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

2023

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

(Exact name of registrant as specified in its charter)
South Carolina (State or other jurisdiction of incorporation or organization)57-0248420 (I.R.S. Employer Identification No.)

Incorporated under the laws

of1 N. Second St. Hartsville, South Carolina

(Address of principal executive offices)

I.R.S. Employer Identification

No. 57-0248420

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 growth 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. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).    ☐
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,June 30, 2023, which was the last business day of the registrant’s most recently completed second fiscal quarter,quarter, was $5,025,108,611. Registrant does not (and did not at July 2, 2017) have anynon-voting common stock outstanding.

$5,752,118,002.

As of February 16, 2018,2024, there were 99,487,36298,127,878 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, 2018,17, 2024, 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 I
Item 1.Page
4
Part I
Item 1.Business5
Item 1A.
9
Item 1B.16
20
Item 2.1C.
Properties20
16
Item 2.
21
Item 3.16
21
Item 4.16
21
Part II
Item 5.17
22
Item 6.
Selected Financial Data23
18
Item 7.18
23
Item 7A.35
37
Item 8.35
37
Item 9.36
38
Item 9A.36
38
Item 9B.36
38
Item 9C.
38
Part III
Item 10.37
39
Item 11.37
39
Item 12.37
39
Item 13.38
39
Item 14.38
40
Part IV
Item 15.39
40
Item 16.
Form10-K Summary40
39

2




SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

PRODUCTS COMPANY

SONOCOPRODUCTSCOMPANY

Forward-Looking Statements

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 statements are based, are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended.amended (the “Exchange Act”). 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 “estimate,“aim,” “project,“anticipate,” “intend,“assume,” “believe,” “can,” “committed,” “consider,” “continue,” “could,” “estimate,” “expect,” “believe,“forecast,” “consider,” “plan,” “strategy,” “opportunity,” “commitment,” “target,” “anticipate,” “objective,“future,” “goal,” “guidance,” “outlook,“intend,” “forecast,“is designed to,” “future,”“re-envision,” “assume,“likely,” “will,” “would,” “can,” “could,“maintain,” “may,” “might,” “aspires,“objective,” “ongoing,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “strategy,” “target,” “will,” “would,” 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 energy, and offsetting high raw material and energy costs, including the potential impact of potential changes in tariffs;

tariffs or imposition of sanctions;

•the effects of economic downturns, inflation, volatility and other macroeconomic factors on the Company and its industry, including effects on consumers and customers;
•the resiliency of the Company’s operating model;
•reduced supply chain and labor disruptions and benefits to the Company therefrom;
•consumer and customer actions in connection with political, social, and economic instability, war and other geopolitical tensions, and widespread public health events, including epidemics or pandemics;
•improved productivity and cost containment;

containment, including cost savings from the Company’s investments;

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

•  effects of acquisitions and dispositions;

•  realization of synergies resulting from acquisitions;

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

•effects and timing of, and anticipated costs, synergies and gains resulting from acquisitions and divestitures, including the Company’s acquisitions of Ball Metalpack Holding, LLC, renamed Sonoco Metal Packaging (“Metal Packaging”), S.P. Holding, Skjern A/S (“Skjern”), the remaining interest in RTS Packaging, LLC (“RTS Packaging”), a paper mill in Chattanooga, Tennessee (the “Chattanooga Mill”), Nordeste Tubetes and NE Tubetes, and Inapel Embalagens Ltda. (“Inapel”), and the Company’s sale of its Sonoco Sustainability Solutions (“S3”) business, its U.S. and Mexico BulkSak businesses, its South Carolina timberland properties, and its Protective Solutions business;
•adequacy and anticipated amounts and uses of cash flows;

•capital allocation, including expected amounts of capital spending;

spending and expected annualized cost savings and other benefits therefrom;

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

•the Company’s ability to adhere to restrictive covenants in its debt agreements;
•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 opportunities and anticipated growth thereof, as well as improving demand for the Company’s products;
•market leadership;

•  research and development spending;

the Company’s human capital management strategy;

•expected impact and costs of resolution of legal proceedings;

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

•the Company’s ability to achieve its sustainability goals, including with respect to 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 (“PBO”) and payments;

•expected impact of implementation of new accounting pronouncements;

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

•continued payment of dividends; and

•planned stock repurchases.

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

•ability to manage the mix of business and execute on the Company’s portfolio simplification strategy, including with respect to divestitures;
•ability to identify and successfully close suitable acquisitions at the levels needed to meet growth targets;
•ability to successfully integrate newly acquired businesses into the Company’s operations and realize synergies and other anticipated benefits within the expected time period, or at all;
•availability, transportation and pricing of raw materials, energy and transportation, including the impact of potential changes in tariffs or sanctions and escalating trade wars, and the impact of war, general regional instability and other geopolitical tensions (such as the ongoing conflict between Russia and Ukraine as well as the economic sanctions related thereto, and the ongoing conflict in Israel and Gaza), 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;

•costs of labor;

•work stoppages due to labor disputes;

•success of new product development, introduction and sales;

sales, including successful timing of new product or product innovation introductions;

•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;

preferences, including changes related to inflation and other macroeconomic factors;

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

2 FORM 10-K SONOCO 2023 ANNUAL REPORT

•competitive pressures, including new product development, and technological market leadership, reputation for quality, industry overcapacity, customer and supplier consolidation, and changes in 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;
•collection of receivables from customers;
•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’s existing businesses on operating results;

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

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

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

•  ability to expand geographically and win profitable new business;

•  ability to identify and successfully close suitable acquisitions at the levels needed to meet growth targets, and successfully integrate newly acquired businesses into the Company’s operations;

•  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;

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

•  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;

•cost of employee and retiree medical, health, and life insurance benefits;
•resolution of income tax contingencies;
•changes in U.S. and foreign tariffs, tax rates, and tax laws, regulations and interpretations thereof, including income, sales and implementation thereof;

use, property, value added, employment, and other taxes;

•accuracy in valuation of deferred tax assets;

•the adoption of new, or changes in, accounting standards or interpretations;
•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 disclosure controls and internal controls, overincluding with regard to financial reporting;

reporting, to prevent or detect errors or acts of fraud;

•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;

regulations, including with respect to climate change and emissions reporting;

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K    3

•operational disruptions at our major facilities;

•failure or disruptions in our information technologies;

technology systems;

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

•ability to meet environmental, sustainability and other social and governmental goals, including with respect to greenhouse gas emissions, and challenges in implementation thereof;
•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 and the ongoing conflict in Israel and Gaza), terrorist activities, public health events (such as the COVID-19 pandemic), and natural disasters.

disasters; and

•inflation and the activities and operations in highly inflationary economies.
More information about the risks, uncertainties, and assumptions that may cause actual results to differ materially from those expressed or forecasted in forward-looking statements is pro-

videdprovided in the Company’sthis Annual Report on Form10-K under Item 1A—“Risk1A - “Risk Factors” and throughout other sections of thatthis report and in other reports filed with the Securities and Exchange Commission.Commission (the “SEC”). 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 SecuritiesSEC on Forms 10-K, 10-Q, and Exchange Commission on Forms10-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’sSEC’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 2023 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 founded in Hartsville, South Carolina, in 1899 as the Southern Novelty Company.Company with the guiding principle that People Build Businesses by doing the right things. At its beginnings in 1899, a team of 12 people worked from a rented warehouse to produce the Company’s first product, 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 designer, developer, and manufacturer of industriala variety of highly engineered and consumersustainable packaging serving multiple end markets. As of December 31, 2023, the Company had approximately 310 locations in 33 countries, serving some of the world’s best-known brands in some 85 nations. Sonoco is committed to creating sustainable products, services, and a providerprograms for the environment and 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, create unique customer experiences, and enhance the quality of products. We seek to help our customers solve their packaging services,challenges by connecting insights to innovation and developing customized solutions that are tailored to the customers’ goals and objectives.
(c) Description of Business –
Segment Reporting
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 19 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form10-K.

(b) Financial information about segments –

The

Effective January 1, 2024, the Company reportswill integrate its financial results in four reportable segments –flexible packaging and thermoforming packaging businesses within the Consumer Packaging Papersegment in order to streamline operations, enhance customer service, and Industrial Converted Products, Displaybetter position the business for accelerated growth. As a result, the Company will change its operating and Packaging,reporting structure to reflect the way it plans to manage its operations, evaluate performance, and Protective Solutions. Information aboutallocate resources going forward. Therefore, in future reporting periods, the Company’s reportable segments is provided in Note 16consumer thermoforming businesses will move from the All Other group of businesses to the Consolidated Financial Statements includedConsumer Packaging segment. The Company’s Industrial Paper Packaging segment will not be affected by these changes. As of and for the year ended December 31, 2023, there were no changes to the manner in Item 8 of this Annual Reportwhich the Company reviewed financial information at the segment level; therefore, these changes had no impact 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.

our reporting structure.

Consumer Packaging

The Consumer Packaging segment accounted for approximately 42%53%, 43%52%, and 43%42% of the Company’s consolidated net sales in the years ended December 31, 2017, 20162023, 2022, and 2015,2021, respectively. The operations in this segment consistconsisted of approximately 80 plants throughout the world. The products, services and marketsworld as of December 31, 2023. Products within the Consumer Packaging segment consist of rigid packaging (paper, metal, and plastic) and flexible packaging, primarily serving the consumer staples market focused on food, beverage, household, and personal products.
Our rigid paper containers are as follows:

Products and ServicesMarkets
Round composite cans, shapedmanufactured from 100% recycled paperboard provided primarily from Sonoco global paper operations. These paper products are primarily used in the food and beverage markets including snacks, baked goods, powdered drinks, and confectionary goods. With the acquisition of Metal Packaging in 2022, we expanded our manufacturing capability in steel and aluminum metal fabrication beyond our existing metal ends and closures products to include metal food and household packaging products for vegetables, tomatoes, fruit, spray cleaners, paint, and other products. Our rigid paperboard containers, fiber and plastic caulk/adhesive tubes, aluminum, steel and peelable membrane easy-open closures for composite and metal cans; thermoformed rigid plastic trays, cups and bowls; injection molded containers, spools and parts; high-barrier flexible and forming plastic packaging films, modified atmosphere packaging, lidding films, printed flexible packaging, rotogravure cylinder engraving, global brand management.Snacks, nuts, cookies, crackers, hard-baked goods, desserts, candy, gum, frozen concentrate, powdered and liquid beverages, powdered infant formula, coffee, refrigerated dough, frozen entrees, processed foods, fresh fruit, vegetables,fresh-cut produce, salads, fresh-baked goods, seafood, poultry, soup, pasta, dairy, sauces, dips, condiments, pet food, meats, cheeses.

This segment included blow-molded plastic bottlesproducts are comprised of thermoformed plastic trays and jarsenclosures for mostfresh produce, condiments, and pre-packaged foods. Our flexible packaging is comprised primarily of 2016. However, on November 7, 2016, the Company completed the saleplastic packaging serving a variety of its rigid plastics blow molding operations.

food and personal product applications where high-barrier properties are critical for freshness and shelf-life.

In 2017,2023, Sonoco’s rigid packaging – paper-based products – waspaper containers were the Company’s second largest revenue-producing group of products and services, representing approximately 22%21% of the Company’s consolidated net sales in the year ended December 31, 2017.2023. This group comprised 23%21% and 21%24% of consolidated net sales in 20162022 and 2015,2021, respectively.

Display andIndustrial Paper Packaging

The Display andIndustrial Paper Packaging segment accounted for approximately 10%35%, 11%37%, and 12%44% of the Company’s consolidated net sales in the years ended December 31, 2017, 20162023, 2022, 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 2015,2021, respectively. This segment servesserved its markets through 164approximately 190 plants on five continents.continents as of December 31, 2023. Sonoco’s paper operations provide the primary raw material for the Company’s fiber-based packaging. Sonoco uses approximately 62%52% of the paper it manufactures, and the remainder is sold to third parties. This vertical integration strategy iswas supported by 1923 paper mills with 2830 paper machines andthroughout the world as of December 31, 2023. The Company also operates 24 recycling facilities throughoutin the world.United States capable of recycling old corrugated containers, paper, plastics, metals, and other recyclable materials that can be processed back through the Sonoco manufacturing ecosystem. In 2017,2023, Sonoco had the capacity to manufacture approximately 1.72.2 million tons of recycled paperboard. Thepaperboard per year. Products within the Industrial Paper Packaging segment consist primarily of goods produced from recycled fiber including paperboard tubes, cores, cones and cans; partitions; paper-based protective materials; and uncoated recycled paperboard for high-end applications such as folding cartons, can board, and laminated structures.

Products across this segment support multiple end markets in consumer staples (food and beverage, food distribution, household and personal products), consumer discretionary (home building, appliances, apparel, and home furnishings), and industrials (construction and building products, services and markets of the Paper and Industrial Converted Products segment areindustrial distribution), as follows:

Products and ServicesMarkets
Recycled paperboard, chipboard, tubeboard, lightweight corestock, boxboard, linerboard, corrugating medium, specialty grades; paperboard tubes and cores, molded plugs, reels; collection, processing and recycling of old corrugated containers, paper, plastics, metal, glass and other recyclable materialsConverted paperboard products, spiral winders, beverage insulators, construction, film, flowable products, metal, paper mills, shipping and storage, tape and label, textiles, wire and cable, municipal, residential, customers’ manufacturing and distribution facilities

well as various other end markets.

In 2017,2023, Sonoco’s tubes and cores products were the Company’s second largest revenue-producing group of products, representing approximately 22%19% of the Company’s consolidated net sales in the year ended December 31, 2017.2023. This group comprised 22%18% and 21% of consolidatedconsolidated net sales in 20162022 and 2015,2021, respectively.

4 FORM 10-K SONOCO 20172023 ANNUAL REPORT    |    FORM 10-K    5

Protective Solutions


All Other
The Protective Solutions segmentbusinesses grouped as All Other accounted for approximately 11%12%, 11%, and 10%14% of the Company’s consolidated net sales in the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively. The products, servicesoperations in All Other consisted of approximately 40 plants throughout the world as of December 31, 2023. Products within the All Other businesses consist of a variety of packaging materials including plastic, paper, foam, and various other specialty materials. All Other businesses serve a wide variety of end markets including consumer staples, consumer discretionary, industrial, and pharmaceuticals. Prior to its divestiture in April 2021, the Company's U.S. global display and packaging business, which included point-of-purchase displays, fulfillment operations, and contract packaging, was reported in All Other.
Other Aspects of the Protective Solutions segment are as follows:

Products and ServicesMarkets

Custom-engineered, paperboard-based and expanded foam protective packaging and components; temperature-assured

packaging

Consumer electronics, automotive, appliances, medical devices, temperature-sensitive pharmaceuticals and food, heating and air conditioning, office furnishings, fitness equipment, promotional and palletized distribution

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 ProductsPackaging 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 several outside sources. After a number of outside sources. Theglobal supply chain challenges in the past several years, 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 manynumerous other countries. Additionally, patentsPatents, trademarks, and trade secrets wereproprietary technology are also acquired as partthrough acquisitions and business combinations. The 2023 acquisitions of several acquisitions over the past year,remaining interest in RTS Packaging and the Chattanooga Mill resulted in the Company acquiring trademarks including the acquisition of Clear LamRTS Packaging®, Wineguard®, Ultra Guardian®, RigidWall®, and Packaging Holdings, Inc.Renew 100®, among others. Patents and subsidiaries, including Peninsula Packaging LLC. These patentsproprietary technology are managed globally by a Sonoco intellectual capital management team through the Company’s subsidiary, Sonoco Development, Inc. (SDI)(“SDI”). SDI globally manages patents, trade secrets, confidentiality agreements, and license agreements. Some patents have been licensed to other manufacturers.manufacturers, often as part of a larger agreement, such as a toll manufacturing agreement. Sonoco also licenses a few patents from outside companies and universities. U.S. patents typically expire twenty years after about 20 years,filing, 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 Internetinternet domain names. Most of Sonoco’s products are marketed worldwide under trademarks such as Sonoco®, ®, SmartSeal®, ®, Sonotube®, ®, Sealclick®, ®, Sonopost® ®, and UltraSeal®. ®, among others. Sonoco’s registered web domain names such as www.sonoco.com and www.sonotube.com provide information about Sonoco, including its people, products, locations, and its products.governance. Trademarks and domain names are licensed to outside companies, utilizing quality control metrics, where appropriate.

Seasonality – The Company’s operations areAlthough demand for the majority of the Company's products is not seasonal to any significant degree, although the ConsumerCompany’s Metal Packaging and Display and Packaging segments normally report slightlyoperations generally experience higher sales and operating profits induring the second halfand third quarters of the year when compared withas demand for certain products increases during the first half.

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

the food packaging season.

Dependence on Customers – On an aggregate basis during 2017,2023, the five largest customers in the PaperConsumer Packaging and Industrial Converted Products segment, the ConsumerPaper Packaging segment and the Protective Solutions segmentsegments accounted for approximately 7%, 22% and 29%26% and 10%, respectively, of each segment’s net 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%15% of that segment’sthe group’s net sales.

Sales to

None of the Company’s largest customercustomers represented approximately 4%10% or more of consolidated revenues in 2017. This concentration of sales volume resulted2023.
Additional information regarding Sonoco's customers is provided in a corresponding concentration of credit, representing approximately 4% ofItem 1A - Risk Factors under the Company’s consolidated trade accounts receivable at December 31, 2017. The Company’s next largest customer comprised approximately 3% of the Company’s consolidated revenues for the year ended December 31, 2017.

caption “Risks Related to Competition, Customers and Suppliers.”

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 allprovides a wide variety of products to multiple end markets and relies on its customers’ forecasts to position raw materials for manufacturing within its facilities. The Company does not carry a significant backlog orders at December 31, 2017, to be shipped during 2018.

and, in general, aligns its customer deliveries on a built-to-order basis.

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 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 2016 and $22.1 million in 2015. Customer-sponsored research and development expenses were not material in any 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 characteristicseach 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.

Compliancecountries where it conducts business with Environmental Laws –respect to a variety of matters. 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 1617 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form10-K, 10-K.

Culture – At Sonoco, our purpose is ingrained 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 vice president directly reporting to our President and Chief Executive Officer (“CEO”), to focus on our global sustainability efforts. This team has expanded and led the Company’s global sustainability programs for all our packaging businesses, including driving efforts to meet our climate change related goals.
5 FORM 10-K SONOCO 2023 ANNUAL REPORT

In partnership with our employees, we are committed to protecting the natural environment and our communities through sustainable practices. We emphasize a culture of accountability and strive to conduct our business in a manner that is fair, ethical, and responsible to earn the trust of our employees. Additionally, we continue to convene our 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 VP Environmental, Sustainability & Technical Services, as the head of the Council, reports quarterly to the Employee and Public Responsibility Committee of the Board of Directors (the “Board”) on Sonoco’s sustainability activities, including tracking of climate-related issues. We are committed to reporting in line with the Global Reporting Initiative, Task Force on Climate-Related Financial Disclosures, and Sustainability Accounting Standards Board standards as of 2023.
Our sustainability goals include the following key elements:
Greenhouse Gas Emissions – We are setting ambitious targets to reduce our global greenhouse gas (“GHG”) emissions in line with the Paris Agreement, which is aimed at limiting the warming of global temperatures to less than 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 as meeting their requirements for being science-based in June 2021.
Energy Usage– We strive to manage, mitigate, and reduce our GHG emissions where possible. In support of our GHG emission reductions, Sonoco aims to continue energy efficiency improvements in our manufacturing plants targeted to reduce total energy use by at least 8% by 2030 from a 2020 baseline, in addition to investing in renewable energy and alternative power projects.
Water Usage – We believe 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 have conducted initial water risk studies at these manufacturing facilities using the WRI Aqueduct water risk tool.
Single Use Plastics– We are working to reduce the use and impact of virgin plastics on the environment. As such, we are working to continue to ensure we can make relevant on-pack recyclability claims for our consumer-based global rigid plastic product portfolio, while also ensuring we are closing the loop through continued use of post-consumer recycled content. We are also committed to responsibly managing resin use at our facilities and are implementing “Operation Clean Sweep”, a program focused on preventing discharge of plastic pellets and nurdles into the environment.
Recycling– We also serve as a valued partner to our customers to reduce the environmental impact of their packaging. We continue to develop a range of products made from renewable materials and materials that can be recycled or composted at the end of their life.
We 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 in “People and Packaging with a Purpose” underlies our efforts to attract, acquire, and retain talented employees for our global businesses. We bring more to packaging than just the package.
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 sustainability; health and safety; diversity, equity and inclusion (“DEI”); and talent development. Integrity is a hallmark of the Sonoco culture.
We seek to engage, develop, and reward our employee base so they can successfully pursue our purpose of Better Packaging. Better Life. The Company believes that a strong focus on human capital through the talent we hire and retain is critical to maintaining our competitiveness. This focus on human capital is reinforced by our Policies on Business Conduct and through increasing employee awareness, education, communication, and training.
As of December 31, 2023, we had approximately 23,000 full-time equivalent employees, with the majority concentrated in the

United States. We consider our employee relations to be strong.

We have labor unions in all regions of our operations. In North America, approximately 13.6% of our employees were represented by unions as of December 31, 2023. We rely on the unique qualities and talents of our employees to help us meet our strategic priorities. Our DEI 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 and focusing on development and promotions, as well as retention efforts. We made significant progress in talent acquisition during 2023, despite a challenging labor market. In the United States, 25% of new employee hires during 2023 identified as female and 43% identified as members of underrepresented ethnic groups.

People Objectives
We rely on the personal relationships and service provided by employees. As such, we believe attracting, recruiting, developing, and retaining diverse talent is vital to our success. The Company is focused on supporting our employees, and we consider the management of our talent to be essential to the ongoing success of our business. Our Board and its Executive Compensation Committee and Employee & Public Responsibility Committee provide oversight of our human capital management strategy.
Health and Safety
We take the health and safety of our employees very seriously. Protecting the health and safety of our employees is a priority, and we are committed to providing a safe and healthy working environment for all our associates.
We use global and local incident data, along with a strong set of leading indicators, to create program and safety improvement action plans to reduce exposures that lead to at-risk situations. Injury rates in 2023 were stable year over year, with a slight decrease in 2023 in overall injuries across the organization in all categories compared to 2022. We continue to focus on preventing serious and disabling injuries across the organization and have demonstrated progress in reducing exposure to high-risk hazards within the manufacturing operations. Focused audit processes, detailed standards, executive leadership, and dedicated capital are focused on driving long-term exposure reductions, with a 97% completion rate on our annual safety improvement plans as of December 31, 2023. Building on our efforts started in 2022 with a focus on leadership, a global initiative, Doing Safety Differently, was launched to further strengthen the culture around safety leadership and employee engagement. This initiative included the rollout of an Operations Leadership Safety Playbook, establishing expectations on how to lead safety. Additionally, a global training initiative for all employees was launched in late 2023 with the intent to equip employees with skills to identify and communicate about exposures in their workplace.
6 FORM 10-K SONOCO 2023 ANNUAL REPORT

Other employee well-being resources include wellness courses and a variety of online training classes, as well as other programs to promote mental and physical health. We continue to utilize employee feedback and surveys to gather information about market riskto better serve our team members. Members of our human resources department annually review benefits to ensure we can support the well-being of our employees and their families.
Diversity, Equity, and Inclusion
Our commitment to DEI starts with our goal of developing a workforce that is diverse in Item 7 – Management’s Discussionbackground, knowledge, skill and Analysisexperience. Sonoco engages in efforts aimed at hiring diverse talent, including initiatives focused on gender, gender identity, underrepresented ethnic groups, LGBTQ+ individuals, people with disabilities, veterans and others. We have implemented policies and training focused on non-discrimination and harassment prevention. We embrace DEI, which we believe fosters leadership through new ideas and perspectives. In 2023, we continued the evolution of Financial Conditionour DEI strategy and Resultsobjectives, an ongoing business imperative. In connection with its diversity initiatives, Sonoco periodically requests that its employees and Board members self-identify based on specified diversity categories. As of Operations underDecember 31, 2023, approximately 25.0% of our total work force and 18.9% of our senior leaders identified as female, while approximately 34.5% of our total workforce and 13.3% of our senior leaders identified as a member of an underrepresented ethnic group. From our global workforce, our employees were located in the caption “Risk Management”following geographic regions as of this Annual ReportDecember 31, 2023: 56% in North America; 17% in Europe; 18% in Latin America; and 9% in the Asia-Pacific region.
For the past 12 years, Sonoco’s employees have expanded and improved our Global Diversity, Equity and Inclusion Council (the “DEI Council”), which is chaired by our President and CEO. In 2022, the Company changed the name of the DEI Council, formerly the Global Diversity and Inclusion Council, to reflect the Company's increasing emphasis on Form10-K.

driving equity as part of an inclusive employee environment. An important part of our DEI efforts includes Sonoco’s Employee Resource Groups, which are groups of employees who support our DEI strategies by leveraging the unique perspectives of their members. In 2023, the DEI Council expanded its formerly known “Week of Understanding” into a “Month of Understanding” due to employee interest and a desire for more ways to connect and educate employees. This resulted in a 15% increase in participation across our global locations.

We have continued to build our Supplier Diversity Program since 2004, integrating diversity and inclusion into our procurement process by laying a strong foundation with key internal and external stakeholders. We developed policies, practices, and procedures to ensure equal opportunity and enable access. As part of Sonoco’s Supplier Diversity Program, supplier diversity progress is reported to the President and CEO, who in turn reports the progress to the Employee & Public Responsibility Committee of the Board.
Talent Development
Attracting, developing, and retaining talented employees is critical to our success and is an integral part of our human capital strategy. We have created a Global Talent Acquisition and Organizational Development team to provide a more holistic approach to managing and enriching the employee lifecycle through continuous training and comprehensive succession planning. Our focus continues to be on hiring, developing, and promoting talent based on a set of core competencies that drives high performance. Our training and development efforts include SONOCO University, our internal learning platform that offers a wide array of in-person and online learning opportunities to build employee competencies. Our professional training staff curates and delivers foundational leadership training to our employees to focus on leadership development as a core competency. We also utilize external organizations and local universities to support our development needs. We have apprenticeship programs with local technical schools and high schools. Other key components of our talent management system include coaching and a formal mentorship program for emerging leaders and high-potential employees. In addition, we conduct regular talent succession assessments along with individual performance reviews for salaried employees in which managers provide regular feedback and coaching to assist with the development of our employees, including the use of individual development plans to assist with individual career development.
We are also focused on pay equity and regularly review our compensation model to promote more fair and inclusive pay practices across our business. We offer competitive benefits packages that we believe reflect the needs of our workforce. In the United States, we provide medical, dental, and vision benefits, life and disability coverage, education reimbursement, and paid time off. We provide retirement benefits including a 401(k)-match program. Our executive compensation program is designed to align incentives with achievement of the Company’s strategic plan and both short- and long-term operating objectives.
(e) Available informationInformation –

The Company electronically files with the Securities and Exchange Commission (SEC)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 (the “1934 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. All references to Sonoco’s websites are intended to be inactive textual references only.



7 FORM 10-K SONOCO 2023 ANNUAL REPORT

Information About our Executive officers of the registrantOfficers –

NameAgeAgePosition and Business Experience for the Past Five Years

Executive Committee

Officers
M. Jack SandersR. Howard Coker61 64(Retiring effective April 2, 2018.)Board member, 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 2017.2020. 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 &and Closures, and Paper &and Industrial Converted Products, EMEA, Asia, Australia and/ New Zealand, 2015-2017; Vice President, Global Rigid Paper & Closures 2015; Group Vice President, Global Rigid Paper & Plastics 2013-2015; Vice President, Global Rigid Paper & Closures 2011-2013.2015-2017. Joined Sonoco in 1985. Mr. Coker is thebrother-in-law of John R.J.R. Haley, oneChairman of Sonoco’s directors.Board of Directors.
John M. FlorenceRobert R. Dillard49 39CorporateChief Financial Officer (“CFO”) since June 2022. Previously, Chief Strategy Officer, April-June 2022; Vice President, General CounselCorporate Development, 2018 - March 2022; President of Personal Care Europe and Secretary since November 2016. Previously Corporate Attorney 2015-2016.Vice President of Strategy and Innovation at Domtar Personal Care, a division of Domtar Corporation, 2016-2018. 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.2018.
Rodger D. Fuller62 56Chief Operating Officer since April 2022. Previously, Executive Vice President, Global Industrial and Consumer, 2020-2022; 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, since 2017. Previously Group2017-2018. Joined Sonoco in 1985.
John M. Florence, Jr.

45 
General Counsel, Secretary, Vice President Paper & Industrialand General Manager Converted Products Americas 2015-2017;North America since June 2022. Previously, Vice President, Global Primary Materials Group 2015; GroupGeneral Counsel, Human Resources and Secretary, 2019-2022. Corporate Vice President, Paper & Industrial Converting N.A. 2013-2015; Vice General Counsel and Secretary, 2016-2019; Joined Sonoco in 2015.

Sean Cairns53 President, Global Rigid PlasticsPaper Packaging since April 2022. Previously, Vice President and General Manager Rigid Paper Products Europe, 2008-2022. Joined Sonoco in 2008.
Russell K. Grissett54 President, Global Flexibles Division since April 2022. Previously, Vice President and General Manager Global Flexibles, 2019-2022; Vice President and General Manager Global Protective Solutions, 2017-2019. Joined Sonoco in 1993.
James A. Harrell III62 President, Global Industrial Paper Packaging since April 2022. Previously, Vice President, Industrial Americas, Asia and Conitex, 2020-2022; Vice President Tubes & Corporate Customers 2011-2013.Cores, US and Canada, 2016-2020. Joined Sonoco in 1985.
Kevin P. MahoneyErnest D. Haynes III51 62Senior Vice President, Corporate PlanningMetal Packaging since February 2011. 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 and 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. Previously Vice President, Finance and Investor Relations & Treasurer for Esterline Technologies Corporation, 2015-2017; Finance Director, Customer Service Aircraft Systems for United Technologies, 2012-2015. Joined Sonoco in 2017.
James A. Harrell III56Vice President, Tubes & Cores, U.S. and Canada since December 2015. Previously Vice President, Global Tubes & Cores Operations February-December 2015; Vice President, Tubes & Cores N.A. 2012-2015; Vice President, 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.April 2022. Previously, Vice President, Rigid Paper N.A. 2011-2013;Containers, North America, 2021-2022; Division Vice President &and General Manager Sonoco Recycling 2009-2011.of Rigid Paper and Containers, North America, 2018-2021. Division Vice President and General Manager of Tubes and Cores, U.S. and Canada, 2015-2018. Joined Sonoco in 2006.1997.
Jeffrey S. Tomaszewski55 President, Diversified Businesses since April 2022. Previously, Vice President, North America Consumer and Global Rigid Paper and Closures, 2020-2022; 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, North America and Display and Packaging, 2018-2019; Division Vice President, Rigid Paper Containers, North America, 2015-2018. Joined Sonoco in 2002.
Lisa K. Weeks56 Vice President, Investor Relations and Corporate Affairs, since April 2022. Previously Senior Vice President, Head of Investor Relations and Chief Strategy Officer at Benchmark Electronics, Inc. 2020-2022. Vice President, Strategy and Investor Relations at Benchmark Electronics, Inc., 2012-2020. Joined Sonoco in 2022.
Adam Wood

55 49Vice President Global Paper Products-Europe since April 2022. Previously Vice President, Paper &and Industrial Converted Products, EMEA, Asia, Australia and New Zealand, since December 2015. Previously Vice President, Global Tubes & Cores February-December 2015; Vice President, Industrial Europe 2014-2015; Division VP/GM, Industrial Europe 2011-2014.2015-2022. Joined Sonoco in 2003.


8 FORM 10-K SONOCO 20172023 ANNUAL REPORT    |    FORM 10-K



Item 1A. Risk factors

Factors

We are subject to risks and uncertainties that could adversely affect our business, reputation, 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,SEC, 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,SEC, 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 310 owned and leased facilities in 33 countries as of December 31, 2023. In 2023, approximately 29% of consolidated sales came from operations outside of the United States, and we may 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, which can vary substantially by country and by region, can 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;
•the risk that 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, or other liabilities related to non-compliance, damage to our reputation, unanticipated operational restrictions or other consequences as a result of our 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, 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 United States;
•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 conflicts between Russia and Ukraine and in Israel and Gaza), catastrophic events, acts of terrorism, and widespread outbreaks of infectious diseases (such as COVID-19).
As discussed further elsewhere in this Annual Report on Form 10-K and in our other filings with the SEC, some of these risks have already affected us.
Global economic conditions and disruptions in the credit markets could adversely affect our business, financial condition, or results of operations.
We have extensive international operations and are dependent on customers and suppliers that operate in local economies around the world. In addition, we access global credit markets as part of our capital allocation strategy. Adverse global macroeconomic conditions could adversely 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 adversely impact demand for our products. For example, as a result of the COVID-19 pandemic, we previously experienced adverse effects on customer stability and demand for our products. Potential effects on us include financial instability, inability to obtain credit to finance operations, and insolvency.


9 FORM 10-K SONOCO 2023 ANNUAL REPORT

We are subject to governmental export and import control laws, economic sanctions, and other regulations in certain jurisdictions where we do business that could subject us to liability or impair our ability to compete in these markets.
Certain 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, the possible loss of export or import privileges, and reputational harm. In addition, if our distributors fail to obtain appropriate import, export or re-export licenses or permits, we may also be materially and adversely affected through reputational harm and penalties. Obtaining the necessary import, export, and re-export licenses 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 otherwise sanctioned countries, governments and persons. Despite our efforts to ensure compliance with applicable law, we cannot guarantee that a violation of export control laws or economic sanctions will not occur. A prohibited shipment could have adverse 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 adversely affect our business. For example, in 2022, following Russia’s invasion of Ukraine and the imposition of economic sanctions against Russia by the United States and other countries, we finalized the exit from our operations in Russia, which consisted of two small manufacturing operations, and incurred asset impairment charges as a result of our exit. We also ceased sourcing from Russian suppliers. Export control laws and economic sanctions may also have an indirect adverse effect on our business. For example, some of our customers previously exported their products to Russia, and any reduction in demand for such customers’ products could in turn reduce demand for our products. Economic sanctions against Russia have also contributed to adverse changes in the global price and availability of natural gas, raw materials and finished goods, which could reduce our sales and earnings or otherwise have an adverse effect on our operations. Any future additional export controls or sanctions imposed by the United States, the United Kingdom, the European Union, or other countries could further exacerbate these effects.
Changes in United States trade policies and global regulations, as well as the overall uncertainty surrounding international trade relations, could materially and adversely affect our consolidated financial condition and results of operations.
We continue to face uncertainty with respect to trade relations between the United States and many of its trading partners. For example, in March 2018, the United States announced new tariffs on imported steel and aluminum products. Other international trade actions and initiatives have also been announced over the past few years, notably the imposition by the United States 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. Additional measures targeting U.S. trade with China, including the expansion of U.S. export controls targeting China and Chinese companies, could potentially have an adverse effect on our consolidated financial condition and results of operations.
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 United States.
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 to successfully 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 adverse impacts of changing U.S. and foreign trade policies could materially and adversely impact our consolidated financial condition and results of operations.
Currency exchange rate fluctuations may adversely affect our results of operations 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 results of operations. 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 net sales, costs, net income, 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, our hedging activities do not completely insulate us from foreign currency fluctuations and also expose us to counterparty risk of nonperformance.
10 FORM 10-K SONOCO 2023 ANNUAL REPORT

Changes in domestic and global economic conditions may have a negativean adverse impact on our business operations and financial results.

Although our business is diversified across various markets and customers, because

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,inflationary pressures, supply chain disruptions, currency fluctuations, geopolitical uncertainty, military conflicts, increased interest rates and recession risks, as well as the difficultiesrising debt levels of the United States and other countries, in dealing with their rising debt levels, and currency fluctuations are likely to continue to put pressure on the economy, and on us. In addition,For example, during 2022 and 2023, the U.S. Federal Reserve raised its benchmark interest rate to combat inflation. Although the Federal Reserve has indicated that it expects to reduce interest rates have been at historic lows for a numberin 2024, high interest rates may persist and may, among other things, reduce the availability and increase the costs of yearsobtaining new variable rate debt and the likelihoodrefinancing existing indebtedness, and adversely impact our financial condition and results of their beginning a return to historic norms appears to be increasing as the general economy improves and unemployment declines. Such an increaseoperations. Additionally, such increases in rates would put additional pressure on consumers and the economy in general.general, which can in turn lead to reduced consumption of products incorporating our packaging. Bank failures or issues in the broader U.S. or global financial systems may have an impact on the broader capital markets and, in turn, our ability to access those markets. As evidenced in recent years, changes in fiscal and monetary policies and tightening of credit availability and/orand financial difficulties, leading to declines in consumer and business confidence and spending, may adversely affect us, or 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 and adverse effect on us.

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 298 facilities in 33 countries. In 2017, approximately 35%results 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;

•  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 relatedprospects.

Risks 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

Manufacturing Operations

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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, paperboard, steel, aluminum and resin.plastic resins. 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, war, political unrest and instability (such as the ongoing conflicts between Russia and Ukraine and in Israel and Gaza), 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/orand to 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

In addition, 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. Any current and future government sanctions or an escalation or widening of the Russia-Ukraine conflict could contribute to further increased volatility of energy and commodity prices, cause further supply chain disruptions, and further adversely affect the cost and availability of energy supplies and other inputs in our European operations. Any energy shortages could impair our ability to continue our operations at such sites at normal levels or at acceptable cost levels, and therefore adversely affect our business operations, financial condition, and results of operations. 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 and 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/orand 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 a 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, negativelyadversely impact our customer relationships, and have a material and 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 effect on our financial condition and results of operations.
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 be able to identify suitable acquisition candidates, which could limit our potential for growth.

We have made numerous acquisitions in recent years,meet anticipated implementation timetables or stay within budgeted costs, and expect to actively seek new acquisitions that management believes will provide meaningful opportunities for growth. However, we may not fully achieve expected results. These initiatives could also adversely impact customer or employee 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 ableno assurance that we will realize these benefits. If, for any reason, the benefits we realize are substantially

11 FORM 10-K SONOCO 2023 ANNUAL REPORT

less than our estimates, or the implementation of these growth initiatives and business strategies adversely affects our operations, costs significantly more or takes significantly longer to identify suitable acquisition candidateseffectuate than we expect, or complete acquisitions on acceptable termsif our assumptions prove inaccurate, our results of operations may be materially and conditions. Other companiesadversely affected.
Material disruptions in our industries have similar investmentbusiness operations could adversely 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 adversely impact production and acquisition strategiesour financial results. Such a disruption could occur as a result of any number of events including but not limited to: political events, trade and other international disputes, war, terrorism, industrial accidents, 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, as well as disruptions related to ours,localized or widespread public health events (including epidemics or pandemics, such as the COVID-19 pandemic). These types of disruptions could materially and competition for acquisitionsadversely affect our earnings to varying degrees depending upon the facility, the duration of the disruption, and our ability to shift business to another facility or find alternative sources of materials or energy. Any losses due to these events may intensify. If we are unable to identify acquisition candidates that meetnot be covered by our criteria, our potential for growthexisting insurance policies or may be restricted.

subject to certain deductibles.
Risks Related to Acquisitions, Divestitures and Joint Ventures

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We may encounter difficulties in integratingfail to realize expected benefits from our acquisitions, which could have an adverse impacteffect on our financial condition and operating results.

As noted in the risk factor above, weresults of operations.

We have invested a substantial amount of capital in acquisitions, joint ventures, and strategic investments, including our acquisition of the remaining equity interest in RTS Packaging and the acquisitions of the Chattanooga Mill in September 2023 and Metal Packaging in January 2022, 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. AcquiredAs 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 and adverse effect on our financial condition and operating results.results of operations. 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:

•substantial costs and indebtedness 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 anticipate delays or restrictions resulting from regulatory review or required approvals;
•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

Even if we are successful in integrating our acquisitions, will improve our competitiveness and profitability, no assurance can be given thatsuch acquisitions willmay not ultimately be successful or accretive to earnings.earnings, and we may not realize the expected benefits from such transactions within the anticipated time frame, or at all. 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.

We may not be able to identify suitable acquisition candidates, or complete acquisitions on our desired timing or terms, which could limit our potential for growth.
We have made numerous acquisitions in recent years and are actively considering new acquisitions that provide meaningful opportunities for growth. However, we may not be able to identify suitable acquisition candidates or complete acquisitions on acceptable timing, 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. 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, including as a result of an inability to satisfy related closing conditions or obtain necessary government consents, or the expiration or termination of applicable regulatory waiting periods. For example, our ability to close our acquisition of the remaining equity interest in RTS Packaging and the acquisition of the Chattanooga Mill, which we completed in September 2023, was previously delayed due to regulatory review of the transaction. In addition, 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. Any of these results could have a material and adverse effect on our business, results of operations, financial condition, and prospects.

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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 toto: 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 any 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 or non-indemnified liabilities, if they materialize, could have a material and adverse effect on our business, financial condition, and results of operations.

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

We are continuously seeking the most cost-effective means and structure to serve our customers and to respond to changes in our markets. Accordingly, fromfacilities, assets or businesses.

From time to time, we have closed higher-cost facilities, implemented reductions in force, 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 2023 we divested our U.S. and Mexico BulkSak businesses, sold our timberland properties, and closed several high-cost operations. In addition, in 2024, we permanently closed our uncoated paperboard mill operations in Sumner, Washington as part of our strategy to rationalize our mill network and lower operating costs. As a result, restructuring and divestiture costs have been, and are expected to continue 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, 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 own or our counterparties’ failure to satisfy pre-closing conditions or 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 be subject to or 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 adversely 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.

results of operations.

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. TheWe also face competition that may be larger, more diversified, or better funded than us. These competitive advantages may enable our competition to adapt more quickly to changing customer or consumer preferences; changes brought about by public health events, supply chain constraints, inflationary pressures, currency fluctuations, geopolitical uncertainty, and increased interest rates; or the introduction of new products, technologies, and equipment, including advanced technologies such as artificial intelligence (“AI”). For example, growing use of AI by our competitors could disrupt our business model and lower the barriers to entry in the markets we serve. If our competitors invest in, develop and utilize AI tools more effectively than us to innovate and introduce go-to-market solutions more rapidly and compete more effectively on quality and price, we could lose business and the profitability of our business could be reduced. Any such impact, as well as the loss of business from our larger customers, customer changes to alternative forms of packaging, or renewal of business with less favorable terms, cancould have a significant and adverse effect on our operating results.

results of operations.

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,
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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, increase our costs, and operating results.

adversely affect our results of operations.

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

Each of our segments has large customers, and the loss of any of these could have a significant and 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 on Customers.”

Challenges to, or the loss of, our intellectual property rights could have an adverse effect 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 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 United States 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 United States. The use of our intellectual property by someone else without our authorization could reduce or eliminate certain 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 costs 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 and 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 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.

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. 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 or imposes restrictions on our business operations, it could have a material and adverse effect on our business, financial condition, and results of operations.
We and the industries in which we operate are at times 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. 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 have adopted risk management and compliance programs, the global and diverse nature of our operations means that legal and compliance risks will continue to exist and that legal proceedings and other contingencies, the outcome of which cannot be predicted with certainty, will arise from time to time, which could adversely affect our business, results of operations, and financial condition.
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Risks Related to Climate Change and Environmental, Health and Safety, and Corporate Social Responsibility Laws and Regulations
Adverse weather and other effects of climate change may result in lower sales and higher costs. In addition, climate-related regulations may add cost and complexity to our operations.
We manufacture packaging products for foods, as well as products used in construction and industrial manufacturing. Adverse or varying weather conditions associated with climate change have impacted and could in the future impact crop yields and harvest timing, which in turn could impact the level and timing of demand for our containers. In addition, poor or extreme weather conditions have temporarily impacted and could in the future 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, have and could in the future result in lost production, supply chain disruptions, and increased material costs. Such disruptions could have, and have in the past had, a material and adverse effect on our results of operations.
There has been increased focus from investors, customers, the general public, and U.S. and foreign governmental and nongovernmental authorities on climate change and GHG emissions. The increasing concern over climate change has resulted, and will continue to result, in transition risks such as shifting customer preferences in favor of more environmentally friendly products, which we may be unable to address, and increased regulation intended to reduce overall 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 United States, 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 United States, several states where we operate manufacturing facilities have enacted or are in the process of enacting regulations limiting GHG emissions 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 United States 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 United States or internationally, compliance with such regulations could significantly increase costs and add complexity to our operations, which could have a material and adverse effect on our business, results of operations, financial condition, and prospects.
Any failure in our procedures to monitor climate related regulatory and policy changes in the jurisdictions in which we operate or in our processes and tools to track our GHG emissions and assess both operational and financial impacts of climate-related regulations, and any failure to comply with any such regulations and policies, could subject us to additional costs and penalties and harm to our reputation. We could also face increased costs related to defending and resolving legal claims and other litigation related to climate change and the alleged impact of our operations on climate change.
Expectations relating to ESG issues and related reporting obligations could expose us to potential liabilities, increased costs, reputational harm, and other adverse effects on our business.
We have voluntarily established and publicly disclosed our GHG reduction targets and other environmental, social and governance (“ESG”) goals and sustainability targets. These targets could prove more costly or difficult to achieve than we expect, and we may be unable to achieve these targets at acceptable cost or at all. If we are unable to meet these targets and goals on our projected timelines or at all, whether as a result of cost, operational or technological limitations, or if such targets or our progress against them are not perceived to be sufficiently robust, our reputation, as well as our relationships with investors, customers and other stakeholders, could be harmed, which could in turn adversely affect our business, results of operations and prospects. In addition, not all of our competitors may seek to establish climate or other ESG targets and goals, or may not establish targets and goals that are comparable to ours, which could result in our competitors achieving competitive advantages through lower supply chain or operating costs, which could adversely affect our business, results of operations, financial condition and prospects.
In addition, ESG matters have recently been the subject of increased regulatory and stakeholder attention, and we expect to need to be prepared to contend with overlapping, yet distinct, climate-related disclosure requirements in multiple jurisdictions. For instance, it is anticipated that the SEC will issue a climate disclosure rule in 2024, which, if implemented as proposed, would significantly expand climate-related disclosure obligations. The State of California has enacted legislation that will require large U.S. companies doing business in California to make broad-based climate-related disclosures starting as early as 2026, and other states are also considering new climate change disclosure requirements. In the European Union, the Corporate Sustainability Reporting Directive, which became effective in 2023, applies to both E.U. and non-E.U. in-scope entities and would require them to provide expansive disclosures on various sustainability topics. We are assessing our obligations under these new laws and expect that compliance with these and other future reporting obligations could require substantial cost and effort. Collecting, measuring, and reporting ESG information and metrics can be costly, difficult, and time-consuming, are subject to evolving reporting standards, and can present numerous operational, reputational, financial, legal, and other risks. Globally, a lack of harmonization in relation to ESG legal and regulatory reform across the jurisdictions in which we operate may increase the cost and difficulty of implementing and complying with rapidly developing ESG reporting standards and requirements, and any failure to comply with such legislation and regulations could result in fines to us and could adversely affect our business, financial condition, results of operations, and cash flows.
At the same time, compliance with ESG-related rules and efforts to meet shareholder expectations on ESG matters may place strain on our employees, systems, and resources. Moreover, increasingly, different stakeholder groups have divergent views on sustainability and ESG matters, which increases the risk that any action or lack thereof with respect to sustainability or ESG matters will be perceived negatively by at least some stakeholders and adversely impact our reputation and business. Anti-ESG sentiment has gained some momentum across the United States, with several states having enacted or proposed “anti-ESG” policies or legislation. If we do not successfully manage ESG-related expectations across stakeholders, it could erode stakeholder trust, impact our reputation, and adversely affect our business, financial condition, results of operations and cash flows.
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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 operating results.

our results of operations.

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 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, 2017,2023, approximately $20.3$7.3 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 wouldand could have a material and adverse effect on our operating results of operations and financial position.

condition.

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 negativelyadversely impact customers’ demand for our products as they comply with such changes and/orand 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 negativelyadversely impact demand for consumer packaged goods and, consequently, for our products, including changes in consumer preferences driven by various health-related concerns and perceptions.

Disclosure

In addition, 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 reputationreputational risk with our customers and other stakeholders if we are unable to 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 operations of one or more of our operating units. However,For example, we may be subject to future policy changes and regulations that discourage the use of single-use plastics 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.

Product liability claims

Further, future compliance with existing and other legal proceedings could adversely affectnew laws and requirements has the potential to disrupt our business operations and financial performance.

We produce productsmay require significant expenditures, 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 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 maintainexisting reserves for specific matters 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.

12SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

Changes in pension plan assets or liabilities may reduce operating results and shareholders’ equity.

We sponsor various defined benefit plans worldwide, 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 of the plans) significantly affects the net periodic benefitfuture 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 have a negative impact on our results of operations and cash flows. As of December 31, 2017, these plans hold a total of approximately $1.5 billion in assets funding 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 meet our assumptions, or discount rates decline, the underfunding of the plans may increase and we may have to contribute additional fundsincrease our reserves. We could also incur substantial liabilities, including fines or sanctions, enforcement actions, natural resource damages claims, cleanup and closure costs, and third-party claims for property damage and personal injury under environmental and other laws. We have insurance coverage, subject to applicable deductibles or retentions, policy limits and other conditions, for certain environmental matters; however, we may not be successful with respect to any claim regarding these plans,insurance or indemnification rights and, if we are successful, any amounts paid pursuant to the insurance or indemnification rights may not be sufficient to cover all our pension expense may increase, which could adversely affect operating resultscosts and shareholders’ equity.

expenses.

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, 2023, we had $2.3 billion of fixed-rate debt outstanding. We also operate a $350$500 million commercial paper program, supported by a $500$900 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 negativean adverse 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 effect 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 we issued $1.2 billion aggregate principal amount of unsecured senior notes in connection with our acquisition of Metal Packaging. 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
16 FORM 10-K SONOCO 2023 ANNUAL REPORT

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;

•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 our term loan facility, under which we had outstanding indebtedness totaling $572 million as of December 31, 2023. Fluctuations in interest rates can increase borrowing costs and, depending on the magnitude of variable-rate borrowings outstanding, could potentially have a material and adverse effect on our business. Other variable-rate borrowings at December 31, 2023 were approximately $96 million.
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, 2023, scheduled debt maturities in 2024 totaled $47 million.

Risks Related to Information Technology and shareholders’ equity.

Fluctuations in currency exchange rates can cause 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 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 process of upgradingnatural disaster, hardware 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 and adverse effect on our business, financial position and results of operations. Although we attempt to mitigate these risks by employing a number of administrative, physical, 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.

Weprocedures 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 target. Accordingly, we may be unable to anticipate these techniques or implement adequate preventative measures. It is possible that we may in the 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 may not be able to identify and respond to such an incident in a timely manner.

A security breach of customer, employee, supplier or company information may have a significant amountmaterial and adverse effect on our business, financial condition and results of goodwilloperations.
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 personal data and information is subject to the risk of intrusion, tampering and theft. Although we develop and maintain systems designed 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 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 intangible assetsthird parties with whom we conduct business. Additionally, we provide confidential, proprietary and personal data and information to third parties when it is necessary to pursue business objectives and there is a write downrisk that the confidentiality of personal data and information held by third parties may be compromised. Increasing use of AI may increase these risks.
The SEC recently adopted rules mandating disclosure regarding cybersecurity risk management and governance, as well as material cybersecurity incidents. In addition to the adoption of the new cybersecurity disclosure rules by the SEC, we continue to see increased regulation of data privacy and security and the adoption of more stringent consumer privacy laws, as well as subject matter specific state laws and national laws regulating the collection and use of data, and security and data breach obligations – including the passage and expansion of data protection laws around the world. It is likely that new laws and regulations will continue to be adopted in the United States and
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internationally, and existing laws and regulations may be interpreted in new ways that would negatively impact operating resultsaffect our business. Although we take reasonable efforts to comply with all applicable laws and shareholders’ equity.

At December 31, 2017,regulations, the carrying valueuncertainty and changes in the requirements of multiple jurisdictions may increase the cost of compliance, reduce demand for our goodwillservices, restrict our ability to offer services in certain locations, 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. jeopardize business transactions across borders.

As a result of this testing,potential cyber threats and existing and new data protection requirements, we have incurred significant 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. We expect to continue to incur such costs and may face increased costs and be required to expend substantial resources in the past recognized goodwill impairment charges,event of an actual or perceived security breach or incident and we have identified two reporting units that currently are at risk of ato comply with the new SEC cybersecurity disclosure rules. 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 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 data protection regulators and result in significant future impairment charge if actual results fall short of expectations. Future changes in thepenalties, and increase our cost of capital, expected cash flows, changes in ourdoing business, strategy, and external market conditions, among other factors, could require us to record an impairment charge for goodwill,all of which could lead to decreased assets and reduced net income. If a significant write down were required, the charge could have a material and adverse effectimpact on our operatingbusiness, 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 results of operations and shareholders’ equity.

We sponsor various defined benefit plans worldwide and had an aggregate PBO for these plans of approximately $436 million as of December 31, 2023. 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 adverse impact on our results of operations and cash flows. As of December 31, 2023, these plans held a total of approximately $309 million in assets consisting primarily of fixed income securities and mutual funds, funding a portion of the PBOs 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 results of operations and shareholders’ equity.

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.

If we are unable to attract, motivate and retain qualified personnel, or if we experience excessive turnover, we may experience declining sales, manufacturing delays or other inefficiencies, increased recruiting, training and relocation costs and other difficulties, and our results of operations, cash flows and financial condition may be adversely impacted.

Changes in U.S. generally accepted accounting principles (“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, defined benefit plans, share-based compensation, 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 and 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 adversely impact our results of operations and shareholders’ equity.
At December 31, 2023, the carrying value of our goodwill and intangible assets was approximately $2.7 billion. We are required to evaluate our goodwill for impairment 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 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 and adverse effect on our results of operations and shareholders’ equity.
Full realization of our deferred tax assets may be affected by a number of factors.

We have deferred tax assets, including U.S.United States 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
18 FORM 10-K SONOCO 2023 ANNUAL REPORT

realize these assets over an extended period. However, if we were unable to generate sufficient future taxable income in the U.S.United States 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 and 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. Tax laws and regulations are continuously evolving with corporate tax reform, base-erosion efforts, global minimum tax, and increased transparency continuing to be high priorities in many tax jurisdictions in which we operate. 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.

Although the timing and methods of implementation may vary, many countries have implemented, or are in the process of implementing, legislation or practices inspired by the base erosion and profit shifting project undertaken by the Organization for Economic Co-operation and Development (“OECD”). In December 2021, the OECD issued its guidance on the Global Anti-Base Erosion (“GloBE”) rules with the purpose of requiring certain multinational companies to pay a minimum level tax on the income generated in each of the jurisdictions in which they operate. In December 2022, the European Council attained a consensus on Pillar Two of the GloBE rules to implement the 15% global minimum tax, and many EU and G20 countries have specified their plan to adhere to some or all of the OECD guidelines. As of December 31, 2023, among the jurisdictions where the Company operates, several have enacted legislation adopting the Pillar Two Rules effective as early as 2024. We will continue to evaluate the impact of these tax law changes on our effective tax rate and financial position. Further, the increased scrutiny on international tax and continuous changes to countries’ tax legislation may also affect the policies and decisions of tax authorities with respect to certain income tax and transfer pricing positions taken by the Company in prior or future periods. We continue to monitor new tax legislation or other developments since significant changes in tax legislation, or in the interpretation of existing legislation, could materially and adversely affect our financial condition and operating results.
In the United States, the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”), which was signed into law on August 16, 2022, includes a number of provisions that may impact us in the future, including a 1% excise tax on share repurchases. 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.
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-

14SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

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 and 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 and 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 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 as of December 31, 2023, we have over 160had approximately 190 subsidiaries and joint ventures in 33 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 and adverse effect on our operations, investor confidence in our business and the trading prices of our securities.

Several

19 FORM 10-K SONOCO 2023 ANNUAL REPORT

Our disclosure controls and procedures and internal controls may not prevent or detect all errors or acts of fraud.
We designed our operationsdisclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are conductedmet. 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. Additionally, controls can be circumvented by joint ventures that we cannot operate solely for our benefit.

Severalthe individual acts of our operations are conducted through joint ventures. In joint ventures, we share ownership and, in some instances, managementpersons, by collusion of a company with onetwo or more parties who maypeople or may not haveby an unauthorized override of the same goals, strategies, priorities or resources as we do. In general, joint ventures are intended to be operated forcontrols. Accordingly, because of 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

inherent limitations 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 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 legal 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 lossescontrol system, misstatements due to these eventserror or fraud may occur and not be covered by our existing insurance policies or may be subject to certain deductibles.

detected.

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 1C. Cybersecurity
Risk management and strategy.
The Company’s approach to risk management is designed to identify, assess, prioritize, and manage significant risk exposures that could affect the Company’s ability to execute its corporate strategy and fulfill its business objectives. The Company manages enterprise risk through its Risk Management Committee (“RMC”) chaired by the Company’s Vice President of Compliance, Risk and Audit with direct oversight from the Company’s General Counsel. The RMC, which is made up of senior leadership across a variety of business functions, defines the Company’s enterprise risk framework based upon analysis of industry and peer benchmarking as well as company-specific data analysis.
As a component of the Company’s enterprise risk management program, the Company’s cybersecurity risk management program outlines the Company’s cybersecurity risk management practices and capabilities, including the division of responsibilities for reviewing the Company’s cybersecurity risk exposure and risk tolerance, tracking emerging information risks, and ensuring proper escalation of certain key risks for periodic review by the Board and its committees.
Cybersecurity risk is evaluated within the population of all enterprise risks in the framework and is included in assessments overseen by the RMC that identify the risks of highest priority to the Company. For these highest priority risks, including cybersecurity risks, the RMC designates risk owners, sets common reporting processes and monitors risk mitigation and treatment strategies to support business continuity.
The Company’s cybersecurity risk management program leverages the National Institute of Standards and Technology Cybersecurity Framework for identifying, assessing, and managing material risks from cybersecurity threats. This approach combines prevention and detection techniques, informed by internal and external sources, to identify and analyze potential threat activities. When a threat is identified, a cyber incident response plan outlines the Company’s procedures for containing, remediating, and recovering from the cybersecurity incident. Cybersecurity tenets are also incorporated into the Company’s technology policies.
The Company’s cybersecurity risk management program focuses on vulnerability management, access management, and user awareness training. Among other things, the Company implements scheduled patching and system updates, proactively scans for vulnerabilities, and engages qualified third-party experts to assess the Company’s information technology infrastructure and identify vulnerabilities and opportunities for continued focus and improvement. When vulnerabilities are identified, the Company’s information technology (“IT”) management team receives reports that assess each vulnerability and track progress in remediating that vulnerability. The IT management team also collaborates with supply chain management and the Company’s third party risk management program to onboard and monitor key third-party service providers to address the potential risk of cybersecurity threats through the use of such third parties. Annual cybersecurity training is mandatory for all users with access to the Company’s IT systems, and the Company conducts monthly tests to promote phishing awareness. In addition to these prevention methods, the Company seeks to detect potential threats through external intelligence and monitoring solutions. External commercial or governmental agencies are also engaged to assess potential threat activity relevant to the Company. The Company also monitors server and endpoint devices across the organization to detect signs of a cyberattack.
The Company has implemented and maintains an information security incident response plan (“IR Plan”), which includes processes to assess, escalate, contain, investigate, and remediate cybersecurity incidents. Upon notification of a potential cybersecurity threat, management defines the threat based on its nature as an information security event, alert, incident, or breach, and all cybersecurity incidents are categorized by level of severity based on the impact of the incident to the Company’s operations. A technical incident response team is responsible for technical response activities, including information gathering and forensic analysis, containment, and remediation efforts. The Company’s Crisis Management Team drives the Company’s enterprise-level crisis response process, leads decisions around response strategies, coordinates resources required to execute such strategies, and oversees all cybersecurity incidents categorized as Critical and High.
Although the Company did not experience a material cybersecurity incident during the year ended December 31, 2023, the scope and impact of any future incident cannot be predicted. See “Item 1A. Risk Factors – Risks Related to Information Technology and Cybersecurity” for more information on the Company’s cybersecurity-related risks.
Governance.
The Company’s day-to-day management of cybersecurity risks is led by the Chief Information Security Officer (“CISO”) with direct oversight from the Chief Information Officer (“CIO”). The Company’s IR Plan includes a defined escalation matrix for critical or high severity information security events involving notifications to the CISO and CIO, who further escalate critical or high severity events to the Company’s Crisis Management Team, which consists of senior management from IT, including the CIO and CISO, Human Resources, Risk and Internal Audit, Marketing and Communications, Legal and Finance. The Crisis Management Team further elevates sufficiently critical and high severity events to the Company’s Cyber Incident Review Committee (“CIRC”), which consists of the CIO, Chief Financial Officer, Chief Accounting Officer, VP of Investor Relations, VP of Compliance, Risk and Audit, and General Counsel, or their delegates. Additional senior management from relevant business units are added to the CIRC as needed based on the nature of identified cybersecurity incidents. The CIRC preliminarily evaluates whether an incident is material and provides a proposal to the CEO and CFO, who work in consultation with the committee to make a final determination of materiality. Such determination is communicated to the Audit Committee of the Board.
The Company’s Crisis Management Team has relevant expertise and experience to assess and remediate cyber threats. The CIO has over 17 years of experience in information technology and security, and the CISO has 31 years of information technology experience and 11 years of information security experience.
20 FORM 10-K SONOCO 2023 ANNUAL REPORT

As part of its broader oversight activities, the Board oversees risks from information security threats and other risks identified by the RMC, both directly and by way of delegation to the Audit Committee. As reflected in its charter, the Audit Committee oversees and specifically discusses the guidelines and policies by which the Company assesses and manages its cybersecurity risk exposures, as well as the steps management has taken to monitor and control such exposures. The Audit Committee also oversees the Company’s internal control over financial reporting, including with respect to financial reporting-related information systems. In addition to any communications of specifically identified cybersecurity events, the Audit Committee receives and discusses quarterly updates on cybersecurity activities, including review of annual external assessment results, training compliance and discussion of cybersecurity risks and resolutions, and is responsible for elevating significant matters to the full Board as events arise. The Board receives an annual update and provides feedback on the Company’s cybersecurity governance processes, risk management plan, and any significant activities related thereto, and also reviews risk management practices in the course of its review of the Company’s corporate strategy, business plans, Board committee reports, and other presentations. In addition to the ordinary-course Board and Audit Committee reporting and oversight described above, the Company also maintains disclosure controls and procedures designed for prompt reporting to the Board and timely public disclosure, as appropriate, of material events covered by our risk management framework, including information security risks.
Item 2. Properties

The Company’s corporate offices are owned and operated in Hartsville, South Carolina. There are 90 As of December 31, 2023, there were a total of approximately 310 owned and 60 leased facilities used by operationsthe Company in 33 countries around the Paper and Industrial Converted Products segment, 34 owned and 46 leasedworld, including approximately 80 facilities used by operations in the Consumer Packaging segment, 7 owned and 17 leased facilities used by operations190 in the Display andIndustrial Paper Packaging segment, and 10 owned and 26 leased40 in the All Other group of businesses. The majority of these facilities used by the Protective Solutions segment. Europe, theare 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)(“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, 2017,2023, cannot be determined.

As of December 31, 20172023 and 2016,2022, the Company had accrued $20.3accrued $7.3 million and $24.5$7.3 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 17 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 other legal proceedingsmatters is provided in Note 14 Note 17 to thethe Consolidated Financial Statements of this Annual Report on Form10-K.

Item 4. Mine safety disclosures

Safety Disclosures

Not applicable.


21 FORM 10-K SONOCO 2023 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, 2017,2023, there were approximately 64,000105,000 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 highultimate determination of whether to pay dividends is within the sole discretion of the Board and low sales pricesis based on a variety of factors, the Company currently plans to continue paying dividends consistent with historical practice as earnings and the Company's liquidity permit. Dividends per common share were $2.02 in 2023, $1.92 in 2022 and $1.80 in 2021. On February 14, 2024, the Company declared a regular quarterly dividend of $0.51 per common share payable on March 8, 2024, to shareholders of record on February 28, 2024.

Graph.jpg



December 31,201820192020202120222023
Sonoco Products Company$100.00 $119.52 $118.61 $119.23 $129.15 $123.15 
S&P 500$100.00 $131.49 $155.68 $200.37 $164.08 $207.21 
Dow Jones US Containers & Packaging$100.00 $128.59 $155.76 $172.84 $142.07 $152.91 
S&P 1500 Materials$100.00 $123.88 $148.16 $188.89 $168.52 $191.27 


22 FORM 10-K SONOCO 2023 ANNUAL REPORT



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
Programs
(d) Maximum
Number or Approximate Dollar Value of Shares
that May Yet be
Purchased under the
Plans or Programs1
10/02/23 - 11/05/23—$——$137,971,853 
11/06/23 - 12/03/23—$——$137,971,853 
12/04/23 - 12/31/23—$——$137,971,853 
Total—$——$137,971,853 

In April 2021, the Board authorized the repurchase of the Company’s common stock in an aggregate amount of up to $350.0 million (the “Stock Repurchase Program”). The Stock Repurchase Program was announced on May 4, 2021 and has no expiration date. During the three months ended December 31, 2023, no shares were repurchased under the Stock Repurchase Program and no other Company stock repurchase plans or programs were outstanding, expired, or terminated. As of December 31, 2023, a total of approximately $138.0 million remained available under the Stock Repurchase Program for each full quarterly period within the last two years as reported on the New York Stock Exchange, as well as cash dividends declared per common share:

future share repurchases.
    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

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

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
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.
2On February 10, 2016, the Board of Directors authorized the repurchase of up to 5,000,000 shares of the Company’s common stock. No shares were repurchased during 2017. During 2016, a total of 2,030,389 shares were repurchased under this authorization at a cost of $100 million. Accordingly, at December 31, 2017, a total of 2,969,611 shares remain available for repurchase under this authorization.

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

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K17

2023.

During the three months ended December 31, 2023, none of the Company’s officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any non-Rule 10b5-1 trading arrangement.

For further information about share repurchases, see Note 18 to the Company’s Consolidated Financial Statements under Item 8 of this Annual Report on Form 10-K.

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 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2022 items and year-to-year comparisons between 2022 and 2021 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, 2022.

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

General overview

Overview

Sonoco is a leadingmulti-billion dollar global designer, developer, and manufacturer of consumer, industriala variety of highly-engineered and protectivesustainable packaging products and providerserving multiple end markets. As of packaging services with 298December 31, 2023, the Company had approximately 310 locations in 33 countries.countries, serving some of the world’s best-known brands in some 85 nations. The Company’s operations are reported in fourCompany's operating and reporting structure consists of two reportable segments, Consumer Packaging Display and Packaging, Paper and Industrial Converted Products, and Protective Solutions.

Generally, the Company serves two broadend-use markets, consumer and industrial, which, period to period, can exhibit different economic characteristics from each other.Paper Packaging, with all remaining businesses reported as All Other. Geographically, in 2023, approximately 65%71% of sales were generated in the United States, 19%14% in Europe, 5% in Asia, 3% in Canada, and 11%7% in other regions.

The Company

Sonoco’s goal is a market-share leader in manyto increase its long-term profitability and return capital to shareholders. Over the past several years, we have simplified our business portfolio around fewer, bigger businesses which has reduced operating complexity and improved agility. We are focused on efficient capital deployment into these larger, core business units to improve economic returns and improve integration effectiveness and speed for acquired strategic assets. In parallel, we have worked on commercial, operational, and supply chain excellence programs to shift the mix of its product lines, particularly in tubes, coresour business towards higher-valued products and composite containers. Competition in mostincrease overall productivity, as well as strategic pricing initiatives to better capture input costs and the value of the Company’s businesses is intense. Demand for the Company’s productsservices we provide.
The Company's primary focus areas in 2023 were to continue to focus on improving returns on promising organic investments and services is primarily driven by the overall levelacquisitions to better manage our business mix, improve profits, improve generation 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 resistant than those that service industrial markets.

Financially, the Company’s objective is to deliver average annual double-digit total returns to shareholders over time. To meet that target, the Company focuses on three major areas: driving profitable sales growth, improving margins and leveraging the Company’s strongoperating cash flow and financial position. Operationally,free cash flow, and operate the business with better efficiency. Another focus area in 2023 was the Company’s goal iscontinued commitment to promote accountability and transparency in its sustainability and corporate responsibility programs.

On September 8, 2023, the Company completed the acquisition of the remaining 65% interest in RTS Packaging from joint venture partner WestRock Company (“WestRock”) and the acquisition of a paper mill in Chattanooga, Tennessee (the “Chattanooga Mill”) from WestRock. These acquisitions further strengthened and expanded the Company’s 100% recycled fiber-based packaging solutions to serve consumer wine, spirits, food, beauty and healthcare markets. On December 1, 2023, the Company completed the acquisition in Brazil of Inapel, significantly expanding the Company’s presence in the flexible packaging services market in Latin America. Both acquisitions build on the Company's strategy of investing in our core businesses. See “Acquisitions and Divestitures—Acquisitions” below for more information.
The Company made other changes in its portfolio in 2023 including the sales of its U.S. and Mexico BulkSak businesses and its S3 business. The Company also sold approximately 55,000 acres of timberland properties as we now produce paper exclusively from recycled fiber and no longer require natural tree fiber for production. In January 2024, the Company entered into a definitive agreement to sell its Protective Solutions business, part of the All Other group of businesses, to Black Diamond Capital Management, LLC. These actions were the result of Sonoco’s continuing evaluation of its business portfolio and were consistent with the Company’s strategic and investment priorities.
23 FORM 10-K SONOCO 2023 ANNUAL REPORT

The Company also continued efforts to improve productivity through focus on operational excellence including the implementation of automation programs and commercial excellence where we are realigning pricing models to value versus legacy cost-based inputs. The results of these efforts reflected positively in the Company's 2023 financial results.
As the Company looks to 2024, we expect year-over-year sales to be the acknowledged leader in high-quality, innovative, value-creating packaging solutions within targeted customer market segments.

Over the next three to four years, the Company aspires to achieve base earnings before interest, taxes, depreciationup modestly and amortization (EBITDA) margins of 16% per year, and increase return on net assets employed to 11% or more, subject to theyear-over-year price/cost 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,negative. We intend to aggressively manage costs and generate positive productivity while navigating global volume uncertainties. Actions taken over the Company believes it will be successful by focusingpast several years have built resiliency into our operating model and are expected to help offset inflation. At the same time, we have invested capital in our core consumer and industrial businesses to position us well for longer term growth and profitability. We remain focused on the following: organic sales growth, including new product developmentexecuting strategic initiatives to simplify our portfolio and expansion in emerging international markets; strategic acquisitions;capture synergies from our recent acquisitions to advance Sonoco through 2024 and margin enhancement through more effective customer relationship management, organizational design, indirect spend management, and improved manufacturing productivity, supply chain and back office support processes.

beyond.

Use ofnon-GAAP financial measures

Non-GAAP Financial Measures

To assess and communicate the financial performance of the Company, SonocoSonoco’s management uses, both internally and externally, certain financial performance measures that are not in conformity with generally accepted accounting principles(“non-GAAP” financial measures).GAAP. Thesenon-GAAP “non-GAAP” financial measures (referred to as “Adjusted”) reflect adjustments to the Company’s net income attributable to the Company (“GAAP operating results adjustedresults”) to removeexclude amounts, including the associated tax effects, relating to restructuring initiatives, to:
•restructuring/asset impairment charges environmental charges, acquisition-related costs, 1;
•acquisition, integration and divestiture-related costs;
•gains or losses from the dispositiondivestiture of businesses excess property insurance recoveries,and other assets;
•losses from the early extinguishment of debt;
•non-operating pension settlement charges, costs;
•amortization expense on acquisition intangibles;
•changes in last-in, first-out (“LIFO”) inventory reserves;
•certain income tax events and adjustments;
•derivative gains/losses;
•other non-operating income and losses; and
•certain 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.”

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 thenon-GAAP “base” performance measures presented herein 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 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.

any.

1 Restructuring and restructuring-related asset impairment charges are a recurring item as Sonoco’sthe Company’s restructuring programs usually require several years to fully implement, and the Company is continually seeking to take actions that could enhance its efficiency. Although recurring, these charges are subject to significant fluctuations from period to period due to the varying levels of restructuring activity and the inherent imprecision in the estimates used to recognize the impairment of assets and the wide variety of costs and taxes associated with severance and termination benefits in the countries in which the restructuring actions occur.

The Company’s management believes the exclusion of the amounts relating to the above-listed items improves the period-to-period comparability and analysis of the underlying financial performance of the business. Non-GAAP figures previously identified by the term “Base” are now identified using the term “Adjusted,” for example, “Adjusted Operating Profit,” “Adjusted Net Income” (referred to as “Adjusted Earnings”), and Adjusted Diluted Earnings Per Share (referred to as “Adjusted EPS”).
In addition to the “Adjusted” results described above, the Company also uses Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA is defined as net income excluding the following: interest expense; interest income; provision for income taxes; depreciation, depletion and amortization expense; non-operating pension costs; net income attributable to noncontrolling interests; restructuring/asset impairment charges; changes in LIFO inventory reserves; gains/losses from the divestiture of businesses and other assets; other income; acquisition, integration and divestiture-related costs; derivative gains/losses; and other non-GAAP adjustments, if any, that may arise from time to time. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by net sales.
The Company’s non-GAAP financial measures are not calculated in accordance with, nor are they an alternative for, measures conforming to GAAP, and they may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles.
The Company presents these non-GAAP financial measures to provide investors with information to evaluate Sonoco’s operating results in a manner similar to how management evaluates business performance. The Company consistently applies its non-GAAP financial 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 plans/forecasts. In addition, these same non-GAAP financial measures are used in determining incentive compensation for the entire management team and in providing earnings guidance to the investing community.
Material limitations associated with the use of such measures include that they do not reflect all period costs included in operating expenses and may not be comparable with similarly named financial measures of other companies. Furthermore, the calculations of these non-GAAP financial measures are based on subjective determinations of management regarding the nature and classification of events and circumstances that the investor may find material and view differently.
To compensate for any limitations in such non-GAAP financial measures, management believes that it is useful in evaluating the Company’s results to review both GAAP information, which includes all of the items impacting financial results, and the related non-GAAP financial measures that exclude certain elements, as described above. Further, Sonoco management does not, nor does it suggest that investors should, consider any non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Whenever reviewing a non-GAAP financial measure, investors are encouraged to review the related reconciliation to understand how it differs from the most directly comparable GAAP measure.
Reconciliations of GAAP to baseNon-GAAP results are presented on pages 22 and 23under “Reconciliations of GAAP to Non-GAAP Financial Measures” below 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 financial 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,assets; restructuring costs and restructuring-related asset impairment charges, acquisition-related costs,charges; acquisition, integration and 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 and 2018 outlook

Despite low growth rates in many of the Company’s served markets and volatile raw material costs, Sonoco reported improved results 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, in 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 relationship of the change in sales prices to the change in costs of materials, energy and freight), manufacturing productivity improvements, and lower management incentives were only partially offset by declines in volume/mix, and higher labor, maintenance and other operating costs. Although these net benefits increased gross profit year over year, changes in the mix of business, as well as higher raw material costs, increased cost of sales disproportionately to sales. As a result, consolidated gross profit margin for 2017 declined to 18.8% compared to 19.6% in 2016.

Current year Net Income Attributable to Sonoco (GAAP earnings) declined $111.1 million, or 38.8%, year over year. The decline was primarily driven by pension settlement charges in 2017 totaling $20.2 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.

24 FORM 10-K SONOCO 20172023 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.

Pension and postretirement benefit expenses for the year were approximately $33.2 million higher in 2017 than 2016, driven primarily by settlement charges related to lump sum payments and purchases of annuities for certain plan participants. The aggregate unfunded position of the Company’s various defined benefit plans decreased from $447.3 million at the end of 2016, to $355.2 million at the end of 2017. This decrease was largely driven by the strong market performance of plan assets and contributions to the plans in 2017, partially offset by the impact of lower discount rates on plan liabilities.

The effective tax rate on GAAP earnings was 9.3 percentage points higher than the prior year while the rate on base earnings was 0.5 percentage points higher than in 2016. The increase in the GAAP effective tax rate was driven by net charges related to the enactment of the Tax Act. The modest increase in the base effective tax rate was due to less benefit from the U.S. manufacturer’s deduction, as well as from other domestic tax adjustments, partially offset by greater benefit from distribution of earnings between high- andlow-tax jurisdictions and the change in treatment of the excess tax benefit from share-based compensation resulting from the adoption of ASU2016-09 in 2017. See Note 2 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 labor 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-related events. These items could have a significant impact on the Company’s future GAAP financial results.

Acquisitions and dispositions

Divestitures

Acquisitions

The Company completed two acquisitions during 20172023 at a net cash cost of $383.8 million, net of cash acquired. approximately $372.6 million.
On March 14, 2017,December 1, 2023, the Company completed the acquisition of Packaging Holdings, Inc.Inapel, a manufacturer of single-layer and subsidiaries, including Peninsula Packaging LLC (“Packaging Holdings”),multilayer materials for $218.8 million, net of cash acquired. Packaging Holdings manufactures thermoformedflexible packaging in Brazil for a wide rangenet cash purchase price of whole fresh fruits,pre-cut fruits$59.2 million, subject to customary working capital adjustments. With the acquisition of Inapel, the Company added approximately 500 employees and produce, prepared salad mixes, as well as baked goods in retail supermarkets from fivetwo manufacturing facilities, including fourlocations in the United States and one in Mexico. The Company financed the transaction with a combinationSao Paulo region of cash and borrowings, including a $150,000 three-year term loan.Brazil. The acquisition of Packaging Holdings is expected to add approximately $190 million of annual salessignificantly expanded the Company’s presence in the Company’s Consumer Packaging segment. flexible packaging services market in Latin America.
On July 24, 2017,September 8, 2023, the Company completed the acquisition of Clear Lamthe remaining 65% interest in RTS Packaging Inc. (“Clear Lam”)from joint venture partner WestRock, and the acquisition of the Chattanooga Mill from WestRock for $165.0net cash consideration of $313.4 million, net of cash acquired. Final consideration will be subject to an

20SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

adjustment fora final working capital adjustment of $0.5 million that was paid to WestRock in January 2024. Prior to completing the acquisitions, the Company held a 35% ownership interest in the RTS Packaging joint venture, which was formed in 1997, and combined the former protective packaging operations of WestRock and Sonoco to market recycled paperboard to glass container manufacturers and producers of wine, liquor, food, and pharmaceuticals. With the acquisition of the remaining interest in RTS Packaging and the acquisition of the Chattanooga Mill, the Company added approximately 1,100 employees, fourteen converting operations, including ten in the United States, two in Mexico, two in South America, and one paper mill in the United States.

Divestitures
On January 30, 2024, the Company entered into a definitive agreement to sell its Protective Solutions business, part of the All Other group of businesses, to Black Diamond Capital Management, LLC for an estimated $80.0 million in cash. The transaction is expected to be completed by the end ofin the first quarterhalf of 2018. Clear Lam manufactures high barrier flexible2024, subject to the satisfaction or waiver of customary closing conditions. This business provides foam components and forming films used to package a varietyintegrated material solutions for various industrial end markets. The business operates nine manufacturing facilities and has approximately 900 employees. This sale is the result of products for consumer packaged goods companies, retailersSonoco’s continuing evaluation of its business portfolio 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 loanis consistent 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. strategic and investment priorities.

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 NovemberJuly 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, 2016,2023, the Company completed the sale of its rigid plastics blow molding operationsU.S. BulkSak business, which consisted of the manufacturing and distribution of flexible intermediate bulk containers, plastic and fiber pallets, and custom fit liners and was a part of the Company’s Industrial Paper Packaging segment, to Amcor Rigid Plastics USA, LLC and Amcor Packaging Canada, Inc.U.S. BulkSak Holdings, LLC. The cash selling price, as adjusted for approximately $280the final working capital settlement, was $20.3 million with cash proceeds totaling $18.3 million received in 2023, and the remaining $2.0 million held in escrow to be released to the Company receiving netwithin 18 months from the date of the sale, pursuant to the settlement of any indemnity claims. As a result of the U.S. BulkSak divestiture, the Company recognized a pretax gain of $6.8 million included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income.

Also on July 1, 2023, the Company agreed to the sale of its Mexico BulkSak business. The sale closed in December 2023 for a cash proceedsselling price, as adjusted for working capital, of $271.8$1.1 million. In conjunction withAs a result of the Mexico BulkSak sale, the Company recognized a pretax gain of $0.1 million which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income.
On January 26, 2023, the Company completed the sale of its S3 business, a provider of customized waste and recycling management programs and part of the Company’s Industrial Paper Packaging segment, to Northstar Recycling Co. (“Northstar”), for total cash proceeds of $13.8 million. An additional $1.5 million of proceeds are being held in escrow and will be released to the Company twenty months following the date of the divestiture, pursuant to any indemnification claims. The Company recognized a pretax gain of $11.1 million during the first quarter of 2023, which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income and is entitled to receive additional proceeds of $3.2 million in the second quarter of 2024 if certain conditions are met. This contingent consideration will be recognized as an additional gain on the disposition,sale at the point the contingencies are resolved.
On January 26, 2023, in connection with the sale of the S3 business, the Company acquired a 2.7% equity interest in Northstar valued at $5.0 million. This investment is being accounted for under the measurement alternative (i.e., cost less impairment, adjusted for any qualifying observable price changes).
Sale of Assets
Following the completion of Project Horizon in the third quarter of 2022, the Company’s project to convert the corrugated medium machine in Hartsville, South Carolina, to produce uncoated recycled paperboard, the Company now produces paper exclusively from recycled fibers and no longer requires natural tree fiber for production. Accordingly, on March 29, 2023, the Company sold its timberland properties, consisting of approximately 55,000 acres, to Manulife Investment Management for net cash proceeds of associated fees, of $104.3$70.8 million. The Company’s rigid plastics blow molding operationsCompany disposed of assets with a net book value of $9.9 million as part of the sale, and recognized a pretax gain from the sale of these assets of $60.9 million during the year ended December 31, 2023, which is included seven manufacturing facilitiesin “Gain/(Loss) on divestiture of business and other assets” in the U.S.Company’s Consolidated Statements of Income.
The Company continually assesses its operational footprint as well as its overall portfolio of businesses and Canada with approximately 850 employees producing containers servingmay consider the personal care and food and

beverage markets. The dispositiondivestiture of these operations is expectedplants and/or business units it considers to negatively impact the 2017 year-over-year sales comparison by approximately $175 million. The decision to sell the blow molding operations was made to focus on, and provide resources 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 operating margin percentages for the Company’s Consumer Packaging segment, nor did it represent a strategic shift for the Company having a major effect on the entity’s operations and financial results.

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 310 locations in 33 countries)countries as of December 31, 2023) 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.

25 FORM 10-K SONOCO 2023 ANNUAL REPORT

The following table recapssummarizes the impact of restructuring and asset impairment charges onfor each of the Company’s net income for the periods presented (dollars 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

years presented:
 Year Ended December 31,
Dollars in thousands20232022
Restructuring and restructuring-related asset impairment charges$56,933 $46,815 
Other asset impairments— 10,095 
Restructuring/Asset impairment charges$56,933 $56,910 

During 2017, 2023, the Company announced the closure of an expanded foam protective packaging plant in the United States and five tubes and cores plants – three in the United States, one in Belgium, and one in China. Asset impairmentrecognized restructuring charges recorded in 2017 included a $17.8 million charge in the fourth quarter of 2017 recognizedrelated to severance for employees terminated 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 eliminationvarious plant closures or whose positions were eliminated as part of approximately 255 positions in conjunction with the Company’s ongoing organizational effectiveness efforts.

During 2016, the Company announced The largest of these plant closures was the closure of four tubes and cores plants—one in the United States, one in Canada, one in Ecuador, and one in Switzerland. The Company closed a packaging services center in Mexico and a fulfillment service center in Brazil. The Company also began manufacturing rationalization efforts in its Reels division, and completed the sales of a Company’s paper mill in FranceHutchinson, Kansas, which was part of the Industrial Paper Packaging segment. Restructuring charges were also incurred during the year for costs related to plant closures, including equipment removal, utilities, plant security, property taxes, and a retail security packaginginsurance at closed facilities. Asset impairment charges were recognized in the Industrial Paper Packaging and Consumer Packaging segments as the result of plant in Puerto Rico. In addition,closures.

During 2022, the Company continuedrecognized restructuring charges related to realign its cost structure, resultingseverance for employees terminated as a result of various plant closures or whose positions were eliminated as part of the Company’s ongoing organizational effectiveness efforts. Restructuring charges were also incurred during the year for consulting services and costs related to plant closures, including equipment removal, utilities, plant security, property taxes, and insurance at closed facilities. Asset impairment charges were recognized in the eliminationIndustrial Paper Packaging and Consumer Packaging segments as the result of approximately 180 positions.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K21

During 2015, theplant closures. 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 other asset impairment charges related toin 2022 totaling $10.1 million, primarily as a result of completing the planned saleexit of a paper millits operations in FranceRussia during the second quarter of 2022. These operations consisted of two small tube and eliminated approximately 235 positions worldwide in conjunction withcore plants and were part of the Company’s organizational effectiveness efforts.

Industrial Paper Packaging segment.

The Company expects to recognize future additional costs totaling approximately $3.6approximately $2.3 million in connection with previously

announced restructuring actions.actions that were underway as of December 31, 2023. The Company believes that the majority of these charges will be incurred and paid by the end of 2018. 2024. 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).

22SONOCO 2017 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 of operations – 2017 versus 2016

Net income attributable to Sonoco (GAAP earnings) was $175.3 million ($1.74 per diluted share)presented in 2017, comparedconjunction with $286.4 million ($2.81 per diluted share) in 2016. Current-year earnings reflect netafter-tax charges totaling $106.4 million, consisting of pension settlement charges, tax charges related to the 2017 U. S. Tax Cuts and Jobs Act, restructuring/asset impairment charges, and acquisition-related expenses. 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 consisting of the gain from the disposalmanagement's analysis of the Company’s rigid plastics blow molding operations, partially offsetresults of operations:

Adjusted Operating Profit, Adjusted Income Before Income Taxes, Adjusted Provision for Income Taxes, Adjusted Earnings Attributable to Sonoco, and Adjusted EPS
 For the year ended December 31, 2023
Dollars in thousands, except per share dataOperating ProfitIncome Before Income TaxesProvision for Income TaxesNet Income Attributable to SonocoDiluted EPS
As Reported (GAAP)$715,790 $614,832 $149,278 $474,959 $4.80 
Acquisition, integration and divestiture-related costs26,254 26,254 6,407 19,847 0.20 
Changes in LIFO inventory reserves(11,817)(11,817)(2,977)(8,840)(0.09)
Amortization of acquisition intangibles87,264 87,264 21,523 65,741 0.66 
Restructuring/Asset impairment charges56,933 56,933 12,920 44,036 0.44 
Gain on divestiture of business and other assets(78,929)(78,929)(19,076)(59,853)(0.60)
Other income, net— (39,657)(9,624)(30,033)(0.30)
Non-operating pension costs— 14,312 3,547 10,765 0.11 
Net gain from derivatives(1,912)(1,912)(482)(1,430)(0.01)
Other adjustments10,142 10,113 5,433 4,680 0.05 
Total adjustments87,935 62,561 17,671 44,913 0.46 
Adjusted$803,725 $677,393 $166,949 $519,872 $5.26 


26 FORM 10-K SONOCO 2023 ANNUAL REPORT

 For the year ended December 31, 2022
Dollars in thousands, except per share dataOperating ProfitIncome Before Income TaxesProvision for Income TaxesNet Income Attributable to SonocoDiluted EPS
As Reported (GAAP)$675,396 $571,282 $118,509 $466,437 $4.72 
Acquisition, integration and divestiture-related costs70,210 70,210 17,640 52,570 0.53 
Changes in LIFO inventory reserves28,445 28,445 7,083 21,362 0.22 
Amortization of acquisition intangibles80,427 80,427 19,554 60,873 0.62 
Restructuring/Asset impairment charges56,910 56,910 11,269 45,542 0.46 
Non-operating pension costs— 7,073 2,007 5,066 0.05 
Net loss from derivatives8,767 8,767 2,183 6,584 0.07 
Other adjustments(290)(426)18,515 (18,941)(0.19)
Total adjustments244,469 251,406 78,251 173,056 1.76 
Adjusted$919,865 $822,688 $196,760 $639,493 $6.48 


Adjusted EBITDA and Adjusted EBITDA Margin

For the Year Ended December 31,
Dollars in thousands20232022
Net income attributable to Sonoco$474,959 $466,437 
Adjustments
     Interest expense136,686 101,662 
     Interest income(10,383)(4,621)
     Provision for income taxes149,278 118,509 
     Depreciation, depletion, and amortization340,988 308,824 
     Non-operating pension costs14,312 7,073 
 Net income attributable to noncontrolling interests942 543 
     Restructuring/Asset impairment charges56,933 56,910 
     Changes in LIFO inventory reserves(11,817)28,445 
     Gain from divestiture of business and other assets(78,929)— 
Other income, net(39,657)
     Acquisition, integration and divestiture-related costs26,254 70,210 
     Net (gain)/loss from derivatives(1,912)8,767 
     Other non-GAAP adjustments10,142 (290)
Adjusted EBITDA$1,067,796 $1,162,469 
Net Sales$6,781,292 $7,250,552 
Net Income Margin7.0 %6.4 %
Adjusted EBITDA Margin15.7 %16.0 %

The Company does not calculate net income by restructuring costs, asset impairment charges, acquisition-related expenses, and foreign income tax losses related to rate adjustments.

Base earnings in 2017 were $281.8 million ($2.79 per diluted share), compared with $277.2 million ($2.72 per diluted share) in 2016.

Both GAAP and base earnings in 2017 benefitted from a positive price/cost relationship, productivity improvements and lower management incentive expense. These favorable factors were partially offsetsegment; therefore, Adjusted EBITDA by negative volume/mix, particularly in Rigid Paper North America, higher overhead and other operating costs, and unfavorable changes in foreign currency translation.

The effective tax rate on GAAP earnings was 46.6%, compared with 37.3% in 2016, and the effective tax rate on base earnings was 31.1%, compared with 30.6% in 2016. The unusually high GAAP effective tax rate in the current year reflects the currently recognized effects of the U.S. Tax Cuts and Jobs Act (Tax Act). Application of the Company’s lower estimated future effective tax rate dueSegment is reconciled to the Tax Act resulted in a decreaseclosest GAAP measure of segment profitability, Segment Operating Profit, which is another method to achieve the same result. Segment Operating Profit is the measure of segment profit or loss reported to the Company’s recorded amountchief operating decision maker for purposes of deferred tax liabilities, net of deferred assets. Consequently,making decisions about allocating resources to the segments and assessing their performance in the fourth quarter of 2017 the Company recorded a $25.7 million decrease to its net deferred tax liabilitiesaccordance with a corresponding decrease to GAAP 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 affectedAccounting Standards Codification (“ASC”) 280, “Segment Reporting,” as prescribed 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.

Financial Accounting Standards Board.

Consolidated net sales for 2017 were $5.0 billion, a $254 million, or 5.3%, increase from 2016. 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 the meaningfulness of reported changes in volume/mix, a $20.7 million reduction in packaging center sales resulting from changes in the level of activity is classified above as “other” 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 number 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. While the full-year average OCC price was up year over year, prices during the year were volatile with periods of sharp increases and decreases resulting in significant margin swings. However, the Company was able to achieve an overall positive price cost relationship. While the Company’s 2017 and 2016 acquisitions added more than $259 million to 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.

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K23

Total domestic sales were $3.3 billion, up 4.9% from 2017 levels. International sales were $1.8 billion, up 6.1% from 2017 with most of the increase driven by growth in the Company’s industrial businesses and the impact of foreign currency translation.

Costs and expenses/margins

Cost of sales was up $241.8 million in 2017, or 6.3%, from the prior year primarily due to raw material price increases and additional volume from acquired businesses, net of disposed businesses. Despite the positive price/cost relationship and modest productivity improvements, an unfavorable mix of sales and higher labor and other costs resulted in gross profit margins declining to 18.8% in 2017 from 19.6% in the prior year.

Aggregate pension and postretirement plan expenses increased $33.2 million in 2017 to a total of $78.5 million, compared with $45.3 million in 2016. In February 2017, 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 course of the program, the Company successfully settled approximately 47% of the projected 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 are reflected in the Company’s Consolidated Statements of Income with approximately 75% 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 $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 million for the year ended December 31, 2017, compared with $51.6 million in 2016. The increase was due primarily to higher average debt levels 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 discretion of the Company 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, 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)  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)%

Segment results, viewedwhich are reviewed by Companythe Company’s management to evaluate segment performance, do not include restructuring charges, the following: restructuring/asset impairment charges, acquisition-related charges, gains or charges; amortization of acquisition intangibles; acquisition, integration, and divestiture-related costs; changes in LIFO inventory reserves; gains/losses from the sale of businesses pension settlement charges, specifically identified tax adjustments, andor other assets; gains/losses on derivatives; or certain other items, if any, the exclusion of which the Company believes improves the comparability and analysis.analysis of the ongoing operating performance of the business. 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. GeneralAll other general corporate expenses with the exception of restructuring charges, asset impairment charges, acquisition-related charges, net interest expense and income taxes, have been allocated as operating costs to each of the Company’s reportable segments.

segments and All Other. Total operating profit is comprised of the sum of segment and All Other operating profit plus certain items that have been allocated to Corporate, including amortization of acquisition intangibles; restructuring/asset impairment charges; changes in LIFO inventory reserves; acquisition, integration and divestiture-related costs; gains/losses from the sale of businesses or other assets; gains/losses on derivatives; and certain other items that were excluded from segment and All Other operating profit.

27 FORM 10-K SONOCO 2023 ANNUAL REPORT

Segment Adjusted EBITDA and All Other Adjusted EBITDA Reconciliation
For the Year Ended December 31, 2023
Dollars in thousandsConsumer Packaging segmentIndustrial Paper Packaging segmentAll OtherCorporateTotal
Segment and Total Operating Profit$382,063 $317,917 $103,745 $(87,935)$715,790 
Adjustments:
  Depreciation, depletion and amortization1
124,483 104,722 24,519 87,264 340,988 
  Equity in earnings of affiliates, net of tax564 9,783 — — 10,347 
  Restructuring/Asset impairment charges2
— — — 56,933 56,933 
  Changes in LIFO inventory reserves3
— — — (11,817)(11,817)
  Acquisition, integration and divestiture-related costs4
— — — 26,254 26,254 
  Gain from divestiture of business and other assets5
— — — (78,929)(78,929)
  Net gains from derivatives6
— — — (1,912)(1,912)
  Other non-GAAP adjustments7
— — — 10,142 10,142 
Segment Adjusted EBITDA$507,110 $432,422 $128,264 $— $1,067,796 
Net Sales$3,626,977 $2,374,113 $780,202 
Segment Operating Profit Margin10.5 %13.4 %13.3 %
Segment Adjusted EBITDA Margin14.0 %18.2 %16.4 %
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $57,044, the Industrial Paper Packaging segment of $16,121, and All Other of $14,099.
2 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $8,059, the Industrial Paper Packaging segment of $38,754, and All Other of $7,623.
3 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $(10,915) and the Industrial Paper Packaging segment of $(902).
4 Included in Corporate are acquisition, integration and divestiture-related costs associated with the Consumer Packaging segment of $1,738 and the Industrial Paper Packaging segment of $5,810.
5 Included in Corporate are gains from the sale of the Company’s timberland properties in the amount of $(60,945), the sale of its S3 business in the amount of $(11,065), and the sales of its BulkSak businesses in the amount of $(6,919), all of which are associated with the Industrial Paper Packaging segment.
6 Included in Corporate are gains on derivatives associated with the Consumer Packaging segment of $(257), the Industrial Paper Packaging segment of $(1,290), and All Other of $(365).
7 Included in Corporate are other non-GAAP adjustments associated with the Industrial Paper Packaging segment of $3,762 and the All Other group of businesses of $3,249.


28 FORM 10-K SONOCO 2023 ANNUAL REPORT

Segment Adjusted EBITDA and All Other Adjusted EBITDA Reconciliation
For the Year Ended December 31, 2022
Dollars in thousandsConsumer Packaging segmentIndustrial Paper Packaging segmentAll OtherCorporateTotal
Segment and Total Operating Profit$526,028 $327,859 $65,978 $(244,469)$675,396 
Adjustments:
   Depreciation, depletion, and amortization1
111,599 91,944 24,854 80,427 308,824 
   Equity in earnings of affiliates, net of tax485 13,722 — — 14,207 
   Restructuring/Asset impairment charges2
— — — 56,910 56,910 
   Changes in LIFO inventory reserves3
— — — 28,445 28,445 
   Acquisition, integration and divestiture-related costs4
— — — 70,210 70,210 
   Net losses from derivatives5
— — — 8,767 8,767 
   Other non-GAAP adjustments— — — (290)(290)
Segment Adjusted EBITDA$638,112 $433,525 $90,832 $— $1,162,469 
Net Sales$3,767,956 $2,684,563 $798,033 
Segment Operating Profit Margin14.0 %12.2 %8.3 %
Segment Adjusted EBITDA Margin16.9 %16.1 %11.4 %
1 Included in Corporate is the amortization of acquisition intangibles associated with the Consumer Packaging segment of $55,089, the Industrial Paper Packaging segment of $8,053, and All Other of $17,285.
2 Included in Corporate are restructuring/asset impairment charges associated with the Consumer Packaging segment of $13,865 and the Industrial Paper Packaging segment of $24,745.
3 Included in Corporate are changes in LIFO inventory reserves associated with the Consumer Packaging segment of $26,753 and the Industrial Paper Packaging segment of $1,692.
4 Included in Corporate are acquisition, integration, and divestiture-related costs associated with the Consumer Packaging segment of $38,690 and the Industrial Paper Packaging segment of $1,885.
5 Included in Corporate are net losses on derivatives associated with the Consumer Packaging segment of $1,230, the Industrial Paper Packaging segment of $5,789, and All Other of $1,748.


Results of Operations – 2023 Versus 2022
Net income attributable to Sonoco (“GAAP results”) were $475.0 million ($4.80 per diluted share) in 2023, compared with $466.4 million ($4.72 per diluted share) in 2022.
GAAP results reflect net after-tax, adjusted charges totaling $44.9 million and $173.1 million in 2023 and 2022, respectively. These adjustments are presented in the “Reconciliations of GAAP to Non-GAAP Financial Measures” tables. Adjusted for these items, Adjusted Earnings in 2023 was $519.9 million ($5.26 per diluted share), compared with $639.5 million ($6.48 per diluted share) in 2022.
The GAAP results were slightly higher in 2023 as a result of the full year impact of the acquisition of Metal Packaging, the acquisition of the remaining interest in RTS Packaging, and the acquisition of the Chattanooga Mill, gains from divestitures and sale of assets, and lower acquisition, integration and divestiture-related costs. These favorable factors were partially offset by lower volumes across the portfolio and unfavorable metal price overlap. Adjusted Earnings in 2023 declined as a result of lower volumes across the portfolio, inflationary pricing pressure within retail in the Consumer Packaging segment, and unfavorable index-related pricing in the Industrial Paper Packaging segment.
Consolidated net sales for 2023 were $6.8 billion, a $0.5 billion, or 6.5%, decrease from 2022. The components of the sales change were:
($ in millions)
Volume/mix$(574)
Selling price(14)
Acquisitions and divestitures, net104 
Foreign currency translation and other, net15 
Total sales decrease$(469)
The lower year-over-year sales were driven by lower volumes across the portfolio and were partially offset by sales from acquisitions. Volume challenges in the Consumer segment resulted from inflationary pricing pressures within retail. This impact, along with unfavorable pricing, was partially offset by the full year impact in 2023 of the January 2022 acquisition of Metal Packaging. Along with unfavorable volume, the Industrial segment was unfavorably impacted by index pricing, partially offset by the impact of the current year acquisitions of the remaining interest in RTS Packaging and the acquisition of the Chattanooga Mill. Volume/mix declines in the All Other group of businesses were partially offset by positive pricing.
29 FORM 10-K SONOCO 2023 ANNUAL REPORT

Total domestic sales were $4.8 billion, down 7.9% from 2022, driven by lower volumes across the portfolio, partially offset by revenue from acquisitions. International sales were $2.0 billion, down 2.8% from 2022.
Costs and Expenses/Margins
Cost of sales decreased $465.3 million in 2023, or 8.0%, from the prior year. The decrease was attributable to the lower sales volume, which was partially offset by lower input costs, primarily for steel and old corrugated cardboard. Gross profit margins increased to 21.2% in 2023 from 19.9% in the prior year primarily due to the previously mentioned lower input costs.
Selling, general and administrative expenses (“SG&A”) increased $34.5 million, or 4.9%, and were 10.9% of sales in 2023 compared to 9.8% of sales in 2022. The current year increase was related to higher compensation, benefits, group medical, and information technology costs resulting from inflation and the impact of acquisitions. These increases were partially offset by lower year-over-year acquisition, integration, and divestiture-related costs. These costs were higher in the prior year due to the January 2022 acquisition of Metal Packaging.
Restructuring and asset impairment charges totaled $56.9 million in both 2023 and 2022. The 2023 charges reflect the closure costs of several operations, including a paper mill in Kansas, a perimeter-of-the-store facility in California, and medical plastics facilities in the United States and United Kingdom. The 2022 charges include severance and other plant closure costs as well as a $9.2 million impairment charge resulting from the Company’s exit from its Russian operations. Additional information regarding restructuring actions and asset impairments is provided in Note 4 to the Company’s Consolidated Financial Statements.
Other income, net was $39.7 million in 2023, reflecting a gain of $44.0 million resulting from the remeasurement of the Company’s previously held equity interest in RTS Packaging to fair value, partially offset by a loss of $4.3 million from the settlement of a contract associated with the acquisition of the Chattanooga Mill that was determined to have unfavorable terms given market conditions at the time of the acquisition. See Note 163 to the Consolidated Financial Statements for further information.
Non-operating pension costs were $14.3 million in 2023, compared with $7.1 million in 2022. The year-over-year increase of $7.2 million was primarily due to higher interest costs on the Company’s defined benefit pension liabilities, resulting from higher year-over-year discount rates. See Note 14 to the Consolidated Financial Statements for further information on employee benefit plans.
Net interest expense totaled $126.3 million for the year ended December 31, 2023, compared with $97.0 million in 2022. The increase was primarily due to higher year-over-year average debt balances resulting from the term loans executed in December 2022 and August 2023 and the impact of higher interest rates on the Company’s variable debt. Additional information regarding the Company’s indebtedness is provided in Note 10 to the Company’s Consolidated Financial Statements.
The effective tax rates on GAAP and Adjusted Earnings for the full year 2023 were 24.3% and 24.6%, respectively, compared with 20.7% and 23.9%, respectively in 2022. The increase in the GAAP effective tax rate for 2023 was due primarily to the absence in 2023 of a release of a valuation allowance on foreign tax credits. The increase in the effective tax rate on Adjusted Earnings was primarily due to a variance in tax rates between jurisdictions in which the respective income and charges were taxed.
Reportable Segments
The Company’s operating and reporting structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other.
Effective January 1, 2024, the Company will integrate its flexible packaging and thermoforming packaging businesses within the Consumer Packaging segment in order to streamline operations, enhance customer service and better position the business for accelerated growth. As a result, the Company will change its operating and reporting structure to reflect the way it plans to manage its operations, evaluate performance, and allocate resources going forward. Therefore, in future reporting periods, the Company’s consumer thermoforming businesses will move from the All Other group of businesses to the Consumer Packaging segment. The Company’s Industrial Paper Packaging segment will not be affected by these changes. As of and for the year ended December 31, 2023, there were no changes to the manner in which the Company reviewed financial information at the segment level; therefore, these changes had no impact on the Company’s reporting structure.
Total operating profit, reported as “Operating Profit” in the Company’s Consolidated Statements of Income, is comprised of the following:
($ in millions)20232022% Change
Segment operating profit:
Consumer Packaging$382.1 $526.0 (27.4)%
Industrial Paper Packaging317.9 327.9 (3.0)%
All Other103.7 66.0 57.1 %
             Total segment operating profit803.7 919.9 (12.6)%
Restructuring/Asset impairment charges(56.9)(56.9)
Amortization of acquisition intangibles(87.3)(80.4)
Other income/(charges), net56.3 (107.1)
Total operating profit*$715.8 $675.5 6.0 %
*Due to rounding, amounts above may not sum to the totals presented
Segment results, which are reviewed by Company management to evaluate segment performance, do not include: restructuring/asset impairment charges: amortization of acquired intangibles: acquisition, integration, and divestiture-related charges; changes in LIFO inventory reserves; gains/losses from the sale of businesses or other assets; gains/losses on derivatives; or certain other items, if any, the exclusion of which the Company believes improves the comparability and analysis of the ongoing operating performance of the business. Accordingly, the term “segment operating profit” is defined as the segment’s portion of “operating profit” excluding those items. All other general corporate expenses have been allocated as operating costs to each of the Company’s reportable segments and All Other.
See Note 19 to the Company’s Consolidated Financial Statements for more information on reportable segments.

30 FORM 10-K SONOCO 2023 ANNUAL REPORT

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 increased
($ in millions)20232022% Change
Net sales$3,627.0 $3,768.0 (3.7)%
Segment operating profits382.1 526.0 (27.4)%
Depreciation, depletion and amortization124.5 111.6 11.6 %
Capital spending186.1 127.5 46.0 %

Consumer Packaging segment net sales decreased year over year dueas volumes continued to the March 14, 2017 acquisition of Packaging Holdings, the July 24, 2017 acquisition of Clear Lam Packaging, Inc.be impacted by inflationary pricing pressures within retail and the full year impact of the

24SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

November 1, 2016 acquisition of Plastic Packaging Inc. These increases were substantially offset by the reduction in year-over-year sales due to the November 2016 disposition of the Company’s rigid plastic blow molding operations. Higher selling prices in most of the segment’s businesses, driven largely by raw material price increases, were mostly offset by volume declines in Rigid Paper Containers North America and Europe as well as Flexible Packaging. Foreign currency translation added approximately $5 million to segment trade sales year over year due to a weaker U.S. dollar.from customer retail destocking throughout the year. Domestic sales were approximately $1,461$2,780 million, up 6.8%down 6.1%, or $93$180 million, from 2016,2022, while international sales were approximately $663$847 million, down 1.9%up 4.9%, or $13$39 million, from 2016.

2022.

Segment operating profits increaseddecreased by $10.0$144.0 million year over year and operating profit margins of 11.8%decreased to 10.5% from 14.0%. The decreases in operating profit and operating margins were unchanged from 2016. The increase in segment operating profits was largely driven by solid gains in manufacturing productivityprimarily due to unfavorable volume/mix and the positiveunfavorable impact of the relationship between selling prices and costs.metal price overlap of approximately $35 million. These benefitsunfavorable impacts were partially offset by volume declines in global composite cans and flexible packaging as well as inflation. Material purchasing and logistics savings were key drivers 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.

improved productivity.

Capital spending in the segment included numerous productivityautomation projects in North America and Europe and expansion of manufacturing capabilities in North America, primarily in flexible packagingEurope, South America, and plastics,Asia.
Industrial Paper Packaging
($ in millions)20232022% Change
Net sales$2,374.1 $2,684.6 (11.6)%
Segment operating profits317.9 327.9 (3.0)%
Depreciation, depletion and amortization104.7 91.9 13.9 %
Capital spending111.6 145.0 (23.0)%
Industrial Packaging segment net sales decreased year over year due to unfavorable volume and expansion of manufacturing capabilities in Europe in rigid paper containers.

Display and 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%

index-related pricing declines. Domestic trade sales in the segment increased $3.2decreased $222 million, or 1.3%13.8%, to $249$1,389 million, while international trade sales decreased $15$89 million, or 5.6%8.3%, to $259$985 million. The increase in domestic trade sales resulted from increased

Segment operating profit decreased year over year, driven by the unfavorable volume at our new retail packaging fulfillment center in Atlanta, Georgia, offset 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 international sales reflects the Company’s exit 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 somewhatindex-related pricing, partially offset by the positivefull-year impact of approximately $10 million from foreign currency translation as a result of a stronger Polish zloty relative to the 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

strategic pricing initiatives.

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 projectincluded numerous automation projects in North America, coupled with expansion of manufacturing capabilitiesproductivity projects in Europe.

PaperNorth America 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 paperEurope, and capacity improvements in the U.S. were higherNorth America, Europe, and Asia.

All Other
($ in millions)20232022% Change
Net sales$780.2 $798.0 (2.2)%
Segment operating profits103.7 66.0 57.1 %
Depreciation, depletion and amortization24.5 24.9 (1.6)%
Capital spending24.8 21.2 17.0 %
All Other net sales decreased 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 uplower volumes, primarily in Europe due to the pass through of higher material costs in that market. Total volume/mix gains were modest in the segmenttemperature assured packaging 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.

SegmentCOVID-related demand declined.

All Other operating profit increased year over year, driven by a positive price/cost relationship as the Company was ableongoing structural improvement programs to favorably navigate dramatic movements in Old Corrugated Containers (OCC) market prices. Improved market conditions resulted in aimprove profitability across this diversified collection of businesses, favorable strategic pricing initiatives and strong turnaround in the Company’s corrugating medium operation in 2017. Operating profit was also benefited by increases in volume and positive changes in the mix of products sold, mostly in Europe and Sonoco Reels, and modest productivity gains.productivity. These favorable factors were partially offset by wage and other fixed cost inflation.

Although conditions improved for the corrugating medium operation in 2017, andimpact of the Company’s outlook for the operation is for continued improvement in 2018, the Company continues to evaluate strategic alternatives for this operation.

Significant capital spending in the segment included the modification 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 to the acquisitions of Laminar Medica and AAR Corporation, each of which was acquired in the second half of 2016. Higher sales prices were offset by volume declines, mostly in automotive components.

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

lower volumes.

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.

Capital spending in the segment included significantAll Other group of businesses was mostly related to customer development and automation projects to support our temperature-assured packaging business.

in North America.

Financial position, liquidityPosition, Liquidity, and capital resources

Capital Resources

Cash flow

Flow

Operating activities

Activities

Cash flowflows from operations totaled $349.4$882.9 million in 2017 and $398.72023 compared with $509.0 million in 2016,2022, a year-over-year decreaseincrease of $49.3$373.9 million. The $110.4GAAP net income increased by $8.9 million declineyear over year, reflecting a non-cash gain in GAAP Net Income reflects2023 resulting from thenon-recurrence remeasurement of last year’s gain onthe Company’s previously held equity interest in RTS Packaging to fair value, and gains from the sale of the Company’s rigid plastics blow molding operationstimberland properties, and the sales of $108.7its S3 and BulkSak businesses. Net income in the current year also reflected a $32.2 million year-over-year increase in non-cash depreciation, depletion and amortization expense and a $5.0 million increase in net non-cash asset impairment charges. Cash contributions to the cash impact of which was reported as an investing activity. Current year net income also reflects higherCompany’s pension and postretirement plans in 2023 were $14.7 million, compared with $37.4 million in 2022, a year-over-year decrease of $22.7 million. The prior year contributions included the final Sonoco Retirement Contribution (“SRC”), the non-elective component of the Sonoco Savings Plan. The SRC was terminated as of December 31, 2021. Accrued expenses and other assets and liabilities used $46.7 million of cash in 2023 and provided $17.9 million of cash in 2022. The year-over-year change was largely driven by the higher payout of management incentive compensation in 2023. Cash paid for taxes increased pension and postretirementby $66.9 million year over year. Tax payments in 2022 benefited from additional accelerated tax depreciation in the United States resulting from the Metal Packaging acquisition, while the 2023 payments did not have this benefit.
Net working capital provided $218.8 million of cash contributions resulting in 2023, while it used $328.7 million of cash in 2022, for a combined year-over-year decreaseincrease in operating cash flows of $28.6$547.5 million. Working capital consumed $5.0The year-over-year improvement was driven largely by inventory reductions in the current year. Inventory levels at the end of 2022 were higher than usual as the Company sought to mitigate supply chain uncertainty caused by lack of availability and shipment delays. Inventory levels decreased in 2023, most notably in tinplate steel, as the Company focused on reducing inventory in a lower sales volume environment. The year-over-year decrease in accounts payable was attributable to the lower spending on inventories and a decline in the cost of inputs (principally steel and old corrugated containers). Accounts receivable provided $27.4 million more cash in 20172023 than in 2016. Changes in inventory2022,
31 FORM 10-K SONOCO 2023 ANNUAL REPORT

reflecting the Company’s active management of collections and compliance with payment terms, along with the impact of lower volumes and lower selling prices.
Investing Activities
Investing activities used $16.1$619.3 million of cash in 2017 versus $11.52023, compared with $1,741.4 million in 2016, a higher2022. The lower year-over-year use of cash of $4.6 million,was primarily attributable topre-buying of certain raw materials at lower acquisition spending as the end of 2017Company invested $372.6 million in anticipation of upcoming price increases. The combined changesacquisitions in accounts receivable2023 (RTS Packaging, the Chattanooga Mill, and accounts payable balances consumed approximately $39Inapel) compared with $1,427.0 million of cash from operations in both 20172022 (Metal Packaging, Skjern, and 2016. The increasesNordeste). Capital expenditures inyear-end accounts receivable balances over the respective prior years 2023 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$363.1 million, $34.3 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 withthan 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,was driven by increased investments in various automation projects and strategic growth and productivity projects in both the loss onConsumer Packaging and 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 million was primarily driven by the final settlement of Fox River-related environmental claims in January 2017 and lower management incentive accruals. Changes in 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 arisingIndustrial Packaging segments. Proceeds 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 $11.5businesses provided $33.2 million of cash in 2016 versus $2.6 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 million 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 Venezuela2023 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. Operatingreceived 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. The year-over-year change of $27.0 million was driven by increases in reserves related to restructuring actions

26SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

implemented during 2016 and the timing 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 payment in December 2016 of taxes arising from the gain on the sale of the blow molding operations.

Investing activities

Cash used by investing activities was $565.7 million in 2017, compared with $3.1 million in 2016. The greater year-over-year use of cash is due in part to the Company’s 2017 acquisitions 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 in 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.its S3 and BulkSak businesses. Proceeds from the sale of assets in 2017 were $5.3 million. Capital spending was $188.9totaled $80.3 million in 2017, compared with $186.7 million in 2016, a decrease of $2.2 million. Capital spending is expected to total approximately $220 million in 2018.

Cash used in investing activities was $3.1 million in 2016, compared with $179.9 million in 2015. The lower year-over-year use of cash is2023, primarily due to a net $239.4 million increase in 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 fortimberland properties, compared with $9.6 million in the disposalprior year. In addition, the Company’s year-over-year investments in affiliated companies increased $8.6 million, including a 2.7% equity interest in Northstar valued at $5.0 million which the Company acquired on January 26, 2023, as part of a paper operation in France. Proceeds in 2015 primarily related to approximately $29.1 million received from the sale of two metal ends and closures plants in February 2015. Acquisition spending,its S3 business to Northstar. Other net investing proceeds provided $6.6 million more cash year over year, primarily as a result 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 repayments 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 the year. No shares were repurchased under this program in 2017. Cash dividends increased 5.0% to $153.1 million in 2017 compared to $146.4 million in 2016, reflecting a $0.02 per share increaselife insurance proceeds received in the quarterly dividend payment approved by the Board of Directors in April 2017.

current year.

Financing Activities
Net cash used by financing activities totaled $315.7$352.0 million in 2016,2023, compared with $256.4a net provision of cash totaling $1,294.2 million in 2015, an increased use2022. Financing activities in 2023 included the net repayment of debt totaling $150.4 million as the Company utilized its strong operating cash flows and proceeds from the sale of assets to repay syndicated term loans ahead of their scheduled maturities. The Company received net debt proceeds of $1,518.8 million from the issuance of green bonds and a three-year term loan facility in 2022 that were used primarily to fund the January 2022 acquisition of Metal Packaging. The change in outstanding checks provided cash of $59.3 million. This increase was driven primarily by$6.4 million in 2023 while using cash of $18.5 million in the useprior year. The year-over-year change is the result of $106.7 millionthe timing and size of cashthe last accounts payable check runs in 20162023 and 2022 relative to the Company’s December 31 year end. Cash used to repurchase 2.2 million shares of the Company’s common stock. Outstanding debtstock to satisfy employee tax withholding obligations in association with the exercise of certain share-based compensation awards was $1,052.7$10.6 million at December 31, 2016in 2023, compared with at $1,128.4to $4.5 million at December 31,2015. These balances reflect net repaymentsin 2022. Also in 2022, the Company used cash of $65.1$14.5 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 repaypurchase the remaining balance of33% ownership interest in Graffo Paranaense de Embalagens S/A from 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. three noncontrolling partners.
Cash dividends increased 6.0% to $146.4totaled $197.4 million in 20162023 compared to $138.0$187.1 million in 2015,2022, reflecting a $0.02 per sharethe increase in the quarterly dividend payment from $0.49 per share to $0.51 per share 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, and current liabilities increased by $197.4 million to $1,000 million, resulting in a decrease in the Company’s current ratio to 1.6 at December 31, 2017 from 1.7 at December 31, 2016. The increase in both current assets and current liabilities was largely attributable to the acquisitions completed in 2017 and higher level of working capital and short-term debt at the end of 2017 compared to the end of 2016.

2023.

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

Resources

The Company’s cash balances are held in numerous locations throughout the world. At December 31, 20172023 and 2016,2022, approximately $238.4$93.8 million and $174.7$170.1 million, respectively, of the Company’s reported cash and cash equivalents balances of $254.9$151.9 million and $257.2$227.4 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, 2023, 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 with 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 also began voluntary supply chain financing programs (the “SCF Programs”) to provide certain suppliers with the opportunity to sell receivables due from the Company to the SCF Programs’ 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 SCF Programs. 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 SCF Programs. All amounts outstanding at December 31, 2023 under the SCF Programs were recorded within trade accounts payable. The amount owed to the participating financial institution under the SCF Programs and included in accounts payable for continuing operations was $35.8 million at December 31, 2023 and $52.4 million at December 31, 2022. The Company accounts for all payments made under the SCF Programs 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 SCF Programs and paid by the Company to the participating financial institution was $188 million during 2023 and $270 million during 2022. 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 SCF Programs. However, the Company does not believe a reduction in, or the elimination of, the SCF Programs would have a material impact on its working capital or cash flows.
The Company’s total debt at December 31, 2023, was $3.1 billion, a year-over-year decrease of $0.1 billion. The year-over-year change reflects the following actions taken during 2023:
•On August 7, 2023, the Company entered into a $900 million term loan facility, maturing on August 7, 2028, with a consortium of Farm Credit System institutions (see Note 10 for more information). A total of $600 million was drawn on August 7, 2023 and used to repay the syndicated term loans that were due in December 2023 and January 2025 and to make certain capital expenditures and to reimburse the Company for certain capital expenditures it had made in its operation of waste disposal facilities in rural areas. An additional $270 million was drawn on September 8, 2023 and used to partially fund the acquisition of the remaining interest in RTS Packaging and the acquisition of the Chattanooga Mill (see Note 3 for more information). As of December 31, 2023, the Company had repaid a total of $295 million of the amounts drawn and had outstanding borrowings of $575 million under the term loan facility.
32 FORM 10-K SONOCO 2023 ANNUAL REPORT

•The Company utilized its strong operating cash flows and proceeds from the sale of assets to repay syndicated term loans of $700 million in July and August 2023, ahead of their scheduled maturities.
On August 7, 2023, the Company increased the commitments under its unsecured revolving credit facility by $150 million to an aggregate amount of $900 million. The Company entered into this five-year facility, which supports its $500 million commercial paper program, on June 30, 2021.
At December 31, 2023, the Company had approximately $152 million in cash and cash equivalents on hand and $900 million in committed availability under its revolving credit facility, all of which was available for drawdown. 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.
As of December 31, 2023, the Company had scheduled debt maturities of $47.1 million, $449.8 million, $21.8 million, $310.4 million, and $583.7 million in 2024, 2025, 2026, 2027, and 2028, respectively. See Note 10 to the Consolidated Financial Statements for additional information regarding the Company’s contractual principal debt maturities.
The Company’s contractual obligation maturities for interest payments on outstanding fixed-rate, long-term debt, as well as financing fees on the backstop line of credit, are expected to total approximately $78.9 million in 2024, $72.4 million in 2025, $71.2 million in 2026, $64.5 million in 2027, and $63.9 million in 2028.
Capital spending is expected to total approximately $350 million in 2024, in line with 2023 (when excluding the impact of proceeds from asset sales). The Company expects increasing levels of investment for profit generating projects in the Rigid Paper, Flexibles, and Metal Packaging businesses centered around footprint optimization, automation, and sales growth support. These increases are expected to be offset by moderating year-over-year levels of maintenance capital.
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 2024 and beyond.
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 of credit, 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 utilize the proceeds to pay down debt and/or 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$127 million at the end of 2017. During 2017,2023, compared with $98 million at the end of 2022. The increase in the unfunded position reflects an additional unfunded liability of approximately $12 million associated with the acquisition of the remaining interest in RTS Packaging and the related assumption of the RTS Packaging Pension Plan (“RTS Plan”). The Company contributed approximately $109$14.7 million to its benefit plans. The Company anticipates that benefitplans in 2023. Benefit plan contributions in 2018 will2024 are expected to total approximately $38$19 million. Future funding requirements will depend largely on actual investment returns, and future actuarial assumptions. Participationassumptions, legislative actions, and changes to the Company’s benefit offerings.
Current assets decreased year over year by $311 million to $2,050 million at December 31, 2023, and current liabilities decreased by $579 million to $1,165 million, resulting in an increase in the U.S. qualified defined benefit pension plan is frozen for salaried andnon-union hourly U.S. employees hired on or after January 1, 2004. In February 2009, the plan was further amendedCompany’s ratio of current assets to freeze service credit earned effectivecurrent liabilities to 1.8 at December 31, 2018. This change is expected2023 from 1.4 at December 31, 2022. Current assets were lower principally due to moderately reduceyear-over-year reductions in inventory while current liabilities decreased primarily due to the volatilityrepayment of long-term funding exposure and expenses.

the syndicated term loan that was due in December 2023.

Total equity increased $175$359 million during 20172023 as net income of $177$476 million, and other comprehensive income totaling $146of $63 million and stock-based compensation of $28 million were partially offset by dividend paymentsdividends of $155 million, stock-based compensation of $13$199 million and share repurchases of $6 million.$11 million for tax share withholding on vested stock compensation granted to employees. The primary componentsdriver of other comprehensive gain wereincome was a $89$70 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, ininvestments.
On April 20, 2021, 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 million translation loss from the impact of a stronger U.S. dollar on the Company’s foreign investments and an increase in actuarial losses totaling $9.6 million, net of tax, in the Company’s various defined benefit plans resulting primarily from lower year-over-year discount rates.

On February 10, 2016, the Company’s Board of Directors authorized the repurchase of up to 5 million shares of the Company’s common stock. During 2016,stock up to an aggregate amount of $350 million. The Company purchased a total of 2.033.29 million shares were repurchased under this authorization during 2021 at a cost of $100$212 million. No shares were repurchased under this authorization during 2017. Accordingly,2022 or 2023; accordingly, a total of $138 million remains available for share repurchases at December 31, 2017, a total of 2.97 million shares remain available for repurchase under this authorization.

2023.

Although the ultimate determination of whether to pay dividends is within the sole discretion of the Board and is based on a variety of Directors,factors, the Company plans to increasecontinue paying dividends consistent with historical practice as earnings grow.and the Company’s liquidity permit. Dividends per common share were $1.54 $2.02 in 2017, $1.462023, $1.92 in 20162022 and $1.37$1.80 in 2015.2021. On February 14, 2018,2024, the Company declared a regular quarterly dividend of $0.39$0.51 per common share payable

28SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

on March 9, 2018,8, 2024, to shareholders of record on February 28, 2018.

Off-balance sheet arrangements

2024.

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 typically extend the lease term in increments from one to five years. For additional information regarding the Company’s contractual lease obligations, see Note 7 to the Consolidated Financial Statements.
As of December 31, 2017.

2023, 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 17 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 to July 1, 2015,

33 FORM 10-K SONOCO 2023 ANNUAL REPORT

Because the economy in Venezuela is considered highly inflationary under U.S. GAAP, 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, 2017,2023, the carrying value of the Company’s net investment in its Venezuelan operations was approximately $1.8$2.1 million. In addition, accumulated other comprehensive loss at December 31, 2017, the Company’s Accumulated Other Comprehensive Loss2023 included a cumulative translation adjustment loss of approximately $3.8 million related to itsthe Company’s Venezuela operations whichoperations. These translation losses would need to be reclassified to net income in the event of a complete exit of the business or deconsolidation of these operations.
Turkey has been deemed to be a decisionhighly inflationary economy under U.S. GAAP since the first quarter of 2022. Accordingly, the Company considers the U.S. dollar to deconsolidate.

be the functional currency of its operations in Turkey and has remeasured monetary assets and liabilities denominated in Turkish lira to U.S. dollars with changes recorded through earnings. The cumulative impact of applying highly inflationary accounting to Turkey has been a pretax charge to earnings of $6.5 million ($5.0 million after tax), including $3.8 million ($2.9 million after tax) during 2023. The magnitude of future earnings impacts is uncertain as such impacts are dependent upon unpredictable movements in the Turkish lira relative to the U.S. dollar. In addition to remeasurement-related charges, significant deterioration in the Turkish economy could result in the recognition of future impairment charges. However, the Company believes its exposure is limited to its net investment in Turkey which, as of December 31, 2023, was approximately $17.8 million.

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,occasionally 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, 2017,2023, the Company had derivative contracts outstanding to hedge the priceprices on a portion of anticipated commoditynatural gas and energy purchases as well as to hedge certain foreign exchange risks for various periods through December 2019.aluminum purchases. These contracts, which qualify as cash flow hedges, included swaps to hedge the purchase price of approximately 7.5 million MMBTUs of natural gas inswaps covering approximately 0.1 million metric million British thermal units (“MMBTUs”) and aluminum swaps covering 488 metric tons. In addition, at December 31, 2023, the U.S. and Canada representing approximately 76.2% and 35.5%Company had certain other commodity contracts outstanding to manage the cost of anticipated natural gas usagepurchases for 2018 and 2019. Additionally,which the Company had swapdoes not apply hedge accounting. These contracts consist of natural gas swaps covering 1796 metric tons of aluminum representing approximately 24% 5.4 million MMBTUs. The Company’s combined designated and non-designated derivative contracts totaled approximately 76% and 10% of anticipated natural gas and aluminum usage, respectively, in North America for 2018. 2024.
The aluminum hedges relateCompany routinely enters into forward contracts to fixed-price customer contracts. At December 31, 2017, the Company had a number of foreign currency contracts in place for both designated and undesignated hedges of eitherhedge certain anticipated foreign currency denominated transactionssales, purchases, and capital spending. For such contracts that are designated and qualify as a cash flow hedge under ASC 815, the gain or existing financial assetsloss on the derivative instrument is reported as a component of other comprehensive income and liabilities.reclassified into earnings in the periods during which the hedged transaction affects earnings. At December 31, 2017,2023, the total notional amount of these contracts, in U.S. dollar terms, was $189$125 million, of which $58$34 million related to the Canadian dollar, $50 million to the Mexican peso, $50$33 million to the Polish Zlotyzloty, $26 million to the Canadian dollar, $11 million to the Brazilian real, $7 million to the Danish krone, $6 million to the Colombian peso, $5 million to the Czech koruna and $31$3 million to all other currencies.

The Company also routinely enters into forward contracts to economically hedge the currency exposure of intercompany debt and 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.

During 2023, the Company became party to cross-currency swap agreements with a total notional amount of $500 million 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 swap agreement provides for the Company to receive semi-annual interest payments in U.S. dollars at a fixed rate and to make semi-annual interest payments in euros at a fixed rate. The risk management objective of entering into such agreements is to manage foreign currency risk relating to net investments in certain European subsidiaries denominated in euros. The agreements are designated as net investment hedges for accounting purposes. The gain or loss on the net investment hedge derivative instrument is included in the foreign currency translation component of accumulated other comprehensive loss until the net investment is sold, diluted, or liquidated. Interest payments received for the cross-currency swap are excluded from the net investment hedge effectiveness assessment and are recorded in interest expense. For the year ended December 31, 2023, the fair value of the Company’s net investment hedges was a loss position of $5.1 million, and a loss of $3.8 million (net of income taxes of $1.3 million) was reported as a component of accumulated other comprehensive loss within foreign currency items.
The total fair market value of the Company’s derivatives was a net unfavorable position of $1.3$10.4 million and $9.7 million at December 31, 2017,2023 and a net favorable position of $2.8 million at December 31, 2016.2022, 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 911 to the Consolidated Financial Statements for more information on financial instruments.

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 partyPRP at several environmentallyenvironmentally 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 hashad accrued $20.3$7.3 million at December 31, 2017, compared with $24.5 million at December 31, 2016,2023 with respect to these sites. See “Environmental Charges,”“Environmental Charges” in Item 3 – Legal Proceedings and Note 1417 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

34 FORM 10-K SONOCO 20172023 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 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 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


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%
Critical Accounting Estimates

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).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.

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, property, plant, and equipment, 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 patents, customer relationships, trade names, proprietary 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. Projecting discounted future cash flows requires the Company to make significant estimates regarding projected revenues, projected earnings before interest, taxes, depreciation, and amortization margins, discount rates and customer attrition rates. 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 on property, plant, and equipment and amortization expense on definite-lived intangible assets. If the estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset could become impaired.
For leases acquired in a business combination, the Company measures the lease liability at the present value of the remaining lease payments, as if the acquired lease were a new lease of the Company at the acquisition date. When the implicit rate in the acquired lease is not readily determinable, the Company calculates the lease liabilities using discount rates based upon the Company’s incremental secured borrowing rate for the region in which the acquisition was completed. An assessment of the certainty associated with the exercise of any lease renewal, termination, and purchase options included in the acquired lease contracts is also performed. The Company measures the right-of-use asset at the same amount as the lease liability as adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms.
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 and other 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 that reporting unit, 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, as determined in accordance with ASC 350, “Intangibles-Goodwill and Other,” are the same as, or one level below, its operating segments, as determined in accordance with ASC 280, “Segment Reporting.”

The Company completed its most recent annual goodwill impairment testing during the third quarter of 2017.2023. 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 pricethe industry, the Company’s overall financial performance, the current and market capitalization movement,projected financial performance of specific reporting units, and business strategy changes, and significant customer wins and losses.changes. The quantitative tests, considered factors such asdescribed further below, relied
35 FORM 10-K SONOCO 2023 ANNUAL REPORT

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, specific business unit risk, the countries in which the reporting units operate, and implied fair values frombased on comparable trading and transactiontrading multiples.

When performing a quantitative analysis, the Company estimates the fair value of its reporting units it does so using a weighted average of the income and market approaches. Under the income approach, the Company uses a discounted cash flow model based on projections of future years’ operating results and associated cash flows, together withflows. The Company’s assessments reflect significant management assumptions and estimates related to 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 under the market approach. The Company’s model discounts projected future cash flows, forecasted over aten-year five-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,the Plastics-Medical reporting unit, previously known as 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 the expected future results in any of its reporting units sufficient to result in goodwill impairment. In management’s opinion, a change of such magnitude would more likely be the result of changes to some combination of the factors identified above, a general deterioration in competitive position, introduction of a superior technology, significant unexpected changes in customer preferences, an inability to pass through significant raw material cost increases, and other such items as identified in “Item 1A. Risk Factors” ofin 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-Medical reporting units having the greatestunit is at risk of impairment in the near term if its operations do not perform in line with management's expectations, or if there is a significantnegative change in the long-term outlook for the business or in other factors such as the discount rate.
Sensitivity Analysis
In the 2023 annual goodwill impairment analysis, projected future impairment if actual results fall short of expectations are Display and Packaging, and Paper and Industrial Converted Products – Europe. Total goodwill associated with these reporting units was approximately $203 million and $95 million, respectively, at December 31, 2017.

The Display and Packagingcash flows for the Plastics-Medical reporting unit designs, manufactures, assembles, packswere discounted at 12.0%, 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. Based on the annual impairment test performed in the third quarter, theits estimated fair value of Display and Packaging exceededwas determined to exceed its carrying value by approximately 37% compared to 64% in the prior year’s 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.29.9%. Based on the valuation work performed during the third quarter, the estimated fair value of Paperdiscounted cash flow model 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 were discounted at 10.0% 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 periodsthe discount rate for this unit would have to be reduced approximately 23%, or the discount rate increased to 12.7%,14.5% 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.

DuringTotal goodwill associated with the time subsequent to the annual evaluation, andPlastics-Medical reporting unit was $64.2 million 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.

2023.

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

Share-Based Compensation Plans
The Company utilizes share-based compensation in the form of stock appreciation rights, restricted stock units, performance contingent restricted stock units (“PCSUs”), and other share-based awards. Certain awards are inThe fair value of the form of contingentCompany’s restricted stock units whereis equal to the ultimate numberclosing price of unitsthe Company’s stock on the date of grant discounted for any projected dividends that are performance based.not eligible to be received during the vesting period. The amount of share-based compensation expense associated with these performance-based awards arePCSUs is based on estimates regardingof future performance using measures defined in the plans. In 2017,stock plan descriptions for each award granted. As of December 31, 2023, these performance measures include the following:
•Adjusted earnings per share — three-year sum of forecasted future and historical annual adjusted earnings per share for the three-year measurement period associated with each award; and
•Return on invested capital — three-year simple average of annual returns calculated by dividing 1) adjusted operating profit after tax (derived from historical or projected adjusted earnings) by 2) the average of total historical or projected debt plus equity for the respective annual periods.
For the most recent award grant in 2023, the performance measures consisted of Earnings per Share and Return on Net Assets Employed.payout will be subject to adjustment by a total stock return modifier as determined by the Company’s relative performance within its targeted peer group. 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 reflectedrecognized 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 See Note 13 to the model include a number of subjective assumptions. Management routinely assessesConsolidated Financial Statements for additional information on the assumptions and methodologies used to calculate estimated fair value ofCompany’s 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.

plans.


36 FORM 10-K SONOCO 2023 ANNUAL REPORT

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 and postretirement plans include the U.S.-based Sonoco Pension Plan, the U.S. nonqualified retirement plans, the U.S. Retirement and Retiree Health and Life Insurance Plan, and the Sonoco U.K. Retirement Benefits Plan. On September 8, 2023, the Company completed the acquisition of the remaining 65% ownership interest of the RTS Packaging joint venture, which included the assumption of the RTS Plan. At the time of the acquisition, the RTS Plan had a projected benefit obligation (“PBO”) of $43.9 million and plan assets of $32.3 million resulting in an unfunded pension obligation of $11.6 million.
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, 2017,2023 in determining the projected benefit obligationPBO and the accumulated benefit obligation for U.S. retirement and retiree health and life insurance plans include:include discount rates of 3.69% and 3.49% for the active and inactive qualified retirement plans, respectively, 3.50% for thenon-qualified retirement plans, and 3.36% for the retiree health and life insurance plan; and rates of compensation increases ranging from 3.28% to 4.02%.increase. The key assumptions used to determine 2017the 2023 net periodic benefit cost for U.S. retirement and retiree health and life insurance plans include:include discount rates, of 4.29% and 3.99% for the active and inactive qualified retirement plans, respectively, 3.97% for thenon-qualified retirement plans, and 3.70% for the retiree health and life insurance plan; an expected long-term rate of return on plan assets, of 7.00% and 6.75% for the active and inactive qualified retirement plans, respectively; and rates of compensation increases ranging from 3.32% to 4.87%.

During 2017, the Company recorded total pension and postretirement benefit expenses of approximately $78.5 million, compared with $45.3 million during 2016. The 2017 amount reflects $82.8 million of expected returns on plan assets at an average assumed rate of 6.3% and interest cost of $56.3 million at a weighted-average discount rate of 3.34%. The expense recognized in 2017 also includes $32.8 million of pension settlement charges, which are discussed in more detail below. The 2016 amount reflects $87.0 million of expected returns on plan assets at an average assumed rate of 6.8% and interest cost of $60.2 million at a weighted-average discount rate of 3.55%. During 2017, the Company made contributions to its pension and postretirement plans of $108.6 million, including a voluntary $50 million contribution to its U.S. active qualified retirement plan. In the prior year, the Company made contributions to its pension and postretirement plans totaling $46.7 million. Contributions vary from year 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 primarily the result of low discount rates. 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

increase.

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 total benefit plan expense to be approximately $8 million lower in 2018 than in 2017. The decrease is primarily due to greater expected returns on plan assets due to a higher asset base resulting from the strong market performance in 2017 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.

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 wasis 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

The sensitivity to changes in the critical assumptions for the Company’s U.S. and U.K. plans as of December 31, 2023, is as follows:
Assumption
($ in millions)
Percentage
Point
Change
Projected Benefit
Obligation
Higher/(Lower)
Annual Expense
Higher/(Lower)
Discount rate0.25% decrease$10.5$0.3
Expected return on assets0.25% decreaseN/A$0.6
Another key assumption for the U.S. retiree health and life insurance plan is a medical cost trend rate beginning at 6.75%7.25% forpost-age 65 participants and trending down to an ultimate rate of 4.5% in 2026.2033. The ultimate trend rate of 4.5% 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.

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.expenses 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 1214 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 operatingadversely affect our results of operations and 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 911 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-43 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.



37 FORM 10-K SONOCO 2023 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, 20172023 and 2016,2022, 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, 2017,2023, 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, 2017,2023, 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, 20172023 and 2016,2022, and the results of theirits operations and theirits cash flows for each of the three years in the period ended December 31, 20172023 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, 2017,2023, 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 consolidatedfinancial 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 consolidatedfinancial 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 Internal Control overOver Financial Reporting, management has excluded RTS Packaging, Holdings Inc.LLC (“RTS Packaging”), the Chattanooga paper mill (“Chattanooga Mill”), and subsidiariesInapel Embalagens Ltda. (“Packaging Holdings”) and Clear Lam Packaging, Inc. (“Clear Lam”Inapel”) from its assessment of internal control over financial reporting as of December 31, 20172023 because they were acquired by the Company in a purchase business combinationcombinations during 2017.2023. We have also excluded RTS Packaging, HoldingsChattanooga Mill, and Clear LamInapel from our audit of internal control over financial reporting. RTS Packaging, HoldingsChattanooga Mill, and Clear LamInapel are wholly-owned subsidiaries whose total assetsrevenues and total revenuesassets excluded from management’s assessment and our audit of internal control over financial reporting collectively represent approximately 4.1%1.3% and 4.3%3.0%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017.

2023.


Definition and limitationsLimitations of internal controlInternal Control over financial reporting

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 matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.


F-1 FORM 10-K SONOCO 2023 ANNUAL REPORT


Goodwill Impairment Assessment – Plastics – Medical Reporting Unit
As described in Notes 1 and 8 to the consolidated financial statements, the Company’s consolidated goodwill balance was $1.8 billion as of December 31, 2023, and the goodwill associated with the Plastics – Medical reporting unit was $64.2 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. As disclosed by management, if the fair value of a reporting unit exceeds the carrying value of that reporting unit, 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. 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 – Medical reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting unit; (ii) a high degree of 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 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 – Medical reporting unit. These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the Plastics – Medical reporting unit; (ii) evaluating the appropriateness of the discounted cash flow model used by management; (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 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 – Medical reporting unit; (ii) the consistency with external market data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow model and (ii) the reasonableness of the discount rate assumption.

Valuation of Customer Lists Intangible Asset – RTS Packaging
As described in Notes 1, 3 and 8 to the consolidated financial statements, on September 8, 2023, the Company completed the acquisition of the remaining 65% interest in RTS Packaging from joint venture partner WestRock Company (“WestRock”) and the acquisition of the Chattanooga Mill from WestRock for net cash consideration of $313.4 million. The acquisitions resulted in $190.6 million of intangible assets, primarily related to customer lists, the majority of which related to the RTS Packaging acquisition. The fair values of intangible assets associated with the acquisitions were determined using an income valuation approach. Projecting discounted future cash flows requires management to make significant estimates regarding projected revenues, projected earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, discount rates and customer attrition rates.
The principal considerations for our determination that performing procedures relating to the valuation of the customer lists intangible asset acquired in the RTS Packaging acquisition is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the customer lists intangible asset acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to projected revenues, projected EBITDA margins, discount rate and customer attrition 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 the acquisition accounting, including controls over management’s valuation of the customer lists intangible asset acquired. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value estimate of the customer lists intangible asset acquired; (iii) evaluating the appropriateness of the income valuation approach used by management; (iv) testing the completeness and accuracy of underlying data used in the income valuation approach; and (v) evaluating the reasonableness of the significant assumptions used by management related to projected revenues, projected EBITDA margins, discount rate and customer attrition rate. Evaluating management’s assumptions related to projected revenues and projected EBITDA margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of RTS Packaging; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income valuation approach and (ii) the reasonableness of the discount rate and customer attrition rate assumptions.

/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina

February 28, 2018

2024


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


F1







F-2 FORM 10-K SONOCO 20172023 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
20232022
Assets
Current Assets
Cash and cash equivalents$151,937 $227,438 
Trade accounts receivable, net of allowances of $21,661 in 2023 and $16,879 in 2022
904,898 862,712 
Other receivables106,644 99,492 
Inventories
Finished and in process324,910 453,981 
Materials and supplies448,591 641,577 
Prepaid expenses113,385 76,054 
Total Current Assets2,050,365 2,361,254 
Property, Plant and Equipment, Net1,906,137 1,710,399 
Goodwill1,810,654 1,675,311 
Other Intangible Assets, Net853,670 741,598 
Long-term Deferred Income Taxes31,329 29,878 
Right of Use Asset-Operating Leases314,944 296,781 
Other Assets224,858 237,719 
Total Assets$7,191,957 $7,052,940 
Liabilities and Equity
Current Liabilities
Payable to suppliers$707,490 $818,885 
Accrued expenses and other324,338 295,841 
Accrued wages and other compensation75,676 109,830 
Notes payable and current portion of long-term debt47,132 502,440 
Accrued taxes10,641 16,905 
Total Current Liabilities1,165,277 1,743,901 
Long-term Debt3,035,868 2,719,783 
Noncurrent Operating Lease Liabilities265,454 250,994 
Pension and Other Postretirement Benefits142,900 120,084 
Deferred Income Taxes100,788 107,293 
Other Liabilities49,835 38,088 
Commitments and Contingencies (Note 17)
Sonoco Shareholders’ Equity
Serial preferred stock, no par value
Authorized 30,000 shares
0 shares issued and outstanding as of December 31, 2023 and 2022
Common shares, no par value
Authorized 300,000 shares
97,957 and 97,645 shares issued and outstanding as of December 31, 2023 and 2022, respectively
7,175 7,175 
Capital in excess of stated value159,047 140,539 
Accumulated other comprehensive loss(366,262)(430,083)
Retained earnings2,624,380 2,348,183 
Total Sonoco Shareholders’ Equity2,424,340 2,065,814 
Noncontrolling Interests7,495 6,983 
Total Equity2,431,835 2,072,797 
Total Liabilities and Equity$7,191,957 $7,052,940 
The Notes beginning on pageF-6 F-7 are an integral part of these consolidated financial statements.


F-3 FORM 10-K SONOCO 20172023 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
202320222021
Net sales$6,781,292 $7,250,552 $5,590,438 
Cost of sales5,345,638 5,810,903 4,528,528 
Gross profit1,435,654 1,439,649 1,061,910 
Selling, general and administrative expenses741,860 707,343 558,180 
Restructuring/Asset impairment charges56,933 56,910 14,210 
Gain/(Loss) on divestiture of business and other assets

78,929 — (2,667)
Operating profit715,790 675,396 486,853 
Other income, net39,657 — — 
Non-operating pension costs14,312 7,073 568,416 
Interest expense136,686 101,662 63,991 
Interest income10,383 4,621 4,756 
Loss from the early extinguishment of debt— — 20,184 
Income/(Loss) before income taxes614,832 571,282 (160,982)
Provision for/(Benefit from) income taxes149,278 118,509 (67,430)
Income/(Loss) before equity in earnings of affiliates465,554 452,773 (93,552)
Equity in earnings of affiliates, net of tax10,347 14,207 10,841 
Net income/(loss)475,901 466,980 (82,711)
Net income attributable to noncontrolling interests(942)(543)(2,766)
Net income/(loss) attributable to Sonoco$474,959 $466,437 $(85,477)
Weighted average common shares outstanding:
Basic98,294 97,991 99,608 
Assuming exercise of awards596 741 — 
Diluted98,890 98,732 99,608 
Per common share
Net income/(loss) attributable to Sonoco:
Basic$4.83 $4.76 $(0.86)
Diluted$4.80 $4.72 $(0.86)
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
202320222021
Net income/(loss)$475,901 $466,980 $(82,711)
Other comprehensive income/(loss):
Foreign currency translation adjustments70,308 (68,780)(75,636)
Changes in defined benefit plans, net of tax(8,654)424 471,350 
Change in derivative financial instruments, net of tax1,737 (1,842)1,119 
Other comprehensive income/(loss)63,391 (70,198)396,833 
Comprehensive income539,292 396,782 314,122 
Net income attributable to noncontrolling interests(942)(543)(2,766)
Other comprehensive loss/(income) attributable to noncontrolling interests430 (460)584 
Comprehensive income attributable to Sonoco$538,780 $395,779 $311,940 
The Notes beginning on pageF-6 F-7 are an integral part of these consolidated financial statements.

F3

F-4 FORM 10-K SONOCO 20172023 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, 2021$1,910,528 100,447 $7,175 $314,056 $(756,842)$2,335,216 $10,923 
Net (loss)/income(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 interest(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)
Share-based compensation22,608   22,608    
December 31, 2021$1,849,541 97,370 $7,175 $119,690 $(359,425)$2,070,005 $12,096 
Net income466,980 466,437 543 
Other comprehensive (loss)/income:
Translation (loss)/income(68,780)(69,240)460 
Defined benefit plan adjustment1
424 424 
Derivative financial instruments1
(1,842)(1,842)
Other comprehensive (loss)/income(70,198)(70,658)460 
Purchase of noncontrolling interest(13,196)(7,080)(6,116)
Dividends(188,259)(188,259)
Issuance of stock awards1,167 354 1,167 
Shares repurchased(4,547)(79)(4,547)
Share-based compensation31,309 31,309 
December 31, 2022$2,072,797 97,645 $7,175 $140,539 $(430,083)$2,348,183 $6,983 
Net income475,901 474,959 942 
Other comprehensive income/(loss):
Translation income/(loss)70,308 70,738 (430)
Defined benefit plan adjustment1
(8,654)(8,654)
Derivative financial instruments1
1,737 1,737 
Other comprehensive income/(loss)63,391 63,821 (430)
Dividends(198,762)(198,762)
Issuance of stock awards1,345 4881,345 
Shares repurchased(10,617)(176)(10,617)
Share-based compensation27,780 27,780 
December 31, 2023$2,431,835 97,957 $7,175 $159,047 $(366,262)$2,624,380 $7,495 
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 20172023 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
202320222021
Cash Flows from Operating Activities
Net income/(loss)$475,901 $466,980 $(82,711)
Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairment loss/(gain)26,445 21,444 (4,082)
Depreciation, depletion and amortization340,988 308,824 245,184 
Loss on early extinguishment of debt— — 20,184 
Share-based compensation expense27,780 31,309 22,608 
Equity in earnings of affiliates, net of tax(10,347)(14,207)(10,841)
Cash dividends from affiliated companies9,389 8,902 8,660 
Net (gain)/loss on disposition of assets(65,947)(5,979)15 
Net (gain)/loss on divestiture of business(57,104)— 2,667 
Pension and postretirement plan expense17,460 10,697 595,620 
Pension and postretirement plan contributions(14,662)(37,409)(163,659)
Net decrease in deferred taxes(12,209)(9,876)(158,836)
Change in assets and liabilities, net of effects from acquisitions, divestitures and foreign currency adjustments
Trade accounts receivable24,935 (2,466)(149,755)
Inventories342,713 (353,478)(130,119)
Payable to suppliers(148,841)27,225 172,430 
Prepaid expenses1,394 33,702 (13,077)
Income taxes payable and other income tax items(28,286)5,504 (42,204)
Accrued expenses and other assets and liabilities(46,691)17,877 (13,412)
Net cash provided by operating activities882,918 509,049 298,672 
Cash Flows from Investing Activities
Purchase of property, plant and equipment(363,077)(328,769)(256,019)
Cost of acquisitions, net of cash acquired(372,616)(1,427,020)(22,209)
Proceeds from the sale of business, net33,237 — 91,569 
Proceeds from the sale of assets80,339 9,621 13,166 
Investment in affiliated companies(11,300)(2,700)

578 
Other net investing proceeds14,081 7,432 

7,013 
Net cash used by investing activities(619,336)(1,741,436)(165,902)
Cash Flows from Financing Activities
Proceeds from issuance of debt962,557 2,153,355 172,042 
Principal repayment of debt(1,112,917)(285,511)(628,119)
Net (decrease)/increase in commercial paper borrowings— (349,000)349,000 
Net increase/(decrease) in book cash overdrafts6,408 (18,529)6,974 
Proceeds from interest rate swap— — 4,387 
Cash dividends – common(197,416)(187,093)(178,622)
Purchase of noncontrolling interest— (14,474)— 
Dividends paid to noncontrolling interests— — (1,009)
Excess cash costs of early extinguishment of debt— — (20,111)
Payments for share repurchases(10,617)(4,547)(218,085)
Net cash (used)/provided by financing activities(351,985)1,294,201 (513,543)
Effects of Exchange Rate Changes on Cash12,902 (5,354)(13,097)
(Decrease)/Increase in Cash and Cash Equivalents(75,501)56,460 (393,870)
Cash and cash equivalents at beginning of year227,438 170,978 564,848 
Cash and cash equivalents at end of year$151,937 $227,438 $170,978 
Supplemental Schedule of Non-Cash Investing Activities:
Non-cash additions to property, plant and equipment$23,168 $20,250 $27,343 
Supplemental Disclosures:
Interest paid, net of amounts capitalized$135,910 $88,208 $68,189 
Income taxes paid, net of refunds$189,773 $122,881 $133,610 
The Notes beginning on pageF-6 F-7 are an integral part of these consolidated financial statements.

F5

F-6 FORM 10-K SONOCO 20172023 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 sharesdoes not control over the financial and operating decisions, butinvestee or in which the Company is not the primary beneficiary but has the ability to exercise significant influence over the investee’s financial and operating decisions, are accounted for by the equity method of accounting. Income applicable to these equity investments is reflectedreported in “Equity in earnings of affiliates, net of tax” in the Consolidated Statements of Income.
Affiliated companies over which the Company exercised a significant influence at December 31, 2023, included:
Entity
Ownership Interest
Percentage at
December 31, 2023
Cascades Conversion, Inc.50.0 %
Cascades Sonoco, Inc.50.0 %
ISI Robotics, LLC20.0 %
Showa Products Company Ltd.22.2 %
Papertech Energía, S.L.25.0 %
Weidenhammer New Packaging, LLC40.0 %
On September 8, 2023, the Company completed the acquisition of the remaining 65% interest in RTS Packaging, LLC (“RTS Packaging”), from joint venture partner WestRock Company (“WestRock”). Prior to September 8, 2023, the Company reported its 35% interest in the RTS Packaging joint venture using the equity method of accounting. From the date of acquisition of the remaining 65% interest, RTS Packaging was accounted for under the acquisition method and its results of operations were included in the Company’s Consolidated Statements of Income. See Note 3 for additional information.
In addition, the Company has certain other equity investments in which it is not able to exercise significant influence so they are accounted for under the measurement alternative (i.e., cost less impairment, adjusted for any qualifying observable price changes). These investments include a 19.5% ownership in a small tubes and cores business in Chile and an 20.5% ownership in a small South Carolina based designer and manufacturer of sustainable protective packaging solutions acquired in June 2022. They also include a 2.7% equity interest in Northstar Recycling Company, LLC (“Northstar”) valued at $5,000 which the Company acquired on January 26, 2023, as part of the sale of its Sonoco Sustainability Solutions (“S3”) business to Northstar. See Note 3 for more information.
The aggregate carrying value of equity investments is reported in “Other Assets” in the Company’s Consolidated Balance Sheets and totaled $107,722 and $106,956$56,399 and $59,171 at December 31, 20172023 and 2016,2022, respectively.

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

Entity

Ownership Interest

Percentage at

December 31, 2017

RTS Packaging JVCO

35.0%

Cascades Conversion, Inc.

50.0%

Cascades Sonoco, Inc.

50.0%

Showa Products Company Ltd.

20.0%

Conitex Sonoco Holding BVI Ltd.

30.0%

Weidenhammer New Packaging, LLC

40.0%

Also included in the investment totals above is the Company’s 19.5% ownership in a small tubes and cores business in Chile and its 12.19% ownership in a small paper recycling business in Finland. These investments are accounted for under the cost method as the Company does not exercise significant influence over them.

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 are included in “Cost of sales,Sales,” and freight charged to customers is included in “Net sales”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 expenses and other” in the Company’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

F-7 FORM 10-K SONOCO 2023 ANNUAL REPORT

No single customer comprised 10% or more of the Company’s customers accounted for approximately 4% of the Company’sconsolidated net sales in 2017, 5% in 2016 and 6% in 2015, primarily in2023, 2022 or 2021, nor did the Display and Packaging and Consumer Packaging segments. Receivablesreceivables balance from thisany single customer accounted for approximately 4% and 3%comprise 10% or more of the Company’s total trade accounts receivable at December 31, 2017 and 2016, respectively. 2023 or December 31, 2022.
The Company’s next largest customer comprised approximately 3% ofCompany engages with third-party financial institutions to sell certain trade accounts receivable from customers in order to accelerate its cash collection cycle. In addition, the Company’s net salesCompany also participates in 2017, 4% in 2016 and 4% in 2015.

Many of the Company’s customers sponsor and actively promote multi-vendor supply chain finance arrangements promoted by certain of its customers. Receivables transferred under both these arrangements generally meet the requirements to be accounted for as a true sale in accordance with guidance under Accounting Standards Codification (“ASC”) 860, “Transfers and Servicing,” resulting in a limited numberderecognition of cases,such receivables from the Company has agreedCompany’s consolidated balance sheets. The sales under these arrangements are made without recourse and the Company’s only continuing involvement with the sold receivables is providing collection services related to participate. Accordingly,the transferred assets. The servicing fees for these arrangements are immaterial to the financial statements given the short-term nature of our arrangements. In total, approximately 7%14% and 6%13% of the Company’s consolidated annualnet sales were settledsubject to settlement under these arrangements in 20172023 and 2016,2022, respectively.

Accounts payable and supply chain financing
The Company facilitates voluntary supply chain financing programs (the “SCF Programs”) to provide certain of its suppliers with the opportunity to sell receivables due from the Company to the participating financial institutions in the programs. Such sales are conducted at the sole discretion of both the suppliers and the financial institutions on a nonrecourse basis at a rate that leverages the Company’s credit rating and thus might be more beneficial to the supplier. No guarantees are provided by the Company or any of our subsidiaries under the SCF Programs. The Company’s responsibility under the agreements is limited to making payment to the financial institutions for confirmed invoices based on the terms originally negotiated with its suppliers. Both the Company and the financial institutions have the right to terminate the SCF Programs by providing 30 days prior written notice to the other party. The Company does not enter into any agreements with suppliers regarding their participation in the SCF Programs.
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$29,300 in 2017, $22,5002023, $28,700 in 20162022 and $22,100$24,100 in 2015 2021 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. Identifying and calculating the cost to exit operations requires certain assumptions to be made about anticipated future liabilities, including severance costs, contractual obligations, and disposition of property, plant and equipment and leased assets. If assets become impaired as a result of a restructuring action, the assetsthey 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.

For facility closures, the Company also generally expects to record costs for equipment relocation and facility carrying costs as incurred and to accrue costs to terminate a lease or other contracts before the end of their term.

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. The Company’s cash and cash equivalents are primarily placed with large sophisticated creditworthy 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%approximated 13% and 11% of total inventories at December 31, 20172023 and 2016,2022, 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 higher by $17,632$39,528 and $17,319$51,342 at December 31, 20172023 and 2016,2022, respectively.

Property, plant and equipment

Plant

Property, plant and equipment 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.

Timber

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, respectively. Gains or losses upon disposal are credited or charged to income as incurred.
The Company sold its timberland properties in March 2023. Prior to the sale, these timber resources arewere stated at cost. Depletion is charged to operationscost and depletion expense was recognized based on the estimated number of units of timber cut during the year.

period.

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 (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 in conjunction with the Company's practical expedient election under ASC 842, “Leases.” Leased assets represent the Company’s right to use an underlying asset during the lease term and are reviewed for impairment whenever events indicate the carrying value may not be recoverable. 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
F-8 FORM 10-K SONOCO 2023 ANNUAL REPORT

(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. When 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 expense is paid during the lease term.
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 using the effective interest method over the lease term and the finance lease asset balance is amortized on a straight-line basis.
Goodwill
Goodwill and other intangible assets

is not amortized. 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 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.

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 estimatescompares the fair value of athe reporting unit it does sowith its carrying amount, and if the carrying value of the reporting unit exceeds the fair value of that reporting unit, an impairment charge is recognized for the excess.

In determining the fair value of the reporting units, 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 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. 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

Impairment of a reporting unit exceeds the carrying value of the reporting unit’slong-lived, intangible and other assets including goodwill, there is no impairment. If not, and the carrying value of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment charge is recognized for the excess. Goodwill is not amortized.

Intangible

Other intangible assets are amortized usually onusing the straight-line method when management has determined that the straight-line method approximates the pattern of consumption of the respective intangible assets, or in relation to the specific pattern of consumption of the assets if the straight-line method does not provide a straight-line basis, over their respectivefair approximation of the consumption of benefits. The useful lives whichof the Company’s intangible assets 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 and other 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, definite-lived intangible, or other 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 its estimate of whether it is more likely than not that additional taxes will be required and the Company reports related interest and penalties within provision for income taxes on the consolidated statement of income.

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.

F-9 FORM 10-K SONOCO 2023 ANNUAL REPORT

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 designated as accounting hedges are recognized either in net income, orand otherwise are recognized in other comprehensive income, depending on the designated purpose of the derivative.income. 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.

Share-Based Compensation Plans
The Company utilizes share-based compensation in the form of restricted stock units, performance contingent restricted stock units, and other share-based awards. The fair value of the Company’s restricted stock units is equal to the closing price of the Company’s stock on the date of grant discounted for any projected dividends that are not eligible to be received during the vesting period.The amount of share-based compensation expense associated with performance contingent restricted stock units is based on estimates of future performance using measures defined in the stock plan descriptions for each award granted. As of December 31, 2023, these performance measures include the following:
•Adjusted earnings per share — three-year sum of forecasted future and historical annual adjusted earnings per share for the three-year measurement period associated with each award; and
•Return on invested capital — three-year simple average of annual returns calculated by dividing 1) adjusted operating profit after tax (derived from historical or projected earnings) by 2) the average of total historical or projected debt plus equity for the respective annual periods.
For the most recent award grant in 2023, the performance payout will be subject to adjustment by a total stock return modifier as determined by the Company’s relative performance within its targeted peer group. 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 recognized in the Company’s Consolidated Financial Statements.
Pension and Postretirement Benefit Plans
The Company provides non-contributory defined benefit pension plans for certain of its employees in the United States, Mexico, Belgium, Germany, Greece, France, and Turkey. The Company also sponsors contributory defined benefit pension plans covering certain of its employees in the United Kingdom, Canada and the Netherlands, and provides postretirement healthcare and life insurance benefits to a limited number of its retirees and their dependents in the United States and Canada, based on certain age and/or service eligibility requirements. The actuarial valuations used to evaluate the plans employ key assumptions that can have a significant effect on the calculated amounts.
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 is used to develop an expected range of returns on plan investments over a 12- to 15-year period, with the expected rate of return selected from a best estimate range within the total range of projected results. The Company periodically re-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.
Other assumptions and estimates impacting the projected liabilities of these plans include inflation, participant withdrawal and mortality rates, medical cost trends, and retirement ages. The Company evaluates the assumptions used in projecting the pension and postretirement liabilities and associated expenses 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.
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 acquisition, including the fair values of identifiable intangible assets; property, plant and equipment; 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 its financial condition and results of operations.
Significant estimates and assumptions in estimating the fair value of acquired patents, customer lists, trademarks, proprietary 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. Projecting discounted future cash flows requires the Company to make significant estimates regarding projected revenues, projected earnings before interest, taxes, depreciation, and amortization margins, discount rates and customer attrition rates. 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 on property, plant and equipment and amortization expense on definite-lived intangible assets. If the estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired assets could be impaired.
For leases acquired in a business combination, the Company measures the lease liability at the present value of the remaining lease payments, as if the acquired lease were a new lease of the Company at the acquisition date. The Company measures the right-of-use asset at the same amount as the lease liability as adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms.
F-10 FORM 10-K SONOCO 2023 ANNUAL REPORT

Reportable segments

The Company identifies its reportable segments by evaluating the level of detail reviewed by the chief operating decision maker and the similarities among operating segments related to 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’s operating and reporting structure consists of two reportable segments, Consumer Packaging and Industrial Paper Packaging, with all remaining businesses reported as All Other.

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.

Changes in estimates and assumptions could impact the carrying value of the accruals from one period to another as additional information becomes known.

Foreign currency translation
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. Because the economies in Turkey and Venezuela are considered highly inflationary under U.S. GAAP, the Company considers the U.S. dollar to be the functional currency for these operations and uses the official exchange rate when remeasuring the financial assets and liabilities of these operations. The remeasurement adjustments are recorded against earnings within the Company’s consolidated income statement.
2. New accounting pronouncements

In February 2018,December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, “Reclassification2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which modifies the rules on income tax disclosures to require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of Certain Tax Effects from Accumulated Other Comprehensive Income,”adopting this new guidance on our consolidated financial statements and related disclosures.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which allow a reclassification from accumulated other comprehensive incomeis intended to retained earnings for stranded tax effects resulting fromimprove reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The purpose of the Tax Cutsamendment is to enable investors to better understand an entity’s overall performance and Jobs Act. This updateassess potential future cash flows. The guidance is effective for fiscal years beginning after December 15, 2018,2023, and interim periods within thosefiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. The Company elected to early adoptis currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
In September 2022, the FASB issued ASU 2022-04 “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” The amendments in this update require that a buyer in a supplier finance program disclose qualitative and quantitative information about its supplier finance programs in each annual reporting period, including a description of key payment terms, and a rollforward of the outstanding obligation as of the end of the annual period. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted this standard in the fourthfirst quarter 2017 using specific identification and as a result reclassified $73,239 from “Accumulated other comprehensive income” to “Retained earnings.” This reclassification related only toof 2023, with the changeexception of the amendment on rollforward information, which will be adopted in the statutory tax rate and affected only the Company’s Consolidated Statementfirst quarter 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.2024. 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 early adoption of the new standard effective January 1, 2018. The adoption isdid not expected to have a material effect on itsthe consolidated financial statements.

In May 2017,March 2022, the FASB issued ASU2017-09, “Scope of Modification Accounting, 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.” which providesThe amendments in this update eliminate the accounting guidance about which changes to the terms or conditions offor troubled debt restructurings while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a share-based payment awardborrower is experiencing financial difficulty. The amendments also require that 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 alldisclose current-period gross write offs by year of the following are the same immediately beforeorigination for financing receivables 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, it is intended to reduce diversitynet investments in practice and resultleases. The amendments in fewer changes to the terms of an award being accounted for as modifications. This update isASU 2022-02 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, 2023, and their adoption did not have a material effect on itsthe consolidated financial statements.

In March 2017,October 2021, the FASB issued ASU2017-07, “Improving 2021-08, “Business Combinations: Accounting for Contract Assets and Contract Liabilities.” The amendments in this Update primarily require that the Presentationacquirer 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 Net Periodic Pension Costthe acquisition date. Generally, this would result in an acquirer recognizing and Net Periodic Postretirement Benefit Cost,” which requires an employer to report service costmeasuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured 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.acquiree's financial statements in accordance with GAAP. The amendments should be applied retrospectivelyin this ASU are effective on a prospective basis 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 annualfiscal years, and interim goodwill impairment tests inperiods within those fiscal years, beginning after December 15, 2019, with early adoption permitted, and should be applied on a prospective basis.2022. The Company intends to elect early adoption of this ASU did not materially affect the standard effective January 1, 2018. Any future goodwill impairment, should it occur, will be determined in accordance with this ASU.

Company’s consolidated financial statements.

In October 2016,March 2020, the FASB issued ASU2016-16, “Intra-Entity Transfers 2020-04, “Facilitation of Assets Other Than Inventory,the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provided 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 Topic 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 sunset accounting standard provision associated with ASU 2020-04 was originally set for December 31, 2022; however, in December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform: Deferral of the Sunset Date of Topic 848,” which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.This pronouncement, which was effective for periods

beginning afteras of its December 15, 2017. ASU2016-16 requires an entity to recognize31, 2022 issuance date, did not have a material impact on the income tax consequences of an intra-entity transfer 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.Company's consolidated financial statements. The Company does not expect that the implementationmarket transition of ASU2016-16LIBOR to have a material effect on its consolidated financial statements.

In August 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 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 and requires disclosure of key information about leasing arrangements 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 impact of ASU2016-02, but expects it toSOFR will have a material impact on its Consolidated Statement of Financial Position.

consolidated financial statements.

F-11 FORM 10-K SONOCO 20172023 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 following the modified retrospective transition method and estimates the impact of the transition adjustment on the beginning balance of retained earnings will be approximately $5,000.


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, there were no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements.

3. Acquisitions and dispositions

divestitures

Acquisitions

On July 24, 2017,December 1, 2023, the Company completed the acquisition of Clear Lam Packaging, Inc.Inapel Embalagens Ltda., (“Clear Lam”Inapel”), a manufacturer of single and multilayer materials for $164,951,flexible packaging in Brazil for a net cash purchase price of cash acquired. Final consideration will be$59,228, subject to an adjustment forcustomary working capital adjustments. With the acquisition of Inapel, the Company added approximately 500 employees and two manufacturing locations in the Sao Paulo region of Brazil. The financial results of Inapel are included in the Company’s Consumer Packaging segment.
On September 8, 2023, the Company completed the acquisition of the remaining 65% interest in RTS Packaging from joint venture partner WestRock and the acquisition of a paper mill in Chattanooga, Tennessee (the “Chattanooga Mill”) from WestRock for net cash consideration of $313,388. In December 2023, the Company agreed to a final working capital settlement of $452, which was paid to WestRock in January 2024. This working capital settlement is expectedreflected in “Accrued expenses and other” in the Company’s Consolidated Balance Sheets as of December 31, 2023. Prior to completing the acquisitions, the Company held a 35% ownership interest in the RTS Packaging joint venture which was formed in 1997 and combined the former protective packaging operations of WestRock and Sonoco to market recycled paperboard to glass container manufacturers and producers of wine, liquor, food, and pharmaceuticals. With the acquisition of the remaining interest in RTS Packaging and the acquisition of the Chattanooga Mill, the Company added approximately 1,100 employees and fourteen converting operations, including ten in the United States, two in Mexico, and two in South America, and one paper mill in the United States. The Company funded the acquisitions with borrowings under a new term loan credit facility and cash on hand. See Note 10 for more information. The financial results of RTS Packaging and the Chattanooga Mill are included in the Company’s Industrial Paper Packaging segment.
On September 8, 2023, the fair value of the Company’s 35% interest in RTS Packaging was determined to be completed by$59,472 based on the endfair value of the first quarterremaining 65% equity interest in RTS Packaging adjusted for the deemed payment of 2018. Clear Lam manufactures high barrier flexiblea control premium, and forming films used to package a varietythe carrying value 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 35% interest was $8,654. The Company financedrecognized a portiongain of $50,818 resulting from this remeasurement to fair value and the reclassification of certain amounts related to the Company’s 35% interest out of “Accumulated other comprehensive loss,” included foreign currency translation losses of $2,033 and losses related to defined benefit pension plans of $4,756. The Company also recognized a loss of $4,372 on the settlement of a contract with unfavorable terms at the time of the transaction with $100,000acquisition. The combined net gain of $39,657 is reflected in borrowings from“Other income, net” in the Company’s Consolidated Statements of Income for the year ended December 31, 2023.
The following table provides a $250,000 five-year term loan withsummary of the purchase consideration (as defined under ASC 805) transferred for the acquisition of the remaining purchase price funded from available short-term credit facilities. interest in RTS Packaging and the acquisition of the Chattanooga Mill:
Purchase Consideration
Cash consideration, net of cash acquired$313,388 
Fair value of previously held interest in RTS Packaging59,472 
Final working capital settlement452 
Settlement of preexisting relationships1,235 
Purchase consideration transferred$374,547 

F-12 FORM 10-K SONOCO 2023 ANNUAL REPORT

The provisionalCompany’s preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Clear Lamthe remaining interest in RTS Packaging, and the Chattanooga Mill, and Inapel acquisitions, as well as revised preliminary fair values reflecting adjustments made during the measurement period for RTS Packaging and the Chattanooga Mill, 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
RTS and Chattanooga MillInapel
Initial AllocationMeasurement Period AdjustmentsPreliminary AllocationPreliminary Allocation
Trade accounts receivable$17,488 $— $17,488 $30,301 
Other receivables— — — 6,088 
Inventories20,209 (947)19,262 9,269 
Prepaid expenses2,720 (589)2,131 1,430 
Property, plant and equipment73,483 753 74,236 11,456 
Right of use asset - operating leases34,604 290 34,894 217 
Other intangible assets199,560 (8,995)190,565 8,653 
Goodwill92,657 14,909 107,566 15,704 
Other assets2,465 (412)2,053 793 
Payable to suppliers(7,320)— (7,320)(15,899)
Accrued expenses and other(12,436)(25)(12,461)(4,606)
Accrued wages and other compensation(2,731)— (2,731)(1,127)
Notes payable and current portion of long-term debt(24)— (24)— 
Noncurrent operating lease liabilities(29,905)— (29,905)(117)
Pension and other postretirement benefits(10,761)(768)(11,529)— 
Long-term debt(1,942)— (1,942)— 
Deferred income taxes(3,419)(2,502)(5,921)(2,934)
Other long-term liabilities(3,293)1,478 (1,815)— 
Net assets acquired$371,355 $3,192 $374,547 $59,228 

The preliminary allocations of the purchase price of the remaining interest in RTS Packaging, the Chattanooga Mill, and Inapel to acquiring Clear Lam, the Company continuedtangible and intangible assets acquired and liabilities assumed, as reflected in the table above, are based on the Company’s preliminary allocations of their respective fair values, based on information currently available. Management is continuing to finalize its valuationsvaluation 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; goodwill; other intangible assets; and deferred income taxes;taxes, and capital leases. Factors comprising goodwill, allexpects to complete its valuations within one year of the respective dates of acquisition.
Goodwill for RTS Packaging and the Chattanooga Mill, of which $87,191 is expected to be deductible for income tax purposes, consists of increased manufacturing capacity, access to certain markets, and the capability to support marquee customers in growing markets. Goodwill for Inapel, none of which is expected to be deductible for

income tax purposes, consists of the ability to grow and improve the Company’s existing flexible packaging operation in Brazil.

The Company has accounted for these acquisitions as business combinations under the acquisition method and has included the results of operations of the acquired businesses in the Company’s Consolidated Statements of Income from their respective dates of acquisition.
The Company completed three acquisitions during 2022 at a net cash cost of $1,444,618. On November 15, 2022, the Company completed the acquisition of S.P. Holding, Skjern A/S (“Skjern”), a privately owned manufacturer of paper based in Skjern, Denmark for $89,610, net of cash acquired. Tangible assets totaled $40,489, intangible assets totaled $39,330, liabilities totaled $22,403, and Goodwill totaled $32,194. Skjern produces high-grade paperboard from recycled paper for rigid paper containers, tubes and cores, and other applications.
On August 31, 2022, the Company completed the acquisition of Nordeste Tubetes and NE Tubetes (collectively “Nordeste”), two small tube and core operations in Brazil. Total consideration for the two businesses was $6,419. Tangible assets totaled $1,374, intangible assets totaled $3,031, and Goodwill totaled $2,014. The Company paid $3,933 at closing and recorded a deferred payment obligation totaling $2,486 in “Other liabilities” on the Company’s Consolidated Balance Sheets. The deferred payment obligation is expected to be paid by the end of 2028.
On January 26, 2022, the Company completed the acquisition of Ball Metalpack Holding, LLC (“Ball Metalpack”), renamed Sonoco Metal Packaging (“Metal Packaging”), a leading supplier of sustainable metal packaging for food and household products and the largest aerosol can producer in North America, for $1,348,589, net of cash acquired. Prior to the Company's acquisition, Ball Metalpack was a joint venture formed in 2018 and owned by Platinum Equity (51%) and Ball Corporation (49%). Metal Packaging consists of eight manufacturing plants in the United States and a headquarters facility in Broomfield, Colorado. Factors comprising goodwill at Metal Packaging include increased access to certain markets as well as the value of the assembled workforce. Clear Lam’s financial
During 2023, the Company finalized its valuations of the assets acquired and the liabilities assumed in the Metal Packaging, Skjern, and Nordeste acquisitions. As a result, the following measurement period adjustments were made to the previously disclosed preliminary fair values of assets acquired and liabilities assumed during the year ended December 31, 2023.
F-13 FORM 10-K SONOCO 2023 ANNUAL REPORT

Measurement Period Adjustments for the year ended December 31, 2023Metal PackagingSkjernNordeste
Other receivables$— $— $(186)
Inventories(73)14 (38)
Property, plant and equipment(247)4,921 494 
Other intangible assets— (3,488)3,031 
Goodwill439 3,135 (3,400)
Accrued expenses and other(119)(203)— 
Taxes Payable— (3,416)— 
Additional cash consideration$— $963 $(99)
The Company accounted for all 2022 acquisitions as business combinations under the acquisition method and has included the results of operations of the acquired businesses in the Company’s Consolidated Statements of Income from the respective dates of acquisition. Financial results for Metal Packaging are included in the Company’s Consumer Packaging segment.

On March 14, 2017, the Company completed the acquisition of Packaging Holdings, Inc.Segment, and subsidiaries, including Peninsula Packaging LLC (“Packaging Holdings”),financial results for $218,774, net of cash acquired. Packaging Holdings manufactures thermoformed packaging for a wide range of whole fresh fruits,pre-cut fruitsNordeste 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 resultsSkjern are included in the Company’s ConsumerIndustrial Paper Packaging segmentsegment. Except for the Metal Packaging acquisition, the Company does not believe that the results of the businesses acquired in 2023, 2022, and 2021 were material to the business will operate asyears presented, individually or in the Peninsula brand of thermoformed packaging products withinaggregate, and are therefore not subject to the Company’s global plastics division.

requirements to provide supplemental pro-forma information.

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

Aggregate Supplemental Information  (unaudited)
    2017

Packaging Holdings and Clear Lam

   

Actual net sales

   $215,227

Actual net income

   $3,886
acquisition through December 31, 2022:
Supplemental InformationJanuary 26 to
Metal PackagingDecember 31, 2022
Net sales$1,035,020 
Net income$62,777 

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 2017the years ended December 31, 2022 and 2016,December 31, 2021, assuming both acquisitionsthe acquisition of Metal Packaging had occurred on January 1, 2016.2021. This pro forma information is presented for informational purposes only and isdoes not necessarily indicative ofpurport to represent the results of operations that would have been achieved if the acquisitionsacquisition had been completed as ofat the beginning of 2016,2021, nor are theyis it 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

Pro Forma Supplemental InformationYears Ended
ConsolidatedDecember 31, 2022December 31, 2021
Net sales$7,300,140 $6,425,771 
Net income/(loss) attributable to Sonoco$528,818 $(145,570)
The pro forma information above does not project the Company’s expected results offor any future period and gives no effect forto any future synergistic benefits that may result from consolidating these subsidiariesthe combination or the costs fromof integrating theirthe acquired operations with those of the Company. Pro forma information for both 2017the years ended December 31, 2022 and 2016December 31, 2021 includes adjustments to depreciation, amortization, interest expense, and income taxes.taxes based upon the final fair value allocation of the purchase price to Metal Packaging’s tangible and intangible assets acquired and liabilities assumed as though the acquisition had occurred on January 1, 2021. Interest expense on the additional debt issued by the Company to fund the acquisition and retention bonuses incurred related to the acquisition are also included in the pro forma information as if the acquisition had occurred on January 1, 2021. Acquisition-related costs of $4,345$28,171 andnon-recurring expenses charges related to fair value adjustments to acquisition-date inventory of $5,750$33,155 were recognized in 2017 in connection with the acquisitions of Packaging Holdings and Clear Lam.during 2022. These costs are excluded from 20172022 pro forma net income and are instead reflected in 2021 pro forma net income as though having been incurredthe acquisition had occurred on January 1, 2016.

2021.

The Company completed four acquisitions during 20162021 at a net cash cost of $88,632.$20,697. 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 PPI to the tangible and intangible assets acquired and liabilities assumed was based on the Company’s preliminary estimates of their fair value, based on information currently available. During 2017, the Company finalized its valuations of the assets and liabilities acquired based on information obtained about facts and circumstances that existed as of their respective acquisition dates. As a result, measurement period adjustments were made to the previously disclosed provisional fair values 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.

On September 19, 2016, the Company completed the acquisition of Laminar Medica (“Laminar”) in the United Kingdom and Czech Republic, from Clinimed (Holdings) Limited, a privately held specialty medical products company based in the U.K. for $17,201, net of cash acquired. In conjunction with this acquisition, which is accounted 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 $8,808 none of which is expected to be tax deductible. Factors comprising goodwill include increased access to certain markets as well as the value of the assembled workforce. The initial allocation of the purchase price of Laminar to the tangible 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, the Company finalized its valuations 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.

On AugustDecember 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, 2016,2021, the Company completed the acquisition of a small tuberecycling facility from American Recycling of Western North Carolina, LLC, a privately held company, for total cash consideration of $6,267. The facility, located in Asheville, North Carolina, primarily services western North Carolina and core business in Australia. Theall-cash purchase priceupstate South Carolina for the processing 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 of which is expected to be tax deductible.

The Company completed two acquisitions during 2015 at an aggregate cost of $21,184, of which $17,447 was paid in cash.recycled materials. On April 1, 2015,November 8, 2021, the Company completed the acquisition of a 67% controlling interest in Graffo Paranaense de Embalagens S/A (“Graffo”)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 $12,787. The Company also completed two smaller acquisitions earlier in 2021. These included Allied Packaging on August 3, 2021, a manufacturer 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 for each of these acquisitions are included in the Company’s Industrial Paper Packaging segment from the respective date acquired.

F-14 FORM 10-K SONOCO 2023 ANNUAL REPORT

Divestiture of Businesses
On July 1, 2023, the Company completed the sale of its U.S. BulkSak business, which consisted of the manufacturing and distribution of flexible packaging business located in Brazil. Graffo, which isintermediate bulk containers, plastic and fiber pallets, and custom fit liners and was a part of the Company’s ConsumerIndustrial Paper Packaging segment, servesto U.S. BulkSak Holdings, LLC. The cash selling price, as adjusted for the confectionery, dairy, pharmaceuticalfinal working capital settlement, was $20,271 with cash proceeds totaling $18,271 received in 2023, and tobacco marketsthe remaining $2,000 held in Brazilescrow to be released to the Company within 18 months from the date of the sale, pursuant to the settlement of any indemnity claims. As a result of the U.S. BulkSak divestiture, the Company wrote off net assets totaling $13,437, including $3,333 of allocated goodwill, and recognized a pretax gain of $6,834 which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income. The escrow balance of $2,000 is reflected as a long-term receivable in “Other assets” on the Company’s Consolidated Balance Sheets as of December 31, 2023.
Also on July 1, 2023, the Company agreed to the sale of its Mexico BulkSak business. The sale closed in December 2023 for a cash selling price, as adjusted for working capital, of $1,096. As a result of the Mexico BulkSak sale, the Company recognized a pretax gain of $85 which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income.
On January 26, 2023, the Company completed the sale of its S3 business, a provider of customized waste and recycling management programs and part of the Company’s Industrial Paper Packaging segment, to Northstar, for total cash proceeds of $13,839. An additional $1,500 of proceeds are being held in escrow and will be released to the Company, pursuant to any indemnification claims, twenty months following the date of the divestiture. The Company wrote off net assets totaling $4,274 as part of the divestiture of the business, including $3,042 of allocated goodwill, and recognized a pretax gain of $11,065 during the first quarter of 2023, which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income. The escrow balance is reflected as a long-term receivable in “Other assets” on the Company’s Consolidated Balance Sheets as of December 31, 2023. The Company is also entitled to receive additional proceeds of $3,200 in the second quarter of 2024 if certain conditions are met. This contingent consideration will be recognized as an additional gain on the sale at the point the contingencies are resolved.
On January 26, 2023, in connection with approximately 230 employees. Total consideration paid for Graffo was approximately $18,334, including cashthe sale of $15,697, and assumed debt of $2,637.

On September 21, 2015,the S3 business, the Company acquired a 2.7% equity interest in Northstar valued at $5,000. This investment is being accounted for under the high-density wood plug business from Smith Family Companies, Inc. Total considerationmeasurement alternative (i.e., cost less impairment, adjusted for any qualifying observable price changes).

The divestitures of the S3 and BulkSak businesses did not represent a strategic shift for the acquisition was $2,850, includingCompany or have a major effect on its operations or financial results. Consequently, these sales did not meet the criteria for reporting as discontinued operations. The cash proceeds from the sales were used for general corporate purposes.
On April 4, 2021, the Company completed the sale of $1,750its U.S. display and a contingent purchase liability of $1,100. The Company will manufacture these wood plugs at its existing facility in Hartselle, Alabama. The acquisition ispackaging business, part of the PaperAll Other group of businesses, to Hood Container Corporation. This business provided design, manufacturing and Industrial Converted Products segment.fulfillment of point-of-purchase displays, as well as contract packaging services, for consumer product customers and had approximately 450 employees across eight manufacturing and fulfillment facilities and four sales and design centers. The contingent liability paymentCompany received net cash proceeds of $1,100$81,675 from the sale, wrote off net assets totaling $84,434, and recognized a loss on the divestiture of $2,759, before tax.
On September 30, 2021, the Company completed the sale of its Plastics-Food thermoforming operation in Wilson, North Carolina to Placon for net cash proceeds of $3,528, resulting in the recognition of a gain on the sale of $92, before tax.
These 2021 divestitures did not meet the criteria for reporting as discontinued operations.
The Company continually assesses its operational footprint as well as its overall portfolio of businesses and may consider the divestiture of plants and/or business units it considers to be suboptimal or nonstrategic.
Sale of Assets
With the completion of Project Horizon, the Company’s project to convert the corrugated medium machine in Hartsville, South Carolina, to produce uncoated recycled paperboard was paid in September 2017, uponrealized. The Company now produces paper exclusively from recycled fibers and no longer requires natural tree fiber for production. Accordingly, on March 29, 2023, the second anniversaryCompany sold its timberland properties, consisting of approximately 55,000 acres, to Manulife Investment Management for net cash proceeds of $70,802. The Company disposed of assets with a net book value of $9,857 as part of the acquisition.

Acquisition-relatedsale, and recognized a pretax gain from the sale of these assets of $60,945 during the year ended December 31, 2023, which is included in “Gain/(Loss) on divestiture of business and other assets” in the Company’s Consolidated Statements of Income.

Acquisition, Integration, and Divestiture-Related Costs
Acquisition, integration, and divestiture-related costs of $8,040, $4,569$26,254, $70,210, and $1,663$17,722 were incurred in 2017, 20162023, 2022 and 2015,2021, respectively. These costs consisting primarily ofinclude legal and professional fees, investment banking fees, representation and warranty insurance premiums, as well as employee-related and other integration activity costs, that 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 methodcosts incurred in 2023 and 2022 also include fair value adjustments to acquisition-date inventory totaling $5,227 and $33,155, respectively, that are included in “Cost of accounting, in accordance with the business combinations subtopic of the

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF10

Accounting Standards Codification and, accordingly, has included their results of operationssales” in the Company’s consolidated statementsConsolidated 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.

Income.

4. Restructuring and asset impairment

Due to its geographic footprint and the cost-competitive nature of its businesses, the Company is continually seeking more cost-effective means and structures to serve its customers and to respond to fundamental changes in its markets. As such, restructuring costs have been, and are expected to be, a recurring component of the Company’s operating costs. The Company has engaged in a numberamount of these costs can vary significantly from quarter to quarter and from year to year depending upon the scope, nature, and location of the restructuring 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,
  
202320222021
Restructuring and restructuring-related asset impairment charges$56,933 $46,815 $9,176 
Other asset impairments— 10,095 5,034 
Restructuring/Asset impairment charges$56,933 $56,910 $14,210 

The table below sets forth restructuring and restructuring-related asset impairment charges by type incurred:
F-15 FORM 10-K SONOCO 2023 ANNUAL REPORT

 Year Ended December 31,
202320222021
Severance and Termination Benefits$26,631 $17,983 $13,097 
Asset Impairment/Disposal of Assets19,603 9,442 (9,116)
Other Costs10,699 19,390 5,195 
Total restructuring and restructuring-related asset impairment charges$56,933 $46,815 $9,176 
The table below sets forth restructuring and restructuring-related asset impairment charges by reportable segment:
 Year Ended December 31,
202320222021
Consumer Packaging$8,059 $12,433 $3,427 
Industrial Paper Packaging38,754 16,019 (1,642)
All Other7,623 (166)2,969 
Corporate2,497 18,529 4,422 
Total restructuring and restructuring-related asset impairment charges$56,933 $46,815 $9,176 
“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, 2021$10,917 $— $1,873 $12,790 
2022 charges17,983 9,442 19,390 46,815 
Cash (payments)/receipts(14,024)7,138 (19,836)(26,722)
Asset write downs/disposals— (16,580)— (16,580)
Foreign currency translation(199)— (35)(234)
Liability, December 31, 2022$14,677 $— $1,392 $16,069 
2023 charges26,631 19,603 10,699 56,933 
Cash (payments)/receipts(27,000)6,842 (10,522)(30,680)
Asset write downs/disposals— (26,445)— (26,445)
Foreign currency translation7 — 69 76 
Liability, December 31, 2023$14,315 $— $1,638 $15,953 

“Severance and Termination Benefits” in 2023 include the cost of severance for approximately 300 employees whose positions were eliminated in conjunction with the Company’s ongoing organizational effectiveness efforts and severance related to the following plant closures: paper mills in Hutchinson, Kansas and Indonesia, part of the Industrial Paper Packaging segment; a metal packaging facility and a perimeter-of-the-store facility in the United States, both part of the Consumer Packaging segment; medical plastics facilities in the United States and United Kingdom, part of the All Other group of businesses; and severance related to the closures of several smaller operations.
“Severance and Termination Benefits” in 2022 include the cost of severance provided to employees terminated as the result of various plant closures, and for approximately 180 employees whose positions were eliminated in conjunction with the Company's ongoing organizational effectiveness efforts.
“Asset Impairment/Disposal of Assets” in 2023 consist primarily of asset impairment charges related to the closure of a paper mill in Hutchinson, Kansas and a metal packaging facility in the United States, and medical plastics facilities in the United States and United Kingdom. These charges were partially offset by gains from the sale of previously impaired assets and a closed perimeter-of-the-store facility, part of the Consumer Packaging segment.
“Asset Impairment/Disposal of Assets” in 2022 consist primarily of asset impairment charges related to plant closures in the Industrial Paper Packaging and Consumer Packaging segments, including asset impairment charges of $3,620 related to Project Horizon. These charges were partially offset by gains from the sale of previously impaired assets and closed facilities in the Consumer Packaging segment and the “All Other” group of businesses. Cash proceeds in 2022 relate to the sales of these assets and facilities, including the partial sale of a previously closed paper mill in Canada, part of the Industrial Paper Packaging segment.
“Other Costs” in 2023 consist primarily of costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance. In 2022, “Other Costs” consist primarily of consulting services and costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance.
The Company expects to pay the majority of the remaining restructuring reserves by the end of 2024 using cash generated from operations. The Company also expects to recognize future additional costscharges totaling approximately $3,600$2,300 in connection with ongoing consulting services and previously announced restructuring actions. The Companyactions and believes that the majority of these charges will be incurred and paid by the end of 2018.2024. 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

F11

F-16 FORM 10-K SONOCO 20172023 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.

Other Asset Impairments
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 totaling $10,095 for the year ended December 31, 2022.

As a result of exiting our operations in Russia, consisting of two small tube and core plants in the Industrial Paper Packaging segment, other asset write downs related toimpairment charges of $9,165 were recognized for the closureyear ended December 31, 2022. These charges include $3,747 of a rigid paper plantcumulative translation adjustment losses that were reclassified from accumulated other comprehensive income upon completion of the Company's exit from Russia on July 1, 2022.
Total other asset impairment charges for the year ended December 31, 2022 also include $930 of fixed asset impairments in Manchester, England (partthe Company’s plastics foods operations, part of the Consumer Packaging segment).

Included in “Asset Impairment/Disposal of Assets” in 2017 is a gain of $2,022 from the sale of the land and building of a rigid paper plant in Manchester, England. The Company received proceeds from the sale of $2,741 and wrote off assets of $719.

“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.

“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

During the fourth quarter of 2017, the Company recognized the impairment of a power generating facility at its Hartsville manufacturing complex. The facility, which is part 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, the Company recognized impairment charges against inventories and certain long-term nonmonetary assets totaling $338. Thesegment. These assets were deemeddetermined to be impaired as the U.S. dollar value of thetheir projected undiscounted cash flows from these assets was no longer sufficient to recover their U.S. dollar carrying values. In addition, 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 the Paper and Industrial Converted Products—Brazil reporting unit had become impaired as a result 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.

Prior to July 1, 2015, the Company used Venezuela’s official exchange rate to report the results of 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 use 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 carry-

value.

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 cash overdrafts and cash pooling

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. At December 31, 20172023 and 2016,2022, outstanding checks totaling $17,343$24,638 and $10,073,$17,986, respectively, were included in “Payable to suppliers” on the Company’s Consolidated Balance Sheets. In addition, outstanding payroll checks of $259 $0 and $11$244 as of December 31, 20172023 and 2016,2022, respectively, were included in “Accrued wages and other compensation” on the Company’s Consolidated Balance Sheets.

Changes in these book cash overdrafts are reported as cash flows from financing activities.

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 $1,308 and $2,789$2,375 as of December 31, 20172023 and 2016,2022, respectively.

6. Property, plant and equipment

Details of the Company’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.

20232022
Land$135,518 $131,362 
Timber resources— 42,202 
Buildings740,138 664,012 
Machinery and equipment3,825,134 3,528,545 
Construction in progress269,061 226,701 
4,969,851 4,592,822 
Accumulated depreciation and depletion(3,063,714)(2,882,423)
Property, plant and equipment, net$1,906,137 $1,710,399 


Depreciation and depletion expense amounted to $178,049$240,614 in 2017, $173,2952023, $216,138 in 20162022 and $179,888$189,667 in 2015.

2021.

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 performed after contemplating all the relevant facts and circumstances in accordance with guidance under ASC 842, “Leases.” Most real estate leases, in particular, include one or more options to renew, with renewal terms that typically extend the lease term in increments from one to five years. The Company’s leases do not have any significant residual value guarantees or restrictive covenants.
The Company completed the acquisition of the remaining interest in RTS Packaging and the acquisition of the Chattanooga Mill on September 8, 2023. The acquisition included operating lease liabilities of $34,604 with a weighted-average remaining lease maturity term and discount rate of 11.5 years and 6.4%, respectively.
The Company completed the acquisition of Metal Packaging on January 26, 2022. The acquisition involved the assumption of operating and finance lease assets and liabilities. The acquired operating lease liabilities of $33,910 had a weighted-average remaining lease maturity term and discount rate of 11.0 years and 2.8%, respectively, and the acquired finance lease liabilities of $46,687 had a weighted-average remaining lease maturity term and discount rate of 3.8 years and 7.5%, respectively, as of the date of acquisition. For additional information about these acquisitions, please see Note 3.
F-17 FORM 10-K SONOCO 2023 ANNUAL REPORT

The following table sets forth the balance sheet location and values of the Company’s lease assets and lease liabilities at December 31, 2023 and December 31, 2022:
ClassificationBalance Sheet LocationDecember 31, 2023December 31, 2022
Lease Assets
Operating lease assetsRight of Use Asset - Operating Leases$314,944 $296,781 
Finance lease assetsOther Assets94,026 103,467 
Total lease assets$408,970 $400,248 
Lease Liabilities
Current operating lease liabilitiesAccrued expenses and other$54,803 $52,306 
Current finance lease liabilitiesNotes payable and current portion of long-term debt18,791 19,015 
Total current lease liabilities73,594 71,321 
Noncurrent operating lease liabilitiesNoncurrent Operating Lease Liabilities265,454 250,994 
Noncurrent finance lease liabilitiesLong-term Debt, net of current portion70,203 83,905 
Total noncurrent lease liabilities335,657 334,899 
Total lease liabilities$409,251 $406,220 
Certain of the Company’s leases include variable costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, and also non-lease components that were incurred based upon actual terms rather than contractually fixed amounts. In addition, variable costs are incurred for lease payments that are 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, 2023, 2022, and 2021:
Lease Cost202320222021
Operating lease cost(a)$54,990 $51,890 $48,158 
Finance lease cost:
     Amortization of lease asset(a) (b)13,110 12,241 5,747 
     Interest on lease liabilities(c)4,447 4,751 1,384 
Variable lease cost(a) (d)40,983 30,269 26,198 
Impairment charges(e)— 293 148 
Total lease cost$113,530 $99,444 $81,635 
(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.

The following table sets forth the five-year maturity schedule of the Company’s lease liabilities as of December 31, 2023:
Maturity of Lease LiabilitiesOperating LeasesFinance LeasesTotal
2024$55,688 $19,163 $74,851 
202548,400 21,186 69,586 
202638,379 16,727 55,106 
202734,125 4,791 38,916 
202831,329 4,277 35,606 
Beyond 2028198,533 38,922 237,455 
Total lease payments406,454 105,066 511,520 
     Less: Interest86,197 16,072 102,269 
Lease Liabilities$320,257 $88,994 $409,251 


F-18 FORM 10-K SONOCO 2023 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, 2023, 2022, and 2021, along with terms of more than one year are as follows: 2018 – $46,400; 2019 – $38,500; 2020 – $30,400; 2021 – $21,300;other lease-related information for the years ended December 31, 2023, 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.

2021:

7.
Lease Term and Discount Rate202320222021
Weighted-average remaining lease term (years):
     Operating leases10.711.211.8
     Finance leases8.89.213.5
Weighted-average discount rate:
     Operating leases4.97%4.27%4.09%
     Finance leases4.89%4.79%2.86%
Other Information202320222021
Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows used by operating leases$54,877 $52,198 $50,479 
     Operating cash flows used by finance leases$4,447 $4,751 $1,384 
     Financing cash flows used by finance leases$15,559 $12,687 $4,699 
Leased assets obtained in exchange for new operating lease liabilities$33,059 $36,158 $20,505 
Leased assets obtained in exchange for new finance lease liabilities$8,354 $10,091 $14,643 
Modification to leased assets for increase in operating lease liabilities$2,938 $2,807 $15,936 
Modification to leased assets for increase/(decrease) in finance lease liabilities$18 $(642)$9,586 
Termination reclasses to decrease operating lease assets$(15,314)$(4,285)$(5,267)
Termination reclasses to decrease operating lease liabilities$(16,169)$(4,537)$(5,602)
Termination reclasses to decrease finance lease assets$(4,564)$(1,351)$(125)
Termination reclasses to decrease finance lease liabilities$(6,462)$(87)$(130)

8. Goodwill and other intangible assets

Goodwill

The changes

Changes in the carrying amount of goodwill by segment for the year ended December 31, 2017,2023, 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
Consumer
Packaging
Industrial Paper
Packaging
All OtherTotal
Balance as of January 1, 2023$898,625 $394,826 $381,860 $1,675,311 
Acquisitions15,704 92,657 — 108,361 
    Divestitures— (6,375)— (6,375)
    Measurement period adjustments439 14,644 — 15,083 
    Foreign currency translation5,669 10,654 1,951 18,274 
Balance as of December 31, 2023$920,437 $506,406 $383,811 $1,810,654 


Goodwill activity reflected under the caption “Acquisitions” relates to the September 8, 2023 acquisitions of the remaining interest in 2017 resulted inRTS Packaging and the addition of $120,682 of goodwill. Of this total, $67,775 was recorded in connection withChattanooga Mill and the March 2017December 1, 2023 acquisition of Packaging Holdings and $52,907 was recorded in connection withInapel. Goodwill activity reflected under the July 2017 acquisition of Clear Lam. In addition to these acquisitions, the Company made small adjustmentscaption “Divestitures” relates to the goodwill relatedsales of the Company’s S3 business on January 26, 2023 and the U.S. BulkSak business on July 1, 2023. Goodwill activity reflected under the caption “Measurement period adjustments” relates to the November 2016 acquisitioncurrent year acquisitions of Plasticsthe remaining interest in RTS Packaging Inc. and the September 2016 acquisitionChattanooga Mill, as well as the prior year acquisitions of Laminar Medica totaling $(1,201)Metal Packaging, Skjern and $(326), respectively.Nordeste. 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 Company 2023 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’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.

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 balance of the Plastics-Medical reporting units having the greatestunit, previously known as Plastics-Healthcare, is at risk of impairment in the near term if the reporting unit’s operations do not perform in line with management’s expectations, or if there is a significantnegative change in the long-term outlook for the business or in other factors such as the discount rate.
F-19 FORM 10-K SONOCO 2023 ANNUAL REPORT

In the annual goodwill impairment analysis completed during the third quarter of 2023, projected future impairment if actual resultscash flows for the Plastics-Medical reporting unit were discounted at 12.0% and its estimated fair value was determined to exceed its carrying values by approximately 29.9%. Based on the discounted cash flow model and holding other valuation assumptions constant, the discount rate for this reporting unit would have to be increased to 14.5% in order for the estimated fair value of the reporting unit to fall short of expectations are Display and Packaging, and Paper and Industrial Converted Products—Europe.below its carrying value. Total goodwill associated with thesethe Plastics-Medical reporting unitsunit was approximately $203,000 and $95,000, respectively,$64,212 at December 31, 2017. A large portion of projected sales2023.
During the time subsequent to the annual evaluation, and at December 31, 2023, 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

20232022
Other Intangible Assets, Gross:
Patents$29,304 $29,303 
Customer lists1,282,689 1,092,232 
Trade names41,836 34,220 
Proprietary technology56,857 57,720 
Other6,916 6,721 
Other Intangible Assets, Gross$1,417,602 $1,220,196 
Accumulated Amortization:
Patents$(19,549)$(17,889)
Customer lists(493,778)(417,034)
Trade names(18,845)(15,892)
Proprietary technology(29,013)(25,113)
Other(2,747)(2,670)
Accumulated Amortization$(563,932)$(478,598)
Other Intangible Assets, Net$853,670 $741,598 


The March 2017 acquisition of the remaining interest in RTS Packaging Holdingsand the acquisition of the Chattanooga Mill on September 8, 2023, and the December 1, 2023 acquisition of Inapel, resulted in the addition of $60,190 $199,217of 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 13.1 years.

14.8 years. The fair values of intangible assets associated with these acquisitions were determined using an income valuation approach.

Aggregate amortization expense on intangible assets was $38,165, $31,887$87,264, $80,445 and $33,273$49,419 for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively. Amortization expense on intangible assets is expected to approximate $42,500$88,200 in 2018, $41,3002024, $79,200 in 2019, $38,7002025, $75,300 in 2020, $36,8002026, $73,900 in 20212027 and $35,200$73,100 in 2022.

8. Debt

Debt2028 based on intangible assets as of December 31, 2023.

9. Supply chain financing
The following table sets forth the balance sheet location and values of the obligations of the Company under its SCF Programs at December 31, was2023 and December 31, 2022:
Balance Sheet Line ItemDecember 31, 2023December 31, 2022
Payable to suppliers(a)
$35,847 $52,415 
Notes payable and current portion of long-term debt(b)
$— $63,448 
(a) The net payment of these obligations is included in “Net cash provided by operating activities” in the Company’s Consolidated Statements of Cash Flows.
(b) The net payment of these obligations is included in “Net cash provided/(used) by financing activities” in the Company’s Consolidated Statements of Cash Flows.

F-20 FORM 10-K SONOCO 2023 ANNUAL REPORT

10. Debt
Details of the Company’s debt at December 31 were 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

20232022
Syndicated term loan due August 2028$572,025 $— 
Syndicated term loan due January 2025— 299,644 
Syndicated term loan due December 2023— 399,246 
1.80% notes due February 2025399,149 398,369 
2.25% notes due February 2027298,421 297,910 
2.85% notes due February 2032495,785 495,264 
3.125% notes due May 2030596,480 595,911 
5.75% notes due November 2040536,246 536,214 
Other foreign denominated debt, average rate of 10.4% in 2023 and 5.7% in 2022
78,800 20,668 
Finance lease obligations88,994 102,920 
Other debt17,100 76,077 
Total debt$3,083,000 $3,222,223 
Less: Notes payable and current portion of long-term debt47,132 502,440 
Long-term debt$3,035,868 $2,719,783 

On March 13, 2017,August 7, 2023, the Company entered into a $150,000credit agreement with a consortium of Farm Credit System institutions and CoBank, ACB, as Administrative Agent (the “Term Loan Agreement”). The Term Loan Agreement provides the Company with the ability to borrow up to $900,000 on an unsecured three-year floating-rate assignable loan agreement. The proceedsbasis (the “Term Loan Facility”). A total of $600,000 was drawn from thisthe Term Loan Facility on August 7, 2023 and used to repay the syndicated term loanloans that were due in December 2023 and January 2025, and to make certain capital expenditures and reimburse the Company for certain capital expenditures it had made in its operation of waste disposal facilities in rural areas. An additional $270,000 was drawn from the Term Loan Facility on September 8, 2023 and used to partially fund the acquisition of the remaining interest in RTS Packaging Holdings.

and the acquisition of the Chattanooga Mill (see Note 3 for more information). Borrowings under the Term Loan Facility, net of any prepayments, will become payable in full on August 7, 2028. As of December 31, 2023, the Company had repaid a total of $295,000 of the amounts drawn under the Term Loan Facility. Borrowings under the Term Loan Facility bear interest at a fluctuating rate per annum equal to, at the Company’s option, (i) the forward-looking SOFR term rate (“Term SOFR” and such borrowings, “Term SOFR Loans”), (ii) a base rate set forth in the Term Loan Agreement, or (iii) a combination thereof, plus, in each case, an applicable margin calculated based on the Company’s credit ratings and, in the of case of Term SOFR Loans, a SOFR Adjustment (as defined in the Term Loan Agreement) of 0.1%. The Company has designated its borrowings under the Term Loan Facility as Term SOFR Loans. The margin currently applicable to Term SOFR Loans based on the Company’s credit ratings, together with the SOFR Adjustment, is 1.90%. If Term SOFR ceases to be available, the benchmark rate shall switch to Daily Simple SOFR (as defined in the Term Loan Agreement). There is no required amortization under the Term Loan Facility, and voluntary prepayments are permissible without penalty, subject to certain conditions pertaining to minimum notice and minimum prepayment and reduction amounts as described in the Term Loan Agreement.

The Term Loan Agreement contains various customary representations and warranties and affirmative and negative covenants, as more fully described in the Term Loan Agreement. The Term Loan Agreement also contains various customary events of default (subject to grace periods, as applicable) including, among others: nonpayment of principal, interest or fees; breach of covenant; payment default on, or acceleration under, certain other material indebtedness; inaccuracy of the representations or warranties in any material respect; bankruptcy or insolvency; inability to pay debts; certain unsatisfied judgments; certain ERISA-related events; the invalidity or unenforceability of the Term Loan Agreement or certain other documents executed in connection therewith; and the occurrence of a change of control.
On July 20, 2017,June 30, 2021, the Company entered into a Credit Agreement in connection with a new five-year $750,000, bankunsecured revolving 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 in the new facility are a $500,000 five-yearConsistent with prior facilities, this 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 for the revolving credit facility and the Company’sSonoco’s current credit ratings, any drawings are subject to the borrowing has anall-in drawn margin of 112.5Term SOFR plus the 125.0 basis points abovemargin. On August 7, 2023, the London Interbank Offered Rate (LIBOR). BorrowingsCompany increased the commitments under this facility by $150,000 to an aggregate amount of $900,000.
On April 28, 2021, the Credit Agreement arepre-payable at any time at the discretionCompany commenced a cash tender offer to purchase up to $300,000 of the Company and$600,000 outstanding principal amount of its 5.75% notes due November 2040. Upon expiration of the term loan has annual amortization payments totaling $12,500.

Consistent with prior facilities, the $500,000 revolving credit facility will continue to support the Company’s $350,000 commercial paper program. If circumstances were to preventtender 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% notes due November 2040$63,206 $18,755 $81,961 
On April 28, 2021, the Company entered into a reverse treasury lock agreement intended to fix the cash cost to fund approximately $100,000 of the maximum $300,000 principal amount subject to being tendered. The settlement of the reverse treasury lock on May 13, 2021 resulted in a loss of $1,356. In addition, the Company wrote off a proportional share of unamortized bond issuance costs and unamortized original issue discounts associated with the 5.75% 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 issuing commercial paper, itthe early extinguishment of debt totaling $20,184.
F-21 FORM 10-K SONOCO 2023 ANNUAL REPORT

The principal requirements of debt maturing in the next five years are:
  
20242025202620272028
Debt maturities by year$47,132 $449,774 $21,778 $310,355 $583,655 
As of December 31, 2023, the Company has scheduled debt maturities through the contractual right to draw funds directlynext twelve months of $47,132. At December 31, 2023, the Company had $151,937 in cash and cash equivalents on the underlying bankhand and $900,000 in committed capacity available for drawdown under its revolving credit facility. The Company had $124,000believes that these amounts, combined with expected net cash flows from operating activities, provide ample liquidity to cover these debt maturities and other cash flow needs of outstanding commercial paper at December 31, 2017 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

rate 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$238,400 available under unused short-term lines of credit at December 31, 2017.2023. These short-term lines of credit are available for general Companycorporate purposes with interest at mutually agreed-upon rates.

The Company utilized cash on hand to fund the repayment of its 5.625% debentures upon their maturity in June 2016.

our subsidiaries, including working capital and hedging requirements.

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, 2017,2023, 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; 2021 – $446,694 and 2022 – $199,414.

9.

11. 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, 2023December 31, 2022
  
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Long-term debt, net of current portion$3,035,868 $2,890,009 $2,719,783 $2,477,884 

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. Itmaturities, which is considered a Level 2 fair value measurement.

Cash flow hedges

Flow Hedges

At December 31, 20172023 and 2016,2022, 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 through December 2024, qualify as cash flow hedges under U.S. GAAP. For derivative instruments that are designated and qualify as a cash flow hedge, the 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 earnings 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 cash flow hedges. At December 31, 2017,2023, these contracts included natural gas swaps covering approximately 7.50.1 million MMBTUs, were outstanding.representing approximately 1% of anticipated natural gas usage in 2024. The Company also has certain natural gas hedges that are not designated as cash flow hedges. See “Non-Designated Derivatives” below for a discussion of these hedges. The Company has also designated swap contracts covering 488 metric tons of aluminum as cash flow hedges. These contracts represent approximately 76.2% and 35.5%10% of anticipated U.S. and Canadianaluminum 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 2018.2024. The total fair values of the Company’s commodity cash flow hedges were innetted to a net loss position totaling $(1,713)of $(41) and $(172) at December 31, 2017,2023 and a net gain position totaling $3,636 at

December 31, 2016.2022, respectively. The amount of the loss included in accumulated other comprehensive loss at December 31, 2017,2023, expected to be reclassified to the income statement during the next twelve months is $(1,166)$(41).

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 2017.2024. The net positions of these contracts at December 31, 2017,2023, were as follows:

follows (in thousands):
CurrencyActionActionQuantityQuantity

Colombian peso

purchasePurchase22,276,464 7,644,551

Mexican peso

purchasePurchase579,207 713,178

Polish zloty

purchase131,417 
Danish Kronepurchase48,225 
Swedish Kronesell(6,827)
Czech korunapurchase109,362 
Europurchase2,291 
Turkish lirapurchase57,507 
Brazilian realpurchase54,302 
British poundsell(435)
Canadian dollar

purchasePurchase35,016 53,771

Euro

Purchase53,546

Turkish lira

Purchase14,131

Russian ruble

Purchase1,410

New Zealand dollar

Sell(809)

Australian dollar

Sell(2,125)

British pound

Sell(12,592)

Polish zloty

Sell(173,137)

The total net fair valuesvalue of the Company’s foreign currency cash flow hedges were $950 and $(184) at December 31, 2017 and 2016, respectively. During 2017 and 2016, certain foreign currency cash flow hedges related to construction in progress were settled asforecasted sales and purchases netted to a gain position of $1,502 at December 31, 2023, and a loss position of $(299) at December 31, 2022. The amount of the capital expenditures were made. Gains totaling $64 and $59 weregain expected to be reclassified from accumulated other comprehensive loss and netted against the carrying value of the capitalized expenditures during the years ended December 31, 2017 and 2016, respectively. The amount of the gain included in accumulated other comprehensive income at December 31, 2017, expected to be reclassified to the income statement during the next twelve months is $88.

Other$1,502. In addition, the Company has entered into forward contracts to hedge certain foreign currency cash flow transactions related to construction in progress. As of December 31, 2023 and December 31, 2022, the net positions of these contracts were $0 and $(564), respectively. During the twelve months ended December 31, 2023, losses from these hedges totaling $(401) were reclassified from accumulated other comprehensive loss and included in the carrying value of the

F-22 FORM 10-K SONOCO 2023 ANNUAL REPORT

capitalized expenditures. No gains or losses are expected to be reclassified from accumulated other comprehensive loss and included in the carrying value of the related fixed assets acquired during the next twelve months.
Net Investment Hedge
During 2023, the Company became a party to cross-currency swap agreements with a total notional amount of $500,000 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 swap agreements, which have a maturity of December 18, 2026, provide for the Company to receive semi-annual interest payments in U.S. dollars at a fixed rate and to make semi-annual interest payments in euro at a fixed rate. The risk management objective of entering into the swap agreements is to manage foreign currency risk relating to net investments in certain European subsidiaries denominated in euros. The agreements are designated as net investment hedges for accounting purposes.
The gain or loss on the net investment hedge derivative instrument is included in the foreign currency translation component of accumulated other comprehensive loss until the net investment is sold, diluted, or liquidated. Interest payments received for the cross-currency swaps are excluded from the net investment hedge effectiveness assessment and are recorded in “Interest expense” on the Company’s Consolidated Statements of Income. The assumptions used in measuring fair value of the cross-currency swaps are considered level 2 inputs, which are based upon the Euro-to-U.S. dollar exchange rate market.
For the year ended December 31, 2023, the fair value of the Company’s net investment hedges was a loss position of $5,073, and a loss of $3,779 (net of income taxes of $1,294) was reported as a component of accumulated other comprehensive loss within foreign currency items.
Non-Designated Derivatives
The Company routinely enters into other derivative contracts which are not designated for hedge accounting treatment under ASC 815, “Derivatives and Hedging.” As such, changes in fair value of these non-designated derivatives

are recorded directly to income and expense in the periods that they occur.

Foreign Currency Hedges
The Company routinely enters into forward contracts or swaps to economically hedge the currency exposure of intercompany debt and 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 currency positions of these non-designated contracts at December 31, 2017,2023, were as follows:

follows (in thousands):
CurrencyActionQuantity
CurrencyColombian pesoPurchaseActionQuantity59,655,780

Colombian peso

Indonesian rupiah		PurchasePurchase4,764,6467,711,880

Mexican peso

PurchasePurchase262,876403,952

Turkish lira

Purchase5,593
Canadian dollar

PurchasePurchase5,923
Thai BahtSell19,988(10,459)

Commodity Hedges
The Company has entered into non-designated derivative contracts to manage the cost of anticipated purchases of natural gas. At December 31, 2023, these contracts consisted of natural gas swaps covering approximately 5.4 million MMBTUs and represented approximately 75% of anticipated usage in North America for 2024, respectively.
Interest Rate Hedges
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 two treasury lock derivative instruments with a notional principal amount of $150,000 each on December 29, 2021 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 notes. The derivatives were settled when the bonds priced on January 11, 2022, with the Company recognizing a gain on the settlement of $5,201. The gain is included in “Selling, general and administrative expenses” on the Company’s Consolidated Statements of Income for the year ended December 31, 2022.
The fair value of the Company’s othernon-designated derivatives position was $(581)a loss of $(6,790) and $(696)$(8,692) at December 31, 20172023 and 2016,December 31, 2022, 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, 2023 and December 31, 2022:

F-23 FORM 10-K SONOCO 2023 ANNUAL REPORT

  Fair Value at December 31
DescriptionBalance Sheet Location20232022
Derivatives designated as hedging instruments:
Commodity ContractsPrepaid expenses$67 $10 
Commodity ContractsOther assets— 8 
Commodity ContractsAccrued expenses and other(108)(155)
Commodity ContractsOther liabilities— (35)
Foreign Exchange ContractsPrepaid expenses2,525 1,251 
Foreign Exchange ContractsAccrued expenses and other(1,024)(2,114)
Net investment hedgePrepaid expenses5,567 — 
Net investment hedgeOther liabilities(10,640)— 
Derivatives not designated as hedging instruments:
Commodity ContractsPrepaid expenses$12 $5 
Commodity ContractsOther assets— 251 
Commodity ContractsAccrued expenses and other(6,782)(8,599)
Commodity ContractsOther liabilities— (295)
Foreign Exchange ContractsPrepaid expenses130 115 
Foreign Exchange ContractsAccrued expenses and other(159)(169)
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.

The following table setstables set forth the effect of the Company’s derivative instruments on financial performance for the twelve monthsyear ended December 31, 2017,2023 and December 31, 2022, excluding the gains or losses 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, 2023
Foreign Exchange Contracts$8,982 Net sales$10,860 
Cost of sales$(3,728)
Commodity Contracts$99 Cost of sales$(32)
Year Ended December 31, 2022
Foreign Exchange Contracts$(1,009)Net sales$3,460 
Cost of sales$(2,852)
Commodity Contracts$5,321 Cost of sales$6,948 

Description
Gain or (Loss)
Recognized
Location of Gain or (Loss) Recognized in Income Statement
Derivatives not Designated as Hedging Instruments:
Year Ended December 31, 2023
Commodity Contracts$(19,087)
Cost of Sales
Foreign Exchange Contracts$7,560 Selling, general and administrative
Year Ended December 31, 2022
Commodity Contracts$1,831 Cost of sales
Foreign Exchange Contracts$355 Selling, general and administrative
F-24 FORM 10-K SONOCO 20172023 ANNUAL REPORT    |

Year Ended December 31, 2023Year Ended December 31, 2022
DescriptionNet SalesCost of SalesNet SalesCost of Sales
Total amount of income and expense line items presented in the Consolidated Statements of Income$10,860 $(3,760)$3,460 $4,096 
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$10,860 $(3,728)$3,460 $(2,852)
Commodity contract:
Amount of gain or (loss) reclassified from accumulated other comprehensive income into net income$— $(32)$— $6,948 

F-25 FORM 10-K

SONOCO 2023 ANNUAL REPORT

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.


12. Fair value measurements

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

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

Assets that are calculated at net asset value (“NAV”) per share are not required to be categorized within the fair value hierarchy.
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, 2023Assets measured at NAV (f)Level 1Level 2Level 3
Hedge derivatives, net:
Commodity contracts$(41)$— $— $(41)$— 
Foreign exchange contracts1,502 — — 1,502 — 
 Net investment hedge(5,073)— — (5,073)— 
Non-hedge derivatives, net:
Commodity contracts(6770)— — (6770)— 
Foreign exchange contracts(29)— — (29)— 
Postretirement benefit plan assets:
 Common Collective(a)12,958 12,958 — — — 
Mutual funds(b)45,931 — — 45,931 — 
 Fixed income securities(c)242,702 63,849 — 178,853 — 
 Short-term investments(d)4,175 — — 4,175 — 
 Real estate funds(e)400 400 — — — 
      Cash and accrued income2,634 — 2,634 — — 
Total postretirement benefit plan assets$308,800 $77,207 $2,634 $228,959 $— 
DescriptionDecember 31, 2022Assets measured at NAV (f)Level 1Level 2Level 3
Hedge derivatives, net:
Commodity contracts$(172)$— $— $(172)$— 
Foreign exchange contracts(863)— — (863)— 
Non-hedge derivatives, net:
      Commodity contracts(8,638)— — (8,638)— 
Foreign exchange contracts(54)— — (54)— 
Postretirement benefit plan assets:
      Common Collective(a)6,497 6,497 — — — 
      Mutual funds(b)50,467 — — 50,467 — 
      Fixed income securities(c)198,628 32,927 — 165,701 — 
      Short-term investments(d)1,099 — — 1,099 — 
      Real estate funds(e)680 680 — — — 
      Cash and accrued income8,504 — 8,504 — — 
Total postretirement benefit plan assets$265,875 $40,104 $8,504 $217,267 $— 

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 NAVs 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.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.
f.Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
F-26 FORM 10-K SONOCO 20172023 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.


The Company’s pension plan assets comprise more than 98%96% 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.

14.

As discussed inin Note 9, 11, the Company uses derivatives to mitigate some of the effect of raw material and energy costcommodity 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’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, 20172023 or 2016.2022. For additional fair value information on the Company’s financial instruments, see Note 9.

11.

13. Share-based compensation plans

The Company provides share-based compensation to certain employees andnon-employee directors in the form of stock appreciation rights, restricted stock units (“RSUs”), performance contingent restricted stock units (“PCSUs”), and other share-based awards. Beginning in 2014, share-based awards were issued pursuant to the Sonoco Products Company 2014 Long-Term2019 Omnibus Incentive Plan (the “2014“2019 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

17, 2019.

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 number of shares of common stock that may be issued under the 2014 Plan was originally set at 10,381,533 shares, which includes all shares then 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 2014 Plan. At December 31, 2017,2023, a total of 6,731,1375,069,768 shares remain available for future grant under the 20142019 Plan. The Company issues new shares for stock unit conversions and stock appreciation right exercises and stock unit conversions. The Company’s stock-based awards tonon-employee directors have not been material.

exercises.

Accounting for share-based compensation

Total compensation cost for share-based payment arrangements was $13,488, $19,289$27,780, $31,309 and $9,257,$22,608, for 2017, 20162023, 2022 and 2015,2021, respectively. The related tax benefit recognized in net incomeincome/(loss) was $5,058, $7,040,$6,920, $7,999, and $3,379,$5,715, for the same years, respectively. Share-based compensation expense is included in “Selling, general and administrative expenses” in the Company’s 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$978, $1,367 and $3,622$1,110 for 2017, 20162023, 2022 and 2015,2021, respectively.

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

Beginning in 2015, stock appreciation rights (SARs) grantedcertain key management employees annually on a discretionary basis. 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, except in the case of death, disability, or involuntary (or good reason) termination within two years of a change in control. SARs grantedFor grants awarded prior to 2015 vested over one year.

Since 2006, the Company has granted SARs annually on a discretionary basis to key employees. 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 2015 vest over three years, withone-third vesting on each anniversary date of the grant, and have10-year terms. As of December 31, 2017, unrecognized compensation cost related to nonvested SARs totaled $2,352. This cost will be recognized over the remaining weighted-average vesting period of approximately 24 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 the Company’s SARs 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

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 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, upon vesting, PCSUs are convertible into common shares on aone-for-one basis. Except in the event of the participant’s death, disability, or retirement, if a participant is not employed by the Company at the end of the performance period, no PCSU’s 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, 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 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. As of December 31, 2017, the 2017 PCSUs to be awarded are estimated to range from 0 to 261,522 units and are tied to the three-year performance period ending December 31, 2019.

2016 PCSU.As of December 31, 2017, the 2016 PCSUs to be awarded are estimated to range from 0 to 373,572 units and are tied to the three-year performance period ending December 31, 2018.

2015 PCSU. The performance cycle for the 2015 PCSUs was completed on December 31, 2017. Outstanding stock units of 141,546 units were determined to have been earned, all of which qualified for vesting on December 31, 2017. The fair value of these units was $5,906 as of December 31, 2017.

2014 PCSU.The performance cycle for the 2014 PCSUs was completed on December 31, 2016. Outstanding stock units of 247,554 units were determined to have been earned, all of which qualified for vesting on December 31, 2016. The fair value of these units was $13,046 as of December 31, 2016.

2013 PCSU.The performance cycle for the 2013 PCSUs was completed on December 31, 2015. Based on performance and the terms of the awards as of December 31, 2015, 205,673 stock units were determined to have been earned, all of which qualified for vesting on December 31, 2015. The fair value of these units was $8,406 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.

The weighted-average grant-date fair value of PCSUs granted was $50.11, $36.33, and $42.44 per share in 2017, 2016 and 2015, respectively. Noncash stock-based compensation associated with PCSUs totaled $3,896, $10,568 and $2,271 for 2017, 2016 and 2015, respectively. As of December 31, 2017, there was approximately $7,017 of total unrecognized compensation cost related to nonvested PCSUs. This cost is expected to be recognized over a weighted-average period of 20 months.

Restricted stock awards

During 2017 and 2016, the Company granted awards of restricted stocks units (RSUs) to executive officers and certain key management employees. These awards vest over a three-year period withone-third vesting on each anniversary date of the grant. Participants2021, participants must be actively employed by the Company on the vesting date for shares to be issued, except in the event of the participant’s death, disability, or involuntary (or good reason) termination within two years of a change in control prior to full vesting, in which case shares will immediately vest. For awards granted since 2020, 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. Once vested, these awards do not expire.

Prior to 2015, the

The Company from time to time grantedgrants special RSUs to certain of its executive officers and directors. These awards normally vestedvest over a five-year period withone-third vesting on each of the third, fourth and fifth anniversaries of the grant, but in some circumstances vestedmay vest over a shorter period, or cliff vest at the end of the five-year period. ANormally a participant must be actively employed by, or serving as a director of, the Company on the vesting date for shares to be issued.issued, but the Company may make other arrangements in connection with termination of employment prior to the vesting date. Officers and directors can elect to defer receipt of RSUs, which will be issued in shares of Sonoco common stock in installments beginning no earlier than six months following separation from the Company or the Board of Directors (the “Board”), respectively. Key management employees are required to take receipt of the stock issued upon the vest date.
The weighted-average grant-date fair value of RSUs granted was $56.87, $53.55 and $57.77 per share in 2023, 2022 and 2021, respectively. The fair value of shares vesting during the year was $10,320, $6,243, and $4,063 for 2023, 2022 and 2021, respectively. Non-cash stock-based compensation associated with restricted stock grants totaled $15,005, $11,113 and $8,278 for 2023, 2022 and 2021, respectively. As of December 31, 2023, there was $11,674 of total unrecognized compensation cost related to nonvested RSUs. This cost is expected to be recognized over a weighted-average period of 26 months.
The activity related to RSUs for the year ended December 31, 2023 is as follows:
NonvestedVestedTotal
Average Grant
Date Fair
Value Per Share
Outstanding, December 31, 2022462,395 73,309 535,704 $53.23 
   Granted325,771 — 325,771 $56.87 
   Vested(172,786)172,786 — 
   Converted(179,198)(179,198)$54.12 
   Cancelled(24,148)— (24,148)$55.79 
   Dividend equivalents2,213 1,918 4,131 $56.97 
Outstanding, December 31, 2023593,445 68,815 662,260 $54.71 
Performance Contingent Restricted Stock Units
The Company grants 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 which performance, relative to defined targets related to earnings and return on invested capital is achieved over a three-year performance cycle and for the 2023 PCSU grant only, a modifier for total stock return performance.
The Company estimates the fair value of its 2023 PCSUs based upon the Company’s stock price on the date of grant and an estimate of the Company’s payout modifier based upon the projected total stock return performance relative to its peer group companies. The comparative
F-27 FORM 10-K SONOCO 2023 ANNUAL REPORT

market indices for the awards that vest based on total stock return to shareholders are the S&P Composite 1500 Materials Index. If the Company’s actual total stock return for the three-year measurement period is determined to be between the 25th and 75th percentile relative to its peers, no additional modifier is triggered for the 2023 PCSU grant upon vesting. If the Company’s total stock return for the three-year measurement period is determined to be above the 75th percentile, the modifier adds 20% to the award’s vested share payout for total stock return performance in the top quartile, and if the Company’s return falls below the 25th percentile relative to its peers, the modifier reduces the award’s share payout by 20% for performance in the bottom quartile.
PCSUs granted 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. Upon vesting, PCSUs are convertible into common shares on a one-for-one basis. Officers can elect to defer receipt of PCSUs, which will be issued in shares of Sonoco common stock in installments beginning no earlier than six months following separation from the Company. Key management employees are required to take receipt of the stock issued upon the vest date. Except in the event of the participant's death, disability, or retirement, if a participant is not employed by the Company at the end of the performance period, no PCSUs will vest. However, certain award agreements provided that in the event of the participant’s death, disability or retirement prior to full vesting, shares wouldwill be issued on a pro rata basis up through the time the participant’s employment or service ceases.

Officers In the event of a change in control, as defined under 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 PCSUs for the year ended December 31, 2023 is as follows:
NonvestedVestedTotalAverage Grant Date Fair Value per Share
Outstanding, December 31, 2022599,382 302,400 901,782 $52.81
   Granted205,178 — 205,178 $55.04
   Performance adjustments(129,224)— (129,224)$55.04
   Vested(225,530)225,530 — 
   Converted— (291,818)(291,818)$51.68
   Cancelled(31,403)— (31,403)$54.08
   Dividend equivalents— 380 380 $56.99
Outstanding, December 31, 2023418,403 236,492 654,895 $53.51
2023 PCSU. As of December 31, 2023, the 2023 PSCUs to be awarded are estimated to range from 0 to 449,255 units, including the 20% total stock return modifier, and directors can electare tied to defer receiptthe three-year performance period ending December 31, 2025.
2022 PCSU. As of RSUs, but key management employeesDecember 31, 2023, the 2022 PSCUs to be awarded are requiredestimated to take receiptrange from 0 to 342,808 units and are tied to the three-year performance period ending December 31, 2024.
2021 PCSU. The performance cycle for the 2021 PSCUs was completed on December 31, 2023. Outstanding stock units of 225,530 units were determined to have been earned. The fair value of these units was $12,600 as of December 31, 2023.
2020 PCSU. The performance cycle for the 2020 PSCUs was completed on December 31, 2022. Outstanding stock issued. units of 280,881 units were determined to have been earned. The fair value of these units was $17,052 as of December 31, 2022.
2019 PCSU. The performance cycle for the 2019 PCSUs was completed on December 31, 2021. Outstanding stock units of 64,243 were determined to have been earned. The fair value of these units was $3,719 as of December 31, 2021.
The weighted-average grant-date fair value of RSUsPCSUs granted was $51.68, $38.40$55.04, $51.94, and $43.35$55.95 per share in 2017, 20162023, 2022 and 2015,2021, respectively. The fair value of shares vesting during the year was $1,129, $1,291, and $2,066 for 2017, 2016 and 2015, respectively.

NoncashNon-cash stock-based compensation associated with restricted stock grantsPCSUs totaled $3,554, $3,122$10,751, $17,900 and $2,336$11,477 for 2017, 20162023, 2022 and 2015,2021, respectively. As of December 31, 2017,2023, there was $2,469approximately $8,746 of total unrecognized compensation cost related to nonvested restricted stock units.PCSUs. This cost is expected to be recognized over a weighted-average period of 2616 months.

Stock appreciation rights

F21SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

Through 2019, the Company granted stock appreciation rights (“SARs”) annually on a discretionary basis to key employees. These SARs 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 vested over three years, with one-third vesting on each anniversary date of the grant, and had 10-year terms. All outstanding SARs are vested as of December 31, 2023.

SARs expense was recognized following the graded-vesting method. As of December 31, 2023, there is no unrecognized compensation cost, and no non-cash stock-based compensation expense was incurred for the year ended December 31, 2023 related to nonvested SARs. Noncash stock-based compensation expense associated with SARs totaled$40 for 2022 and $347 for 2021.

The aggregate intrinsic value of SARS exercised during 2023, 2022, and 2021 was $158, $582, and $2,575, respectively. The activity related to restricted stock unitsthe Company’s SARs for the year ended December 31, 2023 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, 2022— 764,806 764,806 $54.98 
   Vested— — — 
   Granted— — — $— 
   Exercised— (26,671)(26,671)$49.96 
   Forfeited/Expired— (8,620)(8,620)$— 
Outstanding, December 31, 2023— 729,515 729,515 $55.13 
Exercisable, December 31, 2023— 729,515 729,515 $55.13 

F-28 FORM 10-K SONOCO 2023 ANNUAL REPORT

The weighted average remaining contractual life for both SARs outstanding and exercisable at December 31, 2023 was 4.1 years. The aggregate intrinsic value for both SARs outstanding and exercisable at December 31, 2023 was $2,217. At December 31, 2023, the fair market value of the Company’s stock used to calculate intrinsic value was $55.87 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 beginning six months following termination of Board service. Directors must elect to receive these deferred distributions in one, three or five annual installments.

The activity related to deferred compensation for equity award units granted to both employees andnon-employee directors combined is as follows:

Total
Total

Outstanding, December 31, 2016

2022		287,015 323,278

Deferred

36,254 36,362

Converted

(8,406)(4,835)

Dividend equivalents

9,739 10,243

Outstanding, December 31, 2017

2023		324,602 365,048

Deferred compensation


Compensation deferrals for employees and directors, all of $2,850, $2,721, and $1,947, which will be settled in Company stock atafter retirement, was deferredtotaled $2,024, $2,256, and $2,507, during 2017, 2016,2023, 2022, and 2015,2021, respectively.

12.

F-29 FORM 10-K SONOCO 2023 ANNUAL REPORT


14. 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 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 amended to freeze plan benefits for all active participants effective December 31, 2018. Remaining active participants in the U.S. qualified plan will become eligible for SRC contributions effective January 1, 2019.

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)

202320222021
Retirement Plans
Service cost$2,918 $3,304 $3,916 
Interest cost18,101 10,562 24,186 
Expected return on plan assets(9,451)(10,302)(22,888)
Amortization of prior service cost926 913 900 
Amortization of net actuarial loss4,300 6,240 16,503 
Effect of settlement loss1,010 479 550,706 
Effect of curtailment loss— 43 — 
Net periodic benefit cost$17,804 $11,239 $573,323 
Retiree Health and Life Insurance Plans
Service cost$230 $320 $374 
Interest cost507 258 197 
Expected return on plan assets(313)(439)(444)
Amortization of prior service credit— — — 
Amortization of net actuarial gain(768)(681)(744)
Net periodic benefit income$(344)$(542)$(617)

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
  
2023202220232022
Change in Benefit Obligation
Benefit obligation at January 1$352,843 $514,633 $11,244 $13,745 
Service cost2,918 3,304 230 320 
Interest cost18,101 10,562 507 258 
Plan participant contributions60 50 — — 
Plan amendments306 665 11,637 — 
Actuarial loss/(gain)15,663 (124,982)(266)(1,825)
Benefits paid(26,703)(22,268)(788)(1,224)
Impact of foreign exchange rates8,707 (27,273)7 (30)
Effect of settlements(2,373)(1,736)— — 
Effect of curtailments— (112)— — 
Acquisitions43,934 — — — 
Benefit obligation at December 31$413,456 $352,843 $22,571 $11,244 
 Retirement Plans
Retiree Health and
Life Insurance Plans
  
2023202220232022
Change in Plan Assets
Fair value of plan assets at January 1$253,125 $417,105 $12,750 $13,942 
Actual return on plan assets15,968 (119,714)553 (532)
Company contributions13,908 14,677 754 652 
Plan participant contributions60 50 — — 
Benefits paid(26,703)(22,268)(788)(1,224)
Impact of foreign exchange rates10,388 (33,800)— — 
Effect of settlements(2,373)(1,736)— — 
Expenses paid(1,108)(1,189)(56)(88)
Acquisitions32,322 — — — 
Fair value of plan assets at December 31$295,587 $253,125 $13,213 $12,750 
Funded Status of the Plans$(117,869)$(99,718)$(9,358)$1,506 

F-30 FORM 10-K SONOCO 20172023 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

   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
  
2023202220232022
Total Recognized Amounts in the Consolidated Balance Sheets
Noncurrent assets$26,599 $30,322 $— $2,919 
Current liabilities(9,797)(9,478)(1,801)(1,049)
Noncurrent liabilities(134,671)(120,562)(7,557)(364)
Net (liability)/asset$(117,869)$(99,718)$(9,358)$1,506 
Items not yet recognized as a pre-tax component of net periodic pensionbenefit cost that are included in Accumulated Other Comprehensive Loss (Income) as of December 31, 20172023 and 2016,2022, 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
  
2023202220232022
Net actuarial loss/(gain)$114,957 $109,558 $(6,120)$(6,437)
Prior service cost5,557 6,053 11,637 — 
 $120,514 $115,611 $5,517 $(6,437)

The pre-tax 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
  
202320222021202320222021
Adjustments arising during the period:
Net actuarial loss/(gain)$10,709 $4,839 $(63,684)$(451)$(761)$(412)
Prior service cost430 678 837 11,637 — — 
Net settlements/curtailments(1,010)(522)(550,706)— — — 
Amortization recognized during the period:
Net actuarial (loss)/gain(4,300)(6,240)(16,503)768 681 744 
Prior service (cost)/credit(926)(913)(900)— — — 
Total recognized in other comprehensive loss/(income)$4,903 $(2,158)$(630,956)$11,954 $(80)$332 
Total recognized in net periodic benefit cost and other comprehensive loss/(income)$22,707 $9,081 $(57,633)$11,610 $(622)$(285)

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 (“ABO”) for all defined benefit plans was $1,810,462$404,648 and $1,738,196$347,608 at December 31, 20172023 and 2016,2022, respectively.

The projected benefit obligation (PBO)(“PBO”), accumulated benefit obligation (ABO)ABO and fair value of plan assets for pension plans with accumulated benefit obligationsABOs in excess of plan assets were, $1,554,395, $1,538,350$229,397, $224,045 and $1,186,789,$84,929, respectively, as of December 31, 2017,2023, and $1,474,993, $1,446,624$176,702, $171,705 and $1,019,094,$48,277, respectively, as of December 31, 2016.

2022.

RTS Packaging defined benefit plan
On September 8, 2023, the Company completed the acquisition of the remaining 65% ownership interest of the RTS Packaging joint venture, which included the assumption of the RTS Packaging Pension Plan (the “RTS Plan”). At the time of the acquisition, the RTS Plan had a PBO of $43,934 and plan assets of $32,322, resulting in long-term and short term unfunded pension obligations of $11,529 and $83, respectively. Since the formation of the original joint venture, the Company had recognized its 35% share of actuarial gains and losses related to the RTS Plan in “Accumulated other comprehensive loss.” Upon the acquisition of the remaining 65% interest in RTS Packaging, a pre-tax loss of $4,756 ($3,543 after tax) was reclassified out of “Accumulated other comprehensive loss” into earnings. The pre-tax loss is reflected in “Other income, net” in the Company’s Consolidated Statements of Income for the year ending December 31, 2023.
Plan termination, settlements, changes and amendments
The Company amended its U.S. Retiree Health and Life Insurance Plan in 2023 to expand the eligibility requirements for certain non-union hourly employees. The amendment resulted in an increase in both the accumulated postretirement benefit obligation and prior service cost component of accumulated other comprehensive loss of $11,637. The service cost will be amortized over the average life expectancy of the plan participants beginning in 2024.
The Company recognized settlement charges totaling $1,010 and $479 in 2023 and 2022, respectively. Settlements in both years resulted from payments made to certain participants in the Company’s non-union Canadian pension plan who elected a lump sum distribution option upon retirement. Settlements in 2023 also included payments associated with the termination of a pension plan in Taiwan.
In July 2019, the Board 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
F-31 FORM 10-K SONOCO 2023 ANNUAL REPORT

affected by these actions. The Company continues to manage and support the Sonoco Pension Plan for Active Participants (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 of $11,984 were recognized in 2021, primarily due to 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.
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
2024$29,104 $1,853 
2025$29,914 $1,885 
2026$32,028 $2,044 
2027$31,621 $1,906 
2028$31,606 $2,159 
2029-2033$160,293 $9,793 
Assumptions

F23SONOCO 2017 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 benefit 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
20234.84 %4.68 %4.79 %
20225.01 %4.92 %4.97 %
Rate of Compensation Increase
2023— %3.03 %3.11 %
2022— %2.99 %3.29 %

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
20235.01 %4.92 %4.97 %
20222.77 %2.48 %2.22 %
20212.32 %2.04 %1.70 %
Expected Long-term Rate of Return
20232.48 %2.45 %4.70 %
20223.27 %3.18 %3.00 %
20213.27 %2.01 %3.69 %
Rate of Compensation Increase
2023— %2.99 %3.29 %
2022— %3.01 %3.21 %
2021— %3.03 %3.20 %
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.







F-32 FORM 10-K SONOCO 2023 ANNUAL REPORT

Medical trends

The U.S. Retiree Health and Life Insurance Plan makes up approximately 96%98% of the Retiree Health liability. Therefore, the following information relates to the U.S. plan only.

Healthcare Cost Trend RatePre-age 65Post-age 65
20236.25 %7.25 %
20225.80 %6.50 %
Ultimate Trend RatePre-age 65Post-age 65
20234.50 %4.50 %
20224.50 %4.50 %
Year at which the Rate Reaches
the Ultimate Trend Rate
Pre-age 65Post-age 65
202320332033
202220302030
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

Retirement plan assets
The assets of the projectedU.S., RTS Plan, U.K., and Canadian defined 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 comprisedcomprise approximately 15%93% of the beginning of year PBOtotal postretirement benefit plan assets. Therefore, the following disclosures relate only to the assets 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.

Retirement plan assets

The following table sets forth the weighted-average asset allocations of the Company’s retirement plans at December 31, 20172023 and 2016,2022, 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.RTSU.K.Canada
Equity securities202322.2 %18.6 %20.0 %29.4 %
202223.4 %N/A22.6 %34.0 %
Debt securities202376.6 %81.2 %79.1 %70.6 %
202272.9 %N/A76.3 %66.0 %
Cash and short-term investments20231.2 %0.2 %0.9 %— %
20223.7 %N/A1.1 %— %
Total2023100.0 %100.0 %100.0 %100.0 %
2022100.0 %N/A100.0 %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, postretirement benefit plan assets totaled $1,521,890, of which $1,124,453 were assets of the U.S. Defined Benefit Plans.

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 the Active Plan and the Inactive Plan effective January 1, 2011, the Company completed separatebased on asset/liability studiesstudies. These guidelines established a dynamic derisking framework for both plans during 2011 and adopted revised investment guidelines for each. The revised guidelines establish a dynamicde-risking framework that will gradually shiftshifting the allocation of assets to long-duration domestic fixed income from equity and other asset categories, as the relative funding ratio of eachthe plan increasesincreased over time. The current target allocation (midpoint) for the Inactive Plan investment portfolio is: Equity Securities – 49%, Debt Securities – 40%, Alternative – 11% and Cash – 0%. The current target allocation (midpoint) for the Active Plan investment portfolio is: Equity Securities – 57%,- 20% and Debt Securities – 30%, Alternative80%.
RTS defined benefit plan
The Company has adopted similar investment guidelines for the RTS Plan as it has for its U.S. Active Plan assets. The current target allocation (midpoint) for the RTS Plan investment portfolio is: Equity Securities – 13%20% and CashDebt Securities – 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.capitalization. The current target allocation (midpoint) for the investment portfolio is: Equity Securities – 48%,20% and Debt Securities – 52%, Alternative – 0% and Cash – 0%80%.

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 29% Equity Securities – 60%,and 71% Debt Securities – 39%, Alternative – 0% and Cash – 1%.

Securities.

F-33 FORM 10-K SONOCO 2023 ANNUAL REPORT

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 Category20232022
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$19,000 in

2018. 2024. No assurances can be made however, about funding requirements beyond 2018,2024, however, as they will depend largely on actual investment returns and future actuarial assumptions.

assumptions, legislative actions, and changes to the Company’s benefit offerings.

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. TheThrough December 31, 2021, the plan iswas 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,Effective December 31, 2021, the Company’s 401(k) matching contribution was increased to 100% of the first 6% of pretax and/or Roth compensation contributed by the participant. Prior to this, the Company hashad matched 50% on the first 4% of compensation contributed by thesuch participant as pretax contributions whichcontributions. Participants are immediately fully vested.vested in these matching contributions. The Company’s expenses related to the plan for 2017, 20162023, 2022 and 20152021 were approximately $11,200, $11,400$41,000, $38,900 and $11,500,$13,900, respectively.

Thenon-elective component of the plan, the Sonoco Retirement Contribution (SRC)(“SRC”), iswas eliminated effective December 31, 2021 and the benefit replaced by the higher matching 401(k) matching contribution discussed above. The SRC was available to certain employees who arewere not currently active participants in the Company’s U.S. qualified defined benefit pension plan. The SRC providesplan and provided 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 arewere fully vested after three years of service or upon reaching age 55, if earlier. The Company’s expensesAs a result of the termination, the Company recognized no SRC expense in 2023 or 2022. Expenses related to the plan for 2017, 2016 and 20152021 were approximately $14,540, $13,655 and $14,970, respectively.$22,914. Cash contributions to the SRC, which were made annually in March following the year in which they were earned, totaled $14,066, $13,352$21,948 and $12,865$22,665 in 2017, 20162022 and 2015,2021, respectively.

The Company made no annual SRC contributions in 2023 and no additional annual contributions will be made in the future.

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.

15. 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
202320222021
Pretax income
Domestic$400,241 $363,518 $(342,951)
Foreign214,591 207,764 181,969 
Total pretax income$614,832 $571,282 $(160,982)
Current
Federal$79,200 $55,016 $21,247 
State16,681 15,997 15,212 
Foreign65,617 59,762 55,018 
Total current$161,498 $130,775 $91,477 
Deferred
Federal$(5,447)$(2,495)$(120,243)
State(2,249)(5,441)(39,709)
Foreign(4,524)(4,330)1,045 
Total deferred$(12,220)$(12,266)$(158,907)
Total taxes$149,278 $118,509 $(67,430)

F25

F-34 FORM 10-K SONOCO 20172023 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 $69,000 were acquired in the 2017 acquisition of Packaging Holdings.
20232022
Property, plant and equipment$(137,880)$(104,162)
Intangibles(119,225)(104,171)
Leases(48,832)(89,226)
Outside basis in Metal Packaging(68,867)(74,092)
Gross deferred tax liabilities$(374,804)$(371,651)
Retiree health benefits$513 $1,222 
Foreign loss carryforwards62,250 79,460 
U.S. Federal loss and credit carryforwards39,131 36,529 
Capital loss carryforwards3,817 3,626 
U.S. State loss and credit carryforwards21,321 20,961 
Capitalized research and development costs87,743 45,826 
Employee benefits51,829 42,641 
Leases50,704 89,416 
Accrued liabilities and other assets58,699 56,601 
Gross deferred tax assets$376,007 $376,282 
Valuation allowance on deferred tax assets$(70,661)$(82,046)
Total deferred taxes, net$(69,458)$(77,415)

The Company has total federal net operating loss carryforwards of approximately $85,600$79,501 remaining at December 31, 2017.2023. These losses are limited based upon future taxable earnings of the respective entitiesCompany and expire between 20292032 and 2037.2038. U.S. foreign tax credit carryforwards of approximately $22,434 exist at December 31, 2023 and expire in 2027. Foreign subsidiary loss carryforwards of approximately $230,300$258,412 remain at December 31, 2017.2023. Their use is limited to future taxable earnings of the respective foreign subsidiaries.subsidiaries or filing groups. Approximately $219,400$203,574 of these loss carryforwards do not have an expiration date. Of the remaining foreign subsidiary loss carryforwards, approximately $8,000$15,178 expire within the next five years and approximately $2,900$39,660 expire between 2029 and 2043. Foreign subsidiary capital loss carryforwards of approximately $15,256 exist at December 31, 2023 and 2035. do not have an expiration date. Their use is limited to future capital gains of the respective foreign subsidiaries.
Approximately $14,000$10,113 in tax value of state loss carryforwards and $15,000$16,876 of state credit carryforwards remain at December 31, 2017.2023. These state loss and credit carryforwards are limited based upon future taxable earnings of the respective entities or filing group and expire between 20182024 and 2037.2044. State loss and credit carryforwards are reflected at their “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.


A reconciliation of the U.S. federal statutory tax rate to the actual consolidated tax expenseprovision for/(benefit from) 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%
  
202320222021
Statutory tax rate$129,115 21.0 %$119,945 21.0 %$(33,806)21.0 %
State income taxes, net of federal tax benefit16,051 2.6 %13,149 2.3 %(15,863)9.9 %
Valuation allowance4,486 0.7 %(10,477)(1.8)%(33,576)20.9 %
Tax examinations including change in reserve for uncertain tax positions2,183 0.4 %567 0.1 %5,665 (3.5)%
Adjustments to prior year deferred taxes(2,489)(0.4)%(2,110)(0.4)%1,239 (0.8)%
Foreign earnings taxed at other than U.S. rates13,704 2.2 %12,334 2.2 %9,659 (6.0)%
Divestiture of business464 0.1 %— — %(808)0.5 %
Effect of tax rate changes387 0.1 %(2,151)(0.4)%275 (0.2)%
Foreign withholding taxes4,635 0.8 %4,670 0.8 %8,107 (5.0)%
Tax credits(18,841)(3.1)%(14,077)(2.5)%(21,936)13.6 %
Global intangible low-taxed income (GILTI)2,930 0.5 %2,851 0.5 %11,323 (7.0)%
Foreign-derived intangible income(1,106)(0.2)%(657)(0.1)%(202)0.1 %
Foreign currency gain/(loss) on distributions of previously taxed income(2,614)(0.4)%(1,280)(0.2)%3,365 (2.1)%
Other, net373 0.1 %(4,255)(0.7)%(872)0.5 %
Provision for/(Benefit from) income taxes$149,278 24.3 %$118,509 20.7 %$(67,430)41.9 %

On December 22, 2017,

The Company was subject to the one-time transition tax on certain accumulated foreign earnings as part 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 impact of the Tax 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 legislation 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.. Under the provisions of the Tax Act, the transition tax iswas payable in installments over a period of 8 years. Accordingly, $6,155, the total expected to be paid in 2018, is included in “Accrued taxes” in the Company’s Consolidated Balance sheet 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 paid its final installment of $1,366 during 2023 and 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.

no remaining obligation.

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$3,074, $2,051 and $3,200$2,330 for uncertain items arising in 2017, 20162023, 2022 and 2015,2021, 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 $(2,300)$(891), $(2,300)$(1,484) and $(6,500)$3,743 in 2017, 20162023, 2022 and 2015,2021, respectively.

F-35 FORM 10-K SONOCO 2023 ANNUAL REPORT

In many of the countries in which the Company operates, earnings are taxed at rates lowerdifferent than in the U.S.United States. 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

Of the “Effect$18,841 of tax rate changes enacted duringcredits for 2023, $2,442 directly offset the year” for 2017 consists$2,930 of GILTI tax, resulting in a net GILTI tax of $488. Of the benefits relatedremainder, $8,735 relates to the revaluationresearch and development tax credits. The GILTI tax in 2022 of deferred$2,851 was partially offset by GILTI tax assets and liabilities due to the enactmentcredits of the Tax Act.

$1,245, resulting in a net GILTI tax of $1,606.

The benefits included in “Valuation allowance” for 2022 include a $13,182 net recognized benefit of $3,100 related toassociated with the revaluationrelease of the valuation allowance on foreign NOLs due to the enactment of the Tax Act.

an increase in projected future foreign income.

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 if those earnings were repatriated. As of December 31, 2017,2023, these undistributed earnings total $1,040,580. While the Company ismajority of these earnings have already been taxed in the process of evaluating the impactUnited States, 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

202320222021
Gross Unrecognized Tax Benefits at January 1$18,621 $18,142 $11,230 
Increases in prior years’ unrecognized tax benefits378 223 12,283 
Decreases in prior years’ unrecognized tax benefits(572)(144)(275)
Increases in current year’s unrecognized tax benefits4,395 1,807 1,088 
Decreases in unrecognized tax benefits from the lapse of statutes of limitations(1,094)(1,174)(6,170)
Settlements(51)(233)(14)
Gross Unrecognized Tax Benefits at December 31$21,677 $18,621 $18,142 

Of the unrecognized tax benefit balances at December 31, 20172023 and December 31, 2016, approximately $15,5002022, $19,241 and $15,300,$17,821, respectively, would have an impact on the effective tax rate if ultimately recognized.

Interest and/or penalties related to income taxes are reported as part of income tax expense. The Company had approximately $2,300$1,773 and $2,300$859 accrued for interest related to uncertain tax positions at December 31, 20172023 and December 31, 2016,2022, respectively. Tax expense for the year ended December 31, 2017,2023, includes approximately $100net interest expense of interest benefit,$914, which is comprised of an interest benefit of approximately $800$272 related to the adjustment of prior years’ items and interest expense of $700$1,186 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.

2017.

The Company believes that it is reasonably possible that the amount reserved for uncertain tax positions at December 31, 20172023 will increasedecrease by approximately $400$10,018 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’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’s overall effective tax rate.

As previously

16. Revenue recognition
The following tables set forth information about revenue disaggregated by primary geographic regions for the years ended December 31, 2023, 2022 and 2021. The tables also include a reconciliation of disaggregated revenue with reportable segments. The Company’s reportable segments are aligned by product nature as disclosed in Note 19.
Year Ended December 31, 2023Consumer PackagingIndustrial Paper PackagingAll OtherTotal
Primary geographical markets:
   United States$2,779,749 $1,389,492 $649,495 $4,818,736 
   Europe451,990 389,261 80,096 921,347 
   Canada116,595 100,095 — 216,690 
   Asia Pacific100,299 233,446 1,812 335,557 
   Other178,344 261,819 48,799 488,962 
          Total$3,626,977 $2,374,113 $780,202 $6,781,292 
F-36 FORM 10-K SONOCO 2023 ANNUAL REPORT

Year Ended December 31, 2022Consumer PackagingIndustrial Paper PackagingAll OtherTotal
Primary geographical markets:
   United States$2,960,098 $1,611,390 $660,604 $5,232,092 
   Europe442,743 434,076 84,878 961,697 
   Canada117,671 109,997 — 227,668 
   Asia Pacific97,182 275,395 1,157 373,734 
   Other150,262 253,705 51,394 455,361 
          Total$3,767,956 $2,684,563 $798,033 $7,250,552 
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 

Contract assets represent goods produced without alternative use for which the Company received a draft Noticeis 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 Proposed Adjustment (“NOPA”)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 arrangement, 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 customers. The balances of the Internal Revenue Service (IRS)contract assets and liabilities are located in February 2017 proposing an adjustment to income for the 2013 tax year based“Other receivables” and “Accrued expenses and other”, respectively, 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. 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 asConsolidated Balance Sheets.
December 31, 2023December 31, 2022
Contract Assets$54,334 $56,008 
Contract Liabilities$(24,973)$(22,423)


Significant changes in the prior NOPAs. On November 14, 2017,contract assets and liabilities balances during the Company received two final NOPAs proposing the same adjustmentstwelve months ended December 31, 2023 and penalties2022 were 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 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.

follows:
December 31, 2023December 31, 2022
Contract AssetContract LiabilityContract AssetContract Liability
Beginning balance$56,008 $(22,423)$51,106 $(18,993)
Acquired as part of a business combination— (1,436)8,107 (5,418)
Revenue deferred or rebates accrued— (53,464)— (57,510)
Recognized as revenue— 11,761 — 18,201 
Rebates paid to customers— 40,589 — 41,297 
Increases due to rights to consideration for customer specific goods produced, but not billed during the period54,334 — 56,008 — 
Transferred to receivables from contract assets recognized at the beginning of the period and acquired as part of business combination(56,008)— (59,213)— 
Ending balance$54,334 $(24,973)$56,008 $(22,423)

F27

F-37 FORM 10-K SONOCO 20172023 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.

17. 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$2,141 on remediation of the Spartanburg site. During previous years, the Company has increased its reserves for this site by a total of $17 in order to reflect its best estimate of what it is likely to pay in order to complete the remediation. At December 31, 20172023 and 2016,2022, the Company’s accrual for environmental contingencies related to the Spartanburg site totaled $16,504$5,259 and $16,821,$5,425, respectively.
The Company cannot currently estimate its potential liability, damages or range of potential loss, if any, beyond the amounts accrued with respect to this exposure. However, the Company does not believe that the resolution of this matter has a reasonable possibility of having a material adverse effect on the Company’s financial statements.

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, 2023 and 2022, the Company’s accrual for these other sites totaled $1,992 and $1,840, respectively.

Summary

As of December 31, 20172023 and 2016,2022, the Company (and its subsidiaries) had accrued $20,306$7,251 and $24,515,$7,265, respectively, related to environmental contingencies. These accruals are included in “Accrued“Accrued expenses and other”other” on the Company’s Consolidated Balance Sheets.

Other legal and regulatory matters

As described more fully in Note 13 to these Consolidated Financial Statements, the Company has received a final Revenue Agent’s Report (“RAR”) from the IRS proposing an adjustment to income for the 2013 tax year. The incremental tax liability associated with the proposed adjustment would be approximately $89,000, excluding interest and 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.

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.

Commitments

As of December 31, 2017,2023, 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,$244,867, as follows: $118,400$102,713 in 2018; $71,9002024; $97,458 in 2019; $58,8002025; $35,742 in 2020, $37,3002026; $8,954 in 20212027, and a total of $2,900$0 from 20222028 through 2026.

15.2032.


18. Shareholders’ equity and earnings per share

Stock

Share repurchases

On April 20, 2021, the Board authorized the repurchase of the Company’s common stock in an aggregate amount of up to $350,000. A total of $137,972 remained available for share repurchases under this authorization as of December 31, 2022 and December 31, 2023.
No shares were purchased under this authorization during 2023 or 2022. The following transactions occurred during 2021:
•On May 6, 2021, the Company repurchased approximately 53,500 shares for $3,615 from a private stockholder based upon the average closing 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 an estimated average repurchase price 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.
•Pursuant to the ASR Agreement, the financial institution elected to accelerate the settlement of the transaction in two 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 the fiscal period ended 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 rightsSARs, RSUs, and performance-based stock awards.PCSUs. These repurchases, which are not part of a publicly announced plan or program, totaled 119,349175,665 shares during 2017, 148,1292023, 79,347 shares during 2016,2022, and 172,88499,824 shares during 2015,2021, at a cost of $6,335, $6,739$10,617, $4,547 and $7,868,$6,057, respectively.


F-38 FORM 10-K SONOCO 20172023 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 earningsearnings/(loss) 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

202320222021
Numerator:
Net income/(loss) attributable to Sonoco$474,959 $466,437 $(85,477)
Denominator:
Weighted average common shares outstanding98,294 97,991 99,608 
Dilutive effect of share-based compensation596 741 — 
Diluted outstanding shares98,890 98,732 99,608 
Per common share:
Income/(Loss) available to common shareholders:
Basic$4.83 $4.76 $(.86)
Diluted$4.80 $4.72 $(.86)
Cash dividends$2.02 $1.92 $1.80 

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.

Anti-dilutive securities
Potentially dilutive securities are calculated in accordance with the treasury stock method, which assumes the proceeds from the exercise of all dilutive stock appreciation rights (SARs)SARs are used to repurchase the Company’s common stock. Certain SARs are not dilutive because either the exercise price is greater than the average market price of the stock during the reporting period or assumed repurchases from proceeds from the exercise of the SARs were antidilutive.

anti-dilutive.

The average number of shares that were not dilutive and therefore not included in the computation of diluted incomeincome/ (loss) per share was as follows for the years ended December 31, 2017, 20162023, 2022 and 20152021 (in thousands):

    2017  2016  2015

Anti-dilutive stock appreciation rights

    487    357    902

202320222021
Anti-dilutive stock appreciation rights352 373 202 

These stock appreciation rightsSARs 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 Company owns a 51%the computation of diluted net loss per share induring the joint venture and the assets have been consolidated.

year ended December 31, 2021 was 470.

Noncontrolling interests
In April 2015, the Company acquired a 67% controlling interest in Graffo Paranaense de Embalagens S/A (“Graffo”). ThePrior to March 31, 2022, the Company consolidatesconsolidated 100% of Graffo, with the partner’spartner's 33% share included in “Noncontrolling Interests” within the equity section of the balance sheet. On March 31, 2022, the Company paid $14,474 in cash to acquire the remaining 33% ownership interest from the three noncontrolling partners, which resulted in a $6,116 reduction in noncontrolling interest, a $7,080 charge to capital in excess of stated value, and a $1,278 reduction to accrued expenses and other on the Company's Consolidated Balance Sheet. The fair value of this noncontrolling interest was $7,922 at the time of the acquisition.

16.

19. Segment reporting

The Company reports its financial results in fourCompany’s operating and reporting structure consists of two reportable segments, – Consumer Packaging Display and Packaging, Paper and Industrial Converted Products,Paper Packaging, with all remaining businesses reported as All Other.
The products produced and Protective Solutions.

Thesold within the Consumer Packaging segment includes the followingare generally used to package a variety of consumer products and services:consist primarily of round and shaped rigid containerspaper, steel and trays (both composite and thermoformed plastic); extruded and injection-molded plastic products; printed flexible packaging; global brand artwork management; andcontainers; metal and peelable membrane ends, closures, and closures. Thiscomponents; thermoformed plastic trays; and high-barrier flexible packaging.

The primary products produced and sold within the Industrial Paper Packaging segment also included blow-moldedinclude paperboard tubes, cones, and cores; paper-based protective packaging; and uncoated recycled paperboard.
The primary products produced within the All Other group of businesses consist of a variety of packaging materials, including plastic, bottlespaper, foam, and jars through November 7, 2016, whenvarious other specialty materials.
Effective January 1, 2024, the Company completedwill integrate its flexible packaging and thermoforming packaging businesses within the sale of its rigid plastics blow molding operations.

The Display andConsumer Packaging segment includesin order to streamline operations, enhance customer service and better position the following productsbusiness for accelerated growth. As a result, the Company will change its operating and services: designing, manufacturing, assembling, packingreporting structure to reflect the way it plans to manage its operations, evaluate performance, and distributing temporary, semipermanent and permanentpoint-of-purchase displays; supply chain management services, including contract packing, fulfillment and scalable service centers; retail packaging, including printed backer cards, thermoformed blisters and heat sealing equipment; and paper amenities, such as coasters and glass covers.

The Paper and Industrial Converted Products segment includesallocate resources going forward. Therefore, in future reporting periods, the following products: paperboard tubes and cores; fiber-based construction tubes 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 protective packaging and components; and temperature-assurance packaging.

Restructuring charges, asset impairment charges, gainsCompany’s consumer thermoforming businesses will move from the dispositionAll Other group of businesses insurance settlement gains, acquisition-related costs, pension settlement charges, interest expenseto the Consumer Packaging segment. The Company’s Industrial Paper Packaging segment will not be affected by these changes. As of and interest income are includedfor the year ended December 31, 2023, there were no changes to the manner in income before income taxes under “Corporate.”

which the Company reviewed financial information at the segment level; therefore, these changes had no impact on our reporting structure.

F29

F-39 FORM 10-K SONOCO 20172023 ANNUAL REPORT    |    FORM 10-K


The following table sets forth financial information about each of the Company’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 and All Other group of businesses:
  
Years ended December 31
  
Consumer
Packaging
Industrial Paper PackagingAll OtherCorporateConsolidated
Total Revenue
2023$3,639,759 $2,475,935 $789,781 $— $6,905,475 
20223,774,957 2,818,778 808,069 — 7,401,804 
20212,373,583 2,578,379 768,476 — 5,720,438 
Intersegment Sales1
2023$12,782 $101,822 $9,579 $— $124,183 
20227,001 134,215 10,036 — 151,252 
20215,236 114,067 10,697 — 130,000 
Sales to Unaffiliated Customers
2023$3,626,977 $2,374,113 $780,202 $— $6,781,292 
20223,767,956 2,684,563 798,033 — 7,250,552 
20212,368,347 2,464,312 757,779 — 5,590,438 
Income/(Loss) Before Income Taxes2
2023$382,063 $313,545 $103,745 $(184,521)$614,832 
2022526,028 327,859 65,978 (348,583)571,282 
2021274,926 226,798 63,060 (725,766)(160,982)
Identifiable Assets3
2023$3,682,650 $2,559,026 $825,003 $125,278 $7,191,957 
20223,825,675 2,079,326 871,800 276,139 7,052,940 
20211,956,688 1,971,293 886,647 258,607 5,073,235 
Depreciation, Depletion and Amortization4
2023$124,483 $104,722 $24,519 $87,264 $340,988 
2022111,599 91,944 24,854 80,427 308,824 
202178,802 91,141 25,822 49,419 245,184 
Capital Expenditures
2023$186,109 $111,619 $24,838 $40,511 $363,077 
2022127,478 145,021 21,177 35,093 328,769 
202160,532 150,225 22,780 22,482 256,019 
1Intersegment sales are recorded at a market-related transfer price.
2Included in Corporate above are restructuring, restructuring/asset impairment charges, changes in LIFO inventory reserves, net, gains or losses from derivatives, gains or losses from the saledivestiture of a business, environmental settlement gains, property insurance settlement gains,businesses and othernon-operational assets, acquisition, integration and divestiture-related costs, amortization of acquired intangibles, and other non-operating 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
2023$(56,237)$17,064 $(24,486)$(120,862)$(184,521)
2022(138,343)(40,805)(18,800)(150,635)(348,583)
2021(25,983)(2,570)(23,312)(673,900)(725,765)

The remaining amounts reported as Corporate consist of: interest expense; interest income; non-operating pension costs; and portions of interest expense, interestacquisition, integration and divestiture-related costs, restructuring, other income, acquisition related charges, pension settlement charges,net, and othernon-operational non-operating 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 amortizationdepletion incurred at Corporate are allocated to the reportable segments.

F-40 FORM 10-K SONOCO 2023 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
202320222021
Sales to Unaffiliated Customers
United States$4,818,736 $5,232,092 $3,650,090 
Europe921,347 961,697 941,655 
Canada216,690 227,668 212,272 
Asia Pacific335,557 373,734 401,003 
Other488,962 455,361 385,418 
Total$6,781,292 $7,250,552 $5,590,438 
Long-lived Assets
United States$3,504,438 $3,240,011 $2,078,342 
Europe653,730 607,996 545,211 
Canada113,888 96,210 104,913 
Asia Pacific158,301 157,030 157,084 
Other196,504 85,233 68,949 
Total$4,626,861 $4,186,480 $2,954,499 
   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 investments in affiliates, property, plant and equipment, and goodwill and other intangible assets and investment in affiliates (see Notes 1, 6 and 7)8).

SONOCO 2017 ANNUAL REPORT    |    FORM 10-KF30

17.20. 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, 20172023 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.

2022:
Foreign
Currency
Items
Defined
Benefit
Pension Items
Gains and Losses on Cash Flow Hedges
Accumulated
Other
Comprehensive
Loss
Balance at December 31, 2021$(269,076)$(91,397)$1,048 $(359,425)
Other comprehensive (loss)/income before reclassifications(72,987)(3,471)3,244 (73,214)
Amounts reclassified from accumulated other comprehensive loss to net income3,747 3,895 (5,593)2,049 
Amounts reclassified from accumulated other comprehensive loss to fixed assets— — 507 507 
Other comprehensive (loss)/income(69,240)424 (1,842)(70,658)
Balance at December 31, 2022$(338,316)$(90,973)$(794)$(430,083)
Other comprehensive income/(loss) before reclassifications68,705 (16,305)6,622 59,022 
Amounts reclassified from accumulated other comprehensive loss to net income2,033 7,651 (5,177)4,507 
Amounts reclassified from accumulated other comprehensive loss to fixed assets— — 292 292 
Other comprehensive income/(loss)70,738 (8,654)1,737 63,821 
Balance at December 31, 2023$(267,578)$(99,627)$943 $(366,262)




F-41 FORM 10-K SONOCO 2023 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, 20172023 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

2022:

Amount Reclassified from Accumulated Other Comprehensive Loss
Details about Accumulated Other Comprehensive Loss ComponentsYear Ended December 31, 2023Year Ended December 31, 2022Affected Line Item in the Consolidated Statements of Net Income
Foreign currency items
     Loss on Russia restructuring (see Note 4)$— $(3,747)Restructuring/Asset impairment charges
     Loss on RTS Packaging investment (see Note 3)(2,033)— Other income, net
(2,033)(3,747)Net income/(loss)
Defined benefit pension items (see Note 14)
Pension-related loss upon purchase of remaining interest in RTS Packaging joint venture(4,756)— Other income, net
Effect of settlement loss(1,010)(479)Non-operating pension cost
Effect of curtailment loss— (43)Non-operating pension cost
Amortization of defined benefit pension items(4,458)(6,472)Non-operating pension cost
(10,224)(6,994)Income/(loss) before income taxes
2,573 3,099 Provision for/(Benefit from) income taxes
(7,651)(3,895)Net income/(loss)
Gains and losses on cash flow hedges (see Note 11)
Foreign exchange contracts10,860 3,460 Net Sales
Foreign exchange contracts(3,728)(2,852)Cost of sales
Commodity contracts(32)6,948 Cost of sales
7,100 7,556 Income/(loss) before income taxes
(1,923)(1,963)Provision for/(Benefit from) income taxes
5,177 5,593 Net income/(loss)
Amounts reclassified to net income from accumulated other comprehensive loss$(4,507)$(2,049)Net income/(loss)


The following table summarizes the tax (expense) benefit amountsexpense/(benefit) for the components of other comprehensive loss components for the years ended December 31, 2017 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)

income/(loss):
For the year ended December 31, 2023For the year ended December 31, 2022
Before Tax AmountTaxAfter Tax AmountBefore Tax AmountTaxAfter Tax Amount
Foreign currency items:
Other comprehensive income/(loss) before reclassifications$67,411 $1,294 $68,705 $(72,987)$— $(72,987)
Amounts reclassified from accumulated other comprehensive loss to net income2,033 — 2,033 3,747 — 3,747 
Net other comprehensive income/(loss) from foreign currency items69,444 1,294 70,738 (69,240)— (69,240)
Defined benefit pension items:
Other comprehensive (loss)/ income before reclassifications(21,815)5,510 (16,305)(3,365)(106)(3,471)
Amounts reclassified from accumulated other comprehensive loss to net income10,224 (2,573)7,651 6,994 (3,099)3,895 
Net other comprehensive (loss)/income from defined benefit pension items(a)
(11,591)2,937 (8,654)3,629 (3,205)424 
Cash flow hedges:
Other comprehensive income/(loss) before reclassifications9,081 (2,459)6,622 4,312 (1,068)3,244 
Amounts reclassified from accumulated other comprehensive loss to net income(7,100)1,923 (5,177)(7,556)1,963 (5,593)
Amounts reclassified from accumulated other comprehensive loss to fixed assets401 (109)292 805 (298)507 
Net other comprehensive (loss)/income from cash flow hedges2,382 (645)1,737 (2,439)597 (1,842)
Other comprehensive income/(loss)$60,235 $3,586 $63,821 $(68,050)$(2,608)$(70,658)


(a) The change innet other comprehensive (loss)/income from defined benefit planspension items includes pretax changes of $(836) and $(767)$1,391 during the yearsyear ended December 31, 2017 and 2016,2022 related to onethe Company’s former equity method investment in RTS Packaging.
F-42 FORM 10-K SONOCO 2023 ANNUAL REPORT

21. Subsequent events
On January 30, 2024, the Company entered into a definitive agreement to sell its Protective Solutions business, part of the All Other group of businesses, to Black Diamond Capital Management, LLC for an estimated $80,000 in cash. The transaction is expected to be completed in the first half of 2024, subject to the satisfaction or waiver of customary closing conditions. This business provides foam components and integrated material solutions for various industrial end markets. The business operates nine manufacturing facilities and has approximately 900 employees. This sale is the result of the Company’s equity method investments.

18. Selected quarterly financial data

The following table sets forth selected quarterly financial datacontinuing evaluation 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.

its business portfolio and is consistent with its strategic and investment priorities.




F-43 FORM 10-K SONOCO 20172023 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, 2017,2023, 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, 2017,2023, 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”).

Commission.

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, 2017.2023. In conducting management’smanagement's evaluation as described above, RTS Packaging, Holdings, Inc.LLC (“RTS Packaging”) and

subsidiaries (“Packaging Holdings” the Chattanooga paper mill (the “Chattanooga Mill”), both acquired March 14, 2017,in a business combination on September 8, 2023, and Clear Lam Packaging, Inc. (“Clear Lam”),Inapel, a wholly owned subsidiary based in Brazil and acquired July 24, 2017,in a business combination on December 1, 2023, were excluded. TheIn the aggregate, the operations of RTS Packaging, Holdingsthe Chattanooga Mill and Clear Lam, which are included in the Company’s 2017 consolidated financial statements, constitutedInapel represented approximately 4.3%1.3% of the Company’sCompany's consolidated revenues and approximately 4.1%3.0% of total assets as of December 31, 2017.

2023.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 20172023 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-month period ended December 31, 2023, that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other information

Information

Not applicable.

36

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
38 FORM 10-K SONOCO 20172023 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, 201817, 2024, to be filed with the SEC within 120 days after December 31, 2023 (the Proxy Statement)"Proxy Statement"), under the captions “Proposal 1: Election of Directors,” “Information Concerning Directors Whose Terms Continue,” and “Section“Delinquent Section 16(a) Beneficial Ownership Reporting Compliance,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 websitewww.sonoco.com under “Investors—Governance—Documents & Charters”, and is available in printa copy will be provided without charge upon written request. Requests should be directed to any shareholder who requests it.the Corporate Secretary, Sonoco Products Company, 1 North Second Street, Hartsville, SC 29550 USA or through email to CorporateSecretary@sonoco.com. Any waivers or amendments to the provisions of this code of ethics will be posted to thisthe same section of the Company’s 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: Theresa J. Drew, Chairperson; Steven L. Boyd; Richard G. Kyle; Blythe J. McGarvie; and Thomas E. Whiddon, Chairman; Sundaram Nagajaran; Philippe Guillemot; Marc D. Oken; Blythe J. McGarvie, and Richard G. Kyle.

Whiddon.

Audit Committee Financial Expert – The Company’s Board of Directors has determined that the Company has at least two “audit committee financial experts,” as that term is defined by Item 407(d)(5) of RegulationS-K promulgated by the Securities and Exchange Commission,SEC, serving on its audit committee. Theresa J. Drew 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.

Board.

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 website,www.sonoco.com.website. 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 captioncaption “Compensation Committee Interlocks and Insider Participation,” under the caption “Executive Compensation,” and under the caption “Director Compensation” is incorporatedincorporated 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
2023:
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 holders2,371,272 $55.13 5,069,768
Equity compensation plans not approved by security holders— — — 
Total2,371,272 $55.13 5,069,768 
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 10,381,533 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 2014 Plan.12,000,000 shares. At December 31, 2017,2023, a total of 6,731,1375,069,768 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$55.13 relates to stock appreciation rights,SARs, which account for 2,128,012729,515 of the 3,739,5402,371,272 securities issuable upon exercise. The remaining 1,611,5281,641,757 securities relate to deferred compensation stock units, performance-contingent restricted stock unitsPCSUs and restricted stock unit awardsRSUs 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.

39 FORM 10-K SONOCO 2023 ANNUAL REPORT


Item 14. Principal accountant feesAccountant Fees and services

Services

The information set forth in the Proxy Statement under the captioncaption “Independent Registered Public Accounting Firm” is incorporatedincorporated 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, 20162023, 2022, and 20152021
–  Consolidated Statements of Changes in Shareholders’Total Equity for the years ended December 31, 2017, 20162023, 2022, and 20152021
2 
2Financial Statement Schedules
Schedule II – Valuation and Qualifying Accounts for the Years Ended December 31, 2017, 20162023, 2022, and 2015.2021

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

         
2023
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

   $10,884   $1,439 $2431 $2,6532 $9,913

LIFO Reserve

   17,319    3133  —  — 17,632

Valuation Allowance on Deferred Tax Assets

   49,797   6,967  (2,365)4  7,2005 47,199

2016

         
2022
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

   $11,069   $1,566 $(86)1 $1,6652 $10,884

LIFO Reserve

   18,894    (1,575)3  —  — 17,319

Valuation Allowance on Deferred Tax Assets

   49,464   3,273  (306)4  2,6345 49,797

2015

         
2021
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

   $8,547   $2,501 $4671 $4462 $11,069

LIFO Reserve

   17,908    9863  —  — 18,894

Valuation Allowance on Deferred Tax Assets

   63,231   2,248  (5,686)4  10,3295 49,464

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 
3
The exhibits listed on the Exhibit Index to this Form10-K have been are incorporated herein by reference.

Item 16. Form10-K summary

The Company has chosen not to provide a Form Summary

None.
40 FORM 10-K summary.

SONOCO 2023 ANNUAL REPORT




Exhibit Index

3-13Exhibit Index
3-1
3-2
4-13-2
4-2
4-1
4-3
4-2
4-4

SONOCO 2017 ANNUAL REPORT    |    FORM 10-K39

4-3Form of Third Supplemental Indenture (including form of 4.375% Notes due 2021),2040, between Sonoco Products Company and theThe Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.12 to the Registrant’s Form8-K filed October 27, 2011)
4-5
4-4
4-6
10-1
10-2Sonoco Products Company 1996Non-employee Directors’ Stock Plan, as amended (incorporated by referenceExhibit 4.2 to the Registrant’s Form10-Q for the quarter ended September 30, 2007) 8-K filed January 21, 2022)
10-1**
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
10-11**
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)
10-15Description 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

40SONOCO 2017 ANNUAL REPORT    |    FORM 10-K

10-13**
10-22
10-14**
10-15**
10-16**
10-17**
10-18*


10-19*
10-20**
10-21**
10-22*10-23
21
10-24Credit Facility, effective July 20, 2017 (incorporated by reference to Registrant’s Form10-Q for the quarter ended July 2, 2017)
12Statements regarding Computation of Ratio of Earnings to Fixed Charges
21
23
23
31
31
32
32
97
101.INS99Proxy 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
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEF101XBRL Taxonomy Extension Definition Linkbase Document
101.LABTaxonomy Extension Label Linkbase Document
101.PREThe following materials from Sonoco Products Company’s Annual Report on Form10-K for the year ended December 31, 2017, formattedTaxonomy 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 thisthis 28th day of February 2018.

2024.
SONOCO PRODUCTS COMPANY
/s/ R. Howard Coker

/s/ M.J. Sanders

R. Howard Coker
M.J. Sanders
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 thisthis 28th day of February 2018.

2024.
/s/ Robert R. Dillard/s/ Aditya Gandhi

/s/ Barry L. Saunders

Robert R. Dillard		Aditya Gandhi
Barry L. SaundersChief Financial Officer
Senior Vice President and Chief FinancialAccounting Officer
(principal financial officer)

/s/ James W. Kirkland

James W. Kirkland
Corporate Controller
(principal accounting officer)

/s/ J.R. Haley/s/ R. H. Coker
J.R. Haley/Director (Chairman)

/s/     H.E. DeLoach, Jr.        

Director (Executive Chairman)
H.E. DeLoach, Jr.

/s/    M.J. Sanders        

R. H. Coker/President, Chief Executive Officer and Director
M.J. Sanders

/s/ H.A. Cockrell        

S.L. Boyd		Director
H.A. Cockrell

/s/ P.L. Davies

Director
S.L. Boyd/DirectorP.L. DaviesDavies/Director

/s/ T.J. Drew

/s/ P. Guillemot

Director
T.J. Drew/DirectorP. GuillemotGuillemot/Director
/s/ R.R. Hill, Jr./s/ E. Istavridis

R.R. Hill, Jr./s/     J.R. Haley        

Lead Independent Director		E. Istavridis/Director
J.R. Haley

/s/ R.G. Kyle

Director
R.G. Kyle

/s/ B.J. McGarvie

Director
R.G. Kyle/DirectorB.J. McGarvieMcGarvie/Director

/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. WhiddonWhiddon/Director

42SONOCO 2017 ANNUAL REPORT    |    FORM 10-K