigns a single representative or team of specialists to handle that customer’s needs. Some of the units have service staff at the manufacturing facility that interact directly with customers. The Industrial Paper and Industrial Converted Products Packaging segment and certain operations within the Consumer Packaging segment have customer service centers located in Hartsville, South Carolina, which are the main contact points between their North American business units and their customers. Divisional sales personnel also provide sales management, marketing and product development assistance as needed. Typically, product distribution is directly from the manufacturing plant to the customer, but in some cases, product is warehoused in a mutually advantageous location to be shipped to the customer as needed.

Raw Materials – The principal raw materials used by the Company are recovered paper, paperboard, steel, aluminum and plastic resins. Raw materials are purchased from a number of outside sources. The Company considers the supply and availability of raw materials to be adequate to meet its needs.

Patents, Trademarks and Related Contracts – Most inventions and product and process innovations are generated by Sonoco’s development, marketing and engineering staffs,staff, and are important to the Company’s internal growth. Patents have been granted on many inventions created by Sonoco staff in the United States and in many other countries. Additionally, patentsPatents and trade secrets were acquired as part of several acquisitions over the past year,two years, including the August 2020 acquisition of Clear LamCan Packaging and Packaging Holdings, Inc. and subsidiaries, including Peninsula Packaging LLC. the January 2022 acquisition of Ball Metalpack. These patents are managed globally by a Sonoco intellectual capital management team through the Company’s subsidiary, Sonoco Development, Inc. (SDI). SDI globally manages patents, trade secrets, confidentiality agreements and license agreements. Some patents have been licensed to other manufacturers. Sonoco also licenses a few patents from outside companies and universities. U.S. patents expire after about 20 years, and patents on new innovations replace many of the abandoned or expired patents. A second intellectual capital subsidiary of Sonoco, SPC Resources, Inc., globally manages Sonoco’s trademarks, service marks, copyrights and Internet domain names. Most of Sonoco’s products are marketed worldwide under trademarks such as Sonoco®, SmartSeal®, Sonotube®, Sealclick®, Sonopost® and UltraSeal®. Sonoco’s registered web domain names such as www.sonoco.com and www.sonotube.com provide information about Sonoco, its people and its products. Trademarks and domain names are licensed to outside companies where appropriate.

Seasonality – The Company’sAlthough demand for some of the Company's products varies seasonally, overall the Company's operations are not seasonal to any significant degree, although the Consumer Packaging and Display and Packaging segments normally report slightly higher sales and operating profits in the second half of the year, when compared with the first half.

Working Capital Practices – The Company is not required to carry any significant amounts of inventory to meet customer requirements or to assure itself continuous allotment of goods.

degree.

Dependence on Customers – On an aggregate basis during 2017,2021, the five largest customers in the Paper and Industrial Converted Products segment, the Consumer Packaging segmentsegment and the Protective Solutions Industrial Paper Packaging segment accounted for approximately 7%approximately 28% and 9%, 22% and 29%, respectively, of each segment’s net sales.sales. The dependence on a few customers in the Display and Packaging segment is more significant, as the five largest customers in this segmentthe All Other group of businesses accounted for approximately 53%13% of that segment’sthe group’s net sales.

Sales to the Company’s largest customer represented approximately 4%represented 4.2% of consolidatedconsolidated revenues in 2017.2021. This concentration of sales volume resulted in a corresponding concentration of credit, representing approximately 4%approximately 3.4% of the Company’s consolidated trade accounts receivable at December 31, 2017.2021. The Company’s next largest customer comprised approximately 3%3.0% of consolidated revenues in 2021.
Additional information regarding Sonoco's customers is provided in Item 1A - Risk Factors under the Company’s consolidated revenues for the year ended December 31, 2017.

Backlog – Most customer orders are manufactured with a lead time of three weeks or less. Therefore, the amount of backlog orders at December 31, 2017, was not material. The Company expects all backlog orders at December 31, 2017,caption "Risks Related to be shipped during 2018.

Competition, Customers and Suppliers."

Competition – The Company sells its products in highly competitive markets, which include paper, textile, film, food, chemical, packaging, construction, and wire and cable. All of these markets are influenced by the overall rate of economic activity, and their behavior is principally driven by supply and demand. Because we operate in highly competitive markets, we regularly bid for new and continuing business. Losses and/or awards of business from our largest customers, customer changes to alternative forms of packaging, and the repricing of business, can have a significant effect on our operating results. The Company manufactures and sells many of its products globally. The Company, having operated internationally since 1923, considers its ability to serve its customers worldwide in a timely and consistent manner a competitive advantage. The Company also believes that its technological leadership, reputation for quality, and vertical integration are competitive advantages. Expansion of
5 FORM 10-K SONOCO 2021 ANNUAL REPORT

the Company’s product lines and global presence is driven by the rapidly changing needs of its major customers, who demand high-quality,state-of-the-art, environmentally compatible packaging, wherever they choose to do business. It is important to be alow-cost producer in order to compete effectively. The Company is constantly focused on productivity improvements and other cost-reduction initiatives utilizing the latest in technology.

Research Additional information regarding competition is provided in Item 1A - Risk Factors under the caption "Risks Related to Competition, Customers and DevelopmentSuppliers."

Compliance with Government Regulations and Laws – Company-sponsored researchThe Company must comply with extensive laws, rules and development expenses totaled approximately $21.0 millionregulations in 2017, $22.5 millionthe United States and in 2016each of the countries where it conducts business with respect to a variety of matters. Management believes that the Company is in compliance with all material applicable government regulations, including environmental regulations and $22.1 million in 2015. Customer-sponsored research and development expenses weredoes not believe that there is any material in anyimpact on capital expenditures, earnings, or competitive position as a result of these periods. Significant projects in Sonoco’s Consumer Packaging segment include a broad range of new and next generation product developments across flexible packaging, rigid plastic and composite packaging, including development of FlexValve™ integrated venting technology for flexible coffee packaging and PureShield™ powdered infant formula cans for emerging global markets. During 2017, the Paper and Industrial Converted Products segment continued to invest in efforts to design and develop

6SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

new products for the paper industry and for the film and textiles industries. In addition, efforts were focused on enhancing performance characteristics of the Company’s tubes and cores in the construction, tape and paper packaging areas. Technology emphasis was also placed on delivering improved productivity via materials developments and key converting process improvements. Research and development projects in the Company’s Protective Solutions segment were primarily focused on developing new temperature-assurance packaging solutions for the pharmaceuticals and clinical trials market.

Compliancecomply with Environmental Laws –these regulations. Information regarding compliance with government regulations, including environmental laws, is provided in Item 1A - Risk Factors, in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations under the caption “Risk Management,” and in Note 14 to the Consolidated Financial Statements included in Item 8 of this Annual Report onForm 10-K.

Number of Employees – Sonoco had approximately 21,000 employees worldwide as of December 31, 2017.

(d) Financial information about geographic areas –

Financial information about geographic areas is provided in Note 16 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Culture – At Sonoco, our purpose is engrained in our culture. In fact, it drives our culture. It drives our product development. It drives how we work with our customers and each other. It drives what we do, and the decisions we make. Our purpose isn’t just a collection of words. It represents the collective spirit of an organization focused on one thing: Better Packaging. Better Life.
Sustainability - Packaging plays a fundamental role in providing safe and hygienic delivery systems for food, medicines and other essential products around the world. However, we believe the importance of packaging extends beyond its functionality to also include its impact on the planet. During 2020, we established a new corporate team, led by a staff vice president directly reporting to our CEO, to champion our global sustainability efforts. This team leads the Company’s global sustainability programs for all our Consumer- and Industrial-related packaging businesses, including driving efforts to meet our climate change related goals, and addressing the complex regulatory and policy environment landscape. Additionally, we have set up a Corporate Sustainability Council to provide oversight, guidance, and direction on social, community, and environmental issues that impact the reputation and economic performance of the Company and to help address the concerns of our stakeholders. The Council meets quarterly and reports to and is sponsored by Sonoco’s president and CEO. The Council reports on Sonoco’s sustainability activities, biannually, to the Board of Directors.
Our sustainability goals include the following key elements:
Greenhouse Gas Emissions - While we have reduced normalized greenhouse gas ("GHG") emissions by approximately 25% since 2009, we are committed to further improving our environmental impact by setting ambitious new targets to reduce our global greenhouse gas emissions in line with the Paris Agreement, which is aimed at limiting the warming of global temperatures to well below 2°C above pre-industrial levels. Specifically, Sonoco aims to reduce absolute scope 1 and 2 GHG emissions by 25% by 2030 from a 2020 base year. We have also set a goal to reduce absolute scope 3 GHG emissions by 13.5% by 2030 from a 2019 base year by working with our customers and suppliers to develop innovative packaging solutions that reduce packaging waste and improve recyclability. These goals were validated by the Science-Based Target Initiative in June 2021. In addition, we are actively studying necessary operational changes, technology developments and market changes that would be required to achieve net-zero GHG emissions by 2050.
To meet our Science-Based Targets over the next decade, each of our more than 300 global operations are focused on reducing GHG emissions by investing in energy efficiency and renewable energy projects along with purchasing electricity from certified green and reduced-carbon energy sources. In addition, we are incorporating sustainability and environmental metrics into each of our business units’ plans and management incentives.
Energy Usage - In support of our GHG emission reductions, Sonoco aims to continue energy efficiency improvements in our manufacturing plants targeted to reduce normalized energy use by at least 8% by 2030 from a 2020 baseline in addition to investing in energy efficiency, renewable energy and alternative power projects. For example, our "Greening of the Grid" project includes purchasing less carbon intensive electricity from utilities. We believe these actions will reduce cumulative scope 2 GHG emissions by up to 10% by 2030. Also, our ongoing plant efficiency projects are intended to drive an 8% cumulative reduction in scope 1 GHG emissions, stemming from direct investments in plant boiler efficiency, compressed air, LED lighting, vacuum systems, HVAC systems and process chillers.
Water Usage - Reducing our water consumption is part of being responsible stewards of our planet’s resources. Many of our actions to reduce water usage involve our global paper mills, which account for the majority of our global water usage. We plan to conduct water risk studies at these manufacturing facilities using WRI Aqueduct, WWF Water Rich Filter or similar tools.
Plastic Usage - We are committed to responsibly managing resins use at our facilities and are implementing "Operation Clean Sweep", a program focused on preventing discharge of plastic pellets into the environment. We are also working to ensure we can make relevant on-pack recyclability claims for at least 75% of our global rigid plastic product portfolio, while also ensuring we are closing the loop through continued use of post-consumer recycled content.
Recycling - We also serve as a valued partner to our customers to reduce the environmental impact of their packaging. As such, by utilizing recycled materials, the Company has already achieved its goal set in 2019 to increase to at least 85% of the amount, based on weight, of product we recycle or cause to be recycled as a percent of the product we put in the marketplace.
We are focused on continuing to reduce energy usage and air emissions by improving energy efficiency through targeted investments and initiatives. We continue to engage in activities and make investments that we believe will enable us to innovate our products and improve our operational infrastructure as well as drive end-of-life solutions for our products and develop partnerships with key stakeholders across our value chain to help deliver sustainable solutions.
Human Capital Management -Sonoco’s core belief that “we are only as strong as our people” underlies our efforts to attract, acquire and retain talented employees for our global businesses. We seek to engage, develop and reward our employee base of approximately 20,500 so they can successfully pursue our purpose of Better Packaging. Better Life. We depend on our employees to achieve our mission of creating sustainable packaging solutions that help build our customers’ brands, enhance the quality of their products and improve the quality of life for people around the world. We work towards this goal by establishing a foundation for actions that support health and safety, diversity and inclusion, and talent development.
Health and Safety– Protecting the health and safety of our employees is a top priority, and we are committed to providing a safe working environment for all our associates. We use global and local incident data along with identifying leading indicators to create program and safety improvement action plans to reduce conditions and behaviors that lead to at-risk situations. In 2021, we moved our safety program from a historical lagging indicator focus to a more proactive, leading indicator approach. Overall injuries in 2021 were slightly down from 2020 but more importantly were down 10% from 2019. To promote the prevention of more significant Life Changing Events, which are injuries or incidents that cause or have the potential to cause permanent disabilities or the loss of life, we engaged outside experts to conduct assessments of high-risk activities and leveraged learnings globally. In addition, we evaluated our safety systems to improve focus and resources. Globally, we achieved completion of 99% of all safety improvement action plans, which are site level improvement plans designed to reduce risk. Finally, our operations leadership worked together to develop a new safety playbook which will be used globally in 2022 to further train our employees.
6 FORM 10-K SONOCO 2021 ANNUAL REPORT

Our focus on safeguarding the health of our employees continued to evolve around actions we took to reduce exposures to COVID-19. We continued to implement safety protocols across our facilities following recommendations by the U.S. Center for Disease Control and Prevention and the World Health Organization. As the pandemic continuously evolved, we put in place measures and practices for the health and safety of our employees, customers and suppliers, and in the

response to changing local laws. We proactively provided employees with personal protective equipment, and where possible, provided on-site testing and vaccination clinics.

information about market riskDiversity and Inclusion– Sonoco embraces Diversity and Inclusion, and our efforts to increase diversity within our Company are an organizational priority. As of December 31, 2021, our employees were located in Item 7 the following geographic regions: 53% in North America; 19% in Europe, Middle East and Africa; 17% in Latin America; and 11% in Asia Pacific. Our global workforce is 26% female and 74% male and 34% of our U.S. employees identify as a racial minority. We have labor unions in all regions of our operations, and in North America, approximately 16% of our employees are represented by unions. We rely on the unique qualities and talents of our employees to help us meet our strategic priorities. Our Diversity and Inclusion goals are focused on increasing the representation of women and racial minorities into more salaried and senior leadership positions. We are working toward this goal by increasing hiring, focusing on development and promotions, as well as focusing on retention efforts. We made significant progress in talent acquisition during 2021, despite a challenging labor market. In the U.S., 44% of employee hires were female and 34% a member of a minority group in 2021. For the past 10 years, Sonoco’s employees have expanded and improved our Global Diversity and Inclusion Council, which is chaired by our President and CEO. In 2020, the Global Diversity and Inclusion Council chartered a new Business Resource Group ("BRG"), Black Employees @ Sonoco, to join our other five existing BRGs. In 2021, we continued to focus council activities on workforce representation (diversity) and work environment (inclusion) by addressing unconscious bias to promote an environment where diverse backgrounds are appreciated, and diverse ideas are heard. In addition, we are committed to lifting up historically disadvantaged businesses in an effort to make a positive economic impact on society. We have had a dedicated Supplier Diversity program since 2004, and since 2010 we have spent approximately $1.9 billion with certified, diverse suppliers.

Talent Acquisition and Development– Management’s DiscussionAttracting, developing and Analysisretaining talented employees is critical to our success and is an integral part of Financial Conditionour human capital strategy. We have created a Global Talent Acquisition and ResultsOrganization Development team to provide a more holistic approach to managing and enriching the employee lifecycle through continuous training and comprehensive succession planning. In 2021, we significantly expanded Sonoco University, a centralized digital training hub, to provide our employees with diverse learning and career development programs. In addition, we conduct regular talent succession assessments along with individual performance reviews in which managers provide regular feedback and coaching to assist with the development of Operations underour employees, including the caption “Risk Management”use of this Annual Report on Form10-K.

individual development plans to assist with individual career development.

(e) Available informationInformation –

The Company electronically files with the Securities and Exchange Commission (SEC)(the "SEC") its annual reports on Form10-K, its quarterly reports on Form10-Q, its periodic reports onForm 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended (the “1934“Exchange Act”), and proxy materials pursuant to Section 14 of the 1934Exchange Act. The SEC maintains a site on the Internet,www.sec.gov, that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Sonoco also makes its filings available, free of charge, through its Investor Relations website,www.sonoco.comwww.investor.sonoco.com, as soon as reasonably practical after the electronic filing of such material with the SEC.

Sonoco uses its
Investor Relations website as a means of disclosing material non-public information. Accordingly, investors should monitor Sonoco’s Investor

Relations website, in addition to following its press releases, SEC filings, and public conference calls and webcasts. The information posted on
or accessible through Sonoco’s website is not incorporated into this Annual Report on Form 10-K. The references to Sonoco’s websites are
intended to be inactive textual references only.



7 FORM 10-K SONOCO 2021 ANNUAL REPORT

Information About our Executive officers of the registrantOfficers –

NameAgeAgePosition and Business Experience for the Past Five Years

Executive Committee

R. Howard Coker59 
M. Jack Sanders64(Retiring effective April 2, 2018.)Board member since 2020. President and Chief Executive Officer since April 2013. Previously President and Chief Operating Officer December 2010-March 2013; Executive Vice President, Consumer January-December 2010; Executive Vice President, Industrial 2008-2010. Joined Sonoco in 1987.
Robert C. Tiede59President andCEO-elect, effective April 2, 2018. Executive Vice President and Chief Operating Officer since January 2017.Officer. Previously, Senior Vice President, Global Consumer Packaging & Services, Protective Solutions & Reels 2015—2017; Senior Vice President, Global Consumer PackagingPaper and Services 2013-2015; Vice President, Global Flexible & Packaging Services 2009-2013. Joined Sonoco in 2004.
Vicki B. Arthur59Senior Vice President, Plastic Packaging and Protective Solutions since January 2017. Previously Vice President, Global Protective Solutions 2013-2017; Vice President, Protective Solutions, N.A. 2012-2013; Vice President, Global Corporate Customers 2008-2012. Joined Sonoco in 1984.
R. Howard Coker55Industrial Converted Products, 2019-2020; Senior Vice President, Rigid Paper Containers and Paper/Engineered Carriers International, since January 2017. Previously2017-2018; Group Vice President, Global Rigid Paper & Closures, and Paper & Industrial Converted Products, EMEA, Asia, Australia and/ New Zealand, 2015-2017; Vice President, Global Rigid Paper & Closures 2015;2015-2017. Prior to 2015, Group Vice President, Global Rigid Paper & Plastics 2013-2015;Plastics; Vice President, Global Rigid Paper & Closures; Vice President & General Manager, Rigid Paper & Closures, 2011-2013.N.A.; Division Vice President & General Manager, Rigid Paper & Closures. Joined Sonoco in 1985. Mr. Coker is thebrother-in-law of John R.J.R. Haley, oneChairman of Sonoco’s directors.Sonoco's Board of Directors.
John M. Florence
Julie C. Albrecht

54 39Corporate Vice President, General Counsel and Secretary since November 2016. Previously Corporate Attorney 2015-2016. Joined Sonoco in 2015. Previously an attorney at Haynsworth Sinkler Boyd, P.A. 2005-2015. Mr. Florence is theson-in-law of Harris E. DeLoach, Jr., our Executive Chairman.
Rodger D. Fuller56Senior Vice President, Paper/Engineered Carriers U.S./Canada and Display & Packaging since 2017. Previously Group Vice President, Paper & Industrial Converted Products, Americas 2015-2017; Vice President, Global Primary Materials Group 2015; Group Vice President, Paper & Industrial Converting N.A. 2013-2015; Vice President, Global Rigid Plastics & Corporate Customers 2011-2013. Joined Sonoco in 1985.
Kevin P. Mahoney62Senior Vice President, Corporate Planning since February 2011.Chief Financial Officer. Previously Vice President, Corporate Planning 2000-2011. Joined Sonoco in 1987.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K    7

NameAgePosition and Business Experience for the Past Five Years
Allan H. McLeland51Corporate Vice President, Human Resources since January 2011. Previously Staff Vice President, Human Resources, Industrial 2010-2011. Joined Sonoco in 1993.
Barry L. Saunders58Senior Vice President andTreasurer / Assistant Chief Financial Officer, since May 2015. Previously Vice President and Chief Financial Officer 2011-2015; Vice President, Corporate Controller and Chief Accounting Officer 2008-2011. Joined Sonoco in 1989.
Roger P. Schrum62Corporate Vice President, Investor Relations & Corporate Affairs since February 2009. Previously Staff Vice President, Investor Relations & Corporate Affairs 2005-2009. Joined Sonoco in 2005.

Other Corporate Officers

Julie C. Albrecht50Corporate Vice President, Treasurer/Assistant CFO. Previously2017-2018; Vice President, Finance and Investor Relations & Treasurer for Esterline Technologies Corporation, 2015-2017; Finance Director, Customer Service Aircraft Systems for United Technologies, 2012-2015.2012-2015; Vice President, Finance Goodrich Customer Services, Goodrich Corporation, 2010-2012. Joined Sonoco in 2017.
Robert R. Dillard47 Vice President, Corporate Development. Previously Staff Vice President, Corporate Development 2018-2019; President of Personal Care Europe and Vice President of Strategy and Innovation at Domtar Personal Care, a division of Domtar Corporation, 2016-2018. Joined Sonoco in 2018.
John M. Florence, Jr.

43 
Vice President, General Counsel, Human Resources and Secretary. Previously Corporate Vice President, General Counsel and Secretary, 2016-2019; Corporate Attorney, 2015-2016. Prior experience: Attorney with Haynsworth Sinkler Boyd, P.A., Columbia, SC, 2005-2015. Joined Sonoco in 2015.

Rodger D. Fuller60 Executive Vice President Global Industrial and Consumer. Previously Senior Vice President, Global Consumer Packaging, Display and Packaging and Protective Solutions, 2019-2020; Senior Vice President, Paper/Engineered Carriers U.S./Canada and Display and Packaging, 2017-2018; Group Vice President, Paper & Industrial Converted Products, Americas, 2015-2017; Group Vice President, Paper/Tubes and Cores N.A., 2013-2015; Vice President, Global Rigid Plastics & Corporate Customers, 2011-2013; Vice President, Global Rigid Paper & Plastics, January-October 2011; Vice President, Global Rigid Paper & Closures, 2008-2011; Vice President, Rigid Paper & Plastics N.A., 2005-2008; Division Vice President & General Manager, Consumer Products N.A., 2000-2005. Joined Sonoco in 1985.
Richard K. Johnson54 Vice President and Chief Information Officer. Previously Vice President and Chief Information Officer of HNI Corporation, a global manufacturer of office furniture and hearth products, 2011-2019. Currently, member of the Board of Directors for The Marvin Companies, Inc. Joined Sonoco in 2019.
Roger P. Schrum66 Vice President, Investor Relations & Corporate Affairs. Previously Staff Vice President, Investor Relations & Corporate Affairs, 2005-2009. Joined Sonoco in 2005.
Other Corporate Officers
Russell K. Grissett52 Vice President, Global Flexible Packaging effective November 1, 2021. Previously Division Vice President and General Manager of Global Flexibles, 2019-2021; Division Vice President and General Manager of Protective Solutions, 2017-2019; Division Vice President and General Manager Thermosafe, 2013-2017. Joined Sonoco in 1993.
James A. Harrell III60 56Vice President Americas Industrial. Previously Vice President Tubes & Cores, U.S.US and Canada, since December 2015. Previously Vice President, Global Tubes & Cores Operations February-December 2015;2016-2020; Vice President, Tubes & Cores N.A. 2012-2015;, 2010-2015; Vice President & General Manager, Industrial Converting Division N.A. 2010-2012. Joined Sonoco in 1985.
Robert L. Puechl62Vice President, Global Flexibles since January 2011. Previously Vice President, Global Plastics 2010-2011. Joined Sonoco in 1986.
Marcy J. Thompson56Vice President, Marketing and Innovation since July 2013. Previously Vice President, Rigid Paper N.A. 2011-2013;Converted Products, 2009-2010; Division Vice President & General Manager, Sonoco Recycling 2009-2011.Paper, N.A., 2008-2009; Staff Vice President, Global Operating Excellence, Industrial Products, 2007-2008; Division Vice President, Industrial Products/ Paper-Europe, 2002-2007. Joined Sonoco in 2006.1985.
Ernest D. Haynes III49 Vice President, Rigid Paper Containers, North America, effective November 1, 2021. Previously Division Vice President and General Manager of Rigid Paper Containers, North America 2018-2021; Division Vice President of Manufacturing, Tubes and Cores, U.S. and Canada 2015-2018; Director of Manufacturing, Metal Ends & Closures 2012-2015. Joined Sonoco in 1997.
Jeffrey S. Tomaszewski53 Vice President, North America Consumer and Global Rigid Paper & Closures. Previously Division Vice President and General Manager – Global Rigid Paper and Closures, Display and Packaging and Paperboard Specialties, 2019-2020; Division Vice President and General Manager of Rigid Paper Containers, NA and Display and Packaging, 2018-2019; Division Vice President, Rigid Paper Containers, NA, 2015-2018; Division Vice President and General Manager of Global Display and Packaging and Packaging Services, 2013–2015. Joined Sonoco in 2002.
Adam Wood

53 49Vice President, Paper & Industrial Converted Products, EMEA, Australia and New Zealand. Previously Vice President, Paper & Industrial Converted Products, EMEA, Asia, Australia and New Zealand, since December 2015. Previously2015-2019; Vice President, Global Tubes & Cores, February-December 2015; Vice President, Industrial Europe, 2014-2015;2014; Division VP/GM,Vice President and General Manager, Industrial Europe, 2011-2014. Joined Sonoco in 2003.


8 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-K



Item 1A. Risk factors

Factors

We are subject to risks and uncertainties that could adversely affect our business, consolidated financial condition, results of operations and cash flows, ability to pay dividends, and the trading price of our securities. These factors could also cause our actual results to materially differ from the results contemplated by forward-looking statements we make in this report, in our other filings with the Securities and Exchange Commission, and in our public announcements. You should consider the risk factors described below, as well as other factors described elsewhere in this report and in our other filings with the Securities and Exchange Commission, in evaluating us, our business, and any investment in our securities. Although these are the most significant risk factors of which we are currently aware, they are not the only risk factors to which we are subject. Additional risk factors not currently known to us, or that we currently deem immaterial, could also adversely affect our business operations and financial results.

Risks Related to the Domestic and Global Economies and to Doing Business Globally
Our international operations subject us to various risks that could adversely affect our business operations and financial results.
We have operations throughout North and South America, Europe, Australia and Asia, with approximately 300 facilities in 32 countries. In 2021, approximately 35% of consolidated sales came from operations outside of the United States, and we expect to continue to expand our international operations in the future. Management of global operations is extremely complex, and operations in foreign countries are subject to local statutory and regulatory requirements, differing legal environments and other additional risks that may not exist, or be as significant, in the United States. These additional risks may adversely affect our business operations and financial results, and include, without limitation:
•foreign currency exchange rate fluctuations and foreign currency exchange controls;
•hyperinflation and currency devaluation;
•possible limitations on conversion of foreign currencies into dollars or payment of dividends and other payments by non-U.S. subsidiaries;
•tariffs, non-tariff barriers, duties, taxes or government royalties, including the imposition or increase of withholding and other taxes on remittances and other payments by non-U.S. subsidiaries;
•our interpretation of our rights and responsibilities under local statutory and regulatory rules for sales taxes, VAT and similar taxes, statutory accounting requirements, licenses and permits, etc. may prove to be incorrect or unsupportable resulting in fines, penalties, and/or other liabilities related to non-compliance, damage to our reputation, unanticipated operational restrictions and/or other consequences as a result of the Company's actions, or inaction, taken to perform our responsibilities or protect our rights;
•changes in tax laws, or the interpretation of such laws, affecting taxable income, tax deductions, or other attributes relating to our non-U.S. earnings or operations;
•inconsistent product regulation or policy changes by foreign agencies or governments;
•difficulties in enforcement of contractual obligations and intellectual property rights;
•high social benefit costs for labor, including more expansive rights of foreign unions and work councils, and costs associated with restructuring activities;
•national and regional labor strikes;
•difficulties in staffing and managing international operations;
•geographic, language and cultural differences between personnel in different areas of the world;
•differences in local business practices;
•foreign governments’ restrictive trade policies, and customs, import/export and other trade compliance regulations;
•compliance with and changes in applicable foreign laws;
•compliance with U.S. laws, including those affecting trade and foreign investment (including economic sanctions compliance) and the Foreign Corrupt Practices Act;
•loss or non-renewal of treaties between foreign governments and the U.S.;
•product boycotts, including with respect to products of our multi-national customers;
•increased costs of maintaining international manufacturing facilities and undertaking international marketing programs;
•difficulty in collecting international accounts receivable and potentially longer payment cycles;
•the potential for nationalization or expropriation of our enterprises or facilities without appropriate compensation; and
•political, social, legal and economic instability, civil unrest, war and other geopolitical tensions (such as the ongoing military conflict between Russia and Ukraine), catastrophic events, acts of terrorism, and widespread outbreaks of infectious diseases, such as COVID-19.
As discussed further elsewhere in this 10-K and in our other filings with the SEC, some of these risks have already affected us.
Global economic conditions and/or disruptions in the credit markets could adversely affect our business, financial condition or results of operations.
The Company has extensive international operations, and is dependent on customers and suppliers that operate in local economies around the world. In addition, the Company accesses global credit markets as part of its capital allocation strategy. Adverse global macroeconomic conditions could negatively impact our ability to access credit, or the price at which funding could be obtained. Likewise, uncertainty about or a decline in global or regional economic conditions, could have a significant impact on the financial stability of our suppliers and customers, and could negatively impact demand for our products, as has been the case to some extent as a result of impacts of the COVID-19 pandemic. Potential effects include financial instability, inability to obtain credit to finance operations, and insolvency.
We are subject to governmental export and import control laws and regulations in certain jurisdictions where we do business that could subject us to liability or impair our ability to compete in these markets.
Certain of our products are subject to export control laws and regulations and may be exported only with an export license or through an applicable export license exception. If we fail to comply with export licensing, customs regulations, economic sanctions or other laws, we could be subject to substantial civil or criminal penalties, including economic sanctions against us, incarceration for responsible employees and managers, and the possible loss of export or import privileges. In addition, if our distributors fail to obtain appropriate import, export or re-export licenses or permits, we may also be materially adversely affected through reputational harm and penalties. Obtaining the necessary export license for a particular sale may be time consuming and expensive and could result in the delay or loss of sales opportunities.
9 FORM 10-K SONOCO 2021 ANNUAL REPORT

Furthermore, export control laws and economic sanctions prohibit the shipment of certain products to embargoed or sanctioned countries, governments and persons. We cannot guarantee that a violation of export control laws or economic sanctions will not occur. A prohibited shipment could have negative consequences, including government investigations, penalties, fines, civil and criminal sanctions and reputational harm. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could decrease our ability to export or sell our products internationally. Any limitation on our ability to export or sell our products could materially adversely affect our business. For example, in February 2022, following Russia’s invasion of Ukraine, the United States and other countries announced economic sanctions against Russia, and the United States and other countries could impose wider sanctions and take other actions should the conflict further escalate. We maintain two small manufacturing operations in Russia and source certain inputs from Russian suppliers. In addition, some of our customers export their products to Russia. While it is difficult to anticipate the effect the sanctions announced to date may have on Sonoco, and any further sanctions imposed or actions taken by the United States or other countries, the effect of current or further economic sanctions may affect the global price and availability of natural gas, raw materials or finished goods, reduce our sales and earnings or otherwise have an adverse effect on our operations.
Changes in U.S. trade policies and regulations, as well as the overall uncertainty surrounding international trade relations, could materially adversely affect our consolidated financial condition and results of operations.
We continue to face uncertainty with respect to trade relations between the U.S. and many of its trading partners. In March 2018, the U.S. announced new tariffs on imported steel and aluminum products. Other international trade actions and initiatives also were announced in 2018 and 2019, notably the imposition by the U.S. of additional tariffs on products of Chinese origin, and China’s imposition of additional tariffs on products of U.S. origin. These tariffs have had, and we expect that they will continue to have, an adverse effect on our costs of products sold and margins in our North America segment.
In July 2020, the United States-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement, became effective. In response to this agreement, other countries may change their own trade policies, including the imposition of additional tariffs and quotas, which could also adversely affect our business outside the U.S.
In order to mitigate the impact of these trade-related increases on our costs of products sold, we have increased and may in the future increase prices in certain markets and, over the longer term, make changes in our supply chain and, potentially, our U.S. manufacturing strategy. Implementing price increases may cause our customers to find alternative sources for their products. We may be unable successfully to pass on these costs through price increases; adjust our supply chain without incurring significant costs; or locate alternative suppliers for raw materials or finished goods at acceptable costs or in a timely manner. Further, the uncertainty surrounding U.S. trade policy makes it difficult to make long-term strategic decisions regarding the best way to respond to these pressures and could also increase the volatility of currency exchange rates. Our inability to effectively manage the negative impacts of changing U.S. and foreign trade policies could materially adversely impact our consolidated financial condition and results of operations.
Currency exchange rate fluctuations may reduce operating results and shareholders' equity.
Fluctuations in currency exchange rates can cause, and have in the past caused, translation, transaction and other losses that can unpredictably and adversely affect our consolidated operating results. Our reporting currency is the U.S. dollar. However, as a result of operating globally, a portion of our consolidated net sales, costs, assets and liabilities, are denominated in currencies other than the U.S. dollar. In our consolidated financial statements, we translate the local currency financial results of our foreign operations into U.S. dollars based on their respective exchange rates. Depending on the direction, changes in those rates will either increase or decrease operating results and balances as reported in U.S. dollars. Although we monitor our exposures and, from time to time, may use forward currency contracts to hedge certain forecasted foreign currency transactions or foreign currency denominated assets and liabilities, this does not insulate us completely from foreign currency fluctuations and exposes us to counterparty risk of nonperformance.
Changes in domestic and global economic conditions may have a negative impact on our business operations and financial results.

Although our business is diversified across various markets and customers, because of the nature of our products and services, general economic downturns in the United States and globally can adversely affect our business operations and financial results. Current global economic challenges, including shrinking middle class incomes, the difficulties of the United States and other countries in dealing with the effects of the COVID-19 pandemic, their rising debt levels, and currency fluctuations are likely to continue to put pressure on the economy, and on us. In addition,response to the last global economic recession, extraordinary monetary policy actions of the U.S. Federal Reserve and other central banking institutions, including the utilization of quantitative easing, were taken to create and maintain a low interest rate environment. The Federal Reserve slowly began raising its benchmark interest rates have beenover the past few years in response to an improving economy and reduced unemployment. However, as concerns grew in 2019 about a potential global slowdown in the face of unresolved trade negotiations between the United States and China, dampening business investment and slowing the manufacturing sector, the Federal Reserve began lowering rates. On March 15, 2020, at historic lows for a numberthe beginning of yearsthe global coronavirus outbreak, the Federal Reserve cut interest rates even further to near 0% and kept them at that level throughout 2020 and 2021 and into January 2022. However, the likelihoodFederal Reserve may begin to raise its benchmark rate again as soon as March 2022. Such an increase may, among other things, reduce the availability and/or increase the costs of their beginning a return to historic norms appears to be increasing as the general economy improvesobtaining new variable rate debt and unemployment declines. Suchrefinancing existing indebtedness, and negatively impact our financial condition and results of operations. Additionally, such an increase in rates would put additional pressure on consumers and the economy in general. As evidenced in recent years, tightening of credit availability and/or financial difficulties, leading to declines in consumer and business confidence and spending, affect us, our customers, suppliers and distributors. When such conditions exist, customers may delay, decrease or cancel purchases from us, and may also delay payment or fail to pay us altogether. Suppliers may have difficulty filling our orders and distributors may have difficulty getting our products to market, which may affect our ability to meet customer demands, and result in loss of business. Weakened global economic conditions may also result in unfavorable changes in our product price/mix and lower profit margins. We have experienced most of these conditions to some extent as a result of the global economic impact of the pandemic. All of these factors may have a material adverse effect on us.

Our international operations subject us

10 FORM 10-K SONOCO 2021 ANNUAL REPORT

Risks Related to various risks that could adversely affect our business operations and financial results.

We have operations throughout North and South America, Europe, Australia and Asia, with 298 facilities in 33 countries. In 2017, approximately 35% of consolidated sales came from operations and sales outside of the United States, and we expect to continue to expand our international operations in the future. Management of global operations is extremely complex, and operations in foreign countries are subject to local statutory and regulatory requirements, differing legal environments and other additional risks that may not exist, or be as significant, in the United States. These additional risks may adversely affect our business operations and financial results, and include, without limitation:

•  foreign currency exchange rate fluctuations and foreign currency exchange controls;

•  hyperinflation and currency devaluation;

Manufacturing Operations

•  possible limitations on conversion of foreign currencies into dollars or payment of dividends and other payments bynon-U.S. subsidiaries;

•  non-tariff barriers, duties, taxes or government royalties, including the imposition or increase of withholding and other taxes on remittances and other payments bynon-U.S. subsidiaries;

•  our interpretation of our rights and responsibilities under local statutory and regulatory rules for sales taxes, VAT and similar taxes, statutory accounting requirements, licenses and permits, etc. may prove to be incorrect or unsupportable resulting in fines, penalties, and/or other liabilities related tonon-compliance, damage to our reputation, unanticipated operational restrictions and/or other consequences as a result of the Company’s actions, or inaction, taken to perform our responsibilities or protect our rights;

•  changes in tax laws, or the interpretation of such laws, affecting taxable income, tax deductions, or other attributes relating to ournon-U.S. earnings or operations;

•  inconsistent product regulation or policy changes by foreign agencies or governments;

•  difficulties in enforcement of contractual obligations and intellectual property rights;

•  high social benefit costs for labor, including more expansive rights of foreign unions and work councils, and costs associated with restructuring activities;

•  national and regional labor strikes;

•  difficulties in staffing and managing international operations;

•  geographic, language and cultural differences between personnel in different areas of the world;

•  differences in local business practices;

•  foreign governments’ restrictive trade policies, and customs, import/export and other trade compliance regulations;

•  compliance with and changes in applicable foreign laws;

•  compliance with U.S. laws, including those affecting trade and foreign investment and the Foreign Corrupt Practices Act;

•  loss ornon-renewal of treaties between foreign governments and the U.S.;

•  product boycotts, including with respect to products of our multi-national customers;

•  increased costs of maintaining international manufacturing facilities and undertaking international marketing programs;

•  difficulty in collecting international accounts receivable and potentially longer payment cycles;

•  the potential for nationalization or expropriation of our enterprises or facilities without appropriate compensation; and

•  political, social, legal and economic instability, civil unrest, war, catastrophic events, acts of terrorism, and widespread outbreaks of infectious diseases.

Global economic conditions, disruptions in the credit markets and instability of the Euro could adversely affect our business, financial condition or results of operations.

Additionally, there has been concern regarding the overall long-term stability of the Euro and the future of the Euro as a single currency given the diverse economic and political circumstances in individual Eurozone countries. Potential negative developments (such as a Eurozone country in which we operate replacing the Euro with its own currency) and market perceptions related to the Euro could adversely affect the value of our Euro-denominated assets, reduce the amount of our translated amounts of U.S. dollar revenue and income from operations, and otherwise negatively affect our business, financial condition or results of operations. Although instability of the Euro would likely have more broad-reaching effects than only to euro-denominated economies, annual revenue in 2017 for our

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businesses where the Euro is the functional currency totaled $515 million.

The vote by the United Kingdom to leave the European Union could adversely affect us.

In 2016, the U.K. voted to leave the European Union (E.U.) (referred to as Brexit), and in 2017, the U.K. gave the notice that commences the formal Brexit process. Brexit could cause disruptions to and create uncertainty surrounding our U.K. businesses, including affecting relationships with existing and future customers, suppliers and employees. The effects of Brexit will depend on any agreements the U.K. makes to retain access to E.U. markets either during a transitional period or more permanently. The measures could potentially disrupt the markets we serve and the tax jurisdictions in which we operate and adversely change tax benefits or liabilities in these or other jurisdictions. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate. Although the Brexit decision could have broad-reaching effects beyond just in the U.K. itself, annual revenue in 2017 for our U.K. businesses alone totaled $103 million.

We are subject to governmental export and import control laws and regulations in certain jurisdictions where we do business that could subject us to liability or impair our ability to compete in these markets.

Certain of our products are subject to export control laws and regulations and may be exported only with an export license or through an applicable export license exception. If we fail to comply with export licensing, customs regulations, economic sanctions or other laws, we could be subject to substantial civil or criminal penalties, including economic sanctions against us, incarceration for responsible employees and managers, and the possible loss of export or import privileges. In addition, if our distributors fail to obtain appropriate import, export orre-export licenses or permits, we may also be materially adversely affected through reputational harm and penalties. Obtaining the necessary export license for a particular sale may be time consuming and expensive and could result in the delay or loss of sales opportunities.

Furthermore, export control laws and economic sanctions prohibit the shipment of certain products to embargoed or sanctioned countries, governments and persons. While we train our employees to comply with these regulations, we cannot guarantee that a violation will not occur. A prohibited shipment could have negative consequences, including government investigations, penalties, fines, civil and criminal sanctions and reputational harm. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could decrease our ability to export or sell our products internationally. Any limitation on our ability to export or sell our products could materially adversely affect our business.

Raw materials, energy and other price increases or shortages may reduceimpact our net income.

results of operations.

As a manufacturer, our sales and profitability are dependent on the availability and cost of raw materials, labor and other inputs. Most of the raw materials we use are purchased from third parties. Principal examples are recovered paper, steel, aluminum and resin. Prices and availability of these raw materials are subject to substantial fluctuations that are beyond our control due to factors such as changing economic conditions, inflation, currency and commodity price fluctuations, tariffs, resource availability,

transportation costs, weather conditions and natural disasters, political unrest and instability, such as the ongoing military conflict between Russia and Ukraine, war and other factors impacting supply and demand pressures. Increases in costs can have an adverse effect on our business and financial results. Our performance depends, in part, on our ability to pass on cost increases to our customers by raising selling prices and/or offset the impact by improving productivity. Although many of our long-term contracts andnon-contractual pricing arrangements with customers permit limited price adjustments to reflect increased raw material costs, such adjustments may not occur quickly enough, or be sufficient to prevent a materiallymaterial and adverse effect on net income and cash flow. Furthermore, we may not be able to improve productivity or realize sufficient savings from our cost reduction initiatives to offset the impact of increased costs.

Some of our manufacturing operations require the use of substantial amounts of electricity and natural gas, which may be subject to significant price increases as the result of changes in overall supply and demand and the impacts of legislation and regulatory action. In addition, we operate manufacturing sites throughout Europe and, in many instances, continued normal operations at those sites depend on the availability of natural gas and other inputs. If the current conflict between Russia and Ukraine is not resolved, any further sanctions imposed or actions taken by the United States or other countries, and any retaliatory measures by Russia in response, could affect the price of oil and natural gas throughout the world and impact the availability of energy supplies and other inputs at our European manufacturing sites. Such a disruption in the supply of natural gas could impact our ability to continue our operations at such sites at normal levels. We forecast and monitor energy usage, and, from time to time, use commodity futures or swaps in an attempt to reduce the impact of energy price increases. However, we cannot guarantee successthese efforts may be insufficient to protect us against fluctuations in these efforts,energy prices or shortages of natural gas and we could suffer adverse effects to net income and cash flow should we be unable to either offset or pass higher energy costs through to our customers in a timely manner or at all.

Supply shortages or disruptions in our supply chains could affect our ability to obtain timely delivery of materials, equipment and supplies from our suppliers, and, in turn, adversely affect our ability to supply products to our customers. Such disruptions could have a material adverse effect on our business and financial results.

We depend on third parties for transportation services.

We rely primarily on third parties for transportation of the products we manufacture and/or distribute, as well as for delivery of our raw materials. In particular, a significant portion of the goods we manufacture and raw materials we use are transported by railroad or trucks, which are highly regulated. If any of our third-party transportation providers were to fail to deliver the goods that we manufacture or distribute in a timely manner, we might be unable to sell those products at full value, or at all. Similarly, if any of these providers were to fail to deliver raw materials to us in a timely manner, we might be unable to manufacture our products in response to customer demand. In addition, if any of these third parties were to cease operations or cease doing business with us, we might be unable to replace them at reasonable cost. Any failure of a third-party transportation provider to deliver raw materials or finished products in a timely manner could harm our reputation, negatively impact our customer relationships and have a material adverse effect on our financial condition and results of operations.

We may be unable to achieve, or may be delayed in achieving, adequate returns from our efforts to optimize our operations, which could have an adverse impact on our financial condition and operating results.
We continually strive to serve our customers and increase returns to our shareholders through innovation and improved operating performance by investing in productivity improvements, manufacturing efficiencies, manufacturing cost reductions and the rationalization of our manufacturing facilities footprints. However, our operations include complex manufacturing systems as well as intricate scheduling and numerous geographic and logistical complexities, and our business initiatives are subject to significant business, economic and competitive uncertainties and contingencies. We may not meet anticipated implementation timetables or stay within budgeted costs, and we may not fully achieve expected results. These initiatives could also adversely impact customer retention or our operations. Additionally, our business strategies may change from time to time in light of our ability to implement new business initiatives, competitive pressures, economic uncertainties or developments, or other factors. A variety of risks could cause us not to realize some or all of the expected benefits of these initiatives. These risks include, among others, delays in the anticipated timing of activities related to such initiatives, strategies and operating plans; increased difficulty and costs in implementing these efforts; and the incurrence of other unexpected costs associated with operating the business. As a result, there can be no assurance that we will realize these benefits. If, for any reason, the benefits we realize are substantially less than our estimates, or the implementation of these growth initiatives and business strategies adversely affects our operations or costs significantly more or takes significantly longer to effectuate than we expect, or if our assumptions prove inaccurate, our results of operations may be materially adversely affected.
Material disruptions in our business operations could negatively affect our financial results.
Although we take measures to minimize the risks of disruption at our facilities, we from time to time encounter an unforeseen material operational disruption in one of our major facilities, which could negatively impact production and our financial results. Such a disruption could occur as a result of any number of events including but not limited to a major equipment failure, labor stoppages, transportation failures affecting the supply and shipment of materials, disruptions at our suppliers, fire, severe weather conditions, including as a result of climate change, natural disasters and disruptions in utility services. These types of disruptions could materially adversely affect our earnings to varying degrees depending upon the facility, the duration of the disruption, our ability to shift business to another facility or find alternative sources of materials or energy. Any losses due to these events may not be covered by our existing insurance policies or may be subject to certain deductibles.
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Risks Related to Acquisitions, Divestitures and Joint Ventures
We may encounter difficulties in integrating acquisitions, which could have an adverse impact on our financial condition and operating results.
As noted in the risk factors above, we have invested a substantial amount of capital in acquisitions, joint ventures and strategic investments, including our recent acquisition of Ball Metalpack, and we expect that we will continue to do so in the foreseeable future. We are continually evaluating acquisitions and strategic investments that are significant to our business both in the United States and internationally. Acquisitions, joint ventures and strategic investments involve numerous risks. As has happened from time to time in the past, acquired businesses may not achieve the expected levels of revenue, profitability or productivity, or otherwise perform as expected, and acquisitions may involve significant cash expenditures, debt incurrence, operating losses, and expenses that could have a material adverse effect on our financial condition and operating results. Acquisitions also involve special risks, including, without limitation, the potential assumption of unanticipated liabilities and contingencies, and the challenges of effectively integrating acquired businesses.
Other risks and challenges associated with acquisitions, including our recent acquisition of Ball Metalpack, include, without limitation:
•substantial costs associated with negotiating and completing acquisitions;
•demands on management related to increase in size of our businesses and additional responsibilities of management;
•diversion of management's attention;
•disruptions to our ongoing businesses;
•inaccurate estimates of fair value in accounting for acquisitions and amortization of acquired intangible assets, which could reduce future reported earnings;
•difficulties in assimilation and retention of employees;
•difficulties in integration of departments, systems, technologies, books and records, controls (including internal financial and disclosure controls), procedures, and policies;
•potential loss of major customers and suppliers;
•challenges associated with operating in new geographic regions;
•difficulties in maintaining uniform standards, controls, procedures and policies;
•potential failure to identify material problems and liabilities during due diligence review of acquisition targets; and
•potential failure to obtain sufficient indemnification rights to fully offset possible liabilities associated with acquired businesses.
While management believes that acquisitions will improve our competitiveness and profitability, no assurance can be given that acquisitions, including the acquisition of Ball Metalpack, will be successful or accretive to earnings or that the expected benefits from such transactions will be realized within the anticipated time frame, or at all. If actual performance in an acquisition falls short of the projected results, or the assessment of the relevant facts and circumstances was inaccurate or changes, it is possible that a noncash impairment charge of any related goodwill would be required, and our results of operations and financial condition could be adversely affected.
We may not be able to identify suitable acquisition candidates, which could limit our potential for growth.

We have made numerous acquisitions in recent years, and expect to actively seek new acquisitions that management believes will provide meaningful opportunities for growth. However, we may not be able to identify suitable acquisition candidates or complete acquisitions on acceptable terms and conditions. Other companies in our industries have similar investment and acquisition strategies to ours, and competition for acquisitions may intensify. If we are unable to identify acquisition candidates that meet our criteria, our potential for growth may be restricted.

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Even if we do identify acquisition candidates that we believe meet our criteria, we may be unable to complete such acquisitions in a timely manner, on desirable terms or at all, and any acquisitions we complete may not provide the benefits that we anticipate. Our efforts to identify suitable acquisition candidates, even if successful, could also cause us to incur substantial search and transaction fees, divert the time and attention of our management, or fail to identify due diligence or other issues affecting the value and suitability of potential acquisition targets. We may encounter difficulties in integratingalso be unable to complete acquisitions which could have an adverse impact on our financial condition and operating results.

As noted in the risk factor above, we have invested a substantial amount of capital in acquisitions, joint ventures and strategic investments and we expect that we will continuebelieve would be beneficial to do so in the foreseeable future. WeCompany if we are continually evaluating acquisitions and strategic investments that are significantunable to our business both in the United States and internationally. Acquisitions, joint ventures and strategic investments involve numerous risks. Acquired businesses may not achieve the expected levelssatisfy related closing conditions or obtain necessary government consents. Any of revenue, profitability or productivity, or otherwise perform as expected, and acquisitions may involve significant cash expenditures, debt incurrence, operating losses, and expenses thatthese results could have a material and adverse effect on our business, results of operations, financial condition and operating results. Acquisitions also involve special risks, including, without limitation, the potential assumption of unanticipated liabilities and contingencies, and the challenges of effectively integrating acquired businesses.

Other risks and challenges associated with acquisitions include, without limitation:

•  demands on management related to increase in size of our businesses and additional responsibilities of management;

•  diversion of management’s attention;

•  disruptions to our ongoing businesses;

•  inaccurate estimates of fair value in accounting for acquisitions and amortization of acquired intangible assets, which could reduce future reported earnings;

•  difficulties in assimilation and retention of employees;

•  difficulties in integration of departments, systems, technologies, books and records, controls (including internal financial and disclosure controls), procedures, and policies;

•  potential loss of major customers and suppliers;

•  challenges associated with operating in new geographic regions;

•  difficulties in maintaining uniform standards, controls, procedures and policies;

•  potential failure to identify material problems and liabilities during due diligence review of acquisition targets; and

•  potential failure to obtain sufficient indemnification rights to fully offset possible liabilities associated with acquired businesses.

While management believes that acquisitions will improve our competitiveness and profitability, no assurance can be given that acquisitions will be successful or accretive to earnings. If actual performance in an acquisition falls significantly short of the projected results, or the assessment of the relevant facts and circumstances was inaccurate or changes, it is possible that a noncash impairment charge of any related goodwill would be required, and our results of operations and financial condition could be adversely affected.

prospects.

In connection with acquisitions, joint ventures, divestitures or divestitures,other strategic transactions, we may become subject to liabilities and legal claims.

In connection with any acquisitions, joint ventures, divestitures or divestitures,other strategic transactions, we have in the past, and may in the future, become subject to liabilities or legal claims, including but not limited to third party liability and other tort claims; claims for breach of contract; employment-related claims; environmental, health and safety liabilities, conditions or damage; permitting, regulatory or other legal compliance issues; claims for contractual indemnification; or tax liabilities. In addition, we may assume risks and liabilities that our due diligence investigations with respect to acquisitions, joint ventures and other strategic transactions fail to identify, including issues relating to inadequate internal controls and procedures relating to accounting, finance, cybersecurity and data protection controls issues. If we become subject to any of these liabilities or claims with respect to our acquisition of Ball Metalpack or any other acquisition, joint venture, divestiture or other strategic transaction, and they are not adequately covered by insurance or an enforceable indemnity or similar agreement from a creditworthy counterparty, we may be responsible for significantout-of-pocket expenditures. TheseSuch underinsured liabilities, if they materialize, could have a material adverse effect on our business, financial condition and results of operations.

We may encounter difficulties restructuring operations or closing or disposing of facilities.

facilities, assets or businesses.

We are continuously seeking the mostmore cost-effective means and structurestructures to serve our customers and to respond to changes in our markets. Accordingly, from time to time, we have closed higher-cost facilities, sold non-core assets and businesses, and otherwise restructured operations, and are likely to do so again, close higher-cost facilities, sellnon-core assets and otherwise restructure operations in an effort to improve cost competitiveness and profitability. For example, in 2020 and 2021, we divested our global display and packaging operations in two separate transactions. As a result, restructuring and divestiture costs have been, and are expected to be, a recurring component of our operating costs, the magnitude of which could vary significantly from year to year depending on the scope of such activities. Divestitures and restructuring may also result, and have in the past resulted, in significant financial charges for thewrite-off or impairment of assets, including goodwill and other intangible assets. Furthermore, such activities may divert the attention of management, disrupt our ordinary operations, or result in a reduction in the volume of products produced and sold.sold, and the impact of divestitures on our revenue growth may be larger than we anticipate if we experience greater dis-synergies than we expect. In addition, in cases where we seek to divest or otherwise dispose of certain facilities, operations, assets or other components of our business,
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we may be unable to find buyers or alternative exit strategies on acceptable terms, in a timely manner or at all, and we may dispose of facilities, operations, assets or other components of our business at prices or on terms that are less desirable than we had anticipated. Moreover, we may be prevented from completing dispositions as a result of our or our counterparties’ failure to satisfy pre-closing conditions, obtain necessary regulatory or government approvals. We may also be exposed to continuing financial risks from any businesses we divest, including as a result of continuing equity ownership, guarantees, indemnities, responsibility for environmental clean-up or other financial obligations. There is no guarantee that any such activities will achieve our goals, and if we cannot successfully manage the associated risks, our financial position and results of operations could be adversely affected.

We have investments in joint ventures that are not operated solely for our benefit.
Several of our operations are conducted through joint ventures. In joint ventures, we share ownership and, in some instances, management of a company with one or more parties who may or may not have the same goals, strategies, priorities or resources as we do. In general, joint ventures are intended to be operated for the benefit of all co-owners, rather than for our exclusive benefit. Operating a business as a joint venture often requires additional organizational formalities as well as time-consuming procedures for sharing information, accounting and making decisions. In certain cases, our joint venture partners must agree in order for the applicable joint venture to take certain actions, including acquisitions, the sale of assets, budget approvals, borrowing money and granting liens on joint venture property. Our inability to take unilateral action that we believe is in our best interests may have an adverse effect on the financial performance of the joint venture and the return on our investment. In joint ventures, we believe our relationship with our co-owners is an important factor to the success of the joint venture, and if a co-owner changes, our relationship may be adversely affected. In addition, the benefits from a successful joint venture are shared among the co-owners, so that we do not receive all the benefits from our successful joint ventures. Finally, we may be required on a legal or practical basis or both, to accept liability for obligations of a joint venture beyond our economic interest, including in cases where our co-owner becomes bankrupt or is otherwise unable to meet its commitments.
In addition, because we share ownership and management with our joint venture partners, we may have limited control over the actions of a joint venture, particularly when we own a minority interest. As a result, we may be unable to prevent violations of applicable laws or other
misconduct by a joint venture or the failure to satisfy contractual obligations by one or more parties. Moreover, a joint venture may not follow the same requirements regarding compliance, internal controls and internal control over financial reporting that we follow. To the extent another party makes decisions that negatively impact the joint venture or internal control issues arise within the joint venture, we may have to take responsive actions, or we may be subject to penalties, fines or other punitive actions for these activities.
Risks Related to Competition, Customers and Suppliers
We face intense competition, and failure to compete effectively canmay have an adverse effect on our operating results.

We sell our products in highly competitive markets. We regularly bid for new and continuing business, and being a responsive, high-quality,low-cost producer is a key component of effective competition. The loss of business from our larger customers, customer changes to alternative forms of packaging, or renewal of business with less favorable terms canmay have a significant adverse effect on our operating results.

Continuing consolidation of our customer base and suppliers may intensify pricing pressure.

Like us, many of our larger customers have acquired companies with similar or complementary product lines, and many of our customers have been acquired. Additionally, many of our suppliers of raw materials are consolidating. This consolidation of customers and suppliers has increased the concentration of our business with our largest customers, and in some cases, increased pricing pressures. Similarly, consolidation of our larger suppliers has resulted in increased pricing pressures from our suppliers. Further consolidation of customers and suppliers could intensify pricing pressure and reduce our net sales and operating results.

The loss of a key customer, or a reduction in its production requirements, could have a significant adverse impact on our sales and profitability.

Each of our segments has large customers, and the loss of any of these could have a significant adverse effect on the segment’s sales and, depending on the magnitude of the loss, our results of operations and financial condition. Although a majority of our master customer contracts are long-term, they are terminable under certain circumstances, such as our failure to meet quality, pricing, or volume requirements, and the contracts themselves often do not require a specific level of purchasing. There is no assurance that existing customer relationships will be renewed at the same level of production, or at all, at the end of the contract term. Furthermore, although no one customer accounted for more than 10% of our net sales in 2017 or 2016, the loss of any of our major customers, a reduction in their purchasing levels or an adverse change in the terms of supply agreements with these customers could reduce our net sales and net income. Continued consolidation of our customers could exacerbate any such loss. For more information on

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concentration of sales volume in our reportable segments, see Item1(c), “Dependence"Dependence on Customers.”

"

Challenges to, or the loss of, our intellectual property rights could have an adverse impact on our ability to compete effectively.
Our ability to compete effectively depends, in part, on our ability to protect and maintain the proprietary nature of our owned and licensed intellectual property. We own a large number of patents on our products, aspects of our products, methods of use and/or methods of manufacturing, and we own, or have licenses to use, all of the material trademark and trade name rights used in connection with the packaging, marketing and distribution of our major products. We also rely on trade secrets, know-how and other unpatented proprietary technology. We attempt to protect and restrict access to our intellectual property and proprietary information by relying on the patent, trademark, copyright and trade secret laws of the U.S. and other countries, as well as non-disclosure agreements. However, it may be possible for a third party to obtain our information without our authorization, independently develop similar technologies, or breach a non-disclosure agreement entered into with us. Furthermore, many of the countries in which we operate do not have intellectual property laws that protect proprietary rights as fully as do laws in the U.S. The use of our intellectual property by someone else without our authorization could reduce or eliminate certain of our competitive advantages, cause us to lose sales or otherwise harm our business. The costs associated with protecting our intellectual property rights could also adversely impact our business.
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In addition, we are from time to time subject to claims from third parties suggesting that we may be infringing on their intellectual property rights. If we were held liable for infringement, we could be required to pay damages, obtain licenses or cease making or selling certain products.
Intellectual property litigation, which could result in substantial cost to us and divert the attention of management, may be necessary to protect our trade secrets or proprietary technology or for us to defend against claimed infringement of the rights of others and to determine the scope and validity of others’ proprietary rights. We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain any necessary licenses on reasonable terms or at all. Failure to protect our patents, trademarks and other intellectual property rights may have a material adverse effect on our business, consolidated financial condition or results of operations.
Risks Related to Our Products
We may not be able to develop new products acceptable to the market.

For many of our businesses, organic growth depends on product innovation, new product development and timely response to constantly changing consumer demands and preferences. Sales of our products and services depend heavily on the volume of sales made by our customers to consumers. Consumer preferences for products and packaging formats are constantly changing based on, among other factors, cost, convenience, and health, environmental and social concerns and perceptions. Our failure, or the failure of our customers, to develop new or better products in response to changing consumer preferences in a timely manner may hinder our growth potential and affect our competitive position, and adversely affect our business and results of operations.

We are subject to costs and liabilities related to environmental, health and safety, and corporate social responsibility laws and regulations that could adversely affect operating results.

We must comply with extensive laws, rules and regulations in the United States and in each of the countries in which we do business regarding the environment, health and safety, and corporate social responsibility. Compliance with these laws and regulations can require significant expenditures of financial and employee resources.

Federal, state, provincial, foreign and local environmental requirements, including the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), and particularly those relating to air, soil and water quality, handling, discharge, storage and disposal of a variety of substances, and climate change are significant factors in our business and generally increase our costs of operations. We may be found to have environmental liability for the costs of remediating soil or water that is, or was, contaminated by us or a third party at various sites that we now, or previously, owned, used or operated. Legal proceedings may result in the imposition of fines or penalties, as well as mandated remediation programs, that require substantial, and in some instances, unplanned capital expenditures.

We have incurred in the past, and may incur in the future, fines, penalties and legal costs relating to environmental matters, and costs relating to the damage of natural resources, lost property values and toxic tort claims. We have made expenditures to comply with environmental regulations and expect to make additional expenditures in the future. As of December 31, 2017, approximately $20.3 million was reserved for environmental liabilities. Such reserves are established when it is considered probable that we have some liability. However, because the extent of potential environmental damage, and the extent of our liability for the damage, is usually difficult to assess and may only be ascertained over a long period of time, our actual liability in such cases may end up being substantially higher than the currently reserved amount. Accordingly, additional charges could be incurred that would have a material adverse effect on our operating results and financial position.

Many of our products come into contact with the food and beverages packaged within, and therefore we are subject to risks and liabilities related to health and safety matters in connection with those products. Accordingly, our products must comply with various laws and regulations for food and beverages applicable to our customers. Changes in such laws and regulations could negatively impact customers’ demand for our products as they comply with such changes and/or require us to

make changes to our products. Such changes to our products could include modifications to the coatings and compounds we use, possibly resulting in the incurrence of additional costs. Additionally, because many of our products are used to package consumer goods, we are subject to a variety of risks that could influence consumer behavior and negatively impact demand for our products, including changes in consumer preferences driven by various health-related concerns and perceptions.

Disclosure regulations relating to the use of “conflict minerals” sourced from the Democratic Republic of the Congo and adjoining countries could affect the sourcing, availability and cost of materials used in the manufacture of some of our products. We also incur costs associated with supply chain due diligence, and, if applicable, potential changes to products, processes or sources of supply as a result of such due diligence. Because our supply chain is complex, we may also face reputation risk with our customers and other stakeholders if we are unable sufficiently to verify the origins of all such minerals used in our products.

Changes to laws and regulations dealing with environmental, health and safety, and corporate social responsibility issues are made or proposed with some frequency, and some of the proposals, if adopted, might, directly or indirectly, result in a material reduction in the operating results of one or more of our operating units. However, any such changes are uncertain, and we cannot predict the amount of additional capital expenditures or operating expenses that could be necessary for compliance.

Product liability claims and other legal proceedings could adversely affect our operations and financial performance.

We produce products and provide services related to other parties’ products. While we have built extensive operational processes intended to ensure that the design and manufacture of our products meet rigorous quality standards, there can be no assurance that we or our customers will not experience operational process failures that could result in potential product, safety, regulatory or environmental claims and associated litigation. We are also subject to a variety of legal proceedings and legal compliance risks in our areas of operation around the globe. Any such claims, whether with or without merit, could be time consuming and expensive to defend, affect our reputation, and could divert management’s attention and resources. In accordance with customary practice, we maintain insurance against some, but not all, of these potential claims; however, in the future, we may not be able to maintain such insurance at acceptable premium cost levels. In addition, the levels of insurance we maintain may not be adequate to fully cover any and all losses or liabilities. If any significant judgment or claim is not fully insured or indemnified against, it could have a material adverse impact on our business, financial condition and results of operations.

We and the industries in which we operate are at times being reviewed or investigated by regulators and other governmental authorities, which could lead to enforcement actions, fines and penalties or the assertion of private litigation claims and damages. Simply responding to actual or threatened litigation or government investigations of our compliance with regulatory standards may require significant expenditures of time and other resources. While we believe that we have adopted appropriate risk management and compliance programs, the global and diverse nature of our operations means that legal and compliance risks will continue to exist and legal proceedings and other contingencies, the outcome of which cannot be predicted with certainty, will arise from time to time that could adversely affect our business, results of operations and financial condition.

Climate Change Related Risk

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ChangesAdverse weather and climate changes may result in pension plan assets lower sales and/or liabilitieshigher costs. In addition, climate-related regulations may reduce operating resultsadd cost and shareholders’ equity.

complexity to our operations.

We sponsor various defined benefit plans worldwide,manufacture packaging products for foods as well as products used in construction and industrial manufacturing. Adverse or varying weather conditions can impact crop yields and/or harvest timing, which in turn could impact the level and/or timing of demand for our containers. In addition, poor or extreme weather conditions can temporarily impact the level of construction and industrial activity and impact the efficiency of our manufacturing operations. Weather-related events, such as hurricanes and floods, which may increase in frequency and severity due to climate change, could result in lost production, supply chain disruptions and increased material costs. Such disruptions could have, and have an aggregate projected benefit obligation for these plans of approximately $1.8 billion as of December 31, 2017. The difference between defined benefit plan obligations and assets (the funded status ofin the plans) significantly affects the net periodic benefit costs and the ongoing funding requirements of the plans. Among other factors, changes in discount rates and lower-than-expected actual investment returns could substantially increase our future plan funding requirements and havepast had, a negative impactmaterial adverse effect on our results of operations.

Regulatory responses to climate change may result in new laws and regulations intended to reduce overall greenhouse gas ("GHG") emissions. Such rules and regulations could include, among other things, cap-and-trade programs, carbon taxes, and mandates within certain industries or activities to reduce GHG emissions. In the U.S., the Environmental Protection Agency has issued a number of regulations under the Clean Air Act with the goal of reducing GHG emissions. Some of our facilities are subject to these regulations and compliance with such rules and any other regulatory responses to climate change could in the future significantly increase costs and add complexity to our operations.

Additionally, in the U.S., several states where we operate manufacturing facilities have enacted or are in the process of enacting regulations related to GHG emissions and/or implementing cap and trade programs. Our facilities currently fall outside of the scope of these regulations but may be impacted in the future. Several of our manufacturing facilities outside of the U.S. have entered into GHG emissions trading programs as a result of local regulations. Certain countries where we have manufacturing facilities have set GHG reduction targets to align with an agreement signed in April 2016 between 170 countries establishing a framework to reduce global GHG emissions (also known as the "Paris Agreement"), that became effective in November 2016 and which the United States formally rejoined in February 2021. Many of the other countries where we conduct business are expected to develop similar climate change related regulations. To the extent our facilities become subject to additional regulations related to GHG emissions in the U.S. or internationally, compliance with such regulations could significantly increase costs and add complexity to our operations, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.prospects.

In addition, although we have procedures in place to monitor climate related regulatory and policy changes in the jurisdictions in which we operate and have developed processes and tools to track our GHG emissions and assess both the operational and financial impacts of climate-related regulations, any failure in such procedures and tools or other failure to comply with any such regulations and policies could subject us to additional costs and / or penalties as well as harm to our reputation.


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Risks Related to Environmental, Health and Safety, and Corporate Social Responsibility Laws and Regulations
We are subject to costs and potential liabilities related to environmental, health and safety, and corporate social responsibility laws and regulations that could adversely affect our operating results.
We must comply with extensive laws, rules and regulations in the United States and in each of the countries in which we do business regarding the environment, health and safety, and corporate social responsibility. Compliance with these laws and regulations can require significant expenditures of financial and employee resources.
Federal, state, provincial, foreign and local environmental requirements, including the Comprehensive Environmental Response, Compensation and Liability Act, and particularly those relating to air, soil and water quality, handling, discharge, storage and disposal of a variety of substances, and climate change are significant factors in our business and generally increase our costs of operations. We may be found to have environmental liability for the costs of remediating soil or water that is, or was, contaminated by us or a third party at various sites that we now own, use or operate, or previously, owned, used or operated. Legal proceedings may result in the imposition of fines or penalties, as well as mandated remediation programs, that require substantial, and in some instances, unplanned capital expenditures.
We have incurred in the past, and may incur in the future, fines, penalties and legal costs relating to environmental matters, and costs relating to the damage of natural resources, lost property values and toxic tort claims. We have made expenditures to comply with environmental regulations and expect to make additional expenditures in the future. As of December 31, 2017, these plans hold2021, approximately $7.4 million was reserved for environmental liabilities. Such reserves are established when it is considered probable that we have some liability. However, because the extent of potential environmental damage, and the extent of our liability for the damage, is usually difficult to assess and may only be ascertained over a totallong period of approximately $1.5 billiontime, our actual liability in assets fundingsuch cases may end up being substantially higher than the currently reserved amount. Accordingly, additional charges could be incurred that would have a portion of the projected benefit obligations of the plans, which consist primarily of common collective trusts, mutual funds, common stocks and debt securities and also include alternative investments such as interests in real estate funds and hedge funds. If the performance of these assets does not meetmaterial adverse effect on our assumptions, or discount rates decline, the underfunding of the plans may increase and we may have to contribute additional funds to these plans, and our pension expense may increase, which could adversely affect operating results and shareholders’ equity.

financial position.

Many of our products come into contact with the food and beverages packaged within, and therefore we are subject to risks and liabilities related to health and safety matters in connection with those products. Accordingly, our products must comply with various laws and regulations for food and beverages applicable to our customers. Changes in such laws and regulations could negatively impact customers’ demand for our products as they comply with such changes and/or require us to make changes to our products. Such changes to our products could include modifications to the coatings and compounds we use, possibly resulting in the incurrence of additional costs. Additionally, because many of our products are used to package consumer goods, we are subject to a variety of risks that could influence consumer behavior and negatively impact demand for our products, including changes in consumer preferences driven by various health-related concerns and perceptions.
Disclosure regulations relating to the use of “conflict minerals” sourced from the Democratic Republic of the Congo and adjoining countries could affect the sourcing, availability and cost of materials used in the manufacture of some of our products. We also incur costs associated with supply chain due diligence, and, if applicable, potential changes to products, processes or sources of supply as a result of such due diligence. Because our supply chain is complex, we may also face reputation risk with our customers and other stakeholders if we are unable sufficiently to verify the origins of all such minerals used in our products.
Changes to laws and regulations dealing with environmental, health and safety, and corporate social responsibility issues (e.g., sustainability) are made or proposed with some frequency, and some of the proposals, if adopted, might, directly or indirectly, result in a material reduction in the operating results of one or more of our operating units. For example, we may be subject to future policy changes and regulations that discourage the use of single-use plastics and/or mandate the use of recycled content. Such regulations could both result in customers switching to other packaging formats, and therefore result in lost revenue, and result in increased costs associated with sourcing recycled resins and designing and producing products with enhanced recyclability. These or any other such policy changes or new regulations are uncertain and we cannot predict the impact on our markets or the amount of additional capital expenditures or operating expenses that could be necessary for compliance.
Risks Related to Financing Activities
We, or our customers, may not be able to obtain necessary credit or, if so, on reasonable terms.

We have $1.0

At December 31, 2021, we had $1.1 billion of fixed-rate debt outstanding. In addition, in January 2022, in connection with our acquisition of Ball Metalpack, we issued $1.2 billion aggregate principal amount of unsecured senior notes and entered into a $300 million term loan facility. We also operate a $350$500 million commercial paper program, supported by a $500$750 million revolving credit facility of an equal amount committed by a syndicate of eightnine banks until July 2022. If we were prevented from issuing commercial paper, weJune 2026. We have the contractual right to draw funds directly on the underlying bank credit facility. We believe thatfacility, which could possibly occur if there were a disruption in the lenders have the ability to meet their obligations under the facility.commercial paper market. However, if these obligations were not met, we may be forced to seek more costly or cumbersome forms of credit. Should such credit be unavailable for an extended time, it would significantly affect our ability to operate our business and execute our plans. In addition, our customers may experience liquidity problems as a result of a negative change in the economic environment, including the ability to obtain credit, that could limit their ability to purchase our products and services or satisfy their existing obligations.

Our credit ratings are important to

In addition, our ability to issue commercial paper at favorable ratesand access the credit markets, and the cost of interest. Athese borrowings, is affected by the strength of our credit ratings and current market conditions. Failure to maintain credit ratings that are acceptable to investors, including as a result of increased leverage, may adversely affect the cost and other terms upon which we are able to obtain financing, as well as our access to the capital markets. Any downgrade in our credit rating could increase our cost of borrowing.

Certainborrowing, which could have a material and adverse impact on our business, results of our debt agreements impose restrictions with respect to the maintenance ofoperations and financial ratioscondition, and the disposition of assets. The most restrictive covenant currently requires us to maintain a minimum level of interest coverage, and a minimum level of net worth. Although we were substantially above these minimum levels at December 31, 2017, these restrictive covenants could adversely affect our ability to engage in certain business activities that would otherwise be in our best long-term interests.

pay dividends.

Our significant indebtedness could adversely affect our cash flow, increase our vulnerability to economic conditions, and limit or restrict our business activities.

We have incurred, and may incur in the future, significant indebtedness, including in connection with mergers or acquisitions, which may impact the manner in which we conduct business or our access to external sources of liquidity. For example, in January 2022, in connection with our acquisition of Ball Metalpack, we issued $1.2 billion aggregate principal amount of unsecured senior notes and entered into a $300 million term loan facility. In addition to interest payments, from time to time a significant portion of our cash flow may need to be used to service our indebtedness, and, therefore, may not be available for use in our business. Our ability to generate cash flow is subject to general economic, financial, competitive, legislative, regulatory, and other factors that may be beyond our control. Our

indebtedness could have a significant impact on us, including, but not limited to:

•increasing our vulnerability to general adverse economic and industry conditions;

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•requiring us to dedicate a significant portion of our cash flow from operations to payments on our indebtedness, thereby reducing the amount of our cash flow available to fund working capital, acquisitions and capital expenditures, and for other general corporate purposes;

•limiting our flexibility in planning for, or reacting to, changes in our business and our industry;

•restricting us from making strategic acquisitions or exploiting business opportunities; and

•necessitating the divestiture of certain of our assets or businesses in order to generate cash to service our indebtedness;
•limiting our ability to continue paying dividends; or
•limiting our ability to borrow additional funds.

Certain of our debt agreements impose restrictions with respect to the maintenance of financial ratios and the disposition of assets. The most restrictive covenants currently require us to maintain a minimum level of interest coverage, and a minimum level of net worth. These restrictive covenants could adversely affect our ability to engage in certain business activities that would otherwise be in our best long-term interests.
Some of our indebtedness is subject to floating interest rates, which would result in our interest expense increasing if interest rates rise.
We on occasion utilize debt instruments with a variable rate of interest, including the $300 million term loan facility we entered into in January 2022 in connection with our acquisition of Ball Metalpack. Fluctuations in interest rates can increase borrowing costs and, depending on the magnitude of variable-rate borrowings outstanding, could potentially have a material adverse effect on our business. Variable-rate borrowings at December 31, 2021 were approximately $0.5 billion.
We may incur additional debt in the future, which could increase the risks associated with our leverage.

We are continually evaluating and pursuing acquisition opportunities and, as we have in the past, we may from time to time incur additional indebtedness to finance any such acquisitions as we did in 2017, and to fund any resulting increased operating needs. As new debt is added to our current debt levels, the related risks we face could increase. While we will have to effect any new financing in compliance with the agreements governing our then existing indebtedness, changes in our debt levels and or debt structure may impact our credit rating and costs to borrow, as well as constrain our future financial flexibility in the event of a deterioration in our financial operating performance or financial condition.

Currency exchange rate fluctuations may reduce operating results At December 31, 2021, scheduled debt maturities in 2022 totaled $412 million, including $349 million of outstanding commercial paper.

On January 26, 2022, the Company completed the acquisition of Ball Metalpack for $1.35 billion in cash, subject to customary adjustments, including for working capital, cash and shareholders’ equity.

Fluctuationsindebtedness. The acquisition was funded in currency exchange rates can cause translation, transactionpart by proceeds from the Company's $1.2 billion green bond issuance, completed on January 21, 2022, together with borrowings under a new $300 million term loan facility and other losses that can unpredictablycommercial paper borrowings.

Risks Related to Information Technology and adversely affect our consolidated operating results. Our reporting currency is the U.S. dollar. However, as a result of operating globally, a portion of our consolidated net sales, costs, assets and liabilities, are denominated in currencies other than the U.S. dollar. In our consolidated financial statements, we translate the local currency financial results of our foreign operations into U.S. dollars based on their respective exchange rates. Depending on the direction, changes in those rates will either increase or decrease operating results and balances as reported in U.S. dollars. Although we monitor our exposures and, from time to time, may use forward currency contracts to hedge certain forecasted currency transactions or foreign currency denominated assets and liabilities, this does not insulate us completely from foreign currency fluctuations and exposes us to counterparty risk of nonperformance.

As noted previously in these Risk Factors, there are also ongoing concerns about the stability of the euro and its continued viability as a single European currency. If individual countries were to revert, or threaten to revert, to their former local currencies, euro-denominated assets could be significantly devalued. In addition, a dislocation or dissolution of the euro could cause significant volatility and disruption in the global economy, which could adversely impact our business, including the demand for our products, the availability and cost of supplies and materials and our ability to obtain financing at reasonable costs.

Adverse weather and climate changes may result in lower sales.

We manufacture packaging products for beverages and foods as as well as products used in construction and industrial manufacturing. Unseasonably cool weather can temporarily

Cybersecurity

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K13

reduce demand for certain beverages packaged in our containers. In addition, poor weather conditions can temporarily impact the level of construction and industrial activity and also impact the efficiency of our manufacturing operations. Such disruptions could have a material adverse effect on our results of operations.

We rely on our information technology, and its failure or disruption could disrupt our operations compromise customer, employee, vendor and other data, and adversely affect our business, financial condition and results of operations.

We rely on the successful and uninterrupted functioning of our information technologies to securely manage operations and various business functions, and we rely on variousdiverse technologies to process, store and report information about our business, and to interact with customers, vendors and employees around the world. As with all large systems,environments, our information technology systems may be susceptible to damage, disruption or shutdown due to power outages, failures during the processnatural disaster, hardware of upgrading or replacing software hardware failures, computer viruses, cyber attacks, catastrophic events, telecommunications failures,failure, obsolescence, cyberattack, support infrastructure failure, user errors unauthorized access, andor malfeasance resulting in malicious or accidental destruction of information or functionality. We also maintainfunctionality, or other catastrophic events.
From time to time, we have been, and have accesswe will likely continue to sensitive, confidential or personal data or information that isbe, subject to privacy and security laws, regulations and customer controls. Despite our efforts to protect such sensitive, confidential or personal data or information, our facilities and systems and those of our customers and third-party service providers may be vulnerable to security breaches, misplaced or lost data, and programming and/or user errors that could lead to the compromising of sensitive, confidential or personal data or information.

cybersecurity-related incidents.

Information system damages, disruptions, shutdowns or compromises could result in production downtimes and operational disruptions, transaction errors, loss of customers and business opportunities, legal liability, regulatory fines, penalties or intervention, reputational damage, reimbursement or compensatory payments, and other costs, any of which could have a material adverse effect on our business, financial position and results of operations. Although we attempt to mitigate these risks by employing a number of technical and process-based measures, including employee training, comprehensive monitoring of our networks and systems, and maintenance of backup and protective systems, our systems, networks, products, and services remain potentially vulnerable to advancedcyber threats. Furthermore, the tactics, techniques, and persistent threats.

We haveprocedures used by malicious actors to obtain unauthorized access to information technology systems and networks change frequently and often are not recognizable until launched against a significant amount of goodwill and other intangible assets and a write down would negatively impact operating results and shareholders’ equity.

At December 31, 2017, the carrying value of our goodwill and intangible assets was approximately $1.6 billion. We are requiredtarget. Accordingly, we may be unable to evaluate our goodwill amounts annually,anticipate these techniques or more frequently when evidence of potential impairment exists. The impairment test requires us to analyze a number of factors and make estimatesimplement adequate preventative measures. It is possible that require judgment. As a result of this testing, we havemay in the past recognized goodwill impairment charges,future suffer a criminal attack whereby unauthorized parties gain access to our information technology networks and systems, including sensitive, confidential or proprietary data, and we have identified two reporting units that currently are at riskmay not be able to identify and respond to such an incident in a timely manner.

A security breach of a significant future impairment charge if actual results fall short of expectations. Future changes in the cost of capital, expected cash flows, changes in our business strategy, and external market conditions, among other factors, could require us to record an impairment charge for goodwill, which could lead to decreased assets and reduced net income. If a significant write down were required, the charge couldcustomer, employee, supplier or company information may have a material adverse effect on our business, financial condition and results of operations.
We maintain and have access to sensitive, confidential, proprietary and personal data and information that is subject to privacy and security laws, regulations and customer controls. This data and information is subject to the risk of intrusion, tampering and theft. Although we develop and maintain systems to prevent such events from occurring, the development and maintenance of these systems is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated. Moreover, despite our efforts to protect such sensitive, confidential or personal data or information, our facilities and systems and those of our customers, suppliers and third-party service providers may be vulnerable to security breaches, misplaced or lost data, and programming and/or user errors that could lead to the compromise of sensitive, confidential, proprietary or personal data and information. Similar security threats exist with respect to the IT systems of our lenders, suppliers, consultants, advisors and other third parties with whom we conduct business. Additionally, we provide confidential, proprietary and personal information to third parties when it is necessary to pursue business objectives and there is a risk that the confidentiality of data held by third parties may be compromised.
We continue to see increased regulation of data privacy and security and the adoption of more stringent subject matter specific state laws and national laws regulating the collection and use of data, as well as security and data breach obligations – including, for example, the General Data Protection Regulation in the EU, the Cyber Security Law in China, the General Data Protection Law in Brazil, the state of California's California Consumer Privacy Act of 2018 and California Privacy Rights Act of 2020, and additional state privacy and data protection laws in Virginia and Colorado, each of which will come into full effect in 2023. It is likely that new laws and regulations will continue
16 FORM 10-K SONOCO 2021 ANNUAL REPORT

to be adopted in the United States and internationally, and existing laws and regulations may be interpreted in new ways that would affect our business. Although we take reasonable efforts to comply with all applicable laws and regulations, the uncertainty and changes in the requirements of multiple jurisdictions may increase the cost of compliance, reduce demand for our services, restrict our ability to offer services in certain locations, and jeopardize business transactions across borders.
As a result of potential cyber threats and existing and new data protection requirements, we have incurred and expect to continue to incur ongoing operating costs as part of our efforts to protect and safeguard our sensitive, confidential, proprietary and personal data and information, and the sensitive, confidential, proprietary and personal data and information of our customers, suppliers and third-party service providers. These efforts also may divert management and employee attention from other business and growth initiatives. Failure to provide adequate privacy protections and maintain compliance with the new data privacy laws could result in interruptions or damage to our operations, legal or reputational risks, create liabilities for us, subject us to sanctions by national data protection regulators and result in significant penalties, and increase our cost of doing business, all of which could have a material and adverse impact on our business, financial condition and results of operations.
Risks Related to Accounting, Human Resources, Financial and Business Matters and Taxation
Changes in pension plan assets or liabilities may reduce our operating results and shareholders’ equity.

We sponsor various defined benefit plans worldwide, and have an aggregate projected benefit obligation for these plans of approximately $0.5 billion as of December 31, 2021. The difference between defined benefit plan obligations and assets (the funded status of the plans) significantly affects the net periodic benefit costs and the ongoing funding requirements of the plans. Among other factors, changes in discount rates and lower-than-expected investment returns could substantially increase our future plan funding requirements and have a negative impact on our results of operations and cash flows. As of December 31, 2021, these plans hold a total of approximately $0.4 billion in assets consisting primarily of mutual funds and fixed income securities, funding a portion of the projected benefit obligations of the plans. If the performance of these assets does not meet our assumptions, or discount rates decline, the net underfunding of the plans may increase and we may be required to contribute additional funds to these plans, and our pension expense may increase, which could adversely affect operating results and shareholders’ equity.

Our largest pension plan, the Sonoco Pension Plan for Inactive Participants (the "Inactive Plan"), was terminated effective September 30, 2019. Following completion of a limited lump sum offering in April 2021, all remaining liabilities under the Inactive Plan were settled in June 2021 through the purchase of annuities. We made additional net contributions of $124 million to the Inactive Plan in 2021 in order to be fully funded on a termination basis at the time of the annuity purchase and recognized non-cash, pretax settlement charges totaling $539 million as the lump sum payouts and annuity purchases were made.
Our ability to attract, develop and retain talented executives, managers and employees is critical to our success.

Our ability to attract, develop and retain talented employees, including executives and other key managers, is important to our business. The experience and industry contacts of our management team and other key personnel significantly benefit us, and we need expertise like theirs to carry out our business strategies and plans. We also rely on the specialized knowledge and experience of certain key technical employees. The loss of these key officers and employees, or the failure to attract and develop talented new executives, managers and employees, could have a materiallymaterial and adverse effect on our business. Effective succession planning is also important to our long-term success, and failure to ensure effective transfer of knowledge and smooth transitions involving key officers and employees could hinder our strategic planning and execution.

Changes in U.S. generally accepted accounting principles (U.S. GAAP) and SEC rules and regulations could materially impact our reported results.
U.S. GAAP and SEC accounting and reporting changes are common and have become more frequent and significant in the past several years. These changes could have significant effects on our reported results when compared to prior periods and to other companies, and may even require us to retrospectively revise prior periods from time to time. Additionally, material changes to the presentation of transactions in the consolidated financial statements could impact key ratios that analysts and credit rating agencies use to rate our company, increase our cost of borrowing, and ultimately our ability to access the credit markets in an efficient manner.
Our financial results are based upon estimates and assumptions that may differ from actual results.
In preparing our consolidated financial statements in accordance with U.S. GAAP, we make estimates and assumptions that affect the accounting for and recognition of assets, liabilities, revenues and expenses. These estimates and assumptions must be made due to certain information used in the preparation of our financial statements that is dependent on future events, cannot be calculated with a high degree of precision from data available, or is not capable of being readily calculated based on generally accepted methodologies. We believe that accounting for long-lived assets, pension benefit plans, contingencies and litigation, and income taxes involves the more significant judgments and estimates used in the preparation of our consolidated financial statements. Actual results for all estimates could differ materially from the estimates and assumptions that we use, which could have a material adverse effect on our financial condition and results of operations.
We have a significant amount of goodwill and other intangible assets, and a write down would negatively impact our operating results and shareholders' equity.
At December 31, 2021, the carrying value of our goodwill and intangible assets was approximately $1.6 billion. We are required to evaluate our goodwill amounts annually, or more frequently when evidence of potential impairment exists. The impairment test requires us to analyze a number of factors and make estimates that require judgment. As a result of this testing, we have in the past recognized goodwill impairment charges, and we have identified one reporting unit that is currently at risk of a significant future impairment charge if actual results fall short of expectations. Future changes in the cost of capital, expected cash flows, changes in our business strategy, and external market conditions, among other factors, could require us to record an impairment charge for goodwill, which could lead to decreased assets and reduced net income. If a significant write down were required, the charge could have a material adverse effect on our operating results and shareholders' equity.


17 FORM 10-K SONOCO 2021 ANNUAL REPORT

Full realization of our deferred tax assets may be affected by a number of factors.

We have deferred tax assets, including U.S. and foreign operating loss carryforwards, capital loss carryforwards, employee and retiree benefit items, foreign tax credits, and other accruals not yet deductible for tax purposes. We have established valuation allowances to reduce those deferred tax assets to an amount that we believe is more likely than not to be realized prior to expiration of such deferred tax assets. Our ability to use these deferred tax assets depends in part upon our having future taxable income during the periods in which these temporary differences reverse or our ability to carry back any losses created by the deduction of these temporary differences. We expect to realize these assets over an extended period. However, if we were unable to generate sufficient future taxable income in the U.S. and certain foreign jurisdictions, or if there were a significant change in the time period within which the underlying temporary differences became taxable or deductible, we could be required to increase our valuation allowances against our deferred tax assets, which would increase our effective tax rate which could have a material adverse effect on our reported results of operations.

Our annual effective tax rate and the amount of taxes we pay can change materially as a result of changes in U.S. and foreign tax laws, changes in the mix of our U.S. and foreign earnings, adjustments to our estimates for the potential outcome of any uncertain tax issues, and audits by federal, state and foreign tax authorities.

As a large multinational corporation, we are subject to U.S. federal, state and local, and many foreign tax laws and regulations, all of which are complex and subject to significant change and varying interpretations. Changes in these laws or regulations, or any change in the position of taxing authorities regarding their application, administration or interpretation, could have a material adverse effect on our business, consolidated financial condition or results of our operations.

For example, in the U.S., the Biden administration has proposed several corporate tax increases, including raising the U.S. corporate income tax rate and greater taxation of international income, which, if enacted, could materially and adversely affect our tax liability. In addition, our products, and our customers’ products, are subject to import and excise duties and/or sales or value-added taxes in many jurisdictions in which we operate. Increases in these indirect taxes could affect the affordability of our products and our customers’ products, and, therefore, reduce demand.

Recently, international tax norms governing each country’s jurisdiction to tax cross-border international trade have evolved, and are expected to continue to evolve, due in part to the Base Erosion and Profit Shifting project led by the Organization for Economic Cooperation and Development (the “OECD”), an international association of 36 countries including the United States, and supported by the G20. Changes in these laws and regulations, or any change in the position of tax authorities regarding their application, administration or interpretation could adversely affect our financial results. In addition, a number of countries are actively pursuing changes to their tax laws applicable to multinational corporations.
Due to widely varying tax rates in the taxing jurisdictions applicable to our business, a change in income generation to higher taxing jurisdictions or away from lower taxing jurisdictions may also have an adverse effect on our financial condition and results of operations.

We make estimates of the potential outcome of uncertain tax issues based on our assessment of relevant risks and facts and circumstances existing at the time, and we use these assessments to determine the adequacy of our provision for income taxes and othertax-related accounts. These estimates are highly judgmental. Although we believe we adequately pro-

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videprovide for any reasonably foreseeable outcome related to these matters, future results may include favorable or unfavorable adjustments to estimated tax liabilities, which may cause our effective tax rate to fluctuate significantly.

In addition, our income tax returns are subject to regular examination by domestic and foreign tax authorities. These taxing authorities may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our transactions. If any tax authorities were to successfully challenge the tax treatment or characterization of any of our transactions, it could have a material adverse effect on our business, consolidated financial condition or results of our operations. Furthermore, regardless of whether any such challenge is resolved in our favor, the final resolution of such matter could be expensive and time consuming to defend and/or settle. Future changes in tax law could significantly impact our provision for income taxes, the amount of taxes payable, and our deferred tax asset and liability balances.

As further discussed in Note 13 to our December 31, 2017 financial statements included in Item 8 of this Form10-K, the IRS has previously notified us that it disagrees with our characterization of a distribution, and subsequent repayment, of an intercompany note in 2012 and 2013. If the IRS were to prevail, we could be required to make an adjustment to income for the affected years and pay a significant amount of additional taxes, which could have a material adverse effect on our results of operations and financial condition.

Challenges to, or the loss of, our intellectual property rights could have an adverse impact on our ability to compete effectively.

Our ability to compete effectively depends, in part, on our ability to protect and maintain the proprietary nature of our owned and licensed intellectual property. We own a large number of patents on our products, aspects of our products, methods of use and/or methods of manufacturing, and we own, or have licenses to use, all of the material trademark and trade name rights used in connection with the packaging, marketing and distribution of our major products. We also rely on trade secrets,know-how and other unpatented proprietary technology. We attempt to protect and restrict access to our intellectual property and proprietary information by relying on the patent, trademark, copyright and trade secret laws of the U.S. and other countries, as well asnon-disclosure agreements. However, it may be possible for a third party to obtain our information without our authorization, independently develop similar technologies, or breach anon-disclosure agreement entered into with us. Furthermore, many of the countries in which we operate do not have intellectual property laws that protect proprietary rights as fully as do laws in the U.S. The use of our intellectual property by someone else without our authorization could reduce or eliminate certain of our competitive advantages, cause us to lose sales or otherwise harm our business. The costs associated with protecting our intellectual property rights could also adversely impact our business.

In addition, we are from time to time subject to claims from third parties suggesting that we may be infringing on their intellectual property rights. If we were held liable for infringement, we could be required to pay damages, obtain licenses or cease making or selling certain products.

Intellectual property litigation, which could result in substantial cost to us and divert the attention of management, may be necessary to protect our trade secrets or proprietary technology or for us to defend against claimed infringement of the rights of others and to determine the scope and validity of others’ proprietary rights. We may not prevail in any such litigation, and if we are unsuccessful, we may not be able to obtain

any necessary licenses on reasonable terms or at all. Failure to protect our patents, trademarks and other intellectual property rights may have a material adverse effect on our business, consolidated financial condition or results of operations.

If we fail to continue to maintain effective internal control over financial reporting at a reasonable assurance level, we may not be able to accurately report our financial results, and may be required to restate previously published financial information, which could have a material adverse effect on our operations, investor confidence in our business and the trading prices of our securities.

Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud. Any inability to provide reliable financial reports or prevent fraud could harm our business. We are required to assess the effectiveness of our internal control over financial reporting annually, as required by Section 404 of the Sarbanes-Oxley Act. We need to maintain our processes and systems and adapt them as our business grows and changes. This continuous process of maintaining and adapting our internal controls and complying with Section 404 is expensive, time-consuming and requires significant management attention. As we grow our businesses and acquire other businesses, our internal controls will become increasingly complex and we may require significantly more resources. The integration of acquired businesses, including Ball Metalpack, into our internal control over financial reporting has required, and will continue to require, significant time and resources from our management and other personnel and will increase our compliance costs. Additionally, maintaining effectiveness of our internal control over financial reporting is made more challenging by the fact that we have over 160approximately 180 subsidiaries and joint ventures in 3332 countries around the world. As described in Item 9A of this Form10-K, management has concluded that our internal controls over financial reporting were effective as of December 31, 2017. There is no assurance that, in the future, material weaknesses will not be identified that would cause management to change its current conclusion as to the effectiveness of our internal controls. If we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we could be subject to regulatory scrutiny, civil or criminal penalties or litigation. In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect our financial condition, and we may be required to restate previously published financial information, which could have a material adverse effect on our operations, investor confidence in our business and the trading prices of our securities.

Several



18 FORM 10-K SONOCO 2021 ANNUAL REPORT

Risks Related to COVID-19
The direct and indirect results of the COVID-19 pandemic may adversely affect our operations, results of our operations and our financial condition.
Globally, the impact of the COVID-19 pandemic continues to evolve. Our operations and financial performance have continued to be negatively impacted to varying degrees during 2021. For example, consumer demand for certain food and household products retreated from the elevated levels of 2020 as the pantry stocking and panic buying phenomenon experienced in 2020 normalized in 2021. In addition, the supply chain constraints and labor shortages that were seen throughout the economy contributed to a negative price/cost relationship in 2021.
We expect that the future impact of COVID-19 on our operational and financial performance will depend on the behavior of the virus and the world's reaction to it, which are conducted by joint ventures that wehighly uncertain and cannot operate solelybe predicted. New variants such as Delta, Omicron, and others have caused and have the potential to cause further outbreak and economic disruption. Additionally, the effectiveness of vaccines and containment measures to mitigate the impacts of the virus on people's health and the economy could diminish resulting in decreased demand for our benefit.

Severalproducts and/or disruption to our operations. Recent indications of a resurgence of the virus in certain regions and the emergence of variants of the virus for which existing vaccines could be less effective have raised concerns about the re-imposition of local restrictions on business activity and a negative effect on consumer behavior that alone, or together, could impede the Company's business.

We have experienced, and may experience in the future, lower overall demand for certain of our operations are conducted through joint ventures. In joint ventures, we share ownershipproducts due to economic uncertainty and changing consumer behaviors driven by COVID-19 or reduced demand due to our customers’ supply chain issues. We have, and may continue to, experience strong headwinds related to higher supply chain costs and tight labor market due to the continued impacts of COVID-19. Inflation continues, and may continue in some instances, management of a company with one or more parties who may or may not have the same goals, strategies, priorities or resources as we do. In general, joint ventures are intendedfuture, to be operated forrampant resulting in higher commodity and other input costs. Our production capabilities may be disrupted if we are unable to secure sufficient supplies of raw materials, if significant portions of our workforce are unable to work effectively, including because of illness, government actions or other restrictions, or if we have periods of disruptions due to deep cleaning and sanitizing our facilities. An extended period of disruption to our served markets or global supply chains could materially and adversely affect our results of operations, access to sources of liquidity and overall financial condition. In addition, an extended global recession caused by the benefit of allco-owners, rather than for our exclusive benefit. Operating a business as a joint venture often requires additional organizational formalities as well as time-consuming procedures for sharing information, accounting and making decisions. In certain cases, our joint venture partners must agree in order for the applicable joint venture to take certain actions, including acquisitions, the sale of assets, budget approvals, borrowing money and granting liens on joint venture property. Our inability to take unilateral action that we believe is

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K15

in our best interests maypandemic would have an adverse impact on the Company's operations and financial condition.

On September 9, 2021, the Biden Administration announced a plan directing the Occupational Safety and Health Administration (“OSHA”) to issue an emergency temporary standard (“ETS”) requiring all private employers with 100 or more workers to mandate COVID-19 vaccinations or a weekly test for all employees. The ETS was issued on November 5, 2021. However, on January 13, 2022, the United States Supreme Court blocked the OSHA ETS from going into effect. There may be additional action required or enforcement on the part of OSHA as it relates to vaccination or testing policies. Although we cannot currently assess the impact of such potential future enforcement action by OSHA, such regulations or similar regulations in other jurisdictions could have a material and adverse effect on theour results of operations, financial performance of the joint venture and the return on our investment. In joint ventures, we believe our relationship with ourco-owners is an important factor to the success of the joint venture, and if aco-owner changes, our relationship may be adversely affected. In addition, the benefits from a successful joint venture are shared among theco-owners, so that we do not receive all the benefits from our successful joint ventures. Finally, we may be required on a legalcondition or practical basis or both, to accept liability for obligations of a joint venture beyond our economic interest, including in cases where ourco-owner becomes bankrupt or is otherwise unable to meet its commitments.

Material disruptions in our business operations could negatively affect our financial results.

Although we take measures to minimize the risks of disruption at our facilities, we may nonetheless from time to time encounter an unforeseen material operational disruption in one of our major facilities, which could negatively impact production and our financial results. Such a disruption could occur as a result of any number of events including but not limited to a major equipment failure, labor stoppages, transportation failures affecting the supply and shipment of materials, disruptions at our suppliers, fire, severe weather conditions and disruptions in utility services. These types of disruptions could materially adversely affect our earnings to varying degrees depending upon the facility, the duration of the disruption, our ability to shift business to another facility or find alternative sources of materials or energy. Any losses due to these events may not be covered by our existing insurance policies or may be subject to certain deductibles.

cash flows.

Item 1B. Unresolved staff comments

Staff Comments

There are no unresolved written comments from the SEC staff regarding the Company’s periodic or current 1934Exchange Act reports.

Item 2. Properties

The Company’s corporate offices are owned and operated in Hartsville, South Carolina. There are 90approximately 300 owned and 60 leased facilities used by operations in the Paper and Industrial Converted Products segment, 34 owned and 46 leased facilities used by operations in the Consumer Packaging segment, 7 owned and 17 leased facilities used by operations in the Display and Packaging segment, and 10 owned and 26 leased facilities used by the Protective Solutions segment. Europe,Company in 32 countries around the world. The majority of these facilities are located in North America. The most significant foreign geographic region in which the Company operates has 57 manufacturing locations.

is Europe, followed by Asia.

The Company believes that its facilities have been well maintained, are generally in good condition and are suitable for the conduct of its business. The Company does not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.
Item 3. Legal proceedings

Proceedings

The Company has been named as a potentially responsible party (PRP) at several environmentally contaminated sites not owned by the Company. All of the sites are also the responsibility of other parties. The Company’s liability, if any, is shared with such other parties, but the Company’s share has not been finally determined in most cases. In some cases, the Company has cost-sharing agreements with other PRPs relating to the sharing of legal defense costs and cleanup costs for a particular site. The Company has assumed, for accrual purposes, that the other parties to these cost-sharing agreements will perform as agreed. Final resolution of some of the sites is years away, and actual costs to be incurred for these 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 as of December 31, 2017,2021, cannot be determined.

As of December 31, 20172021 and 2016,2020, the Company had accrued $20.3accrued $7.4 million and $24.5$8.1 million, respectively,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 makes appropriate adjustments when warranted.

Fox River settlement

As previously disclosed, in January 2017, U.S. Paper Mills Corp. (U.S. Mills)

For further information about legal proceedings, a wholly owned subsidiary ofsee Note 16 to the Company, obtained Court approval of a final settlement of cost recovery claims made by Appvion, Inc. for $3.3 million. The settlement was paid during the first quarter of 2017, and related legal and professional fees totaling $0.4 million were paid during the course of 2017. All payments were made against previously established reserves and no additional expense was required to be recognized in 2017. As a resultCompany's Consolidated Financial Statements under Item 8 of this settlement becoming final, the Company and U.S. Mills have resolved all pending or threatened legal proceedings related to the Fox River matter, as well as any such proceedings known to be contemplated by governmental authorities.

Annual Report on Form 10-K.

Other legal matters

Legal Matters

Additional information regarding legal proceedingsproceedings is provided in Note 1416 to thethe Consolidated Financial Statements of this Annual Report on Form10-K.

Item 4. Mine safety disclosures

Safety Disclosures

Not applicable.


19 FORM 10-K SONOCO 2021 ANNUAL REPORT


PART II
 

16SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

PARTII

Item 5. Market for registrant’s common equity, related stockholder mattersRegistrant’s Common Equity, Related Stockholder Matters and issuer purchasesIssuer Purchases of equity securities

Equity Securities

The Company’s common stock is traded on the New York Stock Exchange under the stock symbol “SON.” As of December 31, 2017,2021, there were approximately 64,00079,000 shareholder accounts. Information required by Item 201(d) of RegulationS-K can be found in Part III, Item 12 of this Annual Report on Form10-K. The following table indicates

Although the high and low sales pricesultimate determination of whether to pay dividends is within the sole discretion of the Company’s common stock for each full quarterly period withinBoard of Directors and is based on a variety of factors, the last two yearsCompany currently plans to continue paying dividends consistent with historical practice as reported onearnings and the New York Stock Exchange, as well as cash dividends declaredCompany's liquidity permit. Dividends per common share:

share were $1.80 in 2021, $1.72 in 2020 and $1.70 in 2019. On February 9, 2022, the Company declared a regular quarterly dividend of $0.45 per common share payable on March 10, 2022, to shareholders of record on February 23, 2022.
    High  Low  Cash Dividends

2017

         

First Quarter

   $55.58   $51.87   $0.37

Second Quarter

   $54.00   $49.66   $0.39

Third Quarter

   $53.77   $47.10   $0.39

Fourth Quarter

   $55.77   $50.39   $0.39

2016

         

First Quarter

   $49.08   $36.56   $0.35

Second Quarter

   $50.13   $45.02   $0.37

Third Quarter

   $53.57   $49.10   $0.37

Fourth Quarter

   $55.47   $49.50   $0.37

son-20211231_g1.jpg

12/1612/1712/1812/1912/2012/21
Sonoco Products Company$100.00$103.92$107.11$128.02$127.04$127.71
S&P 500$100.00$121.83$116.49$153.17$181.35$233.41
Dow Jones US Containers & Packaging$100.00$119.02$97.06$124.80$151.18$167.76
 









20 FORM 10-K SONOCO 2021 ANNUAL REPORT


The Company made the following purchases of its securities during the fourth quarter of 2017:

2021:

Issuer purchases of equity securities

Period  

(a) Total Number of

Shares Purchased1

  

(b) Average Price

Paid per Share

  

(c) Total Number of

Shares Purchased

as Part of Publicly

Announced Plans or

Programs2

  

(d) Maximum

Number of Shares

that May Yet be

Purchased under the

Plans or Programs2

10/02/17 – 11/05/17

    4,320   $52.40    —    2,969,611

11/06/17 – 12/03/17

    667   $51.98    —    2,969,611

12/04/17 – 12/31/17

    1,761   $54.46    —    2,969,611

Total

    6,748   $52.90    —    2,969,611
Period
(a) Total Number of  
Shares Purchased1
(b) Average Price  
Paid per Share
(c) Total Number of  
Shares Purchased
as Part of Publicly
Announced Plans or
Programs
(d) Maximum
Number or Approximate Dollar Value of Shares
that May Yet be
Purchased under the
Plans or Programs1
10/04/21 - 11/07/21558,683 $58.81558,683 $163,529,035 
11/08/21 - 12/05/21417,508 $61.21417,508 $137,971,853 
12/06/21 - 12/31/21— $—— $137,971,853 
Total976,191 $59.84976,191 $137,971,853 
1A total of 6,748 common shares were repurchased in the fourth quarter of 2017 related to shares withheld to satisfy employee tax withholding obligations in association with the exercise of certain share-based compensation awards. These shares were not repurchased as part of a publicly announced plan or program.
21On February 10, 2016,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 5,000,000$350.0 million. On October 25, 2021, the Company entered into a Rule 10b5-1 Repurchase Plan (“Repurchase Plan") with a financial institution to repurchase outstanding shares of the Company’sCompany's common stock. Nostock pursuant to its Board authorized repurchase program. The Company repurchased and retired 976,191 shares were repurchasedfor $58.4 million during 2017. During 2016, a totalthe fourth quarter of 2,030,389 shares were repurchased under this authorization at a cost2021 prior to the termination of $100 million. Accordingly, at December 31, 2017, a total of 2,969,611 shares remain available for repurchase under this authorization.the Repurchase Plan's trading period on November 23, 2021.

The Company did not make any unregistered sales of its securities during 2017.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K17

2021.


Item 6. Selected financial data

The following table sets forth the Company’s selected consolidated financial information for the past five years. The information presented below should be read together with[Reserved]


Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis contains forward-looking statements, including, without limitation, statements relating to the Company's plans, strategies, objectives, expectations, intentions and resources. Such forward-looking statements should be read in conjunction with our disclosures under "Forward-Looking Statements" and under “Item 1A. Risk Factors” of this Form 10-K.
This section of this Form 10-K generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020. Discussions of 2020 items and year-to-year comparisons between 2020 and 2019 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of thisthe Company's Annual Report on Form10-K and for the Company’s historical Consolidated Financial Statements and the Notes thereto included in Item 8 of this Annual Report on Form10-K. The selected statement of income data and balance sheet data are derived from the Company’s Consolidated Financial Statements.

    Years ended December 31
(Dollars and shares in thousands except per share data)  2017 2016 2015 2014 2013

Operating Results

           

Net sales

   $5,036,650  $4,782,877  $4,964,369  $5,016,994  $4,861,657

Cost of sales and operating expenses

    4,630,932   4,351,452   4,531,188   4,616,104   4,487,184

Restructuring/Asset impairment charges

    38,419   42,883   50,637   22,792   25,038

Gain on disposition of business

    —   (104,292)   —   —   —

Interest expense

    57,220   54,170   56,973   55,140   59,913

Interest income

    (4,475)   (2,613)   (2,375)   (2,749)   (3,187)

Income before income taxes

    314,554   441,277   327,946   325,707   292,709

Provision for income taxes

    146,589   164,631   87,738   108,758   93,631

Equity in earnings of affiliates, net of tax

    (9,482)   (11,235)   (10,416)   (9,886)   (12,029)

Net income

    177,447   287,881   250,624   226,835   211,107

Net (income) attributable to noncontrolling interests

    (2,102)   (1,447)   (488)   (919)   (1,282)

Net income attributable to Sonoco

   $175,345  $286,434  $250,136  $225,916  $209,825

Per common share

           

Net income attributable to Sonoco:

           

Basic

   $1.75  $2.83  $2.46  $2.21  $2.05

Diluted

    1.74   2.81   2.44   2.19   2.03

Cash dividends

    1.54   1.46   1.37   1.27   1.23

Weighted average common shares outstanding:

           

Basic

    100,237   101,093   101,482   102,215   102,577

Diluted

    100,852   101,782   102,392   103,172   103,248

Actual common shares outstanding at December 31

    99,414   99,193   100,944   100,603   102,147

Financial Position

           

Net working capital

   $563,666  $546,152  $384,862  $461,596  $498,105

Property, plant and equipment, net

    1,169,377   1,060,017   1,112,036   1,148,607   1,021,920

Total assets

    4,557,721   3,923,203   4,013,685   4,186,706   3,967,322

Long-term debt

    1,288,002   1,020,698   1,015,270   1,193,680   939,056

Total debt

    1,447,329   1,052,743   1,128,367   1,245,960   974,257

Total equity

    1,730,060   1,554,705   1,532,873   1,503,847   1,706,049

Current ratio

    1.6   1.7   1.4   1.5   1.6

Total debt to total capital1

    45.6%   40.4%   42.4%   45.3%   36.3%

1Calculated as total debt divided by the sum of total debt and total equity.

year ended December 31, 2020.

Item 7. Management’s discussion and analysis of financial condition and results of operations

General overview

Overview

Sonoco is a leading manufacturerprovider of consumer packaging, industrial products and protective packaging products and provider of packaging services with 298approximately 300 locations in 3332 countries. As previously disclosed, Sonoco changed its operating and reporting structure in January 2021 and, as a result, realigned certain of its reportable segments effective January 1, 2021. The Company’s operations are reported in fourrevised structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other. The Company's former Protective Solutions and Display and Packaging segments were eliminated and the underlying businesses and their results were grouped into All Other or, in certain cases, subsumed into the remaining two segments. Changes to the Consumer Packaging segment include moving the Plastics - Healthcare Packaging and Industrial Plastics business units to All Other. The Industrial Paper Packaging segment, previously called Paper and Industrial Converted Products, remains unchanged except that it now includes the Company's fiber protective packaging business unit which was previously included in the Protective Solutions segment. All Other includes our healthcare and Protective Solutions.

protective packaging businesses, including Plastics - Healthcare, Sonoco ThermoSafe, consumer and automotive molded foam, retail security packaging, and paper amenities. Prior to the divestiture of the Company's global display and packaging operations in two separate transactions, the European contract packaging business on November 30, 2020 and the U.S. display and packaging business on April 4, 2021, these businesses were also included in All Other.

Generally, the Company serves two broadend-use markets, consumer and industrial, which, period to period, can exhibit different economic characteristics from each other. Geographically, in 2021 approximately 65% of sales were generated in the United States, 19%17% in Europe, 5%7% in Asia, 4% in Canada and 11%7% in other regions.

The Company is a market-share leader in many of its product lines, particularly in uncoated recycled paperboard, tubes, cores, cones and composite containers. Competition in most of the Company’s businesses is intense. Demand for the Company’s products and services is primarily driven by the overall level of consumer consumption of

non-durable goods; however, certain product and service groups are tied more directly to durable goods, such as appliances, automobiles and construction. The businesses that supply and/or service consumer product companies have tended to be, on a relative basis, more recession resistantless impacted by economic downturns than those that service industrial markets.

The primary objective of the Company’s enterprise strategy is to be the benchmark company for yield and stability in the packaging industry. Financially, the Company’s objective iskey objectives are to deliver averagegrow annual double-digit totalbase operating profit and to increase returns to shareholders over time. To meet that target,the long-term. Base operating profit is a non-GAAP financial measure reflecting adjustments to the reported GAAP operating profit for certain items. For an explanation of how and why the Company focusesuses such non-GAAP financial measures, and the types of adjustments made, see "Use of Non-GAAP Financial Measures" below. The Company intends to deliver on three major areas: driving profitable sales growth, improving marginsthese objectives by focusing its capital allocation strategy on increased internal investment into its core Consumer and leveragingIndustrial businesses and by consolidating around a uniform operating model to expand the Company’s competitive advantages while simplifying its structure to improve efficiency and effectiveness.
Key focus areas for the Company's operating strategy include:
> Being strategic with capital investments while maintaining a strong balance sheet
> Expanding sustainability excellence
> Expanding operational excellence
> Expanding commercial excellence
> Expanding supply chain excellence
> Executing structural transformation.

21 FORM 10-K SONOCO 2021 ANNUAL REPORT

COVID-19
Impact on Operating Results
While the social distancing response to COVID-19 has resulted in increased consumer demand for certain food and household products, COVID-19 had an overall negative impact on results in 2021 but to a much lesser extent than 2020. Consumer demand for certain food and household products retreated from the elevated levels of 2020 as the pantry stocking and panic buying phenomenon experienced in 2020 normalized in 2021. This retreat in the Consumer Packaging segment was more than offset by a return to pre-pandemic volume levels in our Industrial Paper Packaging segment. However, the supply chain constraints and labor shortages that were seen throughout the economy contributed to a negative price/cost relationship.
As the pandemic wanes, the Company expects sales volume, excluding acquisitions, to modestly increase. Sales volume of at-home food packaging is expected to continue to normalize while demand in other consumer market segments picks up. Volume in our Industrial Paper Packaging businesses as well as All Other is expected to improve. The Company expects COVID-19 induced and other inflationary pressures to flatten out in 2022 and for selling prices to improve resulting in a favorable price/cost relationship.
Financial Flexibility and Liquidity
Sonoco has maintained a strong balance sheet and substantial liquidity in the form of cash, cash equivalents and revolving credit facilities, as well as the ability to issue commercial paper and to access liquidity in the banking and debt capital markets. The following actions taken in 2021 largely related to the Company's efforts to reposition its cash balances and debt portfolio in anticipation of a waning of the COVID-19 pandemic:
•On April 5, 2021, the Company received cash proceeds totaling $79.7 million from the sale of its U.S. display and packaging business.
•On May 10, 2021, the Company paid $150 million in connection with an accelerated share repurchase agreement to repurchase shares of its common stock.
•On May 25, 2021, the Company repurchased $63.2 million of its outstanding 5.75% notes, due November 2040, for a total cash cost of $82.0 million.
•On May 25, 2021, upon maturity, the Company paid $177.8 million to retire its 1% Euro loan.
•On June 30, 2021, the Company entered into a new five-year $750 million, unsecured revolving credit facility which replaced an existing $500 million facility. Consistent with prior facilities, the new revolving credit facility supports the Company's $500 million commercial paper program.
•On August 1, 2021, the Company repaid its $250 million, 4.375% debentures without penalty ahead of their November 2021 maturity.
Following the actions above, at December 31, 2021, the Company had approximately $171 million in cash and cash equivalents on hand and $750 million in committed availability under its revolving credit facility, of which $401 million was available for draw down net of $349 million of outstanding commercial paper. At December 31, 2021, scheduled debt maturities in 2022 totaled approximately $412 million, including outstanding commercial paper. The Company believes cash on hand and available credit, combined with expected net cash flows generated from operating and investing activities, will provide sufficient liquidity to cover these and other cash flow needs of the Company over the course of 2022 and financial position. Operationally,beyond. For additional information concerning the Company’s goal isCompany's liquidity, including debt transactions occurring subsequent to December 31, 2021, see "Capital Resources" in this Form 10-K.
Health, Safety and Business Continuity
The health and safety of Sonoco’s associates, contractors, suppliers and the general public are a top priority. Included among the safety measures the Company implemented in consideration of COVID-19 are: conducting health screenings for personnel entering our operations, routinely cleaning high-touch surfaces, following social distancing protocols, prohibiting all non-critical business travel, and encouraging all associates who can to work from home when possible. Additionally, the Company maintains an internal site dedicated to the communication of COVID-related guidance and policies to our employees around the world.
Sonoco also has a Global Task Force to develop and implement business continuity plans to ensure its operations are as prepared as possible to be the acknowledged leader in high-quality, innovative, value-creating packaging solutions within targeted customer market segments.

Over the next threeable to four years, the Company aspirescontinue producing and shipping product to achieve base earnings before interest, taxes, depreciation and amortization (EBITDA) margins of 16% per year, and increase return on net assets employed to 11% or more, subject to the impacts of potential acquisitions (see “Use ofNon-GAAP financial measures” below). Although achieving these goals could

18SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

prove to be difficult, the Company believes it will be successful by focusing on the following: organic sales growth, including new product development and expansion in emerging international markets; strategic acquisitions; and margin enhancement through more effective customer relationship management, organizational design, indirect spend management, and improved manufacturing productivity,its customers without disruption. Sonoco has a diverse global supply chain and back office support processes.

to date has not experienced significant raw material or other supply disruptions.

Use ofnon-GAAP financial measures

Non-GAAP Financial Measures

To assess and communicate the financial performance of the Company, Sonoco management uses, both internally and externally, certain financial performance measures that are not in conformity with generally accepted accounting principles(“ (“non-GAAP” financial measures). Thesenon-GAAP financial measures reflect the Company’s GAAP operating results adjusted to remove amounts, including the associated tax effects, relating to restructuring initiatives, asset impairment charges, environmental charges, acquisition-relatedacquisition/divestiture-related costs, gains or losses from the dispositiondivestiture of businesses, excessearly extinguishment of debt, property insurance recoveries in excess of recorded losses, non-operating pension settlement charges,costs, certain income tax events and adjustments, and other items, if any, including other incometax-related adjustments and/or events, the exclusion of which management believes improves theperiod-to-period comparability and analysis of the underlying financial performance of the business. The adjustednon-GAAP results are identified using the term “base,” for example, “base earnings.”

Starting in the first quarter of 2022 and going forward, the Company will also include adjustments in these non-GAAP financial measures to exclude amortization expense on acquisition intangibles. This change is being made to better align the Company's definition of base earnings with those of its peers, better reflect the Company's operating performance, and increase the usefulness of such measures to the investing community.

The Company’s base financial performance measures are not in accordance with, nor an alternative for, measures conforming to generally accepted accounting principles and may be different fromnon-GAAP measures used by other companies. In addition, thesenon-GAAP measures are not based on any comprehensive set of accounting rules or 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 uses theconsistently applies its non-GAAP “base” performance measures presented herein and uses them for internal planning and forecasting purposes, to evaluate its ongoing operations, and to evaluate the ultimate performance of management and each business unit against plan/forecast all the way up through the evaluation of the Chief Executive Officer’s performance by the Board of Directors. In addition, these samenon-GAAP 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 thesenon-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Sonoco presents thesenon-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 use of such measures are that they do not reflect all period costs included in operating expenses and may not reflect financial results that are comparable to financial results of other companies that present similar costs differently. Furthermore, the calculations of thesenon-GAAP 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
22 FORM 10-K SONOCO 2021 ANNUAL REPORT

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 thenon-GAAP measures that exclude certain elements, as described above.

Restructuring and restructuring-related 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.

Similarly, non-operating pension expense is a recurring item. However, this expense is subject to significant fluctuations from period to period due to changes in actuarial assumptions, global financial markets (including stock market returns and interest rate changes), plan changes, settlements, curtailments, and other changes in facts and circumstances.

Reconciliations of GAAP to base results are presented on pages 2225 and 23 in conjunction26 in conjunction with management’s discussion and analysis of the Company’s results of operations. Whenever reviewing anon-GAAP financial measure, readers are encouraged to review the related reconciliation to fully understand how it differs from the related GAAP measure. Reconciliations are not provided fornon-GAAP measures related to future years due to the likely occurrence of one or more of the following, the timing and magnitude of which management is unable to reliably forecast: possible gains or losses on the sale of businesses or other assets, restructuring costs and restructuring-related asset impairment charges, acquisition-relatedacquisition/divestiture-related costs, and the tax effect of these items and/or other incometax-related events. These items could have a significant impact on the Company’sCompany's future GAAP financial results.

2017 overview

2021 Overview
Management's primary focus areas in 2021 were managing through challenges of the COVID-19 pandemic, generating profitable growth, improving margins, and 2018 outlook

Despite lowenhancing the Company's sustainability. Overall, management was expecting relatively flat net sales. Divestitures and acquisitions were expected to have a net negative impact as sales lost due to the divestiture of the Company's European contract packaging business were expected to be greater than the full-year impact of sales added by 2020 acquisitions. This net sales decrease was expected to be mostly offset by an organic volume increase of approximately 2.0%. Overall, the Company anticipated a negative price/cost relationship as the prices of key raw materials, such as recycled fiber and plastic resins, and freight costs were expected to rise. Manufacturing and other productivity gains were expected to offset a significant portion of the negative price/cost impact and projected increases in labor and other costs. The Company expected modest gross profit margin improvement while base operating profit as a percent of sales was expected to remain flat.

In line with expectations, divestitures, net of acquisitions, decreased sales by $337.2 million. However, the Company exceeded its organic growth rates in manyprojection which, adjusted for the disposition of the global display and packaging business, was 2.9%. This growth combined with increased selling prices, mostly implemented to recover rising raw material and other costs, led to an overall sales increase of 6.7%.
GAAP operating profit increased $129.0 million from 2020 largely driven by lower restructuring and asset impairment charges as well as a non-recurring loss on the 2020 sale of the Company’s served marketsEuropean contract packaging business. In 2021, the Company recorded after-tax asset impairment and volatile raw material costs, Sonoco reported improved resultsrestructuring charges of $8.8 million compared to $112.7 million in 2017, posting year-over-year improvements in our Paper and Industrial Converted Products and Consumer Packaging segments. Operating profit improved $24.8 million, or 19.1 percent, year-over-year, in2020. The 2020 charges were largely attributable to its Plastics - Food thermoforming operations on the Paper and Industrial Converted Products segment and $10.0 million, or 4.1 percent, in our Consumer Packaging segment. The performance of our Protective Solutions and Display and Packaging segments fell short of expectations in 2017 as both posted year-over-year declines in operating profit. Display and Packaging experienced significant startup costs related to a new pack center near Atlanta, Georgia, while Protective Solutions struggled with decreased volumes, specifically in automotive components. On a company-wide basis, gains from a positive overall price/cost relationship (the relationshipwest coast of the changeUnited States and in sales pricesMexico. Despite the increase in GAAP operating profit, total segment operating profit (referred to as base operating profit) decreased 2.2%. This decline was driven by a negative price/cost environment, increases in labor and other costs, and the change in costsnegative impact of materials, energy and freight), manufacturing productivity improvements, and lower management incentivesdivestitures (net of acquisitions). These negative factors were only partially offset by declines in volume/mix,productivity improvements and higher labor, maintenancevolumes.
Gross profit in 2021 was $1,061.9 million, compared with $1,046.3 million in 2020. Despite the small increase, gross profit as a percentage of sales declined to 19.0%, compared to 20.0% in 2020. This margin percentage reduction was the result of a negative price cost environment as the Company was unable to fully recover rising material and other operating costs. Although these netGAAP selling, general and administrative (SG&A) expenses increased $29.7 million driven by more-normalized expenses for medical benefits, increased gross profit year over year, changes in the mix of business,strategic information technology activity, and higher acquisition and divestiture transaction costs. Despite this increase, SG&A expenses as well as higher raw material costs, increased costa percentage of sales disproportionately to sales. As a result, consolidated gross profit margin for 2017 declined to 18.8%were flat in 2021 compared to 19.6%2020.
Pursuant to a resolution approved by the Company's Board of Directors, the Sonoco Pension Plan for Inactive Participants (the "Inactive Plan") was terminated effective September 30, 2019. Following completion of a limited lump-sum offering in 2016.

Current year Net Income AttributableApril 2021, the Company settled all remaining liabilities under the Inactive Plan through the purchases of annuities in June 2021. The Company made additional contributions to Sonoco (GAAP earnings) declined $111.1the Inactive Plan totaling approximately $124 million or 38.8%, year over year. The decline was primarily driven by pensionin 2021 in order to be fully funded on a termination basis at the time of the annuity purchase.

Excluding settlement charges in 2017 totaling $20.2of $550.7 million,after-tax, and a $51.3 million net tax charge related to the enactment of the U.S. Tax Cuts and Jobs Act (Tax Act). Prior year results included a $49.3 million gain, after tax, related to the sale of the Company’s rigid plastics blow molding operations. Base earnings, which exclude the previously mentioned current year charges, the prior year gain from the sale of the rigid plastics blow molding operations, as well as certain other items of income and expense, as more fully described within this Item under “Use ofNon-GAAP financial measures” and reconciled within this Item under “Reconciliations of GAAP toNon-GAAP financial measures,” improved $4.5 million, or 1.6%, year over year.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K19

Key expectations for 2017 were that overall volumes would increase by around 2%, with volumes in Protective Solutions and Display and Packaging expected to increase at higher rates, price/cost would be positive, and that overall productivity would be strong enough to offset the expected inflation in labor and other costs, except for increases in pension and post-retirement expense. Volume was essentially flat overall as modest declines in Global Rigid Paper Containers, Protective Packaging and recycling were partially offset by gains in Paper, Plastics and Display and Packaging. Reported sales were up 5.3% from a combination of higher selling prices in response to higher raw material costs, the positive impact of acquisitions net of dispositions, and the translation impact of a weaker dollar. Offsetting the earnings impact of lower than expected volume, the Company was able to achieve a stronger than expected positive price/cost relationship in many of its businesses, aided by the timing and magnitude of certain raw material cost changes together with procurement productivity gains. Although manufacturing productivity improvements for the year fell short of expectations, the results of our fixed cost productivity and cost management efforts were better than expected and partially offset inflation in labor and other costs.

Pensionrecorded 2021 pension and postretirement benefit expenses of approximately $44.9 million, compared with $58.0 million during 2020. The decreased expense was primarily the result of recognizing only a partial year of expenses for the year were approximately $33.2 million higherInactive Plan due to its settlement in 2017 than 2016, driven primarily by settlement charges related to lump sum payments and purchases of annuities for certain plan participants.June 2021. The aggregate net unfunded position of the Company’s various defined benefit plans decreased from $447.3to $97 million at the end of 2016, to $355.22021 compared with $294 million at the end of 2017.2020. This decrease reflects current-year contributions and investment returns as well as lower plan liabilities resulting from higher year-over-year discount rates.

Net (loss)/income attributable to Sonoco (GAAP earnings) was largely driven by$(85.5) million for the strong market performanceyear ended December 31, 2021, compared with $207.5 million for the year ended December 31, 2020, a year-over-year decrease of plan assets$(292.9) million, reflecting the above-mentioned pension settlement charges in 2021. GAAP earnings represented (1.5)% of sales in 2021 compared to 4.0% of sales in 2020.
Although base operating profit declined somewhat, base earnings attributable to Sonoco increased 3.0%, or $10.2 million, year over year, reflecting lower net interest expense and contributions to the plans in 2017, partially offset by the impact ofa lower discount rates on plan liabilities.

effective base income tax rate.

The effective tax rate on GAAP earnings was 9.3 percentage points higher than41.9%, compared with 20.7% in 2020, and the prior year while theeffective tax rate on base earnings was 0.5 percentage points23.6%, compared with 25.1% in 2020. The higher than in 2016. The increase in the2021 GAAP effective tax rate was driven by net charges related to the enactmentprimarily resulted from a combination of the Tax Act. The modest increase inregular tax benefit recognized on the base effectiveCompany's reported pretax loss together with a discrete tax rate was due to less benefit from the U.S. manufacturer’s deduction,realization of additional foreign tax credits generated by an amendment of the Company's 2017 US income tax return.
During 2021, the Company made significant progress on Project Horizon, a $125 million project to transform the corrugated medium machine in Hartsville, South Carolina, to produce uncoated recycled paperboard ("URB"). Project Horizon also includes a new finished goods warehouse on the Hartsville campus as well as from other domestic tax adjustments, partially offset by greater benefit from distributioninfrastructure improvements to the Hartsville paper manufacturing complex. Project Horizon began in the last half of earnings between high-2020 andlow-tax jurisdictions is expected to be completed in the third quarter of 2022. The new URB machine is being designed with the goal of being the largest and lowest-cost producer of URB in the world, with a targeted annual production capacity of 180,000 tons, and capable of producing a wide range of high-value paper grades to service the Company's Industrial Paper Packaging businesses and external trade customers. Project Horizon is expected to drive significant annualized cost savings beginning in 2023.
On April 4, 2021, the Company completed the sale of its U.S. display and packaging business, part of the All Other group of businesses, to Hood Container Corporation for $80.0 million 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 eight manufacturing and fulfillment facilities and four sales and design centers.
23 FORM 10-K SONOCO 2021 ANNUAL REPORT

On December 19, 2021, the Company entered into a definitive agreement to acquire Ball Metalpack Holding, LLC ("Ball Metalpack"), a leading manufacturer of sustainable metal packaging for food and household products and the changelargest aerosol can producer in treatmentNorth America, for $1.35 billion in cash subject to customary adjustments, including for working capital, cash and indebtedness. Ball Metalpack was formed in 2018 and consists of eight manufacturing plants in the United States, and is headquartered in Broomfield, Colorado. This acquisition fits the Company's strategy of investing in its core businesses as it complements our largest Consumer Packaging franchise – global rigid paper packaging. In addition, it further expands the Company's sustainable packaging portfolio with metal packaging. The acquisition of Ball Metalpack was completed on January 26, 2022. See Note 20 to the Consolidated Financial Statements for additional information.
The Company generated $298.7 million in cash from operations during 2021, compared with $705.6 million in 2020. The primary drivers of the excessdecrease were the cash contributions to the Inactive Plan in 2021 to fully fund the plan prior to its settlement, and higher levels of working capital driven by increased business activity, inflation, and supply chain dynamics that affected customer demand and resulted in fluctuating inventory levels. Cash generated from operations also declined due to the payment of a portion of social security taxes previously deferred pursuant to the CARES Act and increased cash paid for taxes as the tax benefit from share-based compensation resultingthe 2021 funding of the Inactive Plan was deducted on the Company's 2020 tax return.
Acquisitions and Divestitures
Acquisitions
The Company completed four acquisitions during 2021 at a net cash cost of $20.7 million. On December 30, 2021, the Company completed the acquisition of a recycling facility from American Recycling of Western North Carolina, LLC, a privately held company, for total cash consideration of $6.3 million. The facility, located in Asheville, North Carolina, primarily services western North Carolina and upstate South Carolina for the processing of recycled materials. On November 8, 2021, the Company completed the acquisition of D&W Paper Tube Inc., a privately owned manufacturer of paper tubes and cardboard cores, serving the carpet and textile industries and consisting of two manufacturing facilities in Chatsworth, Georgia, for total cash consideration of $12.8 million. On August 3, 2021, the Company completed the acquisition of Allied Packaging, a privately owned manufacturer of paper packaging and related manufacturing equipment, consisting of a single manufacturing facility in Sydney, Australia, for total cash consideration of $0.8 million, and on March 8, 2021, the Company completed the acquisition of TuboTec, a small tube and core operation in Brazil, for total cash consideration of $0.8 million. The financial results of all these acquired operations are included in the Company's Industrial Paper Packaging segment from the adoptiondate acquired.
As discussed above, on December 19, 2021, the Company entered into a definitive agreement to acquire Ball Metalpack. The acquisition of ASU2016-09 in 2017.Ball Metalpack was completed on January 26, 2022. See Note 220 to the Consolidated Financial Statements for further information about this new accounting standard.

The Company generated $349.4 million in cash from operations during 2017, compared with $398.7 million in 2016. The majority of the year-over-year decrease is attributable to a $50 million voluntary contribution to the Company’s U.S. qualified defined benefit pension plan in the fourth quarter of 2017 and timing of payments and collection of receivables, partially offset by lower year-over-year income tax payments. Cash flow from operations is expected to be between $560 and $580 million in 2018.

Outlook

In 2018, management’s focus will be on driving synergies related to the businesses acquired in 2017, accelerating organic growth, improving manufacturing productivity and using the Company’s strong financial position to make strategic acquisitions primarily aimed at its targeted growth areas of thermoforming, flexibles and protective packaging, along with select consolidating industrial opportunities primarily in emerging markets. The Company has identified a number of targeted growth projects, the majority of which fall within its Consumer Packaging, Display and Packaging, and Protective Solutions segments and emerging markets that are expected to help drive

organic growth. In addition, a key area of focus will be on ramping up production and improving operating efficiency at the Company’s new contract packaging services center near Atlanta, Georgia. Expected cost increases in raw materials, particularly tinplate steel and old corrugated containers (OCC), could create pressure on reported earnings. An offsetting factor could be the realization of forecasted declines in the value of the US dollar which would increase the reported earnings of our foreign operations. In large part, productivity efforts will be focused on reducing our operations’unit-cost-to-produce through the continued internal roll out of the Sonoco Performance System, our systematic approach to operational excellence.

Management expects overall volume in 2018 to increase approximately 2%. Although the Company has projected that overall price/cost will be positive in 2018, the likelihood of continued volatility in key raw material prices could make pricing for their recovery more challenging. Manufacturing productivity is expected to more than offset the projected increases in laboracquisition and other costs.

Excluding thenon-recurring settlement charges recognized in 2017, the Company projects total benefit plan expense to be approximately $8 million lower in 2018 than in 2017. This anticipated decrease is primarily due to greater expected returns on plan assets due to a higher asset base. Partially offsetting this favorable impact is the effect of lower discount rates. Total contributions in 2018 to the Company’s domestic and international pension and postretirement plans are expected to be approximately $38.5 million.

In consideration of the above factors, management is projecting overall margins for both gross profit and base EBIT to improve modestly over 2017 levels.

Absent any additional borrowings in 2018 from acquisition activity, net interest expense is expected to increase approximately $3 million driven by higher average annual debt balances from funding 2017 acquisitions. The consolidated effective tax rate on base earnings is expected to be between 26% and 27% in 2018 compared with 31.1% in 2017. The anticipated year-over-year decline is driven by the enactment of the Tax Act.

The Company does not provide projected GAAP earnings results due to the likely occurrence of one or more of the following, the timing and magnitude of which we are unable to reliably forecast: possible gains or losses on the sale of businesses or other assets, restructuring costs and restructuring-related impairment charges, acquisition-related costs, and the income tax effects of these items and/or other incometax-relatedsubsequent events. These items could have a significant impact on the Company’s future GAAP financial results.

Acquisitions and dispositions

Acquisitions

The Company completed two acquisitions during 2017 at a cost of $383.8 million, net of cash acquired. On March 14, 2017, the Company completed the acquisition of Packaging Holdings, Inc. and subsidiaries, including Peninsula Packaging LLC (“Packaging Holdings”), for $218.8 million, net of cash acquired. Packaging Holdings manufactures thermoformed packaging for a wide range of whole fresh fruits,pre-cut fruits and produce, prepared salad mixes, as well as baked goods in retail supermarkets from five manufacturing facilities, including four in the United States and one in Mexico. The Company financed the transaction with a combination of cash and borrowings, including a $150,000 three-year term loan. The acquisition of Packaging Holdings is expected to add approximately $190 million of annual sales in the Company’s Consumer Packaging segment. On July 24, 2017, the Company completed the acquisition of Clear Lam Packaging, Inc. (“Clear Lam”) for $165.0 million net of cash acquired. Final consideration will be subject to an

Divestitures

20SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

adjustment for working capital, which is expected to be completed by the end of the first quarter of 2018. Clear Lam manufactures high barrier flexible and forming films used to package a variety of products for consumer packaged goods companies, retailers and other industrial manufacturers, with a focus on structures used for perishable foods. It has production facilities in Elk Grove Village, Illinois, and Nanjing, China. The Company financed a portion of the transaction with $100 million in borrowings from a $250 million five-year term loan with the remaining purchase price funded from available short-term credit facilities. The acquisition of Clear Lam is expected to add approximately $140 million of annual sales in the Company’s Consumer Packaging segment.

The Company completed four acquisitions during 2016 at a cost of $88.6 million, net of cash acquired. On June 24, 2016, the Company completed an acquisition in its Paper and Industrial Converted Products segment of a small tube and core business in Australia for $0.9 million in cash. On August 30, 2016, the Company completed the acquisition in its Protective Solutions segment of the temperature-controlled cargo container assets, licenses, trademarks, and manufacturing rights from AAR Corporation. Total consideration for this business was $6.0 million consisting of a current cash payment of $3.0 million,non-contingent deferred cash consideration of $2.0 million, and contingent consideration valued at $1.0 million. Also in the Protective Solutions segment, Laminar Medica (“Laminar”), a privately held specialty medical products company based in the U.K., was acquired on September 19, 2016 for $17.2 million, net of cash acquired. On November 1, 2016, the Company completed the acquisition in its Consumer Packaging segment of Plastic Packaging Inc. (“PPI”), a privately held Hickory,NC-based flexible packaging company for $67.6 million, net of cash acquired. Founded in 1957, PPI specializes inshort-run, customized flexible packaging for consumer brands in markets including: food products (i.e. frozen foods, baked goods, seafood), pet products (i.e. dry food, bird seed, litter), confection (i.e. seasonal promotions, heat-sealed chocolate packaging, hard and soft candy), and health and personal care (i.e. nutraceuticals, diapers, tissues/wipes).

The Company completed two acquisitions during 2015 at an aggregate cost of $21.2 million, of which $17.4 million was paid in cash. On April 1, 2015, the Company acquired a 67% controlling interest in Graffo Paranaense de Embalagens S/A (“Graffo”), a flexible packaging business located in Brazil. Graffo serves the confectionery, dairy, pharmaceutical and tobacco markets in Brazil with approximately 230 employees. Total consideration paid for Graffo was approximately $18.3 million, including cash of $15.7 million, and assumed debt of $2.6 million. On September 21, 2015, the Company acquired the high-density wood plug business from Smith Family Companies, Inc., in Hartselle, Alabama. Total consideration for the acquisition was $2.9 million, including cash of $1.8 million and a contingent purchase liability of $1.1 million. The contingent liability payment of $1.1 million was paid in September 2017, upon the second anniversary of the acquisition.

Dispositions

On November 7, 2016,30, 2021, the Company completed the sale of its rigid plastics blow moldingPlastics - Food thermoforming operation in Wilson, North Carolina to Placon for net cash proceeds of $3.5 million, resulting in the recognition of a gain on the sale of $0.1 million, before tax.

On April 4, 2021, the Company completed the divestiture of its U.S. display and packaging business, part of the All Other group of businesses, to Hood Container Corporation for $80 million 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 to Amcor Rigid Plastics USA, LLCincluded eight manufacturing and Amcor Packaging Canada, Inc. for approximately $280fulfillment facilities and four sales and design centers. Net cash proceeds of $79.7 million were received on April 5, 2021. The final working capital settlement occurred in the third quarter of 2021 with the Company receiving netadditional cash proceeds of $271.8$2.0 million and the buyer assuming certain liabilities totaling $0.8 million. In conjunction with the sale,As a result, the Company recognized a gainnet loss on the disposition, netsale of associated fees, of $104.3 million. The Company’s rigid plastics blow molding operations included seven manufacturing facilities in the U.S. display and Canada with approximately 850 employees producing containers servingpackaging business totaling $2.8 million, before tax.
The divestiture of the personal careU.S. display and foodpackaging business was preceded by the November 30, 2020 divestiture of the Company's European display and

beverage markets. The disposition of these operations is expected to negatively impact the 2017 year-over-year sales comparison by approximately $175 million. packaging business. The decision to sell its global display and packaging businesses was part of the blow molding operations was madeCompany's efforts to simplify its operating structure to focus on growing its core Consumer and provide resourcesIndustrial packaging businesses around the world. These sales are not expected to further enhance, the Company’s targeted growth businesses, including flexible packaging, thermoformed rigid plastics, and temperature-assurance packaging. This sale did not notably affect consolidated operating margin percentages, for the Company’s Consumer Packaging segment, nor did itdo they represent a strategic shift for the Company havingthat will have a major effect on the entity’s operations and financial results.

Consequently, the sales did not meet the criteria for reporting as discontinued operations. The net proceeds from the sales were used for general corporate purposes.

The Company continually assesses its operational footprint as well as its overall portfolio of businesses and may consider the divestiture of plants and/or business units it considers to be suboptimal or nonstrategic. See Note 3 to the Consolidated Financial Statements for further information about acquisitionacquisitions and disposition activities.

divestitures.

Restructuring and asset impairment charges

Asset Impairment Charges

Due to its geographic footprint (298(approximately 300 locations in 3332 countries) and the cost-competitive nature of its businesses, the Company is constantly seeking the mostfrequently seeks more cost-effective means and structurestructures to serve its customers, to improve profitability, 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 year to year depending upon the scope and location of the restructuring activities.

24 FORM 10-K SONOCO 2021 ANNUAL REPORT

The following table recapssummarizes the impact of restructuring and asset impairment charges onfor each of the Company’s net incomeyears presented:
 Year Ended December 31,
Dollars in thousands202120202019
Restructuring and restructuring-related asset impairment charges$9,176 $67,729 $44,819 
Other asset impairments5,034 77,851 15,061 
Restructuring/Asset impairment charges$14,210 $145,580 $59,880 
During 2021, the Company recognized severance charges for employees terminated as a result of various plant closures, employees impacted by Project Horizon, and employees whose positions were eliminated in conjunction with the periods presented (dollarsCompany's ongoing organizational effectiveness efforts. In addition, the Company recognized gains from the sale of real estate in thousands):

  Year Ended December 31
   2017 2016 2015

Exit costs:

      

2017 Actions

  $14,646  $—  $—

2016 Actions

   1,795   30,930   —

2015 and Earlier Actions

   1,961   4,831   26,229

Asset impairments:

   20,017   7,122   24,408

Total restructuring/asset impairment charges

  $38,419  $42,883  $50,637

Income tax benefit

   (13,064)   (7,520)   (22,641)

Impact of noncontrolling interests, net of tax

   (71)   (161)   (93)

Total impact of restructuring/asset impairment charges, net of tax

  $25,284  $35,202  $27,903

the Industrial Paper Packaging segment and gains from the sale of other assets impaired in the prior year as a result of consolidations in the Company's Plastics - Food thermoforming operations. The Company recognized other asset impairment charges totaling $5.0 million in the year ended December 31, 2021. These charges consisted of fixed asset impairments in the Company's Plastics - Food thermoforming operations, part of the Consumer Packaging segment, and in the temperature-assured packaging business, part of the All Other group of businesses.

During 2017,2020, the Company announced the closures of a paper mill in Canada, a paper machine in the United States, a cone operation in Europe and four tube and core plants, one in Europe and three in the United States (all part of the Industrial Paper Packaging segment); and the closure of an expanded foam protective packaginga paperboard specialties plant in the United States and five tubes and cores plants – three(part of the All Other group of businesses). Restructuring actions in the United States, one in Belgium, and one in China. Asset impairment charges recorded in 2017Consumer Packaging segment included a $17.8 million charge in the fourth quarter of 2017 recognized as a result of the Company’s decision to shut down its #9 boiler in the Hartsville, South Carolina manufacturing complex. In addition, the Company recognized severance charges throughout 2017 related to the elimination of approximately 255 positions in conjunction with the Company’s ongoing organizational effectiveness efforts.

During 2016, the Company announced the closure of four tubes and cores plants—two graphic design operations, one in the United States one in Canada, one in Ecuador, and one in Switzerland. The Company closedthe United Kingdom, and the consolidation in the Company's Plastics - Food thermoforming operations on the west coast of the United States and in Mexico. This consolidation resulted in the closure of a packaging services centermanufacturing facility in the United States and the conversion of a manufacturing facility in Mexico into a warehouse and a fulfillment service centerdistribution center. During the fourth quarter of 2020, the Company recognized other asset impairments totaling $77.9 million on certain long-lived, intangible, and right of use assets, primarily in Brazil. The Company also began manufacturing rationalization efforts in its Reels division, and completed the sales of a paper mill in France and a retail security packaging plant in Puerto Rico.Company's Plastics - Food thermoforming operations. In addition, the Company continued to realign its cost structure, resulting in the elimination of approximately 180275 positions.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K21

During 2015, the Company announced the closure of six rigid paper facilities—two in the United States, one in Canada, one in Russia, one in Germany, and one in the United Kingdom; the closure of a production line at a thermoforming plant in the United States; and the sale of a portion of its metal ends and closures business in the United States. Restructuring actions also included the closures of a tubes and cores plant, a recycling business, and a printed backer card facility in the United States. During 2015, the Company also recognized asset impairment charges related to the planned sale of a paper mill in France and eliminated approximately 235 positions worldwide in conjunction with the Company’s organizational effectiveness efforts.

The Company expects to recognize future additional costs totaling approximately $3.6$2.0 million in connection with previously

announced restructuring actions. The Company believes that the majority of these charges will be incurred and paid by the end of 2018.2022. The Company regularly evaluates its cost structure, including its manufacturing capacity, and additional restructuring actions are likely to be undertaken. Restructuring and asset impairment 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 Company operates.

See Note 4 to the Consolidated Financial Statements for further information about restructuring activities and asset impairment charges.

Reconciliations of GAAP tonon-GAAP financial measures

Non-GAAP Financial Measures

The following tables reconcile the Company’snon-GAAP financial measures to their most directly comparable GAAP financial measures for each of the years presented:

   For the year ended December 31, 2017
Dollars and shares in thousands, except per share data  GAAP 

Restructuring/

Asset

Impairment

 

Acquisition

Related

Costs

  Other
Adjustments (1)		 Base

Income before interest and income taxes

   $367,299  $38,419  $13,790   $30,482  $449,990

Interest expense, net

    52,745   —   —    —   52,745

Income before income taxes

   $314,554  $38,419  $13,790   $30,482  $397,245

Provision for income taxes

    146,589   13,064   3,841    (40,123)   123,371

Income before equity in earnings of affiliates

   $167,965  $25,355  $9,949   $70,605  $273,874

Equity in earnings of affiliates, net of tax

    9,482   —   —    581   10,063

Net income

   $177,447  $25,355  $9,949   $71,186  $283,937

Less: Net (income) attributable to noncontrolling interests, net of tax

    (2,102)   (71)   —    —   (2,173)

Net income attributable to Sonoco

   $175,345  $25,284  $9,949   $71,186  $281,764

Per diluted common share

   $1.74  $0.25  $0.10   $0.71  $2.79
(1)Consists of the following: pension settlement charges of $32,761 ($20,241 after tax), partially offset by insurance settlement gains; tax charges of approximately $76,933 related to aone-time transition tax on certain accumulated foreign earnings offset by approximately $25,668 related to an increase in net deferred tax assets, both of which are related to implementation of the U.S. Tax Cuts and Jobs Act; and other net tax charges totaling $492.

   For the year ended December 31, 2016
Dollars and shares in thousands, except per share data  GAAP 

Restructuring/

Asset

Impairment

 

Acquisition

Related

Costs

  Other
Adjustments(2)		 Base

Income before interest and income taxes

   $492,834  $42,883  $4,569   $(103,360)  $436,926

Interest expense, net

    51,557   —   —    —   51,557

Income before income taxes

   $441,277  $42,883  $4,569   $(103,360)  $385,369

Provision for income taxes

    164,631   7,520   1,422    (55,803)   117,770

Income before equity in earnings of affiliates

   $276,646  $35,363  $3,147   $(47,557)  $267,599

Equity in earnings of affiliates, net of tax

    11,235   —   —    —     11,235

Net income

   $287,881  $35,363  $3,147   $(47,557)  $278,834

Less: Net (income) attributable to noncontrolling interests, net of tax

    (1,447)   (161)   —    —   (1,608)

Net income attributable to Sonoco

   $286,434  $35,202  $3,147   $(47,557)  $277,226

Per diluted common share

   $2.81  $0.35  $0.03   $(0.47)  $2.72
(2)Consists of the following: gain from the sale of the rigid plastics blow molding operations totaling $104,292 ($49,341 after tax); $850 increase ($522 after tax) in reserves for Fox River environmental claims; $1,203 net tax loss due primarily to changes in rates and valuation allowances for foreign entities; and other charges totaling $82 ($59 after tax).

22
 For the year ended December 31, 2021
Dollars and shares in thousands, except per share dataGAAP
Restructuring/
Asset
Impairment(1)
Acquisition/Divestiture
Related
Costs(2)
Other Adjustments(3)
Base
Operating profit$486,853 $14,210 $17,722 $(3,420)$515,365 
Non-operating pension costs568,416 — — (568,416)— 
Interest expense, net59,235 — — 2,165 61,400 
Loss from the early extinguishment of debt20,184 ��� — (20,184)— 
(Loss)/Income before income taxes(160,982)14,210 17,722 583,015 453,965 
(Benefit from)/Provision for income taxes(67,430)5,363 3,535 165,531 106,999 
(Loss)/Income before equity in earnings of affiliates(93,552)8,847 14,187 417,484 346,966 
Equity in earnings of affiliates, net of tax10,841 — — (1,394)9,447 
Net (loss)/income(82,711)8,847 14,187 416,090 356,413 
Less: Net (income) attributable to noncontrolling interests, net of tax(2,766)— — 2,052 (714)
Net (loss)/income attributable to Sonoco(85,477)8,847 14,187 418,142 355,699 
Diluted weighted average common shares outstanding(4):
99,608 469 100,077 
Per diluted common share$(0.86)$0.09 $0.14 $4.18 $3.55 



25 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-K

   For the year ended December 31, 2015
Dollars and shares in thousands, except per share data  GAAP 

Restructuring/

Asset

Impairment

 

Acquisition

Related

Costs

  Other
Adjustments(3)		 Base

Income before interest and income taxes

   $382,544  $50,637  $1,663   $(22,280)  $412,564

Interest expense, net

    54,598   —   —    —   54,598

Income before income taxes

   $327,946  $50,637  $1,663   $(22,280)  $357,966

Provision for income taxes

    87,738   22,641   9    746   111,134

Income before equity in earnings of affiliates

   $240,208  $27,996  $1,654   $(23,026)  $246,832

Equity in earnings of affiliates, net of tax

    10,416   —   —    —   10,416

Net income

   $250,624  $27,996  $1,654   $(23,026)  $257,248

Less: Net (income)/loss attributable to noncontrolling interests, net of tax

    (488)   (93)   —    —   (581)

Net income attributable to Sonoco

   $250,136  $27,903  $1,654   $(23,026)  $256,667

Per diluted common share

   $2.44  $0.27  $0.02   $(0.22)  $2.51
(3)Consists of the following: gain from the release of reserves related to the partial settlement of the Fox River environmental claims totaling $32,543 ($19,928 after tax); income tax gains from the release of valuation allowances against net deferred tax assets in Spain, Canada, the Netherlands, and the United Kingdom totaling $9,563; legal and financial professional expenses associated with the Company’s investigation of financial misstatements in Mexico totaling $7,099 ($4,380 after tax); additional expenses related to executive life insurance policies totaling $2,188 ($1,344 after tax); and other charges totaling $976 ($741 after tax).

Results

 For the year ended December 31, 2020
Dollars and shares in thousands, except per share dataGAAP
Restructuring/
Asset
Impairment(1)
Acquisition
Related
Costs(2)
Other Adjustments(5)
Base
Operating profit$357,804 $145,580 $4,671 $18,934 $526,989 
Non-operating pension costs30,142 — — (30,142)— 
Interest expense, net72,070 — — — 72,070 
Income before income taxes$255,592 $145,580 $4,671 $49,076 $454,919 
Provision for income taxes53,030 32,868 1,236 27,126 114,260 
Income before equity in earnings of affiliates$202,562 $112,712 $3,435 $21,950 $340,659 
Equity in earnings of affiliates, net of tax4,679 — — — 4,679 
Net income$207,241 $112,712 $3,435 $21,950 $345,338 
Less: Net (income) attributable to noncontrolling interests, net of tax222 (60)— — 162 
Net income attributable to Sonoco$207,463 $112,652 $3,435 $21,950 $345,500 
Per diluted common share$2.05 $1.11 $0.03 $0.22 $3.41 
(1) Restructuring/Asset impairment charges are a recurring item as Sonoco’s restructuring actions 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 operations – 2017 versus 2016

Netrestructuring 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. Additionally, 2020 includes net asset impairment charges totaling $100,242 mostly related to the Company's Plastics - Food thermoforming operations.

(2) Includes costs related to potential and actual acquisitions and divestitures.
(3) Includes non-operating pension expenses related to after-tax settlement charges of $410,417, related primarily to the settlement of the Inactive Plan in the second quarter.
(4) Due to the magnitude of certain expenses considered by management to be non-base, the Company reported a 2021 GAAP net loss attributable to Sonoco. In instances where a company incurs a net loss, including potential common shares in the denominator of a diluted earnings per-share computation will have an antidilutive effect on the per-share loss. GAAP therefore requires the exclusion of any unexercised share awards or other like instruments for purposes of calculating weighted average shares outstanding. Accordingly, the Company did not include any unexercised share awards or other like instruments in calculating weighted average shares outstanding for GAAP purposes in the table above, which resulted in basic weighted average common shares outstanding and diluted weighted average common shares outstanding being the same. However, the Company also presents base net income attributable to Sonoco, (GAAP earnings)which excludes the net non-base items. In order to maintain consistency and comparability of base diluted EPS, dilutive unexercised share awards were included in the calculation to the same extent they would have been had GAAP net income attributable to Sonoco been equal to base net income attributable to Sonoco.
(5) Includes non-operating pension costs, the loss on the sale of the Company's European contract packaging business and approximately $17,400 of income tax benefits related to the sale.

Results of Operations – 2021 Versus 2020
Net (loss)/income attributable to Sonoco ("GAAP results") was $175.3a net loss of $(85.5) million ($1.74(0.86) per diluted share) in 2017,2021, compared with $286.4net income of $207.5 million ($2.812.05 per diluted share) in 2016. Current-year earnings2020.
The GAAP results reflect netafter-tax, non-base charges totaling $106.4$441.2 million consisting of pension settlement charges, tax charges related to the 2017 U. S. Tax Cuts and Jobs Act, restructuring/asset impairment charges,$138.0 million in 2021 and acquisition-related expenses.2020, respectively. These charges were partially offset by insurance settlement gains.

Net income in 2016 was positively impacted by a netafter-tax benefit of $9.2 million consistingnon-base items consisted of the gain from the disposal of the Company’s rigid plastics blow molding operations, partially offset by restructuring costs, asset impairment charges, acquisition-related expenses, and foreign income tax losses related to rate adjustments.

Basefollowing:

For the year ended
Amounts in MillionsDecember 31, 2021December 31, 2020
Non-Operating Pensions costs$423.5 $22.2 
Net recognized benefit on 2017 amended U. S. income tax return(30.0)— 
Loss on early extinguishment of debt15.0 — 
Other non-base tax charges15.5— 
Restructuring/Asset impairment charges8.8 112.7 
Euro derivative gain related to Euro loan repayment(3.3)— 
Refund of foreign VAT and applicable interest(3.1)— 
Net Loss/(Gain) on divestitures of businesses1.2(2.8)
Acquisition related costs14.2 3.4 
Net all other non-base charges, after tax(0.6)2.5
Total non-base charges, after tax$441.2 $138.0 

Adjusted for these items, base earnings in 20172021 were $281.8$355.7 million ($2.793.55 per diluted share), compared with $277.2$345.5 million ($2.723.41 per diluted share) in 2016.

2020.

Both GAAP and base earnings in 2017 benefitted2021 reflect the negative impact of price/cost which was especially impactful to our Consumer Packaging segment and our All Other group as the Company was not able to fully recover plastic resin and steel inflation. Additionally, wage and other cost inflation, along with the negative impact of divestitures (net of acquisitions), also drove earnings down year over year. These impacts were offset
26 FORM 10-K SONOCO 2021 ANNUAL REPORT

by productivity gains and volume/mix increase as a result of the global recovery as impact from the COVID-19 pandemic waned. However, just as the quarantines and lock downs at the start of the pandemic drove demand in our Consumer Packaging segment due to pantry stocking, the easing of these restrictions drove year-over-year sales declines for this segment as consumer demand lessened. GAAP earnings in 2021 were further unfavorably impacted by a positive price/cost relationship, productivity improvements and lower management incentive expense. These favorable factors were$538.3 million increase in non-operating pension costs which was driven by the previously mentioned pension settlements. This was partially offset by negative volume/mix, particularlya $131.4 million decrease in Rigid Paper North America, higher overheadrestructuring activity and other operating costs, and unfavorable changes in foreign currency translation.

asset write-offs.

The 2021 full-year effective tax raterates on GAAP and base earnings was 46.6%were 41.9% and 23.6%, respectively, compared with 37.3%20.7% and 25.1%, respectively in 2016, and the effective tax rate on base earnings was 31.1%, compared with 30.6% in 2016.2020. The unusually highhigher 2021 GAAP effective tax rate in the current year reflects the currently recognized effectsprimarily resulted from a combination of the U.S. Tax Cuts and Jobs Act (Tax Act). Applicationregular tax benefit recognized on the Company's reported pretax loss, together with a discrete tax benefit from the realization of additional foreign tax credits generated by an amendment of the Company’s lower estimated future effective tax rate due to the Tax Act resulted in a decrease to the Company’s recorded amount of deferred tax liabilities, net of deferred assets. Consequently, in the fourth quarter ofCompany's 2017 the Company recorded a $25.7 million decrease to its net deferred tax liabilities with a corresponding decrease to GAAPUS income tax expense. This decrease in expense was more than offset by a $76.9 million charge to record the Tax Act’sone-time transition tax on certain accumulated foreign earnings. The 2016 GAAP tax rate, which was also higher than normal, was negatively affected by the tax impact of the disposal of the Company’s rigid plastics blow molding operations. The effective tax rate on base earnings was essentially flat year over year.

return.

Consolidated net sales for 20172021 were $5.0$5.6 billion, a $254$353 million, or 5.3%6.7%, increase from 2016.2020. The components of the sales change were:

($ in millions)    

Volume/mix

   $(19)

Selling price

    182

Acquisitions and divestitures, net

    69

Foreign currency translation and other, net

    22

Total sales increase

   $254

In order to enhance
($ in millions)
Volume/mix$144 
Selling price504 
Acquisitions and divestitures, net(337)
Foreign currency translation and other, net42 
Total sales increase$353 

Sales volume/mix, adjusted for the meaningfulness of reported changes in volume/mix, a $20.7 million reduction indisplay and packaging center sales resulting from changesdivestitures, rose approximately 2.9% driven by increases in the levelIndustrial Paper Packaging segment and the All Other group of activity is classified above as “other”businesses. These increases were largely due to the low/inconsistent correlation that typically exists between changes in revenue and changes in operating profit in our packaging center operations.

Sales volume/mix was essentially flat as organic volume growth and a favorable change in product mix in a numberglobal recovery from disruptions caused by the COVID-19 pandemic. Many of our businesses mostly offset volume declines in rigid paper containers and automotive components. For the most part, price changes for the Company’s products were driven by changes in the underlying raw materials costs. In 2017, many of the Company’s primary raw materials saw increases in their market prices; especially, old corrugated containers (OCC) which saw an average increase of more than 50% year over year. This increase most directly affected the Paper and Industrial Converted Products segment while the increase in other raw materials, mainly resins, most directly affected the Consumer Packaging segment. Whilesegment's food packaging product lines benefited in the full-year average OCC price was upprior year from customers' preferences for at-home eating during the quarantines and lockdowns during the beginning of the pandemic. The easing of quarantine and lockdown restrictions in 2021 resulted in volumes declining in these businesses to levels consistent with historical sales. Selling prices were higher year over year prices during the year were volatile with periods of sharp increases and decreases resulting in significant margin swings. However,all segments as the Company was ableincreased prices to achieve an overall positive price cost relationship. While the Company’s 2017attempt to recover rising raw material and 2016other costs. Divestitures, net of acquisitions, added more than $259 million toreduced comparable year-over-year sales the impact was mostly offset by sales decreases of $191 million related to dispositions, the most significant of which was the 2016 sale of the Company’s rigid plastics blow molding operations. Finally, foreign exchange rate changes increased year-over-year sales as almost all of the foreign currencies in which the Company conducts business strengthened slightly in relation to the U.S. Dollar.

$337 million.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K23

Total domestic sales were $3.3were $3.7 billion, up 4.9%7.0% from 2017 levels.2020, as higher selling prices and demand increases in Industrial Paper Packaging and All Other businesses located in the United States more than offset domestic divestitures and demand declines for the Company's consumer products. International sales were $1.8$1.9 billion, up 6.1%6.3% from 2017 with most of the2020. The year-over-year increase in international sales was driven by growth in the Company’s industrial businessesincreased sales prices and higher volumes. These increases were partially offset by lost sales from divestitures, net of acquisitions.

Costs and Expenses/Margins
Despite the impact of foreign currency translation.

Costs and expenses/margins

Costdivestitures, cost of sales was up $241.8increased $337.4 million in 2017,2021, or 6.3%8.1%, from the prior year primarily due toyear. This increase was driven by raw material, pricefreight, and other cost increases, as well as volume increases. Gross profit margins decreased to 19.0% in 2021 from 20.0% in the prior year as cost inflation was only partially offset by productivity improvements.

Selling, general and additional volume from acquired businesses, net of disposed businesses. Despite the positive price/cost relationshipadministrative ("SG&A") expenses increased $29.7 million, or 5.6%, and modest productivity improvements, an unfavorable mixwere 10.0% of sales compared to 10.1% of sales in 2020. The current year increase in SG&A expenses was driven by higher costs of providing medical benefits, strategic information technology activity, and higher laboracquisition and other costs resulteddivestiture-related transaction costs.
GAAP operating profit was 8.7% of sales in 2021 compared to 6.8% in 2020. Base operating profit decreased to 9.2% of sales in 2021 compared to 10.1% in 2020. GAAP operating profit increased $129.0 million and base operating profit decreased $11.6 million. The increases in 2021 GAAP operating profit and operating profit margin are largely attributable to a $131.4 million decrease in restructuring and asset impairment charges as well as an $11.8 million year-over-year decrease in losses from divestitures of businesses. The decreased base operating profit margin reflects the previously mentioned decline in gross profit margins declining to 18.8% in 2017 from 19.6% in the prior year.

Aggregate pensionmargin as well as higher SG&A costs.

Restructuring and postretirement plan expenses increased $33.2asset impairment charges totaled $14.2 million and $145.6 million in 20172021 and 2020, respectively. Additional information regarding restructuring actions and asset impairments is provided in Note 4 to the Company’s Consolidated Financial Statements. Additional information regarding the loss on the sale of the Company's domestic display and packaging business as well as the loss on the sale of the European contract packaging business is provided in Note 3 to the Company’s Consolidated Financial Statements.
Non-operating pension costs increased $538.3 million in 2021 to a total of $78.5$568.4 million, compared with $45.3$30.1 million in 2016. In February 2017,2020. The higher year-over-year expense is primarily due to the Company initiated a program to settle a portion of its pension liability related to terminated vested participants in the U.S. qualified retirement plans through either a single,lump-sum payment or the purchase of an annuity. During the coursesettlement of the program, the Company successfully settled approximately 47%Inactive Plan. Service cost, a component of the projectednet periodic benefit obligation of the terminated vested plan participants. As a result of these and other smaller settlements, the Company recognizednon-cash settlement charges totaling $32.8 million in 2017. The settlement charges are reflected in selling, general and administrative expenses, and account for virtually all of the year-over-year increase in pension and postretirement plan expenses. The remainder of pension and postretirement plan expenses areexpense, is reflected in the Company’sCompany's Consolidated Statements of Income with approximately 75% in cost of sales and 25% in selling, general and administrative expenses. See Note 1213 to the Consolidated Financial Statements for further information on employee benefit plans.

Selling, general and administrative expenses increased $37.7 million, or 7.4%, and were 10.8% of sales compared to 10.6% of sales in 2016. The current year increase in selling, general and administrative expenses is largely attributable to the previously mentioned pension settlements. In addition, acquisition-related costs increased $9.2 million from last year to $13.8 million. Absent these items, selling, general and administrative expenses were essentially flat year over year.

GAAP Earnings before interest and income taxes (EBIT) were 7.3% of sales in 2017 compared to 10.3% in 2016, The largest contributor to this decline was the 2016 gain on the sale of the Company’s rigid plastics blow molding business. Base EBIT declined to 8.9% of sales in 2017 compared to 9.1% in 2016. The year-over-year decrease in gross profit margin discussed above contributed to the declines in both GAAP EBIT and Base EBIT.

Restructuring and restructuring-related asset impairment charges totaled $38.4 million and $42.9 million in 2017 and 2016, respectively. Additional information regarding restructuring actions and impairments is provided in Note 4 to the Company’s Consolidated Financial Statements.

Research and development costs, all of which were charged to expense, were $21 million in 2017 and $22.5 million in 2016. Management expects research and development spending to remain at a similar level in 2018.

Net interest expense totaled $52.7$59.2 million for the year ended December 31, 2017,2021, compared with $51.6$72.1 million in 2016.2020. The increasedecrease was primarily due primarily to higherthe impact of lower average debt levelsborrowings as the Company used debt to fund acquisitions. On July 20, 2017, the Company entered into a Credit Agreement in connection with a new $750 million bank credit facility with a syndicate of eight banks replacing its then-existing credit facility entered into on October 2, 2014, and reflecting substantially the same terms and conditions. Included in the new facility are a $500 million five-year revolving credit facility and a $250 million five-year term

loan. Based on the pricing grid in the Credit Agreement and the Company’s current credit ratings, the borrowing has anall-in drawn margin of 112.5 basis points above the London Interbank Offered Rate (LIBOR). Borrowings under the Credit Agreement arepre-payable at any time at the discretionresult of the CompanyCompany's efforts to reposition its cash balances and the term loan has annual amortization payments totaling $12.5 million. In June 2016, the Company settled its $75.2 million 5.625% debentures upon their maturity, anddebt portfolio in May 2016 used proceeds from a new 1.00% fixed rate Euro 150 million loan to settle the remaining $150 million balanceanticipation of a variable rate term loan entered into in conjunction withwaning of the 2014 acquisition of Weidenhammer Packaging Group.

COVID-19 pandemic.

27 FORM 10-K SONOCO 2021 ANNUAL REPORT

Reportable segments

Segments

The Company reportschanged its financial resultsoperating and reporting structure in fourJanuary 2021 and, as a result, realigned certain reportable segments –effective January 1, 2021. The revised structure consists of two reportable segments, Consumer Packaging Display and Packaging, Paper and Industrial Converted Products, and Protective Solutions.

Paper Packaging, with all remaining businesses reported as All Other. Segment financial information for prior periods has been recast to conform to the current-year presentation.

Consolidated operating profits, also referred toreported as “Income before interest and income taxes” on“Operating Profit” in the Company's Consolidated Statements of Income, are comprised of the following:

($ in millions)  2017  2016  % Change

Segment operating profit

         

Consumer Packaging

   $250.9   $240.9    4.1%

Display and Packaging

    2.5    14.8    (83.1)%

Paper and Industrial Converted Products

    154.5    129.7    19.1%

Protective Solutions

    42.1    51.5    (18.3)%

Restructuring/Asset impairment charges

    (38.4)    (42.9)    (10.4)%

Acquisition-related costs

    (13.8)    (4.6)    201.8%

Othernon-operational (charges)/income, net

    (30.5)    103.4    (129.5)%

Consolidated operating profits

   $367.3   $492.8    (25.5)%

($ in millions)20212020% Change
Segment operating profit:
Consumer Packaging$252.8 $278.4 (9.2)%
Industrial Paper Packaging218.3 176.8 23.5 %
All Other44.2 71.7 (38.4)%
Total segment operating profit515.3 526.9 (2.2)%
Restructuring/Asset impairment charges(14.2)(145.6)(90.2)%
Acquisition/(Divestiture)-related costs(17.7)(4.7)276.6 %
Other non-base income/(charges), net3.4 (18.9)(118.0)%
Consolidated operating profit*$486.8 $357.7 36.1 %
*Due to rounding, amounts above may not sum to the totals presented

Segment results viewed by Company management to evaluate segment performance do not include restructuring charges, asset impairment charges, acquisition-relatedacquisition/divestiture-related charges, gains or losses from the sale of businesses, pension settlement charges, specifically identified tax adjustments, and certain other items, if any, the exclusion of which the Company believes improves comparability and analysis. Accordingly, the term “segment operating profits”profit” is defined as the segment’s portion of “Income before interest and income taxes”“Operating profit” excluding those items. General corporate expenses, with the exception of restructuring charges, asset impairment charges, acquisition-relatedacquisition/divestiture-related charges, net interest expense and income taxes, have been allocated as operating costs to each of the Company’s reportable segments.

See Note 1618 to the Company’s Consolidated Financial Statements for more information on reportable segments.

Consumer Packaging

($ in millions)  2017  2016  % Change

Trade sales

   $2,123.5   $2,043.1    3.9%

Segment operating profits

    250.9    240.9    4.1%

Depreciation, depletion and amortization

    98.9    88.9    11.3%

Capital spending

    63.6    86.4    (26.3)% 

Sales
($ in millions)20212020% Change
Trade sales$2,368.3 $2,229.9 6.2 %
Segment operating profits252.8 278.4 (9.2)%
Depreciation, depletion and amortization98.7 109.3 (9.7)%
Capital spending60.5 59.0 2.5 %

Trade sales increased year over year due to the March 14, 2017 acquisitionsales price increases implemented to recover rising material and other operating costs. The year-over-year impact of Packaging Holdings, the July 24, 2017 acquisition of Clear Lam Packaging, Inc.acquisitions on sales totaled $21.7 million and theincluded a full year impact of the

24SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

November 1, 2016 acquisition of Plasticsales from Can Packaging, Inc.acquired August 3, 2020. These increasespositive impacts were substantiallysomewhat offset by the reductionvolume/mix declines as volume erosion in year-over-year sales duerigid paper containers, driven by a return to more normal demand as eased restrictions related to the November 2016 disposition ofCOVID-19 pandemic decreased consumers' preference for at-home meals. Volume/mix increases in the Company’s rigid plastic blow molding operations. Higher selling pricesother businesses in most of the segment’s businesses, driven largely by raw material price increases, were mostlysegment partially offset by volume declines in Rigid Paper Containers North America and Europe as well as Flexible Packaging.this year-over-year decline. Foreign currency translation addedincreased sales by approximately $5$25 million to segment trade sales year over year due to a weaker U.S. dollar. Domestic sales were approximately $1,461$1,608 million, up 6.8%1.7%, or $93$26 million, from 2016,2020, while international sales were approximately $663$761 million, down 1.9%up 17.3%, or $13$112 million, from 2016.

2020.

Segment operating profits increaseddecreased by $10.0$25.6 million year over year and operating profit margins of 11.8%10.7% were unchangeddown 181 basis points from 2016.2020. The increasedecreases in segment operating profits wasand operating profit margins were largely driven by solid gains in manufacturing productivityrising material costs and the positive impact of the relationship between selling prices and costs. These benefitsvolume/mix declines which were partially offset by volume declines in global composite cansproductivity and flexible packaging as well as inflation. Material purchasing and logistics savings were key driversthe full-year impact of the positive price/cost relationship. At an operating profit level, the negative impact of divestitures somewhat exceeded the benefit of acquisitions largely due to timing.

Can Packaging acquisition.

Capital spending in the segment included numerous productivity projects and expansion of manufacturing capabilities in North America primarily in flexible packaging and plastics, and expansion of manufacturing capabilities in Europe in(primarily rigid paper containers.

Displaycontainers and flexible packaging), Europe and Asia (primarily rigid paper containers).

Industrial Paper Packaging

($ in millions)  2017  2016  % Change

Trade sales

   $508.2   $520.4    (2.3)% 

Segment operating profits

    2.5    14.8    (83.1)% 

Depreciation, depletion and amortization

    17.1    16.7    2.2%

Capital spending

    23.9    11.5    107.1%

($ in millions)20212020% Change
Trade sales$2,464.3 $1,991.5 23.7 %
Segment operating profits218.3 176.8 23.5 %
Depreciation, depletion and amortization96.1 94.8 1.4 %
Capital spending150.2 87.5 71.7 %

Domestic trade sales in the segment increased $3.2$244 million, or 1.3%20.7%, to $249$1,422 million, while international trade sales decreased $15increased $229 million, or 5.6%28.2%, to $259$1,043 million. The increase in both domestic and international trade sales resulted from higher selling prices implemented to cover inflation on raw materials and other costs. Additionally, strong volume/mix, especially in global tubes and cores, increased volume at our new retail packaging fulfillment center in Atlanta, Georgia, offsetsales year over year as these businesses began to recover from the effects of disruptions caused by lower volume in retail security packaging and the impact of the July 2016 sale of our retail security packaging facility in Juncos, Puerto Rico. The decrease in internationalCOVID-19 pandemic. Additionally, sales reflects the Company’s exitgrew approximately $25 million from a packaging center fulfillment contract with a customer resulting in the transition of the operation of certain facilities in Mexico and Brazil back to the customer during the first half of 2016. This decline in sales was somewhat offset by the positive impact of approximately $10 million from foreign currency translation as a result of a stronger Polish zloty relative to theweaker U.S. dollar year over year.

The decrease in segment operating profit was largely due to inefficiencies and higher than expected operating costs associated with the ramp up of production at the new pack center in Atlanta. Higher than anticipated production requirements, primarily in response to multiple hurricanes, exceeded the new facility’s capability to operate efficiently with the installed equipment and a relatively inexperienced workforce that has also incurred a higher than expected turnover rate. The Company is working to resolve these and other operational issues and is optimistic that over time the center will be able to achieve efficiency and cost levels in line with expectations. An inability to

meaningfully improve the operating results of this pack center, and/or improve results of other operations of the reporting unit, may result in charges for long-term asset impairment, or goodwill impairment, or both.

Capital spending in the segment was driven by a significant customer development project in North America coupled with expansion of manufacturing capabilities in Europe.

Paper and Industrial Converted Products

($ in millions)  2017  2016  % Change

Trade sales

   $1,866.2   $1,693.5    10.2%

Segment operating profits

    154.5    129.7    19.1%

Depreciation, depletion and amortization

    74.9    74.7    0.1%

Capital spending

    61.4    60.6    1.4%

On average, market costs for recovered paper in the U.S. were higher year over year resulting in higher average selling prices in all of the segment’s domestic businesses. Selling prices were also higher in Brazil and the Andean region, primarily due to overall inflation, and were up in Europe due to the pass through of higher material costs in that market. Total volume/mix gains were modest in the segment as gains in Europe, which were due to a combination of market share gains and regional expansion, and volume increases in US and Canadian Paper were mostly offset by volume declines in other businesses, particularly US and Canadian Tubes and Cores and Recycling. Changes in foreign exchange rates had little impact on reported sales in the segment. Total domestic sales in the segment increased $103 million, or 10.1%, to $1,128 million while international sales increased $70 million, or 10.4%, to $739 million.

Segment operating profit increased year over year, driven by volume gains, strong productivity improvements, and a positive price/cost relationship asrelationship.

During 2021, the Company was ablemade significant progress on Project Horizon, its $125 million investment to favorably navigate dramatic movementstransform the corrugated medium machine in Old Corrugated Containers (OCC) market prices. Improved market conditions resulted inHartsville, South Carolina, to produce uncoated recycled paperboard ("URB"). Project Horizon also includes a strong turnaroundnew finished goods warehouse on the Hartsville campus as well as other infrastructure improvements to the Hartsville paper manufacturing complex. Project Horizon began in the Company’s corrugating medium operation in 2017. Operating profit was also benefited by increases in volumelast half of 2020 and positive changesis expected to be completed in the mixthird quarter of products sold, mostly2022. The new URB machine is being designed with the goal of being the largest and lowest-cost producer of URB in Europethe world, with a targeted annual production capacity of 180,000 tons and Sonoco Reels,capable
28 FORM 10-K SONOCO 2021 ANNUAL REPORT

of producing a wide range of high-value paper grades to service the Company's Industrial Paper Packaging businesses and modest productivity gains. These favorable factors were partially offset by wage and other fixedexternal trade customers. Project Horizon is expected to drive significant annualized cost inflation.

Although conditions improved for the corrugating medium operationsavings beginning in 2017, and the Company’s outlook for the operation is for continued improvement in 2018, the Company continues2023.

In addition to evaluate strategic alternatives for this operation.

SignificantProject Horizon, capital spending in the segment included the modificationmodifications of several paper machines in North America, numerous productivity projects, and IT investments.

Protective Solutions

($ in millions)  2017  2016  % Change

Trade sales

   $538.8   $525.9    2.4%

Operating profits

    42.1    51.5    (18.3)%

Depreciation, depletion and amortization

    26.8    24.8    7.9%

Capital spending

    19.0    12.9    48.0%

Sales increased year over year due

All Other
($ in millions)20212020% Change
Trade sales$757.8 $1,016.1 (25.4)%
Segment operating profits44.2 71.7 (38.4)%
Depreciation, depletion and amortization44.3 51.2 (13.5)%
Capital spending22.8 24.7 (7.7)%
The main driver of the year-over-year decrease in sales was $361 million in divested sales related to the acquisitionsdivestitures of Laminar Medicathe Company's European contract packaging and AAR Corporation, each of which was acquiredU.S. display and packaging businesses in November 2020 and April 2021, respectively. Strong volume/mix increases in the second half of 2016. Higher salesremaining businesses in the group as well as higher selling prices, wereimplemented to offset by volume declines, mostly in automotive components.

Segmenthigher raw material and other costs, somewhat offset divested sales.

All Other operating profit decreased year over year, due to volume declines and associated productivity losses. A negative

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K25

price/cost relationship and increases in labor, overhead and other costs also negatively impacted profits year over year.

Domestic sales were $426 million in 2017 down $10 million, or 2%, from 2016. International sales increased to $113 million up $23 million, or 26%. The increase in international sales was driven by prior-year acquisitions.

the display and packaging divestitures as well as a negative price/cost environment. Volume/mix gains and strong productivity improvements partially offset these losses.

Capital spending in the segment included significantAll Other group of businesses was mostly related to customer development and productivity related projects to supportin North America, primarily in our temperature-assuredmolded foam protective packaging business.

and temperature assured businesses.

Financial position, liquidityPosition, Liquidity and capital resources

Capital Resources

Cash flow

Flow

Operating activities

Activities

Cash flowflows from operations totaled $349.4$298.7 million in 20172021 and $398.7$705.6 million in 2016,2020. Although GAAP net (loss)/income decreased $290.0 million year-over-year, the decline was essentially offset by the year-over-year impact of increases in non-cash pension costs from pension settlement charges partially offset by lower non-cash asset impairment activity in 2021. Cash pension contributions in 2021 were $163.7 million, a year-over-year decreaseincrease of $49.3$123.2 million. The $110.4This increase was primarily related to funding the Inactive Plan prior to settling the plan's obligations in the second quarter of 2021. Cash paid for taxes increased $68.6 million decline in GAAP Net Income reflectsyear-over-year; 2020 tax payments benefited from a deduction related to thenon-recurrence of last year’s gain on anticipated 2021 contributions to the sale of the Company’s rigid plastics blow molding operations of $108.7 million, the cash impact of which was reported as an investing activity. Current year net income also reflects higher pension and postretirement expenses and increased pension and postretirement cash contributions resulting in a combined year-over-year decrease in operating cash flows of $28.6 million. Inactive Plan.
Working capital consumed $5.0 million more cash in 2017 than in 2016. Changes in inventory used $16.1$107.4 million of cash in 2017 versus $11.52021 compared to providing $51.5 million in 2016, a higher year-over-year use2020. The additional cash consumption of cash of $4.6 million, primarily attributable topre-buying of certain raw materials at the end of 2017 in anticipation of upcoming price increases. The combined changes in accounts receivable and accounts payable balances consumed approximately $39 million of cash from operations in both 2017 and 2016. The increases inyear-end accounts receivable balances over the respective prior years were due to a combination of factors including the timing of collections from certain customers, changes in terms and sales mix by customer, and changes in selling prices.Non-cash asset impairment charges were $12.9 million higher year over year, due largely to the fourth quarter 2017 impairment of a power generating facility at the Company’s Hartsville manufacturing complex, which was determined to have been rendered obsolete by the Company’s new biomass facility and which is now scheduled for closure. The net benefit from changes in deferred income tax and income tax payable balances was $25.1 million greater in 2017 compared with the previous year. The year-over-year increase is attributable to the U.S. Tax Cuts and Jobs Act, including the recording of a liability for the new transition tax on certain accumulated foreign earnings, partially offset by a reduction in the Company’s net deferred tax liabilities which were reduced as a result of the decrease in the federal tax rate from 35% to 21%.Non-cash share-based compensation expenses were $5.8 million lower year over year as expenses recognized in association with our performance-based awards decreased, reflecting assumptions about actual performance against targeted performance metrics over the vesting period of the awards. Net losses on disposition of assets totaled $2.0 million in 2017 compared with $14.2 million in 2016, a year-over-year change of $12.1 million, driven by the loss on the disposition of a paperboard mill in France in 2016. Changes in accrued expenses reflect a $14.6 million use of cash in 2017 compared with a $11.7 million use of cash in 2016. The year-over-year change of $2.9$158.9 million was primarily driven by recovery from disruptions caused by the final settlementCOVID-19 pandemic as net working capital grew throughout the year driven by increased business activity levels, inflation, and supply chain dynamics that affected customer demand and resulted in fluctuating inventory levels.While higher raw material prices increased year-end 2021 balances for both inventory and accounts payable, the Company also made pre-buys of Fox River-related environmental claimscertain raw materials in January 2017anticipation of 2022 price increases and lower management incentive accruals. Changesto mitigate stock-out risk. Accounts receivable consumed $167.6 million more cash in 2021 than in 2020 due to higher fourth-quarter sales activity compared to the prior year. The Company continued to actively manage collections and saw year-over-year improvement in its already strong customer payment terms compliance; however, offsetting this benefit was an increase in the average length of customer payment terms due largely to sales mix.
Accrued expenses and other assets and liabilities used $37.1 million of additional cash in 2017 compared to 2016, driven by $16.0 million in timing differences related to certainnon-income tax payments, $7.0 million related to the timing of costs and associated reimbursements related to the relocation of a facility, and a net

change of $5.7 million in the incremental costs of obtaining contracts with certain customers. Cash paid for income taxes was $37.8 million lower year over year due primarily to the payment in 2016 of taxes arising from the gain on the sale of the rigid plastics blow molding operations.

Cash flow from operations totaled $398.7 million in 2016 and $452.9 million in 2015, a year-over-year decrease of $54.3 million. Although 2016 net income increased year over year by $37.3 million, 2016 net income includes apre-tax gain of $108.7 million from the November 2016 sale of the Company’s rigid plastics blow molding operations, the proceeds of which are reported as investing cash flows. Lower year-over-year pension and postretirement expenses together with higher pension and postretirement cash contributions resulted in a combined year-over-year decrease in operating cash flow of $22.7 million. More cash was consumed by working capital changes in 2016 compared with the prior year. The change in trade accounts receivable consumed $29.3 million more cash year over year. While the seasonal slowdown at the end of 2016 was greater than in 2015, ending trade accounts receivable increased more in 2016 than in 2015, due largely to current-year payment term extensions and isolated payment collection timing issues at the end of 2016. Changes in inventory used $11.5$7.3 million of cash in 2016 versus $2.62021 compared with a $56.5 million in 2015, a higher year-over-year use of cash of $8.9 million, primarily attributable to certain businessespre-buying raw materials at the end of 2016 in anticipation of upcoming price increases. The change in accounts payable provided $5.6 millionprovision of cash in 2016 compared with $12.3 million in 2015, a lower year-over-year provision of $6.8 million. This decline was primarily due to the lower level of business activity in the latter part of 2016 compared with the same period in 2015.Non-cash asset impairment charges were $17.3 million lower year over year, due largely to the prior year recognition of a foreign exchange remeasurement loss on the Company’s net assets in Venezuela as the Company moved from translating these operations at the country’s official rate to an alternative exchange rate and the prior year impairment of fixed assets related to the Company’s paperboard mill inSchweighouse-sur-Moder, France which was sold in early 2016. Thenon-cash impact of changes in environmental reserves increased $33.4 million due to a $0.9 million increase in the reserves being recorded in 2016 in anticipation of final settlement of claims related to Fox River, compared with reductions in these reserves in 2015 of $32.5 million pretax, $19.9 million after tax. Operating cash flows provided by changes intax-related activities was $45.4 million greater in 2016 compared with the previous year. The increase was due primarily to the use of available prepaid taxes to offset current year tax liabilities in 2016, contrasted with 2015 when there was a use of cash primarily from the overpayment of estimated taxes due to passage of new tax rules late in the year. The year-over-year variance in the change in the net deferred tax liability balances also contributed to the net provision of cash and resulted largely from variances in pension payments, the use of U.S. net operating losses and deferred taxes in foreign jurisdictions.Non-cash share-based compensation expenses were $10.0 million higher year over year as expenses recognized in association with our performance-based awards increased, reflecting assumptions about actual performance against targeted performance metrics over the vesting period of the awards. Net losses on disposition of assets totaled $14.2 million in 2016 compared with a net gain of $5.7 million in 2015, a year-over-year change of $19.9 million. The change was driven by the loss on the disposition of a paperboard mill in France in 2016. Accrued expenses used $11.7 million in 2016 compared with a provision of $15.3 million in 2015.2020. The year-over-year change was largely the result of $27.0 million was driven by increasesa benefit in reserves related to restructuring actions

26SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

implemented during 2016 and2020 from the timingdeferral of payments for other accrued expenses. Changes in other assets and liabilities provided $15.1 million of additional cash in 2016 compared to 2015, driven by higher year-over-year receipts of cash related to rebates, value added taxes, and customer reimbursable costs. Cash paid for taxes was $29.9 million higher year over year including the impact of the Company's portion of social security taxes of approximately $32 million, pursuant to the CARES Act, while 2021 reflects the subsequent payment in December 2016 of taxes arising from the gain on the saleone half of the blow molding operations.

deferred amount. The remaining amount deferred is expected to be paid before December 2022.

Investing activities

Activities

Cash used by investing activities was $565.7$165.9 million in 2017, 2021, compared with $3.1$126.3 million in 2016. The greater year-over-year use2020. Capital spending was $256.0 million in 2021, compared with $194.1 million in 2020, an increase of $61.9 million primarily due to spending on Project Horizon, a $125 million project to convert our corrugated medium machine to a state-of-the-art uncoated recycled paperboard machine. Spending on acquisitions used $22.2 million of cash is due in part2021 compared with $49.3 million in 2020. Proceeds from the sale of businesses provided $91.6 million of cash in 2021 primarily from the sale of the Company's U.S. display and packaging business, compared to $103.4 million in 2020, principally from the Company’s 2017 acquisitionssale of Packaging Holdings and Clear Lam for a total of $383.7 million, whereas acquisition spending in 2016 was lower at $88.6 million. Also contributing to the year-over-year change in cash used by investing activities is a decrease inCompany's European contract packaging business. The Company received proceeds from the sale of assets. Proceeds in 2016 included $271.8 million from the November 2016 sale of the Company’s rigid plastics blow molding operations, partially offset by cash paid for the disposal of a paper operation in France. Proceeds from the sale of assets in 2017 were $5.3 million. Capital spending was $188.9totaling $13.2 million in 2017,2021 compared with $186.7$13.0 million in 2016, a decreasethe prior year.
Financing Activities
Net cash used by financing activities increased $350.7 million year over year as financing activities used $513.5 million of $2.2 million. Capital spending is expected to total approximately $220cash in 2021, compared with $162.9 million in 2018.

Cash used in investing activities was $3.1 million in 2016, compared with $179.9 million in 2015.2020. The lower year-over-yeargreater use of cash is primarily duereflects a year-over-year increase in share repurchases of $209.6 million pursuant to a repurchase authorization approved by the Company's Board of Directors in April 2021. The greater use of cash also reflects higher year-over-year net $239.4debt repayments of $92.9 million increase in proceeds from the sale2021 compared with 2020 and $20.1 million of assets. Proceeds in 2016 included $271.8 million from the November 2016 sale of the Company’s rigid plastics blow molding operations, partially offset byexcess cash paid for the disposal of a paper operation in France. Proceeds in 2015 primarilycosts related to approximately $29.1 million received from the sale of two metal ends and closures plants in February 2015. Acquisition spending, net of cash acquired, was $71.2 million higher year-over-year as the Company completed four acquisitions in 2016 versus two in 2015. Activity in 2016 included the acquisition of Plastic Packaging Inc. for $67.6 million whereas the cash paid for acquisitions in 2015 was significantly lower. Capital spending was $186.7 million in 2016, compared with $192.3 million in 2015, a decrease of $5.6 million.

Financing activities

Net cash provided by financing activities totaled $203.2 million in 2017, compared with a use of $315.7 million in 2016, an increased provision of cash of $518.9 million. This

increase was driven primarily by increased borrowings associated with acquisition activity in 2017. Outstanding debt was $1,447.3 million at December 31, 2017 compared with at $1,052.7 million at December 31, 2016. These balances reflect net borrowings of $355.2 million during 2017, compared with net repaymentsearly extinguishment of debt totaling $65.1 million in 2016. The Company completed a share repurchase program in 2016 through which it acquired 2.0 million shares of the Company’s common stock at a cost of $100 million throughout thecurrent year. No shares were repurchased under this program in 2017.

Cash dividends increased 5.0%3.5% to $153.1$178.6 million in 20172021 compared to $146.4$172.6 million in 2016,2020, reflecting a full year of the $0.02 per share increase in the quarterly dividend payment approved by the Board of Directors in April 2017.

NetFebruary 2021.

The change in outstanding checks provided cash used by financing activities totaled $315.7of $7.0 million in 2016,2021 while providing $21.0 million in the prior year. The year-over-year change is the result of the timing and size of the last accounts payable check runs in December 2021 and December 2020 relative to the Company's December 31 year end. Other financing cash flows also included $4.4 million of proceeds realized from an interest rate swap in 2021, compared with $256.4$14.5 million in 2015, an increased use of cash of $59.3 million. This increase was driven primarily2020.
29 FORM 10-K SONOCO 2021 ANNUAL REPORT

Capital Resources
Current assets decreased year over year by the use of $106.7$171.9 million of cash in 2016 to repurchase 2.2 million shares of the Company’s common stock. Outstanding debt was $1,052.7$1,658.7 million at December 31, 2016 compared with at $1,128.4 million at December 31,2015. These balances reflect net repayments of $65.1 million during the 12 months ending December 31, 2016, including $75.3 million for the repayment of the Company’s 5.625% debentures upon their maturity on June 15, 2016. The balances also reflect Euro 150 million of borrowings in May 2016, under an unsecured, five-year, 1.0% fixed-rate assignable loan agreement, which were used in part to repay the remaining balance of the $150 million term loan used to fund the October 2014 acquisition of Weidenhammer Packaging Group. In 2015, net debt repayments used $114.7 million of cash as the Company paid down a portion of the incremental debt incurred to fund the acquisition of Weidenhammer. Cash dividends increased 6.0% to $146.4 million in 2016 compared to $138.0 million in 2015, reflecting a $0.02 per share increase in the quarterly dividend payment approved by the Board of Directors in April 2016.

Current assets increased year over year by $214.9 million to $1,564 million at December 31, 2017,2021, and current liabilities increased by $197.4$14.1 million to $1,000$1,525.8 million, resulting in a decrease in the Company’s ratio of current ratioassets to 1.6current liabilities to 1.1 at December 31, 20172021 from 1.71.2 at December 31, 2016.2020. Current assets were lower due to a decrease in cash largely stemming from repurchases of the Company's common stock in 2021, contributions to the Inactive Plan, and greater year-over-year net repayments of debt. The decrease in cash was partially offset by increases in accounts receivable and inventory. Current liabilities were higher year over year primarily due to an increase in both current assetsaccounts payable, partially offset by a reduction in accrued expenses as a result of funding the outstanding liabilities of the Inactive Plan pursuant to settling the obligations of the plan through lump sum payments and current liabilities was largely attributable to the acquisitions completed in 2017 and higher levelpurchase of working capital and short-term debt atannuities during the endsecond quarter of 2017 compared to the end of 2016.

2021.

Contractual obligations

The following table summarizes contractual obligations at December 31, 2017:

   Payments Due In
($ in millions)  Total  2018  2019-2020  2021-2022  Beyond 2022  Uncertain

Debt obligations

   $1,447.3   $159.3   $33.0   $646.1   $608.9   $—

Interest payments1

    868.2    46.4    92.8    79.2    649.8    —

Operating leases

    186.8   $46.4   $68.9   $39.0   $32.5    —

Transition tax under Tax Act2

    76.9    6.2    12.3    12.3    46.1    —

Income tax contingencies3

    17.0    —    —    —    —    17.0

Purchase obligations4

    289.3    118.4    130.7    39.4    0.8    —

Total contractual obligations5

   $2,885.5   $376.7   $337.7   $816.0   $1,338.1   $17.0
1Includes interest payments on outstanding fixed-rate, long-term debt obligations, as well as financing fees on the backstop line of credit.
2In December 2017, the Company recognized a transition tax of $76.9 million on certain accumulated foreign earnings in order to comply with the U.S. Tax Cuts and Jobs Act (“Tax Act”). The liability for this tax, which is based on the best information available to the Company at the present time, is payable in installments over a period of 8 years.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K27

3Due to the nature of this obligation, the Company is unable to estimate the timing of the cash outflows. Includes gross unrecognized tax benefits of $17.1, plus accrued interest associated with the unrecognized tax benefit of $2.2, adjusted for the deferred tax benefit associated with the future deduction of unrecognized tax benefits and the accrued interest of $1.5 and $0.8, respectively.
4Includes only long-term contractual commitments. (Does not include short-term obligations for the purchase of goods and services used in the ordinary course of business.)
5Excludes potential cash funding requirements of the Company’s retirement plans and retiree health and life insurance plans.

Capital resources

The Company’s cash balances are held in numerous locations throughout the world. At December 31, 20172021 and 2016,2020, approximately $238.4$154.4 million and $174.7$170.8 million, respectively, of the Company’s reported cash and cash equivalents balances of $254.9$171.0 million and $257.2$564.8 million, respectively, were held outside of the United States by 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. Under prior law, cash repatriated to the U.S. was subject to federal income taxes, less applicable foreign tax credits. As the Company enjoys amplehas maintained sufficient domestic liquidity through a combination of operating cash flow generation and access to bank and capital markets borrowings, we have generally considered our offshore cash balancesforeign unremitted earnings to be indefinitely invested outside the United States and hadcurrently have no plans to repatriate thesesuch earnings, other than excess cash balances. However, due to changes in U.S.balances that can be repatriated at minimal tax lawscost. Accordingly, as part of the enactment of the Tax Cuts and Jobs Act, beginning in 2018 cash repatriated will generally not be subject to federal income taxes; accordingly,December 31, 2021, the Company is considering opportunitiesnot providing for taxes on these amounts for financial reporting purposes. Computation of the potential deferred tax liability associated with unremitted earnings considered to repatriate cash balances. The Company will finalize its analysis during 2018 and, as provided for in SAB 118, will make any necessary adjustments in the financial statements of future periods within the provided time frame, including a determination of our intentions with respect to undistributed earnings of international subsidiaries.

Under Internal Revenue Service rules, U.S. corporations may borrow funds from foreign subsidiaries for up to 30 days without unfavorable tax consequences. The Company has utilized these rules at various times in prior years to temporarily access offshore cash in lieu of issuing commercial paper. The Company didbe indefinitely reinvested is not access any offshore cash under these rules in 2017. However, depending on its immediate offshore cash needs, the Company may choose to access such funds again in the future as allowed under the rules.

On July 20, 2017, the Company entered into a Credit Agreement in connection with a new $750 million bank credit facility with a syndicate of eight banks replacing an existing credit facility entered into on October 2, 2014, and reflecting substantially the same terms and conditions. The Company operates a $350 million commercial paper program, supported by a $500 million five-year revolving credit facility. If circumstances were to prevent the Company from issuing commercial paper, it has the contractual right to draw funds directly on the underlying revolving bank credit facility.

The Company’s total debt at December 31, 2017, was $1,447 million, a year-over-year increase of $395 million driven primarily by the $250 million term loan used to finance the Clear Lam and Packaging Holdings acquisitions and the increase in commercial paper. The Company had $124 million of commercial paper outstanding at December 31, 2017 and none at December 31, 2016.

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 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.

The Company, as part of its ongoing efforts to improve cash flow and related liquidity, works with suppliers to improve its terms and conditions, including extending payment terms. Beginning in 2020, the Company started facilitating a voluntary supply chain financing program (the "program") to provide certain suppliers with the opportunity to sell receivables due from the Company to the program's participating financial institution. Such sales are conducted at the sole discretion of both the suppliers and the financial institution on a non-recourse basis at a rate that leverages the credit rating of the Company and thus might be more beneficial to the supplier. No guarantees are provided by the Company or any of its subsidiaries under the program. Responsibility is limited to making payment on the terms originally negotiated with suppliers, regardless of whether those suppliers sell the receivables to the financial institution. The Company does not enter into any agreements with suppliers regarding their participation in the program. All outstanding amounts owed under the program are recorded within trade accounts payable. The amount owed to the participating financial institution under the program and included in accounts payable for continuing operations was $47 million at December 31, 2021. The Company accounts for all payments made under the program as a reduction to cash flows from operations and reports them within "changes in payable to suppliers" in the Consolidated Statements of Cash Flows. The total amount settled through the program and paid by the Company to the participating financial institution was $178 million during 2021 and $50 million during 2020, the first year of the program. The Company expects that the amounts settled through the program will continue to grow in 2022 and future periods. A downgrade in the Company's credit rating or changes in the financial markets could limit financial institutions’ willingness to commit funds to, and participate in, the program. However, the Company does not believe a reduction in, or the elimination of, the program would have a material impact on its working capital or cash flows.
The Company’s total debt at December 31, 2021, was $1,611 million, a year-over-year decrease of $90 million. The year-over-year change includes the following actions taken in 2021 related to the Company's efforts to reposition its cash balances and debt portfolio in anticipation of a waning of the COVID-19 pandemic:
•On April 5, 2021, the Company received cash proceeds totaling $79.7 million from the sale of its U.S. display and packaging business.
•On May 10, 2021, the Company paid $150 million in connection with an accelerated share repurchase agreement to repurchase shares of its common stock.
•On May 25, 2021, the Company repurchased $63.2 million of its outstanding 5.75% notes, due November 2040, for a total cash cost of $82.0 million.
•On May 25, 2021, upon maturity, the Company paid $177.8 million to retire its 1% Euro loan.
•On June 30, 2021, the Company entered into a new five-year $750 million, unsecured revolving credit facility which replaced an existing $500 million facility. Consistent with prior facilities, the new revolving credit facility supports the Company's $500 million commercial paper program.
•On August 1, 2021, the Company repaid its $250 million, 4.375% debentures without penalty ahead of their November 2021 maturity.
Following the actions above, at December 31, 2021, the Company had approximately $171 million in cash and cash equivalents on hand, $750 million in committed availability under its revolving credit facility, of which $401 million was available for drawdown, net of $349 million of outstanding commercial paper balances. The Company has the contractual right to draw funds directly on the underlying revolving credit facility, which could possibly occur if there were a disruption in the commercial paper market. Scheduled debt maturities in 2022 total approximately $412 million, including outstanding commercial paper. The Company believes cash on hand and available credit, combined with expected net cash flows generated from operating and investing activities, will provide sufficient liquidity to cover these and other cash flow needs of the Company over the course of 2022 and beyond.
As of December 31, 2021, the Company had scheduled debt maturities of $411.5 million in 2022, including $349.0 million of commercial paper, and had scheduled debt maturities of $8.0 million, $6.1 million and $5.3 million in 2023, 2024 and 2025, respectively. See Note 9 to the Consolidated Financial Statements for additional information regarding the Company's contractual principal debt maturities.
On January 21, 2022, subsequent to the end of the fiscal year, the Company completed its inaugural offering of green bonds to support the Company's sustainability strategy. The aggregate principal amount of the unsecured notes totaled $1.2 billion, consisting of $400 million aggregate principal amount of 1.800% Notes due 2025, $300 million aggregate principal amount of 2.250% Notes due 2027, and $500 million aggregate principal amount of 2.850% Notes due 2032. Also on January 21, 2022, the Company entered into a $300 million term loan facility maturing in January 2025 with a syndicate of eight banks. The funds from this facility were drawn on January 26, 2022 and used, along with a portion of the net proceeds from the bonds and commercial paper borrowings, to fund the acquisition of Ball Metalpack, which was consummated the same day. See Note 20 to the Consolidated Financial Statements for additional information about these subsequent events.
The Company's contractual obligation maturities for interest payments on outstanding fixed-rate, long-term debt, including the notes issued on January 21, 2022, as well as financing fees on the backstop line of credit, are expected to total approximately $76.4 million in 2022, $78.2 million in both 2023 and 2024, and $72.2 million in 2025.

30 FORM 10-K SONOCO 2021 ANNUAL REPORT

Capital spending is expected to total approximately $325 million in 2022, higher than 2021, due to expected spending on projects that had been planned for 2021, but were delayed, anticipated capital investments at Ball Metalpack, and continued spending on Project Horizon, which is expected to total approximately $50 million in 2022. Consistent with its past practice, the Company expects to continue investing in its capital assets in subsequent periods but does not currently have significant contractual commitments.
Acquisitions and internal investments are key elements of the Company’s growth strategy. The Company believes that its cash on hand, coupled with cash generated from operations and available borrowing capacity will enable it to support this strategy. Although the Company believes that it has excess borrowing capacity beyond its current lines, there can be no assurance that such financing would be available or if so, atavailable on terms that are acceptable to the Company.

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. Should these efforts result in the future sale of any plants or business units, management expects to first seek to utilize the proceeds to invest in growth projects or strategic acquisitions.

The net underfunded position of the Company’s various U.S and international defined benefit pension and postretirement plans was approximately $332$97 million at the end of 2017. During 2017,2021, compared with $294 million at the end of 2020. The decrease of $197 million reflects the final settlement of the liabilities of the Inactive Plan during 2021. The Inactive Plan was terminated effective September 30, 2019, and the liabilities settled through a combination of a limited lump-sum offering in April 2021 and annuity purchases in June 2021. The Company contributed approximately $109$164 million to its benefit plans.plans in 2021, including $124 million to the Inactive Plan in order to be fully funded on a termination basis at the time of the annuity purchase. The Company anticipatesrealized a cash tax benefit of approximately $38 million in 2020 on the Inactive Plan contributions that were deductible in its 2020 income tax filings. Contributions to the Company's benefit plan contributionsplans in 2018 will2022, including the Sonoco Retirement Contribution ("SRC"), are expected to total approximatelyapproximately $38 million. Future funding requirements will depend largely on actual investment returns, and future actuarial assumptions. Participation inassumptions, legislative actions, and changes to the U.S. qualified definedCompany's benefit pension plan is frozen for salariedofferings.
In October 2021, the Company's Board of Directors approved an amendment to the Sonoco Retirement andnon-union hourly U.S. employees hired on or after January 1, 2004. In February 2009, Savings Plan to eliminate the plan was further amendedSRC and to freeze service credit earnedincrease the Company's 401(k) matching contribution to 100% of the first 6% of eligible contributions effective as of December 31, 2018. This change2021. The amendment is expected to moderately reducebe neutral to total expense in 2022. However, the volatilityCompany's operating cash flow is expected to be negatively affected in 2022 as it will reflect both the annual funding of long-term funding exposurethe SRC earned in 2021 and expenses.

the higher 401(k) matching contributions.

Total equity increased $175decreased $61 million during 20172021 as net income of $177 million and other comprehensive income totaling $146of $397 million were partially offset by dividend payments of $155 million,and stock-based compensation of $13$23 million were offset by a net loss of $83 million, dividends of $180 million and share repurchases of $6$218 million. The primary components of other comprehensive gainincome were a $89 million translation gain from the impact of a weaker U.S. dollar on the Company’s foreign investments which were partially offset by additional actuarial gains totaling $60 million, net of tax, in the Company’s various defined benefit plans resulting primarily from lower year-over-year discount rates. Total equity increased $21.8 million during 2016 as net income of $287.9 million was partially offset by other comprehensive losses totaling $34.9 million, dividend payments of $147.7 million, and share repurchases of $106.7 million. The primary components of other comprehensive loss were a $32.4$76 million translation loss from the impact of a stronger U.S. dollar on the Company’s foreign investments and an increase inthe reclassification of actuarial losses in the Company’s defined benefit plans totaling $9.6$471 million, net of tax, from accumulated other comprehensive loss to net income, primarily relating to the settlement of the Inactive Plan in the Company’s various defined benefit plans resulting primarily from lower year-over-year discount rates.

second quarter of 2021.

On February 10, 2016,April 20, 2021, the Company’s Board of Directors authorized the repurchase of the Company's common stock up to 5 million sharesan aggregate amount of the Company’s common stock. During 2016,$350 million. The Company purchased a total of 2.033.29 million shares were repurchasedunder this authorization during 2021 at a cost of $212 million. Accordingly, a total of $138 million remained available for share repurchases under this authorization at a cost of $100 million. No shares were repurchased under this authorization during 2017. Accordingly, at December 31, 2017, a total of 2.97 million shares remain available for repurchase under this authorization.

2021.

Although the ultimate determination of whether to pay dividends is within the sole discretion of the Board of Directors and is based on a variety of factors, the Company plans to increasecontinue paying dividends consistent with historical practice as earnings grow.and the Company's liquidity permit. Dividends per common shareshare were $1.54$1.80 in 2021, $1.72 in 2017, $1.462020 and $1.70 in 2016 and $1.37 in 2015.2019. On February 14, 2018,9, 2022, the Company declared a regular quarterly dividend of $0.39$0.45 per common share payable

28SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

on March 9, 2018,10, 2022, to shareholders of record on February 28, 2018.

Off-balance sheet arrangements

23, 2022.

The Company had no materialoff-balance sheetroutinely enters into leasing arrangements for real estate (including manufacturing facilities, office space, warehouses, and packaging centers), transportation equipment (automobiles, forklifts, and trailers), and office equipment (copiers and postage machines). Lease contracts with a term of 12 months or less are not recorded on the consolidated balance sheet. Leased assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation arising from the lease. Leased assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Most real estate leases, in particular, include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years. For additional information regarding the Company's contractual lease obligations, see Note 7 to the Consolidated Financial Statements.
As of December 31, 2017.

2021, the Company had long-term obligations to purchase electricity and steam, which it uses in its production processes, as well as long-term purchase commitments for certain raw materials, principally old corrugated containers. For additional information regarding the Company's purchase commitment obligations, see Note 16 to the Consolidated Financial Statements.

Risk management

Management

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 facilities are spreadlocated throughout the world, and the Company generally sells in the same countries where it produces.produces with both revenue and costs transacted in the local currency. The Company monitors these exposures and may use traditionalforeign currency swapsforward contracts and forward exchange contractsother risk management instruments to hedgemanage exposure to changes in foreign currency cash flows and the translation of monetary assets and liabilities on the Company’s consolidated financial statements by hedging a portion of forecasted transactions that are denominated in foreign currencies, foreign currency assets and liabilities or net investment in foreign subsidiaries. The Company’s foreign operations are exposed to political, geopolitical and cultural risks, but the risks are mitigated by diversification and the relative stability of the countries in which the Company has significant operations.

Prior

Due to July 1, 2015,the highly inflationary economy in Venezuela, the Company used Venezuela’s official exchange rateconsiders the U.S. dollar to reportbe the results of its operations in Venezuela. As a result of significant inflationary increases, and to avoid distortion of its consolidated results from translationfunctional currency of its Venezuelan operations and uses the Company concluded that it was appropriate to begin translating its Venezuelan operations using an alternativeofficial exchange rate. Accordingly, effective July 1, 2015,rate when remeasuring the Company began translating its Venezuelan operations, and all monetary assets and liabilitiesfinancial results of those operations. Economic conditions in Venezuela usinghave worsened considerably over the alternative rate known aspast several years and there is no indication that conditions are due to improve in the SIMADI rate (replacedforeseeable future. Further deterioration could result in 2016 by the DICOM rate). This resulted inrecognition of an impairment charge or a foreign exchange remeasurement loss on net monetary assets. In addition, the usedeconsolidation of the significantly higher SIMADI rate resulted in the need to recognize impairment charges against inventories and certain long-term nonmonetary assets as the U.S. dollar value of projected future cash flows from these assets was no longer sufficient to recover their U.S. dollar carrying values. The combined $12.1 million impact of the impairment charges and remeasurement loss, on both a before andafter-tax basis, was recognized in the third quarter of 2015. As a result of the continued devaluation of the Venezuelan Bolivar in 2017, the Company recognized additional impairment charges and remeasurement losses in 2017 totaling $0.8 million.subsidiary. At December 31, 2017,2021, the carrying value of the Company’sCompany's net investment in its Venezuelan operations was approximately $1.8$1.9 million. In addition, at December 31, 2017,2021, the Company’sCompany's Accumulated Other Comprehensive Loss included a cumulative translation adjustment loss of $3.8 million related to its Venezuela operations which would need to be reclassified to net income in the event of a complete exit of the business or a decisiondeconsolidation of these operations.
The Company has operations in the United Kingdom and elsewhere in Europe that had the potential to deconsolidate.

be impacted by the exit of the U.K. from the European Union (Brexit) at the end of January 2020 and the new E.U.-U.K. Trade and Cooperation Agreement which went into effect December 31, 2020. Our U.K. operations developed contingency plans regarding potential customs clearance issues, tariffs and other uncertainties resulting from Brexit and the new agreement with the European Union. Although it is difficult to predict all of the possible future impacts to our supply chain or in our customers' downstream markets, the operational impacts subsequent to Brexit have been minor. The Company has evaluated the future potential operational impacts and uncertainties of Brexit and continues to believe that the likelihood of a material impact on our future results of operations is low. Although there are some cross-border sales made out of and into the U.K., most of what the Company produces in the U.K. is also sold in the U.K. and the same is true for continental Europe. In some cases, companies that have been

31 FORM 10-K SONOCO 2021 ANNUAL REPORT

importing from Europe into the U.K. are now seeking local sources, which has actually been positive for our U.K. operations. Our annual revenue in 2021 for our U.K. businesses totaled approximately $144 million on a standalone basis. Although Brexit could have broad-reaching effects beyond just in the U.K. itself, we believe our exposure to this uncertainty is limited.
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, from time to time, use traditional, unleveraged interest-rate swaps to manage its mix of fixed and variable rate debt and to control its exposure to interest rate movements within select ranges.

At December 31, 2017,2021, the Company had derivative contracts outstanding to hedge the price on a portion of anticipated commodity and energy purchases as well as to hedge certain foreign exchange risks for various periods through December 2019.natural gas purchases. These contracts, which qualify as cash flow hedges, included natural gas swaps covering approximately 1.7 million metric million British thermal units ("MMBTUs"). In addition, at December 31, 2021, the Company had certain other commodity contracts outstanding to manage the cost of anticipated natural gas purchases for which the Company does not apply hedge the purchase price of approximately 7.5 million MMBTUsaccounting. These contracts consist of natural gas in the U.S.swaps covering approximately 3.9 million MMBTUs. The Company's designated and Canada representingnon-designated natural gas derivative contracts total approximately 76.2% and 35.5%73% of anticipated natural gas usage in North America for 20182022.
The Company routinely enters into forward contracts to economically hedge the currency exposure of intercompany debt and 2019. Additionally,foreign currency denominated receivables and payables. The Company does not apply hedge accounting treatment under ASC 815 for these instruments. As such, changes in fair value are recorded directly to income and expense in the Company had swap contracts covering 1796 metric tons of aluminum representing approximately 24% of anticipated usage for 2018. The aluminum hedges relate to fixed-price customer contracts.periods that they occur. At December 31, 2017, the Company had a number of foreign currency contracts in place for both designated and undesignated hedges of either anticipated foreign currency denominated transactions or existing financial assets and liabilities. At December 31, 2017,2021, the total notional amount of these contracts, in U.S. dollar terms, was $189$81 million, of which $58$13 million related to the Canadian dollar, $50$24 million to the Mexican peso, $50$23 million to the Polish Zloty, $7 million to the Colombian Peso, $9 million to the Euro and $31$5 million to all other currencies.

On January 21, 2022, the Company completed a registered public offering of unsecured bonds including $500 million aggregate principal amount of 2.850% Notes due 2032 (the"2032 Notes"), maturing on February 1, 2032. On December 29, 2021, the Company entered into treasury lock derivative instruments with two banks, with a notional principal amount of $150 million each, with the risk management objective of reducing the Company's exposure to increases in the underlying Treasury index up to the date of pricing of the 2032 Notes. The fair value of the contracts was a net loss position of $(0.6) million at December 31, 2021. The derivatives were settled when the bonds priced on January 11, 2022, with the Company recognizing a gain on the settlement of $5.2 million.
The total fair market value of the Company’sCompany's derivatives was a net unfavorable positionfavorable position of $1.3$1.5 million atand $0.6 million at December 31, 2017,2021 and a net favorable position of $2.8 million at December 31, 2016.2020, respectively. Derivatives are marked to fair value using published market prices, if available, or using estimated values based on current price quotes and a discounted cash flow model. See Note 910 to the Consolidated Financial Statements for more information on financial instruments.

As a result of the weakening global economy due to the COVID-19 pandemic, the Company increased its allowance for cumulative expected credit losses by $0.4 million and $0.3 million during 2021 and 2020, respectively. Continued weakness in the economy may require additional charges to be recognized in future periods.
The Company is subject to various federal, state and local environmental laws and regulations in the United States and in each of the countries where we conduct business, concerning, among other matters, solid waste disposal, wastewater effluent and air emissions. Although the costs of compliance have not been significant due to the nature of the materials and processes used in manufacturing operations, such laws also make generators of hazardous wastes and their legal successors financially responsible for the cleanup of sites contaminated by those wastes. The Company has been named a potentially responsible party at several environmentally contaminated sites. These regulatory actions and a small number of private party lawsuits are believed to represent the Company’s largest potential environmental liabilities. The Company has accrued $20.3$7.4 million at December 31, 2017,2021, compared with $24.5$8.1 million at December 31, 2016,2020, with respect to these sites. See “Environmental Charges,” Item 3 – Legal Proceedings and Note 1416 to the Consolidated Financial Statements for more information on environmental matters.

Results of operations – 2016 versus 2015

Consolidated net sales for 2016 were $4.8 billion, a $181 million, or 3.7%, decrease from 2015. The components of the sales change were:

($ in millions)    

Volume/mix

   $6

Selling price

    (25)

Acquisitions and divestitures, net

    (25)

Foreign currency translation and other, net

    (137)

Total sales decrease

   $(181)

In order to enhance the meaningfulness of reported changes in volume/mix, a $63.7 million reduction in packaging center

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K29

sales resulting from changes in the level of activity, primarily from the previously reported loss of contract packaging business in Irapuato, Mexico, is classified above as “other” due to the low/inconsistent correlation that typically exists between changes in revenueCritical Accounting Policies and changes in operating profit in our packaging center operations.

Sales volume/mix was essentially flat as organic volume growth and a favorable change in product mix in a number of our businesses offset volume declines in rigid paper containers. For the most part, price changes for the Company’s products were driven by changes in the underlying raw materials costs. In 2016, many of the Company’s primary raw materials saw decreases in their market prices; however, old corrugated containers (OCC) saw a moderate increase year over year. This increase most directly affected the Paper and Industrial Converted Products segment while the decrease in other raw materials, mainly resins, most directly affected the Consumer Packaging segment. While the Company’s 2016 and 2015 acquisitions added more than $20 million to comparable year-over-year sales, the impact was more than offset by comparable sales decreases related to dispositions, the most significant of which was the 2016 sale of the Company’s rigid plastics blow molding operations. Finally, foreign exchange rate changes decreased sales year-over-year as almost all of the foreign currencies in which the Company conducts business weakened in relation to the U.S. Dollar.

Total domestic sales were $3.1 billion, down 3.1% from 2015 levels. International sales were $1.7 billion, down 4.6% from 2015 with most of the decrease driven by the impact of foreign currency translation. Additionally, sales in Mexico were lower due to the loss of contract packaging business in Irapuato, Mexico.

Costs and expenses/margins

Cost of sales was down $189.5 million in 2016, or 4.7%, from the prior year primarily as a result of foreign currency translation, certain raw material price declines, disposed businesses, lower pension expense and productivity improvements, somewhat offset by the impact of acquisitions. Partially offsetting these benefits were an unfavorable mix of sales and higher labor and other costs. Overall, the Company was able to achieve a positive price cost relationship, aided by certain raw material price declines in some businesses and procurement productivity gains. As a result, gross profit margins improved to 19.6% in 2016 from 18.7% in the prior year.

Aggregate pension and postretirement plan expenses decreased $12.0 million in 2016 to a total of $45.3 million, compared with $57.3 million in 2015. The decrease was primarily the result of the Company’s previously disclosed change in its method to estimate service and interest cost components of net periodic benefit cost. On January 1, 2016 the Company began using a full yield curve approach to estimate these costs as opposed to the previous method that used a single weighted-average discount rate. Approximately 75% of pension and postretirement plan expenses are reflected in cost of sales and 25% in selling, general and administrative expenses. See Note 12 to the Consolidated Financial Statements for further information on employee benefit plans.

Selling, general and administrative expenses increased $9.8 million, or 2.0%, and were 10.6% of sales compared to 10.0% of sales in 2015. In 2015, selling, general and administrative expenses included a $32.5 million gain from the release of environmental reserves upon the partial settlement of the Fox River environmental claim, and included expenses totaling approximately $7.1 million for legal and professional fees related to the financial misstatements at our Irapuato, Mexico, packaging center. Absent these items, the year-over-year change in selling, general and administrative expenses would

Estimates

have been a decrease of $15.6 million. The year-over-year decrease reflects lower pension expense, a reduction in costs related to the Company’s domestic self-insured employee group medical plan, lower legal and professional fees, reductions from the sale of the Company’s rigid plastics blow molding operations, and the favorable effect of foreign currency translation from a stronger U.S. dollar. These favorable factors were partially offset by increases in 2016 incentive-based compensation and general inflation.

GAAP Earnings before interest and income taxes (EBIT) were 10.3% of sales in 2016 compared to 7.7% in 2015, The largest contributor to this increase was the 2016 gain on the sale of the Company’s rigid plastics blow molding business. Base EBIT was 9.1% of sales in 2016 compared to 8.3% in 2015, in line with the year-over-year increase in gross profit margin discussed above which contributed to the improvements in both GAAP EBIT and Base EBIT.

Restructuring and restructuring related asset impairment charges totaled $42.9 million and $50.6 million in 2016 and 2015, respectively. Additional information regarding restructuring actions and impairments is provided in Note 4 to the Company’s Consolidated Financial Statements.

Research and development costs, all of which were charged to expense, were $22.5 million in 2016 and $22.1 million in 2015. Management expects research and development spending to remain at a similar level in 2017.

Net interest expense totaled $51.6 million for the year ended December 31, 2016, compared with $54.6 million in 2015. The decrease was due primarily to lower average debt levels as the Company settled its $75.2 million 5.625% debentures upon their maturity in June 2016, and in May 2016 used proceeds from a new 1.00% fixed rate Euro 150 million loan to settle the remaining $150 million balance of a variable rate term loan entered into in conjunction with the 2014 acquisition of Weidenhammer Packaging Group.

Reportable segments

The Company reports its financial results in four reportable segments – Consumer Packaging, Display and Packaging, Paper and Industrial Converted Products, and Protective Solutions.

Consolidated operating profits, also referred to as “Income before interest and income taxes” on the Consolidated Statements of Income, are comprised of the following:

($ in millions)  2016 2015 % Change

Segment operating profit

       

Consumer Packaging

   $240.9  $231.6   4.0%

Display and Packaging

    14.8   10.9   35.7%

Paper and Industrial Converted Products

    129.7   124.1   4.5%

Protective Solutions

    51.5   46.0   12.0%

Restructuring/Asset impairment charges

    (42.9)   (50.6)   (15.3)%

Acquisition-related costs

    (4.6)   (1.7)   174.7%

Othernon-operational gains, net

    103.4   22.3   363.9%

Consolidated operating profits

   $492.8  $382.5   28.8%

Consumer Packaging

($ in millions)  2016  2015  % Change

Trade sales

   $2,043.1   $2,122.6    (3.7)%

Segment operating profits

    240.9    231.6    4.0%

Depreciation, depletion and amortization

    88.9    96.2    (7.6)%

Capital spending

    86.4    76.0    13.7%

30SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

Sales decreased year over year due to decreased sales prices driven by decreases in resins and other raw material costs coupled with a number of dispositions. The Company’s sold its rigid plastic blow molding operations in November 2016 and in February 2015 sold a portion of its metal ends and closures business, consisting of two facilities in Canton, Ohio. The year-over-year impact of these dispositions more than offset the additional sales from the acquisition of Plastic Packaging Inc. on November 1, 2016. Organic volume growth in flexible packaging and plastics somewhat offset volume declines in global composite cans. Trade sales in the segment were reduced by approximately $27 million year over year as a result of foreign currency translation due to a stronger U.S. dollar. Domestic sales were approximately $1,368 million, down 5.6%, or $81 million, from 2015, while international sales were approximately $675 million, up 0.2%, or $1 million, from 2015.

Segment operating profits increased by $9.3 million year over year and operating profit margins increased to 11.8% from 10.9% in 2015. The increase in segment operating profits was largely driven by a positive price/cost relationship and solid gains in fixed cost productivity. These benefits were partially offset by inflation, volume declines in global composite cans, and the impact of foreign currency translation. Material purchasing and logistics savings were key drivers of the positive price/cost relationship. The previously mentioned divestitures were almost completely offset by acquisitions at an operating profit level.

Significant capital spending in the Consumer Packaging segment included numerous productivity projects and expansion of manufacturing capabilities in North America in both flexible packaging and plastics, and expansion of manufacturing capabilities in Europe in rigid paper and plastic containers.

Display and Packaging

($ in millions)  2016  2015  % Change

Trade sales

   $520.4   $606.1    (14.1)%

Segment operating profits

    14.8    10.9    35.7%

Depreciation, depletion and amortization

    16.7    16.6    0.6%

Capital spending

    11.5    10.9    5.8%

Domestic trade sales in the segment decreased $12.8 million, or 5.0%, to $246 million, while international trade sales decreased $73 million, or 21.0%, to $274 million. The decrease in domestic trade sales resulted from lower volume in retail security packaging and the impact of the July 2016 sale of our retail security packaging facility in Juncos, Puerto Rico. The decrease in international sales reflects the Company’s exit in 2016 from packaging center fulfillment contract with a customer. The Company transitioned the operation of the facility back to the customer during the first half of 2016. Additionally, the negative impact of approximately $18 million from foreign currency translation as a result of a weaker Mexican peso and Polish zloty relative to the U.S. dollar also lowered sales year over year.

The increase in segment operating profit was driven by a positive price/cost relationship and total productivity. These gains were partially offset by the impact of foreign currency translation and inflation of labor and other costs along with volume declines in retail security packaging.

Capital spending in the segment included numerous productivity and customer development projects in North America.

Paper and Industrial Converted Products

($ in millions)  2016  2015  % Change

Trade sales

   $1,693.5   $1,729.8    (2.1)%

Segment operating profits

    129.7    124.1    4.5%

Depreciation, depletion and amortization

    74.7    76.7    (2.6)%

Capital spending

    60.6    74.0    (18.1)%

The U.S. Dollar strengthened against the local currencies in virtually every international market where the segment operates, resulting in a $31 million year-over-year decrease in sales due to foreign currency translation. Additionally, the divestiture of the Company’s paperboard mill inSchweighouse-sur-Moder, France was only partially offset by sales from acquired businesses, a small tubes and cores business in Australia acquired in June 2016 and a domestic high-density wood plug business acquired in September 2015. On average market costs for recovered paper in the U.S. were higher year over year resulting in higher average selling prices in all of the segment’s domestic businesses with the exception of corrugating medium. Selling prices were slightly higher in Brazil and the Andean region, primarily due to overall inflation, and were up in Europe due to the pass through of higher material costs in that market. Total volume/mix was effectively flat in the segment despite gains in Europe and Latin America which were due to a combination of market share gains and regional expansion. Volume decreased in our reels business on lower volumes in nail-wood reels and lower demand for steel reels used in bothon- andoff-shore applications in the oil and gas industry. Volume also declined in our recycling business primarily due to a 2015 action to exit a recovery facility operating agreement coupled with some loss of market share. In addition, volume decreased on our one corrugating medium machine due to general market softening. Total domestic sales in the segment decreased $18 million, or 1.7%, to $1,025 million while international sales decreased $18 million, or 2.6%, to $668 million.

Segment operating profit increased year over year driven by total productivity. Adding to this were gains from the previously mentioned acquisitions and divestitures. Partially offsetting these gains were price cost declines driven by the Company’s single corrugating medium machine which continued to struggle as market supply depressed sales price and forced a larger portion of output to be sold in less-profitable foreign markets. In corrugating medium, lower selling prices and reduced volume, which also had a negative impact on productivity, resulted in a $16.2 million year-over-year reduction in product line profitability. Excluding corrugating medium, the segment’s operating profit would have increased $21.8 million, or 17.8%, driven by solid gains in manufacturing productivity, a positive price cost relationship, and lower fixed costs.

Significant capital spending in the segment included the modification of several paper machines in North America and numerous productivity projects.

Protective Solutions

($ in millions)  2016  2015  % Change

Trade sales

   $525.9   $505.9    4.0%

Operating profits

    51.5    46.0    12.0%

Depreciation, depletion and amortization

    24.8    23.6    5.4%

Capital spending

    12.9    15.7    (18.2)%

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K31

Sales increased year over year due to higher volume in temperature-assured packaging, molded foam automotive components and paper-based protective packaging, partially reduced by the negative impact of foreign currency translation.

Segment operating profit increased year over year due to a positive price/cost relationship and higher volume which were partially offset by increases in labor, overhead and other costs.

Domestic sales were $436 million in 2016 up $14 million, 3.2%, from 2015. International sales increased more modestly to $90 million up $6 million, or 7.6%.

Capital spending in the segment included numerous productivity and customer development projects.

Critical accounting policies and estimates

Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates these estimates and assumptions on an ongoing basis, including but not limited to those related to inventories, bad debts, derivatives, income taxes, share-based compensation, goodwill, intangible assets, restructuring, pension and other postretirement benefits, environmental liabilities, and contingencies and litigation. Estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances. The results of these estimates may form the basis of the carrying value of certain assets and liabilities and may not be readily apparent from other sources. Actual results could differ from those estimates. The impact of and any associated risks related to estimates, assumptions and accounting policies are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as in the Notes to the Consolidated Financial Statements, if applicable, where such estimates, assumptions and accounting policies affect the Company’s reported and expected financial results.

The Company believes the accounting policies discussed in the Notes to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form10-K are critical to understanding the results of its operations. The following discussion represents those policies that involve the more significant judgments and estimates used in the preparation of the Company’s Consolidated Financial Statements.

32 FORM 10-K SONOCO 2021 ANNUAL REPORT

Business Combinations
The Company’s acquisitions of businesses are accounted for in accordance with ASC 805, "Business Combinations." The Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquired business at their fair values as of the date of acquisition. Goodwill is measured as the excess of the consideration transferred, also measured at fair value, over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of identifiable intangible assets, deferred tax asset valuation allowances, liabilities including those related to debt, pensions and other postretirement plans, uncertain tax positions, contingent consideration and contingencies. This method also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If we are required to adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could have a material impact on our financial condition and results of operations.
Significant estimates and assumptions in estimating the fair value of acquired customer relationships, technology, and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset could be impaired.
Impairment of long-lived, intangibleLong-Lived, Intangible and other assets

Other Assets

Assumptions and estimates used in the evaluation of potential impairment can result in adjustments affecting the carrying values of long-lived, intangible and other assets and the recognition of impairment expense in the Company’s Consolidated Financial Statements. The Company evaluates its long-lived assets (property, plant and equipment), definite-lived intangible assets and other assets (including right of use lease assets, notes receivable and equity investments) for impairment whenever indicators of impairment exist, or when it commits to sell the asset. If the sum of the undiscounted expected future cash flows from a long-lived asset or definite-lived intangible asset group is less than the carrying value of that asset group, an asset impairment charge is recognized. Key assumptions and estimates used in the projection of expected future cash flow modelflows generally include price levels, sales growth, profit margins and asset life. The amount of an impairment charge, if any,

is calculated as the excess of the asset’s carrying value over its fair value, generally represented by the discounted future cash flows from that asset or, in the case of assets the Company evaluates for sale, as estimated sale proceeds less costs to sell. The Company takes into consideration historical data and experience together with all other relevant information available when estimating the fair values of its assets. However, fair values that could be realized in actual transactions may differ from the estimates used to evaluate impairment. In addition, changes in the assumptions and estimates may result in a different conclusion regarding impairment.

Impairment of goodwill

In accordance with ASC 350, theGoodwill

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 2017.2021. For testing purposes, the Company performed an assessment of each reporting unit using either a qualitative evaluation or a quantitative test. The Company’s reporting units are one level below its operating segments, as determined in accordance with ASC 350. The qualitative evaluations considered factors such as the macroeconomic environment, Company stock price and market capitalization movement, current year operating performance as compared to prior projections, business strategy changes, and significant customer wins and losses. The quantitative tests, considered factors such asdescribed further below, relied on the current year operating performance as compared to prior projections, expected changes inoutlook of reporting unit management for future operating performance,results and took into consideration, among other things, the expected impact of the COVID-19 pandemic on future operations, specific business unit risk, the countries in which the reporting units operate, and implied fair values frombased on comparable trading and transaction multiples.

When performing a quantitative analysis, the Company estimates the fair value of its reporting units it does so using a discounted cash flow model based on projections of future years’ operating results and associated cash flows, together withflows. 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, which are validated by observed comparable trading and transaction multiples.multiples based on guideline public companies. The Company’s model discounts projected future cash flows, forecasted over aten-year seven-year period, with an estimated residual growth rate. The Company’s projections incorporate management’s estimates of the most-likely expected future results, including significant assumptions and estimates related to, among other things: sales volumes and prices, new business, profit margins, income taxes, capital expenditures and changes in working capital requirements and, where applicable, improved operating margins.results. Projected future cash flows are discounted to present value using a discount rate that management believes is appropriate for the reporting unit.

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

In considering the level of uncertainty regarding the potential for goodwill impairment, management has concluded that any such impairment would, in most cases, likely be the result of adverse changes in more than one assumption. Management does not consider any of itsconsiders the assumptions used to be either aggressive or conservative, but rather its best estimates across a range of possible outcomes based on available evidence at the time of the assessment. Other than in Display and Packaging,Plastics - Healthcare, which is discussed below, there is no specific singular event or single change in circum-

32SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

stancescircumstances 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"Item 1A. Risk Factors” ofFactors" in this Annual Report on Form10-K.

Although no reporting units failed the testing noted above,annual impairment test, in management’s opinion, the goodwill of the Plastics - Healthcare reporting units having the greatestunit 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.
33 FORM 10-K SONOCO 2021 ANNUAL REPORT

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 futurenegative price/cost relationships will persist over the long-term, or profit margins do not improve as expected, goodwill impairment if actual results fall short of expectations are Display and Packaging, and Paper and Industrial Converted Products – Europe.charges may be possible in the future. Total goodwill associated with thesethe Plastics – Healthcare reporting unitsunit was approximately $203$64.3 million and $95 million, respectively, at December 31, 2017.

The Display and Packaging reporting unit designs, manufactures, assembles, packs and distributes temporary, semi-permanent and permanentpoint-of-purchase displays; provides supply chain management services, including contract packing, fulfillment and scalable service centers; and manufactures retail packaging, including printed backer cards, thermoformed blisters and heat sealing equipment.2021. Based on the most-recent annual impairment test, performed in the third quarter, the estimated fair value of Display and Packagingthe Plastics – Healthcare reporting unit exceeded its carrying value by approximately 37% compared to 64% in the prior year’s13.3%.

Sensitivity Analysis
In its 2021 annual test. The unit’s goodwill impairment analysis, reflects expectations for moderate sales growth and improved percentage profit margins based largely on the expected successful ramp up of operations at the Company’s new battery packaging facility in Atlanta, Georgia. Operations at this facility began inmid-2017, and results to date have been well below projections due to a variety of internal and external factors impacting production efficiencies and operating costs. These operational issues and the resulting poor results relative to projections have continued in the fourth quarter. The Company is working to resolve these issues and continues to be optimistic that over time the center will be able to achieve efficiency and cost levels in line with expectations. In addition, the analysis reflects expected cash flow improvements from future productivity initiatives and increased capacity within this new center and elsewhere in the reporting unit. A large portion of expected sales in this reporting unit is concentrated in two customers and if the business with either one of these customers is lost, or other projected synergies and productivity gains are not realized, a goodwill impairment charge could be incurred. Based on an assessment made at December 31, 2017, which gave consideration to the current under-performance of the reporting unit largely driven by the previously mentioned issues at the new packaging center, the fair value of the Display and Packaging reporting unit has continued to decline from the time of the annual impairment test. Although this assessment did not result in a conclusion that as of December 31, 2017 it was more likely than not that goodwill had been impaired, in management’s opinion continued under-performance in future quarters relative to forecasts would likely result in an impairment charge.

Paper and Industrial Converted Products – Europe manufactures paperboard tubes and cores, fiber-based construction tubes and forms and recycled paperboard. In recent years the Eurozone has faced persistent high unemployment, spillover effects ofgeo-political conflicts in Eastern Europe and the Middle East, and uncertainties over the United Kingdom’s exit negotiations with the European Union. Despite these issues, the economy experienced steady year over year growth in the last couple of years and the Company expects the momentum to

continue in the near future. This outlook is supported by accommodative monetary policy, recovery in manufacturing and export activities, and lower inflation related to energy price declines. The growth is expected to slow down slightly in the outer years as the European Central Bank gradually tightens its monetary policies. This reporting unit experienced a significant increase in raw material costs during 2017 which it was not able to fully offset through higher selling prices. Management expects this negative price/cost relationship to improve going forward and despite the challenges noted, believes the reporting unit should be able to grow at or above the Eurozone’s projected GDP growth rates and continue to mitigate the impact of these factors. However, if economic conditions were to deteriorate and management were unable to fully mitigate the impacts, or be unable to consistently recover additional significant cost increases or otherwise fail to achieve expected sales volumes and profit margins, a goodwill impairment charge could be incurred. Based on the valuation work performed during the third quarter, the estimated fair value of Paper and Industrial Converted Products – Europe exceeded its carrying value by approximately 29%, compared with 55% in the prior year.

For the annual analyses performed during 2017, projected future cash flows for the Plastics - Healthcare reporting unit were discounted at 10.0%8.3%. Based on the discounted cash flow model and 8.5% for Display and Packaging and Paper and Industrial Converted Products – Europe, respectively. Holdingholding other valuation assumptions constant, Display and Packaging projected operating profits across all future periods would have to be reduced approximately 23%13.0%, or the discount rate increased to 12.7%9.3%, in order for the estimated fair value of the reporting unit to fall below the reporting unit’sits carrying value. The corresponding percentages for Paper and Industrial Converted Products – Europe are 19% and 10.4%, respectively.

During the time subsequent to the annual evaluation, and at December 31, 2017, 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 have occurred.

Income taxes

Taxes

The Company follows ASC 740, Accounting for Income Taxes, which requires a reduction of the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not such assets will not be realized. Deferred tax assets generally represent expenses that have been recognized for financial reporting purposes, but for which the corresponding tax deductions will occur in future periods. The valuation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns and future profitability. Our accounting for deferred tax consequences represents our best estimate of those future events. Changes in our current estimates, due to unanticipated events or otherwise, could have a material impact on our financial condition and results of operations.

For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those positions not meeting themore-likely-than-not standard, no tax benefit has been recognized in the financial statements. Associated interest has also been recognized, where applicable.

As previously disclosed, the Company received a draft Notice of Proposed Adjustment (“NOPA”) from the Internal Revenue Service (IRS) in February 2017 proposing an adjustment to income for the 2013 tax year based on the IRS’s

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K33

recharacterization of a distribution of an intercompany note made in 2012, and the subsequent repayment of the note over the course of 2013, as if it were a cash distribution made in 2013. In March 2017, the Company received a draft NOPA proposing penalties of $18 million associated with the IRS’s recharacterization, as well as an Information Document Request (“IDR”) requesting the Company’s analysis of why such penalties should not apply. The Company responded to this IDR in April 2017. On October 5, 2017, the Company received two revised draft NOPAs proposing the same adjustments and penalties as in the prior NOPAs. On November 14, 2017, the Company received two final NOPAs proposing the same adjustments and penalties as in the prior NOPAs. On November 20, 2017, the Company received a Revenue Agents Report (“RAR”) that included the same adjustments and penalties as in the prior NOPAs. At the time of the distribution in 2012, it was characterized as a dividend to the extent of earnings and profits, with the remainder as a tax free return of basis and taxable capital gain. As the IRS proposes to recharacterize the distribution, the entire distribution would be characterized as a dividend. The incremental tax liability associated with the income adjustment proposed in the RAR would be approximately $89 million, excluding interest and the previously referenced penalties. On January 22, 2018, the Company filed a protest to the proposed deficiency with the IRS, which will cause the matter to be referred to the Appeals Division of the IRS. The Company strongly believes the position of the IRS with regard to this matter is inconsistent with applicable tax laws and existing Treasury regulations, and that the Company’s previously reported income tax provision for the year in question is appropriate. However, there can be no assurance that this matter will be resolved in the Company’s favor. Regardless of whether the matter is resolved in the Company’s favor, the final resolution of this matter could be expensive and time consuming to defend and/or settle. While the Company believes that the amount of tax originally paid with respect to this distribution is correct, and accordingly has not provided additional reserve for tax uncertainty, there is still a possibility that an adverse outcome of the matter could have a material effect on its results of operations and financial condition.

The estimate for the potential outcome of any uncertain tax issue is highly judgmental. The Company believes it has adequately provided for any reasonably foreseeable outcome related to these matters. 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 limitations on potential assessments expire. Additionally, the jurisdictions in which earnings or deductions are realized may differ from current estimates. As a result, the eventual resolution of these matters could have a different impact on the effective rate than currently reflected or expected.

Stock-based compensation plans

Stock-Based Compensation Plans
The Company utilizes share-based compensation in the form of restricted stock appreciation rights,units, performance contingent restricted stock units, and other share-based awards. Certain awards are in the form of contingent stock units where the ultimate number of units are performance based. The amount of share-based compensation expense associated with these performance-based awards areperformance contingent restricted stock units is based on estimates regardingof future performance using measures defined in the plans. In 2017, thestock plan descriptions for each award granted. As of December 31, 2021, these performance measures consistedinclude the following:
•Base earnings per share — three-year sum of Earningsforecasted future and historical annual base earnings per Share and share for the three-year measurement period associated with each award;
•Return on Net Assets Employed. invested capital — three-year simple average calculated using the annual returns calculated by dividing 1) net base operating profit after tax (derived from historical or projected base earnings) by 2) the average of total historical or projected debt plus equity for the respective annual periods; and
•Return on net assets employed — three-year simple average calculated using the annual returns calculated by dividing 1) net base operating profit after tax (derived from historical or projected base earnings) by 2) the average of total historical or projected net assets for the respective annual periods.
Changes in estimates regarding the future achievement of these performance measures may result in significant fluctuations from period to period in the amount of share-based compensation expense reflected in the Company’s Consolidated Financial Statements.

The Company uses an option-pricing model to determine the grant date fair value of its stock appreciation rights. Inputs to the model include a number of subjective assumptions. Management routinely assesses the assumptions and methodologies used to calculate estimated fair value of share-based compensation per share. Circumstances may change and additional data may become available over time that results in changes to these assumptions and methodologies, which could materially impact fair value determinations.

Pension and postretirement benefit plans

Postretirement Benefit Plans

The Company has significant pension and postretirement benefit liabilities and costs that are measured using actuarial valuations. The largest of the Company's pension plans are the U.S.-based Sonoco Pension Plan (the "Active Plan") and the Inactive Plan. On July 17, 2019, the Company's Board of Directors approved the termination of the Inactive Plan effective September 30, 2019. Following completion of a limited lump-sum offering in the second quarter of 2021, the Company settled all remaining liabilities under the Inactive Plan in June 2021 through the purchase of annuities.
The actuarial valuations used to evaluate the plans employ key assumptions that can have a significant effect on the calculated amounts. The key assumptions used at December 31, 2017,2021 in determining the projected benefit obligation and the accumulated benefit obligation for U.S. retirement and retiree health and life insurance plans include: discount rates of 3.69% and 3.49%3.05% for the active and inactive qualified retirement plans, respectively, 3.50%Active Plan, 2.66% for the Company's non-qualified retirement plans, and 3.36%2.48% for the Company's retiree health and life insurance plan. The rate of compensation increase for the retiree health and life insurance plan; and rates of compensation increases ranging from 3.28% to 4.02%plan was 3.01%. The key assumptions used to determine 2017the 2021 net periodic benefit cost for U.S. retirement and retiree health and life insurance plans include: discount rates of 4.29%2.75% and 3.99%2.31% for the activeActive Plan and inactive qualified retirement plans,Inactive Plan, respectively, 3.97%2.28% for thenon-qualified retirement plans, and 3.70%2.04% for the retiree health and life insurance plan; an expected long-term rate of return on plan assets of 7.00% and 6.75%3.27% for the activeActive Plan and inactive qualified retirement plans, respectively;2.01% for the Inactive Plan; and ratesa rate of compensation increases ranging from 3.32% to 4.87%increase for the retiree health and life insurance plan of 3.03%.

During 2017,2021, the Company recorded total pension and postretirement benefit expenses of approximately $78.5$595.6 million, compared with $45.3$58.0 million during 2016.2020. The 20172021 amount reflects $82.8non-cash settlement charges of $550.7 million, primarily related to the settlement of the Inactive Plan's liabilities. Absent the settlement charges, total pension and postretirement benefit expenses were approximately $13.1 million lower
year over year. Charges in 2021 reflect $23.3 million of expected returns on plan assets at an average assumed rate of 6.3%3.61% and interest cost of $56.3$24.4 million at a weighted-average discount rate of 3.34%2.43%. The expense recognized in 2017 also includes $32.8 million of pension settlement charges, which are discussed in more detail below. The 20162020 amount reflects $87.0$51.1 million of expected returns on plan assets at an average assumed rate of 6.8%3.18% and interest cost of $60.2$51.6 million at a weighted-average discount rate of 3.55%2.76%. During 2017,2021, the Company made contributions to its pension and postretirement plans of $108.6$163.7 million, including $124.4 million to the Inactive Plan in order to be fully funded on a voluntary $50 million contribution to its U.S. active qualified retirement plan. Intermination basis at the prior year, the Company made contributions to its pension and postretirement plans totaling $46.7time annuity purchases were made. Contributions in 2020 totaled $40.4 million. Contributions vary from year
34 FORM 10-K SONOCO 2021 ANNUAL REPORT

to year depending on various factors, the most significant being the market value of assets and interest rates. Cumulative net actuarial losses, were approximately $616 million at December 31, 2017, and are primarilyprincipally the result of low discount rates. Actuarialrates, decreased from $736 million at December 31, 2020 to $105 million at December 31, 2021, primarily due to the settlement of the Inactive Plan during 2021. Remaining actuarial losses/gains outside of the 10% corridor defined by U.S. GAAP are amortized over the average remaining service life of the plan’s active participants or the average remaining life expectancy of the plan’s inactive participants if all, or almost all, of the plan’s participants are inactive.

In February 2017, the Company initiated a program to settle a portion of the projected benefit obligation (PBO) relating to terminated vested participants in the U.S. qualified retirement plans through either a single,lump-sum payment or the purchase of an annuity. The terminated vested population comprised approximately 15% of the beginning of year PBO of these plans.

The Company successfully settled approximately 47% of the PBO for the terminated vested plan participants. As a result of these and other smaller settlements, the Company recognizednon-cash settlement charges of $32.8 million in 2017. All

34SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

settlement payments were funded from plan assets and did not require the Company to make any additional cash contributions in 2017. The Company does not expect to recognize any additional settlement charges in 2018.

Excluding thenon-recurring settlement charges recognized in 2017, the Company projects that total benefit plan expense toexpenses will be approximately $8 million lower in 20182022, $588 million lower than in 2017. The2021. This decrease is due primarily due to greaterthe settlement of the Inactive Plan. Contributions to the Company's benefit plans in 2022, including the Sonoco Retirement Contribution ("SRC"), are expected to total approximately $38 million. Future funding requirements will depend largely on actual investment returns, on plan assets duefuture actuarial assumptions, legislative actions, and changes to a higher asset base resulting from the strong market performanceCompany's benefit offerings.

In October 2021, the Company's Board of Directors approved an amendment to the Sonoco Retirement and Savings Plan to eliminate the SRC and to increase the Company's 401(k) matching contribution to 100% of the first 6% of eligible contributions effective as of December 31, 2021. The amendment is expected to be neutral to total expense in 20172022. However, the Company's operating cash flow is expected to be negatively affected in 2022 as it will reflect both the annual funding of the SRC earned in 2021 and the $50 million voluntary contribution made to the U.S. active qualified retirement plan in the fourth quarter of 2017. Partially offsetting this favorable impact, is the effect of lower discount rates on year-over-year benefit plan expense.

higher 401(k) matching contributions.

The Company adjusts its discount rates at the end of each fiscal year based on yield curves of high-quality debt instruments over durations that match the expected benefit payouts of each plan. The expected rate of return assumption is derived by taking into consideration the targeted plan asset allocation, projected future returns by asset class and active investment management. A third-party asset return model was used to develop an expected range of returns on plan investments over a12- to15-year period, with the expected rate of return selected from a best estimate range within the total range of projected results. The Company periodicallyre-balances its plan asset portfolio in order to maintain the targeted allocation levels. The rate of compensation increase assumption is generally based on salary and incentive compensation increases. A key assumption for the U.S. retiree health and life insurance plan is a medical cost trend rate beginning at 6.75%8.27% forpost-age 65 participants and trending down to an ultimate rate of 4.5%4.4% in 2026.2030. The ultimate trend rate of 4.5%4.4% represents the Company’s best estimate of the long-term average annual medical cost increase over the duration of the plan’s liabilities. It provides for real growth in medical costs in excess of the overall inflation level.

The sensitivity to changes in the critical assumptions for the Company’s U.S. plans as of December 31, 2021, is as follows:
Assumption
($ in millions)
Percentage
Point
Change
Projected Benefit
Obligation
Higher/(Lower)
Annual Expense
Higher/(Lower)
Discount rate-.25 pts$5.9$0.3
Expected return on assets-.25 ptsN/A$0.1
Other assumptions and estimates impacting the projected liabilities of these plans include inflation, participant withdrawal and mortality rates and retirement ages. The Company annually reevaluatesevaluates the assumptions used in projecting the pension and postretirement liabilities and associated expense.expense annually. These judgments, assumptions and estimates may affect the carrying value of pension and postretirement plan net assets and liabilities and pension and postretirement plan expenses in the Company’s Consolidated Financial Statements.

The sensitivity to changes in the critical assumptions for the Company’s U.S. plans as of December 31, 2017, is as follows:

Assumption

($ in millions)

  

Percentage

Point

Change

  

Projected Benefit

Obligation

Higher/(Lower)

  

Annual

Expense

Higher/

(Lower)

Discount rate

    -.25 pts   $46.7   $2.9

Expected return on assets

    -.25 pts    N/A   $2.6

See Note 1213 to the Consolidated Financial Statements for additional information on the Company’s pension and postretirement plans.

Recent accounting pronouncements

Accounting Pronouncements

Information regarding recent accounting pronouncements is provided in Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form10-K.

Item 7A. Quantitative and qualitative disclosures about market risk

Qualitative Disclosures About Market Risk

Information regarding market risk is provided in this Annual Report on Form10-K under the following items and captions: “Our international operations subject us to various risks that could adversely affect our business operations and financial results” and “Currency exchange rate fluctuations may reduce operating results and shareholders’shareholders' equity” inItem 1A-Risk1A - Risk Factors; “Risk Management” in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations; and in Note 910 to the Consolidated Financial Statements in Item 8 – Financial Statements and Supplementary Data.

Item 8. Financial statementsStatements and supplementary data

Supplementary Data

The Consolidated Financial Statements and Notes to the Consolidated Financial Statements are provided on pagesF-1 through F-32F-41 of this report. Selected quarterly financial data is provided in Note 18 to the Consolidated Financial Statements included in this Annual Report on Form10-K.



35 FORM 10-K SONOCO 2021 ANNUAL REPORT

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K35

REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM

To the Board of Directors and shareholdersShareholders of Sonoco Products Company

Opinions on the financial statementsFinancial Statements and internal controlInternal Control over financial reporting

Financial Reporting


We have audited the accompanying consolidated balance sheets of Sonoco Products Company and its subsidiaries (the “Company”) as of December 31, 20172021 and 2016,2020, and the related consolidated statements of income, comprehensive income, changes in total equity and cash flows for each of the three years in the period ended December 31, 2017,2021, including the related notes and financial statement schedule listed in the accompanying index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company’sCompany's internal control over financial reporting as of December 31, 2017,2021, based on criteria established inInternal Control—Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20172021 and 2016,2020, and the results of theirits operations and theirits cash flows for each of the three years in the period ended December 31, 20172021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2021, based on criteria established inInternal Control—Control - Integrated Framework (2013) issued by the COSO.


Basis for opinions

Opinions


The Company’sCompany's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’sManagement's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’sCompany's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)(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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.


Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant esti-

matesestimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on


Definition and Limitations of Internal Control over Financial Reporting management has excluded Packaging Holdings Inc. and subsidiaries (“Packaging Holdings”) and Clear Lam Packaging, Inc. (“Clear Lam”) from its assessment of internal control over financial reporting as of December 31, 2017 because they were acquired by the Company in a purchase business combination during 2017. We have also excluded Packaging Holdings and Clear Lam from our audit of internal control over financial reporting. Packaging Holdings and Clear Lam are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent approximately 4.1% and 4.3%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017.

Definition and limitations of internal control over financial reporting


A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-1 FORM 10-K SONOCO 2021 ANNUAL REPORT

Goodwill Impairment Assessment - Plastics - Healthcare Reporting Unit

As described in Notes 1 and 8 to the consolidated financial statements, the Company’s consolidated goodwill balance was $1.32 billion as of December 31, 2021, and the goodwill associated with the Plastics - Healthcare reporting unit was $64.3 million. Management 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. 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 is recognized for the excess. Fair value is estimated using a discounted cash flow model based on projections of future years’ operating results and associated cash flows combined with comparable trading and transaction multiples based on guideline public companies. The calculated estimated fair value of the reporting unit reflects a number of significant management assumptions and estimates including the forecast of sales growth, gross profit margins, and discount rates.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the Plastics - Healthcare reporting unit is a critical audit matter are (i) the significant judgment by management when determining the fair value measurement of the reporting unit; (ii) the significant auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the forecast of sales growth, gross profit margins, and the discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Plastics - Healthcare reporting unit. These procedures also included, among others (i) testing management’s process for determining the fair value of the Plastics - Healthcare reporting unit; (ii) evaluating the appropriateness of the discounted cash flow model; (iii) testing the completeness and accuracy of underlying data used in the discounted cash flow model; and (iv) evaluating the reasonableness of the significant assumptions used by management related to the forecast of sales growth, gross profit margins, and the discount rate. Evaluating management’s assumptions related to the forecast of sales growth and gross profit margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Plastics - Healthcare reporting unit; (ii) the consistency with external market data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and in the evaluation of the reasonableness of the discount rate significant assumption.

/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina

February 28, 2018

2022


We have served as the Company’s auditor since 1967.


F1







F-2 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-K

Consolidated Balance Sheets


CONSOLIDATED BALANCE SHEETS
Sonoco Products Company

(Dollars and shares in thousands)

At December 31

  2017 2016

Assets

     

Current Assets

     

Cash and cash equivalents

   $254,912  $257,226

Trade accounts receivable, net of allowances of $9,913 in 2017 and $10,884 in 2016

    725,251   625,411

Other receivables

    64,561   43,553

Inventories

     

Finished and in process

    196,204   127,446

Materials and supplies

    277,859   245,368

Prepaid expenses

    44,849   49,764
    1,563,636   1,348,768

Property, Plant and Equipment, Net

    1,169,377   1,060,017

Goodwill

    1,241,875   1,092,215

Other Intangible Assets, Net

    331,295   224,958

Long-term Deferred Income Taxes

    62,053   42,130

Other Assets

    189,485   155,115

Total Assets

   $4,557,721  $3,923,203

Liabilities and Equity

     

Current Liabilities

     

Payable to suppliers

   $548,309  $477,831

Accrued expenses and other

    217,018   205,303

Accrued wages and other compensation

    66,337   68,693

Notes payable and current portion of long-term debt

    159,327   32,045

Accrued taxes

    8,979   18,744
    999,970   802,616

Long-term Debt

    1,288,002   1,020,698

Pension and Other Postretirement Benefits

    355,187   447,339

Deferred Income Taxes

    74,073   59,753

Other Liabilities

    110,429   38,092

Commitments and Contingencies

     

Sonoco Shareholders’ Equity

     

Serial preferred stock, no par value

     

Authorized 30,000 shares

     

0 shares issued and outstanding as of December 31, 2017 and 2016

     

Common shares, no par value

     

Authorized 300,000 shares

     

99,414 and 99,193 shares issued and outstanding
at December 31, 2017 and 2016, respectively

    7,175   7,175

Capital in excess of stated value

    330,157   321,050

Accumulated other comprehensive loss

    (666,272)   (738,380)

Retained earnings

    2,036,006   1,942,513

Total Sonoco Shareholders’ Equity

    1,707,066   1,532,358

Noncontrolling Interests

    22,994   22,347

Total Equity

    1,730,060   1,554,705

Total Liabilities and Equity

   $4,557,721  $3,923,203

(Dollars and shares in thousands)
At December 31
20212020
Assets
Current Assets
Cash and cash equivalents$170,978 $564,848 
Trade accounts receivable, net of allowances of $19,651 in 2021 and $20,920 in 2020755,609 658,808 
Other receivables95,943 103,636 
Inventories
Finished and in process199,823 167,018 
Materials and supplies362,290 283,673 
Prepaid expenses74,034 52,564 
1,658,677 1,830,547 
Property, Plant and Equipment, Net1,297,500 1,244,110 
Goodwill1,324,501 1,389,255 
Other Intangible Assets, Net278,143 321,934 
Long-term Deferred Income Taxes25,818 42,479 
Right of Use Asset-Operating Leases268,390 296,020 
Other Assets220,206 152,914 
Total Assets$5,073,235 $5,277,259 
Liabilities and Equity
Current Liabilities
Payable to suppliers$721,312 $536,939 
Accrued expenses and other290,874 430,241 
Accrued wages and other compensation90,476 81,248 
Notes payable and current portion of long-term debt411,557 455,784 
Accrued taxes11,544 7,415 
1,525,763 1,511,627 
Long-term Debt1,199,106 1,244,440 
Noncurrent Operating Lease Liabilities234,167 262,048 
Pension and Other Postretirement Benefits158,265 171,518 
Deferred Income Taxes70,482 86,018 
Other Liabilities35,911 91,080 
Commitments and Contingencies00
Sonoco Shareholders’ Equity
Serial preferred stock, no par value
Authorized 30,000 shares
0 shares issued and outstanding as of December 31, 2021 and 202000
Common shares, no par value
Authorized 300,000 shares
97,370 and 100,447 shares issued and outstanding as of December 31, 2021 and 2020, respectively7,175 7,175 
Capital in excess of stated value119,690 314,056 
Accumulated other comprehensive loss(359,425)(756,842)
Retained earnings2,070,005 2,335,216 
Total Sonoco Shareholders’ Equity1,837,445 1,899,605 
Noncontrolling Interests12,096 10,923 
Total Equity1,849,541 1,910,528 
Total Liabilities and Equity$5,073,235 $5,277,259 
The Notes beginning on pageF-6 F-7 are an integral part of these consolidated financial statements.


F-3 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-KF2

Consolidated Statements of Income


CONSOLIDATED STATEMENTS OF INCOME
Sonoco Products Company

(Dollars and shares in thousands except per share data)

Years ended December 31

  2017 2016 2015

Net sales

   $5,036,650  $4,782,877  $4,964,369

Cost of sales

    4,087,260   3,845,451   4,034,947

Gross profit

    949,390   937,426   929,422

Selling, general and administrative expenses

    543,672   506,001   496,241

Restructuring/Asset impairment charges

    38,419   42,883   50,637

Gain on disposition of business, net

    —   104,292   —

Income before interest and income taxes

    367,299   492,834   382,544

Interest expense

    57,220   54,170   56,973

Interest income

    4,475   2,613   2,375

Income before income taxes

    314,554   441,277   327,946

Provision for income taxes

    146,589   164,631   87,738

Income before equity in earnings of affiliates

    167,965   276,646   240,208

Equity in earnings of affiliates, net of tax

    9,482   11,235   10,416

Net income

    177,447   287,881   250,624

Net (income) attributable to noncontrolling interests

    (2,102)   (1,447)   (488)

Net income attributable to Sonoco

   $175,345  $286,434  $250,136

Weighted average common shares outstanding:

       

Basic

    100,237   101,093   101,482

Assuming exercise of awards

    615   689   910

Diluted

    100,852   101,782   102,392

Per common share

       

Net income attributable to Sonoco:

       

Basic

   $1.75  $2.83  $2.46

Diluted

   $1.74  $2.81  $2.44

Cash dividends

   $1.54  $1.46  $1.37

Consolidated Statements of Comprehensive Income

(Dollars and shares in thousands except per share data)
Years ended December 31
202120202019
Net sales$5,590,438 $5,237,443 $5,374,207 
Cost of sales4,528,528 4,191,104 4,316,378 
Gross profit1,061,910 1,046,339 1,057,829 
Selling, general and administrative expenses558,180 528,439 530,867 
Restructuring/Asset impairment charges14,210 145,580 59,880 
Loss on divestiture of business, net

2,667 14,516 — 
Operating profit486,853 357,804 467,082 
Non-operating pension costs568,416 30,142 24,713 
Interest expense63,991 75,046 66,845 
Interest income4,756 2,976 5,242 
Loss from the early extinguishment of debt20,184 — — 
(Loss)/Income before income taxes(160,982)255,592 380,766 
(Benefit from)/Provision for income taxes(67,430)53,030 93,269 
(Loss)/Income before equity in earnings of affiliates(93,552)202,562 287,497 
Equity in earnings of affiliates, net of tax10,841 4,679 5,171 
Net (loss)/income(82,711)207,241 292,668 
Net (income)/loss attributable to noncontrolling interests(2,766)222 (883)
Net (loss)/income attributable to Sonoco$(85,477)$207,463 $291,785 
Weighted average common shares outstanding:
Basic99,608 100,939 100,742 
Assuming exercise of awards— 270 434 
Diluted99,608 101,209 101,176 
Per common share
Net (loss)/income attributable to Sonoco:
Basic$(0.86)$2.06 $2.90 
Diluted$(0.86)$2.05 $2.88 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Sonoco Products Company

(Dollars in thousands)

Years ended December 31

  2017 2016 2015

Net income

   $177,447  $287,881  $250,624

Other comprehensive income/(loss):

       

Foreign currency translation adjustments

    89,108   (32,405)   (129,652)

Changes in defined benefit plans, net of tax

    59,924   (9,577)   31,042

Change in derivative financial instruments, net of tax

    (2,580)   7,091   810

Other comprehensive income/(loss)

    146,452   (34,891)   (97,800)

Comprehensive income/(loss)

    323,899   252,990   152,824

Net (income) attributable to noncontrolling interests

    (2,102)   (1,447)   (488)

Other comprehensive loss/(income) attributable to noncontrolling interests

    (1,105)   (956)   4,118

Comprehensive income/(loss) attributable to Sonoco

   $320,692  $250,587  $156,454

(Dollars in thousands)
Years ended December 31
202120202019
Net (loss)/ income$(82,711)$207,241 $292,668 
Other comprehensive income/(loss):
Foreign currency translation adjustments(75,636)46,092 8,270 
Changes in defined benefit plans, net of tax471,350 11,666 (87,033)
Change in derivative financial instruments, net of tax1,119 325 2,035 
Other comprehensive income/(loss)396,833 58,083 (76,728)
Comprehensive income314,122 265,324 215,940 
Net (income)/loss attributable to noncontrolling interests(2,766)222 (883)
Other comprehensive loss attributable to noncontrolling interests584 1,878 838 
Comprehensive income attributable to Sonoco$311,940 $267,424 $215,895 
The Notes beginning on pageF-6 F-7 are an integral part of these consolidated financial statements.

F3

F-4 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-K

Consolidated Statements of Changes in Total Equity


CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY
Sonoco Products Company

(Dollars and shares in
thousands)		  

Total

Equity

 

 

Common Shares

  

Capital in

Excess of

Stated

Value

 

Accumulated

Other

Comprehensive

Loss

 

Retained

Earnings

  

Non-

controlling

Interests

   Outstanding Amount      

January 1, 2015

   $1,503,847   100,603  $7,175   $396,980  $(608,851)  $1,692,891   $15,652

Net income

    250,624            250,136    488

Other comprehensive income/(loss):

                 

Translation loss

    (129,652)          (125,534)      (4,118)

Defined benefit plan adjustment1

    31,042          31,042     

Derivative financial instruments1

    810          810     
   

 

 

          

 

 

      

 

 

 

Other comprehensive loss

    (97,800)          (93,682)      (4,118)
   

 

 

          

 

 

      

 

 

 

Dividends

    (139,200)            (139,200)   

Issuance of stock awards

    6,091   514      6,091       

Shares repurchased

    (7,868)   (173)      (7,868)       

Stock-based compensation

    9,257        9,257       

Non-controlling interest from acquisition

    7,922                              7,922

December 31, 2015

   $1,532,873   100,944  $7,175   $404,460  $(702,533)  $1,803,827   $19,944

Net income

    287,881            286,434    1,447

Other comprehensive income/(loss):

                 

Translation gain/(loss)

    (32,405)          (33,361)      956

Defined benefit plan adjustment1

    (9,577)          (9,577)     

Derivative financial instruments1

    7,091          7,091     
   

 

 

          

 

 

      

 

 

 

Other comprehensive income/(loss)

    (34,891)          (35,847)      956
   

 

 

          

 

 

      

 

 

 

Dividends

    (147,748)            (147,748)   

Issuance of stock awards

    4,040   428      4,040       

Shares repurchased

    (106,739)   (2,179)      (106,739)       

Stock-based compensation

    19,289              19,289                

December 31, 2016

   $1,554,705   99,193   7,175    321,050   (738,380)   1,942,513    22,347

Net income

    177,447            175,345    2,102

Other comprehensive income/(loss):

                 

Translation gain

    89,108          88,003      1,105

Defined benefit plan adjustment1

    59,924          59,924     

Derivative financial instruments1

    (2,580)          (2,580)     
   

 

 

          

 

 

      

 

 

 

Other comprehensive income

    146,452          145,347      1,105
   

 

 

          

 

 

      

 

 

 

Dividends

    (154,773)            (154,773)   

Issuance of stock awards

    1,636   341      1,636       

Shares repurchased

    (6,335)   (120)      (6,335)       

Stock-based compensation

    13,488        13,488       

Impact of new accounting pronouncements

    —        318   (73,239)   72,921   

Non-controlling interest from acquisition

    (2,560)                              (2,560)

December 31, 2017

   $1,730,060   99,414  $7,175   $330,157  $(666,272)  $2,036,006   $22,994
(Dollars and shares in thousands)
Total
Equity
Common Shares
Capital in
Excess of
Stated
Value
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Non-
controlling
Interests
OutstandingAmount
January 1, 2019$1,772,278 99,829 $7,175 $304,709 $(740,913)$2,188,115 $13,192 
Net income292,668 291,785 883 
Other comprehensive loss:
Translation gain/(loss)8,270 9,108 (838)
Defined benefit plan adjustment1
(87,033)(87,033)
Derivative financial instruments1
2,035 2,035 
Other comprehensive loss(76,728)(75,890)(838)
Dividends paid to noncontrolling interests(214)(214)
Dividends(171,597)(171,597)
Issuance of stock awards1,343 538 1,343 
Shares repurchased(9,608)(169)(9,608)
Stock-based compensation14,334   14,334    
Impact of new accounting pronouncements(6,771)— 0(6,771)
December 31, 2019$1,815,705 100,198 $7,175 $310,778 $(816,803)$2,301,532 $13,023 
Net income207,241 207,463 (222)
Other comprehensive income/(loss):
Translation gain/(loss)46,092 47,970 (1,878)
Defined benefit plan adjustment1
11,666 11,666 
Derivative financial instruments1
325 325 
Other comprehensive loss58,083 59,961 (1,878)
Dividends(173,570)(173,570)
Issuance of stock awards1,154 398 1,154 
Shares repurchased(8,483)(149)(8,483)
Stock-based compensation10,607 10,607 
Impact of new accounting pronouncements(209)(209)
December 31, 2020$1,910,528 100,447 $7,175 $314,056 $(756,842)$2,335,216 $10,923 
Net loss(82,711)(85,477)2,766 
Other comprehensive income/(loss):
Translation loss(75,636)(75,052)(584)
Defined benefit plan adjustment1
471,350 471,350 
Derivative financial instruments1
1,119 1,119 
Other comprehensive income/(loss)396,833 397,417 (584)
Dividends paid to noncontrolling interests(1,009)(1,009)
Dividends(179,734)(179,734)
Issuance of stock awards1,111 309 1,111 
Shares repurchased(218,085)(3,386)(218,085)
Stock-based compensation22,608 22,608 
December 31, 2021$1,849,541 97,370 $7,175 $119,690 $(359,425)$2,070,005 $12,096 
1
1net of tax

The Notes beginning on pageF-6 F-7 are an integral part of these consolidated financial statements.

F-5 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-KF4

Consolidated Statements of Cash Flows


CONSOLIDATED STATEMENTS OF CASH FLOWS
Sonoco Products Company

(Dollars in thousands)

Years ended December 31

  2017 2016 2015

Cash Flows from Operating Activities

       

Net income

   $177,447  $287,881  $250,624

Adjustments to reconcile net income to net cash provided by operating activities

       

Asset impairment

    20,017   7,122   24,408

Depreciation, depletion and amortization

    217,625   205,182   213,161

Loss/(Gain) on adjustment of Fox River environmental reserves

    —   850   (32,543)

Share-based compensation expense

    13,488   19,289   9,257

Equity in earnings of affiliates

    (9,482)   (11,235)   (10,416)

Cash dividends from affiliated companies

    6,967   10,231   8,131

Gain/(Loss) on disposition of assets, net

    2,039   14,173   (5,719)

Gain on disposition of business

    —   (108,699)   —

Pension and postretirement plan expense

    78,506   45,281   57,308

Pension and postretirement plan contributions

    (108,579)   (46,716)   (36,009)

Tax effect of share-based compensation exercises

    —   2,654   3,601

Excess tax benefit of share-based compensation

    —   (2,695)   (3,622)

Net (decrease)/increase in deferred taxes

    (20,553)   2,591   (3,737)

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

       

Trade accounts receivable

    (43,773)   (44,672)   (15,398)

Inventories

    (16,067)   (11,515)   (2,567)

Payable to suppliers

    4,226   5,550   12,349

Prepaid expenses

    (110)   5,125   (6,766)

Accrued expenses

    (14,606)   (11,742)   15,299

Income taxes payable and other income tax items

    70,180   21,913   (17,118)

Fox River environmental reserves

    —   (1,043)   (1,335)

Other assets and liabilities

    (27,967)   9,154   (5,978)

Net cash provided by operating activities

    349,358   398,679   452,930

Cash Flows from Investing Activities

       

Purchase of property, plant and equipment

    (188,913)   (186,741)   (192,295)

Cost of acquisitions, net of cash acquired

    (383,725)   (88,632)   (17,447)

Cash paid for disposition of assets

    —   (8,436)   —

Proceeds from the sale of assets

    5,271   280,373   32,530

Investment in affiliates and other

    1,687   294   (2,657)

Net cash used by investing activities

    (565,680)   (3,142)   (179,869)

Cash Flows from Financing Activities

       

Proceeds from issuance of debt

    448,511   241,180   68,182

Principal repayment of debt

    (217,320)   (306,305)   (182,900)

Net increase in commercial paper borrowings

    124,000   —   —

Net increase/(decrease) in outstanding checks

    7,518   (163)   (684)

Cash dividends – common

    (153,137)   (146,364)   (138,032)

Excess tax benefit of share-based compensation

    —   2,695   3,622

Shares acquired

    (6,335)   (106,739)   (7,868)

Shares issued

    —   —   1,324

Net cash provided/(used) by financing activities

    203,237   (315,696)   (256,356)

Effects of Exchange Rate Changes on Cash

    10,771   (5,049)   4,561

(Decrease)/Increase in Cash and Cash Equivalents

    (2,314)   74,792   21,266

Cash and cash equivalents at beginning of year

    257,226   182,434   161,168

Cash and cash equivalents at end of year

   $254,912  $257,226  $182,434

Supplemental Cash Flow Disclosures

       

Interest paid, net of amounts capitalized

   $57,170  $53,411  $57,551

Income taxes paid, net of refunds

   $96,962  $134,777  $104,922

(Dollars in thousands)
Years ended December 31
202120202019
Cash Flows from Operating Activities
Net (loss)/income$(82,711)$207,241 $292,668 
Adjustments to reconcile net income to net cash provided by operating activities:
Asset (gain)/impairment(4,082)100,242 25,026 
Depreciation, depletion and amortization239,086 255,359 239,140 
Loss on early extinguishment of debt20,184 — — 
Gain on adjustment of environmental reserves— — (10,675)
Share-based compensation expense22,608 10,607 14,334 
Equity in earnings of affiliates, net of tax(10,841)(4,679)(5,171)
Cash dividends from affiliated companies8,660 6,777 6,620 
Net loss/(gain) on disposition of assets15 (2,752)746 
Net loss on divestiture of business2,667 14,516 — 
Pension and postretirement plan expense595,620 57,973 52,741 
Pension and postretirement plan contributions(163,659)(40,411)(231,234)
Net (decrease)/increase in deferred taxes(158,836)573 16,958 
Change in assets and liabilities, net of effects from acquisitions, divestitures and foreign currency adjustments
Trade accounts receivable(149,755)17,853 59,615 
Inventories(130,119)12,125 2,631 
Payable to suppliers172,430 21,487 (25,383)
Prepaid expenses(13,077)4,754 4,030 
Income taxes payable and other income tax items(42,204)(12,545)(6,201)
Accrued expenses and other assets and liabilities(7,314)56,501 (9,995)
Net cash provided by operating activities298,672 705,621 425,850 
Cash Flows from Investing Activities
Purchase of property, plant and equipment(256,019)(194,127)(195,934)
Cost of acquisitions, net of cash acquired(22,209)(49,261)(298,380)
Proceeds from the sale of business, net91,569 103,411 — 
Proceeds from the sale of assets13,166 12,966 14,614 
Other net investing activities7,591 684 603 
Net cash used by investing activities(165,902)(126,327)(479,097)
Cash Flows from Financing Activities
Proceeds from issuance of debt172,042 1,121,860 276,843 
Principal repayment of debt(628,119)(886,055)(139,582)
Net increase/(decrease) in commercial paper borrowings349,000 (250,000)130,000 
Net increase/(decrease) in outstanding checks6,974 20,950 (4,486)
Proceeds from interest rate swap4,387 14,480 — 
Payment of contingent consideration— (3,000)(5,500)
Cash dividends – common(178,622)(172,626)(170,253)
Dividends paid to noncontrolling interests(1,009)— (214)
Excess cash costs of early extinguishment of debt(20,111)— — 
Payments for share repurchases(218,085)(8,483)(9,608)
Net cash (used)/provided by financing activities(513,543)(162,874)77,200 
Effects of Exchange Rate Changes on Cash(13,097)3,145 941 
(Decrease)/Increase in Cash and Cash Equivalents(393,870)419,565 24,894 
Cash and cash equivalents at beginning of year564,848 145,283 120,389 
Cash and cash equivalents at end of year$170,978 $564,848 $145,283 
Supplemental Schedule of Non-Cash Investing Activities:
Non-cash additions to property, plant and equipment$27,343 $3,139 $5,342 
Supplemental Disclosures:
Interest paid, net of amounts capitalized$68,189 $71,707 $66,768 
Income taxes paid, net of refunds$133,610 $65,002 $82,512 
The Notes beginning on pageF-6 F-7 are an integral part of these consolidated financial statements.

F5

F-6 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-K


NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS

Sonoco Products Company (dollars in thousands except per share data)

1. Summary of significant accounting policies

Basis of presentation

The Consolidated Financial Statements include the accounts of Sonoco Products Company and its majority-owned subsidiaries (the “Company” or “Sonoco”) after elimination of intercompany accounts and transactions.

Investments in affiliated companies in which the Company shares control over the financial and operating decisions, but in which the Company is not the primary beneficiary, are accounted for by the equity method of accounting. Income applicable to these equity investments is reflected in “Equity in earnings of affiliates, net of tax” in the Consolidated Statements of Income. The aggregate carrying value of equity investments is reported in “Other Assets” in the Company’s Consolidated Balance SheetsSheets and totaled $107,722 totaled $54,356 and $106,956$51,938 at December 31, 20172021 and 2016,2020, respectively.

Affiliated companies over which the Company exercised a significant influence at December 31, 2017,2021, included:

Entity

Ownership Interest

Percentage at

December 31, 2017

2021

RTS Packaging JVCO

35.0 35.0%%

Cascades Conversion, Inc.

50.0 50.0%%

Cascades Sonoco, Inc.

50.0 50.0%%

Showa Products Company Ltd.

22.2 20.0%%

Conitex Sonoco Holding BVI Ltd.

Papertech Energía, S.L.		25.0 30.0%%

Weidenhammer New Packaging, LLC

40.0 40.0%%

Also includedincluded in the investment totals above is the Company’sCompany’s 19.5% ownership in a small tubes and cores business in Chile and its 12.19%12.2% ownership in a small paper recycling business in Finland. TheseAs the Company is not able to exercise significant influence over these investees, the equity investments are accounted for under the measurement alternative (i.e., cost method asless impairment, adjusted for any qualifying observable price changes). These investments are not material either individually or in the Company does not exercise significant influence over them.

aggregate.

Estimates and assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue recognition

The Company records revenue generally at a point in time when title and risk of ownership passcontrol transfers to the customer either upon shipment or delivery, depending on the terms of sale. Additionally, in certain cases, control transfers over time in conjunction with production where the Company is entitled to payment with margin for products produced that are customer specific and when persuasive evidence of an arrangement exists, delivery has occurred without alternative use. For products that meet these two criteria, the Company recognizes over time revenue under the input method as goods are produced. The Company commonly enters into Master Supply Arrangements with customers to provide goods and/or services have been rendered, the sales priceover specific time periods. Customers submit purchase orders with quantities and prices to the customer is fixed or determinable and when collectibility is reasonably assured. Certain judgments, such as provisionscreate a contract for estimates of sales returns and allowances, are required in the application of the Company’s revenue policy and, therefore, are included in the results of operations in its Consolidated Financial Statements.accounting purposes. Shipping and handling expenses are considered a fulfillment cost, and included in “Cost"Cost of sales,”Sales," and freight charged to customers is included in “Net sales”"Net Sales" in the Company’sCompany's Consolidated Statements of Income.

The Company has rebate agreements with certain customers. These rebates are recorded as reductions of sales 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’sCompany's Consolidated Balance Sheets.

Payment terms under the Company's arrangements are typically short term in nature. The Company provides prompt payment discounts to certain customers if invoices are paid within a predetermined period. Prompt payment discounts are determinable within a short period after the originating sale and like sales returns, are treated as a reduction of revenue.

Accounts receivable and allowance for doubtful accounts

The Company’s trade accounts receivable arenon-interest bearing and are recorded at the invoiced amounts. The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses in existing accounts receivable. Provisions are made toThe Company performs an evaluation of lifetime expected credit losses inherent in its accounts receivable at each balance sheet date. Such an evaluation includes consideration of historical loss experience, trends in customer payment frequency, present economic conditions, and judgment about the allowance for doubtful accounts at such time that collectionfuture financial health of all or part of a trade account receivable is in question.its customers and industry sector. The allowance for doubtful accounts is monitored on a regular basis and adjustments are made as needed to ensure that the account properly reflects the Company’s best estimate of uncollectible trade accounts receivable. Account balances are charged off against the allowance for doubtful accounts when the Company determines that the receivable will not be recovered.

Sales to one of the Company’s customerslargest customer accounted for approximately 4% of the Company’s net sales in 2017,2021, 4% in 2020 and 5% in 2016 and 6% in 2015,2019, primarily in the Display and Packaging and Consumer Packaging segments.segment. Receivables from thisthe largest customer accounted for approximately 4% and 3% of the Company’s total trade accounts receivable at December 31, 20172021 and 2016, respectively.3% at December 31, 2020. The Company’s next largest customer comprised approximately 3% of the Company’sCompany’s net sales in 2017,2021, 4% in 20162020 and 4% in 2015.

Many2019.

Certain of the Company’s customers sponsor and actively promote multi-vendor supply chain finance arrangements and, in a limited number of cases, the Company has agreed to participate. Accordingly, approximately 7% and 6%10% and 11% of consolidated annual sales were settled under these arrangements in 20172021 and 2016,2020, respectively.

F-7 FORM 10-K SONOCO 2021 ANNUAL REPORT

Accounts payable and supply chain financing
The Company facilitates a voluntary supply chain financing program (the "program") to provide certain of its suppliers with the opportunity to sell receivables due from the Company to the participating financial institution in the program. Such sales are conducted at the sole discretion of both the suppliers and the financial institution on a non-recourse 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 our subsidiaries under the program. The Company's responsibility is limited to making payment on the terms originally negotiated with its suppliers, regardless of whether the suppliers sell their receivables to the financial institution. The Company does not enter into any agreements with suppliers regarding their participation in the program. The amount owed to the participating financial institution under the program and included in accounts payable was $46,832 at December 31, 2021 and $38,900 at December 31, 2020.
Research and development

Research and development costs are charged to expense as incurred and include salaries and other directly related expenses. Research and development costs totaling approximately $21,000$24,100 in 2017, $22,5002021, $22,000 in 20162020 and $22,100$23,300 in 2015 2019 are included in “Selling, general and administrative expenses” in the Company’s Consolidated Statements of Income.

Restructuring and asset impairment

Costs associated with exit or disposal activities are recognized when the liability is incurred. If assets become impaired as a result of a restructuring action, the assets are written down to fair value, less estimated costs to sell, if applicable. A number of significant estimates and assumptions are involved in the determination of fair value. The Company considers historical experience and all available information at the time the estimates are made; however, the amounts that are ultimately realized upon the sale of divested assets may differ from the estimated fair values reflected in the Company’s Consolidated Financial Statements.

Cash and cash equivalents

Cash equivalents are composed of highly liquid investments with an original maturity to the Company of generally three months or less when purchased. Cash equivalents are recorded at cost, which approximates market.

fair market value. As part of its cash management system, the Company uses “zero balance” accounts to fund disbursements. Under this system, the bank balance is zero at the end of each day, while the book balance is usually a negative amount due to reconciling items such as outstanding checks. Changes in these book cash overdrafts are reported as cash flows from financing activities.

The Company’s cash and cash equivalents are primarily placed with large sophisticated credit-worthy financial institutions thereby limiting the Company’s credit exposure.
Inventories

Inventories

The majority of the Company's inventories are accounted for using the first-in, first-out (FIFO) method and are stated at the lower of cost or net realizable value.
Thelast-in,first-out (LIFO) method is used for the valuation of certain of the Company’s domestic inventories, primarily metal, internally manufactured paper and paper purchased from third parties.

The LIFO method of accounting was used to determine the carrying costs of approximately 14%parties, and 19% ofapproximated 15% and 15% of total inventories at December 31, 20172021 and 2016,2020, respectively. The remaining

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF6

inventoriesInventories accounted for using the LIFO method are determined onstated at thefirst-in,first-out (FIFO) method.

lower of cost or market. If the FIFO method of accounting had been used for all inventories, total inventory would have been higherhigher by $17,632 $22,900 and $17,319 $20,371at December 31, 20172021 and 2016,2020, respectively.

Property, plant and equipment

Plant assets represent the original cost of land, buildings and equipment, less depreciation, computed under the straight-line method over the estimated useful lives of the assets, and are reviewed for impairment whenever events indicate the carrying value may not be recoverable. Equipment lives generally range from 3 to 11 years, and buildings range from 15 to 40 years.

Expenditures for repairs and maintenance are charged to expense as incurred. When properties are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and related allowance accounts. Gains or losses are credited or charged to income as incurred.
Timber resources are stated at cost. Depletion is charged to operations based on the estimated number of units of timber cut during the year.

Goodwill

Leases
At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The assessment is based on (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and other intangible(3) whether the Company has the right to direct the use of the asset. When the Company determines a lease exists, a leased asset and corresponding lease liability are recorded on its consolidated balance sheet. Lease contracts with a term of 12 months or less are not recorded on the consolidated balance sheet. Leased assets

represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation arising from the lease. The Company’s leased assets and liabilities may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The Company has lease agreements with non-lease components that relate to lease components (e.g., common area maintenance such as cleaning or landscaping, etc.). The Company accounts for each lease and any non-lease components associated with that lease as a single lease component for all underlying asset classes in accordance with the scope of the lease accounting standard.

Leased assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the implicit rate in the Company's leases is not readily determinable, the Company 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. Lease payments may be fixed or variable, however, only fixed payments or in-substance fixed payments are included in determining the lease liability. Variable lease payments are recognized in operating expenses in the period in which the obligation for those payments is incurred.
The Company recognizes fixed lease expense for operating leases on a straight-line basis over the lease term. For finance leases, the Company recognizes interest expense on the lease liability over the lease term and the finance lease asset balance is amortized on a straight-line basis.
F-8 FORM 10-K SONOCO 2021 ANNUAL REPORT

Goodwill
The Company assesses its goodwill for impairment annually andduring 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. In performing the impairment test, the Company uses either a qualitative evaluation or a quantitative test. The qualitative evaluation considers factors such ascompares the macroeconomic environment, Company stock pricefair value of the reporting unit with its carrying amount and market capitalization movement, business strategy changes, and significant customer wins and losses. Therecognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. This quantitative test considers factors such as the amount by which estimated fair value exceeds current carrying value, current year operating performance as compared to prior projections, and implied fair values from comparable trading and transaction multiples.

Calculated reporting unit estimated fair values reflect a number of significant management assumptions and estimates including the Company’s forecast of sales volumes and prices, profit margins, income taxes, capital expenditures and changes in working capital requirements. Changes in these assumptions and/or discount rates could materially impact the estimated fair values.

When the Company estimates

In determining the fair value of athe reporting unit, it does sounits, management considered both the income approach and the market approach. Fair value was estimated using a discounted cash flow model based on projections of future years’ operating results and associated cash flows corroborated bycombined with comparable trading and transaction multiples.multiples based on guideline public companies. The Company’scalculated estimated fair value of the reporting unit reflects a number of significant management assumptions and estimates including the forecast of sales growth, gross profit margins, and discount rates. Changes in these assumptions could materially impact the estimated fair value.
The Company's projections incorporate management’smanagement's best estimates of the expected future results, which include expectations related to new and retained business and future operating margins. Projected future cash flows are then discounted to present value using a discount rate management believes is commensurate with the risks inherent in the cash flows.

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 not, and the carrying value of the reporting unit’s goodwillunit exceeds the implied fair value of that goodwill,reporting unit, an impairment charge is recognized for the excess. Goodwill is not amortized.

Impairment of long-lived, intangible and other assets
Intangible assets are amortized, usually on a straight-line basis, over their respective useful lives, which generally range from 3 to 40 years. The Company has no intangibles with indefinite lives. The Company evaluates its intangible assets for impairment whenever indicators of impairment exist.
Assumptions and estimates used in the evaluation of potential impairment can result in adjustments affecting the carrying values of long-lived, intangible and other assets and the recognition of impairment expense in the Company’s Consolidated Financial Statements. The Company has no intangiblesevaluates its long-lived assets (property, plant and equipment), definite-lived intangible assets and other assets (including right of use lease assets, notes receivable and equity investments) for impairment whenever indicators of impairment exist, or when it commits to sell the asset. If the sum of the undiscounted expected future cash flows from a long-lived asset or definite-lived intangible asset group is less than the carrying value of that asset group, an asset impairment charge is recognized. Key assumptions and estimates used in the projection of expected future cash flows generally include price levels, sales growth, profit margins and asset life. The amount of an impairment charge, if any, is calculated as the excess of the asset’s carrying value over its fair value, generally represented by the discounted future cash flows from that asset or, in the case of assets the Company evaluates for sale, estimated sale proceeds less costs to sell. The Company takes into consideration historical data and experience together with indefinite lives.

all other relevant information available when estimating the fair values of its assets. However, fair values that could be realized in actual transactions may differ from the estimates used to evaluate impairment. In addition, changes in the assumptions and estimates may result in a different conclusion regarding impairment.

Income taxes

The Company provides for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting requirements and tax laws. Assets and liabilities are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The Company recognizes liabilities for uncertain income tax positions based on our estimate of whether it is more likely than not that additional taxes will be required and we report related interest and penalties as income taxes.

Derivatives

The Company uses derivatives to mitigate the effect of fluctuations in some of its raw material and energy costs, foreign currencies, and, from time to time, interest rates. The Company purchases commodities such as recovered paper, metal resins and energy, generally at market or at fixed prices that are established with the vendor as part of the purchase process for quantities expected to be consumed in the ordinary course of business. The Company may enter into commodity futures or swaps to manage the effect of price fluctuations. The Company may use foreign currency forward contracts and other risk management instruments to manage exposure to changes in foreign currency cash flows and the translation of monetary assets and liabilities on the Company’s consolidated financial statements. The Company is exposed to interest-rate fluctuations as a result of using debt as a source of financing for its operations. The Company may from time to time use traditional, unleveraged interest rate swaps to adjust its mix of fixed and variable rate debt to manage its exposure to interest rate movements.

Additionally, the Company elected the normal purchase, normal sale scope exception for physical commodity contracts that meet the definition of a derivative. Derivative instruments, to the extent in an asset position, expose the Company to credit loss in the event of nonperformance by the counterparties to the derivative agreements. The Company manages its exposure to counterparty credit risk through minimum credit standards, diversification of counterparties and procedures to monitor concentrations of credit risk. The Company may enter into financial derivative contracts that may contain credit-risk-related contingent features, which could result in a counterparty requesting immediate payment or demanding immediate and ongoing full overnight collateralization on derivative instruments in net liability positions.

The Company records its derivatives as assets or liabilities on the balance sheet at fair value using published market prices or estimated values based on current price and/or rate quotes and discounted estimated cash flows. Changes in the fair value of derivatives are recognized either in net income or in other comprehensive income, depending on whether the derivative is designated purpose of the derivative.in a cash flow or net investment hedging relationship or not. Amounts in accumulated other comprehensive income are reclassified into earnings in the same period or periods during which the hedged forecasted transaction affects earnings. It is the Company’s policy not to speculate in derivative instruments.

Business combinations
The Company’s acquisitions of businesses are accounted for in accordance with ASC 805, "Business Combinations." The Company recognizes the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquired business at their fair values as of the date of acquisition. Goodwill is measured as the excess of consideration transferred, also measured at fair value, over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The acquisition method of accounting requires the Company to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of
F-9 FORM 10-K SONOCO 2021 ANNUAL REPORT

acquisition, including the fair values of identifiable intangible assets, deferred tax asset valuation allowances, liabilities including those related to debt, pensions and other postretirement plans, uncertain tax positions, contingent consideration and contingencies. This method also requires the Company to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If the Company is required to adjust provisional amounts that were recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could have a material impact on our financial condition and results of operations.
Significant estimates and assumptions in estimating the fair value of acquired customer relationships, technology, and other identifiable intangible assets include future cash flows that the Company expects to generate from the acquired assets, discount rate, customer attrition rate, and long-term revenue growth projections. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, the Company could record impairment charges. In addition, the Company has estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If the estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset could be impaired.
Reportable segments

The Company identifies its reportable segments by evaluating the level of detail reviewed by the chief operating decision maker, gross profit margins, nature of products sold, nature of the production processes, type and class of customer, methods used to distribute products, and nature of the regulatory environment. Of these factors, the Company believes that the most significant in determining the aggregation of operating segments are the nature of the products and the type of customers served.

The Company changed its operating and reporting structure in January 2021 and, as a result, realigned certain of its reportable segments effective January 1, 2021. The revised structure consists of 2 reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other. Segment financial information for prior periods has been recast to conform to the current-year presentation.

Contingencies

Pursuant to U.S. GAAP for accounting for contingencies, accruals for estimated losses are recorded at the time information becomes available indicating that losses are probable and that the amounts are reasonably estimable. Amounts so accrued are not discounted.


2. New accounting pronouncements

In February 2018,October 2021, the Financial Accounting Standards Board (“FASB”("FASB") issued Accounting Standards Update (“ASU”("ASU") 2018-02, “Reclassification2021-08, “Business Combinations: Accounting for Contract Assets and Contract Liabilities." The amendments in this Update primarily require that the acquirer recognize and measure contract assets and contract liabilities acquired in a business combination as if the acquirer had originated the related revenue contracts rather than at fair value as of Certain Tax Effects from Accumulated Other Comprehensive Income,” which allowthe acquisition date. Generally, this would result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree's financial statements in accordance with generally accepted accounting principles. The amendments in this ASU are effective on a reclassification from accumulated other comprehensive income to retained earningsprospective basis for stranded tax effects resulting from the Tax Cutsfiscal years, and Jobs Act. This update is effective forinterim periods within those fiscal years, beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. The Company elected to early adopt this standard in the fourth quarter 2017 using specific identification and as a result reclassified $73,239 from “Accumulated other comprehensive income” to “Retained earnings.” This reclassification related only to the change in the statutory tax rate and affected only the Company’s Consolidated Statement of Financial Position at December 31, 2017, and Consolidated Statements of Changes in Total Equity for the year ended December 31, 2017.

F7SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

In August 2017, the FASB issuedASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities,” which expands and refines hedge accounting for both financial andnon-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The update to the standard is effective for periods beginning after December 15, 2018, with early adoption permitted in any interim period after issuance of this update. The Company intends to elect early2022. Early adoption of the standard effective January 1, 2018.amendments is permitted, including adoption in an interim period. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. The Company is currently evaluating the impact that ASU 2021-08's adoption is not expected towill have a material effect on its consolidated financial statements.

In May 2017,March 2020, the FASB issued ASU2017-09, “Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under Topic 718. Under the new guidance, modification accounting to a share-based payment award will not be applied if all 2020-04, "Facilitation of the following are the same immediately before and after the change: the award’s fair value (or calculated value or intrinsic value, if those measurement methods are used); the award’s vesting conditions; and the award’s classification as an equity or liability instrument. While the new guidance does not change the accounting for modifications, itEffects of Reference Rate Reform on Financial Reporting". ASU 2020-04 is intended to reduce diversityprovide temporary optional expedients and exceptions to applying U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate ("SOFR"). In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform,” to clarify that certain optional expedients and exceptions in practiceTopic 848 for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform.The relief offered by the guidance in fewer changesboth ASU 2020-04 and ASU 2021-01, if adopted, is available to companies for the termsperiod March 12, 2020 through December 31, 2022. We do not expect that the market transition of an award being accountedLIBOR to SOFR will have a material impact on our consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12 "Income Taxes, (Topic 740): Simplifying the Accounting for as modifications.Income Taxes". This update isASU removes certain exceptions from recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. It also reduces complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The amendments in ASU 2019-12 were effective for annual periods, beginning after December 31, 2017, with early adoption permitted in any interim period after issuancethe Company as of this update. The Company elected to early adopt the standard in the fourth quarter 2017. TheJanuary 1, 2021, and their adoption did not have a material effect on itsthe consolidated financial statements.

In March 2017, the FASB issued ASU2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires an employer to report service cost in the same line item as other compensation costs arising from employees during the period. The other components of net benefit cost as defined are required to be presented separately from the service cost component and outside a subtotal of income from operations, if one is presented, or disclosed. This update also allows only the service cost component to be eligible for capitalization when applicable and is effective for periods beginning after December 15, 2017. The amendments should be applied retrospectively for the presentation of the components of net benefit cost in the income statement and prospectively for the capitalization of the service cost component. The Company does not expect the implementation of ASU2017-07 to have a material effect on its consolidated financial statements.

In January 2017, the FASB issued ASU2017-04, “Simplifying the Test for Goodwill Impairment,” eliminating the requirement to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. Under ASU2017-04, goodwill impairment testing is performed by comparing the fair value of the reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The new standard is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted, and should be applied on a prospective basis. The Company intends to elect early adoption of the standard effective January 1, 2018. Any future goodwill impairment, should it occur, will be determined in accordance with this ASU.

In OctoberJune 2016, the FASB issued ASU2016-16, “Intra-Entity Transfers 2016-13, "Measurement of Assets Other Than Inventory,” effectiveCredit Losses on Financial Instruments," which requires measurement and recognition of expected versus incurred credit losses for periods

beginning after December 15, 2017. ASU2016-16 requiresfinancial assets held. The measurement of expected credit losses should be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The Company adopted this standard on January 1, 2020 using a modified retrospective approach and recorded a cumulative-effect adjustment to retained earnings of $209, an entityincrease to recognize the allowance for doubtful accounts of $279, and a decrease to deferred income tax consequencesliabilities of an intra-entity transfer$70 as of an asset upon transfer other than inventory, eliminating the current recognition exception. Prior to this ASU, GAAP prohibited the recognition of current and deferred income taxes for intra-entity asset transfers until the asset was sold to an outside party. The recognition prohibition was an exception to the principle of comprehensive recognition of current and deferred income taxes in GAAP. The Company does not expect the implementation of ASU2016-16 to have a material effect on its consolidated financial statements.

January 1, 2020.

In AugustJanuary 2016, the FASB issued ASU2016-15, “Classification of Certain Cash Receipts and Cash Payments,” providing clarification on eight cash flow classification issues, including 1) debt prepayment or debt extinguishment costs, 2) settlement of relatively insignificant debt instruments, 3) contingent consideration payments, 4) insurance claim settlements, 5) life insurance settlements, 6) distributions received from equity method investees, 7) beneficial interests in securitization transactions, and 8) separately identifiable cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company does not expect the implementation of ASU2016-15 to have a material effect on its consolidated financial statements.

In March 2016, the FASB issued ASU2016-09, “Improvements to Employee Share-Based Payment Accounting,” which impacts several aspects of the accounting for share-based payment transactions, including among others, the classification of excess tax benefits in the statements of income and cash flows and accounting for forfeitures. The Company’s adoption of this update effective January 1, 2017 resulted in the recognition of $2,453 of excess tax benefits in the income statement during 2017. In accordance with the provisions of this ASU, excess tax benefits have also been recognized on a prospective basis within the operating section of the consolidated statement of cash flows for 2017, rather than the financing section. Pursuant to adoption of the new ASU, the Company recorded a cumulative charge to retained earnings of $318 for the elimination of estimated forfeitures associated with the Company’s share-based compensation. The Company has elected to recognize forfeitures prospectively as they occur beginning January 1, 2017.

In March 2016, the FASB issued ASU2016-08, “Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which provides guidance on recording revenue on a gross basis versus a net basis based on the determination of whether an entity is a principal or an agent when another party is involved in providing goods or services to a customer. The amendments in this update affect the guidance in ASUNo. 2014-09 and are effective in the same time frame as ASU2014-09 as discussed below.

In February 2016, the FASB issued ASU2016-02, “Leases” which changes accounting for leases and requires "Leases," requiring lessees to recognize the assets and liabilities arising from all leases, including those classified as operating leases under previous accounting guidance on the balance sheet a right-of-use asset and requireslease liability for all long-term leases and requiring disclosure of key information about leasing arrangements in order to increase transparency and comparability among organizations. The accounting for lessors does not fundamentally change except for changes to conform and align guidance to the lessee guidance. The guidance is effective for reporting periods beginning after December 15, 2018, including interim periods within those fiscal years and requires retrospective application. The Company is still assessing the impactadopted ASU 2016-02 as of ASU2016-02, but expects it to have a material impact on its Consolidated Statement of Financial Position.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF8

In May 2014, the FASB issued ASU2014-09, “Revenue From Contracts With Customers,” which changes the definitions/criteria used to determine when revenue should be recognized from being based on risks and rewards to being based on control. Among other changes, ASU2014-09 changes the manner in which variable consideration is recognized, requires recognition of the time value of money when payment terms exceed one year, provides clarification on accounting for contract costs, and expands disclosure requirements. ASU2014-09 is effective for reporting periods beginning after December 15, 2017. Although the Company will not complete its final assessment and quantification of the impact of ASU2014-09 on its consolidated financial statements until adoption, it expects the adoption to have the effect of accelerating the timing of revenue recognition compared to current standards for those arrangements under which the Company is producing customer-specific products without alternative use and would be entitled to payment for work completed, including a reasonable margin. The Company plans to adopt ASU2014-09 in the first quarter of fiscal 2018 followingJanuary 1, 2019, using the modified retrospective transition method and estimateselected to apply the impactoptional transition approach prescribed by ASU 2018-11 which allows entities to initially apply the new leases standard at the adoption date, without adjusting comparative periods. Upon the adoption of ASU 2016-02, the transitionCompany recorded on its consolidated balance sheet right of use assets totaling $336,083 and lease liabilities totaling $344,362, as well as a cumulative effect adjustment on the beginning balance ofto retained earnings will be approximately $5,000.

of $6,771 and a $1,508 reduction to deferred tax liabilities.

Other than the pronouncements discussed above, there have been no other newly issued nor newly applicable accounting pronouncements that have had, or are expected to have, a material impact on the Company’s financial statements. Further, at December 31, 2017,2021, there were no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements.

F-10 FORM 10-K SONOCO 2021 ANNUAL REPORT

3. Acquisitions and dispositions

divestitures

Acquisitions

On July 24, 2017,December 19, 2021, the Company entered into a definitive agreement to acquire Ball Metalpack Holding, LLC ("Ball Metalpack"), a leading manufacturer of sustainable metal packaging for food and household products and the largest aerosol can producer in North America, for $1,350,000 in cash subject to customary adjustments, including for working capital, cash and indebtedness. Ball Metalpack was a joint venture owned by Platinum Equity (51%) and Ball Corporation (49%). Previously part of Ball Corporation, Ball Metalpack was formed in 2018 and consists of 8 manufacturing plants in the United States and a headquarters facility in Broomfield, Colorado. This acquisition fits the Company's strategy of investing in its core businesses as it complements its largest Consumer Packaging franchise – global rigid paper packaging. In addition, it further expands the Company's sustainable packaging portfolio with metal packaging. The acquisition of Ball Metalpack was completed on January 26, 2022. See Note 20 for additional information.
The Company completed 4 acquisitions during 2021 at a net cash cost of $20,697. On December 30, 2021, the Company completed the acquisition of Clear Lam Packaging,a recycling facility from American Recycling of Western North Carolina, LLC ("American Recycling"), a privately held company, for total cash consideration of $6,267. The facility, located in Asheville, North Carolina, primarily services western North Carolina and upstate South Carolina for the processing of recycled materials. On November 8, 2021, the Company completed the acquisition of D&W Paper Tube Inc. (“Clear Lam”("D&W") for $164,951, net, a privately owned manufacturer of cash acquired. Final consideration will be subject to an adjustment for working capital, which is expected to be completed bypaper tubes and cardboard cores, serving the endcarpet and textile industries and consisting of the first quarter of 2018. Clear Lam manufactures high barrier flexible and forming films used to package a variety of products for consumer packaged goods companies, retailers and other industrial manufacturers, with a focus on structures used for perishable foods. It has production2 manufacturing facilities in Elk Grove Village, Illinois, and Nanjing, China. Chatsworth, Georgia, for total cash consideration of $12,787.
The Company financed a portion of the transaction with $100,000 in borrowings from a $250,000 five-year term loan with the remaining purchase price funded from available short-term credit facilities. The provisionalpreliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Clear LamAmerican Recycling and D&W acquisitions are as follows:

Clear Lam:    

Trade accounts receivable

   $11,575

Inventories

    25,933

Property, plant and equipment

    25,673

Goodwill

    52,907

Other intangible assets

    77,600

Trade accounts payable

    (17,813)

Other net tangible assets /(liabilities)

    (10,924)

Net assets

   $164,951

Subsequent to acquiring Clear Lam, the Company continued to finalize its valuations of certain assets and liabilities based on new information obtained about facts and circumstances that existed as of the acquisition date including, but not limited to: inventory; property, plant and equipment; other intangible assets; deferred income taxes; and capital leases. Factors comprising goodwill, all of which is expected to be deductible for

income tax purposes, include increased access to certain markets as well as the value of the assembled workforce. Clear Lam’s financial results are included in the Company’s Consumer Packaging segment.

On March 14, 2017, the Company completed the acquisition of Packaging Holdings, Inc. and subsidiaries, including Peninsula Packaging LLC (“Packaging Holdings”), for $218,774, net of cash acquired. Packaging Holdings manufactures thermoformed packaging for a wide range of whole fresh fruits,pre-cut fruits and produce, prepared salad mixes, as well as baked goods in retail supermarkets from five manufacturing facilities, including four in the United States and one in Mexico. The Company financed the transaction with a combination of cash and borrowings, including a $150,000 three-year term loan which was subsequently repaid with proceeds from the $250,000 term loan noted above. The fair values of the assets acquired and liabilities assumed in connection with the acquisition of Packaging Holdings are as follows:

Packaging Holdings:    

Trade accounts receivable

   $14,415

Inventories

    42,959

Property, plant and equipment

    53,787

Goodwill

    67,775

Other intangible assets

    60,190

Trade accounts payable

    (22,394)

Other net tangible assets /(liabilities)

    2,042

Net assets

   $218,774

Subsequent to acquiring Packaging Holdings, the Company continued to finalize its valuations of certain assets and liabilities based on new information obtained about facts and circumstances that existed as of the acquisition date including, but not limited to: inventory; property, plant and equipment; other intangible assets; deferred income taxes; and capital leases. Factors comprising goodwill, of which approximately $30,500 is expected to be deductible for income tax purposes, include increased access to certain markets as well as the value of the assembled workforce. Packaging Holding’s financial results are included in the Company’s Consumer Packaging segment and the business will operate as the Peninsula brand of thermoformed packaging products within the Company’s global plastics division.

The following table presents the aggregate, unaudited financial results for Packaging Holdings and Clear Lam from their respective dates of acquisition:

Aggregate Supplemental Information  (unaudited)
    2017

Packaging Holdings and Clear Lam

   

Actual net sales

   $215,227

Actual net income

   $3,886
American RecyclingD&W
Trade accounts receivable$685 $— 
Inventories169 934 
Property, plant and equipment2,726 929 
Goodwill989 4,108 
Other intangible assets2,236 7,100 
Payable to suppliers(373)(284)
Other net tangible liabilities(165)— 
Net Assets$6,267 $12,787 

F9SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

Although neither of the acquisitions completed during 2017 is considered individually material, they are considered material on a combined basis. The following table presents the Company’s estimated pro forma consolidated results for 2017 and 2016, assuming both acquisitions had occurred on January 1, 2016. This pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had been completed as of the beginning of 2016, nor are they necessarily indicative of future consolidated results.

Pro Forma Supplemental Information  (unaudited)
    2017  2016

Consolidated

      

Net sales

   $5,143,066   $5,080,492

Net income attributable to Sonoco

   $178,205   $271,749

Earnings per share:

      

Pro forma basic

   $1.78   $2.69

Pro forma diluted

   $1.77   $2.67

The pro forma information above does not project the Company’s expected results of any future period and gives no effect for any future synergistic benefits that may result from consolidating these subsidiaries or costs from integrating their operations with those of the Company. Pro forma information for both 2017 and 2016 includes adjustments to depreciation, amortization, interest expense, and income taxes. Acquisition-related costs of $4,345 andnon-recurring expenses related to fair value adjustments to acquisition-date inventory of $5,750 were recognized in 2017 in connection with the acquisitions of Packaging Holdings and Clear Lam. These costs are excluded from 2017 pro forma net income and reflected as though having been incurred on January 1, 2016.

The Company completed four acquisitions during 2016 at a net cash cost of $88,632. On November 1, 2016, the Company completed the acquisition of Plastic Packaging Inc. (“PPI”), a privately held Hickory, N.C.-based flexible packaging company for $67,568, net of cash acquired. Founded in 1957, PPI, which is part of the Company’s Consumer Packaging segment, specializes inshort-run, customized flexible packaging for consumer brands in markets including food products, pet products, confection, and health and personal care. PPI operates two manufacturing facilities in North Carolina with approximately 170 employees. In conjunction with this acquisition, the Company initially recorded net tangible assets of $22,756, identifiable intangibles of $18,900, and goodwill of $25,912 none of which is expected to be tax deductible. Factors comprising goodwill include the ability to leverage product offerings across a broader customer base and the value of the assembled workforce. The initial allocation of the purchase price of PPIAmerican Recycling and D&W to the tangible and intangible assets acquired and liabilities assumed was based on the Company’sCompany's preliminary estimates of their fair value, basedrelying on information currently available. During 2017, the Company finalizedManagement is continuing to finalize its valuations of thecertain assets and liabilities acquired based on information obtained about factslisted in the table above, and circumstances that existed as ofexpects to complete its valuations within one year from their respective acquisition dates. Asdates of acquisition. Goodwill for American Recycling and D&W, all of which is expected to be deductible for income tax purposes, consists of increased access to certain markets and the assembled workforce.

The Company also completed 2 smaller acquisitions earlier in 2021. These included Allied Packaging on August 3, 2021, a result, measurement period adjustmentsmanufacturer of paper packaging and related manufacturing equipment, consisting of a single manufacturing facility in Sydney, Australia, for total cash consideration of $802, and TuboTec on March 8, 2021, a small tube and core operation in Brazil, for total cash consideration of $841.
The financial results of all the businesses acquired in 2021 are included in the Company's Industrial Paper Packaging segment from the date acquired. The Company does not believe that the results of the businesses acquired in 2021 were madematerial to the previously disclosed provisional fair valuesyears presented, individually or in the aggregate, and are therefore not subject to the supplemental pro-forma information required by ASC 805. Accordingly, this information is not presented herein.
The Company completed 2 acquisitions during 2020 at a net cash cost of PPI’s net assets that increased identifiable intangibles by $1,400, increased property, plant and equipment by $400, increased the deferred tax liability by $599, and decreased goodwill by $1,201.

$49,446. On September 19, 2016,August 3, 2020, the Company completed the acquisition of Laminar Medica (“Laminar”) in the United Kingdom and Czech Republic, from Clinimed (Holdings) Limited,Can Packaging, a privately held specialty medical products companyowned designer and manufacturer of sustainable paper packaging and related manufacturing equipment, based in the U.K.Habsheim, France, for $17,201,$45,473, net of cash acquired. In conjunctionCan Packaging operates 2 paper can manufacturing facilities in France, along with thisa research and development center where it designs and builds patented packaging machines and sealing equipment. The acquisition which is accountedof Can Packaging expands Sonoco's ability to provide innovative recyclable packaging in various shapes and sizes. Goodwill for as part of the Company’s Protective Sol-

utions segment, the Company initially recorded net tangible assets of $2,739, identifiable intangibles of $5,654, and goodwill of $8,808Can Packaging, none of which is expected to be deductible for income tax deductible. Factors comprising goodwill includepurposes, consists of increased access to certain markets as well asmarkets. Can Packaging's financial results from the value ofdate acquired are included in the assembled workforce. The initial allocation ofCompany's Consumer Packaging segment. Final consideration was subject to a post-closing adjustment for the purchase price of Laminarchange in working capital to the tangibledate of closing. This settlement occurred in January 2021 and intangible assets acquired and liabilities assumed was based on the Company’s preliminary estimates of their fair value, based on information currently available at that time. During 2017,resulted in the Company finalized its valuationsmaking an additional cash payment of the assets and liabilities acquired based on information obtained about facts and circumstances that existed as of their respective acquisition dates. The measurement period adjustments to the previously disclosed provisional fair values of Laminar’s net assets decreased goodwill by $326, decreased deferred tax liabilities by $487, and decreased property, plant and equipment by $161.

$1,512.

On August 30, 2016, the Company completed the acquisition of the temperature-controlled cargo container assets, licenses, trademarks, and manufacturing rights from AAR Corporation. Total consideration for this business was $6,000, including cash paid of $3,000,non-contingent deferred payments of $2,000, and a contingent purchase liability totaling $1,000. Thenon-contingent deferred payments are due in two installments, $1,000 that was paid 12 months from the closing date, and $1,000 payable 24 months from the closing date. The contingent purchase liability is based upon a highly attainable metric which the Company expects to be met. The contingent liability is payable in two installments, $500 due 36 months from the closing date and $500 due 48 months from the closing date. In relation to this acquisition, which is accounted for as part of the Protective Solutions segment, the Company recorded net tangible assets of $200, identifiable intangibles of $4,100, and goodwill of $1,700, all of which will be tax deductible.

On June 24, 2016,January 10, 2020, the Company completed the acquisition of a small tube and core businessoperation in Australia. Theall-cash purchase priceJacksonville, Florida, from Design Containers, Inc. ("Jacksonville"), for total cash consideration of the business was $863. In conjunction with this acquisition, which is part of the Paper and Industrial Converted Products segment, the Company recorded net tangible assets of $149, identifiable intangibles of $297, and goodwill of $417 none$3,973. Goodwill for Jacksonville, all of which is expected to be deductible for income tax deductible.

purposes, consists of increased access to certain markets. Jacksonville's financial results from the date acquired are included in the Company's Industrial Paper Packaging segment.

The Company does not believe that the results of the businesses acquired in 2020 were material to the years presented, individually or in the aggregate, and are therefore not subject to the requirements to provide supplemental pro-forma information. Accordingly, this information is not presented herein.
The Company completed two2 acquisitions during 20152019 at an aggregatea net cash cost of $21,184, of which $17,447 was paid in cash.$297,926. On April 1, 2015,December 31, 2019, the Company completed the acquisition of a 67% controlling interest in Graffo Paranaense de Embalagens S/A (“Graffo”Thermoform Engineered Quality, LLC, and Plastique Holdings, LTD, (together "TEQ"), for $187,292, net of cash acquired. The operations acquired consist of 3 thermoforming and extrusion facilities in the United States along with a flexiblethermoforming operation in the United Kingdom and thermoforming and molded-fiber manufacturing operation in Poland. The acquisition of TEQ provided a platform to further expand Sonoco's healthcare packaging business. Final consideration was subject to a post-closing adjustment for the change in working capital to the date of closing. This adjustment was settled in April 2020 resulting in the receipt of cash from the sellers totaling $185.
On August 9, 2019, the Company completed the acquisition of Corenso Holdings America, Inc. ("Corenso") for $110,634, net of cash acquired. Corenso is a leading manufacturer of uncoated recycled paperboard (URB) and high-performance cores used in the paper, packaging films, tape, and specialty industries. Corenso operates a 108,000-ton per year URB mill and core converting facility in Wisconsin Rapids,
F-11 FORM 10-K SONOCO 2021 ANNUAL REPORT

Wisconsin, as well as a core converting facility in Richmond, Virginia, expanding the Company's ability to produce a wide variety of sustainable coreboard grades.
Goodwill for both TEQ and Corenso is comprised of the assembled workforce and increased access to certain markets. The amount of goodwill expected to be deductible for income tax purposes is $59,005 for TEQ and $0 for Corenso. The results of operations of TEQ and Corenso are reflected in the Company's Consumer Packaging segment and the Industrial Paper Packaging segment, respectively.
The Company does not believe that the results of the businesses acquired in 2019 were material to the years presented, individually or in the aggregate, and are therefore not subject to the supplemental pro-forma information required by ASC 805. Accordingly, this information is not presented herein.
Divestitures
On April 4, 2021, the Company completed the sale of its U.S. display and packaging business, located in Brazil. Graffo, which is part of the Company’s Consumer Packaging segment, servesAll Other group of businesses, to Hood Container Corporation 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 confectionery, dairy, pharmaceuticalprojected levels at the time of closing. Net cash proceeds of $79,704 were received on April 5, 2021 and tobacco marketsthe Company recognized a loss on the divestiture of this business of $5,516, before tax, in Brazil with approximately 230 employees. Total consideration paid for Graffo was approximately $18,334, includingthe first quarter of 2021. During the quarter ended October 3, 2021, the Company finalized the working capital settlement related to this sale. The settlement resulted in additional cash proceeds of $15,697,$1,971 and assumed debtthe buyer's assumption of $2,637.

certain liabilities totaling $786. As a result, the Company recognized a reduction in the previously reported loss on the sale of this business of $2,757, before tax, in the third quarter of 2021, bringing the total loss on the sale of business to $2,759, before tax.

On September 21, 2015,30, 2021, the Company acquiredcompleted the high-density wood plugsale of its Plastics - Food thermoforming operation in Wilson, North Carolina ("Wilson Thermoforming") to Placon for net cash proceeds of $3,528, resulting in the recognition of a pre-tax gain on the sale of $92.
Assets and liabilities disposed of in the sales of U.S. Display and Packaging and Wilson Thermoforming included the following:
U.S. Display and PackagingWilson Thermoforming
Trade accounts receivable$26,342 $— 
Inventories8,434 1,805 
Property, plant and equipment, net9,551 550 
Right of use asset - operating leases11,627 147 
Goodwill53,039 1,058 
Trade accounts payable(10,735)— 
Accrued expenses(2,197)(54)
Operating lease liabilities(12,343)(70)
Other net tangible assets716 — 
Net asset disposal$84,434 $3,436 
Net proceeds81,675 3,528 
Loss/(Gain) on divestiture of business$2,759 $(92)
As previously disclosed, the Company completed the divestiture of its European contract packaging business, Sonoco Poland Packaging Services Sp. z.o.o., on November 30, 2020. The selling price of $120,000 was adjusted at closing for certain indebtedness assumed by the buyer and for anticipated differences between targeted levels of working capital and the projected levels at the time of closing. The Company received net cash proceeds at closing of $105,913, with the buyer funding an escrow account with an additional $4,600. In the second quarter of 2021, the Company received $6,366 in additional proceeds from Smith Family Companies, Inc. Total considerationthe sale, which included the release of $4,000 from escrow plus a post-closing adjustment of $2,366 for the acquisitionworking capital settlement. The remaining $600 in escrow is expected to be released in the second quarter of 2022, pending any indemnity claims. The receipt of the additional cash proceeds is reflected in "Proceeds from the sale of businesses, net" in the Consolidated Statements of Cash Flows.
The decision to sell its global display and packaging businesses was $2,850, including cash of $1,750 and a contingent purchase liability of $1,100. The Company will manufacture these wood plugs at its existing facility in Hartselle, Alabama. The acquisition is part of the PaperCompany's efforts to simplify its operating structure to focus on growing its core Consumer and Industrial Converted Products segment.packaging businesses around the world. These sales are not expected to notably affect consolidated operating margin percentages, nor do they represent a strategic shift for the Company that will have a major effect on the entity’s operations and financial results. Consequently, the sales did not meet the criteria for reporting as discontinued operations. The contingent liability paymentnet proceeds from the sales were used for general corporate purposes. There were no divestitures during 2019.
The Company continually assesses its operational footprint as well as its overall portfolio of $1,100 was paid in September 2017, uponbusinesses and may consider the second anniversarydivestiture of the acquisition.

Acquisition-relatedplants and/or business units it considers to be suboptimal or nonstrategic.

Acquisition and Divestiture-Related Costs
Acquisition and divestiture-related costs of $8,040, $4,569$17,722, $4,671 and $1,663$8,842 were incurred in 2017, 20162021, 2020 and 2015,2019, respectively. These costs, consisting primarily of legal and professional fees, are included in “Selling, general and administrative expenses” in the Company’s Consolidated Statements of Income.

The Company has accounted for these acquisitions as business combinations under the acquisition method of accounting, in accordance with the business combinations subtopic of the

F-12 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-KF10

Accounting Standards Codification and, accordingly, has included their results of operations in the Company’s consolidated statements of net income from the respective dates of acquisition.

Dispositions

On November 7, 2016 the Company completed the sale of its rigid plastics blow molding operations to Amcor Rigid Plastics USA, LLC and Amcor Packaging Canada, Inc. These operations manufactured containers serving the personal care and food and beverage markets and consisted of seven manufacturing facilities (six in the U.S. and one in Canada), with approximately 850 employees. The selling price was approximately $280,000, with the Company receiving net cash proceeds of $271,817 at closing with another $7,775 held in escrow pending resolution of a contingency. In conjunction with the sale, the Company wrote off the following assets and liabilities: trade accounts receivable of $35,031; inventory of $14,700; trade accounts payable of $18,494; property, plant and equipment of $41,210; other net tangible liabilities totaling $499; goodwill of $76,435; and identifiable intangibles (primarily customer lists) of $14,735. Disposal-related costs totaled $4,407, resulting in the recognition of a gain on the disposition of $104,292. During 2017, the contingency was resolved with no additional proceeds being released to the Company and no additional gain on sale being recorded. The decision to sell the blow molding operations was made in order to allow the Company to focus on, and provide resources to further enhance, its targeted growth businesses, including flexible packaging, thermoformed rigid plastics, and temperature-assurance packaging. The sale did not represent a strategic shift for the Company that will have a major effect on the entity’s operations and financial results. Consequently, the sale did not meet the criteria for reporting as a discontinued operation. There were no dispositions in 2017 or 2015.


4. Restructuring and asset impairment

Due to its geographic footprint and the cost-competitive nature of its businesses, the Company is constantly seeking more cost-effective means and structures to serve its customers and to respond to fundamental changes in its markets. As such, restructuring costs have been and are expected to be a recurring component of the Company's operating costs. The Company has engaged in a numberamount of these costs can vary significantly from year to year depending upon the scope, nature, and location of the restructuring actions over the past several years. Actions initiated in 2017 and 2016 are reported as “2017 Actions” and “2016 Actions,” respectively. Actions initiated prior to 2016, all of which were substantially complete at December 31, 2017, are reported as “2015 and Earlier Actions.”

activities.

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

  Year Ended December 31
   2017 2016 2015

Restructuring/Asset impairment:

      

2017 Actions

  $15,329  $—  $—

2016 Actions

   1,935   32,997   —

2015 and Earlier Actions

   2,570   7,269   38,572

Other asset impairments

   18,585   2,617   12,065

Restructuring/Asset impairment charges

  $38,419  $42,883  $50,637

Income tax benefit

   (13,064)   (7,520)   (22,641)

Equity method investments, net of tax

   —   —   —

Restructuring cost/(benefit) attributable to noncontrolling interests, net of tax

   (71)   (161)   (93)

Total impact of restructuring/asset impairment charges, net of tax

  $25,284  $35,202  $27,903

Pretax
 Year Ended December 31,
  
202120202019
Restructuring and restructuring-related asset impairment charges$9,176 $67,729 $44,819 
Other asset impairments5,034 77,851 15,061 
Restructuring/Asset impairment charges$14,210 $145,580 $59,880 

The table below sets forth restructuring and restructuring-related asset impairment charges by type incurred:
 Year Ended December 31,
202120202019
Severance and Termination Benefits$13,097 $36,997 $24,864 
Asset Impairment/Disposal of Assets(9,116)22,394 9,674 
Other Costs5,195 8,338 10,281 
Total restructuring and restructuring-related asset impairment charges$9,176 $67,729 $44,819 
The table below sets forth restructuring and restructuring-related asset impairment charges by reportable segment:
 Year Ended December 31,
202120202019
Consumer Packaging3,427 25,548 $32,971 
Industrial Paper Packaging(1,642)32,691 5,148 
All Other2,969 7,266 4,636 
Corporate4,422 2,224 2,064 
Total restructuring and restructuring-related asset impairment charges$9,176 $67,729 $44,819 
"Restructuring and restructuring-related asset impairment charges" and "Other asset impairments" are included in “Restructuring/Asset impairment charges” in the Consolidated Statements of Income.

The following table sets forth the activity in the restructuring accrual included in “Accrued expenses and other” on the Company’s Consolidated Balance Sheets:

Accrual Activity
Severance
and
Termination
Benefits
Asset
Impairment/
Disposal
of Assets
Other
Costs
Total
Liability, December 31, 2019$10,765 $— $592 $11,357 
2020 charges36,997 22,394 8,338 67,729 
Cash (payments)/receipts(32,189)6,963 (9,570)(34,796)
Asset write downs/disposals— (29,357)1,143 (28,214)
Foreign currency translation382 — 8 390 
Liability, December 31, 2020$15,955 $— $511 $16,466 
2021 charges13,097 (9,116)5,195 9,176 
Cash (payments)/receipts(17,828)15,308 (6,313)(8,833)
Asset write downs/disposals— (6,192)2,479 (3,713)
Foreign currency translation(307)— 1 (306)
Liability, December 31, 2021$10,917 $— $1,873 $12,790 

"Severance and Termination Benefits" in 2021 include the cost of severance provided to employees terminated as the result of various plant closures, as well as certain employees impacted by Project Horizon who accepted severance packages in December 2021. Severance costs were also incurred for certain employees as a result of the sale of the Company's Plastics - Food thermoforming operations in the United States (part of the Consumer Packaging segment). In addition, the charges include the cost of severance for approximately 315 employees whose positions were eliminated in conjunction with the Company's ongoing organizational effectiveness efforts.
F-13 FORM 10-K SONOCO 2021 ANNUAL REPORT

"Severance and Termination Benefits" in 2020 include the cost of severance provided to employees terminated as the result of the closures of a paper mill in Canada, a paper machine in the United States, a cone operation in Europe, and 4 tube and core plants, 1 in Europe and 3 in the United States (all part of the Industrial Paper Packaging segment); the closure of a paperboard specialties plant in the United States (part of the All Other group of businesses); and the closure of 2 graphic design operations, 1 in the United States and 1 in the United Kingdom (part of the Consumer Packaging segment). Severance costs were also incurred in the Consumer Packaging segment as a result of consolidation efforts in the Company's Plastics - Food thermoforming operations on the west coast of the United States and Mexico. This consolidation resulted in the closure of a manufacturing facility in the United States and the conversion of a manufacturing facility in Mexico into a warehouse and distribution center. In addition, the charges include the cost of severance for approximately 275 employees whose positions were eliminated in conjunction with the Company's ongoing organizational effectiveness efforts.
"Asset Impairment/Disposal of Assets" recognized in 2021 consists primarily of gains from the sale of real estate in the Industrial Paper Packaging segment, and gains from the sale of other assets impaired in the prior year as a result of consolidations in the Company's Plastics - Food thermoforming operations.
"Asset Impairment/Disposal of Assets" in 2020 consisted of asset impairment charges resulting from consolidations in the Company's Plastics - Food thermoforming operations, the closure of a paper mill in Canada, the closure of a paper machine in the United States, the closure of a graphic design operation in the United States, and various other restructuring actions during the year. These losses were partially offset by gains from the sales of a tubes and core facility in the United States and several other buildings associated with previously closed facilities.
"Other Costs" in 2021 and 2020 consist primarily of costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance.
The Company expects to pay the majority of the remaining restructuring reserves by the end of 2022 using cash generated from operations. The Company also expects to recognize future additional costscharges totaling approximately $3,600$2,000 in connection with previously announced restructuring actions. The Companyactions and believes that the majority of these charges will be incurred and paid by the end of 2018.2022. The Company continually evaluates its cost structure, including its manufacturing capacity, and additional restructuring actions are likely to be undertaken.

2017 actions

During 2017, the Company announced the closure of an expanded foam protective packaging plant in the United States (part of the Protective Solutions segment) and five tubes and cores plants—three in the United States, one in Belgium, and one in China (all part of the Paper and Industrial Converted Products segment). In addition, approximately 255 positions were eliminated throughout 2017 in conjunction with the Company’s ongoing organizational effectiveness efforts.

Below is a summary of 2017 Actions and related expenses by type incurred and estimated to be incurred through completion.

2017 Actions Year Ended
December 31,
2017		 

Estimated

Total Cost

Severance and Termination Benefits

    

Consumer Packaging

  $4,191  $5,941

Display and Packaging

   741   741

Paper and Industrial Converted Products

   4,018   4,018

Protective Solutions

   1,398   1,398

Corporate

   452   452

Asset Impairment/Disposal of Assets

    

Consumer Packaging

   351   351

Paper and Industrial Converted Products

   (95)   (95)

Protective Solutions

   871   871

Other Costs

    

Consumer Packaging

   879   1,479

Display and Packaging

   789   1,489

Paper and Industrial Converted Products

   1,001   1,251

Protective Solutions

   742   742

Corporate

   (9)   (9)

Total Charges and Adjustments

  $15,329  $18,629

The following table sets forth the activity in the 2017 Actions restructuring accrual included in “Accrued expenses and other” on the Company’s Consolidated Balance Sheets:

2017 Actions
Accrual Activity		 

Severance

and

Termination

Benefits

 

Asset

Impairment/

Disposal

of Assets

 

Other

Costs

 Total

Liability, December 31, 2016

  $—  $—  $—  $—

2017 charges

   10,800   1,127   3,402   15,329

Cash payments

   (6,951)   636   (3,187)   (9,502)

Asset write downs/disposals

   —   (1,763)   —   (1,763)

Foreign currency translation

   40   —   (2)   38

Liability, December 31, 2017

  $3,889  $—  $213  $4,102
Other Asset Impairments

F11SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

Included in “Asset Impairment/Disposal of Assets” above is a loss of $1,238 primarily related to the impairment of fixed assets resulting from the closure of an expanded foam protective packaging plant in North Carolina, and a net gain of $111 relating primarily to the sale of two vacated buildings. The Company received proceeds of $636 from the sale of these buildings andwrote-off assets of $525.

“Other costs” consist primarily of costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance.

The Company expects to pay the majority of the remaining 2017 Actions restructuring costs by the end of 2018 using cash generated from operations.

2016 actions

During 2016, the Company initiated the following actions: the closure of four tubes and cores plants—one in the United States, one in Canada, one in Ecuador, and one in Switzerland (all part of the Paper and Industrial Converted Products segment); a packaging services center in Mexico (part of the Display and Packaging segment); and a fulfillment service center in Brazil (part of the Display and Packaging segment). The Company also began manufacturing rationalization efforts in its Reels division (part of the Paper and Industrial Converted Products segment), and completed the sales of a paper mill in France (part of the Paper and Industrial Converted Products segment) and a retail security packaging plant in Puerto Rico (part of the Display and Packaging segment). In addition, the Company continued to realign its cost structure, resulting in the elimination of approximately 180 positions.

Below is a summary of 2016 Actions and related expenses by type incurred and estimated to be incurred through completion.

  Year Ended
December 31,		 

Total

Incurred to

Date

 

Estimated

Total Cost

2016 Actions 2017 2016  

Severance and Termination Benefits

        

Consumer Packaging

  $34  $2,407  $2,441  $2,441

Display and Packaging

   (49)   4,304   4,255   4,255

Paper and Industrial Converted Products

   494   5,887   6,381   6,381

Protective Solutions

   —   678   678   678

Corporate

   14   1,550   1,564   1,564

Asset Impairment/Disposal of Assets

        

Consumer Packaging

   —   (306)   (306)   (306)

Display and Packaging

   96   2,712   2,808   2,808

Paper and Industrial Converted Products

   45   13,300   13,345   13,345

Other Costs

        

Consumer Packaging

   59   731   790   790

Display and Packaging

   388   286   674   674

Paper and Industrial Converted Products

   804   1,298   2,102   2,102

Protective Solutions

   50   150   200   200

Total Charges and Adjustments

  $1,935  $32,997  $34,932  $34,932

The following table sets forth the activity in the 2016 Actions restructuring accrual included in “Accrued expenses and other” on the Company’s Consolidated Balance Sheets:

2016 Actions
Accrual Activity		 

Severance

and

Termination

Benefits

 

Asset

Impairment/

Disposal

of Assets

 

Other

Costs

 Total

Liability, December 31, 2015

  $—  $—  $—  $—

2016 charges

   14,826   15,706   2,465   32,997

Cash receipts/(payments)

   (11,244)   (7,322)   (1,819)   (20,385)

Asset write downs/disposals

   —   (8,384)   —   (8,384)

Foreign currency translation

   (24)   —   (6)   (30)

Liability, December 31, 2016

  $3,558  $—  $640  $4,198

2017 charges

   493   141   1,301   1,935

Adjustments

   —   —   —   —

Cash (payments)/receipts

   (3,458)   —   (1,394)   (4,852)

Asset write downs/disposals

   —   (141)   (253)   (394)

Foreign currency translation

   14   —   35   49

Liability, December 31, 2017

  $607  $—  $329  $936

Included in “Asset Impairment/Disposal of Assets” above is a loss of $12,694 from the sale of a paperboard mill in France in May 2016, which includes the payment of $8,436 of cash required in order to consummate the disposition with the acquiror. Other assets divested in connection with the sale included net fixed assets of $3,201, andrecognized other tangible assets, net of liabilities disposed, of $1,057. Also included in “Asset Impairment/Disposal of Assets” is a loss of $2,421 from the sale of a retail security packaging business in Puerto Rico in July 2016. The Company received proceeds of $1,816 from the sale of this business. Assets written off in connection with the sale included net fixed assets of $217, other tangible assets, net of liabilities disposed, of $858, goodwill of $1,215, and other intangible assets (customer lists) of $1,947. Additional disposals of fixed assets totaling $(13,988) were recognized from restructuring actions initiated in 2016.

“Other Costs” in both 2016 and 2017 consist primarily of costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance.

The Company expects to pay the majority of the remaining 2016 Actions restructuring costs by the end of 2018 using cash generated from operations.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF12

2015 and earlier actions

2015 and Earlier Actions are comprised of a number of plant closures and workforce reductions initiated prior to 2016.

Below is a summary of 2015 and Earlier Actions and related expenses by type incurred.

   Year Ended December 31,
2015 and Earlier Actions  2017 2016 2015

Severance and Termination Benefits

       

Consumer Packaging

   $1,053  $3,147  $15,883

Display and Packaging

    83   97   994

Paper and Industrial Converted Products

    249   (6)   8,729

Protective Solutions

    —   —   25

Corporate

    6   (19)   2,775

Asset Impairment/Disposal of Assets

       

Consumer Packaging

    (1,377)   1,658   (4,303)

Display and Packaging

    (6)   335   474

Paper and Industrial Converted Products

    263   190   10,097

Protective Solutions

    (28)   3   133

Other Costs

       

Consumer Packaging

    1,561   949   1,490

Display and Packaging

    6   206   372

Paper and Industrial Converted Products

    631   522   1,360

Protective Solutions

    129   187   532

Corporate

    —   —   11

Total Charges and Adjustments

   $2,570  $7,269  $38,572

The following table sets forth the activity in the 2015 and Earlier Actions restructuring accrual included in “Accrued expenses and other” on the Company’s Consolidated Balance Sheets:

2015 and Earlier Actions
Accrual Activity		 

Severance

and

Termination

Benefits

 

Asset

Impairment/

Disposal

of Assets

 

Other

Costs

 Total

Liability, December 31, 2015

  $15,730  $—  $470  $16,200

2016 charges

   5,095   3,185   5,085   13,365

Adjustments

   (1,876)   (999)   (3,221)   (6,096)

Cash receipts/(payments)

   (15,124)   2,154   (2,339)   (15,309)

Asset write downs/disposals

   —   (4,340)   —   (4,340)

Foreign currency translation

   (217)   —   5   (212)

Liability, December 31, 2016

  $3,608  $—  $—  $3,608

2017 charges

   1,987   (1,148)   2,840   3,679

Adjustments

   (596)   —   (513)   (1,109)

Cash receipts/(payments)

   (3,778)   2,921   (1,828)   (2,685)

Asset write downs/disposals

   —   (1,773)   —   (1,773)

Foreign currency translation

   265   —   123   388

Liability, December 31, 2017

  $1,486  $—  $622  $2,108

Included in “Asset Impairment/Disposal of Assets” in 2016 were the proceeds and gain from the sale of an asset related to the disposition of a paper mill facility in Pennsylvania. Also included in 2016 were asset impairment charges andtotaling $5,034 in the year ended December 31, 2021. These charges consisted of fixed asset write downs related toimpairments totaling $2,635 in the closure of a rigid paper plant in Manchester, England (partCompany's Plastics - Food thermoforming operations, part of the Consumer Packaging segment).

Includedsegment, and $2,399 in “Asset Impairment/Disposal of Assets” in 2017 is a gain of $2,022 from the saletemperature-assured packaging business, part of the land and buildingAll Other group of a rigid paper plant in Manchester, England. businesses. The assets were impaired as the value of their projected undiscounted cash flows was determined to no longer be sufficient to recover their carrying value.

The Company received proceeds from the sale of $2,741 and wrote off assets of $719.

“Other Costs”recognized other asset impairment charges totaling $77,851 in both 2016 and 2017 consist primarily of costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance.

“Adjustments” in 2017 relate primarily to revisions to reserves for remaining severance payments and future building rental costs.

The Company expects to recognize future pretax charges of approximately $300 associated with 2015 and Earlier Actions, and expects to pay the majority of the remaining 2015 and Earlier Actions restructuring costs by the end of 2018 using cash generated from operations.

Other asset impairments

During2020. In the fourth quarter of 2017,2020, management concluded that certain long-lived assets of the Company's Plastics - Food thermoforming operations, part of the Consumer Packaging segment, were impaired as the projected undiscounted cash flows from these assets were not sufficient to recover their carrying value. As a result, the Company recognized thepretax impairment charges of $39,604 on intangible assets, $22,899 on fixed assets, and $9,714 on leased assets for a power generating facility at its Hartsville manufacturing complex. The facility, which is parttotal of the Paper and Industrial Converted Products segment, was determined to have been rendered obsolete by the Company’s new biomass facility and is scheduled for closure at the end of the first quarter of 2018. As a result of the pending closure, the Company recognized a pretax asset impairment charge of $17,822, which includes the remaining net book value of the facility, in December 2017.

As a result of the continued devaluation of the Venezuelan Bolivar in 2017,$72,217. In addition, the Company recognized impairment charges against inventories andtotaling $2,155 related to certain long-term nonmonetaryintangible assets totaling $338. The assets were deemed to be impairedwithin the temperature-assured packaging business, part of the All Other group of businesses, as the U.S. dollar value of the projected undiscounted cash flows from these assets was no longer sufficient to recover their U.S. dollar carrying values. In addition,values, $2,563 related to fixed assets that were determined to be obsolete due to a change in strategy within the Company has recognized foreign exchange remeasurement losses on net monetary assets of $425.

During the Company’s 2016 annual goodwill impairment testing, management concluded that goodwill associated with theglobal Rigid Paper and Industrial Converted Products—Brazil reporting unit had become impaired as a resultContainers business, part of the continued deterioration of economic conditions in Brazil. Accordingly, an impairment charge totaling $2,617, the entire amount of goodwill associated with this reporting unit, was recognized during the third quarter of 2016. No other impairments were identified during this most recently completed annual goodwill impairment testing.

PriorConsumer Packaging segment, and $916 related to July 1, 2015, the Company used Venezuela’s official exchange rate to report the results ofcertain buildings and inventory at its operations in Venezuela. As a result of significant inflationary increases, and to avoid distortion of its consolidated results from translation of its Venezuelan operations, the Company concluded that it was an appropriate time to begin translating its Venezuelan operations using an alternative exchange rate. Accordingly, effective July 1, 2015, the Company began translating its Venezuelan operations using the most current published Venezuelan exchange rate (which at that time was known as the SIMADI rate). This resulted in a foreign exchange remeasurement loss on net monetary assets. In addition, the useHartsville manufacturing complex, part of the significantly higher SIMADI rate resulted inIndustrial Paper Packaging segment, that were determined to have been rendered obsolete by the need to recognize impairment charges against inventories and certain long-term nonmonetary assets as the U.S. dollar value of projected future cash flows from these assets was no longer sufficient to recover their U.S. dollar carry-

Company's new Project Horizon initiative.

F13SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

ing values. The combined impact of the impairment charges and remeasurement loss was $12,065 on both a before andafter-tax basis, recognized in the third quarter of 2015.

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

5. Book overdrafts and cash pooling

At December 31, 20172021 and 2016,2020, outstanding checks totaling $17,343$36,759 and $10,073,$29,719, respectively, were included in “Payable to suppliers” on the Company’s Consolidated Balance Sheets. In addition, outstanding payroll checks of $259$0 and $11$65 as of December 31, 20172021 and 2016,2020, respectively, were included in “Accrued wages and other compensation” on the Company’s Consolidated Balance Sheets.

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 cash deposit or borrowing positions 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 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. The Company’s Consolidated Balance Sheets reflect a net cash deposit under this pooling arrangement of $3,328$19,502 and $2,789$4,809 as of December 31, 20172021 and 2016,2020, respectively.

6. Property, plant and equipment

Details of the Company’sCompany's property, plant and equipment at December 31 are as follows:

   2017 2016

Land

   $87,878  $84,404

Timber resources

    41,664   41,441

Buildings

    502,046   478,924

Machinery and equipment

    2,871,622   2,637,753

Construction in progress

    143,403   113,118
    3,646,613   3,355,640

Accumulated depreciation and depletion

    (2,477,236)   (2,295,623)

Property, plant and equipment, net

   $1,169,377  $1,060,017

Estimated costs for completion of capital additions under construction totaled approximately $79,000 at December 31, 2017.

20212020
Land$112,714 $119,262 
Timber resources42,355 42,310 
Buildings550,497 566,529 
Machinery and equipment3,179,781 3,191,008 
Construction in progress237,056 132,223 
4,122,402 4,051,332 
Accumulated depreciation and depletion(2,824,902)(2,807,222)
Property, plant and equipment, net$1,297,500 $1,244,110 


Depreciation and depletion expense amounted to $178,049$189,667 in 2017, $173,2952021, $201,004 in 20162020 and $179,888$186,540 in 2015.

2019.

F-14 FORM 10-K SONOCO 2021 ANNUAL REPORT

7. Leases
The Company has certain propertiesroutinely 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 at the Company's sole discretion. Most real estate leases, in particular, include 1 or more options to renew, with renewal terms that can extend the lease term from one to 50 years. The Company's leases do not have any significant residual value guarantees or restrictive covenants.
The following table sets forth the balance sheet location and values of the Company’s lease assets and lease liabilities at December 31, 2021 and December 31, 2020:
ClassificationBalance Sheet LocationDecember 31, 2021December 31, 2020
Lease Assets
Operating lease assetsRight of Use Asset - Operating Leases$268,390 $296,020 
Finance lease assetsOther Assets55,826 36,267 
Total lease assets$324,216 $332,287 
Lease Liabilities
Current operating lease liabilitiesAccrued expenses and other$45,305 $52,138 
Current finance lease liabilitiesNotes payable and current portion of long-term debt6,952 4,663 
Total current lease liabilities$52,257 $56,801 
Noncurrent operating lease liabilitiesNoncurrent Operating Lease Liabilities$234,167 $262,048 
Noncurrent finance lease liabilitiesLong-term Debt, net of current portion53,330 33,280 
Total noncurrent lease liabilities$287,497 $295,328 
Total lease liabilities$339,754 $352,129 
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 leased under noncancelable operating leases. Future minimum rentals under noncancelable operating leasesindexed to a change in rate or index. Because the right of use asset recorded on the balance sheet was determined based upon factors considered at the commencement date, subsequent changes in the rate or index that were not contemplated in the right of use asset balances recorded on the balance sheet result in variable expenses being incurred when paid during the lease term.
The following table sets forth the components of the Company's total lease cost for the years ended December 31, 2021, 2020, and 2019:
Lease Cost202120202019
Operating lease cost(a)$48,158 $58,678 $61,845 
Finance lease cost:
     Amortization of lease asset(a) (b)5,747 7,387 6,965 
     Interest on lease liabilities(c)1,384 1,050 763 
Variable lease cost(a) (d)26,198 36,758 51,616 
Impairment charges(e)148 11,340 — 
Total lease cost$81,635 $115,213 $121,189 
(a) Production-related and administrative amounts are included in cost of sales and selling, general and administrative expenses, respectively.
(b) Included in depreciation and amortization.
(c) Included in interest expense.
(d) Also includes short term lease costs, which are deemed immaterial.
(e) Impairment charges are included in "Restructuring/asset impairment charges" in the Company's Consolidated Statements of Income. See Note 4 for more information.

F-15 FORM 10-K SONOCO 2021 ANNUAL REPORT

The following table sets forth the five-year maturity schedule of the Company's lease liabilities as of December 31, 2021:
Maturity of Lease LiabilitiesOperating LeasesFinance LeasesTotal
2022$46,286 $7,034 $53,320 
202342,665 7,249 49,914 
202435,446 5,753 41,199 
202529,366 5,032 34,398 
202624,058 4,836 28,894 
Beyond 2026176,036 44,687 220,723 
Total lease payments$353,857 $74,591 $428,448 
     Less: Interest74,385 14,309 88,694 
Lease Liabilities$279,472 $60,282 $339,754 

With the January 2022 acquisition of Ball Metalpack, (see Note 20 - Subsequent Events), the annual maturity of lease liabilities is expected to increase.























F-16 FORM 10-K SONOCO 2021 ANNUAL REPORT

The following tables set forth the Company's weighted average remaining lease term and discount rates used in the calculation of its outstanding lease liabilities at December 31, 2021, 2020, and 2019, along with terms of more than one year are as follows: 2018 – $46,400; 2019 – $38,500;other lease-related information for the years ended December 31, 2021, 2020, – $30,400; 2021 – $21,300; 2022 – $17,700 and thereafter – $32,500. Total rental expense under operating leases was approximately $68,900 in 2017, $71,800 in 2016 and $72,400 in 2015.

2019:

7.
Lease Term and Discount Rate202120202019
Weighted-average remaining lease term (years):
     Operating leases11.811.810.2
     Finance leases13.512.93.8
Weighted-average discount rate:
     Operating leases4.09%4.28%4.74%
     Finance leases2.86%2.94%2.97%
Other Information202120202019
Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows used by operating leases$50,479 $58,305 $61,532 
     Operating cash flows used by finance leases$1,384 $1,050 $763 
     Financing cash flows used by finance leases$4,699 $7,437 $7,989 
Leased assets obtained in exchange for new operating lease liabilities$20,505 $90,361 $28,762 
Leased assets obtained in exchange for new finance lease liabilities$14,643 $23,117 $24,106 
Modification to leased assets for increase/(decrease) in operating lease liabilities$15,936 $(9,947)1,792 
Modification to leased assets for increase/(decrease) in finance lease liabilities$9,586 $14,005 (3,177)
Termination reclasses to decrease operating lease assets$(5,267)$(27,508)(5,658)
Termination reclasses to decrease operating lease liabilities$(5,602)$(27,985)(5,662)
Termination reclasses to decrease finance lease assets$(125)$(25,079)(2,991)
Termination reclasses to decrease finance lease liabilities$(130)$(25,199)(3,067)


8. Goodwill and other intangible assets

Goodwill

The changes


Effective January 1, 2021, the Company changed its operating and reporting structure and, as a result, realigned certain of its reportable segments. Accordingly, the beginning balances of goodwill by segment have been recast to conform with the new structure. Changes in the carrying amount of goodwill by segment for the year ended December 31, 2017,2021, are as follows:

   

Consumer

Packaging

 

Display

and

Packaging

 

Paper and

Industrial

Converted

Products

 

Protective

Solutions

 Total

Balance as of January 1, 2017

  $435,590  $203,414  $221,983  $231,228  $1,092,215

Acquisitions

   120,682   —   —   —   120,682

Other

   (1,201)   —   —   (326)   (1,527)

Foreign currency translation

   17,645   —   11,795   1,065   30,505

Balance as of December 31, 2017

  $572,716  $203,414  $233,778  $231,967  $1,241,875

Acquisitions in 2017 resulted
Consumer
Packaging
Industrial Paper
Packaging
All OtherTotal
Balance as of January 1, 2021$581,244 $369,315 $438,696 $1,389,255 
Acquisitions— 6,014 — 6,014 
    Divestitures(1,058)— (53,039)(54,097)
    Measurement period adjustments1,512 — — 1,512 
    Foreign currency translation(9,282)(7,549)(1,352)(18,183)
Balance as of December 31, 2021$572,416 $367,780 $384,305 $1,324,501 


Goodwill from 2021 acquisitions relates to the first quarter acquisition of TuboTec and the fourth quarter acquisitions of D&W and American Recycling. Divestitures relate to the divestiture of the Company's U.S display and packaging business in the additionfirst quarter of $120,6822021 and the divestiture of goodwill. Of this total, $67,775 was recordeda small Plastics - Food thermoforming operation. Measurement period adjustments relate to final working capital settlements made in connection with the March 2017first quarter of 2021 for the prior-year acquisition of Packaging Holdings and $52,907 was recorded in connection with the July 2017 acquisition of Clear Lam. In addition to these acquisitions, the Company made small adjustments to the goodwill related to the November 2016 acquisition of Plastics Packaging, Inc. and the September 2016 acquisition of Laminar Medica totaling $(1,201) and $(326), respectively.Can Packaging. See Note 3 for additional information.

The Company assesses goodwill for impairment annually andduring 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 2017. As part of this testing, the Company2021, and analyzed certain qualitative and quantitative factors in determining whether a goodwill impairment. Goodwill is tested for impairment using either a qualitative evaluation or a quantitative test.existed. The qualitative evaluation considers factors such as the macroeconomic environment, Company stock price and market capitalization movement, business strategy changes, and significant customer wins and losses. The quantitative test considers factors such as the amount by which estimated fair value exceeds current carrying value, current year operating performance as compared to prior projections, and implied fair values from comparable trading and transaction multiples. When calculated, reporting unit estimated fair values reflectCompany's assessments reflected a number of significant management assumptions and estimates including the Company’sCompany's forecast of sales volumes and prices,growth, gross profit margins, income taxes, capital expenditures and changes in working capital requirements.discount rates. Changes in these assumptions and/or discount rates could materially impact the estimated fair values. When the Company estimates the fair value of a reporting unit, it does so using a discounted cash flow model based on projections of future years’ operating results and associated cash flows, together with comparable trading and transaction multiples. The Company’s projections incorporate management’s best estimates of the expected future results, which include expectations related to new business, and, where applicable, improved operating margins. Management’s projections related to revenue growth and/or margin improvements arise from a combination of factors, including expectations for volume growth with existing customers, product expansion, improved price/cost, productivity gains, fixed cost leverage, improvement in general economic conditions, increased operational capacity, and customer retention. Projected future cash flows are then discounted to present value

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF14

using a discount rate management believes is commensurate with the risks inherent in the cash flows for each reporting unit. Because the Company’s assessments incorporate management’s expectations for the future, including forecasted growth and/or margin improvements, if there are changes in the relevant facts and circumstances and/or expectations, management’s assessment 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 likely be the result of adverse changes in more than one assumption. Other than in Display and Packaging, there is no specific singular event or single change in circumstances the Company 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.

Company's conclusions. Based on its assessments, the Company concluded that there was no impairment of goodwill for any of its reporting units. The assessments reflected a number of significant management assumptions and estimates including the Company’s forecast of sales volumes and prices, profit margins, income taxes, capital expenditures and changes in working capital requirements. Changes in these assumptions and/or discount rates could materially impact the Company’s conclusions.

Although no reporting units failed the assessments noted above,annual impairment test, in management’s opinion, the goodwill of the Plastics - Healthcare reporting units having the greatestunit 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.
F-17 FORM 10-K SONOCO 2021 ANNUAL REPORT

Although beginning to benefit from economic recovery, the results of the Plastics – Healthcare reporting unit have been negatively impacted by end-market weakness due to the COVID-19 pandemic. In addition, the unit is facing near-term headwinds from higher raw material and other cost increases. Assuming COVID-19 infection rates continue to decline, management expects market demand will improve over the coming year and that selling price increases and/or cost reductions, including restructuring actions and investments in production efficiency projects, will mitigate the impacts of recent raw material and other cost inflation. However, should it become apparent that the ongoing post-COVID-19 recovery is likely to be significantly weaker, delayed, or prolonged compared to management’s current expectations, significant negative price/cost relationships will persist over the long-term, or gross profit margins do not improve as expected, goodwill impairment charges may be possible in the future.
In its annual goodwill impairment analysis as of October 3, 2021, projected future impairment if actual results fall short of expectations are Display and Packaging, and Paper and Industrial Converted Products—Europe.cash flows for the Plastics - Healthcare reporting unit were discounted at 8.3%. Total goodwill associated with thesethis reporting unitsunit was $64,263 at December 31, 2021. In the latest annual impairment test, the estimated fair value of the Plastics - Healthcare reporting unit was determined to exceed its carrying value by approximately $203,00013.3% . Based on the discounted cash flow model and $95,000, respectively,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.
During the time subsequent to the annual evaluation, and at December 31, 2017. A large portion of projected sales2021, the Company considered whether any events and/or changes in circumstances had resulted in the Display and Packaginglikelihood that the goodwill of any of its reporting unitunits may have been impaired. It is concentrated in two customers, the loss of either of which could impact the Company’s conclusion regarding the likelihood of goodwill impairment for the unit.

management's opinion that no such events have occurred.


Other intangible assets

Details at December 31 are as follows:

    2017 2016

Other Intangible Assets, Gross:

     

Patents

   $21,957  $13,164

Customer lists

    497,634   362,162

Trade names

    25,148   19,902

Proprietary technology

    20,779   20,721

Land use rights

    298   288

Other

    1,740   1,701

Other Intangible Assets, Gross

   $567,556  $417,938

Accumulated Amortization:

     

Patents

   $(7,187)  $(5,647)

Customer lists

    (210,212)   (172,292)

Trade names

    (4,427)   (2,733)

Proprietary technology

    (13,192)   (11,236)

Land use rights

    (47)   (41)

Other

    (1,196)   (1,031)

Accumulated Amortization

   $(236,261)  $(192,980)

Other Intangible Assets, Net

   $331,295  $224,958

20212020
Other Intangible Assets, Gross:
Patents$29,315 $29,325 
Customer lists592,195 622,430 
Trade names32,043 32,088 
Proprietary technology22,846 22,813 
Other2,807 2,831 
Other Intangible Assets, Gross$679,206 $709,487 
Accumulated Amortization:
Patents$(16,275)$(14,511)
Customer lists(347,274)(339,159)
Trade names(14,106)(12,156)
Proprietary technology(21,394)(19,833)
Other(2,014)(1,894)
Accumulated Amortization$(401,063)$(387,553)
Other Intangible Assets, Net$278,143 $321,934 


The March 2017 acquisitionacquisitions of Packaging HoldingsD&W in November 2021 and American Recycling in December 2021 resulted in the addition of $60,190$7,100 and $2,236, respectively, of intangible assets, of which $48,400 related to customer lists, $8,790 to patents, and $3,000 to trade names. The July 2017 acquisition of Clear Lam resulted in the addition of $77,600 of intangible assets, of which $75,500 related to customer lists and $2,100 to trade names. In addition, adjustments were made in 2017 to the provisional fair values of

the assets acquired and the liabilities assumed in the November 2016 acquisition of PPI which resulted in the recognition of an additional $1,400 of intangible assets, all of whichprimarily related to customer lists. These intangible assetsintangibles will be amortized over an expected average useful life of 13.110 years.

Aggregate amortization expense on intangible assets was $38,165, $31,887$49,419, $52,899 and $33,273$51,580 for the years ended December 31, 2017, 20162021, 2020 and 2015,2019, respectively. Amortization expense on intangible assets is expected to approximate $42,500$45,800 in 2018, $41,3002022, $41,800 in 2019, $38,7002023, $33,500 in 2020, $36,8002024, $25,200 in 2025 and $21,700 in 2026 based on intangible assets as of December 31, 2021. With the January 2022 acquisition of Ball Metalpack, (see Note 20 - Subsequent Events), annual amortization expense is expected to increase.
F-18 FORM 10-K SONOCO 2021 and $35,200 in 2022.

8.ANNUAL REPORT


9. Debt

Debt

Details of the Company's debt at December 31 waswere as follows:

    2017  2016

5.75% debentures due November 2040

   $599,171   $599,136

4.375% debentures due November 2021

    248,803    248,490

9.2% debentures due August 2021

    4,294    4,309

1.00% foreign loan due May 2021

    177,218    154,936

Term loan, due July 2022

    246,328    —

Commercial paper, average rate of 1.24% in 2017 and 0.63% in 2016

    124,000    —

Other foreign denominated debt, average rate of 3.7% in 2017 and 3.8% in 2016

    21,735    33,254

Other notes

    25,780    12,618

Total debt

    1,447,329    1,052,743

Less current portion and short-term notes

    159,327    32,045

Long-term debt

   $1,288,002   $1,020,698

20212020
Commercial paper, average rate of 0.16% in 2021 and 0.75% in 2020$349,000 $— 
1.00% Euro loan due May 2021— 183,662 
9.2% debentures due August 2021— 4,320 
4.375% debentures due November 2021— 249,741 
3.125% debentures due May 2030595,342 594,687 
5.75% debentures due November 2040536,182 599,279 
Other foreign denominated debt, average rate of 3.0% in 2021 and 2.2% in 202055,432 15,522 
Finance lease obligations60,282 37,943 
Other notes14,424 15,070 
Total debt$1,610,662 $1,700,224 
Less current portion and short-term notes411,557 455,784 
Long-term debt$1,199,106 $1,244,440 


On March 13, 2017,June 30, 2021, the Company entered into a $150,000new five-year $750,000, unsecured three-year floating-rate assignable loan agreement. The proceeds from this term loan were used to fund the acquisition of Packaging Holdings.

On July 20, 2017, the Company entered into a Credit Agreement in connection with a new $750,000 bankrevolving credit facility with a syndicate of eight banks replacingwhich replaced an existing credit facility entered into on October 2, 2014,July 20, 2017, and reflectingreflects substantially the same terms and conditions. Included inConsistent with prior facilities, the new facility are a $500,000 five-year revolving credit facility and a $250,000 five-year term loan.supports the Company's $500,000 commercial paper program. Based on the pricing grid, in the Credit Agreement and the Company’sSonoco's current credit ratings, thea London Interbank Offering Rate (LIBOR) borrowing has anall-in drawn margin of 112.5125.0 basis points abovepoints. On September 21, 2021, the London Interbank Offered Rate (LIBOR). Borrowings underCompany borrowed $50,000 from the Credit Agreement arepre-payable at any time atrevolving credit facility. These borrowings were repaid in full on October 1, 2021.

On April 28, 2021, the discretionCompany commenced a cash tender offer to purchase up to $300,000 of the $600,000 outstanding principal amount of its 5.75% notes due November 2040. Upon expiration of the tender on May 25, 2021, the Company repurchased 10.53% of its outstanding 5.75% notes for a total cash cost of $81,961, as shown below:
Principal Amount TenderedPremium and Other Amounts PaidTotal Cash
Paid
 5.75% debentures due November 2040$63,206 $18,755 $81,961 
On April 28, 2021, the Company entered into a reverse treasury lock agreement intended to fix the cash cost to fund approximately $100,000 of the maximum $300,000 principal amount subject to being tendered. The settlement of the reverse treasury lock on May 13, 2021 resulted in a loss of $1,356. In addition, the Company wrote off a proportional share of unamortized bond issuance costs and unamortized original issue discounts associated with the 5.75% 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.
The Company's 1%, 150,000 euro-denominated debt 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 2 forward contracts to buy a total of 150,000 euros, to manage foreign currency risk related to the Company's funding of the debt repayment upon maturity. The Company recognized a gain of $4,387 upon the May 21, 2021 maturity of these forward contracts. The gain is included in "Selling, general and administrative expenses" on the Company's Consolidated Statements of Income for the year ended December 31, 2021 and the term loanproceeds from the settlement of the contracts and the debt maturity payment are reflected in "Net cash (used)/provided by financing activities" in the Company's Consolidated Statement of Cash Flows for the year ended December 31, 2021.
On August 1, 2021, the Company repaid its $250,000, 4.375% debentures without penalty ahead of their November 2021 maturity. Also on August 1, 2021, the Company repaid its $4,321, 9.2% debentures upon their maturity.
The principal requirements of debt maturing in the next five years are:
  
20222023202420252026
Debt maturities by year$411,557 $7,992 $6,131 $5,306 $4,992 
As of December 31, 2021, the Company has annual amortization payments totaling $12,500.

Consistent with prior facilities,scheduled debt maturities through the $500,000next twelve months of $411,557 including $349,000 of outstanding commercial paper. At December 31, 2021, the Company has $170,978 in cash and cash equivalents on hand and $750,000 in committed capacity under its revolving credit facility, will continue to support the Company’s $350,000 commercial paper program. If circumstances were to prevent the Company from issuing commercial paper, it has the contractual right to draw funds directly on the underlying bank credit facility. The Company had $124,000of which $401,000 was available for drawdown, net of outstanding commercial paper at December 31, 2017balances. The Company believes that these amounts, combined with expected net cash flows from operating activities, provide ample liquidity to cover these debt maturities and none at December 31, 2016.

Proceeds from the $250,000 term loan were used to repay the $150,000 term loan entered into on March 13, 2017, and the remaining $100,000 was used to partially fund the Clear Lam acquisition.

In May 2016, the Company’s wholly-owned subsidiary Sonoco Deutschland Holdings GmbH entered into a Euro 150,000, unsecured five-year fixed-rate assignable loan agreement guaranteed by the Company. The loan bears interest at a

F15SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

rateother cash flow needs of 1.00% and is due in May 2021. The loan may be redeemed in whole by the Company at any time with notice. The proceedsover the course of the loan were used primarily to settle the remaining balance of the three-year term loan used to fund the November 2014 acquisition of Weidenhammer Packaging Group.

next year.

In addition, to the $500,000 committed revolving bank credit facility, the Company had approximately $203,000$195,417 available under unused short-term lines of credit at December 31, 2017.2021. These short-term lines of credit are available for general corporate purposes of our subsidiaries, including working capital and hedging requirements.
On January 21, 2022, the Company purposes,completed a registered public offering of unsecured notes with interest at mutually agreed-upon rates.

Thean aggregate principal amount of $1,200,000. Also, on January 21, 2022, the Company utilized cash on handentered into a new $300,000 term loan facility with a syndicate of 8 banks. Proceeds from the notes and the term loan, together with commercial paper borrowings, were used to fund the repayment of its 5.625% debentures upon their maturity in June 2016.

Ball Metalpack acquisition. See Note 20 for additional information.

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 covenantcovenants currently requiresrequire the Company to maintain a minimum level of interest coverage, and a minimum level of net worth, as defined.defined in the agreements. As of December 31, 2017,2021, the Company had substantial toleranceCompany's interest coverage and net worth were substantially above the minimum levels required under these covenants.

The principal requirements of debt maturing in the next five years are: 2018 – $159,327; 2019 – $16,531; 2020 – $16,439;

F-19 FORM 10-K SONOCO 2021 – $446,694 and 2022 – $199,414.

9.ANNUAL REPORT


10. Financial instruments and derivatives

The following table sets forth the carrying amounts and fair values of the Company’s significant financial instruments wherefor which the carrying amount differs from the fair value.

  December 31, 2017 December 31, 2016
   

Carrying

Amount

 

Fair

Value

 

Carrying

Amount

 

Fair

Value

Long-term debt

  $1,288,002  $1,426,862  $1,020,698  $1,116,336

 December 31, 2021December 31, 2020
  
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Long-term debt, net of current portion$1,199,106 $1,434,711 $1,244,440 $1,538,132 

The carrying value of cash and cash equivalents short-term debt and long-term variable-rateshort-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. It is considered a Level 2 fair value measurement.

Cash flow hedges

Flow Hedges

At December 31, 20172021 and 2016,2020, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows. ToThese contracts, which have maturities ranging to December 2022, qualify as cash flow hedges under U.S. GAAP. For derivative instruments that are designated and qualify as a cash flow hedge, the extent considered effective,gain or loss on the changes in fair valuederivative instrument is reported as a component of these contracts are recorded in other comprehensive income and reclassified to income or expenseinto earnings in the same period inor periods during which the hedged transaction affects earnings and is presented in the same income statement line item impacts earnings.

as the earning effect of the hedged item.

Commodity cash flow hedges

The Company hasCash Flow Hedges

Certain derivative contracts entered into certain derivative contracts to manage some of the cost of anticipated purchases of natural gas and aluminum and old corrugated containers (OCC).have been designated by the Company as hedges. At December 31, 2017,2021, these contracts included natural gas swaps covering approximately 7.5 MMBTUs were outstanding. These contracts represent approximately 76.2% and 35.5%1.7 million MMBTUs. The Company also has certain natural gas hedges that it does not treat as Cash Flow Hedges. See Other Derivatives below for a discussion of anticipated U.S. and Canadian usage for 2018 and 2019, respectively. Additionally, the Company had swap contracts covering 1,796 metric tons of aluminum representing approximately 24% of anticipated usage for 2018.these hedges. The total fair values of the Company’s commodity cash flow hedges were innetted to a net lossgain position totaling $(1,713)of $1,491 at December 31, 2017,2021 and a net gainloss position totaling $3,636of $(647) at

December 31, 2016.2020. The amount of the lossgain included in accumulated other comprehensive loss at December 31, 2017,2021 expected to be reclassified to the income statement during the next twelve months is $(1,166).

$1,491.

Foreign currency cash flow hedges

Currency Cash Flow Hedges

The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales, purchases, and purchases forecastedcapital spending expected to occur in 2017.2022. The net positions of these contracts at December 31, 2017,2021, were as follows:

follows (in thousands):
CurrencyActionActionQuantity

Colombian peso

PurchasePurchase7,644,55126,964,039 

Mexican peso

PurchasePurchase713,178478,872 

Canadian dollar

Polish zloty		PurchasePurchase53,77186,960 

Euro

Czech koruna		PurchasePurchase53,54666,323 

Turkish lira

PurchasePurchase14,13116,776 

Russian ruble

Canadian dollar		PurchasePurchase1,41015,862 

Euro

Purchase7,315 
British poundPurchase3,541 
New Zealand dollar

SellSell(290)(809)

Australian dollar

SellSell(422)(2,125)

British pound

Russian ruble		SellSell(89,271)(12,592)

Polish zloty

Sell(173,137)

The total net fair valuesvalue of the Company’s foreign currency cash flow hedges were $950related to forecasted sales and $(184)purchases netted to a gain position of $336 and $555 at December 31, 20172021 and 2016,December 31, 2020, respectively. During 2017 and 2016,Gains of $336 are expected to be reclassified from accumulated other comprehensive loss to the income statement during the next twelve months. In addition, the Company has entered into forward contracts to hedge certain foreign currency cash flow hedgestransactions related to constructionequipment purchases denominated in progress were settled asa foreign currency. As of December 31, 2021 and December 31, 2020, the capital expenditures were made. Gainsnet position of these contracts was $(457) and $47, respectively. During the twelve months ended December 31, 2021, losses from these hedges totaling $64 and $59$(330) were reclassified from accumulated other comprehensive loss and netted againstincluded in the carrying value of the capitalized expenditures during the years ended December 31, 2017 and 2016, respectively. The amountexpenditures. Losses of the gain included in accumulated other comprehensive income at December 31, 2017,$(457) are expected to be reclassified tofrom accumulated other comprehensive loss and included in the income statementcarrying value of the related fixed assets acquired during the next twelve months is $88.

months.

Net Investment Hedge
In January 2020, the Company entered into a cross-currency swap agreement with a notional amount of $250,000 to effectively convert a portion of the Company's fixed-rate, U.S. dollar denominated debt, including the semi-annual interest payments, to fixed-rate euro-denominated debt. The risk management objective was to manage foreign currency risk relating to net investments in certain European subsidiaries denominated in foreign currencies. As a result of significant strengthening of the U.S. dollar and a reduction in the differential between U.S. and European interest rates, the fair market value of the swap position appreciated significantly during the first quarter of 2020. In March 2020, the
F-20 FORM 10-K SONOCO 2021 ANNUAL REPORT

Company terminated the swap agreement and received a net cash settlement of $14,480. The Company recorded this foreign currency translation gain in "Accumulated other comprehensive loss," net of a tax provision of $7,581.
Other derivatives

Derivatives

The Company routinely enters into forward contracts or swaps to economically hedge the currency exposure of intercompany debt and existing foreign currency denominated receivables and payables. The Company does not apply hedge accounting treatment under ASC 815 for these instruments. As such, changes in fair value are recorded directly to income and expense in the periods that they occur. The net positions of these contracts at December 31, 2017,2021, were as follows:

follows (in thousands):
CurrencyActionActionQuantity

Colombian peso

PurchasePurchase4,764,64628,089,457 

Mexican peso

Indonesian rupiah		PurchasePurchase262,87621,279,953 

Mexican peso

Purchase357,895 
Turkish liraPurchase38,142 
Thai BahtPurchase16,436 
Canadian dollar

PurchasePurchase19,9882,682 

In addition to the contracts designated as cash flow hedges described above, the Company has entered into derivative contracts to manage the cost of anticipated purchases of natural gas. At December 31, 2021, these contracts consisted of natural gas swaps covering approximately 3.9 million MMBTUs. The Company's designated and non-designated natural gas derivative contracts total approximately 5.6 million MMBTUs and represent approximately 73% of anticipated natural gas usage in North America for 2022.
Pursuant to the registered public offering of unsecured 2.85% notes with a principal amount of $500,000 maturing on February 1, 2032, the Company entered into treasury lock derivative instruments with 2 banks, with a notional principal amount of $150,000 each on December 29, 2021. These instruments had the risk management objective of reducing exposure to the Company of increases in the underlying Treasury index up to the date of pricing of the notes. The fair value of the contracts was a net loss position of $(550) at December 31, 2021. The derivatives were settled when the bonds priced on January 11, 2022, with the Company recognizing a gain on the settlement of $5,201.
The fair value of the Company’s other derivatives was $(581) were net gains of $92 and $(696)$599 at December 31, 20172021 and 2016,2020, respectively.

The Company has determined all derivatives for which it has applied hedge accounting under ASC 815 to be highly effective and as a result no material ineffectiveness has been recorded during the periods presented.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF16

The following table sets forth the location and fair values of the Company’s derivative instruments:

       Fair Value at
December 31
Description  Balance Sheet Location                           2017         2016    

Derivatives designated as hedging instruments:

       

Commodity Contracts

  Prepaid expenses   $149  $3,240

Commodity Contracts

  Other assets   $—  $527

Commodity Contracts

  Accrued expenses and other   $(1,417)  $(89)

Commodity Contracts

  Other liabilities   $(445)  $(42)

Foreign Exchange Contracts

  Prepaid expenses   $2,232  $761

Foreign Exchange Contracts

  Accrued expenses and other   $(1,282)  $(946)

Derivatives not designated as hedging instruments:

       

Foreign Exchange Contracts

  Prepaid expenses   $90  $194

Foreign Exchange Contracts

  Accrued expenses and other   $(671)  $(890)

instruments at December 31, 2021 and 2020:
  Fair Value at December 31
DescriptionBalance Sheet Location20212020
Derivatives designated as hedging instruments:
Commodity ContractsPrepaid expenses$1,599 $867 
Commodity ContractsAccrued expenses and other$(108)$(1,512)
Commodity ContractsOther liabilities$— $(2)
Foreign Exchange ContractsPrepaid expenses$848 $997 
Foreign Exchange ContractsAccrued expenses and other$(969)$(395)
Derivatives not designated as hedging instruments:
Commodity ContractsPrepaid expenses$1,815 $484 
Commodity ContractsAccrued expenses and other$(1,132)0
Foreign Exchange ContractsPrepaid expenses$135 $140 
Foreign Exchange ContractsAccrued expenses and other$(176)$(25)
Interest Rate Lock ContractAccrued expenses and other$(550)$— 

While certain of the Company’sCompany'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.


F-21 FORM 10-K SONOCO 2021 ANNUAL REPORT

The following table setstables set forth the effect of the Company’s derivative instruments on financial performance for the twelve monthsyear ended December 31, 2017,2021 and December 31, 2020, excluding the gains on foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to the carrying value of the capitalized expenditures:

Description 

Amount of Gain or

(Loss) Recognized

in OCI on

Derivative

(Effective Portion)

  

Location of Gain or

(Loss) Reclassified

from Accumulated

OCI Into Income

(Effective Portion)

  

Amount of Gain or
(Loss) Reclassified
from Accumulated
OCI Into Income

(Effective Portion)

  

Location of Gain or

(Loss) Recognized

in Income on

Derivative

(Ineffective Portion)

  

Amount of Gain or

(Loss) Recognized

in Income on

Derivative

(Ineffective Portion)

 

Derivatives in Cash Flow Hedging Relationships:

     

Foreign Exchange Contracts

 $5,947   Net sales  $11,738   Net sales  $— 
   Cost of sales  $(6,764)   Cost of sales  $— 

Commodity Contracts

 $(3,062)   Cost of sales  $1,667   Cost of sales  $176 
       

Location of Gain or

(Loss) Recognized in
Income Statement

  

Gain or (Loss)

Recognized

         

Derivatives not designated as hedging instruments:

     

Foreign Exchange Contracts

   Cost of sales  $—   
   

Selling, general and

administrative

 

 

 $(2,138)   

F17
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:
Year Ended December 31, 2021
Foreign Exchange Contracts$210 Net sales$3,212 
Cost of sales$(2,544)
Commodity Contracts$10,039 Cost of sales$7,794 
Year Ended December 31, 2020
Foreign Exchange Contracts$(3,596)Net sales$(6,662)
Cost of sales$3,576 
Commodity Contracts$(227)Cost of sales$(1,213)

Description
Gain or (Loss)
Recognized
Location of Gain or (Loss) Recognized in Income Statement
Derivatives not Designated as Hedging Instruments:
Year Ended December 31, 2021
Commodity Contracts$1,118 Selling, general and administrative
Foreign Exchange Contracts$(737)Selling, general and administrative
Interest Rate Lock Contracts$(550)Selling, general and administrative
Year Ended December 31, 2020
Commodity Contracts$226 Cost of sales
Foreign Exchange Contracts$(358)Selling, general and administrative
Year Ended December 31, 2021Year Ended December 31, 2020
DescriptionRevenueCost of SalesRevenueCost of Sales
Total amount of income and expense line items presented in the Consolidated Statements of Income$3,212 $5,250 $(6,662)$2,363 
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$3,212 $(2,544)$(6,662)$3,576 
Commodity contract:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into net income$— $7,794 $— $(1,213)

F-22 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-K

The following table sets forth the effect of the Company’s derivative instruments on financial performance for the twelve months ended December 31, 2016, excluding the gains on foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to the carrying value of the capitalized expenditures:

Description 

Amount of Gain or

(Loss) Recognized

in OCI on

Derivative

(Effective Portion)

  

Location of Gain or

(Loss) Reclassified

from Accumulated

OCI Into Income

(Effective Portion)

 

Amount of Gain or
(Loss) Reclassified from

Accumulated OCI

Into Income

(Effective Portion)

  

Location of Gain or

(Loss) Recognized

in Income on

Derivative

(Ineffective Portion)

  

Amount of Gain or

(Loss) Recognized

in Income on

Derivative

(Ineffective Portion)

 

Derivatives in Cash Flow Hedging Relationships:

     

Foreign Exchange Contracts

  $(420)  Net sales $(8,769)   Net sales  $— 
  Cost of sales $3,981   Cost of sales  $— 

Commodity Contracts

  $3,032  Cost of sales $(3,583)   Cost of sales  $(444) 
       

Location of Gain or

(Loss) Recognized in

Income Statement

 

Gain or (Loss)

Recognized

         

Derivatives not designated
as hedging instruments:

     

Foreign Exchange Contracts

  Cost of sales $—   
  Selling, general

and administrative

 $(2,118)   

10.



11. Fair value measurements

Fair value is defined as 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 at the measurement date. 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.

The following tables set forth information regarding the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis:

Description  December 31,
2017		 Assets
measured
at NAV (g)		  Level 1  Level 2 Level 3

Hedge derivatives, net:

             

Commodity contracts

   $(1,713)  $—   $—   $(1,713)  $—

Foreign exchange contracts

    950   —    —    950   —

Non-hedge derivatives, net:

             

Foreign exchange contracts

    (581)   —    —    (581)   —

Deferred compensation plan assets

    268   —    268    —   —

Postretirement benefit plan assets:

             

Common Collective Trust(a)

    1,010,274   1,010,274    —    —   —

Mutual funds(b)

    214,555   —    —    214,555   —

Fixed income securities(c)

    167,992   —    —    167,992   —

Short-term investments(d)

    2,239      1,052    1,187   —

Hedge fund of funds(e)

    69,500   69,500    —    —   —

Real estate funds(f)

    56,690   56,690    —    —   —

Cash and accrued income

    640   —    640    —   —

Total postretirement benefit plan assets

   $1,521,890  $1,136,464   $1,692   $383,734  $—

DescriptionDecember 31, 2021Assets measured at NAV (g)Level 1Level 2Level 3
Hedge derivatives, net:
Commodity contracts$1,491 $— $— $1,491 $— 
Foreign exchange contracts(121)— — (121)— 
Non-hedge derivatives, net:
Commodity contracts683 00683 0
Foreign exchange contracts(41)— — (41)— 
Interest rate lock contract(550)0— (550)— 
Postretirement benefit plan assets:
 Common Collective(a)$8,882 $8,882 $— $— $— 
Mutual funds(b)118,559 — — 118,559 — 
 Fixed income securities(c)292,883 41,120 — 251,763 — 
Short-term investments(d)1,211 — — 1,211 — 
 Real estate funds(f)592 592 — — — 
      Cash and accrued income8,920 — 8,920 — — 
Total postretirement benefit plan assets$431,047 $50,594 $8,920 $371,533 $— 
DescriptionDecember 31, 2020Assets measured at NAV (g)Level 1Level 2Level 3
Hedge derivatives, net:
Commodity contracts$(647)$— $— $(647)$— 
Foreign exchange contracts602 — — 602 — 
Non-hedge derivatives, net:
      Commodity contracts484 00484 0
Foreign exchange contracts115 — — 115 — 
Postretirement benefit plan assets:
      Common Collective(a)$7,750 $7,750 $— $— $— 
      Mutual funds(b)152,756 — — 152,756 — 
      Fixed income securities(c)1,533,149 1,297,826 17 235,306 — 
      Short-term investments(d)1,223 — — 1,223 — 
      Hedge fund of funds(e)67 67 — — — 
      Real estate funds(f)552 552 — — — 
      Cash and accrued income117,638 — 117,638 — — 
Total postretirement benefit plan assets$1,813,135 $1,306,195 $117,655 $389,285 $— 

a.Common collective trust investments consist of domestic and international large and mid capitalization equities, including emerging markets and funds invested in both short-term and long-term bonds. Underlying investments are generally valued at closing prices from national exchanges. Commingled funds, private securities, and limited partnerships are valued at unit values or net asset values provided by the investment managers.
b.Mutual fund investments are comprised of equity securities of corporations with large capitalizations and also include funds invested in corporate equities in international and emerging markets and funds invested in long-term bonds, which are valued at closing prices from national exchanges.
c.Fixed income securities include funds that invest primarily in government securities and long-term bonds. Underlying investments are generally valued at closing prices from national exchanges, fixed income pricing models, and independent financial analysts. Fixed income commingled funds are valued at unit values provided by the investment managers.
F-23 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-KF18

Description  December 31,
2016		 Assets
measured
at NAV (g)		  Level 1  Level 2 Level 3

Hedge derivatives, net:

             

Commodity contracts

   $3,636  $—   $—   $3,636  $—

Foreign exchange contracts

    (185)   —    —    (185)   —

Non-hedge derivatives, net:

             

Foreign exchange contracts

    (696)   —    —    (696)   —

Deferred compensation plan assets

    349   —    349    —   —

Postretirement benefit plan assets:

             

Common Collective Trust(a)

    874,996   874,996    —    —   —

Mutual funds(b)

    213,244   —    —    213,244   —

Fixed income securities(c)

    118,224   —    —    118,224   —

Short-term investments(d)

    7,686   6,090    513    1,083   —

Hedge fund of funds(e)

    72,003   72,003    —    —   —

Real estate funds(f)

    62,694   62,694    —    —   —

Cash and accrued income

    390   —    390    —   —

Total postretirement benefit plan assets

   $1,349,237  $1,015,783   $903   $332,551  $—
(a)Common collective trust investments consist of domestic and international large and mid capitalization equities, including emerging markets and funds invested in both short-term and long-term bonds. Underlying investments are generally valued at closing prices from national exchanges. Commingled funds, private securities, and limited partnerships are valued at unit values or net asset values provided by the investment managers.
(b)Mutual fund investments are comprised of equity securities of corporations with large capitalizations and also include funds invested in corporate equities in international and emerging markets and funds invested in long-term bonds, which are valued at closing prices from national exchanges.
(c)Fixed income securities include funds that invest primarily in government securities and long-term bonds. Underlying investments are generally valued at closing prices from national exchanges, fixed income pricing models, and independent financial analysts. Fixed income commingled funds are valued at unit values provided by the investment managers.
(d)Short-term investments include several money market funds used for managing overall liquidity. Underlying investments are generally valued at closing prices from national exchanges. Commingled funds are valued at unit values provided by the investment managers.
(e)The hedge fund of funds category includes investments in funds representing a variety of strategies intended to diversify risks and reduce volatility. It includes event-driven credit and equity investments targeted at economic policy decisions, long and short positions in U.S. and international equities, arbitrage investments and emerging market equity investments. Investments are valued at unit values or net asset values provided by the investment managers.
(f)This category includes investments in real estate funds (including office, industrial, residential and retail) primarily throughout the United States. Underlying real estate securities are generally valued at closing prices from national exchanges. Commingled funds, private securities, and limited partnerships are valued at unit values or net asset values provided by the investment managers.
(g)Certain assets that are measured at fair value using the net asset value (NAV) per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.


d.Short-term investments include several money market funds used for managing overall liquidity. Underlying investments are generally valued at closing prices from national exchanges. Commingled funds are valued at unit values provided by the investment managers.
e.The hedge fund of funds category includes investments in funds representing a variety of strategies intended to diversify risks and reduce volatility. It includes event-driven credit and equity investments targeted at economic policy decisions, long and short positions in U.S. and international equities, arbitrage investments and emerging market equity investments. Investments are valued at unit values or net asset values provided by the investment managers.
f.This category includes investments in real estate funds (including office, industrial, residential and retail). Underlying real estate securities are generally valued at closing prices from national exchanges.
g.Certain assets that are measured at fair value using the net asset value (NAV) per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

The Company’s pension plan assets comprise more than 98%97% of its total postretirement benefit plan assets. TheAccordingly, the assets of the Company’s various pension plans and retiree health and life insurance plans are largely invested in the same funds and investments and in similar proportions and, as such, are not shown separately, but are combined in the tables above. Postretirement benefit plan assets are netted against postretirement benefit obligations to determine the funded status of each plan. The funded status is recognized in the Company’s Consolidated Balance Sheets as shown in Note 12.

13.

As discussed inin Note 9, 10, the Company uses derivatives to mitigate some of the effect of raw material and energy cost 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.

Certain deferred compensation plan liabilities are funded and the assets invested in various exchange traded mutual funds. These assets are measured using quoted prices in accessible active markets for identical assets.

The Company does not currently have any nonfinancial assets or liabilities that are recognized or disclosed at fair value on a recurring basis. None of the Company’sCompany's financial assets or liabilities isare 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 years ended December 31, 20172021 or 2016.2020. For additional fair value information on the Company’sCompany's financial instruments, see Note 9.

11.10.

12. Share-based compensation plans

The Company provides share-based compensation to certain employees andnon-employee directors in the form of restricted stock appreciation rights,units, performance contingent restricted stock units, and other share-based awards. Beginning in 2014,2019, share-based awards were issued pursuant to the Sonoco Products Company 2019 Omnibus Incentive Plan (the "2019 Plan"), which became effective upon approval by the shareholders on April 17, 2019. Awards issued from 2014 through 2018 were issued pursuant to the Sonoco Products Company 2014 Long-Term Incentive Plan (the “2014 Plan”), which became effective upon approval by the shareholders on April 16, 2014. Awards issued from 2012 through 2013 were issued pursuant to the Sonoco Products Company 2012 Long-Term Incentive Plan (the “2012 Plan”) and awards issued from 2009 through 2011 were issued pursuant to the Sonoco Products Company 2008 Long-Term Incentive Plan (the “2008 Plan”). Awards issued prior to 2009

F19SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

were issued pursuant to the 1991 Key Employee Stock Plan (the “1991 Plan”) or the 1996Non-Employee Directors Stock Plan (the “1996 Plan”).

The maximum numberA total of 12,000,000 shares of common stock thatare reserved for awards granted under the 2019 Plan. As of the April 17, 2019 effective date, the 2019 Plan superseded the 2014 Plan and became the only plan under which equity-based compensation may be awarded to employees and non-employee directors. However, any awards under any of the prior plans that were outstanding on the effective date of the 2019 Plan remain subject to the terms and conditions, and continue to be governed by such prior plans. Awards issued between January 1 and April 16, 2019 were effectively issued under the 2019 Plan when such awards were transferred over to be applied against the 2019 Plan’s reserve. Share reserve reductions for restricted and performance-based stock awards originally granted under the 2014 Plan was originally set at 10,381,533 shares, which includes all shares then remaining underwere weighted higher than stock appreciation rights in accordance with the 2012 Plan and an additional 4,500,000 shares authorized undershareholder-approved conversion formula included within the 20142019 Plan. Awards granted under all previous plans which are forfeited, expire or are cancelledcanceled without delivery of shares, or which result in forfeiture of shares back to the Company, will be added to the total shares available under the 20142019 Plan. At December 31, 2017,2021, a total of 6,731,1378,494,373 shares remain available for future grant under the 20142019 Plan. The Company issues new shares for stock appreciation right exercises and stock unit conversions. The Company’s stock-based awards tonon-employee directors have not been material.

Accounting for share-based compensation

Total compensation cost for share-based payment arrangements was $13,488, $19,289$22,608, $10,607 and $9,257,$14,334, for 2017, 20162021, 2020 and 2015,2019, respectively. The related tax benefit recognized in net income was $5,058, $7,040,$5,715, $2,686, and $3,379,$3,500, for the same years, respectively. Share-based compensation expense is included in “Selling, general and administrative expenses” in the Consolidated Statements of Income.

The Company accounts for forfeitures of its share-based payment arrangements as they occur.

An “excess” tax benefit is created when the tax deduction for an exercised stock appreciation right, exercised stock option or converted stock unit exceeds the compensation cost that has been recognized in income. As discussed in Note 2 to these Consolidated Financial Statements, ASU2016-09 required that excess tax benefits be recognized on the income statement beginning in 2017. Previously, these excess tax benefits were not recognized on the income statement, but rather on the consolidated balance sheet within the line item “Capital in excess of stated value.” The additional net excess tax benefit realized was $2,453, $2,695$1,110, $2,528 and $3,622$3,520 for 2017, 20162021, 2020 and 2015,2019, respectively.

Restricted Stock appreciation rightsUnits
The Company grants awards of restricted stock units (RSUs) to executive officers and stock options

Beginning in 2015, stock appreciation rights (SARs) grantedcertain key management employees. These awards vest over three years anda three-year period with one-third vesting on each anniversary date of the grant. The expense for these RSUs is recognized following the graded-vesting method, which results in front-loaded expense being recognized during the early years of the required service period. Unvested SARs are cancelable upon termination of employment,For grants awarded prior to 2021, participants must be actively employed by the Company on the vesting date for shares to be issued, except in the caseevent of the participant’s death, disability, or involuntary (or good reason) termination within two years of a change in control. SARs grantedcontrol prior to 2015 vested over one year.

Since 2006,full vesting, in which case shares will immediately vest. For the Company has granted SARs annually2021 grant, in the event of the participant’s death, disability or retirement prior to full vesting, shares will be issued on a discretionarypro rata basis up through the time the participant’s employment or service ceases. Once vested, these awards do not expire.

The Company from time to key employees.time grants special RSUs to certain of its executive officers and directors. These SARs are granted at market (have an exercise price equal to the closing market price on the date of the grant) and can be settled only in stock. The SARs granted in and since 2015awards normally vest over three years,a five-year period withone-third vesting on each anniversary dateof the third, fourth and fifth anniversaries of the grant, but in some circumstances may vest over a shorter period, or cliff vest at the end of the five-year period. Normally a participant must be actively employed by, or serving as a director of, the Company on the vesting date for shares to be issued, but the Company may make other arrangements in connection with termination of employment prior to the vesting date. Officers and have10-year terms.directors can elect to defer receipt of RSUs, but key management employees are required to take receipt of stock issued. The weighted-average grant-date fair value of RSUs granted was $57.77, $54.16 and $57.76 per share in 2021, 2020 and 2019, respectively. The fair value of shares vesting during the year was $4,063, $3,277, and $3,217 for 2021, 2020 and 2019, respectively.
F-24 FORM 10-K SONOCO 2021 ANNUAL REPORT

Noncash stock-based compensation associated with restricted stock grants totaled $8,278, $4,549 and $3,351 for 2021, 2020 and 2019, respectively. As of December 31, 2017,2021, there was $8,061 of total unrecognized compensation cost related to nonvested SARs totaled $2,352.restricted stock units. This cost willis expected to be recognized over the remaininga weighted-average vesting period of approximately 2446 months. Noncash stock-based compensation associated with SARs totaled $3,719, $2,878, and $2,750 for 2017, 2016, and 2015, respectively.

The aggregate intrinsic value of SARS exercised during 2017, 2016, and 2015 was $3,786, $9,510, and $11,888, respectively. The weighted-average grant date fair value of SARs granted was $7.29, $5.04 and $6.49 per share in 2017, 2016 and 2015, respectively. The Company computed the estimated fair values of all SARs using the Black-Scholes option-pricing model applying the assumptions set forth in the following table:

    2017  2016  2015

Expected dividend yield

    2.7%    3.5%    2.8%

Expected stock price volatility

    17.2%    18.5%    18.2%

Risk-free interest rate

    2.0%    1.3%    1.7%

Expected life of SARs

    6 years    6 years    6 years

The assumptions employed in the calculation of the fair value of SARs were determined as follows:

Expected dividend yield – the Company’s annual dividend divided by the stock price at the time of grant.
Expected stock price volatility – based on historical volatility of the Company’s common stock measured weekly for a time period equal to the expected life.
Risk-free interest rate – based on U.S. Treasury yields in effect at the time of grant for maturities equal to the expected life.
Expected life – calculated using the simplified method as prescribed in U.S. GAAP, where the expected life is equal to the sum of the vesting period and the contractual term divided by two.

The activity related to restricted stock units for the Company’s SARsyear ended December 31, 2021 is as follows:

   Nonvested Vested Total 

Weighted-

average

Exercise

Price

Outstanding, December 31, 2016

   1,146,749   768,897   1,915,646  $41.06

Vested

   (443,405)   443,405   —  

Granted

   536,760   —   536,760  $54.46

Exercised

   —   (292,122)   (292,122)  $40.17

Forfeited/Expired

   (28,082)   (4,190)   (32,272)  $43.29

Outstanding, December 31, 2017

   1,212,022   915,990   2,128,012  $44.53

Exercisable, December 31, 2017

   —   915,990   915,990  $40.82

The weighted average remaining contractual life for SARs outstanding and exercisable at December 31, 2017 was 8.0 years and 5.8 years, respectively. The aggregate intrinsic value for SARs outstanding and exercisable at December 31, 2017 was $18,926 and $10,631, respectively. At December 31, 2017, the fair market value of the Company’s stock used to calculate intrinsic value was $53.14 per share.

There were no stock options outstanding at December 31, 2017. The aggregate intrinsic value of stock options exercised during 2015 was $975. Cash received by the Company on option exercises was $1,324 for 2015. There were no stock options exercised during 2017 and 2016.

Performance-based stock awards

NonvestedVestedTotal
Average Grant
Date Fair
Value Per Share
Outstanding, December 31, 2020209,583 75,863 285,446 $50.19 
   Granted201,570 — 201,570 $57.77 
   Vested(68,231)68,231 — 
   Converted— (64,093)(64,093)$53.28 
   Cancelled(12,053)— (12,053)$55.98 
   Dividend equivalents1,728 2,263 3,991 $62.95 
Outstanding, December 31, 2021332,597 82,264 414,861 $53.32 


Performance Contingent Restricted Stock Units
The Company grants performance contingent restricted stock units (PCSUs) annually on a discretionary basis to executive officers and certain key management employees. The ultimate number of PCSUs awarded is dependent upon the degree to

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF20

which performance, relative to defined targets related to earnings, return on invested capital, and return on net assets employed, are achieved over a three-year performance cycle. PCSUs granted in 2015 and afterwards vest at the end of the three-year performance period if the respective performance targets are met. No units will be awarded if the performance targets are not met. For PCSUs granted in 2014 and earlier, units awarded vested at the end of the three-year performance period if the respective performance targets were met. In the event performance targets were not met, a minimum number of outstanding units were awarded and vested at the end of the performance period, 50% of the remaining number of threshold shares vested at the end of the fourth year and the remaining 50% at the end of the fifth year. Regardless of grant date, uponUpon vesting, PCSUs are convertible into common shares on aone-for-one 1-for-one basis. Except in the event of the participant’sparticipant's death, disability, or retirement, if a participant is not employed by the Company at the end of the performance period, no PCSU’sPCSUs will vest. However, in the event of the participant’s death, disability or retirement prior to full vesting, shares will be issued on a pro rata basis up through the time the participant’s employment or service ceases. In the event of a change in control, as defined under the 2014 Plan and the 2019 Plan, all unvested PCSUs will vest at target on a pro rata basis if the change in control occurs during the three-year performance period.

The activity related to performance contingent restricted stock units for the year ended December 31, 2021 is as follows:

   Nonvested Vested Total Average Grant
Date Fair Value
per Share

Outstanding, December 31, 2016

   486,045   551,020   1,037,065  $35.56

Granted

   130,761   —   130,761  $50.11

Performance adjustments

   (134,899)   —   (134,899)  $39.43

Vested

   (145,414)   145,414   —  

Converted

   —   (220,155)   (220,155)  $36.90

Cancelled

   (1,874)     (1,874)  $36.31

Dividend equivalents

   —   10,145   10,145  $51.73
  

 

 

   

Outstanding, December 31, 2017

   334,619   486,424   821,043  $37.12

2017 PCSU.
NonvestedVestedTotalAverage Grant Date Fair Value per Share
Outstanding, December 31, 2020157,122 166,432 323,554 $49.15
   Granted145,696 — 145,696 $55.95
   Performance adjustments256,711 — 256,711 $54.28
   Vested(64,243)64,243 — 
   Converted— (133,960)(133,960)$46.34
   Cancelled(14,633)— (14,633)$54.79
   Dividend equivalents— 938 938 $62.95
Outstanding, December 31, 2021480,653 97,653 578,306 $53.67

2021 PCSU. As of December 31, 2017,2021, the 2017 PCSUs2021 PSCUs to be awarded are estimated to range from 0 to 261,522285,724 units and are tied to the three-year performance period ending December 31, 2019.

20162023.

2020 PCSU.As of December 31, 2017,2021, the 2016 PCSUs2020 PSCUs to be awarded are estimated to range from 0 to 373,572297,648 units and are tied to the three-year performance period ending December 31, 2018.

20152022.

2019 PCSU. The performance cycle for the 20152019 PCSUs was completed on December 31, 2017.2021. Outstanding stock units of 141,546 units64,243 were determined to have been earned, all of which qualified for vesting on December 31, 2017.earned. The fair value of these units was $5,906$3,719 as of December 31, 2017.

2014 PCSU.2021.

2018 PCSU. The performance cycle for the 20142018 PCSUs was completed on December 31, 2016.2020. Outstanding stock units of 247,554 units139,886 were determined to have been earned, all of which qualified for vesting on December 31, 2016.earned. The fair value of these units was $13,046$8,288 as of December 31, 2016.

2020.

20132017 PCSU.The performance cycle for the 20132017 PCSUs was completed on December 31, 2015. Based on performance and the terms2019. Outstanding stock units of the awards as of December 31, 2015, 205,673 stock84,522 units were determined to have been earned, all of which qualified for vesting on December 31, 2015.earned. The fair value of these units was $8,406$5,217 as of December 31, 2015.

2012 PCSU. The performance cycle for the 2012 PCSUs was completed on December 31, 2014. Based on the performance achieved and the terms of the award, 143,519 stock units qualified for vesting on December 31, 2014 with a fair value of $6,272. A total of 4,387 units vested on December 31, 2015, and 4,140 units vested on December 31, 2016. The fair value of the stock units vesting in 2015 and 2016 was $179 and $218, respectively.

2011 PCSU.The performance cycle for the 2011 PCSUs was completed on December 31, 2013. Based on the performance achieved and the terms of the award, 123,414 stock units were awarded. A total of 61,707 stock units vested on December 31, 2014, with the remaining 61,707 stock units vesting on December 31, 2015. The fair value of the stock units vesting in 2014 and 2015 was $2,697 and $2,522, respectively.

2019.

The weighted-average grant-date fair value of PCSUs granted was $50.11, $36.33,$55.95, $52.00, and $42.44$56.04 per share in 2017, 20162021, 2020 and 2015,2019, respectively. Noncash stock-based compensation associated with PCSUs totaled $3,896, $10,568$11,477, $2,023 and $2,271$5,171 for 2017, 20162021, 2020 and 2015,2019, respectively. As of December 31, 2017,2021, there was approximately $7,017$14,259 of total unrecognized compensation cost related to nonvested PCSUs. This cost is expected to be recognized over a weighted-average period of 2021 months.

Restricted stock awards

During 2017 and 2016,

Stock appreciation rights
Through 2019, the Company granted awards of restricted stocks units (RSUs)stock appreciation rights (SARs) annually on a discretionary basis to executive officers and certain key management employees. These awardsSARs had an exercise price equal to the closing market price on the date of the grant and can be settled only in stock. The SARs granted from 2015 through 2019 vest over a three-year periodthree years, withone-third vesting on each anniversary date of the grant. Participants must be actively employed by the Company on the vesting date for shares to be issued,grant, and have 10-year terms. Unvested SARs are cancelable upon termination of employment, except in the eventcase of the participant’s death, disability, or involuntary (or good reason) termination within two years of a change in control prior to full vesting,control.
SARs expense is recognized following the graded-vesting method, which results in which case shares will immediately vest. Once vested, these awards do not expire.

Prior to 2015,front-loaded expense being recognized during the Company from time to time granted RSUs to certain of its executive officers and directors. These awards normally vested over a five-year period withone-third vesting on eachearly years of the third, fourth and fifth anniversaries of the grant, but in some circumstances vested over a shorterrequired service period. A participant must be actively employed by, or serving as a director of, the Company on the vesting date for shares to be issued. However, certain award agreements provided that in the event of the participant’s death, disability or retirement prior to full vesting, shares would be issued on a pro rata basis up through the time the participant’s employment or service ceases.

Officers and directors can elect to defer receipt of RSUs, but key management employees are required to take receipt of stock issued. The weighted-average grant-date fair value of RSUs granted was $51.68, $38.40 and $43.35 per share in 2017, 2016 and 2015, respectively. The fair value of shares vesting during the year was $1,129, $1,291, and $2,066 for 2017, 2016 and 2015, respectively.

Noncash stock-based compensation associated with restricted stock grants totaled $3,554, $3,122 and $2,336 for 2017, 2016 and 2015, respectively. As of December 31, 2017, there was $2,469 of total2021, unrecognized compensation cost related to nonvested restricted stock units.SARs totaled $40. This

F-25 FORM 10-K SONOCO 2021 ANNUAL REPORT

cost is expected towill be recognized over athe remaining weighted-average vesting period of 26approximately 2 months.

Noncash stock-based compensation expense associated with SARs totaled $347,$1,442, and $3,227 for 2021, 2020,and 2019, respectively.
The aggregate intrinsic value of SARS exercised during 2021, 2020, and 2019 was $2,575, $2,771, and $11,836, respectively. The weighted-average grant date fair value of SARs granted was $8.30 per share in 2019. No SARs were granted during 2021 and 2020.

F21SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

The Company computed the estimated fair values of all SARs granted during 2019 using the Black-Scholes option-pricing model applying the assumptions set forth in the following table:
2019
Expected dividend yield2.7 %
Expected stock price volatility16.6 %
Risk-free interest rate2.6 %
Expected life of SARs6 years

The assumptions employed in the calculation of the fair value of SARs were determined as follows:

•Expected dividend yield – the Company’s annual dividend divided by the stock price at the time of grant.

•Expected stock price volatility – based on historical volatility of the Company’s common stock measured weekly for a time period equal to the expected life.
•Risk-free interest rate – based on U.S. Treasury yields in effect at the time of grant for maturities equal to the expected life.
•Expected life – calculated using the simplified method as prescribed in U.S. GAAP, where the expected life is equal to the sum of the vesting period and the contractual term divided by two.
The activity related to restricted stock unitsthe Company’s SARs for the year ended December 31, 2021 is as follows:

   Nonvested Vested Total 

Average Grant

Date Fair

Value Per Share

Outstanding, December 31, 2016

   210,346   178,510   388,856  $35.85

Granted

   69,373   —   69,373  $51.68

Vested

   (53,543)   53,543   —  

Converted

   —   (38,380)   (38,380)  $38.81

Cancelled

   (2,493)   —   (2,493)  $42.01

Dividend equivalents

   2,124   5,957   8,081  $51.73
  

 

 

   

Outstanding, December 31, 2017

   225,807   199,630   425,437  $38.41

NonvestedVestedTotal
Weighted-
average
Exercise
Price
Outstanding, December 31, 2020397,677 873,751 1,271,428 $53.83 
   Vested(259,687)259,687 — 
   Granted— — — $— 
   Exercised— (363,102)(363,102)$50.95 
   Forfeited/Expired(13,826)(14,829)(28,655)$53.12 
Outstanding, December 31, 2021124,164 755,507 879,671 $55.03 
Exercisable, December 31, 2021— 755,507 755,507 $54.08 

The weighted average remaining contractual life for SARs outstanding and exercisable at December 31, 2021 was 6.1 years and 5.9 years, respectively. The aggregate intrinsic value for SARs outstanding and exercisable at December 31, 2021 was $3,598 and $2,800, respectively. At December 31, 2021, the fair market value of the Company’s stock used to calculate intrinsic value was $57.89 per share.
Deferred compensation plans

Certain officers of the Company receive a portion of their compensation, either current or deferred, in the form of stock equivalent units. Units are granted as of the day the cash compensation would have otherwise been paid using the closing price of the Company’s common stock on that day. Deferrals into stock equivalent units are converted into phantom stock equivalents as if Sonoco shares were actually purchased. The units immediately vest and earn dividend equivalents. Units are distributed in the form of common stock upon retirement over a period elected by the employee.

Non-employee directors may elect to defer a portion of their cash retainer or other fees (except chair retainers) into phantom stock equivalent units as if Sonoco shares were actually purchased. The deferred stock equivalent units accrue dividend equivalents, and are issued in shares of Sonoco common stock six months following termination of Board service. Directors must elect to receive these deferred distributions in one, three1, 3 or five5 annual installments.

The activity related to deferred compensation for equity award units granted to both employees andnon-employee directors combined is as follows:

Total

Outstanding, December 31, 2016

2020		323,278372,413 

Deferred

36,36238,127 

Converted

(4,835)

Dividend equivalents

10,243(40,527)

   Dividend equivalents

10,744 
Outstanding, December 31, 2017

2021		365,048380,757 


Deferred compensation for employees and directorsof $2,850, $2,721,$2,507, $2,593, and $1,947,$2,585, which will be settled in Company stock at retirement, was deferred during 2017, 2016,2021, 2020, and 2015,2019, respectively.

12.

F-26 FORM 10-K SONOCO 2021 ANNUAL REPORT


13. Employee benefit plans

Retirement plans and retiree health and life insurance plans

The Company providesnon-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 Company froze participation in its U.S. qualified defined benefit pension plan for newly hired salaried andnon-union hourly employees effective December 31, 2003. To replace this benefit, the Company providesnon-union U.S. employees hired on or after January 1, 2004, with an annual contribution, called the Sonoco Retirement Contribution (SRC), to their participant accounts in the Sonoco Retirement and Savings Plan. Also eligible for the SRC are former participants of the

The U.S. qualified defined benefit pension plan who elected to transfer out of that plan under aone-time option effective January 1, 2010.

On February 4, 2009, the U.S. qualified defined benefit pension plan was further amended to freeze plan benefits for all active, non-union participants effective December 31, 2018. RemainingFormer active participants in the U.S. qualified plan will becomebecame eligible for SRC contributions effective January 1, 2019.

In October 2021, the Sonoco Retirement and Savings Plan was further amended to eliminate the SRC and to increase the Company's 401(k) matching contribution effective as of December 31, 2021.
The components of net periodic benefit cost include the following:

   2017 2016 2015

Retirement Plans

      

Service cost

  $18,543  $19,508  $23,366

Interest cost

   55,873   59,719   70,797

Expected return on plan assets

   (81,212)   (85,466)   (94,307)

Amortization of net transition obligation

   —   —   65

Amortization of prior service cost

   910   809   745

Amortization of net actuarial loss

   39,209   39,009   42,584

Effect of settlement loss

   32,761   —   —

Other

   —   —   49

Net periodic benefit cost

  $66,084  $33,579  $43,299

Retiree Health and Life Insurance Plans

      

Service cost

  $313  $309  $711

Interest cost

   463   482   766

Expected return on plan assets

   (1,636)   (1,579)   (1,661)

Amortization of prior service credit

   (499)   (498)   (104)

Amortization of net actuarial gain

   (759)   (667)   (673)

Net periodic benefit income

  $(2,118)  $(1,953)  $(961)

202120202019
Retirement Plans
Service cost$3,916 $3,969 $3,968 
Interest cost24,186 51,297 57,348 
Expected return on plan assets(22,888)(50,733)(65,143)
Amortization of prior service cost900 1,006 1,022 
Amortization of net actuarial loss16,503 28,833 30,681 
Effect of settlement loss550,706 854 2,377 
Effect of curtailment loss— 32 — 
Net periodic benefit cost$573,323 $35,258 $30,253 
Retiree Health and Life Insurance Plans
Service cost$374 $358 $308 
Interest cost197 336 467 
Expected return on plan assets(444)(371)(718)
Amortization of prior service credit— (279)(498)
Amortization of net actuarial gain(744)(834)(823)
Net periodic benefit income$(617)$(790)$(1,264)


F-27 FORM 10-K SONOCO 2021 ANNUAL REPORT

The following tables set forth the Plans’ obligations and assets at December 31:

  Retirement Plans 

Retiree Health and

Life Insurance Plans

   2017 2016 2017 2016

Change in Benefit Obligation

        

Benefit obligation at January 1

  $1,777,424  $1,733,596  $17,568  $19,053

Service cost

   18,543   19,508   313   309

Interest cost

   55,873   59,719   463   482

Plan participant contributions

   391   439   744   888

Plan amendments

   639   812   —   —

Actuarial loss/(gain)

   99,402   93,772   (1,249)   (1,223)

Benefits paid

   (81,547)   (89,455)   (2,183)   (1,956)

Impact of foreign exchange rates

   29,753   (40,856)   35   15

Other

   —   (111)   —   —

Benefit obligation at December 31

  $1,837,938  $1,777,424  $15,691  $17,568
 Retirement Plans
Retiree Health
and
Life Insurance Plans
  
2021202020212020
Change in Benefit Obligation
Benefit obligation at January 1$2,092,297 $1,976,197 $14,880 $14,495 
Service cost3,916 3,969 374 358 
Interest cost24,186 51,297 197 336 
Plan participant contributions14 165 — 443 
Plan amendments608 419 — — 
Actuarial (gain)/loss(138,157)149,264 (939)356 
Benefits paid(66,641)(96,257)(768)(1,122)
Impact of foreign exchange rates(4,999)13,482 1 14 
Effect of settlements(1,396,494)(2,463)— — 
Effect of curtailments(97)(3,776)— — 
Benefit obligation at December 31$514,633 $2,092,297 $13,745 $14,880 

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF22

  Retirement Plans 

Retiree Health and

Life Insurance Plans

   2017 2016 2017 2016

Change in Plan Assets

        

Fair value of plan assets at January 1

  $1,325,389  $1,298,186  $23,848  $22,250

Actual return on plan assets

   198,071   130,717   3,986   1,872

Company contributions

   93,662   32,504   851   860

Plan participant contributions

   443   439   744   888

Benefits paid

   (81,547)   (89,455)   (2,183)   (1,956)

Impact of foreign exchange rates

   29,460   (39,147)   —   —

Expenses paid

   (8,225)   (7,855)   (69)   (66)

Fair value of plan assets at December 31

  $1,494,713  $1,325,389  $27,177  $23,848

Funded Status of the Plans

  $(343,225)  $(452,035)  $11,486  $6,280
 Retirement Plans
Retiree Health and
Life Insurance Plans
  
2021202020212020
Change in Plan Assets
Fair value of plan assets at January 1$1,799,109 $1,683,520 $14,026 $12,881 
Actual return on plan assets(46,148)188,695 (84)1,372 
Company contributions140,226 17,282 768 626 
Plan participant contributions14 165 — 443 
Benefits paid(66,641)(96,257)(768)(1,122)
Impact of foreign exchange rates(4,630)13,667 — — 
Effect of settlements(1,396,494)(2,752)— — 
Expenses paid(8,331)(5,211)— (174)
Fair value of plan assets at December 31$417,105 $1,799,109 $13,942 $14,026 
Funded Status of the Plans$(97,528)$(293,188)$197 $(854)
  Retirement Plans 

Retiree Health and

Life Insurance Plans

   2017 2016 2017 2016

Total Recognized Amounts in the Consolidated Balance Sheets

        

Noncurrent assets

  $24,380  $3,863  $12,851  $7,506

Current liabilities

   (13,220)   (9,409)   (820)   (802)

Noncurrent liabilities

   (354,385)   (446,489)   (545)   (424)

Net (liability)/asset

  $(343,225)  $(452,035)  $11,486  $6,280


 Retirement Plans
Retiree Health and
Life Insurance Plans
  
2021202020212020
Total Recognized Amounts in the Consolidated Balance Sheets
Noncurrent assets$70,221 $26,814 $1,758 $553 
Current liabilities(10,375)(150,310)(1,055)(849)
Noncurrent liabilities(157,374)(169,692)(506)(558)
Net liability$(97,528)$(293,188)$197 $(854)

Items not yet recognized as a component of net periodic pension cost that are included in Accumulated Other Comprehensive Loss (Income) as of December 31, 20172021 and 2016,2020, are as follows:

   Retirement Plans  

Retiree Health and

Life Insurance Plans

    2017  2016  2017 2016

Net actuarial loss/(gain)

   $625,831   $708,533   $(9,822)  $(7,056)

Prior service cost/(credit)

    3,780    4,051    (1,275)   (1,774)
    $629,611   $712,584   $(11,097)  $(8,830)
 Retirement Plans
Retiree Health and
Life Insurance Plans
  
2021202020212020
Net actuarial loss/(gain)$111,481 $742,374 $(6,357)$(6,689)
Prior service cost6,288 6,351 — — 
 $117,769 $748,725 $(6,357)$(6,689)
F-28 FORM 10-K SONOCO 2021 ANNUAL REPORT


The amounts recognized in Other Comprehensive Loss/(Income) include the following:

  Retirement Plans 

Retiree Health and

Life Insurance Plans

   2017 2016 2015 2017 2016 2015

Adjustments arising during the period:

            

Net actuarial loss/(gain)

  $(10,732)  $56,060  $8,352  $(3,525)  $(1,449)  $(4,129)

Prior service cost/(credit)

   639   1,069   513   —   —   (2,273)

Net settlements/curtailments

   (32,761)   —   —   —   —   —

Reversal of amortization:

            

Net actuarial (loss)/gain

   (39,209)   (39,009)   (42,584)   759   667   673

Prior service (cost)/credit

   (910)   (809)   (745)   499   498   104

Net transition obligation

   —   —   (65)   —   —   —

Total recognized in other comprehensive loss/(income)

  $(82,973)  $17,311  $(34,529)  $(2,267)  $(284)  $(5,625)

Total recognized in net periodic benefit cost and other comprehensive loss/(income)

  $(16,889)  $50,890  $8,770  $(4,385)  $(2,237)  $(6,586)

 Retirement Plans
Retiree Health and
Life Insurance Plans
  
202120202019202120202019
Adjustments arising during the period:
Net actuarial loss/(gain)$(63,684)$12,452 $146,414 $(412)$(468)$(914)
Prior service cost/(credit)$837 $1,229 $1,667 $— $— $— 
Net settlements/curtailments$(550,706)$(886)$(2,377)$— $— $— 
Reversal of amortization:
Net actuarial (loss)/gain$(16,503)$(28,833)$(30,681)$744 $834 $823 
Prior service (cost)/credit$(900)$(1,006)$(1,022)$— $279 $498 
Total recognized in other comprehensive loss/(income)$(630,956)$(17,044)$114,001 $332 $645 $407 
Total recognized in net periodic benefit cost and other comprehensive loss/(income)$(57,633)$18,214 $144,254 $(285)$(145)$(857)

Of the amounts included in Accumulated Other Comprehensive Loss/(Income) as of December 31, 2017, the portions the Company expects to recognize as components of net periodic benefit cost in 2018 are as follows:

    

Retirement

Plans

  

Retiree Health and

Life Insurance Plans

Net actuarial loss/(gain)

   $37,385   $(960)

Prior service cost/(credit)

    972    (498)

Net transition obligation

    —    —
    $38,357   $(1,458)


The accumulated benefit obligation for all defined benefit plans was $1,810,462$504,944 and $1,738,196$2,081,850 at December 31, 20172021 and 2016,2020, respectively.

The projected benefit obligation (PBO), accumulated benefit obligation (ABO) and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were, $1,554,395, $1,538,350$228,127, $223,657 and $1,186,789,$61,686, respectively, as of December 31, 2017,2021, and $1,474,993, $1,446,624$1,788,070, $1,783,883 and $1,019,094,$1,468,068, respectively, as of December 31, 2016.

2020.


Plan termination, settlements, changes and amendments
In July 2019, the Company's Board of Directors approved a resolution to terminate the Sonoco Pension Plan for Inactive Participants (the "Inactive Plan"), a tax-qualified defined benefit plan, effective September 30, 2019. Following completion of a limited lump sum offering in April 2021, the Company settled all remaining liabilities under the Inactive Plan in June 2021 through the purchase of annuities. The Company made additional net contributions of $124,432 to the Inactive Plan in 2021 in order to be fully funded on a termination basis at the time of the annuity purchase. Non-cash, pretax settlement charges totaling $538,722 were recognized in 2021 as the lump sum payouts and annuity purchases were made. The termination of the Inactive Plan applied to participants who had separated service from Sonoco and to non-union active employees who no longer accrued pension benefits. There was no change in the cumulative benefit previously earned by the approximately 11,000 participants affected by these actions. The Company continues to manage and support the Active Plan, comprised of approximately 700 active participants who continue to accrue benefits in accordance with a flat-dollar multiplier formula.
Additional settlement charges totaling $11,984 and $854 were recognized in 2021 and 2020, respectively, primarily as a result of activity in our Canadian plans, including settlement charges in 2021 from the annuitization of the Trenton Union Plan in Ontario, Canada. This plan was terminated in June 2020 and the participants were fully annuitized in December 2021. Settlements in 2020 resulted from lump-sum payments to certain participants of the Company's other Canadian pension plans who elected a lump-sum distribution option upon retirement.
Projected benefit payments
The following table sets forth the Company’s projected benefit payments for the next ten years:

Year Retirement Plans  

Retiree Health and

Life Insurance Plans

 
2018 $97,268  $1,515 
2019 $93,487  $1,498 
2020 $96,124  $1,427 
2021 $94,688  $1,403 
2022 $96,280  $1,327 
2022-2026 $510,603  $5,663 
YearRetirement Plans
Retiree Health and
Life Insurance Plans
2022$23,934 $1,183 
2023$23,564 $1,163 
2024$23,999 $1,141 
2025$25,129 $1,116 
2026$27,620 $1,096 
2026-2030$129,131 $4,971 

F23









F-29 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-K


Assumptions

The following tables set forth the major actuarial assumptions used in determining the PBO, ABObenefit obligation and net periodic cost:

Weighted-average
assumptions

used to determine benefit

obligations at
December 31

 

U.S.

Retirement

Plans

 

U.S. Retiree

Health and

Life Insurance

Plans

 Foreign
Plans

Discount Rate

      

2017

   3.59%   3.36%   2.78%

2016

   4.12%   3.70%   2.95%

Rate of Compensation Increase

      

2017

   3.40%   3.28%   3.62%

2016

   3.60%   3.32%   3.65%

Weighted-average
assumptions

used to determine net
periodic benefit

cost for years ended
December 31

 

U.S.

Retirement

Plans

 

U.S. Retiree

Health and

Life Insurance

Plans

 

Foreign

Plans

Discount Rate

      

2017

   4.12%   3.70%   2.95%

2016

   4.36%   3.78%   3.71%

2015

   4.00%   3.52%   3.49%

Expected Long-term Rate of Return

      

2017

   6.86%   6.98%   4.52%

2016

   7.47%   7.31%   4.75%

2015

   7.67%   7.39%   4.92%

Rate of Compensation Increase

      

2017

   3.60%   3.32%   3.65%

2016

   3.69%   3.36%   3.52%

2015

   3.99%   3.42%   3.51%

Weighted-average assumptions
used to determine benefit
obligations at December 31
U.S.
Retirement
Plans
U.S. Retiree
Health and
Life Insurance
Plans
Foreign Plans
Discount Rate
20212.77 %2.48 %2.22 %
20202.32 %2.04 %1.70 %
Rate of Compensation Increase
2021— %3.01 %3.21 %
2020— %3.03 %3.20 %

Weighted-average assumptions
used to determine net periodic benefit
cost for years ended December 31
U.S.
Retirement
Plans
U.S. Retiree
Health and
Life Insurance
Plans
Foreign
Plans
Discount Rate
20212.32 %2.04 %1.70 %
20202.87 %2.89 %2.28 %
20194.24 %4.02 %3.11 %
Expected Long-term Rate of Return
20213.27 %2.01 %3.69 %
20202.93 %2.93 %4.10 %
20196.63 %6.73 %4.62 %
Rate of Compensation Increase
2021— %3.03 %3.20 %
2020— %3.04 %3.37 %
2019— %3.06 %3.65 %

The Company adjusts its discount rates at the end of each fiscal year based on yield curves of high-quality debt instruments over durations that match the expected benefit payouts of each plan. The expected long-term rate of return assumption is based on the Company’s current and expected future portfolio mix by asset class, and expected nominal returns of these asset classes using an economic “building block” approach. Expectations for inflation and real interest rates are developed and various risk premiums are assigned to each asset class based primarily on historical performance. The expected long-term rate of return also gives consideration to the expected level of outperformance to be achieved on that portion of the Company’s investment portfolio under active management. The assumed rate of compensation increase reflects historical experience and management’s expectations regarding future salary and incentive increases.

Medical trends

The U.S. Retiree Health and Life Insurance Plan makes up approximately 96%95% of the Retiree Health liability. Therefore, the following information relates to the U.S. plan only.

Healthcare Cost Trend RatePre-age 65Post-age 65
20216.91 %8.27 %
20206.00 %6.00 %
Ultimate Trend RatePre-age 65Post-age 65
20214.45 %4.40 %
20204.50 %4.50 %
Year at which the Rate Reaches
the Ultimate Trend Rate
Pre-age 65Post-age 65
202120302030
202020262026
Healthcare Cost Trend Rate  Pre-age 65  Post-age 65

2017

    6.75%    6.75%

2016

    7.00%    7.00%
Ultimate Trend Rate  Pre-age 65  Post-age 65

2017

    4.50%    4.50%

2016

    4.80%    4.80%

Year at which the Rate Reaches

the Ultimate Trend Rate

  Pre-age 65  Post-age 65

2017

    2026    2026

2016

    2059    2059

Increasing the assumed trend rate for healthcare costs by one percentage point would increase the accumulated postretirement benefit obligation (the APBO) and total service and interest cost component approximately $176 and $15, respectively. Decreasing the assumed trend rate for healthcare costs by one percentage point would decrease the APBO and total service and interest cost component approximately $163 and $13, respectively.

Based on amendments to the U.S. plan approved in 1999, which became effective in 2003, cost increases borne by the Company are limited to the Urban CPI, as defined.

Plan settlements, changes and amendments

In February 2017, the Company initiated a program to settle a portion of the projected benefit obligation (PBO) relating to terminated vested participants in the U.S. qualified retirement plans through either a single, lump-sum payment or the purchase of an annuity. The terminated vested population comprised approximately 15% of the beginning of year PBO of these plans. The Company successfully settled approximately 47% of the PBO for the terminated vested plan participants. As a result of these and other smaller settlements, the Company recognized non-cash settlement charges of $32,761 in 2017. All settlement payments were funded from plan assets and did not require the Company to make any additional cash contributions in 2017. The Company does not expect to recognize any additional settlement charges in 2018.

During 2015, the Company’s U.S. Retiree Medical and Life Insurance Plan was amended to eliminate certain life insurance benefits for all nonunion and applicable union participants. The effect of this and other smaller amendments was a reduction in the accumulated postretirement benefit obligation of $2,273.




F-30 FORM 10-K SONOCO 2021 ANNUAL REPORT

Retirement plan assets

The following table sets forth the weighted-average asset allocations of the Company’s retirement plans at December 31, 20172021 and 2016,2020, by asset category.

Asset Category      U.S.  U.K.  Canada

Equity securities

    2017    51.7%    44.7%    71.7%
    2016    51.4%    46.6%    64.9%

Debt securities

    2017    37.1%    54.7%    27.9%
    2016    34.7%    52.8%    35.0%

Alternative

    2017    11.2%    —%    —%
    2016    13.9%    —%    —%

Cash and short-term investments

    2017    —%    0.6%    0.4%
    2016    —%    0.6%    0.1%

Total

    2017    100.0%    100.0%    100.0%
    2016    100.0%    100.0%    100.0%

Asset Category
  
U.S.U.K.Canada
Equity securities202123.5 %32.8 %33.6 %
20200.6 %41.4 %34.8 %
Debt securities202172.0 %66.6 %66.4 %
202092.2 %58.1 %55.4 %
Cash and short-term investments20214.5 %0.6 %— %
20207.2 %0.5 %9.8 %
Total2021100.0 %100.0 %100.0 %
2020100.0 %100.0 %100.0 %

The Company employs a total-return investment approach whereby a mix of equities and fixed income investments are

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF24

used to maximize the long-term return of plan assets for a desired level of risk. Alternative assets such as real estate funds, private equity funds and hedge funds aremay also be used to enhance expected long-term returns while improving portfolio diversification. Risk tolerance is established through consideration of plan liabilities, plan funded status and corporate financial condition. Investment risk is measured and monitored on an ongoing basis through periodic investment portfolio reviews and periodic asset/liability studies.

At December 31, 2017,2021, postretirement benefit plan assets totaled $1,521,890,$431,047, of which $1,124,453$51,715, $304,582, and $50,837 were assets of the U.S., U.K. and Canadian Defined Benefit Plans.

Plans, respectively.

U.S. defined benefit plans

The equity investments consist of direct ownership and funds and are diversified among U.S. andnon-U.S. stocks of small to large capitalizations. Following the December 2010 amendment that split the U.S. qualified defined benefit pension plan intoCompany has adopted investment guidelines for both the Active Plan and the Inactive Plan effective January 1, 2011, the Company completed separatePlans based on asset/liability studies for both plans during 2011 and adopted revised investmenteach. These guidelines for each. The revised guidelines establishestablished a dynamicde-risking derisking framework that willfor gradually shiftshifting the allocation of assets to long-duration domestic fixed income from equity and other asset categories, as the relative funding ratio of each plan increasesincreased over time. The current target allocation (midpoint) forBeginning in 2019, the Company accelerated the derisking measures in its U.S. defined benefit plans by reallocating plan assets to a more conservative mix of primarily fixed income investments. Subsequent to these derisking actions, the Inactive Plan investment portfolio is: Equity Securities – 49%, Debt Securities – 40%, Alternative – 11%was terminated effective September 30, 2019 and Cash – 0%.fully settled in June 2021. As of December 31, 2021, only the Active Plan remains. The current target allocation (midpoint) for the Active Plan investment portfolio is: Equity Securities – 57%,- 20% and Debt Securities – 30%, Alternative – 13% and Cash – 0%80%.

United Kingdom defined benefit plan

The equity investments consist of direct ownership and funds and are diversified among U.K. and international stocks of small and large capitalizations. The current target allocation (midpoint) for the investment portfolio is: Equity Securities – 48%,32% and Debt Securities – 52%, Alternative – 0% and Cash – 0%68%.

Canada defined benefit plan

The equity investments consist of direct ownership and funds and are diversified among Canadian and international stocks of primarily large capitalizations and short to intermediate duration corporate and government bonds. The current target allocation (midpoint) for the investment portfolio is:is 28% Equity Securities – 60%,and 72% Debt Securities – 39%, Alternative – 0% and Cash – 1%.

Securities.

Retiree health and life insurance plan assets

The following table sets forth the weighted-average asset allocations by asset category of the Company’s retiree health and life insurance plan.

Asset Category  December 31,
2017		  December 31,
2016

Equity securities

    63.6%    61.9%

Debt securities

    30.8%    31.2%

Alternative

    5.4%    6.8%

Cash

    0.2%    0.1%

Total

    100.0%    100.0%

Asset Category20212020
Equity securities—%—%
Debt securities100.0%100.0%
Cash—%—%
Total100.0%100.0%


Contributions

Based on current actuarial estimates, the Company anticipates that the total contributions to its retirementdefined benefit plans and retiree health and life insurance plans, excluding contributions to the Sonoco Savings Plan, will be approximately $38,500$16,000 in

2018. 2022. No assurances can be made however, about funding requirements beyond 2018,2022, however, as they will depend largely on actual investment returns and future actuarial assumptions.

Sonoco Retirement and Savings and Retirement Plan

The Sonoco SavingsRetirement and RetirementSavings 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 andnon-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 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. Since January 1, 2010, the Company has matched 50% on the first 4% of compensation contributed by the participant as pretax contributions which are immediately fully vested. The Company’s expenses related to the plan for 2017, 20162021, 2020 and 20152019 were approximately $11,200, $11,400$13,900, $13,700 and $11,500,$13,400, respectively.

Thenon-elective component of the plan, the Sonoco Retirement Contribution (SRC), is available to certain employees who are not currently active participants in the Company’s U.S. qualified defined benefit pension plan. The SRC provides for an annual Company contribution of 4% of all eligible pay plus 4% of eligible pay in excess of the Social Security wage base to eligible participant accounts. Participants are fully vested after three years of service or upon reaching age 55, if earlier. The Company’s expenses related to the plan for 2017, 20162021, 2020 and 20152019 were approximately $14,540, $13,655$22,914, $23,505 and $14,970,$23,752, respectively. Cash contributions to the SRC totaled $14,066, $13,352$22,665, $22,503 and $12,865$14,573 in 2017, 20162021, 2020 and 2015, respectively.

2019, respectively, and are expected to total approximately $22,000 in 2022.

F-31 FORM 10-K SONOCO 2021 ANNUAL REPORT

In October 2021, the Company's Board of Directors approved an amendment to the Sonoco Retirement and Savings Plan to eliminate the SRC and to increase the Company's 401(k) matching contribution to 100% of the first 6% of pretax and/or Roth compensation contributed by the participant effective as of December 31, 2021. The amendment is expected to be neutral to total expense in 2022, but will be negative to operating cash flows in 2022 due to the timing of funding 401(k) matching contributions subsequent to each pay period compared with the annual funding of the SRC.
Other plans

The Company also provides retirement and postretirement benefits to certain othernon-U.S. employees through various Company-sponsored and local government sponsored defined contribution arrangements. For the most part, the liabilities related to these arrangements are funded in the period they arise. The Company’s expenses for these plans were not material for all years presented.

13.

14. Income taxes

The provision for taxes on income for the years ended December 31 consists of the following:

    2017 2016 2015

Pretax income

       

Domestic

   $168,180  $318,702  $255,897

Foreign

    146,374   122,575   72,049

Total pretax income

   $314,554  $441,277  $327,946

Current

       

Federal

   $120,398  $110,567  $55,678

State

    5,623   10,808   6,000

Foreign

    40,328   40,788   31,610

Total current

   $166,349  $162,163  $93,288

Deferred

       

Federal

   $(16,797)  $(861)  $11,002

State

    3,499   (869)   (2,359)

Foreign

    (6,462)   4,198   (14,193)

Total deferred

   $(19,760)  $2,468  $(5,550)

Total taxes

   $146,589  $164,631  $87,738
202120202019
Pretax income
Domestic$(342,951)$54,397 $217,098 
Foreign181,969 201,195 163,668 
Total pretax income$(160,982)$255,592 $380,766 
Current
Federal$21,247 $10,868 $14,933 
State15,212 4,608 2,565 
Foreign55,018 42,764 45,911 
Total current$91,477 $58,240 $63,409 
Deferred
Federal$(120,243)$432 $25,064 
State$(39,709)$512 8,599 
Foreign1,045 (6,154)(3,803)
Total deferred$(158,907)$(5,210)$29,860 
Total taxes$(67,430)$53,030 $93,269 

F25SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

Deferred tax liabilities/(assets)(liabilities)/assets are comprised of the following at December 31:

    2017 2016

Property, plant and equipment

   $83,584  $115,946

Intangibles

    174,395   219,584

Gross deferred tax liabilities

   $257,979  $335,530

Retiree health benefits

   $595  $(971)

Foreign loss carryforwards

    (59,975)   (61,381)

U.S. Federal loss carryforwards

    (17,977)   (10,105)

Capital loss carryforwards

    —   (20)

Employee benefits

    (115,771)   (202,085)

Accrued liabilities and other

    (100,031)   (93,142)

Gross deferred tax assets

   $(293,159)  $(367,704)

Valuation allowance on deferred tax assets

   $47,200  $49,797

Total deferred taxes, net

   $12,020  $17,623

Federal loss carryforwards of approximately $69,000 were acquired in the 2017 acquisition of Packaging Holdings.
20212020
Property, plant and equipment$(97,806)$(91,752)
Intangibles(96,057)(110,796)
Leases(75,587)(79,531)
Gross deferred tax liabilities$(269,450)$(282,079)
Retiree health benefits$2,935 $4,065 
Foreign loss carryforwards76,462 81,143 
U.S. Federal loss and credit carryforwards34,700 78,100 
Capital loss carryforwards4,050 3,121 
Employee benefits46,503 47,134 
Leases78,518 84,076 
Accrued liabilities and other assets75,611 69,341 
Gross deferred tax assets$318,779 $366,980 
Valuation allowance on deferred tax assets$(93,992)$(128,435)
Total deferred taxes, net$(44,663)$(43,534)

The Company has total federal net operating loss carryforwards of approximately $85,600$53,675 remaining at December 31, 2017.2021. These losses are limited based upon future taxable earnings of the respective entitiesCompany and expire between 20292030 and 2037.2036. U.S. foreign tax credit carryforwards of approximately $21,769 exist at December 31, 2021 and expire in 2027. Foreign subsidiary loss carryforwards of approximately $230,300$307,002 remain at December 31, 2017.2021. Their use is limited to future taxable earnings of the respective foreign subsidiaries.subsidiaries or filing groups. Approximately $219,400$191,458 of these loss carryforwards do not have an expiration date. Of the remaining foreign subsidiary loss carryforwards, approximately $8,000$16,951 expire within the next five years and approximately $2,900$98,594 expire between 20232027 and 2035. 2041. Foreign subsidiary capital loss carryforwards of approximately $16,187 exist at December 31, 2021 and do not have an expiration date. Their use is limited to future capital gains of the respective foreign subsidiaries.
Approximately $14,000$11,086 in tax value of state loss carryforwards and $15,000$16,636 of state credit carryforwards remain at December 31, 2017.2021. These state loss and credit carryforwards are limited based upon future taxable earnings of the respective entities or filing group and expire between 20182022 and 2037.2041. State loss and credit carryforwards are reflected at their “tax”"tax" value, as opposed to the amount of expected gross deduction due to the vastly different apportionment and statutory tax rates applicable to the various entities and states in which they file.

The Company has recorded a $15,700 deferred tax asset in France primarily related to cumulative net operating losses. These losses have an indefinite carryforward period and the Company expects to utilize them over the next 20 to 25 years. Accordingly, a valuation allowance on the deferred asset has not been provided.

files.


F-32 FORM 10-K SONOCO 2021 ANNUAL REPORT

A reconciliation of the U.S. federal statutory tax rate to the actual consolidated tax expense(benefit from)/provision for income taxes is as follows:

   2017    2016    2015   

Statutory tax rate

  $110,094   35.0%  $154,447   35.0%  $114,781   35.0%

State income taxes, net of federal tax benefit

   4,780   1.5   7,477   1.7%   4,872   1.5%

Valuation allowance

   (3,333)   (1.1)   639   0.1%    (8,080)   (2.5)%

Tax examinations including change in reserve for uncertain tax positions

   4,895   1.6   732   0.2%    (3,245)   (1.0)%

Adjustments to prior year deferred taxes

   (1,415)   (0.4)   (2,401)   (0.5)%   1,596   0.5%

Foreign earnings taxed at other than U.S. rates

   (16,233)   (5.2)   (15,930)   (3.6)%   (9,065)   (2.8)%

Disposition of business

   537   0.2   22,810   5.2%   (11,996)   (3.6)%

Effect of tax rate changes enacted during the year

   (22,183)   (7.1)   2,517   0.6%   (2,235)   (0.7)%

Deduction related to qualified production activities

   (5,384)   (1.7)   (5,215)   (1.2)%   (5,968)   (1.8)%

Transition tax

   76,933   24.5   —   —   —   —

Other, net

   (2,102)   (0.7)   (445)   (0.1)%   7,078   2.2%

Total taxes

  $146,589   46.6%  $164,631   37.3%  $87,738   26.8%
  
202120202019
Statutory tax rate$(33,806)21.0 %$53,674 21.0 %$79,961 21.0 %
State income taxes, net of federal tax benefit(15,863)9.9 %4,859 1.9 %7,767 2.0 %
Valuation allowance(33,576)20.9 %1,589 0.6 %3,174 0.8 %
Tax examinations including change in reserve for uncertain tax positions5,665 (3.5)%5,546 2.2 %(1,639)(0.4)%
Adjustments to prior year deferred taxes1,239 (0.8)%(265)(0.1)%(499)(0.1)%
Foreign earnings taxed at other than U.S. rates9,659 (6.0)%3,275 1.3 %5,083 1.3 %
Divestiture of business(808)0.5 %(15,356)(6.0)%— — %
Effect of tax rate changes275 (0.2)%(523)(0.2)%531 0.1 %
Foreign withholding taxes8,107 (5.0)%2,157 0.8 %2,015 0.5 %
Tax credits(21,936)13.6 %(13,529)(5.3)%(13,310)(3.5)%
Global intangible low-taxed income (GILTI)11,323 (7.0)%15,795 6.2 %12,340 3.2 %
Foreign-derived intangible income(202)0.1 %(1,238)(0.5)%(1,225)(0.3)%
Foreign currency gain/(loss) on distributions of previously taxed income3,365 (2.1)%(344)(0.1)%— — %
Other, net(872)0.5 %(2,610)(1.1)%(929)(0.2)%
(Benefit from)/Provision for income taxes$(67,430)41.9 %$53,030 20.7 %$93,269 24.4 %

On December 22, 2017,

The total amount of the Tax Cuts and Jobs Act (“Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, a change in methodology for taxation of earnings fromnon-US operations, and aone-time transition tax on certain accumulated foreign earnings as of December 31, 2017. The Company has calculated its best estimate of the impactpart of the Tax Cuts and Jobs Act in itsyear-end income tax provision in accordance with its understanding of the ("Tax Act and guidance available as of the date of this filing and as a result has recorded $51,265 as additional income tax expense in the fourth quarter of 2017, the period in which the legislationAct") was enacted. The provisional amount related to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future, was $25,668 of additional benefit. The provisional amount related to theone-time transition tax on certain accumulated foreign earnings was $76,933.$80,580. Under the provisions of the Tax Act, the transition tax is payable in installments over a period of 8 years. Accordingly, $6,155, the total expected to beThe first 2 installments were paid in 2018 and 2019 with the filing of the Company's 2017 and 2018 U.S. income tax returns. The liability is further reduced by the deemed overpayment of federal income taxes. In 2021 the Company amended its 2017 U.S. income tax return to reflect a decrease in the transition tax from the increased use of foreign tax credits. The resulting overpayment reduced the remaining installment payments by $44,500. The remaining obligation of $1,795 is included in “Accrued taxes”"Other Liabilities" in the Company’sCompany's Consolidated Balance sheetSheet at December 31, 2017, and the remainingnon-current portion of $70,778 is included in “Other Liabilities.”

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations where a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The Company has recognized the provisional tax impacts related to the one time transition tax and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. Any subsequent adjustment to these amounts will be recorded to current tax expense in 2018 in the quarter the analysis is completed.

2021.

The change in “Tax examinations including change in reserve for uncertain tax positions” is shown net of associated deferred taxes and accrued interest. Included in the change are net increases in reserves for uncertain tax positions of approximately $2,600, $3,000$2,330, $1,866 and $3,200$1,832 for uncertain items arising in 2017, 20162021, 2020 and 2015,2019, respectively, combined with adjustments related to prior year items, primarily decreases related to lapses of statutes of limitations in international, federal and state jurisdictions as well as overall changes in facts and judgment. These adjustments decreasedchanged the reserve by a total of approximately $(2,300), $(2,300)$3,743, $(2,601) and $(6,500)$(3,471) in 2017, 20162021, 2020 and 2015,2019, respectively.

In many of the countries in which the Company operates, earnings are taxed at rates lowerdifferent than in the U.S. This benefitdifference is reflected in “Foreign earnings taxed at other than U.S. rates” along with other items, if any, that impacted taxes on foreign earnings in the periods presented.

The effect on tax expense for “Disposition of business” in 2016 relates to the sale of the Company’s rigid plastic blow molding operations, its retail security packaging operation in Juncos, Puerto Rico, and its paper mill in France. The above adjustment reflects the recognition of tax gains in excess of book gains due to basis differences, and losses on which no future tax benefit will be recognized. For 2015, the adjustment pertains primarily to recognition of beneficial tax attributes related to the disposition of a portion of the Company’s metal ends and closures business.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF26

The benefits included in “Adjustments to prior year deferred taxes” for each of the years presented consist primarily of adjustments to deferred tax assets and liabilities arising from changes in estimates.

The benefits included in "Divestiture of business" relate to the “Effectsale of the Company's European contract packaging business.
Of the $21,936 of tax rate changes enacted duringcredits for 2021, $8,208 directly offsets the year”$11,323 of GILTI tax, resulting in a net GILTI tax of $3,115. Of the remainder, $10,980 relates to Research & Development tax credits, which is made up of amounts for 2017 consists of the benefits related to the revaluation of deferredboth 2021 and 2020 tax assets and liabilities due to the enactment of the Tax Act.

years.

The benefits included in “Valuation allowance”"Valuation allowance" include a $39,843 net recognized benefit of $3,100 related toassociated with the revaluationamendment of the valuation allowanceCompany's 2017 U.S. income tax return to report increased utilization of its foreign tax credits.
The Company maintains its assertion that its undistributed foreign earnings are indefinitely reinvested and, accordingly, has not recorded any deferred income tax liabilities that would be due to the enactment of the Tax Act.

if those earnings were repatriated. As of December 31, 2017,2021, these undistributed earnings total $849,720. While the Company ismajority of these earnings have already been taxed in the process of evaluating the impactU.S., a portion would be subject to foreign withholding and U.S. income taxes and credits if distributed. Computation of the Tax Act on its permanent reinvestment assertion. With respect to accumulateddeferred tax liability associated with unremitted earnings of foreign subsidiaries, no additional U.S. federal income taxes or foreign withholding taxes have been provided as all accumulated earnings of foreign subsidiaries are deemed to have been remitted as part of theone-time transition tax. The Company will finalize its analysis during 2018 and, as provided for in SAB 118, will make any necessary adjustments in the financial statements of future periods within the provided time frame, including a determination of our intentions with respect to undistributed earnings of international subsidiaries.

be indefinitely reinvested is not practicable at this time.

Reserve for uncertain tax positions

The following table sets forth the reconciliation of the gross amounts of unrecognized tax benefits at the beginning and ending of the periods indicated:

   2017 2016 2015

Gross Unrecognized Tax Benefits at January 1

  $17,700  $17,200  $26,000

Increases in prior years’ unrecognized tax benefits

   700   1,400   1,500

Decreases in prior years’ unrecognized tax benefits

   (2,400)   (3,500)   (2,100)

Increases in current year’s unrecognized tax benefits

   1,600   3,000   1,700

Decreases in unrecognized tax benefits from the lapse of statutes of limitations

   (300)   (100)   (9,200)

Settlements

   (200)   (300)   (700)

Gross Unrecognized Tax Benefits at December 31

  $17,100  $17,700  $17,200

202120202019
Gross Unrecognized Tax Benefits at January 1$11,230 $12,200 $14,400 
Increases in prior years’ unrecognized tax benefits12,283 91 — 
Decreases in prior years’ unrecognized tax benefits(275)(464)(1,300)
Increases in current year's unrecognized tax benefits1,088 1,569 1,300 
Decreases in unrecognized tax benefits from the lapse of statutes of limitations(6,170)(1,866)(2,300)
Settlements(14)(300)100 
Gross Unrecognized Tax Benefits at December 31$18,142 $11,230 $12,200 

Of the unrecognized tax benefit balances at December 31, 20172021 and December 31, 2016, approximately $15,5002020, $17,425 and $15,300,$10,470, respectively, would have an impact on the effective tax rate if ultimately recognized.

F-33 FORM 10-K SONOCO 2021 ANNUAL REPORT

Interest and/or penalties related to income taxes are reported as part of income tax expense. The Company had approximately $2,300$875 and $2,300$2,006 accrued for interest related to uncertain tax positions at December 31, 20172021 and December 31, 2016,2020, respectively. Tax expense for the year ended December 31, 2017,2021, includes approximately $100an interest benefit of interest benefit,$1,131, which is comprised of an interest benefit of approximately $800$1,396 related to the adjustment of prior years’years' items and interest expense of $700$265 on unrecognized tax benefits. The amounts listed above for accrued interest and interest expense do not reflect the benefit of a federal tax deduction which would be available if the interest were ultimately paid.

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 before 2012.

2015.

The Company believes that it is reasonably possible that the amount reserved for uncertain tax positions at December 31, 20172021 will increasedecrease by approximately $400$224 over the next twelve months. This change includes the anticipated increase in reserves related to existing positions offset by settlements of issues currently under examination and the release of existing reserves due to the expiration of the statute of limitations. Although the Company’sCompany'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 effective tax rate may fluctuate significantly on a quarterly basis. The Company has operations in many countries outside of the United States and the taxes paid 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 loss of those benefits would have a material effect on the Company’sCompany's overall effective tax rate.

As previously disclosed, in February 2017 the Company received a draft Notice of Proposed Adjustment (“NOPA”) from the Internal Revenue Service (IRS) in February 2017("IRS") proposing an adjustmentadjustments to income for the 2012 and 2013 tax year based on the IRS’s recharacterization of a distribution of an intercompany note made in 2012, and the subsequent repayment of the note over the course of 2013, as if it were a cash distribution made in 2013.years. In March 2017, the Company received a draft NOPA proposing penalties of $18,000 associated with the IRS’s recharacterization, as well as an Information Document Request (“IDR”) requesting the Company’s analysis of why such penalties should not apply. The Company responded to this IDR in April 2017. On October 5, 2017, the Company received two revised draft NOPAs proposing the same adjustments and penalties as in the prior NOPAs. On November 14, 2017, the Company received two final NOPAs proposing the same adjustments and penalties as in the prior NOPAs. On November 20, 2017, the Company received a Revenue Agents Report (“RAR”) that included the same adjustments and penalties as in the prior NOPAs. At the time of the distribution in 2012, it was characterized as a dividend to the extent of earnings and profits, with the remainder as a tax free return of basis and taxable capital gain. As the IRS proposes to recharacterize the distribution, the entire distribution would be characterized as a dividend. The incremental tax liability associated with the income adjustment proposed in the RAR would be approximately $89,000, excluding interest and the previously referenced penalties. On January 22, 2018, the Company filed a protest to the proposed deficiency with the IRS, which will causeand the matter to bewas referred to the Appeals Division of the IRS. In the second quarter of 2021, the Company paid $5,613 in taxes and interest to settle the dispute.
15. Revenue Recognition
The Company strongly believeschanged its operating and reporting structure in January 2021, realigning certain of its reportable segments. The revised structure consists of 2 reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining business reported as All Other. The Company's reportable segments are aligned by product nature as disclosed in Note 18. Previously reported amounts have been recast to conform to the positioncurrent year presentation.
The following tables set forth information about revenue disaggregated by primary geographic regions for the years ended December 31, 2021, 2020 and 2019. The tables also include a reconciliation of disaggregated revenue with reportable segments.
Year Ended December 31, 2021Consumer PackagingIndustrial Paper PackagingAll OtherTotal
Primary geographical markets:
   United States$1,607,810 $1,421,684 $620,596 $3,650,090 
   Europe444,734 408,093 88,828 941,655 
   Canada117,492 94,780 — 212,272 
   Asia Pacific82,882 316,841 1,280 401,003 
   Other115,429 222,914 47,075 385,418 
          Total$2,368,347 $2,464,312 $757,779 $5,590,438 
Year Ended December 31, 2020Consumer PackagingIndustrial Paper PackagingAll OtherTotal
Primary geographical markets:
   United States$1,581,639 $1,177,903 $651,721 $3,411,263 
   Europe394,473 328,410 332,947 1,055,830 
   Canada96,457 84,968 — 181,425 
   Asia Pacific74,823 241,163 684 316,670 
   Other82,467 159,030 30,758 272,255 
          Total$2,229,859 $1,991,474 $1,016,110 $5,237,443 
F-34 FORM 10-K SONOCO 2021 ANNUAL REPORT

Year Ended December 31, 2019Consumer PackagingIndustrial Paper PackagingAll OtherTotal
Primary geographical markets:
   United States$1,571,030 $1,178,904 $658,525 $3,408,459 
   Europe368,417 346,102 364,247 1,078,766 
   Canada108,848 117,201 — 226,049 
   Asia Pacific70,504 278,401 1,354 350,259 
   Other89,775 177,272 43,627 310,674 
          Total$2,208,574 $2,097,880 $1,067,753 $5,374,207 

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 receipts of advanced payments. For multi-year arrangements with pricing mechanisms, the Company will generally defer revenue during the initial term of the IRSarrangement, and will release the deferral over the back half of the contract term. Contract assets and liabilities are generally short in duration given the nature of products produced by the Company.
The following table sets forth information about contract assets and liabilities from contracts with regard to this matter is inconsistent with applicable tax lawscustomers. The balances of the contract assets and existing Treasury regulations,liabilities are located in "Other receivables" and that"Accrued expenses and other" on the Company’s previously reported income tax provision for the year in question is appropriate. However, there can be no assurance that this matter will be resolvedConsolidated Balance Sheets.
December 31, 2021December 31, 2020
Contract Assets$51,106 $48,390 
Contract Liabilities(18,993)(16,687)


Significant changes in the Company’s favor. Regardless of whethercontract assets and liabilities balances during the matter is resolved in the Company’s favor, the final resolution of this matter could be expensivetwelve months ended December 31, 2021 and time consuming to defend and/or settle. While the Company believes that the amount of tax originally paid with respect to this distribution is correct, and accordingly has not provided additional reserve for tax uncertainty, there is still a possibility that an adverse outcome of the matter could have a material effect on its results of operations and financial condition.

2020 were as follows:
December 31, 2021December 31, 2020
Contract AssetContract LiabilityContract AssetContract Liability
Beginning balance$48,390 $(16,687)$56,364 $(17,047)
Revenue deferred or rebates accrued— (36,527)— (32,512)
Recognized as revenue— 7,238 — 9,189 
Rebates paid to customers— 26,983 — 23,683 
Increases due to rights to consideration for customer specific goods produced, but not billed during the period51,106 — 48,390 — 
Transferred to receivables from contract assets recognized at the beginning of the period(48,390)— (56,364)— 
Ending balance$51,106 $(18,993)$48,390 $(16,687)

F27SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

In January 2018, the FASB released guidance on accounting for the global intangiblelow-taxed income (“GILTI”) provisions of the Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that, subject to an accounting policy election, it will be acceptable to either recognize deferred taxes for temporary differences expected to reverse as GILTI or treat the effects of such a reversal as a current tax item if and when incurred. Currently, the Company has not elected a method and will only do so after its completion of the analysis of the GILTI provisions, as provided for in SAB 118.

14.16. 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.

Fox River settlement

In January 2017, U.S. Paper Mills Corp. (U.S. Mills), a wholly owned subsidiary of the Company, obtained Court approval of a final settlement of cost recovery claims made by Appvion, Inc. for $3,334. The settlement was paid during the first quarter of 2017, and related legal and professional fees totaling $369 were paid during the course of 2017. All payments were made against previously established reserves and no additional expense was required to be recognized in 2017. As a result of this settlement becoming final, the Company and U.S. Mills have resolved all pending or threatened legal proceedings related to the Fox River matter, as well as any such proceedings known to be contemplated by governmental authorities.

Spartanburg

In connection with its acquisition of Tegrant in November 2011, the Company identified potential environmental contamination at a site in Spartanburg, South Carolina. The total remediation cost of the Spartanburg site was estimated to be $17,400 at the time of the acquisition and an accrual in this amount was recorded on Tegrant’s opening balance sheet. Since the acquisition, the Company has spent a total of $913$1,845 on remediation of the Spartanburg site. During previous years,
Based on favorable developments at the Spartanburg site, the Company has increasedreduced its reserves for this siteestimated environmental reserve by a total$10,000 during the third quarter of $172019 in order to reflect its revised best estimate of what it is likely to pay in order to complete the remediation. This adjustment resulted in a $10,000 reduction in "Selling, general and administrative expenses" in the Company's Consolidated Statement of Income for the year ended December 31, 2019.
At December 31, 20172021 and 2016,2020, the Company’sCompany's accrual for environmental contingencies related to the Spartanburg site totaled $16,504$5,555 and $16,821,$5,700, respectively. The Company cannot currently estimate its potential liability, damages or range of potential loss, if any, beyond the amounts
F-35 FORM 10-K SONOCO 2021 ANNUAL REPORT

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’sCompany's financial statements.

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 poten-

tialpotential 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’sCompany's financial statements.

At December 31, 2021 and 2020, the Company's accrual for these other sites totaled $1,825 and $2,433, respectively.

Summary

As of December 31, 20172021 and 2016,2020, the Company (and its subsidiaries) had accrued $20,306$7,380 and $24,515,$8,133, respectively, related to environmental contingencies. These accruals are included in “Accrued expenses and other” on the Company’s Consolidated Balance Sheets.

Other legal and regulatory matters

As described more fullypreviously disclosed, in Note 13 to these Consolidated Financial Statements,February 2017 the Company has received a final Revenue Agent’s ReportNotice of Proposed Adjustment (“RAR”NOPA”) from the IRSInternal Revenue Service (“IRS”) proposing an adjustmentadjustments to income for the 2012 and 2013 tax year. The incremental tax liability associated with the proposed adjustment would be approximately $89,000, excluding interest and penalties. On January 22,years. In 2018, the Company filed a protest to the proposed deficiency with the IRS, which will causeand the matter to bewas referred to the Appeals Division of the IRS. The Company strongly believesIn the positionsecond quarter of the IRS with regard to this matter is inconsistent with applicable tax laws and existing Treasury regulations, and that the Company’s previously reported income tax provision for the year in question is appropriate. However, there can be no assurance that this matter will be resolved in the Company’s favor. Regardless of whether the matter is resolved in the Company’s favor, the final resolution of this matter could be expensive and time consuming to defend and/or settle. While2021, the Company believes thatpaid $5,613 in taxes and interest to settle the amount of tax originally paid with respect to this distribution is correct, and accordingly has not provided additional reserve for tax uncertainty, there is still a possibility that an adverse outcome of the matter could have a material effect on its results of operations and financial condition.

In addition to those described above, the Company is subject to other various legal proceedings, claims and litigation arising in the normal course of business. While the outcome of these matters could differ from management’s expectations, 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.

dispute.

Commitments

As of December 31, 2017,2021, the Company had long-term obligations to purchase electricity and steam, which it uses in its production processes, as well as long-term purchase commitments for certain raw materials, principally old corrugated containers. These purchase commitments require the Company to make total payments of approximately $289,300,$99,271, as follows: $118,400$81,398 in 2018; $71,9002022; $15,153 in 2019; $58,8002023; $1,419 in 2020, $37,3002024, $1,301 in 20212025, and a total of $2,900$0 from 20222026 through 2026.

15.2030.


17. Shareholders’ equity and earnings per share

Stock

Share repurchases

On April 20, 2021, the Company's Board of Directors (the "Board") authorized the repurchase of the Company's common stock in an aggregate amount of up to $350,000. Following the transactions described below, a total of $137,972 remains available for share repurchases under this authorization as of December 31, 2021.
On May 6, 2021, the Company repurchased approximately 53,500 shares for $3,615 from a private stockholder based upon the average stock price on that day.
On May 10, 2021, the Company entered into an accelerated share repurchase agreement ("ASR Agreement") with a financial institution to repurchase 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 1,751,825 initial shares to the Company, representing 80% of the expected number of shares to be repurchased during the repurchase period based upon the closing stock price on May 10, 2021 of $68.50 per share. The initial shares received were retired by the Company. The final number of shares repurchased and retired was based on the Company's volume-weighted average share price during the repurchase period, less a discount and subject to certain adjustments (the "Settlement Price").
Pursuant to the ASR Agreement, the financial institution elected to accelerate the settlement of the transaction in 2 tranches. On July 21, 2021, the financial institution transferred 167,743 additional shares to the Company based upon an effective Settlement Price of $66.52 and a notional value of $50,000, or one third of the total $150,000 prepayment. On July 26, 2021, the financial institution transferred 336,996 additional shares to the Company upon full settlement of the remaining $100,000 notional value of the transaction at the final Settlement Price of $66.45.
On October 25, 2021, the Company entered into a Rule 10b5-1 Repurchase Plan with a financial institution to repurchase outstanding shares of the Company's common stock pursuant to its Board authorization. The Company repurchased and retired 976,191 shares for $58,413 prior to the termination of the trading period on November 23, 2021.
The costs of these share repurchases were allocated to "Capital in excess of stated value" on the Company's Consolidated Balance Sheet as of December 31, 2021.
The Company occasionally repurchases shares of its common stock to satisfy employee tax withholding obligations in association with the exercise of stock appreciation rights, restricted stock, and performance-based stock awards. These repurchases, which are not part of a publicly announced plan or program, totaled 119,34999,824 shares during 2017, 148,1292021, 148,680 shares during 2016,2020, and 172,884169,290 shares during 2015,2019, at a cost of $6,335, $6,739$6,057, $8,483 and $7,868,$9,608, respectively.


F-36 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-KF28

On February 10, 2016, the Company’s Board of Directors authorized the repurchase of up to 5,000,000 shares of the Company’s common stock. During 2016, a total of 2,030,389 shares were repurchased under this authorization at a cost of $100,000. No shares were repurchased during 2017. Accordingly, at December 31, 2017, a total of 2,969,611 shares remain available for repurchase under this authorization.

No shares were repurchased during 2015.


Earnings per share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

   2017 2016 2015

Numerator:

      

Net income attributable to Sonoco

  $175,345  $286,434  $250,136

Denominator:

      

Weighted average common shares outstanding

   100,237   101,093   101,482

Dilutive effect of stock-based compensation

   615   689   910

Diluted outstanding shares

   100,852   101,782   102,392

Per common share:

      

Net income attributable to Sonoco:

      

Basic

  $1.75  $2.83  $2.46

Diluted

  $1.74  $2.81  $2.44

202120202019
Numerator:
Net (loss)/income attributable to Sonoco$(85,477)$207,463 $291,785 
Denominator:
Weighted average common shares outstanding99,608 100,939 100,742 
Dilutive effect of stock-based compensation— 270 434 
Diluted outstanding shares99,608 101,209 101,176 
Per common share:
(Loss)/Income available to common shareholders:
Basic$(0.86)$2.06 $2.90 
Diluted$(0.86)$2.05 $2.88 
Cash dividends$1.80 $1.72 $1.70 

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

The Company paid dividends totaling $1.54, $1.46, and $1.37 per share in 2017, 2016 and 2015, respectively.

Potentially dilutive securities are calculated in accordance with the treasury stock method. For stock appreciation rights (SARs), in particular, the treasury stock method which assumes the proceeds from the exercise of all dilutive stock appreciation rights (SARs)SARs are used to repurchase the Company’s common stock. Certain SARs are not dilutive because either the exercise price is greater than the average market price of the stock during the reporting period or assumed repurchases from proceeds from the exercise of the SARs were antidilutive.


The average number of shares that were not dilutive and therefore not included in the computation of diluted (loss) income per share was as follows for the years ended December 31, 2017, 20162021, 2020 and 20152019 (in thousands):

    2017  2016  2015

Anti-dilutive stock appreciation rights

    487    357    902

202120202019
Anti-dilutive stock appreciation rights202 772 475 

These stock appreciation rights may become dilutive in future periods if the market price of the Company’s common stock appreciates.

Noncontrolling interests

DuringDiluted earnings per share is computed by dividing net income by the third quarterweighted 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 2017, the Company recorded a $1,341 noncontrolling interest related to the creation of a joint venturecommon stock for the manufactureyear ended December 31, 2021 is the same as basic net loss per share because otherwise dilutive securities are excluded from the computation of tubes and coresdiluted net loss per share. The number of potentially dilutive securities excluded from a facility in Saudi Arabia. the computation of diluted net loss per share during the year ended December 31, 2021 was $470.

18. Segment reporting
The Company ownschanged its operating and reporting structure in January 2021 and, as a 51% share in the joint venture and the assets have been consolidated.

In April 2015, the Company acquired a 67% controlling interest in Graffo Paranaense de Embalagens S/A (“Graffo”). The Company consolidates 100%result, realigned certain of Graffo, with the partner’s 33% share included in “Noncontrolling Interests” on the Consolidated Balance Sheet. The fair value of this noncontrolling interest was $7,922 at the time of the acquisition.

16. Segment reporting

The Company reports its financial results in four reportable segments –effective January 1, 2021. The revised structure consists of 2 reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other.

The Company's former Protective Solutions and Display and Packaging Papersegments have been eliminated and Industrial Converted Products,the underlying businesses and Protective Solutions.

their results have been realigned into All Other or, in certain cases, subsumed into the remaining 2 segments.

The Consumer Packaging segment primarily serves prepared and fresh food markets along with other packaging for direct consumer products and includes the following products and services: round and shaped rigid containers and trays (both composite and thermoformed plastic); extruded and injection-molded plastic products; printed flexible packaging; global brand artwork management; andpaper containers; metal and peelable membrane ends and closures. This segment also included blow-moldedclosures; thermoformed plastic bottlestrays and jars through November 7, 2016, when the Company completed the sale of its rigid plastics blow molding operations.

containers; printed flexible packaging; and global brand artwork management.

The Display andIndustrial Paper Packaging segment, previously called Paper and Industrial Converted Products, includes the following products: fiber-based tubes, cones, and cores; fiber-based construction tubes; fiber-based protective packaging and components; wooden, metal and composite wire and cable reels and spools; and recycled paperboard, corrugating medium, recovered paper and material recycling services.
Businesses grouped as All Other include healthcare, protective and retail security packaging and industrial plastic products. These businesses include the following products and services: designing, manufacturing, assembling, packingthermoformed rigid plastic trays and distributing temporary, semipermanentdevices; custom-engineered molded foam protective packaging and permanentpoint-of-purchase displays; supply chain management services, including contract packing, fulfillmentcomponents; temperature-assured packaging; injection molded and scalable service centers;extruded containers, spools and parts; retail security packaging, including printed backer cards, thermoformed blisters and heat sealing equipment; and paper amenities, such as coastersamenities. Prior to the divestiture of the Company's global display and glass covers.

The Paperpackaging business in 2 separate transactions, the European contract packaging business on November 30, 2020 and Industrial Converted Products segment includes the following products: paperboard tubesU.S. display and cores; fiber-based construction tubespackaging business on April 4, 2021, these businesses, which included point-of-purchase displays, fulfillment operations, and forms; wooden, metal and composite wire and cable reels and spools; and recycled paperboard, linerboard, corrugating medium, recovered paper and material recycling services.

The Protective Solutions segment includes the following products: custom-engineered paperboard-based and expanded foam protectivecontract packaging, and components; and temperature-assurance packaging.

were reported in All Other.

Restructuring charges, asset impairment charges, gains or losses from the dispositiondivestiture of businesses, insurance settlement gains, acquisition-related costs, non-operating pension settlement charges,costs, interest expense and interest income are included in (loss)/income before income taxes under “Corporate.”

"Corporate".

F29


F-37 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-K


The following table sets forth financial information about each of the Company’sCompany's business segments:

    Years ended December 31 
    

Consumer

Packaging

   Display
and
Packaging		   Paper and
Industrial
Converted
Products		   

Protective

Solutions

   Corporate  Consolidated 

Total Revenue

 

2017

  $2,129,022   $511,099   $2,007,321   $540,665   $—  $5,188,107 

2016

   2,048,621    522,955    1,793,512    527,450    —   4,892,538 

2015

   2,126,916    608,064    1,835,896    508,182    —   5,079,058 

Intersegment Sales1

 

2017

  $5,557   $2,863   $141,141   $1,896   $—  $151,457 

2016

   5,509    2,542    100,059    1,551    —   109,661 

2015

   4,357    1,953    106,110    2,269    —   114,689 

Sales to Unaffiliated Customers

 

2017

  $2,123,465   $508,236   $1,866,180   $538,769   $—  $5,036,650 

2016

   2,043,112    520,413    1,693,453    525,899    —   4,782,877 

2015

   2,122,559    606,111    1,729,786    505,913    —   4,964,369 

Income Before Income Taxes2

 

2017

  $250,899   $2,502   $154,468   $42,121   $(135,436)  $314,554 

2016

   240,925    14,797    129,678    51,526    4,351   441,277 

2015

   231,590    10,904    124,057    46,013    (84,618)   327,946 

Identifiable Assets3

 

2017

  $1,890,516   $480,892   $1,346,391   $552,425   $287,497  $4,557,721 

2016

   1,447,886    446,906    1,164,365    573,949    290,097   3,923,203 

2015

   1,507,621    491,268    1,199,280    561,592    253,924   4,013,685 

Depreciation, Depletion and Amortization4

 

2017

  $98,882   $17,090   $74,850   $26,803   $—  $217,625 

2016

   88,875    16,716    74,742    24,849    —   205,182 

2015

   96,220    16,623    76,744    23,574    —   213,161 

Capital Expenditures

 

2017

  $63,617   $23,908   $61,443   $19,031   $20,914  $188,913 

2016

   86,369    11,542    60,601    12,860    15,369   186,741 

2015

   75,986    10,906    74,008    15,724    15,671   192,295 
segments. Segment financial information for prior periods has been recast to conform to the current-year presentation.
  
Years ended December 31
  
Consumer
Packaging
Industrial Paper PackagingAll OtherCorporateConsolidated
Total Revenue
20212,373,583 2,578,379 768,476 — $5,720,438 
20202,234,292 2,090,731 1,024,060 — 5,349,083 
20192,213,874 2,208,871 1,078,496 — 5,501,241 
Intersegment Sales1
20215,236 114,067 10,697 — $130,000 
20204,433 99,257 7,950 — 111,640 
20195,300 110,991 10,743 — 127,034 
Sales to Unaffiliated Customers
20212,368,347 2,464,312 757,779 — $5,590,438 
20202,229,859 1,991,474 1,016,110 — 5,237,443 
20192,208,574 2,097,880 1,067,753 — 5,374,207 
(Loss) / Income Before Income Taxes2
2021252,824 218,345 44,195 (676,346)$(160,982)
2020278,443 176,809 71,737 (271,397)255,592 
2019207,408 244,982 73,002 (144,626)380,766 
Identifiable Assets3
20211,956,688 1,971,293 886,647 258,607 $5,073,235 
20201,926,294 1,805,388 1,018,091 527,486 5,277,259 
20191,950,127 1,736,734 1,287,281 152,147 5,126,289 
Depreciation, Depletion and Amortization4
202198,737 96,084 44,265 — $239,086 
2020109,310 94,801 51,248 — 255,359 
2019107,948 86,861 44,331 — 239,140 
Capital Expenditures
202160,532 150,225 22,780 22,482 $256,019 
202059,040 87,549 24,701 22,837 194,127 
201961,787 112,852 14,204 7,091 195,934 
1
1Intersegment sales are recorded at a market-related transfer price.
2
2Included in Corporate above are restructuring, interest expense, interest income, restructuring/asset impairment charges, gains from the sale of a business, environmental settlement gains, property insurance settlement gains, non-operating pension costs, acquisition/divestiture-related charges, and othernon-operational income and expenses associated with the following segments:

    

Consumer

Packaging

  Display
and
Packaging		   

Paper and

Industrial

Converted

Products

  

Protective

Solutions

  Corporate  Total 

2017

  $9,990  $2,082   $24,281  $3,071  $43,267  $82,691 

2016

   (80,500)   7,883    27,567   1,018   (11,876)   (55,908) 

2015

       15,097        1,812    (490)   (1,469)         15,070        30,020 
Consumer
Packaging
Industrial Paper
Packaging		All OtherCorporateTotal
2021$4,197 $(3,056)$5,343 $669,862 $676,346 
2020100,166 33,450 27,835 109,946 271,397 
201940,831 5,491 1,828 96,476 144,626 

The remaining amounts reported as Corporate consist of interest expense, interest income, acquisition related charges,non-operating pension settlement charges,costs, and othernon-operational income and expenses not associated with a particular segment.

3Identifiable assets are those assets used by each segment in its operations. Corporate assets consist primarily of cash and cash equivalents, investments in affiliates, headquarters facilities, deferred income taxes and prepaid expenses.
4Depreciation, depletion and amortization incurred at Corporate are allocated to the reportable segments.

F-38 FORM 10-K SONOCO 2021 ANNUAL REPORT

Geographic regions

Sales to unaffiliated customers and long-lived assets by geographic region are as follows:

   2017 2016 2015

Sales to Unaffiliated Customers

      

United States

  $3,263,975  $3,112,016  $3,206,513

Europe

   981,178   951,783   971,302

Canada

   245,992   268,556   262,038

All other

   545,505   450,522   524,516

Total

  $5,036,650  $4,782,877  $4,964,369
202120202019
Sales to Unaffiliated Customers
United States$3,650,090 $3,411,263 $3,408,459 
Europe941,655 1,055,830 1,078,766 
Canada212,272 181,425 226,049 
Asia Pacific401,003 316,670 350,259 
Other385,418 272,255 310,674 
Total$5,590,438 $5,237,443 $5,374,207 
Long-lived Assets
United States$2,078,342 $2,016,185 $2,177,918 
Europe545,211 673,725 648,648 
Canada104,913 102,932 107,470 
Asia Pacific157,084 163,393 160,740 
Other68,949 51,001 64,043 
Total$2,954,499 $3,007,236 $3,158,819 
   2017 2016 2015

Long-lived Assets

      

United States

  $1,962,196  $1,671,168  $1,719,746

Europe

   659,615   599,698   627,126

Canada

   120,062   111,452   157,208

All other

   108,395   101,828   104,563

Total

  $2,850,268  $2,484,146  $2,608,643

Sales are attributed to countries/regions based upon the plant location from which products are shipped. Long-lived assets are comprised of property, plant and equipment, goodwill, intangible assets and investment in affiliates (see Notes 6 and 7)8).

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF30

17.19. Accumulated other comprehensive loss

The following table summarizes the components of accumulated other comprehensive loss and the changes in accumulated other comprehensive loss, net of tax as applicable, for the years ended December 31, 20172021 and 2016:

    

Foreign

Currency

Items

 

Defined

Benefit

Pension
Items

 Gains and
Losses on
Cash Flow
Hedges		 

Accumulated

Other

Comprehensive

Loss

Balance at December 31, 2015

   $(253,137)  $(444,244)  $(5,152)  $(702,533)

Other comprehensive income/(loss) before reclassifications

    (33,361)   (35,841)   1,673   (67,529)

Amounts reclassified from accumulated other comprehensive loss to net income

    —   26,264   5,359   31,623

Amounts reclassified from accumulated other comprehensive loss to fixed assets

    —   —   59   59

Other comprehensive income/(loss)

    (33,361)   (9,577)   7,091   (35,847)

Balance at December 31, 2016

   $(286,498)  $(453,821)  $1,939  $(738,380)

Other comprehensive income/(loss) before reclassifications

    88,003   9,840   2,266   100,109

Amounts reclassified from accumulated other comprehensive loss to net income

    —   49,849   (4,675)   45,174

Amounts reclassified from accumulated other comprehensive loss to fixed assets

    —   —   64   64

Other comprehensive income/(loss)

    88,003   59,689   (2,345)   145,347

Amounts reclassified from accumulated other comprehensive loss to retained earnings

    —   (73,004)   (235)   (73,239)

Balance at December 31, 2017

   $(198,495)  $(467,136)  $(641)  $(666,272)

“Other comprehensive income/(loss) before reclassifications” during 2017, includes $5,071 of “Defined Benefit Pension Items” related to the release of a portion of the valuation allowance on deferred tax assets related to the pension plan of a foreign subsidiary.

2020:
Foreign
Currency
Items
Defined
Benefit
Pension Items
Gains and Losses on Cash Flow Hedges
Accumulated
Other
Comprehensive
Loss
Balance at December 31, 2019$(241,994)$(574,413)$(396)$(816,803)
Other comprehensive income/(loss) before reclassifications60,336 (10,480)(2,952)46,904 
Amounts reclassified from accumulated other comprehensive loss to net income(12,366)22,146 3,278 13,058 
Amounts reclassified from accumulated other comprehensive loss to fixed assets— — (1)(1)
Other comprehensive income/(loss)47,970 11,666 325 59,961 
Balance at December 31, 2020$(194,024)$(562,747)$(71)$(756,842)
Other comprehensive (loss)/income before reclassifications(75,052)49,145 7,589 (18,318)
Amounts reclassified from accumulated other comprehensive loss to net loss— 422,205 (6,258)415,947 
Amounts reclassified from accumulated other comprehensive loss to fixed assets— — (212)(212)
Other comprehensive (loss) income(75,052)471,350 1,119 397,417 
Balance at December 31, 2021$(269,076)$(91,397)$1,048 $(359,425)




F-39 FORM 10-K SONOCO 2021 ANNUAL REPORT

The following table summarizes the amounts reclassified from accumulated other comprehensive loss and the affected line items in the consolidated statements of net income for the years ended December 31, 20172021 and 2016:

  Amount Reclassified from Accumulated Other
Comprehensive Loss		  
Details about Accumulated Other
Comprehensive Loss Components		 Twelve Months Ended
December 31, 2017		 Twelve Months Ended
December 31, 2016		 Affected Line Item in the
Consolidated Statements of Net Income

Gains and losses on cash flow hedges

      

Foreign exchange contracts

  $11,738  $(8,769)   Net Sales

Foreign exchange contracts

   (6,764)   3,981   Cost of sales

Commodity contracts

   1,667   (3,583)   Cost of sales
   6,641   (8,371)   Income before income taxes
    (1,966)   3,012   Provision for income taxes
   $4,675  $(5,359)   Net income

Defined benefit pension items

      

Effect of settlement

  $(32,761)  $—   

Selling, general, and administrative

expenses


Amortization of defined benefit pension items

   (29,146)   (28,990)   Cost of sales

Amortization of defined benefit pension items

   (9,715)   (9,663)   
Selling, general, and administrative
expenses
   (71,622)   (38,653)   Income before income taxes
    21,773   12,389   Provision for income taxes
    (49,849)   (26,264)   Net income

Total reclassifications for the period

  $(45,174)  $(31,623)   Net income

F31SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

2020:

Details about Accumulated Other Comprehensive Loss ComponentsYear Ended December 31, 2021Year Ended December 31, 2020Affected Line Item in the Consolidated Statements of Net Income
Foreign currency items
Amounts reclassified to net (loss)/income$— $12,366 Loss on divestiture of business,net
— 12,366 Net (loss)/income
Defined benefit pension items (see Note 13)
Effect of settlement loss(550,706)(854)Non-operating pension cost
Effect of curtailment loss— (32)Non-operating pension cost
Amortization of defined benefit pension items(16,659)(28,726)Non-operating pension cost
(567,365)(29,612)
145,160 7,466 (Benefit from)/Provision for income taxes
(422,205)(22,146)Net (loss)/income
Gains and losses on cash flow hedges (see Note 10)
Foreign exchange contracts3,212 (6,662)Net Sales
Foreign exchange contracts(2,544)3,576 Cost of sales
Commodity contracts7,794 (1,213)Cost of sales
8,462 (4,299)(Loss)/Income before income taxes
(2,204)1,021 (Benefit from)/Provision for income taxes
6,258 (3,278)Net (loss)/income
Total reclassifications for the period$(415,947)$(13,058)Net (loss)/income


The following table summarizes the tax (expense) benefit amounts for the other comprehensive loss components for the years ended December 31, 20172021 and 2016:

   For the year ended December 31,
2017		 For the year ended December 31,
2016
    Before Tax
Amount		 Tax
(Expense)
Benefit		 After
Tax
Amount		 Before Tax
Amount		 Tax
(Expense)
Benefit		 After
Tax
Amount

Foreign currency items

   $88,003  $—  $88,003  $(33,361)  $—  $(33,361)

Defined benefit pension items:

             

Other comprehensive income/(loss) before reclassifications

    13,118   (3,278)   9,840   (56,383)   20,542   (35,841)

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

    71,622   (21,773)   49,849   38,653   (12,389)   26,264

Net other comprehensive income/(loss) from defined benefit pension items

    84,740   (25,051)   59,689   (17,730)   8,153   (9,577)

Gains and losses on cash flow hedges:

             

Other comprehensive income/(loss) before reclassifications

    3,355   (1,089)   2,266   2,613   (940)   1,673

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

    (6,641)   1,966   (4,675)   8,371   (3,012)   5,359

Amounts reclassified from accumulated other comprehensive income/(loss) to fixed assets

    64   —   64   59   —   59

Net other comprehensive income/(loss) from cash flow hedges

    (3,222)   877   (2,345)   11,043   (3,952)   7,091

Other comprehensive income/(loss)

   $169,521  $(24,174)  $145,347  $(40,048)  $4,201  $(35,847)

2020:
For the year ended December 31, 2021For the year ended December 31, 2020
Before Tax AmountTax (Expense) BenefitAfter Tax AmountBefore Tax AmountTax (Expense) BenefitAfter Tax Amount
Foreign currency items:
Other comprehensive (loss)/income before reclassifications(a)
$(75,052)$— $(75,052)$67,917 $(7,581)$60,336 
Amounts reclassified from accumulated other comprehensive loss to net (loss)/income— — — (12,366)— (12,366)
Gains and losses on foreign currency items:(75,052)— (75,052)55,551 (7,581)47,970 
Defined benefit pension items:
Other comprehensive income/(loss) before reclassifications63,559 (14,414)49,145 (13,217)2,737 (10,480)
Amounts reclassified from accumulated other comprehensive loss to net (loss)/income(b)
567,365 (145,160)422,205 29,612 (7,466)22,146 
Net other comprehensive income/(loss) from defined benefit pension items(c)
630,924 (159,574)471,350 16,395 (4,729)11,666 
Gains and losses on cash flow hedges:
Other comprehensive income/(loss) before reclassifications10,249 (2,660)7,589 (3,823)871 (2,952)
Amounts reclassified from accumulated other comprehensive loss to net (loss)/income(8,462)2,204 (6,258)4,299 (1,021)3,278 
Amounts reclassified from accumulated other comprehensive loss to fixed assets(289)77 (212)(1)— (1)
Net other comprehensive income/(loss) from cash flow hedges1,498 (379)1,119 475 (150)325 
Other comprehensive income/(loss)$557,370 $(159,953)$397,417 $72,421 $(12,460)$59,961 


(a) Other comprehensive (loss)/income from foreign currency items for the year ended December 31, 2020 includes the settlement gain and corresponding tax provision related to the termination of a net investment hedge. See Note 10 for more information.

(b)See Note 13 for more information.

F-40 FORM 10-K SONOCO 2021 ANNUAL REPORT

(c)The change innet other comprehensive (loss)/income from defined benefit planspension items includes pretax changes of $(836)$(32) and $(767)$4 during the years ended December 31, 20172021 and 2016,2020, related to one of the Company’s equity method investments.

18. Selected quarterly financial data


20. Subsequent Events
On January 21, 2022, the Company completed a registered public offering of unsecured notes (the "Notes") with an aggregate principal amount of $1,200,000. The following table sets forth selected quarterly financial dataNotes consisted of the Company:

(unaudited)  

First

Quarter

  

Second

Quarter

  

Third

Quarter

  

Fourth

Quarter*

2017

            

Net sales

   $1,172,324   $1,240,674   $1,324,634   $1,299,018

Gross profit

    220,222    235,875    250,873    242,420

Restructuring/Asset impairment charges

    4,111    7,897    511    25,900

Net income attributable to Sonoco

    53,733    43,125    72,812    5,675

Per common share:

            

Net income attributable to Sonoco:

            

- basic

   $0.54   $0.43   $0.73   $0.06

- diluted

    0.53    0.43    0.72    0.06

Cash dividends

            

- common

    0.37    0.39    0.39    0.39

Market price

            

- high

    55.58    54.00    53.77    55.77

- low

    51.87    49.66    47.10    50.39

2016

            

Net sales

   $1,226,276   $1,205,680   $1,208,724   $1,142,197

Gross profit

    245,253    242,013    235,373    214,787

Restructuring/Asset impairment charges

    9,228    23,278    8,947    1,430

Net income attributable to Sonoco

    59,914    56,252    65,395    104,873

Per common share:

            

Net income attributable to Sonoco:

            

- basic

   $0.59   $0.56   $0.65   $1.04

- diluted

    0.59    0.55    0.64    1.04

Cash dividends

            

- common

    0.35    0.37    0.37    0.37

Market price

            

- high

    49.08    50.13    53.57    55.47

- low

    36.56    45.02    49.10    49.50
*Net income attributable to Sonoco in the fourth quarter of 2017 includes an additional tax provision of $51,265 resulting from new U.S. tax reform legislation, and the fourth quarter of 2016 includes a netafter-tax gain of $49,341 from the sale of the Company’s rigid plastic blow molding operations.

following:


Principal AmountInterest RateMaturity
2025 Notes$400,000 1.800%February 1, 2025
2027 Notes300,000 2.250%February 1, 2027
2032 Notes500,000 2.850%February 1, 2032
Total$1,200,000 

The Notes are the Company’s 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 contains certain covenants with respect to the Company that, among other things, restrict the entry into secured indebtedness, sale and leaseback transactions and certain mergers, consolidations and transfers of all or substantially all of the Company’s assets.
Also on January 21, 2022, the Company entered into a $300,000 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 Ball Metalpack. The unsecured loan has a three-year term. Interest is assessed at the Secured Overnight Financing Rate (SOFR) plus a margin based on a pricing grid that uses the registrant’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 at our discretion.
On January 26, 2022, the Company completed the acquisition of Ball Metalpack, a joint venture owned by Platinum Equity and Ball Corporation, for $1,350,000 in cash subject to customary adjustments, including for working capital, cash and indebtedness. Ball Metalpack is a leading manufacturer of sustainable metal packaging for food and household products and the largest aerosol can producer in North America. The acquisition was funded primarily by proceeds from the issuance of the Notes, together with borrowings from the Term Loan Facility and the Company's commercial paper program. Previously part of Ball Corporation, the Ball Metalpack joint venture was formed in 2018 and has approximately 1,300 employees across 8 manufacturing locations in the United States and a headquarters facility in Broomfield, Colorado. The Ball Metalpack name will be changed to Sonoco Metal Packaging.
Given the timing of completion of the acquisition, the Company is currently unable to provide a preliminary purchase price allocation. Such allocation, as well as any required pro forma financial disclosures required by ASC 805, are expected to be included in the quarterly report on Form 10-Q for the quarter ended April 3, 2022.


F-41 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-KF32


Item 9. Changes in and disagreements with accountantsDisagreements With Accountants on accountingAccounting and financial disclosure

Financial Disclosure

None.

Item 9A. Controls and procedures

Procedures

Disclosure controlsControls and procedures

Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer (“CEO”("CEO") and Chief Financial Officer (“CFO”("CFO"), conducted an evaluation of our disclosure controls and procedures as defined in Rule13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Act. Our disclosure controls and procedures are designed to ensureprovide reasonable assurance that information disclosed in the reports that we file or submit is recorded, processed, summarized and reported within the relevant 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’sCompany's management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures. Based on this evaluation, our CEO and CFO concluded that such controls and procedures, as of December 31, 2017,2021, the end of the period covered by this Annual Report on Form10-K, were effective.

effective at a reasonable assurance level.

Management’s reportReport on internal controlInternal Control over financial reporting

Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule13a-15(f). Our internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017,2021, the end of the period covered by this report based on the framework in Internal Control—Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”("COSO").

Based on our evaluation under the framework in Internal Control—Control - Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2017. In conducting management’s evaluation as described above, Packaging Holdings, Inc. and

2021.

subsidiaries (“Packaging Holdings”), acquired March 14, 2017, and Clear Lam Packaging, Inc. (“Clear Lam”), acquired July 24, 2017, were excluded. The operations of Packaging Holdings and Clear Lam, which are included in the Company’s 2017 consolidated financial statements, constituted approximately 4.3% of the Company’s consolidated revenues and approximately 4.1% of total assets as of December 31, 2017.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 20172021 as stated in their report, which appears at the beginning of Item 8 of this Annual Report on Form10-K.

Changes in internal control over financial reporting

There have been no changes in the Company’s internal control over financial reporting during the three months ended December 31, 2017, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the effectivenessEffectiveness of controls

Controls

The Company’sCompany's management, including the CEO and CFO, does not expect that the Company’sCompany's disclosure controls and procedures or internal control over financial reporting will prevent all error and all fraud. Internal control over financial reporting, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives will be met. Because of the inherent limitations in internal control over financial reporting, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected timely.

Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting occurring during the three months ended December 31, 2021, that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other information

Information

Not applicable.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
36 FORM 10-K SONOCO 20172021 ANNUAL REPORT    |    FORM 10-K


PARTIII

Item 10. Directors, executive officersExecutive Officers and corporate governance

Corporate Governance

The information set forth in the Company’s definitive Proxy Statement for the annual meeting of shareholders to be held on April 18, 201820, 2022, to be filed with the SEC within 120 days after December 31, 2021 (the Proxy Statement)"Proxy Statement"), under the captions “Proposal 1: Election of Directors,” “Information Concerning Directors Whose Terms Continue,” and “Section 16(a) Beneficial Ownership Reporting Compliance,“Delinquent Section 16 Reports,” is incorporated herein by reference. Information about executive officers of the Company is set forth in Item 1 of this Annual Report on Form10-K under the caption “Executive Officers of the Registrant.“Information About our Executive Officers.”

Code of Ethics – The Company has adopted a code of ethics (as defined in Item 406 of RegulationS-K) that applies to its principal executive officer, principal financial officer, principal accounting officer, and other senior executive and senior financial officers. This code of ethics is available through the Company’s website,www.sonoco.com, and is available in print to any shareholder who requests it. Any waivers or amendments to the provisions of this code of ethics will be posted to this website within four business days after the waiver or amendment.

Audit Committee Members – The Company has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.Act. The audit committee is comprised of the following members: Thomas E. Whiddon, Chairman; Sundaram Nagajaran; Philippe Guillemot;Theresa Drew; Robert R. Hill, Jr.; Eleni Istavridis; Richard G. Kyle; Blythe J. McGarvie; Marc D. Oken; Blythe J. McGarvie, and Richard G. Kyle.

Lloyd M. Yates.

Audit Committee Financial Expert – The Company’s Board of Directors has determined that the Company has at least twothree “audit committee financial experts,” as that term is defined by Item 407(d)(5) of RegulationS-K promulgated by the Securities and Exchange Commission, serving on its audit committee. Theresa Drew, Marc D. Oken, and Thomas E. Whiddon and Marc D. Oken meet the terms of the definition and are independent based on the criteria in the New York Stock Exchange Listing Standards. Pursuant to the terms of Item 407(d)(5) of RegulationS-K, a person who is determined to be an “audit committee financial expert” will not be deemed an expert for any purpose as a result of being designated or identi-

fiedidentified as an “audit committee financial expert” pursuant to Item 407, and such designation or identification does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the audit committee and Board of Directors in the absence of such designation or identification. Further, the designation or identification of a person as an “audit committee financial expert” pursuant to Item 407 does not affect the duties, obligations or liability of any other member of the audit committee or Board of Directors.

The Company’s Corporate Governance Guidelines, Audit Committee Charter, Corporate Governance and Nominating Committee Charter and Executive Compensation Committee Charter are available through the Company’s websitewww.sonoco.com.. This information is available in print to any shareholder who requests it.

Item 11. Executive compensation

Compensation

The information set forth in the Proxy Statement under the caption “Compensation Committee Interlocks and Insider Participation,” under the caption “Executive Compensation,” and under the caption “Director Compensation” is incorporated herein by reference. The information set forth in the Proxy Statement under the caption “Compensation Committee Report” is also incorporated herein by reference, but pursuant to the Instructions to Item 407(e)(5) of RegulationS-K, such report shall not be deemed to be “soliciting material” or subject to Regulation 14A, and shall be deemed to be “furnished” and not “filed” and will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934 as a result of being so furnished.

Item 12. Security ownershipOwnership of certain beneficial ownersCertain Beneficial Owners and managementManagement and related stockholder matters

Related Stockholder Matters

The information set forth in the Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners,” and under the caption “Security Ownership of Management” is incorporated herein by reference.

 

Equity compensation plan information

Compensation Plan Information

The following table sets forth aggregated information about all of the Company’s compensation plans (including individual compensation arrangements) under which equity securities of the Company are authorized for issuance as of December 31, 2017:

Plan category  

Number of securities

to be issued upon

exercise of

outstanding options,

warrants and rights

(a)

  

Weighted-average

exercise price of

outstanding options,

warrants and rights

(b)

  

Number of securities

remaining available for

future issuance under

equity compensation

plans (excluding

securities reflected in

column (a))1

(c)

Equity compensation plans approved by security holders

    3,739,540   $44.53    6,731,137

Equity compensation plans not approved by security holders

    —    —    —

Total

    3,739,540   $44.53    6,731,137
2021:
Plan category
Number of securities  
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
Weighted-average
exercise price of
outstanding options,  
warrants and rights
(b)
Number of securities
remaining available for  
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))1
(c)
Equity compensation plans approved by security holders2,253,595 $55.03 8,494,373
Equity compensation plans not approved by security holders— — — 
Total2,253,595 $55.03 8,494,373 
1
1The Sonoco Products Company 2014 Long-term2019 Omnibus Incentive Plan (the "2019 Plan") was adopted at the Company’s 20142019 Annual Meeting of Shareholders. The maximum number of shares of common stock that may be issued under this plan was set at 10,381,53312,000,000 shares, which included all shares remaining under the 2012 Plan and an additional 4,500,000 shares authorized under the 2014 Plan. Awards granted under all previous plans which are forfeited, expire or are cancelled without delivery of shares, or which result in forfeiture of shares back to the Company, will be added to the total shares available under the 20142019 Plan. At December 31, 2017,2021, a total of 6,731,1378,494,373 shares remain available for future grant under the 20142019 Plan.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K37

The weighted-average exercise price of $44.53$55.03 relates to stock appreciation rights, which account for 2,128,012879,671 of the 3,739,5402,253,595 securities issuable upon exercise. The remaining 1,611,5281,373,924 securities relate to deferred compensation stock units, performance-contingent restricted stock units and restricted stock unit awards that have no exercise price requirement.

Item 13. Certain relationshipsRelationships and related transactions,Related Transactions, and director independence

Director Independence

The information set forth in the Proxy Statement under the captions “Related Party Transactions” and “Corporate Governance – Director Independence Policies” is incorporated herein by reference. Each current member of the Audit, Corporate Governance and Nominating and Executive Compensation Committees is independent as defined in the listing standards of the New York Stock Exchange.


37 FORM 10-K SONOCO 2021 ANNUAL REPORT

Item 14. Principal accountant feesAccountant Fees and services

Services

The information set forth in the Proxy Statement under the caption “Independent Registered Public Accounting Firm” is incorporated herein by reference.


38SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

PARTIV


Item 15. Exhibits and financial statement schedules

Financial Statement Schedules
(a)1 
(a)1
Financial Statements – The following financial statements are provided under Item 8 – Financial Statements and Supplementary Data of this Annual Report on Form10-K:
–  Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 20162021, 2020 and 20152019
–  Consolidated Statements of Changes in Shareholders’Total Equity for the years ended December 31, 2017, 20162021, 2020 and 20152019
2��Financial Statement Schedules
2Financial Statement Schedules
Schedule II – Valuation and Qualifying Accounts for the Years Ended December 31, 2017, 20162021, 2020 and 2015.2019

Column A  Column B  Column C—Additions Column D Column EColumn AColumn BColumn C - Additions Column D Column E
Description  

Balance at

Beginning

of Year

  

Charged to

Costs and

Expenses

 

Charged to

Other

 Deductions 

Balance

at End

of Year

Description
Balance at
Beginning
of Year
Charged to
Costs and
Expenses
 
Charged to
Other
 Deductions 
Balance
at End
of Year

2017

         
20212021

Allowance for Doubtful Accounts

   $10,884   $1,439 $2431 $2,6532 $9,913Allowance for Doubtful Accounts$20,920 $(824)  $(18)1$427 2$19,651 

LIFO Reserve

   17,319    3133  —  — 17,632LIFO Reserve20,317 2,583 3— — 22,900 

Valuation Allowance on Deferred Tax Assets

   49,797   6,967  (2,365)4  7,2005 47,199Valuation Allowance on Deferred Tax Assets128,435 (33,532)  (866)445 593,992 

2016

         
20202020

Allowance for Doubtful Accounts

   $11,069   $1,566 $(86)1 $1,6652 $10,884Allowance for Doubtful Accounts$14,382 $8,067   $54 1$1,583 2$20,920 

LIFO Reserve

   18,894    (1,575)3  —  — 17,319LIFO Reserve20,203 114 3— — 20,317 

Valuation Allowance on Deferred Tax Assets

   49,464   3,273  (306)4  2,6345 49,797Valuation Allowance on Deferred Tax Assets105,347 22,816   2,447 42,175 5128,435 

2015

         
20192019

Allowance for Doubtful Accounts

   $8,547   $2,501 $4671 $4462 $11,069Allowance for Doubtful Accounts$11,692 $4,320   $322 1$1,952 2$14,382 

LIFO Reserve

   17,908    9863  —  — 18,894LIFO Reserve18,854 1,349 3— — 20,203 

Valuation Allowance on Deferred Tax Assets

   63,231   2,248  (5,686)4  10,3295 49,464Valuation Allowance on Deferred Tax Assets103,289 2,662   (1,116)4(512)5105,347 

1    Includes translation adjustments and other insignificant adjustments.

2    Includes amounts written off.

3    Includes adjustments based on pricing and inventory levels.

4    Includes translation adjustments and increases to deferred tax assets which were previously fully reserved.

5    Includes utilization of capital loss carryforwards, net operating loss carryforwards and other deferred tax assets.

All other schedules not included have been omitted because they are not required, are not applicable or the required information is given in the financial statements or notes thereto.

3 
The exhibits listed on the Exhibit Index to this Form 10-K are incorporated herein by reference.


Item 16. Form 10-K Summary
None.

38 FORM 10-K SONOCO 2021 ANNUAL REPORT



Exhibit Index
3The exhibits listed on the Exhibit Index to this Form10-K have been incorporated herein by reference.

Item 16. Form10-K summary

The Company has chosen not to provide a Form10-K summary.

Exhibit Index

2-1*
3
3-1
3-1
3-2
3-24-1
4-24-1
4-34-2
4-4

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K39

4-5
Form of Fifth Supplemental Indenture, including form of 3.125% Notes due 2030, dated as of April 22, 2020, between Sonoco Products Company and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-K filed April 22, 2020)
4-64-3
10-1**4-4Form of Fourth Supplemental Indenture (including form of 5.75% Notes due 2040), between Sonoco Products Company and the Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Registrant’s Form8-K filed October 27, 2011)
10-11991 Sonoco Products Company Key Employee Stock Plan, as amended (incorporated by reference to the Registrant’s Form10-Q for the quarter ended September 30, 2007)
10-2Sonoco Products Company 1996Non-employee Directors’ Stock Plan, as amended (incorporated by reference to the Registrant’s Form10-Q for the quarter ended September 30, 2007)
10-3

10-2**10-4
10-3**10-5
10-4**10-6
10-5**10-7
10-6**10-8
10-7**10-9
10-8**10-10
10-9**10-11
10-10**10-12Performance-based Annual Incentive Plan for Executive Officers (incorporated by reference to the Registrant’s Proxy Statement for the April 19, 2000, Annual Meeting of Shareholders)
10-13
10-14Description of Stock Appreciation Rights and Performance Contingent Restricted Stock Units granted to executive officers of the Registrant on February 8, 2011 (incorporated by reference to Registrant’sForm 8-K filed February 14, 2011)
10-11**
10-15Description of Stock Appreciation Rights and Performance Contingent Restricted Stock Units granted to executive officers of the Registrant on February 7, 2012 (incorporated by reference to Registrant’sForm 8-K filed February 13, 2012)
10-16Description of Stock Appreciation Rights and Performance Contingent Restricted Stock Units granted to executive officers of the Registrant on February 12, 2013 (incorporated by reference to Registrant’s Form8-K filed February 19, 2013)
10-17Description of Stock Appreciation Rights and Performance Contingent Restricted Stock Units granted to executive officers of the Registrant on February 12, 2014 (incorporated by reference to Registrant’s Form8-K filed February 18, 2014)
10-18Description of Stock Appreciation Rights, Restricted Stock Units and Performance Contingent Restricted Stock Units granted to executive officers of the Registrant on February 11, 2015 (incorporated by reference to Registrant’sForm 8-K filed February 17, 2015)
10-19Description of Stock Appreciation Rights, Restricted Stock Units and Performance Contingent Restricted Stock Units granted to executive officers of the Registrant on February 10, 2016 (incorporated by reference to Registrant’sForm 8-K filed February 16, 2016)
10-20
10-12**
10-21
10-13**
10-14**
10-15**
10-16**
10-17**

40SONOCO 2017 ANNUAL REPORT    |    FORM 10-K



10-18*
10-22
10-19*
10-20*
10-21*
10-23
10-22**
10-24
12Statements regarding Computation of Ratio of Earnings to Fixed Charges
21
21
23
23
31
31
32
32
101.INS
99Proxy Statement, filedXBRL Instance Document - the instance document does not appear in conjunction with annual shareholders’ meeting scheduled for April 18, 2018 (to be filedthe Interactive Data File because its XBRL tags are embedded within 120 days after December 31, 2017)the Inline XBRL document
101.SCHTaxonomy Extension Schema Document
101101.CALThe following materials from Sonoco Products Company’s Annual Report on Form10-K for the year ended December 31, 2017, formattedXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABTaxonomy Extension Label Linkbase Document
101.PRETaxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at December 31, 2017 and 2016, (ii) Consolidated Statements of Income for the years ended December 31, 2017, 2016 and 2015, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015, (iv) Consolidated Statements of Changes in Total Equity for the years ended December 31, 2017, 2016 and 2015, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015, and (vi) Notes to the Consolidated Financial Statements.Exhibit 101)

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K41


* Certain portions of these exhibits have been redacted pursuant to Item 601(b)(2)(ii) or Item 601(b)(10)(iv) of Regulation S-K. The Company hereby agrees to furnish supplementally an unredacted copy of the exhibit to the SEC upon its request.
** Indicates management contract or compensatory plan.



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 28th day of February 2018.

2022.
SONOCO PRODUCTS COMPANY

/s/ M.J. Sanders

R. Howard Coker
M.J. SandersR. Howard Coker
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on this 28th day of February 2018.

2022.

/s/ Barry L. Saunders

Julie C. Albrecht		/s/ James W. Kirkland
Barry L. SaundersJulie C. AlbrechtJames W. Kirkland
Senior Vice President and Chief Financial OfficerCorporate Controller
(principal financial officer)(principal accounting officer)


/s/ James W. Kirkland

James W. Kirkland/s/ J.R. Haley/s/ R. H. Coker
Corporate ControllerJ.R. Haley/Director (Chairman)R. H. Coker/President, Chief Executive Officer and Director
(principal accounting officer)

/s/ P.L. Davies/s/ T.J. Drew
P.L. Davies/DirectorT.J. Drew/Director
/s/ P. Guillemot/s/ R.R. Hill, Jr.
P. Guillemot/DirectorR.R. Hill, Jr./Director
/s/ E. Istavridis/s/ R.G. Kyle
E. Istavridis/DirectorR.G. Kyle/Director
/s/ B.J. McGarvie/s/ J.M. Micali
B.J. McGarvie/DirectorJ.M. Micali/Director
/s/ S. Nagarajan/s/ M.D. Oken
S. Nagarajan/DirectorM.D. Oken/Director
/s/ T.E. Whiddon/s/ L.M. Yates
T.E. Whiddon/DirectorL.M. Yates/Director

/s/     H.E. DeLoach, Jr.        

Director (Executive Chairman)
H.E. DeLoach, Jr.

/s/    M.J. Sanders        

President, Chief Executive Officer and Director
M.J. Sanders

/s/     H.A. Cockrell        

Director
H.A. Cockrell

/s/     P.L. Davies        

Director
P.L. Davies

/s/     P. Guillemot        

Director
P. Guillemot

/s/     J.R. Haley        

Director
J.R. Haley

/s/     R.G. Kyle        

Director
R.G. Kyle

/s/     B.J. McGarvie        

Director
B.J. McGarvie

/s/     J.M. Micali        

Director
J.M. Micali

/s/     S. Nagarajan        

Director
S. Nagarajan

/s/     M.D. Oken        

Director
M.D. Oken

/s/     T.E. Whiddon        

Director
T.E. Whiddon

42SONOCO 2017 ANNUAL REPORT    |    FORM 10-K