UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



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

For the quarterly period ended ~~September 27, 2015~~April 3, 2016



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

For the transition period from to

Commission File No. 001-11261

SONOCO PRODUCTS COMPANY



Incorporated under the laws of South Carolina		I.R.S. Employer Identification No. 57-0248420

1 N. Second St.

Hartsville, South Carolina 29550

Telephone: 843/383-7000

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 ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock at ~~October 15, 2015~~April 21, 2016:

Common stock, no par value: ~~100,938,184~~100,756,169

SONOCO PRODUCTS COMPANY

INDEX



PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements:	3

	Condensed Consolidated Balance Sheets - ~~September 27, 2015~~April 3, 2016 (unaudited) and December 31, ~~2014~~2015 (unaudited)	3

	Condensed Consolidated Statements of Income – Three ~~and Nine~~ Months Ended ~~September 27, 2015~~April 3, 2016 (unaudited) and ~~September 28, 2014 (Restated)~~March 29, 2015 (unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income – Three ~~and Nine~~ Months Ended ~~September 27, 2015~~April 3, 2016 (unaudited) and ~~September 28, 2014 (Restated)~~March 29, 2015 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows – ~~Nine~~Three Months Ended ~~September 27, 2015~~April 3, 2016 (unaudited) and ~~September 28, 2014 (Restated)~~March 29, 2015 (unaudited)	6

	Notes to Condensed Consolidated Financial Statements	7

	Report of Independent Registered Public Accounting Firm	3223

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3324

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	4833

Item 4.	Controls and Procedures.	4833

PART II. OTHER INFORMATION		5034

Item 1.	Legal Proceedings.	5034

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	5235

Item 6.	Exhibits.	5235

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(Dollars and shares in thousands)


	September 27, 2015			December 31, 2014*			April 3, 2016			December 31, 2015*
Assets
Current Assets
Cash and cash equivalents	$	193,423		$	161,168		$	152,338		$	182,434
Trade accounts receivable, net of allowances	688,476			653,737			679,528			627,962
Other receivables	38,063			38,580			38,049			46,801
Inventories:
Finished and in process	145,835			151,150			152,750			139,589
Materials and supplies	250,974			269,126			249,783			245,894
Prepaid expenses	53,920			61,071			48,037			64,698
Deferred income taxes	32,481			38,957
	1,403,172			1,373,789			1,320,485			1,307,378
Property, Plant and Equipment, Net	1,102,472			1,148,607			1,121,818			1,112,036
Goodwill	1,145,919			1,177,962			1,154,955			1,140,461
Other Intangible Assets, Net	256,143			280,935			239,897			245,095
Long-term Deferred Income Taxes	44,594			45,442			53,098			52,626
Other Assets	161,336			167,176			157,752			156,089
Total Assets	$	4,113,636		$	4,193,911		$	4,048,005		$	4,013,685
Liabilities and Equity
Current Liabilities
Payable to suppliers	$	510,173		$	517,228		$	495,200		$	508,057
Accrued expenses and other	324,401			334,086			281,521			294,227
Notes payable and current portion of long-term debt	129,022			52,280			117,134			113,097
Accrued taxes	11,117			8,599			22,413			7,135
	974,713			912,193			916,268			922,516
Long-term Debt, Net of Current Portion	1,073,043			1,200,885			1,015,804			1,015,270
Pension and Other Postretirement Benefits	438,724			444,231			412,968			432,964
Deferred Income Taxes	89,813			91,157			78,185			72,933
Other Liabilities	38,057			41,598			39,438			37,129
Commitments and Contingencies
Sonoco Shareholders’ Equity
Common stock, no par value
Authorized 300,000 shares 100,937 and 100,603 shares issued and outstanding at September 27, 2015 and December 31, 2014, respectively	7,175			7,175
Authorized 300,000 shares 100,752 and 100,944 shares issued and outstanding at April 3, 2016 and December 31, 2015, respectively							7,175			7,175
Capital in excess of stated value	399,736			396,980			392,150			404,460
Accumulated other comprehensive loss	(710,248		)	(608,851		)	(663,857		)	(702,533		)
Retained earnings	1,783,384			1,692,891			1,828,242			1,803,827
Total Sonoco Shareholders’ Equity	1,480,047			1,488,195			1,563,710			1,512,929
Noncontrolling Interests	19,239			15,652			21,632			19,944
Total Equity	1,499,286			1,503,847			1,585,342			1,532,873
Total Liabilities and Equity	$	4,113,636		$	4,193,911		$	4,048,005		$	4,013,685



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

See accompanying Notes to Condensed Consolidated Financial Statements

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

(Dollars and shares in thousands except per share data)


	Three Months Ended						Nine Months Ended
	September 27, 2015			September 28, 2014			September 27, 2015			September 28, 2014			Three Months Ended
				(as Restated)						(as Restated)			April 3, 2016			March 29, 2015
Net sales	$	1,242,592		$	1,262,503		$	3,697,234		$	3,700,151		$	1,226,276		$	1,206,052
Cost of sales	1,013,219			1,040,059			3,007,155			3,038,996			981,023			985,662
Gross profit	229,373			222,444			690,079			661,155			245,253			220,390
Selling, general and administrative expenses	130,341			110,507			357,893			360,712			134,193			96,665
Restructuring/Asset impairment charges	19,551			5,908			29,637			11,571			9,228			(359		)
Income before interest and income taxes	79,481			106,029			302,549			288,872			101,832			124,084
Interest expense	14,340			13,620			42,352			40,574			14,189			13,775
Interest income	653			702			1,843			1,878			402			554
Income before income taxes	65,794			93,111			262,040			250,176			88,045			110,863
Provision for income taxes	24,775			27,539			75,019			79,322			29,194			26,221
Income before equity in earnings of affiliates	41,019			65,572			187,021			170,854			58,851			84,642
Equity in earnings of affiliates, net of tax	2,976			2,294			7,291			6,896			1,339			1,046
Net income	$	43,995		$	67,866		$	194,312		$	177,750		$	60,190		$	85,688
Net (income) attributable to noncontrolling interests	(81		)	(810		)	(239		)	(858		)
Net (income)/loss attributable to noncontrolling interests													(276		)	92
Net income attributable to Sonoco	$	43,914		$	67,056		$	194,073		$	176,892		$	59,914		$	85,780
Weighted average common shares outstanding:
Basic	101,548			102,128			101,454			102,451			101,628			101,283
Diluted	102,405			103,087			102,387			103,425			102,329			102,167
Per common share:
Net income attributable to Sonoco:
Basic	$	0.43		$	0.66		$	1.91		$	1.73		$	0.59		$	0.85
Diluted	$	0.43		$	0.65		$	1.90		$	1.71		$	0.59		$	0.84
Cash dividends	$	0.35		$	0.32		$	1.02		$	0.95		$	0.35		$	0.32

See accompanying Notes to Condensed Consolidated Financial Statements

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (unaudited)

(Dollars in thousands)


	Three Months Ended						Nine Months Ended
	September 27, 2015			September 28, 2014			September 27, 2015			September 28, 2014			Three Months Ended
				(as Restated)						(as Restated)			April 3, 2016			March 29, 2015
Net income	$	43,995		$	67,866		$	194,312		$	177,750		$	60,190		$	85,688
Other comprehensive income/(loss):
Foreign currency translation adjustments	(55,520		)	(47,645		)	(114,766		)	(46,543		)	30,828			(62,986		)
Changes in defined benefit plans, net of tax	6,767			4,386			11,915			11,903			5,948			6,273
Changes in derivative financial instruments, net of tax	210			(1,229		)	1,454			80			1,900			(1,205		)
Other comprehensive income/(loss)	(48,543		)	(44,488		)	(101,397		)	(34,560		)	38,676			(57,918		)
Comprehensive income/(loss)	(4,548		)	23,378			92,915			143,190
Net (income) attributable to noncontrolling interests	(81		)	(810		)	(239		)	(858		)
Other comprehensive loss attributable to noncontrolling interests	4,413			250			4,574			115
Comprehensive (loss)/income attributable to Sonoco	$	(216	)	$	22,818		$	97,250		$	142,447
Comprehensive income													98,866			27,770
Net (income)/loss attributable to noncontrolling interests													(276		)	92
Other comprehensive (income)/loss attributable to noncontrolling interests													(1,412		)	631
Comprehensive income attributable to Sonoco													$	97,178		$	28,493

See accompanying Notes to Condensed Consolidated Financial Statements

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Dollars in thousands)


	Nine Months Ended
	September 27, 2015			September 28, 2014			Three Months Ended
				(as Restated)			April 3, 2016			March 29, 2015
Cash Flows from Operating Activities:
Net income	$	194,312		$	177,750		$	60,190		$	85,688
Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairment	14,773			4,139			—			275
Depreciation, depletion and amortization	157,216			144,728			53,572			51,877
Gain on reversal of Fox River environmental reserves	(32,543		)	—			—			(32,543		)
Share-based compensation expense	4,783			11,789			4,840			3,878
Equity in earnings of affiliates	(7,291		)	(6,896		)	(1,339		)	(1,046		)
Cash dividends from affiliated companies	5,480			5,494			1,150			450
Net gain on disposition of assets	(6,473		)	(1,173		)	(1,242		)	(8,369		)
Pension and postretirement plan expense	42,844			29,780			10,657			13,012
Pension and postretirement plan contributions	(29,416		)	(58,421		)	(32,042		)	(17,017		)
Tax effect of share-based compensation exercises	3,515			2,341			1,120			3,404
Excess tax benefit of share-based compensation	(3,525		)	(2,511		)	(1,161		)	(3,400		)
Net (decrease)/increase in deferred taxes	(7,709		)	16,715
Net increase in deferred taxes							220			3,405
Change in assets and liabilities, net of effects from acquisitions, dispositions, and foreign currency adjustments:
Trade accounts receivable	(70,794		)	(100,006		)	(41,623		)	(48,936		)
Inventories	(11,982		)	1,018			(11,218		)	(6,066		)
Payable to suppliers	26,581			28,362			(17,213		)	7,094
Prepaid expenses	(9,053		)	(10,772		)	4,427			530
Accrued expenses	45,346			24,743			(6,171		)	(4,036		)
Income taxes payable and other income tax items	3,717			12,406			28,415			15,301
Fox River environmental reserve spending	(796		)	(15,000		)
Other assets and liabilities	(845		)	2,911			13,805			(3,171		)
Net cash provided by operating activities	318,140			267,397			66,387			60,330
Cash Flows from Investing Activities:
Purchase of property, plant and equipment	(140,869		)	(135,287		)	(55,685		)	(40,954		)
Cost of acquisitions, net of cash acquired	(17,447		)	(10,964		)
Proceeds from the sale of assets	31,310			6,451			2,592			30,708
Investment in affiliates and other, net	(2,773		)	(4,520		)	46			(2,808		)
Net cash used in investing activities	(129,779		)	(144,320		)	(53,047		)	(13,054		)
Cash Flows from Financing Activities:
Proceeds from issuance of debt	57,311			30,526			13,787			14,127
Principal repayment of debt	(105,388		)	(30,267		)	(10,993		)	(12,802		)
Net increase in commercial paper	—			36,000
Net decrease in outstanding checks	(2,609		)	(712		)
Net increase in outstanding checks							9,841			8,752
Excess tax benefit of share-based compensation	3,525			2,511			1,161			3,400
Cash dividends	(102,702		)	(96,446		)	(35,396		)	(32,263		)
Shares acquired	(7,729		)	(48,731		)	(18,931		)	(7,591		)
Shares issued	1,307			2,482			559			1,165
Net cash used in financing activities	(156,285		)	(104,637		)	(39,972		)	(25,212		)
Effects of Exchange Rate Changes on Cash	179			(4,451		)	(3,464		)	17,572
Net Increase in Cash and Cash Equivalents	32,255			13,989
Net (Decrease)/Increase in Cash and Cash Equivalents							(30,096		)	39,636
Cash and cash equivalents at beginning of period	161,168			217,567			182,434			161,168
Cash and cash equivalents at end of period	$	193,423		$	231,556		$	152,338		$	200,804

See accompanying Notes to Condensed Consolidated Financial Statements

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

~~Note 1: Restatement of Previously Issued Financial Statements~~

~~Misstatements at the Irapuato Packaging Center~~

As previously reported in its 2014 amended Annual Report on Form 10-K/A filed on August 26, 2015, the Company discovered certain accounting irregularities at a contract packaging center in Irapuato, Mexico, part of the Display and Packaging segment, in July 2015, in the course of closing its books for the second quarter of 2015.

Promptly upon discovery, the Company reported these accounting irregularities to the Audit Committee of the Board of Directors, and a formal investigation into the matter was initiated to determine whether any adjustments would be required with respect to the Company's previously issued financial statements. The Audit Committee retained independent outside legal and accounting advisers to assist with this investigation.

Through this investigation, which concluded in August 2015, the irregularities were found to have consisted of a pattern of unsupported journal entries and other actions involving the Irapuato finance, plant, and pack center managers that misstated revenue, cost of sales, trade accounts receivable, other receivables, prepaid expenses, accrued expenses and other, and trade accounts payable for reporting periods dating back to 2011. The misstatements were made to conceal shortfalls in operating profits at the Irapuato packaging center. Neither cash nor previously reported cash flows from operations were affected. The Irapuato finance manager did not fully disclose the extent of his conduct to his managers, and concealed these irregularities from senior management, corporate finance, and our independent registered public accounting firm.

The Company determined that revenue and cost of sales had been misstated from 2012 through the first quarter of 2015, resulting in a cumulative overstatement of net income of approximately $23,315, or $0.23 per diluted common share. Of this overstatement, approximately $2,139 related to the first quarter of 2015, while $10,817, $9,758, and $601 related to the years ending December 31, 2014, 2013, and 2012, respectively. The reported balance sheets were also misstated for the annual and interim periods from 2012 through the first quarter of 2015.

~~Other Items~~

In addition to the misstatements related to the Irapuato, Mexico, packaging center, certain out-of-period adjustments were made in 2014 that the Company concluded at the time, based on its evaluation of both quantitative and qualitative factors, were not material to any of its previously issued financial statements. These adjustments included the following:

~~As disclosed in the Company's Form 10-Q for the three and six-month periods ending June 29, 2014, during the second quarter of 2014 the Company recorded a valuation allowance of~~ ~~$11,516~~ on deferred tax assets related to the pension plan of a foreign subsidiary. This valuation allowance should have been established in years prior to 2014 when the deferred tax assets were recognized. The error affected comprehensive income, but not net income, from 2010 through the first quarter of 2014.

In December 2014, the valuation of finished goods and work in process inventory in our Flexible Packaging business (part of the Consumer Packaging segment) was found to have been based on incorrect costing standards resulting in the overstatement of finished goods and work in process inventory and a corresponding understatement of cost of sales totaling $1,184. Pretax operating profits for the segment had been overstated by approximately $924 in 2012 and $260 in 2013. The adjustment resulted in a $770 reduction in the Company's reported net income in 2014.

In December 2014, an out-of-period adjustment was made that reduced both deferred tax expense and deferred tax liabilities in various jurisdictions by a total of $3,202. Of this adjustment, approximately $639 related to 2013, $491 to 2012, $789 to 2011, $910 to 2010, and $373 to 2009.

~~Analysis~~

In its assessment of materiality, the Company considered, both individually and in the aggregate, the misstatements at the contract packaging center in Irapuato, Mexico, and the impact of the other items discussed above. Its assessment included an evaluation of the qualitative and quantitative factors relevant to that assessment.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

~~Conclusion~~

The Company concluded that the misstatements associated with the Irapuato packaging center warranted restatement of the previously reported financial statements for the years ended December 31, 2014, 2013, and 2012, the interim periods within the year ended December 31, 2014, and for the three-month period ended March 29, 2015. The impact of the accounting irregularities prior to 2012 was not material. The Irapuato packaging center commenced operations in 2010 and those operations were not fully to scale until 2012.

The Audit Committee of the Board of Directors analyzed these misstatements, and, after consulting with management, concluded on August 9, 2015, that the financial statements for the years ended December 31, 2012, 2013, and 2014, the interim periods within the year ended December 31, 2014, and for the three-month period ended March 29, 2015, should be restated and should no longer be relied upon.

~~Restatement Details~~

On August 26, 2015, the Company filed an amended Annual Report on Form 10-K/A for the year ended December 31, 2014 in which it restated the previously issued consolidated financial statements for the years ended December 31, 2014, 2013, and 2012, for the misstatements related to Irapuato. In addition, the previously issued consolidated financial statements were revised to reflect in the proper periods the previously recorded out-of-period adjustments discussed above.

On August 26, 2015, the Company also filed a Quarterly Report on Form 10-Q for the period ended June 28, 2015 in which it restated the previously issued condensed consolidated financial statements for the three- and six-month periods ended June 29, 2014. On August 28, 2015, the Company filed an amended Quarterly Report on Form 10-Q/A for the period ended March 29, 2015 in which it restated the previously issued condensed consolidated financial statements for the three-month periods ended March 29, 2015 and March 30, 2014.

Restated condensed consolidated financial statements for the three- and nine-month periods ended September 28, 2014, along with a reconciliation of the amounts previously reported to the restated amounts, are provided below.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

CONDENSED CONSOLIDATED STATEMENT OF INCOME
Three Months Ended
September 28, 2014
as Previously Reported
Effect of Restatement September 28, 2014
as Restated
Net sales $ 1,263,574
$ (1,071 ) $ 1,262,503
Cost of sales 1,035,910
4,149
1,040,059
Gross profit 227,664
(5,220 ) 222,444
Selling, general and administrative expenses 110,507
—
110,507
Restructuring/Asset impairment charges 5,908
—
5,908
Income before interest and income taxes 111,249
(5,220 ) 106,029
Interest expense 13,620
—
13,620
Interest income 702
—
702
Income before income taxes 98,331
(5,220 ) 93,111
Provision for income taxes 28,891
(1,352 ) 27,539
Income before equity in earnings of affiliates 69,440
(3,868 ) 65,572
Equity in earnings of affiliates, net of tax 2,294
—
2,294
Net income $ 71,734
$ (3,868 ) $ 67,866
Net (income) attributable to noncontrolling interests (810 ) —
(810 )
Net income attributable to Sonoco $ 70,924
$ (3,868 ) $ 67,056
Weighted average common shares outstanding:
Basic 102,128
—
102,128
Diluted 103,087
—
103,087
Per common share:
Net income attributable to Sonoco:
Basic $ 0.69
$ (0.03 ) $ 0.66
Diluted $ 0.69
$ (0.04 ) $ 0.65
Cash dividends $ 0.32
$ —
$ 0.32

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended

September 28, 2014
as Previously Reported

Effect of
Restatement

September 28, 2014
as Restated
Net income $ 71,734
$ (3,868 ) $ 67,866
Other comprehensive income/(loss):
Foreign currency translation adjustments (48,018 ) 373
(47,645 )
Changes in defined benefit plans, net of tax 4,386
—
4,386
Changes in derivative financial instruments, net of tax (1,229 ) —
(1,229 )
Other comprehensive income/(loss) (44,861 ) 373
(44,488 )
Comprehensive income 26,873
(3,495 ) 23,378
Net (income) attributable to noncontrolling interests (810 ) —
(810 )
Other comprehensive loss attributable to noncontrolling interests 250
—
250
Comprehensive income attributable to Sonoco $ 26,313
$ (3,495 ) $ 22,818

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended
September 28, 2014
as Previously Reported
Effect of
Restatement
September 28, 2014
as Restated
Net sales $ 3,696,580
$ 3,571
$ 3,700,151
Cost of sales 3,024,876
14,120
3,038,996
Gross profit 671,704
(10,549 ) 661,155
Selling, general and administrative expenses 360,712
—
360,712
Restructuring/Asset impairment charges 11,571
—
11,571
Income before interest and income taxes 299,421
(10,549 ) 288,872
Interest expense 40,574
—
40,574
Interest income 1,878
—
1,878
Income before income taxes 260,725
(10,549 ) 250,176
Provision for income taxes 82,053
(2,731 ) 79,322
Income before equity in earnings of affiliates 178,672
(7,818 ) 170,854
Equity in earnings of affiliates, net of tax 6,896
—
6,896
Net income $ 185,568
$ (7,818 ) $ 177,750
Net (income) attributable to noncontrolling interests (858 ) —
(858 )
Net income attributable to Sonoco $ 184,710
$ (7,818 ) $ 176,892
Weighted average common shares outstanding:
Basic 102,451
—
102,451
Diluted 103,425
—
103,425
Per common share:
Net income attributable to Sonoco:
Basic $ 1.80
$ (0.07 ) $ 1.73
Diluted $ 1.79
$ (0.08 ) $ 1.71
Cash dividends $ 0.95
$ —
$ 0.95

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Nine Months Ended

September 28, 2014
as Previously
Reported

Effect of
Restatement

September 28, 2014
as Restated
Net income $ 185,568
$ (7,818 ) $ 177,750
Other comprehensive income/(loss):
Foreign currency translation adjustments (46,854 ) 311
(46,543 )
Changes in defined benefit plans, net of tax 387
11,516
11,903
Changes in derivative financial instruments, net of tax 80
—
80
Other comprehensive income/(loss) (46,387 ) 11,827
(34,560 )
Comprehensive income 139,181
4,009
143,190
Net (income) attributable to noncontrolling interests (858 ) —
(858 )
Other comprehensive loss attributable to noncontrolling interests 115
—
115
Comprehensive income attributable to Sonoco $ 138,438
$ 4,009
$ 142,447

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended

September 28, 2014
as Previously Reported
Effect of Restatement
September 28, 2014
as Restated
Cash Flows from Operating Activities:
Net income $ 185,568
$ (7,818 ) $ 177,750
Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairment 4,139
—
4,139
Depreciation, depletion and amortization 144,728
—
144,728
Gain on reversal of Fox River environmental reserves —
—
—
Share-based compensation expense 11,789
—
11,789
Equity in earnings of affiliates (6,896 ) —
(6,896 )
Cash dividends from affiliated companies 5,494
—
5,494
Gain on disposition of assets (1,173 ) —
(1,173 )
Pension and postretirement plan expense 29,780
—
29,780
Pension and postretirement plan contributions (58,421 ) —
(58,421 )
Tax effect of share-based compensation exercises 2,341
—
2,341
Excess tax benefit of share-based compensation (2,511 ) —
(2,511 )
Net change in deferred taxes 18,076
(1,361 ) 16,715
Change in assets and liabilities, net of effects from acquisitions, dispositions, and foreign currency adjustments:

Trade accounts receivable (102,862 ) 2,856
(100,006 )
Inventories 1,018
—
1,018
Payable to suppliers 28,661
(299 ) 28,362
Prepaid expenses (10,772 ) —
(10,772 )
Accrued expenses 20,823
3,920
24,743
Income taxes payable and other income tax items 13,776
(1,370 ) 12,406
Fox River environmental reserve spending (15,000 ) —
(15,000 )
Other assets and liabilities (1,161 ) 4,072
2,911
Net cash provided by operating activities 267,397
—
267,397
Cash Flows from Investing Activities:
Purchase of property, plant and equipment (135,287 ) —
(135,287 )
Cost of acquisitions, net of cash acquired (10,964 ) —
(10,964 )
Proceeds from the sale of assets 6,451
—
6,451
Investment in affiliates and other, net (4,520 ) —
(4,520 )
Net cash used in investing activities (144,320 ) —
(144,320 )
Cash Flows from Financing Activities:
Proceeds from issuance of debt 30,526
—
30,526
Principal repayment of debt (30,267 ) —
(30,267 )
Net increase in commercial paper 36,000
—
36,000
Net decrease in outstanding checks (712 ) —
(712 )
Excess tax benefit of share-based compensation 2,511
—
2,511
Cash dividends (96,446 ) —
(96,446 )
Shares acquired (48,731 ) —
(48,731 )
Shares issued 2,482
—
2,482
Net cash used in financing activities (104,637 ) —
(104,637 )
Effects of Exchange Rate Changes on Cash (4,451 ) —
(4,451 )
Net Decrease in Cash and Cash Equivalents 13,989
—
13,989
Cash and cash equivalents at beginning of period 217,567
—
217,567
Cash and cash equivalents at end of period $ 231,556
$ —
$ 231,556

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

Note 2:1: Basis of Interim Presentation

In the opinion of the management of Sonoco Products Company (the “Company” or “Sonoco”), the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments, unless otherwise stated) necessary to state fairly the consolidated financial position, results of operations and cash flows for the interim periods reported herein. Operating results for the three ~~and nine~~ months ended ~~September 27, 2015,~~April 3, 2016, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2015.~~2016. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s ~~amended~~ Annual Report on Form ~~10-K/A~~10-K for the fiscal year ended December 31, ~~2014.~~2015.

With respect to the unaudited condensed consolidated financial information of the Company for the ~~three- and nine-month~~three-month periods ended ~~September 27,~~April 3, 2016 and March 29, 2015 ~~and September 28, 2014~~ included in this Form 10-Q, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated ~~October 28, 2015~~May 6, 2016 appearing herein, states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited financial information because that report is not a “report” or a “part” of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

Note 3:2: New Accounting Pronouncements

In ~~July 2015,~~March 2016, the Financial Accounting Standards Board (FASB) issued ASU ~~2015-11, "Simplifying~~2016-09, "Improvements to Employee Share-Based Payment Accounting," which simplifies several aspects of the ~~Measurement~~accounting for share-based payment transactions, including 1) accounting for income taxes, 2) classification of ~~Inventory." ASU 2015-11 requires that inventory be measured at the lower of cost or net realizable value. Net realizable value is the estimated selling price~~excess tax benefits in the ~~ordinary course~~statement of ~~business, less reasonably predictable costs~~cash flows, 3) forfeitures, 4) minimum statutory tax withholding requirements, 5) cash flow classification of ~~completion, disposal,~~employee taxes withheld in the form of shares, 6) the practical expedient for estimating the expected term, and ~~transportation. Inventory measured using last-in, first-out or the retail inventory method are excluded from the scope of this update which~~7) intrinsic value. The guidance is effective for ~~fiscal years~~annual reporting periods beginning after December 15, 2016, and interim periods within ~~fiscal years~~those annual periods. The Company does not expect the implementation of ASU 2016-09 to have a material effect on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-08, "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 ASU No. 2014-09 and are effective in the same time frame as ASU 2014-09 as discussed below.

In February 2016, the FASB issued ASU 2016-02, 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 ~~31, 2017.~~15, 2018, including interim periods within those fiscal years and requires retrospective application. The ~~new guidance does not represent a change from~~Company is still assessing the ~~Company’s current policy to measure inventory at lower of cost or net realizable value; therefore, implementation~~impact of ASU ~~2015-11 will not have a material impact~~2016-02 on ~~the Company's~~its consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance ~~Costs.~~Costs," ~~ASU 2015-03~~which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, and not recorded as separate assets. This update iswas effective for reporting periods beginning after December 15, 2015, and iswas required to be applied on a retrospective basis. ~~The~~Accordingly, the Company ~~plans to adopt~~adopted ASU 2015-03 in the first quarter of ~~2016. As the Company's~~2016, and reclassified debt issuance costs ~~are not material, implementation~~totaling $6,427 and $6,584 from "Other Assets" to "Long-Term Debt, Net of ~~this update will not have a material impact~~Current Portion" on the Company's ~~consolidated financial statements.~~Condensed Consolidated Balance Sheets as of April 3, 2016 and December 31, 2015, respectively.

In May 2014, the FASB issued ASU 2014-09, "Revenue From Contracts With ~~Customers.~~Customers," ~~ASU 2014-09~~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, ASU 2014-09 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. The effective date for implementation of ASU

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

2014-09 has been deferred and is now effective for reporting periods beginning after December 15, 2017. The Company is still assessing the impact of ASU 2014-09 on its consolidated financial statements.

During the ~~three- and nine-month periods~~three-month period ended ~~September 27, 2015,~~April 3, 2016, 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 ~~September 27, 2015,~~April 3, 2016, there were no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

Note 4:3: Acquisitions

On September 21, 2015, the Company acquired the high-density wood plug business from Smith Family Companies, Inc. Total consideration for the acquisition was $2,850, including cash of $1,750 and a contingent purchase liability of $1,100. The purchase price was allocated to the intangible assets acquired, including $2,750 to customer lists and $100 to a non-compete agreement. The Company will manufacture these wood plugs at its existing facility in Hartselle, Alabama. The acquisition, part of the Company's Paper and Industrial Converted Products segment, is expected to add approximately $3,700 of annual sales. The contingent liability will be paid within 30 days of the second anniversary of the acquisition if targeted levels of sales are maintained.

On April 1, 2015, the Company completed the acquisition of 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. It is expected to generate annual sales of approximately $30,000. Total consideration paid for Graffo was approximately $18,334, including cash of $15,697, and debt assumed totaling $2,637. The allocation of the purchase price of Graffo to the tangible and intangible assets acquired and liabilities assumed was based on the Company's preliminary estimates of their fair value, based on the information currently available. In conjunction with this acquisition, the Company has preliminarily recorded net tangible assets of $5,438, goodwill of $10,147 (all of which is expected to be tax deductible), identifiable intangibles of $10,671, and a noncontrolling interest of $7,922. Factors comprising goodwill include the ability to leverage product offerings across a broader customer base and the value of the assembled workforce. The Company is continuing to finalize its valuation of certain assets and liabilities, including, but not limited to, identifiable intangibles and deferred taxes, and expects to complete the valuation during the fourth quarter of 2015.

On October 31, 2014, the Company completed the acquisition of Weidenhammer Packaging Group (“Weidenhammer”), a manufacturer of composite cans, drums, and luxury tubes, as well as rigid plastic containers using thin-walled injection molding technology with in-mold labeling. Total consideration paid for Weidenhammer was $355,316, subject to adjustment for the change in working capital to the date of close. The amount of the adjustment is expected to be finalized in the fourth quarter of 2015. As the acquisition was completed near the end of the year, the allocation of the purchase price reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, was based on provisional estimates of the fair value of the tangible and intangible assets acquired and liabilities assumed. During the first half of 2015, the Company finalized its valuations of most of the acquired assets and liabilities based on information obtained about facts and circumstances that existed as of the acquisition date. As a result, adjustments were made to the provisional fair values that reduced long-term deferred income tax liabilities and goodwill by $4,974 at December 31, 2014. The amounts shown in the Company’s Condensed Consolidated Balance Sheet as of December 31, 2014, have been adjusted to reflect these changes. The Company is finalizing the assessment of the valuation of certain assets and liabilities, including, but not limited to, income taxes and environmental reserves, and expects the valuation to be completed by the first anniversary of the acquisition.

Acquisition-related costs of ~~$288~~$326 and ~~$1,680~~$1,166 were incurred in the three months ended ~~September 27,~~April 3, 2016 and March 29, 2015, ~~and September 28, 2014,~~ respectively. These costs ~~totaled $3,536 and $2,950 for the nine months ended September 27, 2015 and September 28, 2014, respectively. Acquisition-related costs consist~~consisted primarily of legal and professional fees and are included in "Selling, general and administrative expenses" in the Company's Condensed Consolidated Statements of Income.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

Note 5:4: Shareholders' Equity

Earnings per Share

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


	Three Months Ended				Nine Months Ended
	September 27, 2015		September 28, 2014		September 27, 2015		September 28, 2014		Three Months Ended
			(as Restated)				(as Restated)		April 3, 2016		March 29, 2015
Numerator:
Net income attributable to Sonoco	$	43,914	$	67,056	$	194,073	$	176,892	$	59,914	$	85,780
Denominator:
Weighted average common shares outstanding:
Basic	101,548,000		102,128,000		101,454,000		102,451,000		101,628,000		101,283,000
Dilutive effect of stock-based compensation	857,000		959,000		933,000		974,000		701,000		884,000
Diluted	102,405,000		103,087,000		102,387,000		103,425,000		102,329,000		102,167,000
Reported net income attributable to Sonoco per common share:
Basic	$	0.43	$	0.66	$	1.91	$	1.73	$	0.59	$	0.85
Diluted	$	0.43	$	0.65	$	1.90	$	1.71	$	0.59	$	0.84

Certain stock appreciation rights to purchase shares of the Company's common stock are not dilutive because the exercise price is greater than the market price of the stock at the end of the reporting period. The average number of stock appreciation rights that were not dilutive and therefore not included in the computation of diluted earnings per share was ~~1,165,126~~1,429,743 and ~~718,845~~395,883 during the ~~three- and nine-month~~three month periods ended ~~September 27,~~April 3, 2016 and March 29, 2015, ~~respectively, and 638,160 and 640,901 during the three- and nine-month periods ended September 28, 2014,~~ respectively. No adjustments were made to reported net income attributable to Sonoco in the computations of earnings per share.

Stock Repurchases

~~The~~On February 10, 2016, the Company’s Board of Directors ~~has authorized~~restored the remaining share repurchase authorization of upthe Company's common stock to its original 5,000,000 ~~shares of~~shares. During the ~~Company’s common stock. A~~three months ended April 3, 2016, a total of ~~2,000,000 and 132,500~~353,722 shares were repurchased under this authorization ~~in 2014 and 2013, respectively. During the nine months ended September 27, 2015, no additional shares were purchased;~~at a cost of $15,318; accordingly, at ~~September 27, 2015~~April 3, 2016, a total of ~~2,867,500~~4,646,278 shares remain available for repurchase.

The Company frequently repurchases shares of its common stock to satisfy employee tax withholding obligations in association with certain share-based compensation awards. These repurchases, which are not part of a publicly announced plan or program, totaled ~~169,590~~87,163 shares in the ~~nine~~three months ended ~~September 27,~~April 3, 2016 at a cost of $3,613, and 166,485 shares in the three months endedMarch 29, 2015 at a cost of $~~7,729, and~~ ~~87,583~~ ~~shares in the nine months endedSeptember 28, 2014 at a cost of~~ ~~$3,718~~7,591.

~~Dividend Declarations~~

~~On July 14, 2015, the Board of Directors declared a regular quarterly dividend of $0.35 per share. This dividend was paid on September 10, 2015 to all shareholders of record as of August 14, 2015.~~

~~On October 19, 2015, the Board of Directors declared a regular quarterly dividend of $0.35 per share. This dividend is payable~~ ~~December 10, 2015~~ ~~to all shareholders of record as of November 13, 2015.~~

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Dividend Declarations

On February 10, 2016, the Board of Directors declared a regular quarterly dividend of $0.35 per share. This dividend was paid on March 10, 2016 to all shareholders of record as of February 24, 2016.

On April 20, 2016, the Board of Directors declared a regular quarterly dividend of $0.37 per share. This dividend is payable June 10, 2016 to all shareholders of record as of May 13, 2016.

Note 6:5: Restructuring and Asset Impairment

The Company has engaged in a number of restructuring actions over the past several years. Actions initiated in ~~2015~~2016 and ~~2014~~2015 are reported as ~~“2015~~“2016 Actions” and ~~“2014~~“2015 Actions,” respectively. Actions initiated prior to ~~2014,~~2015, all of which were substantially complete at ~~September 27, 2015,~~April 3, 2016, are reported as ~~“2013~~“2014 and Earlier Actions.”

Following are the total restructuring and asset impairment charges/(credits), net of adjustments, and gains on dispositions recognized by the Company during the periods presented:


	2015						2014
	Third Quarter			Nine Months			Third Quarter			Nine Months			April 3, 2016				March 29, 2015
Restructuring/Asset impairment:
2016 Actions														$	6,413			$	—
2015 Actions	$	7,125		$	15,033		$	—		$	—			2,766				(851		)
2014 Actions	418			2,027			1,928			6,256
2013 and Earlier Actions	(57		)	512			1,250			2,585
Other asset impairments	12,065			12,065			2,730			2,730
2014 and Earlier Actions														49				492
Restructuring/Asset impairment charges	$	19,551		$	29,637		$	5,908		$	11,571			$	9,228			$	(359	)
Income tax benefit	$	(1,574	)	$	(16,850	)	$	(1,954	)	$	(3,342	)		(2,920		)		(11,591		)
Costs attributable to noncontrolling interests, net of tax	(5		)	(75		)	(11		)	(26		)		(7		)		(15		)
Total impact of restructuring/asset impairment charges, net of tax	$	17,972		$	12,712		$	3,943		$	8,203			$	6,301			$	(11,965	)

Pre-tax restructuring and asset impairment charges are included in “Restructuring/Asset impairment charges” in the Condensed Consolidated Statements of Income.

When recognizable in accordance with GAAP, the Company expects to recognize future additional charges totaling approximately $~~6,500~~4,250 in connection with previously announced restructuring ~~actions, and~~actions. The Company believes that the majority of these charges will be incurred and paid by the end of ~~2015 and paid by mid-2016.~~2016. The Company continually evaluates its cost structure, including its manufacturing capacity, and additional restructuring actions ~~may~~are likely to be undertaken. The Company is attempting to sell a paper mill in France. In January 2016, the Company received a non-binding proposal from a prospective buyer for the purchase of this business. The proposal is subject to the results of an environmental review and other due diligence, which is ongoing. If a sale is consummated under the current terms of this proposal, the Company estimates that it would recognize a loss of approximately $12,000. Should a sale not occur, the Company expects to pursue the closure of this facility in which case the Company estimates that it would incur additional severance, liquidation and other closing-related costs in excess of $15,000.

~~2015~~

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

2016 Actions

During ~~2015,~~2016, the Company announced the closure of ~~four~~one of its packaging services centers in Mexico (part of the Display and Packaging segment). In addition, approximately 60 positions were eliminated in the first quarter of 2016 in conjunction with the Company's ongoing organizational effectiveness efforts.

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



2016 Actions	First Quarter 2016			Estimated Total Cost
Severance and Termination Benefits
Consumer Packaging	$	965		$	1,515
Display and Packaging	1,376			3,076
Paper and Industrial Converted Products	2,411			2,661
Protective Solutions	322			322
Corporate	1,429			1,429
Asset Impairment / Disposal of Assets
Consumer Packaging	(306		)	(306		)
Other Costs
Consumer Packaging	198			698
Display and Packaging	—			50
Paper and Industrial Converted Products	18			18
Total Charges and Adjustments	$	6,413		$	9,463

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



2016 Actions	Severance and Termination Benefits			Asset Impairment/ Disposal of Assets			Other Costs			Total
Accrual Activity 2016 Year to Date	Severance and Termination Benefits			Asset Impairment/ Disposal of Assets			Other Costs			Total
Liability at December 31, 2015	$	—		$	—		$	—		$	—
2016 charges/(income)	6,503			(306		)	216			6,413
Cash receipts/(payments)	(2,962		)	1,114			(170		)	(2,018		)
Asset write downs/disposals	—			(808		)	—			(808		)
Foreign currency translation	5			—			—			5
Liability at April 3, 2016	$	3,546		$	—		$	46		$	3,592

"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 2016 Actions restructuring costs by the end of 2016 using cash generated from operations.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

2015 Actions

During 2015, the Company initiated the following restructuring actions in its Consumer Packaging segment: the closure of six rigid paper facilities ~~- two~~(two in the United States, one in Canada, one in Russia, one in Germany, and one in the United ~~Kingdom (part~~Kingdom); the closure of ~~the Consumer Packaging segment). The Company also closed~~ a production line at ~~one of its~~a thermoforming ~~plants~~plant in the United ~~States (part~~States; and the sale of ~~the Consumer Packaging segment) and sold~~ a portion of its metal ends and closures business in the United ~~States (part of~~States. Restructuring actions initiated in the ~~Consumer Packaging segment). The Company announced the closure of a Tubes and Cores plant (part of the~~ Paper and Industrial Converted Products ~~division)~~segment include the closures of a tubes and cores plant and a recycling business in the United States. The Company also recognized an asset impairment charge related to the potential disposition of a paper mill in France. Restructuring actions initiated in the Display and Packaging segment consisted of the closure of a printed backer card facility ~~(part of the Display and Packaging segment)~~ in the United States. In addition, ~~approximately 210 positions were eliminated~~the Company continued to realign its cost structure, resulting in the ~~first three quarters~~elimination of ~~2015 in conjunction with the Company's announced ongoing organizational effectiveness~~ ~~efforts.~~approximately 235 positions.

Below is a summary of 2015 Actions and related expenses by segment and by type incurred and estimated to be incurred through completion.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~


										2016				2015				Total Incurred to Date			Estimated Total Cost
2015 Actions	Third Quarter 2015			Total Incurred to Date			Estimated Total Cost				First Quarter 2016				First Quarter 2015						Estimated Total Cost
Severance and Termination Benefits																		Total Incurred to Date
Consumer Packaging	$	2,997		$	7,465		$	11,665			$	1,790			$	2,201		$	16,837		$	16,837
Display and Packaging	576			780			880				6				—			1,121			1,121
Paper and Industrial Converted Products	$	2,300		$	7,362		$	7,562			98				3,028			8,577			8,577
Protective Solutions	39			39			39				—				—			39			39
Corporate	210			2,409			2,759				—				1,166			2,775			2,775
Asset Impairment / Disposal of Assets
Consumer Packaging	(53		)	(4,883		)	(4,883		)		(10		)		(7,331		)	(4,313		)	(4,313		)
Display and Packaging	194			211			211				—				—			474			474
Paper and Industrial Converted Products	230			451			451				—				2			10,198			10,198
Other Costs
Consumer Packaging	441			936			1,936				375				75			1,775			2,725
Display and Packaging	89			89			289				—				—			351			401
Paper and Industrial Converted Products	102			163			413				507				8			758			858
Corporate	—			11			11				—				—			11			11
Total Charges and Adjustments	$	7,125		$	15,033		$	21,333			$	2,766			$	(851	)	$	38,603		$	39,703

The ~~followi~~ngfollowing table sets forth the activity in the 2015 Ac~~tions~~Actions restructuring accrual included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets:

2015 Actions
Severance
and
Termination
Benefits

Asset
Impairment/
Disposal
of Assets

Other
Costs
Total
Accrual Activity
2015 Year to Date
Liability at December 31, 2014 $ —
$ —
$ —
$ —
2015 charges/(income) 18,055
(4,221 ) 1,199
15,033
Cash receipts/(payments) (7,284 ) 29,145
(1,199 ) 20,662
Asset write downs/disposals —
(24,924 ) —
(24,924 )
Foreign currency translation (185 ) —
—
(185 )
Liability at March 29, 2015 $ 10,586
$ —
$ —
$ 10,586



2015 Actions	Severance and Termination Benefits			Asset Impairment/ Disposal of Assets			Other Costs			Total
Accrual Activity 2016 Year to Date	Severance and Termination Benefits			Asset Impairment/ Disposal of Assets			Other Costs			Total
Liability at December 31, 2015	$	15,376		$	—		$	—		$	15,376
2016 charges	1,894			—			882			2,776
Adjustments	—			(10		)	—			(10		)
Cash payments	(3,924		)	10			(766		)	(4,680		)
Asset write downs/disposals	—			—			—			—
Foreign currency translation	111			—			2			113
Liability at April 3, 2016	$	13,457		$	—		$	118		$	13,575

Included in "Asset Impairment/Disposal of Assets" above is a gain of $7,224 from the sale of a portion of the Company's metal ends and closures business, including two production facilities in Canton, Ohio. The Company received proceeds of $29,128 from the sale of this business. Assets disposed of in connection with the sale included: net fixed assets of $9,806, inventory of $7,158, goodwill of $1,727, and other intangible assets of $3,516. Liabilities of $303 were assumed by the buyer and disposed of under the terms of the sale. Beneficial tax attributes associated with this disposition provided an income tax benefit of approximately $9,200. Also included are asset impairment charges totaling $3,003 relating primarily to the closure of a thermoforming line in Waynesville, North Carolina.

"“Other ~~costs"~~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 2015 Actions restructuring costs by the end of ~~2015~~2016 using cash generated from operations.

~~2014 Actions~~

During 2014, the Company announced the closures of a tube and core plant in Canada (part of the Paper and Industrial Converted Products segment); a molded foam plant in the United States and a temperature-assured packaging plant in the United States (both part of the Protective Solutions segment); and two recycling facilities - one in the United States and one in Brazil (both part of the Paper and Industrial Converted Products segment). The Consumer Packaging segment also realized significant cash and non-cash restructuring charges as the result of halting the planned start up of a rigid paper facility in Europe following the acquisition of Weidenhammer. In addition, the Company continued to realign its cost structure, resulting in the elimination of approximately 125 positions.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

~~Below is a summary of 2014 Actions and related expenses by segment and by type incurred and estimated to be incurred through completion.~~

2015 2014
Total
Incurred
to Date
Estimated
Total Cost
2014 Actions Third Quarter Nine Months Third Quarter Nine Months
Severance and Termination Benefits
Consumer Packaging $ 33
$ 836
$ 136
$ 824
$ 1,686
$ 1,686
Display and Packaging (9 ) (9 ) 590
590
585
585
Paper and Industrial Converted Products —
127
295
2,878
3,404
3,404
Protective Solutions (15 ) (2 ) 182
370
758
758
Asset Impairment / Disposal of Assets
Consumer Packaging $ —
—
631
631
2,446
2,446
Paper and Industrial Converted Products —
—
(27 ) 665
781
781
Protective Solutions 100
133
—
—
468
468
Other Costs
Consumer Packaging $ 14
90
19
39
7,310
7,310
Display and Packaging —
21
4
4
2,756
2,756
Paper and Industrial Converted Products 82
381
105
77
1,028
1,078
Protective Solutions 213
450
(7 ) 178
788
838
Total Charges and Adjustments $ 418
$ 2,027
$ 1,928
$ 6,256
$ 22,010
$ 22,110

~~The following table sets forth the activity in the~~ 2014 ~~Actions restructuring accrual included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets:~~

2014 Actions Severance
and
Termination
Benefits Asset
Impairment/
Disposal
of Assets Other
Costs Total
Accrual Activity
2015 Year to Date

Liability at December 31, 2014 $ 859
$ —
$ 463
$ 1,322
2015 charges 1,048
133
994
2,175
Adjustments (96 ) —
(52 ) (148 )
Cash payments (1,402 ) —
(1,389 ) (2,791 )
Asset write downs/disposals —
(133 ) —
(133 )
Foreign currency translation —
—
(16 ) (16 )
Liability at March 29, 2015 $ 409
$ —
$ —
$ 409

“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 2014 Actions restructuring costs by the end of 2015 using cash generated from operations.

~~2013~~ and Earlier Actions

~~2013~~2014 and Earlier Actions are comprised of a number of plant closures and workforce reductions initiated prior to ~~2014.~~2015. Charges for these actions in both ~~2015~~2016 and ~~2014~~2015 relate primarily to the cost of plant closures including severance, equipment removal, plant security, property taxes and insurance. ~~Partially offsetting these charges were gains from the sale of a former service center in Finland, closed in 2011.~~

The Company expects to recognize future pretax charges of approximately $100 associated with ~~2013~~2014 and Earlier Actions.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

Below is a summary of expenses/(income) incurred by segment for ~~2013~~2014 and Earlier Actions for the ~~three- and nine-~~threemonth periods ended ~~September 27, 2015~~April 3, 2016 and ~~September 28, 2014~~March 29, 2015.


	2015						2014						2016			2015
2013 & Earlier Actions	Third Quarter			Nine Months			Third Quarter			Nine Months
2014 & Earlier Actions													Three Months			Three Months
Consumer Packaging	$	—		$	—		$	(395	)	$	(617	)	$	—		$	32
Display and Packaging	—			(39		)	105			523
Paper and Industrial Converted Products	(57		)	551			1,541			2,619			(2		)	364
Protective Solutions	—			—			26			87			51			96
Corporate	—			—			(27		)	(27		)
Total Charges and Adjustments	$	(57	)	$	512		$	1,250		$	2,585		$	49		$	492

The accrual for ~~2013~~2014 and Earlier Actions totaled ~~$664~~$360 and ~~$1,990~~$824 at ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014,~~2015, respectively, and is included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets. The accrual relates primarily to environmental remediation costs at a former paper mill in the United States and unpaid severance. The Company expects the majority of ~~both~~ the liability ~~and the future costs~~ associated with ~~2013~~2014 and Earlier Actions to be paid by the end of ~~2015~~2016 using cash generated from operations.

~~Other Asset Impairments~~

In addition to the restructuring charges discussed above, as a result of recent significant inflationary increases, and to avoid distortion of its consolidated results from translation of its Venezuelan operations, during the third quarter of 2015 the Company began translating its Venezuelan operations using the most current published Venezuelan exchange rate (the SIMADI rate) of 198 bolivars to the dollar rather than continue using the official rate of 6.3 bolivars to 1 U.S. dollar. 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 carrying values. The combined impact of the impairment charges and remeasurement loss was $12,065 on both a before and after-tax basis.

The Company recorded a pretax asset impairment charge of $2,730 in the third quarter of 2014 to write off the customer list obtained in the 2008 acquisition of a small packaging fulfillment business included in the Company's Display and Packaging segment. This business provided display assembly and fulfillment services to a single customer in the pharmaceutical industry. As a result of losing this business, the Company has impaired the remaining unamortized balance of the customer list.

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

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

Note 7:6: Accumulated Other Comprehensive Loss

The following table summarizes the components of accumulated other comprehensive loss and the changes in the balances of each component of accumulated other comprehensive loss, net of tax as applicable, for the ~~nine~~three months ended ~~September 27, 2015~~April 3, 2016 and ~~September 28, 2014:~~March 29, 2015:


													Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Items			Foreign Currency Items			Accumulated Other Comprehensive Loss
Balance at December 31, 2015													$	(5,152	)	$	(444,244	)	$	(253,137	)	$	(702,533	)
Other comprehensive income/(loss) before reclassifications													411			—			30,828			31,239
Amounts reclassified from accumulated other comprehensive loss to net income													1,514			5,948			—			7,462
Amounts reclassified from accumulated other comprehensive loss to fixed assets													(25		)	—			—			(25		)
Net current-period other comprehensive income													1,900			5,948			30,828			38,676
Balance at April 3, 2016													$	(3,252	)	$	(438,296	)	$	(222,309	)	$	(663,857	)
	Gains and Losses on Cash Flow Hedges			Defined Benefit Pension Items (as Restated)			Foreign Currency Items (as Restated)			Accumulated Other Comprehensive Loss (as Restated)
Balance at December 31, 2014	$	(5,962	)	$	(475,286	)	$	(127,603	)	$	(608,851	)	$	(5,962	)	$	(475,286	)	$	(127,603	)	$	(608,851	)
Other comprehensive income/(loss) before reclassifications	1,844			(8,239		)	(114,766		)	(121,161		)	(3,479		)	—			(62,986		)	(66,465		)
Amounts reclassified from accumulated other comprehensive loss to net income	(153		)	20,154			—			20,001			2,511			6,273			—			8,784
Amounts reclassified from accumulated other comprehensive loss to fixed assets	(237		)	—			—			(237		)	(237		)	—			—			(237		)
Net current-period other comprehensive income/(loss)	1,454			11,915			(114,766		)	(101,397		)	(1,205		)	6,273			(62,986		)	(57,918		)
Balance at September 27, 2015	$	(4,508	)	$	(463,371	)	$	(242,369	)	$	(710,248	)

Balance at December 31, 2013	$	(262	)	$	(344,622	)	$	(24,985	)	$	(369,869	)
Other comprehensive income/(loss) before reclassifications	1,261			(531		)	(46,543		)	(45,813		)
Amounts reclassified from accumulated other comprehensive loss to net income	(1,192		)	12,434			—			11,242
Amounts reclassified from accumulated other comprehensive loss to fixed assets	11			—			—			11
Net current-period other comprehensive income/(loss)	80			11,903			(46,543		)	(34,560		)
Balance at September 28, 2014	$	(182	)	$	(332,719	)	$	(71,528	)	$	(404,429	)
Balance at March 29, 2015													$	(7,167	)	$	(469,013	)	$	(190,589	)	$	(666,769	)

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

The following table summarizes the effects on net income of significant amounts classified out of each component of accumulated other comprehensive loss for the ~~three- and nine-month~~three-month periods ended ~~September 27, 2015~~April 3, 2016 and ~~September 28, 2014:~~March 29, 2015:


	Amount Reclassified from Accumulated Other Comprehensive Loss													Amount Reclassified from Accumulated Other Comprehensive Loss
	Three Months Ended						Nine Months Ended							Three Months Ended
Details about Accumulated Other Comprehensive Loss Components	September 27, 2015			September 28, 2014			September 27, 2015			September 28, 2014			Affected Line Item in the Condensed Consolidated Statements of Net Income	April 3, 2016			March 29, 2015			Affected Line Item in the Condensed Consolidated Statements of Net Income
Gains and losses on cash flow hedges
Foreign exchange contracts	$	2,757		$	241		$	4,010		$	(1,669	)	Net sales	$	(2,240	)	$	(4,088	)	Net sales
Foreign exchange contracts	1,965			232			3,437			2,343			Cost of sales	1,045			2,401			Cost of sales
Commodity contracts	(2,245		)	123			(7,202		)	1,248			Cost of sales	(1,511		)	(2,423		)	Cost of sales
	2,477			596			245			1,922			Total before tax	(2,706		)	(4,110		)	Total before tax
	(767		)	(303		)	(92		)	(730		)	Tax (provision)/benefit	1,192			1,599			Tax (provision)/benefit
	$	1,710		$	293		$	153		$	1,192		Net of tax	$	(1,514	)	$	(2,511	)	Net of tax
Defined benefit pension items
Amortization of defined benefit pension items^(a)	$	(8,059	)	$	(4,868	)	$	(23,931	)	$	(14,482	)	Cost of sales	$	(7,143	)	$	(7,445	)	Cost of sales
Amortization of defined benefit pension items^(a)	(2,686		)	(1,622		)	(7,976		)	(4,826		)	Selling, general and administrative	(2,381		)	(2,481		)	Selling, general and administrative
	(10,745		)	(6,490		)	(31,907		)	(19,308		)	Total before tax	(9,524		)	(9,926		)	Total before tax
	3,973			2,195			11,753			6,874			Tax benefit	3,576			3,653			Tax benefit
	$	(6,772	)	$	(4,295	)	$	(20,154	)	$	(12,434	)	Net of tax	$	(5,948	)	$	(6,273	)	Net of tax
Total reclassifications for the period	$	(5,062	)	$	(4,002	)	$	(20,001	)	$	(11,242	)	Net of tax	$	(7,462	)	$	(8,784	)	Net of tax


(a)	See Note 1110 for additional details.

At ~~September 27, 2015~~April 3, 2016, the Company had commodity contracts outstanding to fix the costs of certain anticipated purchases of natural gas and aluminum, and foreign currency contracts to hedge certain anticipated foreign currency denominated sales and purchases. The amounts included in accumulated other comprehensive loss related to these cash flow hedges were net losses of $~~7,206~~4,754 ($~~4,508~~3,252 after tax) at ~~September 27, 2015~~April 3, 2016, and net losses of $~~9,617~~8,036 ($~~5,962~~5,152 after tax) at December 31, ~~2014~~2015.

The cumulative tax benefit on Cash Flow Hedges included in Accumulated Other Comprehensive Loss was $~~2,698~~1,502 at ~~September 27, 2015~~April 3, 2016, and $~~3,655~~2,884 at December 31, ~~2014~~2015. During the ~~three- and nine-~~three ~~month periods~~-month period ended ~~September 27, 2015~~April 3, 2016, the tax benefit on Cash Flow Hedges changed by ~~$(368) and $(957), respectively.~~$(1,382).

The cumulative tax benefit on Defined Benefit Pension Items was $~~250,306~~244,212 at ~~September 27, 2015~~April 3, 2016, and $~~256,840~~247,788 at December 31, ~~2014~~2015. During the ~~three- and nine-~~three~~month periods~~-month period ended ~~September 27, 2015~~April 3, 2016, the tax benefit on Defined Benefit Pension Items changed by ~~$(3,965) and $(6,534), respectively.~~$(3,576).

During the ~~three- and nine-~~three ~~month periods~~-month period ended ~~September 27, 2015~~April 3, 2016, changes in noncontrolling interests included foreign currency translation adjustments of $~~(4,413)~~1,412 ~~and~~ ~~$(4,574), respectively.~~.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Note 8:7: Goodwill and Other Intangible Assets

Goodwill

A summary of the changes in goodwill by segment for the ~~nine~~three months ended ~~September 27, 2015~~April 3, 2016 is as follows:

Consumer
Packaging

Display
and
Packaging

Paper and
Industrial
Converted
Products
Protective
Solutions
Total
Goodwill at December 31, 2014 $ 508,582
$ 204,629
$ 243,586
$ 221,165
$ 1,177,962
Acquisitions 10,147
—
—
—
10,147
Dispositions (1,727 ) —
—
—
(1,727 )
Foreign currency translation (27,582 ) —
(12,881 ) —
(40,463 )
Goodwill at September 27, 2015 $ 489,420
$ 204,629
$ 230,705
$ 221,165
$ 1,145,919



	Consumer Packaging		Display and Packaging		Paper and Industrial Converted Products		Protective Solutions		Total
Goodwill at December 31, 2015	$	487,342	$	204,629	$	227,325	$	221,165	$	1,140,461
Foreign currency translation	10,401		—		4,093		—		14,494
Goodwill at April 3, 2016	$	497,743	$	204,629	$	231,418	$	221,165	$	1,154,955

In May 2015, the Company acquired a majority ownership in a flexible packaging business in Brazil. In connection with this acquisition, the Company recognized $10,147 of Goodwill. See Note 4 for additional information. The Company disposed of goodwill totaling $(1,727) in connection with the sale of a portion of the Company's metal ends and closures business, including two production facilities in Canton, Ohio. See Note 6 for additional information.

The Company assesses 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. ~~The~~As part of this testing, the Company ~~completed~~analyzes certain qualitative and quantitative factors in determining goodwill impairment. In its most recent annual ~~goodwill impairment testing during~~assessment, completed in the third quarter of 2015. Goodwill is tested for impairment using 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. Based on the results of its qualitative and quantitative assessments,2015, the Company concluded that there was no impairment of goodwill for any of its reporting units.

~~When calculated, reporting unit estimated fair values reflect~~ The assessment 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 ~~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 using a discount rate management believes is commensurate with the risks inherent in the cash flows.

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.conclusions.

Although no reporting units failed the assessments noted above, in management’s opinion, the reporting units having the greatest risk of a significant future impairment if actual results fall short of expectations are ~~Plastics – Blowmolding,~~ Display and Packaging, and Paper and Industrial Converted Products - Europe. Total goodwill associated with these reporting units was approximately ~~$116,400,~~ $204,600 and ~~$88,500,~~$87,300, respectively, at ~~September 27, 2015.~~ April 3, 2016.

A large portion of sales in the Display and Packaging reporting unit is concentrated in one customer. ~~Management expects~~Subsequent to ~~retain~~the annual testing this ~~business; however, if~~customer informed the Company of its decision not to renew a contract to continue operating a packaging center in Irapuato, Mexico. This triggering event resulted in a reassessment of the most recent annual impairment test for the Display and Packaging reporting unit completed as of the third quarter of 2015. Accordingly, the Company reperformed the impairment analysis for this reporting unit taking into consideration the effect on sales and operating profit of the lower business volume and concluded that goodwill in the Display and Packaging reporting unit was not impaired. The remaining business with this customer is currently under negotiations for contract renewal. If a significant amount of business were lost and not replaced under similar terms, it is ~~possible~~likely that a goodwill impairment charge ~~would~~could be incurred.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

There ~~were~~have been no other triggering events identified between the most recent annual impairment test and ~~September 27, 2015~~.

April 3, 2016.

Other Intangible Assets

A summary of other intangible assets as of ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014~~2015 is as follows:


	September 27, 2015			December 31, 2014			April 3, 2016			December 31, 2015
Other Intangible Assets, gross
Patents	$	12,963		$	13,883		$	13,102		$	12,716
Customer lists	385,818			385,466			386,586			381,938
Trade names	19,271			19,366			19,286			19,246
Proprietary technology	17,748			17,786			17,754			17,738
Land use rights	293			320			303			297
Other	1,281			1,309			1,248			1,223
Other Intangible Assets, gross	$	437,374		$	438,130		$	438,279		$	433,158
Accumulated Amortization	$	(181,231	)	$	(157,195	)	$	(198,382	)	$	(188,063	)
Other Intangible Assets, net	$	256,143		$	280,935		$	239,897		$	245,095

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

~~The Company recorded $13,521 of identifiable intangible assets~~

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in connection with 2015 acquisitions, the vast majority of which related to customer lists. These customer lists will be amortized over their average expected useful life of approximately 12 years. See Note 4 for additional information. Also during 2015, the Company disposed of customer lists totaling $3,516 in connection with the sale of a portion of its metal ends and closures business, including two production facilities in Canton, Ohio. See Note 6 for additional information.thousands except per share data)

(unaudited)

Aggregate amortization expense was $~~8,533~~8,336 and $~~7,040~~8,150 for the three months ended ~~September 27, 2015~~April 3, 2016 and ~~September 28, 2014~~March 29, 2015, ~~respectively, and $24,857 and $20,863 for the nine months ended September 27, 2015 and September 28, 2014, respectively .~~respectively. Amortization expense on other intangible assets is expected to total approximately $~~33,700~~ ~~in 2015,~~ ~~$33,000~~32,000 in 2016, $~~32,200~~31,200 in 2017, $~~31,600~~30,400 in 2018, $29,400 in 2019 and $~~30,200~~27,500 in ~~2019.~~2020.

Note 9:8: Financial Instruments and Derivatives

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

September 27, 2015 December 31, 2014

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value
Long-term debt, net of current portion $ 1,073,043
$ 1,153,067
$ 1,200,885
$ 1,322,795



	April 3, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, net of current portion	$	1,015,804	$	1,103,943	$	1,015,270	$	1,081,732

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

Cash Flow Hedges

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

At ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014~~2015, the Company had derivative financial instruments outstanding to hedge anticipated transactions and certain asset and liability related cash flows. These contracts, which have maturities ranging from ~~July 2015~~May 2016 to December 2016, qualify as cash flow hedges under U.S. GAAP. To the extent considered effective, the changes in fair value of these contracts are recorded in other comprehensive income and reclassified to income or expense in the period in which the hedged item impacts earnings. The Company has determined all hedges to be highly effective and as a result no material ineffectiveness has been recorded.

Commodity Cash Flow Hedges

The Company has entered into certain derivative contracts to manage the cost of anticipated purchases of natural gas and aluminum. At ~~September 27, 2015~~April 3, 2016, natural gas swaps covering approximately ~~5.9~~4.9 MMBTUs were outstanding. These contracts represent approximately 74% and ~~74%~~19% of anticipated U.S. and Canadian usage for the remainder of ~~2015~~2016 and ~~2016,~~2017, respectively. Additionally, the Company had swap contracts covering ~~1,224~~3,340 metric tons of aluminum and ~~660~~1,980 short tons of OCC, representing approximately ~~52%~~54% and 1% of anticipated usage for the remainder of ~~2015,~~2016, respectively. The fair values of the Company’s commodity cash flow hedges netted to loss positions of $~~(4,050)~~(3,794) and $~~(6,086)~~(3,611) at ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014~~2015, respectively. The amount of the loss included in Accumulated Other Comprehensive Loss at ~~September 27, 2015~~April 3, 2016, that is expected to be reclassified to the income statement during the next twelve months is $~~(3,575)~~(3,342).

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Foreign Currency Cash Flow Hedges

The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales and purchases forecast to occur in ~~2015.~~2016. The net positions of these contracts at ~~September 27, 2015~~April 3, 2016 were as follows (in thousands):



Currency	Action	Quantity
Colombian peso	purchase	~~4,440,059~~4,246,472
Mexican peso	purchase	~~97,696~~420,109
Canadian dollar	purchase	~~14,465~~62,960
~~Euro~~Russian ruble	purchase	~~7,307~~6,428
British pound	purchase	4,499
Turkish lira	purchase	~~2,256~~
~~Russian ruble~~	~~purchase~~	~~304~~
~~Polish zloty~~	~~purchase~~	~~275~~1,001
New Zealand dollar	sell	(~~840~~468	)
Australian dollar	sell	(~~1,616~~1,348	)
~~British pound~~Polish zloty	sell	(~~2,366~~1,919	)
Euro	sell	(4,587	)

The fair value of these foreign currency cash flow hedges netted to a loss position of $~~(3,236)~~(1,085) at ~~September 27, 2015~~April 3, 2016 and $~~(3,526)~~(4,612) at December 31, ~~2014~~2015, respectively. During the ~~nine~~three months ended ~~September 27, 2015,~~April 3, 2016, certain foreign currency cash flow hedges related to construction in progress were settled as the related capital expenditures were made. ~~Gains~~Losses from these hedges totaling $~~237~~25 were reclassified from accumulated other comprehensive loss and included in the carrying value of the assets acquired. During the next twelve months, a loss of $~~(3,215)~~(1,146) is expected to be reclassified from Accumulated Other Comprehensive Loss to the income statement.

Other Derivatives

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

The net positions of these contracts at ~~September 27, 2015~~April 3, 2016, were as follows (in thousands):



Currency	Action	Quantity
Colombian peso	purchase	66,739,152
Mexican peso	purchase	213,071
Canadian dollar	purchase	19,957
British pound	purchase	12,000
Euro	sell	(38,268	)

The fair value of the Company’s other derivatives was $(802) and $(2,180) at April 3, 2016 and December 31, 2015, respectively.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)



~~Currency~~	~~Action~~	~~Quantity~~
~~Colombian peso~~	~~purchase~~	~~36,757,020~~
~~Mexican peso~~	~~purchase~~	~~237,727~~
~~British pound~~	~~sell~~	—
~~Euro~~	~~sell~~	~~(19,175~~	)

~~The fair value of the Company’s other derivatives was~~ ~~$(2,478)~~ ~~and~~ ~~$(1,098)~~ at ~~September 27, 2015~~ ~~and~~ ~~December 31, 2014, respectively.~~

The following table sets forth the location and fair values of the Company’s derivative instruments at ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014~~2015:


Description	Balance Sheet Location	September 27, 2015			December 31, 2014			Balance Sheet Location	April 3, 2016			December 31, 2015
Derivatives designated as hedging instruments:
Commodity Contracts								Prepaid expenses	$	9		$	8
Commodity Contracts	Accrued expenses and other	$	(3,641	)	$	(5,808	)	Accrued expenses and other	$	(3,622	)	$	(3,425	)
Commodity Contracts	Other liabilities	$	(409	)	$	(278	)	Other liabilities	$	(181	)	$	(194	)
Foreign Exchange Contracts	Prepaid expenses	$	1,087		$	574		Prepaid expenses	$	827		$	156
Foreign Exchange Contracts	Accrued expenses and other	$	(4,323	)	$	(4,100	)	Accrued expenses and other	$	(1,912	)	$	(4,768	)
Derivatives not designated as hedging instruments:
Foreign Exchange Contracts	Prepaid expenses	$	91		$	68		Prepaid expenses	$	722		$	50
Foreign Exchange Contracts	Accrued expenses and other	$	(2,569	)	$	(1,166	)	Accrued expenses and other	$	(1,524	)	$	(2,230	)

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



Description

Location of Gain or (Loss) Recognized in

Income Statement

The following tables set forth the effect of the ~~Company's~~Company’s derivative instruments on financial performance for the three months ended ~~September 27,~~April 3, 2016 and March 29, 2015 ~~and September 28, 2014:~~:


Description		Amount of Gain or (Loss) Recognized in OCI on Derivatives (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 Derivatives (Ineffective Portion)	Amount of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion)				Amount of Gain or (Loss) Recognized in OCI on Derivatives (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 Derivatives (Ineffective Portion)	Amount of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion)
Derivatives in Cash Flow Hedging Relationships:	Derivatives in Cash Flow Hedging Relationships:												Derivatives in Cash Flow Hedging Relationships:
Three months ended September 27, 2015
Three months ended April 3, 2016													Three months ended April 3, 2016
Foreign Exchange Contracts	Foreign Exchange Contracts	$	4,784		Net sales	$	2,757		Net sales	$	—			$	2,317		Net sales	$	(2,240	)	Net sales	$	—
					Cost of sales	$	1,965										Cost of sales	$	1,045
Commodity Contracts	Commodity Contracts	$	(1,728	)	Cost of sales	$	(2,244	)	Cost of sales	$	(30	)		$	(1,766	)	Cost of sales	$	(1,511	)	Cost of sales	$	110
Three months ended September 28, 2014
Three months ended March 29, 2015													Three months ended March 29, 2015
Foreign Exchange Contracts	Foreign Exchange Contracts	$	(55	)	Net sales	$	241		Net sales	$	—			$	(4,301	)	Net sales	$	(4,088	)	Net sales	$	—
					Cost of sales	$	232										Cost of sales	$	2,401
Commodity Contracts	Commodity Contracts	$	(1,250	)	Cost of sales	$	123		Cost of sales	$	44			$	(2,150	)	Cost of sales	$	(2,423	)	Cost of sales	$	40



Description	Location of Gain or (Loss) Recognized in Income Statement	Gain or (Loss) Recognized
Derivatives not Designated as Hedging Instruments:
Three months ended April 3, 2016
Foreign Exchange Contracts	Cost of sales	$	—
	Selling, general and administrative	$	(498	)
Three months ended March 29, 2015
Foreign Exchange Contracts	Cost of sales	$	—
	Selling, general and administrative	$	285

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Description
Location of Gain or (Loss) Recognized in
Income Statement
Gain or (Loss)
Recognized
Derivatives not Designated as Hedging Instruments:
Three months ended September 27, 2015
Foreign Exchange Contracts Cost of sales $ (1,972 )
Selling, general and administrative $ (141 )
Three months ended September 28, 2014
Foreign Exchange Contracts Cost of sales $ 77
Selling, general and administrative $ (194 )

~~The following tables set forth the effect of the Company’s derivative instruments on financial performance for the~~ ~~nine months endedSeptember 27, 2015~~ ~~and~~ ~~September 28, 2014~~:

Description
Amount of Gain or
(Loss) Recognized
in OCI on
Derivatives
(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
Derivatives
(Ineffective Portion)

Amount of Gain
or (Loss) Recognized
in Income on
Derivatives
(Ineffective
Portion)
Derivatives in Cash Flow Hedging Relationships:
Nine months ended September 27, 2015
Foreign Exchange Contracts $ 7,974
Net sales $ 4,010
Net sales $ —
Cost of sales $ 3,437

Commodity Contracts $ (5,080 ) Cost of sales $ (7,201 ) Cost of sales $ 80
Nine months ended September 28, 2014
Foreign Exchange Contracts $ 420
Net sales $ (1,669 ) Net sales $ —
Cost of sales $ 2,343

Commodity Contracts $ 1,519
Cost of sales $ 1,248
Cost of sales $ —

Description
Location of Gain or (Loss) Recognized in
Income Statement
Gain or (Loss)
Recognized
Derivatives not Designated as Hedging Instruments:
Nine months ended September 27, 2015
Foreign Exchange Contracts Cost of sales $ (1,601 )
Selling, general and administrative $ (127 )
Nine months ended September 28, 2014
Foreign Exchange Contracts Cost of sales $ (359 )
Selling, general and administrative $ (41 )

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

Note ~~10:~~9: Fair Value Measurements

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



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

The following table sets forth information regarding the Company’s financial assets and financial liabilities, excluding retirement and postretirement plan assets, measured at fair value on a recurring basis:


Description	September 27, 2015			Level 1		Level 2			Level 3		April 3, 2016			Level 1		Level 2			Level 3
Hedge derivatives, net:
Commodity contracts	$	(4,050	)	$	—	$	(4,050	)	$	—	$	(3,794	)	$	—	$	(3,794	)	$	—
Foreign exchange contracts	(3,236		)	—		(3,236		)	—		(1,085		)	—		(1,085		)	—
Non-hedge derivatives, net:
Foreign exchange contracts	(2,478		)	—		(2,478		)	—		(802		)	—		(802		)	—
Deferred compensation plan assets	915			915		—			—		469			469		—			—

Description	December 31, 2014			Level 1		Level 2			Level 3		December 31, 2015			Level 1		Level 2			Level 3
Hedge derivatives, net:
Commodity contracts	$	(6,086	)	$	—	$	(6,086	)	$	—	$	(3,611	)	$	—	$	(3,611	)	$	—
Foreign exchange contracts	(3,526		)	—		(3,526		)	—		(4,612		)	—		(4,612		)	—
Non-hedge derivatives, net:
Foreign exchange contracts	(1,098		)	—		(1,098		)	—		(2,180		)	—		(2,180		)	—
Deferred compensation plan assets	944			944		—			—		460			460		—			—

As discussed in Note 9,8, the Company uses derivatives to mitigate the effect of raw material and energy cost fluctuations, foreign currency fluctuations and, from time to time, interest rate movements. Fair value measurements for the Company’s derivatives are classified under Level 2 because such measurements are estimated based on observable inputs such as interest rates, yield curves, spot and future commodity prices and spot and future exchange rates.

Certain deferred compensation plan liabilities are funded by 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 is measured at fair value using significant unobservable inputs. There were no transfers in or out of Level 1 or Level 2 fair value measurements during the ~~three- and nine-~~threemonth ~~periods~~period ended ~~September 27, 2015~~April 3, 2016.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Note ~~11:~~10: Employee Benefit Plans

Retirement Plans and Retiree Health and Life Insurance Plans

The Company provides non-contributory defined benefit pension plans for a majority of its employees in the United States and certain of its employees in Mexico and Belgium. Effective December 31, 2003, the Company froze participation for newly hired salaried and non-union hourly U.S. employees in its qualified defined benefit pension plan. At that time, the Company adopted a defined contribution plan, the Sonoco Investment and Retirement Plan (SIRP), which covers its non-union U.S. employees hired on or after January 1, 2004. The Company also sponsors contributory defined benefit pension plans covering the majority of its employees in the United Kingdom, Canada, and the Netherlands. In addition, the Company 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 effective December 31, 2003 for newly hired salaried and non-union hourly employees. At that time, the Company adopted a defined contribution plan, the Sonoco Investment and Retirement Plan (SIRP), covering its non-union U.S. employees hired on or after January 1, 2004, and former participants of the U.S. qualified defined benefit pension plan who elected to transfer out of that plan and into the SIRP under a one-time option effective January 1, 2010. On January 1, 2013, the SIRP was merged into the Sonoco Savings Plan and the name was changed to the Sonoco Retirement and Savings Plan. The Company provides an annual contribution to participant accounts in the Sonoco Retirement and Savings Plan, called the Sonoco Retirement Contribution (SRC), equal to 4% of the participant's eligible pay plus 4% of eligible pay in excess of the social security wage base.

On February 4, 2009, the U.S. qualified defined benefit pension plan was amended to freeze plan benefits for all active participants effective December 31, 2018. Remaining active participants in the U.S. qualified plan will become ~~participants of the SIRP~~eligible for SRC contributions effective January 1, 2019.

The Company also provides postretirement healthcare and life insurance benefits to a limited number of its retirees and their dependents in the United States and Canada, based on certain age and/or service eligibility requirements.

The components of net periodic benefit cost include the following:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 27, 2015			September 28, 2014			September 27, 2015			September 28, 2014			April 3, 2016			March 29, 2015
Retirement Plans
Service cost	$	5,735		$	5,491		$	17,076		$	16,283		$	5,023		$	5,253
Interest cost	17,657			18,376			52,419			54,684			15,326			16,933
Expected return on plan assets	(23,485		)	(23,290		)	(69,738		)	(69,342		)	(22,044		)	(22,726		)
Amortization of net transition obligation	39			102			120			303			—			40
Amortization of prior service cost	185			168			552			497			193			180
Amortization of net actuarial loss	10,581			6,630			31,414			19,726			9,596			9,728
Net periodic benefit cost	$	10,712		$	7,477		$	31,843		$	22,151		$	8,094		$	9,408
Retiree Health and Life Insurance Plans
Service cost	$	195		$	181		$	579		$	539		$	85		$	178
Interest cost	228			258			675			768			130			222
Expected return on plan assets	(411		)	(398		)	(1,218		)	(1,187		)	(404		)	(393		)
Amortization of prior service credit	(26		)	(345		)	(77		)	(1,026		)	(128		)	(25		)
Amortization of net actuarial loss	(34		)	(65		)	(102		)	(192		)	(137		)	(5		)
Net periodic benefit income	$	(48	)	$	(369	)	$	(143	)	$	(1,098	)	$	(454	)	$	(23	)

The Company made aggregate contributions of $~~16,551~~18,690 and $~~46,372~~4,152 to its defined benefit retirement and retiree health and life insurance plans during the ~~nine~~three months ended ~~September 27, 2015~~April 3, 2016 and ~~September 28, 2014~~March 29, 2015, respectively. The Company anticipates that it will make additional aggregate contributions of approximately $~~6,000~~22,300 to its defined benefit retirement and retiree health and life insurance plans over the remainder of ~~2015.~~2016.

Sonoco ~~Investment and~~ Retirement ~~Plan (SIRP)~~Contribution (SRC)

The ~~Company recognized SIRP expense totaling~~ ~~$4,215~~ ~~and~~ ~~$3,242~~ ~~for the quarters ended~~ ~~September 27, 2015~~ ~~and~~ ~~September 28, 2014, respectively, and $11,144 and $8,728 for the nine-month periods ended September 27, 2015 and September 28, 2014, respectively. Contributions to the SIRP,~~Sonoco Retirement Contribution, which is funded annually in the first quarter, totaled $13,352 during the three months ended April 3, 2016, and $12,865 during the ~~nine~~three months ended ~~September 27,~~March 29, 2015~~, and~~ ~~$12,049~~ ~~during the~~ ~~nine months ended September 28, 2014~~. No additional ~~SIRP~~SRC contributions are expected during the remainder of ~~2015.~~ 2016. The Company recognized expense related to the SRC of $3,018 and $3,627 for the three month periods ended April 3, 2016 and March 29, 2015, respectively.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Note ~~12:~~11: Income Taxes

The Company’s effective tax rate for the ~~three- and nine-~~three~~month~~-month periods ending ~~September 27,~~April 3, 2016 and March 29, 2015,, was ~~37.7%~~33.2% and ~~28.6%, respectively, and its effective tax rate for the three- and nine-month periods ended September 28, 2014, was~~ ~~29.6%~~23.7% ~~and 31.7%~~, respectively. The rates for the ~~three and nine-month~~three-month periods of both years varied from the U.S. statutory rate due primarily to the favorable effect of certain international operations that are subject to tax rates generally lower than the U.S. rate, the favorable effect of the manufacturer’s deduction on U.S. taxes, and the effect of changes in uncertain tax positions. The effective tax rate for the three-month period ended ~~September 27,~~March 29, 2015 ~~however,~~ was higher than the U.S. statutory rate due to the foreign exchange related impairment charges of the Company's Venezuelan assets, for which no tax benefit was recorded. The effective tax rate for the nine-month period ended September 27, 2015, while also impacted by the Venezuelan impairment, wasfurther reduced ~~by the release of a valuation allowance against tax loss carryforwards in Spain in the second quarter and~~ by the recognition of beneficial tax attributes associated with the disposition of the Company's Canton, Ohio metal ends and closures ~~facilities in the first quarter.~~facilities.

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 U.S. federal, or non-U.S., income tax examinations by tax authorities for years before 2012. With respect to state and local income taxes, the Company is no longer subject to examination for years prior to ~~2010,~~2011, with few exceptions.

The Company’s total liability for uncertain tax benefits has not changed significantly since December 31, ~~2014.~~2015. The Company has ~~$2,200~~$3,300 of reserves for uncertain tax benefits for which it believes it is reasonably possible that a resolution may be reached within the next twelve months. Although the Company’s estimate for the potential outcome for any uncertain tax issue is highly judgmental, management believes that any reasonably foreseeable outcomes related to these matters have been adequately provided for. However, future results may include favorable or unfavorable adjustments to estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments expire. Additionally, the jurisdictions in which earnings or deductions are realized may differ from current estimates. As a result, the Company’s effective tax rate may fluctuate significantly on a quarterly basis. The Company has operations and pays taxes in many countries outside of the U.S. and taxes on those earnings are subject to varying rates. The Company is not dependent upon the favorable benefit of any one jurisdiction to an extent that loss of those benefits would have a material effect on the Company’s overall effective tax rate.

Note ~~13:~~12: Segment Reporting

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

The Consumer Packaging segment includes the following products and services: round and shaped rigid containers and trays (both composite and thermoformed plastic); blow-molded plastic bottles and jars; extruded and injection-molded plastic products; printed flexible packaging; global brand artwork management; and metal and peelable membrane ends and closures.

The Display and Packaging segment includes the following products and services: designing, manufacturing, assembling, packing and distributing temporary, semipermanent and permanent point-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 includes 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-assured packaging.

The following table sets forth net sales, intersegment sales and operating profit for the Company’s reportable segments. “Segment operating profit” is defined as the segment’s portion of “Income before interest and income taxes” excluding restructuring charges, asset impairment charges, acquisition-related costs, and certain other items, if any, the exclusion of which the Company believes improves comparability and analysis of the financial performance of the

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

business. General corporate expenses have been allocated as operating costs to each of the Company’s reportable segments. "Other, net" for the ~~nine~~three months ended ~~September 27,~~March 29, 2015 is largely ~~composed~~comprised of a $32,543 gain from the reversal of environmental liability reserves related to Fox River.

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

SEGMENT FINANCIAL INFORMATION


	Three Months Ended						Nine Months Ended
	September 27, 2015			September 28, 2014			September 27, 2015			September 28, 2014			Three Months Ended
				(as Restated)						(as Restated)			April 3, 2016			March 29, 2015
Net sales:
Consumer Packaging	$	521,499		$	479,609		$	1,572,490		$	1,418,200		$	527,338		$	519,877
Display and Packaging	162,945			177,364			450,334			497,543			144,267			145,786
Paper and Industrial Converted Products	427,753			480,741			1,298,940			1,426,367			423,074			422,311
Protective Solutions	130,395			124,789			375,470			358,041			131,597			118,078
Consolidated	$	1,242,592		$	1,262,503		$	3,697,234		$	3,700,151		$	1,226,276		$	1,206,052
Intersegment sales:
Consumer Packaging	$	1,587		$	1,008		$	4,588		$	2,916		$	1,332		$	1,680
Display and Packaging	523			385			1,371			1,165			497			397
Paper and Industrial Converted Products	26,243			25,824			78,832			78,822			26,381			27,551
Protective Solutions	731			366			1,796			1,752			586			608
Consolidated	$	29,084		$	27,583		$	86,587		$	84,655		$	28,796		$	30,236
Income before interest and income taxes:
Segment operating profit:
Consumer Packaging	$	55,282		$	49,769		$	166,840		$	140,783		$	62,865		$	54,028
Display and Packaging	5,405			2,007			7,278			9,549			3,281			838
Paper and Industrial Converted Products	32,292			48,996			99,052			125,289			33,299			27,797
Protective Solutions	12,911			10,277			36,200			25,204			12,026			9,685
Restructuring/Asset impairment charges	(19,551		)	(5,908		)	(29,637		)	(11,571		)	(9,228		)	359
Other, net	(6,858		)	888			22,816			(382		)	(411		)	31,377
Consolidated	$	79,481		$	106,029		$	302,549		$	288,872		$	101,832		$	124,084

Note ~~14:~~13: 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 and Remaining Claim

In March 2014, U.S. Paper Mills Corp. (U.S. Mills), a wholly owned subsidiary of the Company, and five other defendants reached a ~~potential~~ settlement with the United States Environmental Protection Agency (EPA) and the Wisconsin Department of Natural Resources (WDNR) for natural resource damages and the environmental cleanup of the lower Fox River in Wisconsin. The terms of the settlement, ~~was approved by the court on February 6, 2015 and~~which became final on April 7, 2015, ~~when the time for appeal of the court's order expired with no appeal having been taken. The terms of the settlement~~ required U.S. Mills to pay $14,700, which was paid in April 2014, and ~~protect~~protects U.S. Mills from claims by other parties relating to natural resource damages and the cleanup of the lower Fox River, except claims pursuant to Section 107 of the Comprehensive Environment Response, Compensation and Liability Act (CERCLA).

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

River. The claim is asserted for approximately $200,000. Although the Company believes that the maximum amount for which the defendants could be liable is substantially less, the court has not yet ruled on the issue.

At December 31, ~~2014,~~2015, U.S. Mills had reserves totaling $~~37,775~~3,896 for potential liabilities associated with the lower Fox River. During the quarter ending March 29, 2015, U.S. Mills spent a total of $232 on legal fees related to Fox River. As a result of the settlement becoming final, the Company reversed $32,543 of the reserves, leaving a total of $5,000 reserved at March 29, 2015 for remaining potential liabilities associated with the lower Fox River. The reversal of these reserves resulted in reductions of "Selling, general and administrative expenses" and "Accrued expenses and other" in the Company's Condensed Consolidated Financial Statements in the first quarter of 2015.

Appvion claim. Through ~~September 27, 2015,~~April 3, 2016, the Company has spent approximately ~~$564~~$304 on legal costs related to ~~the remaining Appvion~~this claim, leaving a reserve of ~~$4,436~~$3,592 remaining at ~~September 27, 2015.~~April 3, 2016. The actual costs that may be incurred associated with the Appvion claim are dependent upon many factors and it is possible that costs could ultimately be higher than the amount provided for in the

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

remaining reserve. Because of the continuing uncertainties surrounding U.S. Mills' possible liability, including a potentially favorable resolution, the Company cannot currently estimate its potential liability, damages or range of potential loss, if any, beyond the amounts reserved, and an adverse resolution of these matters could have an adverse effect on the Company's financial position, results of operations and/or cash flows. The Company believes that the maximum additional exposure to its consolidated financial position beyond the amount reserved at ~~September 27, 2015~~ is limited to the equity position of U.S. Mills, which was approximately ~~$124,000~~$125,000 at ~~September 27, 2015.~~April 3, 2016.

Tegrant

On November 8, 2011, the Company completed the acquisition of Tegrant. During its due diligence, the Company identified several potential environmentally contaminated sites. The total remediation cost of these sites was estimated to be $18,850 at the time of 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 ~~$697~~$741 on remediation of these sites. During 2014 and 2015, the Company increased its reserves for these sites by ~~$324~~a total of $392 in order to reflect its best estimate of what it is likely to pay in order to complete the remediation. At ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014~~2015, the Company's accrual for Tegrant's environmental contingencies totaled $~~18,477~~18,501 and $~~18,635~~18,521, 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.

Village of Rockton

~~On September 15, 2014,~~The previously disclosed actions instituted by the Village of Rockton ~~Illinois instituted 81 actions~~ against the Company in the Circuit Court for the Seventeenth Judicial Circuit, Winnebago, Illinois. Each action seeks to assess penalties of up to $0.75 per day since December 2, 2007 for violations of one of three sectionson September 15, 2014, were dismissed with prejudice by stipulation of the Municipal Code that: (a) require lots or premises to be maintained in a safe and sanitary condition at all times; (b) make it unlawful for any substance which shall be dangerous or detrimental to health to be allowed to exist in connectionparties on April 19, 2016, with any business, be used therein or used in any work or labor carried on in the Village and prohibit any health menace be permitted to exist in connection with business or in connection with any such work or labor; and (c) make it unlawful for any ashes, rubbish, tin cans and all combustibles to be deposited or dumped upon any lot or land in the Village, and require that they be deposited or dumped in the area set aside for that purpose. The actions relate to a paper plant in the Village closed by the Company in 2008 that the Company is in the process of remediating through the Illinois Environmental Protection Agency’s “brownfields” program. The Company has removed the casesno impact to the United States District Court for the Northern District of Illinois and plans to vigorously defend its interests while continuing to participate in the “brownfields” program. The Company cannot currently estimate its potential liability, damages or range of potential loss, if any, with respect to this exposure.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 potential remediation liabilities are shared with such other parties, and, in most cases, the Company’s share, if any, cannot be reasonably estimated at the current time. However, the Company does not believe that the resolution of these matters has a reasonable possibility of having a material adverse effect on the Company's financial statements.

~~SONOCO PRODUCTS COMPANY~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(unaudited)~~

Summary

As of ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014~~2015, the Company (and its subsidiaries) had accrued $~~25,595~~24,806 and $~~59,253~~25,195, respectively, related to environmental contingencies. These accruals are included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets.

Other Legal Matters

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

Report of Independent Registered Public Accounting Firm

To the Shareholders and Directors of Sonoco Products Company:

We have reviewed the accompanying condensed consolidated balance sheet of Sonoco Products Company (the "Company") and its subsidiaries as of ~~September 27, 2015,~~April 3, 2016, and the related condensed consolidated statements of income and comprehensive income for the ~~three and nine-month~~three-month periods ended ~~September 27,~~April 3, 2016 and March 29, 2015 ~~and September 28, 2014~~ and the condensed consolidated statement of cash flows for the ~~nine-month~~three-month periods ended ~~September 27, 2015~~April 3, 2016 and ~~September 28, 2014.~~March 29, 2015. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the accompanying condensed consolidated financial statements, the Company has restated its condensed consolidated financial statements as of September 28, 2014 and for the three and nine-month periods then ended to correct misstatements.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, ~~2014,~~2015, and the related consolidated statements of income, of comprehensive income, of changes in total equity, and of cash flows for the year then ended (not presented herein), and in our report dated March 2, 2015, except for the effects on the consolidated financial statements of the restatement described in Note 2, the goodwill measurement period adjustment described in Note 4, and the matter described in the second paragraph of Management's Report on Internal Control over Financial Reporting, as to which the date is August 25, 2015,February 29, 2016, we expressed an unqualified opinion on those consolidated financial ~~statements (with an explanatory paragraph indicating that the Company has restated its 2014, 2013 and 2012 annual financial statements).~~statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2014,~~2015, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. As discussed in Note 2 to the accompanying consolidated interim financial statements, the Company changed its method of accounting for Debt Issuance Costs in the three-month period ended April 3, 2016. The accompanying December 31, 2015 consolidated balance sheet reflects this change.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

~~October 28, 2015~~May 6, 2016

SONOCO PRODUCTS COMPANY



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

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

availability and supply of raw materials, and offsetting high raw material costs;

improved productivity and cost containment;

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 activities;

adequacy and anticipated amounts and uses of cash flows;

expected amounts of capital spending;

refinancing and repayment of debt;

financial strategies and the results expected of them;

financial results for future periods;

producing improvements in earnings;

profitable sales growth and rates of growth;

market leadership;

research and development spending;

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

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

goodwill impairment charges and fair values of reporting units;

future asset impairment charges and fair values of assets;

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

creation of long-term value and returns for shareholders;

continued payment of dividends; and

planned stock repurchases.

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

availability and pricing of raw materials, energy and transportation, 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;

consumer demand for products and changing consumer preferences;

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

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

SONOCO PRODUCTS COMPANY

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;

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 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 obligations and earnings of pension and postretirement benefit plans;

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

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

resolution of income tax contingencies;

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

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

accuracy in valuation of deferred tax assets;

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

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

liability for and anticipated costs of environmental remediation actions;

effects of environmental laws and regulations;

operational disruptions at our major facilities;

failure or disruptions in our information technologies;

loss of consumer or investor confidence;

ability to protect our intellectual property rights;

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

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

economic disruptions resulting from terrorist activities and natural disasters.

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

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

SONOCO PRODUCTS COMPANY

COMPANY OVERVIEW

Sonoco is a leading provider of consumer packaging, industrial products, protective packaging and packaging supply chain services, with approximately ~~334~~330 locations in 34 countries.

Sonoco competes in multiple product categories, with its operations organized and reported in four segments: Consumer Packaging, Display and Packaging, Paper and Industrial Converted Products, and Protective Solutions. The majority of the Company’s revenues are from products and services sold to consumer and industrial products companies for use in the packaging of their products for sale or shipment. The Company also manufactures paperboard, primarily from recycled materials, for both internal use and open market sale. Each of the Company’s operating units has its own sales staff and maintains direct sales relationships with its customers.

As previously disclosed, the Company discovered in July 2015 that certain prior-period amounts had been misstated at a contract packaging center in Irapuato, Mexico, part of the Company's Display and Packaging segment. These misstatements affected the reported revenues and operating profits, as well as certain balance sheet line item amounts, from 2012 through the first quarter of 2015. Promptly upon discovering the misstatement of the prior-period amounts, the Audit Committee engaged an international independent registered public accounting firm and an independent international law firm to conduct a forensic investigation of the events leading to the misstatements, including any ineffectiveness of internal controls over financial reporting. The Audit Committee has been advised by this accounting firm that, after consultation

First Quarter 2016 Compared with the independent law firm, the accounting firm is satisfied that the corrected prior-period operating results reported in this Form 10-Q properly reflect such results, and that the changes in internal control over financial reporting disclosed in Part I - Item 4 of this Form 10-Q properly address the deficiencies in internal controls that resulted in the misstatement.

Prior-period amounts presented herein have been restated to properly reflect the corrected operating results of the Irapuato contract packaging center and to reflect in the proper period previously disclosed out-of-period adjustments made during 2014. See Note 1 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for further details.

~~Third~~First Quarter 2015 ~~Compared with Third Quarter 2014~~

RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES

Measures calculated and presented in accordance with generally accepted accounting principles are referred to as GAAP financial measures. The following tables reconcile the Company’s non-GAAP financial measures to their most directly comparable GAAP financial measures in the Company’s Condensed Consolidated Statements of Income for each of the periods presented. These non-GAAP financial measures (referred to as “Base”) are the GAAP measures adjusted to exclude (dependent upon the applicable period) restructuring charges, asset impairment charges, acquisition charges, specifically identified tax adjustments and certain other items, if any, the exclusion of which the Company believes improves comparability and analysis of the underlying financial performance of the business.


	For the three months ended September 27, 2015											For the three months ended April 3, 2016
Dollars in thousands, except per share data	GAAP			Restructuring/ Asset Impairment⁽¹⁾			Other Adjustments⁽²⁾		Base			GAAP			Restructuring/ Asset Impairment			Other Adjustments⁽¹⁾		Base
Income before interest and income taxes	$	79,481		$	19,551		$	6,858	$	105,890		$	101,832		$	9,228		$	411	$	111,471
Interest expense, net	13,687			—			—		13,687			13,787			—			—		13,787
Income before income taxes	65,794			19,551			6,858		92,203			88,045			9,228			411		97,684
Provision for income taxes	24,775			1,574			2,018		28,367			29,194			2,920			104		32,218
Income before equity in earnings of affiliates	41,019			17,977			4,840		63,836			58,851			6,308			307		65,466
Equity in earnings of affiliates, net of tax	2,976			—			—		2,976			1,339			—			—		1,339
Net income	43,995			17,977			4,840		66,812			60,190			6,308			307		66,805
Net (income) attributable to noncontrolling interests	(81		)	(5		)	—		(86		)	(276		)	(7		)	—		(283		)
Net income attributable to Sonoco	$	43,914		$	17,972		$	4,840	$	66,726		$	59,914		$	6,301		$	307	$	66,522
Per diluted common share	$	0.43		$	0.18		$	0.05	$	0.65		$	0.59		$	0.06		$	0.00	$	0.65

⁽¹⁾~~Includes $12,065 of asset impairments related to the devaluation of the Venezuelan Bolivar.~~

⁽²⁾~~Consists primarily of legal and financial professional expenses associated with the Company's investigation of financial misstatements in Mexico and acquisition-related costs.~~

~~SONOCO PRODUCTS COMPANY~~

For the three months ended September 28, 2014
Dollars in thousands, except per share data
GAAP
(as Restated)
Restructuring/
Asset
Impairment
Other
Adjustments ⁽¹⁾

Base
(as Restated)
Income before interest and income taxes $ 106,029
$ 5,908
$ (888 ) $ 111,049
Interest expense, net 12,918
—
—
12,918
Income before income taxes 93,111
5,908
(888 ) 98,131
Provision for income taxes 27,539
1,954
(129 ) 29,364
Income before equity in earnings of affiliates 65,572
3,954
(759 ) 68,767
Equity in earnings of affiliates, net of tax 2,294
—
—
2,294
Net income 67,866
3,954
(759 ) 71,061
Net (income) attributable to noncontrolling interests (810 ) (11 ) 533
(288 )
Net income attributable to Sonoco $ 67,056
$ 3,943
$ (226 ) $ 70,773
Per diluted common share $ 0.65
$ 0.04
$ 0.00
$ 0.69

⁽¹⁾Consists primarily of acquisition-related costs.



	For the three months ended March 29, 2015
Dollars in thousands, except per share data	GAAP		Restructuring/ Asset Impairment ⁽¹⁾			Other Adjustments ⁽²⁾			Base
Income before interest and income taxes	$	124,084	$	(359	)	$	(31,377	)	$	92,348
Interest expense, net	13,221		—			—			13,221
Income before income taxes	110,863		(359		)	(31,377		)	79,127
Provision for income taxes	26,221		11,591			(12,512		)	25,300
Income before equity in earnings of affiliates	84,642		(11,950		)	(18,865		)	53,827
Equity in earnings of affiliates, net of tax	1,046		—			—			1,046
Net income	85,688		(11,950		)	(18,865		)	54,873
Net (income)/loss attributable to noncontrolling interests	92		(15		)	—			77
Net income attributable to Sonoco	$	85,780	$	(11,965	)	$	(18,865	)	$	54,950
Per diluted common share	$	0.84	$	(0.12	)	$	(0.18	)	$	0.54

⁽¹⁾Includes disposal and income tax gains related to the sale of a portion of the Company's metal ends and closures business.

⁽²⁾Includes acquisition-related costs and ~~non-base income tax charges.~~the release of reserves related to the partial settlement of the Fox River environmental claims.

SONOCO PRODUCTS COMPANY

RESULTS OF OPERATIONS

The following discussion provides a review of results for the three months ended ~~September 27, 2015~~April 3, 2016 versus the three months ended ~~September 28, 2014.~~March 29, 2015.

OVERVIEW

Net sales for the ~~third~~first quarter of ~~2015 decreased 1.6%~~2016 increased 1.7% to ~~$1,243~~$1,226 million, compared with ~~$1,263~~$1,206 million in the same period last year. ~~Sales~~As a result of the Company's accounting calendar, the first quarter of 2016 contained 94 days, which is 6 more calendar days than last year's quarter. However, for the majority of the Company's operations, the current quarter only contained 3 more business days, a 4.9% increase over last year's quarter. In addition to the impact of more days, sales benefited from other volume/mix improvements along with acquisition-related sales. These gains were ~~negatively impacted $82 million~~partially offset by a negative impact from foreign currency translation along with lower selling prices stemming from a year-over-year decline in recovered paper and resin costs. ~~These negative factors were largely offset by net acquisition sales gains of $64 million and modest volume growth.~~

Net income attributable to Sonoco for the ~~third~~first quarter of ~~2015~~2016 was ~~$43.9~~$59.9 million, compared to ~~$67.1~~$85.8 million reported for the same period of ~~2014.~~2015. Current quarter net income includes ~~$4.8 million, after-tax, of legal and financial professional services fees incurred to investigate and correct the financial misstatements at our Irapuato packaging center, and~~ after-tax restructuring and asset impairment charges of ~~$18.0~~$6.3 million. ~~Current quarter asset impairment charges include $12.1 million of foreign currency translation driven asset impairments in Venezuela for which no tax benefit was recognized.~~ Results for the prior ~~year~~year's quarter include after-tax benefits from the reversal of environmental reserves and a gain on the sale of two plants of $19.9 million and $16.8 million, respectively. Additionally, first quarter 2015 results also include after-tax restructuring and asset impairment charges of $4.8 million and after-tax acquisition charges of ~~$3.9 million and~~ ~~$(0.2) million, respectively.~~$1.1 million. Base net income attributable to Sonoco (base earnings) was ~~$66.7~~$66.5 million ($0.65 per diluted share) in the ~~third~~first quarter of ~~2015~~2016 versus ~~$70.8~~$55.0 million ($~~0.69~~0.54 per diluted share) in ~~2014.~~2015.

Strong ~~performances~~year-over-year earnings improvements in each of the ~~Consumer Packaging, Display and Packaging, and Protective Solutions~~Company's segments ~~were more than offset by lower results in the Paper and Industrial Converted Products segment, resulting~~resulted in a ~~5.8% decrease~~20.5% increase in base earnings per share compared to the ~~prior year~~prior-year quarter. Overall, the current quarter benefited from a ~~favorable~~positive price/cost relationship, ~~modest~~ improvements in manufacturing productivity, lower pension and postretirement benefit costs, and gains from volume/mix, which showed improvement beyond the positive impact of ~~prior year acquisitions. However,~~additional business days. Partially offsetting these positive factors were higher ~~pension expense and~~ labor, maintenance and other operating costs, ~~a prior-year legal settlement gain and~~ the negative ~~effect~~impact of foreign currency translation due to a stronger U.S. dollar, ~~on foreign currency translation more than offset those benefits. Despite only modest volume growth compared to the prior-year quarter~~ and ~~a negative change~~an increase in the ~~mix of business, current-quarter~~effective tax rate. Current-quarter earnings reflect ~~an 84~~a 173 basis point increase in the Company's overall gross profit margin compared to the prior year's quarter, largely due to the favorable price/cost relationship and improved productivity.

~~SONOCO PRODUCTS COMPANY~~

OPERATING REVENUE

Net sales for the ~~third~~first quarter of ~~2015 decreased~~2016 increased $20 million over the ~~prior year~~prior-year period.

The components of the sales change were:


	($ in millions)			($ in millions)
Volume/mix	$	13		$	78
Selling prices	(11		)	(16		)
Acquisitions and Divestitures	64			4
Foreign currency translation and other, net	(86		)	(46		)

Total sales decrease	$	(20	)
Total sales increase				$	20

COSTS AND EXPENSES

A positive price/cost relationship (the relationship of the change in sales prices to the change in costs of materials, energy and freight), which was due to costs decreasing more than selling prices, productivity improvements and ~~productivity improvements~~lower pension expense, benefited gross margin, but ~~were~~was partially offset by higher ~~pension,~~ maintenance, labor, and other costs. ~~Acquisitions, net of divestitures, added approximately $49 million to cost of goods sold compared to the prior year quarter, which was more than offset by the~~The translation impact of a stronger ~~dollar. Gross~~dollar lowered reported cost of goods sold by approximately $36 million compared to the first quarter of 2015. The gross profit margin percentage ~~which was 18.5%~~improved to 20.0% this quarter ~~would have been 18.4% absent acquisitions,~~ compared to ~~17.6%~~18.3% in the ~~prior year~~prior-year quarter.

~~Third-quarter~~

SONOCO PRODUCTS COMPANY

First-quarter selling, general and administrative ("SG&A") costs increased ~~$19.8~~$37.5 million, or ~~17.9%~~38.8%, from the prior year ~~Excluding the impact~~reflecting last year's $32.5 million reversal of acquisitions and dispositions, legal and professional fees related to the financial misstatements at our Irapuato packaging center, and the prior year's third quarter impact of a net $5.0 million technology-related legal settlement,Fox River environmental reserves. Absent that reversal, SG&A costs would have increased ~~$0.9~~$5.0 million, or ~~0.8%~~5.2%. ~~The~~This increase was primarily due to ~~normal labor rate increases, general~~the additional days in the current year quarter, but also reflects wage inflation and ~~other expenses.~~higher management incentive costs offset by lower pension and postretirement expense and the impact of foreign currency translation.

Current quarter restructuring and restructuring-related asset impairment charges totaled ~~$19.6~~$9.2 million compared with ~~$5.9~~$(0.4) million in the same period last year. ~~The increase is largely due to foreign currency translation related impairment charges of $12.1 million on Venezuela assets with~~Charges in the ~~remainder~~current year are primarily related to the Company's ongoing organizational effectiveness efforts ~~which were announced late last year~~ and ~~other~~ plant closure costs. Charges in the prior year's first quarter were offset by a pretax gain of $7.3 million from the sale of two metal ends and closures plants. Additional information regarding restructuring and asset impairment charges is provided in Note 65 to the Company’s Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Net interest expense for the ~~third~~first quarter increased to ~~$13.7~~$13.8 million, compared with ~~$12.9~~$13.2 million during the ~~third~~first quarter of ~~2014.~~2015. The increase was due to ~~higher average~~the additional days in the current year's quarter partially offset by lower year-over-year debt ~~levels, primarily resulting from the Company's acquisition of Weidenhammer in November 2014.~~levels.

The effective tax rate on GAAP and base earnings in the ~~third~~first quarter of ~~2015~~2016 was ~~37.7%~~33.2% and ~~30.8%~~33.0%, respectively, compared with ~~29.6%~~23.7% and ~~29.9%~~32.0%, respectively, for last year's ~~third~~ quarter. The ~~effective~~main driver of the year-over-year increase in the GAAP income tax rate ~~on both GAAP and base earnings was higher than~~is the recognition in the prior ~~year’s~~year of beneficial tax attributes associated with the first quarter ~~due to a less favorable distribution~~2015 sale of ~~earnings between high~~two metal ends and low-tax jurisdictions as well as certain non-recurring tax charges occurring in the current quarter. In addition, the GAAP rate was greater than the prior year’s rate and the corresponding base rate primarily due to the foreign currency translation related impairment charges of Venezuelan assets for which no tax benefit was recorded.closures plants.

~~SONOCO PRODUCTS COMPANY~~

REPORTABLE SEGMENTS

The following table recaps net sales for the ~~third~~first quarters of ~~2015~~2016 and ~~2014~~2015 ($ in thousands):


	Three Months Ended
	September 27, 2015		September 28, 2014		% Change		Three Months Ended
			(as Restated)				April 3, 2016		March 29, 2015		% Change
Net sales:
Consumer Packaging	$	521,499	$	479,609	8.7	%	$	527,338	$	519,877	1.4	%
Display and Packaging	162,945		177,364		(8.1	)%	144,267		145,786		(1.0	)%
Paper and Industrial Converted Products	427,753		480,741		(11.0	)%	423,074		422,311		0.2	%
Protective Solutions	130,395		124,789		4.5	%	131,597		118,078		11.4	%
Consolidated	$	1,242,592	$	1,262,503	(1.6	)%	$	1,226,276	$	1,206,052	1.7	%

Consolidated operating profits, also referred to as “Income before interest and income taxes” on the Company’s Condensed Consolidated Statements of Income, are comprised of the following ($ in thousands):


	Three Months Ended
	September 27, 2015			September 28, 2014			% Change		Three Months Ended
				(as Restated)					April 3, 2016			March 29, 2015		% Change
Income before interest and income taxes:
Segment operating profit
Consumer Packaging	$	55,282		$	49,769		11.1	%	$	62,865		$	54,028	16.4	%
Display and Packaging	5,405			2,007			169.3	%	3,281			838		291.5	%
Paper and Industrial Converted Products	32,292			48,996			(34.1	)%	33,299			27,797		19.8	%
Protective Solutions	12,911			10,277			25.6	%	12,026			9,685		24.2	%
Restructuring/Asset impairment charges	(19,551		)	(5,908		)	230.9	%	(9,228		)	359		(2,670.5	)%
Other, net	(6,858		)	888					(411		)	31,377
Consolidated	$	79,481		$	106,029		(25.0	)%	$	101,832		$	124,084	(17.9	)%

SONOCO PRODUCTS COMPANY

The following table recaps restructuring/asset impairment charges attributable to each of the Company’s segments during the ~~third~~first quarters of ~~2015~~2016 and ~~2014~~2015 ($ in thousands):


	Three Months Ended					Three Months Ended
	September 27, 2015		September 28, 2014			April 3, 2016		March 29, 2015
Restructuring/Asset impairment charges:
Consumer Packaging	$	3,432	$	391		$	3,012	$	(5,023	)
Display and Packaging	850		3,429			1,382		—
Paper and Industrial Converted Products	14,722		1,914			3,032		3,402
Protective Solutions	337		201			373		96
Corporate	210		(27		)	1,429		1,166
Total	$	19,551	$	5,908		$	9,228	$	(359	)

Segment results viewed by Company management to evaluate segment performance do not include restructuring charges, asset impairment charges, acquisition-related charges, interest expense, income taxes, or certain other items, if any, the exclusion of which the Company believes improves the comparability and analysis of the underlying financial performance of the business. Accordingly, the term “segment operating profit” is defined as the segment’s portion of “Income before interest and income taxes” excluding those items. All other general corporate expenses have been allocated as operating costs to each of the Company’s reportable segments.

~~SONOCO PRODUCTS COMPANY~~

Consumer Packaging

Segment sales grew 1.4% over the prior year's quarter due to the additional business days along with acquisitions, partially offset by lower selling prices, stemming primarily from lower resin and metal costs, and the negative impact of foreign currency translation. Excluding the estimated benefit of additional business days, overall volume was relatively flat as volume improved in global composite cans and flexible packaging, but declined in rigid plastic containers.

Segment operating profit increased 16.4% over the prior year's quarter and segment operating margins improved to 11.9 percent of sales during the ~~quarter were up 8.7% due primarily to~~quarter. Overall, the ~~Weidenhammer~~segment benefited from a positive price/cost relationship, including a favorable change in LIFO inventory reserves driven by declining commodity prices, productivity improvements and ~~Graffo acquisitions and higher volumes in flexible packaging.~~lower pension costs. These positive factors were partially offset by ~~the loss of sales from two metal ends plants divested in the first quarter of 2015, lower selling prices in the plastics businesses,~~higher labor, maintenance and other operating costs, and the negative ~~effect~~impact of ~~a stronger U.S. dollar on~~ foreign currency translation.

Segment operating profit increased 11.1%, driven by the acquisitions of Weidenhammer and Graffo, a positive price/cost relationship and flexible packaging productivity improvements. These gains were partially offset by a negative change in the mix of business and higher pension, labor and other costs.

Display and Packaging

Reported sales for the quarter were down ~~8.1% year over year~~1.0% compared to last year’s quarter due primarily to the negative impact of foreign currency translation, ~~which was partially~~largely offset by the impact of additional business days. Absent the impact of days, volumes were higher ~~display and~~in our international packaging fulfillment ~~volume.~~businesses as well as our packaging center operations in Poland.

Operating profits increased ~~$3.4~~$2.4 million from the ~~prior-year~~prior year's quarter due to ~~volume~~a positive price/cost relationship and ~~mix improvements in display and fulfillment and strong~~ productivity ~~gains in packaging services, partially offset by higher labor and other costs and the impact of a stronger dollar on foreign currency translation.~~gains.

SONOCO PRODUCTS COMPANY

Paper and Industrial Converted Products

~~Segment~~Reported segment sales were ~~down 11.0% due to~~essentially flat with the prior year's quarter as volume gains, which were driven primarily by the impact of additional business days, were offset by the negative impact of foreign currency translation ~~lower global volume,~~ and ~~reduced~~lower selling prices stemming from ~~lower~~reduced recovered fiber ~~prices.~~costs. Volume/mix, excluding additional business days, showed improvement in our global tube and core operations, while in our paper operations, gains in North America's paperboard businesses were partially offset by lower corrugating medium results.

Operating ~~profits declined 34.1% year over year as~~profit improved 19.8% on solid productivity gains, a positive price/cost relationship, lower ~~global volume and unfavorable mix, general cost inflation, increased~~ pension expense and the ~~negative impact of foreign currency translation~~benefit from additional days in the quarter, which were ~~only~~ partially offset by ~~productivity improvements.~~inflation in labor and other operating expenses.

Protective Solutions

The Protective Solutions segment includes the following products: custom-engineered, paperboard-based and expanded foam protective packaging and components; and temperature-assured packaging.

Segment sales ~~were up 4.5%~~ for the quarter ~~primarily due to improved~~were up 11.4% year over year on strong volume ~~in temperature-assured packaging, molded foam automotive components and paper-based appliance packaging,~~beyond the impact of additional business days, partially offset by the negative impact of foreign currency exchange ~~translation.~~translation and lower selling prices.

Operating profits increased ~~25.6% due to~~24.2% as volume gains, ~~along with~~including the impact of additional days, and a positive price/cost ~~and manufacturing productivity improvements,~~relationship were only partially offset by ~~an unfavorable mix of business and~~ higher labor, maintenance and other operating costs.

~~SONOCO PRODUCTS COMPANY~~

~~Nine Months Ended September 27, 2015 Compared with Nine Months Ended September 28, 2014~~

~~RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES~~

The following tables reconcile the Company’s non-GAAP financial measures to their most directly comparable GAAP financial measures in the Company’s Condensed Consolidated Statements of Income for each of the periods presented.

For the nine months ended September 27, 2015
Dollars in thousands, except per share data GAAP
Restructuring/
Asset
Impairment ⁽¹⁾

Other
Adjustments ⁽²⁾
Base
Income before interest and income taxes $ 302,549
$ 29,637
$ (22,816 ) $ 309,370
Interest expense, net 40,509
—
—
40,509
Income before income taxes 262,040
29,637
(22,816 ) 268,861
Provision for income taxes 75,019
16,850
(7,214 ) 84,655
Income before equity in earnings of affiliates 187,021
12,787
(15,602 ) 184,206
Equity in earnings of affiliates, net of tax 7,291
—
—
7,291
Net income 194,312
12,787
(15,602 ) 191,497
Net (income) attributable to noncontrolling interests (239 ) (75 ) —
(314 )
Net income attributable to Sonoco $ 194,073
$ 12,712
$ (15,602 ) $ 191,183
Per diluted common share $ 1.90
$ 0.12
$ (0.15 ) $ 1.87

⁽¹⁾~~Includes disposal and income tax gains related to the sale of a portion of the Company's metal ends and closures business and asset impairments related to the devaluation of the Venezuelan Bolivar.~~

⁽²⁾ Consists primarily of a gain from the release of reserves related to the partial settlement of the Fox River environmental claims, an income tax gain from the release of a valuation allowance against tax loss carryforwards in Spain, legal and financial professional expenses associated with the Company's investigation of financial misstatements in Mexico, and acquisition-related costs.

For the nine months ended September 28, 2014
Dollars in thousands, except per share data
GAAP
(as Restated)
Restructuring/
Asset
Impairment
Other
Adjustments ⁽¹⁾

Base
(as Restated)
Income before interest and income taxes $ 288,872
$ 11,571
$ 382
$ 300,825
Interest expense, net 38,696
—
—
38,696
Income before income taxes 250,176
11,571
382
262,129
Provision for income taxes 79,322
3,342
(75 ) 82,589
Income before equity in earnings of affiliates 170,854
8,229
457
179,540
Equity in earnings of affiliates, net of tax 6,896
—
—
6,896
Net income 177,750
8,229
457
186,436
Net (income) attributable to noncontrolling interests (858 ) (26 ) 533
(351 )
Net income attributable to Sonoco $ 176,892
$ 8,203
$ 990
$ 186,085
Per diluted common share $ 1.71
$ 0.08
$ 0.01
$ 1.80

⁽¹⁾~~Consists primarily of acquisition-related costs and non-base income tax charges.~~

~~SONOCO PRODUCTS COMPANY~~

~~RESULTS OF OPERATIONS~~

~~The following discussion provides a review of results for the nine months ended September 27, 2015 versus the nine months ended September 28, 2014.~~

~~OVERVIEW~~

Net sales for the first nine months of 2015 were $3,697 million, essentially unchanged from $3,700 million in the same period last year. Higher year-over-year sales from business acquisitions, primarily Weidenhammer and Graffo, and modest volume growth were offset by lower selling prices tied to reduced material input costs, primarily recovered paper and resin, and the negative effect of foreign currency translation from the strengthening U.S. dollar.

Net income attributable to Sonoco for the first nine months of 2015 was $194.1 million, compared to $176.9 million reported for the same period of 2014. Net income for 2015 includes after-tax restructuring and other non-base items netting to a $2.9 million gain. These non-base items include after-tax gains from the net reversal of environmental reserves of $20.2 million, a gain from the sale of two metal ends plants of $16.8 million, and a $3.2 million income tax benefit resulting from the release of a valuation allowance against tax loss carryforwards in Spain. These gains were offset by after-tax charges of $17.4 million related to restructuring actions, Venezuela asset impairment charges of $12.1 million, and $7.8 million of other non-base charges consisting of costs incurred in response to the Irapuato financial misstatements and acquisition-related expenses. Results for 2014 include non-base after-tax charges of $9.2 million, $8.2 million of which were costs associated with restructuring activities. Base net income attributable to Sonoco (base earnings) in the first half of 2015 was $191.2 million ($1.87 per diluted share) versus $186.1 million ($1.80 per diluted share) in 2014.

Operating results for the first nine months of 2015 reflect solid productivity and price/cost improvements over the 2014 period. Although these improvements were more than offset by higher pension, labor and other costs and a negative foreign currency translation impact, base income before interest and taxes increased 2.8% year over year due to the impact of acquisitions. Despite only modest volume growth of approximately one percent year over year, the Company's year-to-date consolidated gross profit margin percentage improved 79 basis points due to an improved positive price/cost relationship.

~~OPERATING REVENUE~~

~~Net sales for the first nine months of 2015 decreased $(3) million over the same period last year. The components of the sales change were:~~

($ in millions)
Volume/mix $ 36
Selling prices (36 )
Acquisitions 199
Foreign currency translation and other, net (202 )

Total sales decrease $ (3 )

~~COSTS AND EXPENSES~~

Cost of sales declined year over year as a net increase from acquisitions and divestitures was more than offset by foreign currency translation and lower raw materials and energy prices. A positive price/cost relationship and productivity improvements benefited year-to-date gross margin, which increased to 18.7% from 17.9% last year, but were partially offset by higher pension, maintenance, labor, and other costs.

Selling, general and administrative costs decreased $2.8 million, or 0.8%. Excluding the impact of acquisitions, SG&A costs would have been down $24.8 million, or 6.9%. However, 2015 selling, general, and administrative costs benefited from a net release of environmental reserves of $32.9 million, primarily related to the Fox River lawsuit, see Note 14 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q. Additionally, 2015 selling, general, and administrative costs include $6.6 million in professional fees and other costs incurred as a result of the Irapuato financial misstatements.

~~SONOCO PRODUCTS COMPANY~~

Restructuring and restructuring-related asset impairment charges totaled $29.6 million in the first nine months of 2015 compared with $11.6 million last year. Additional information regarding restructuring actions and impairments is provided in Note 6 to the Company’s Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.

Net interest expense for the first nine months of 2015 increased to $40.5 million, compared with $38.7 million during the same period in 2014. The increase was due to higher average debt levels, primarily resulting from the Company's acquisition of Weidenhammer in November 2014.

The effective tax rate on GAAP and base earnings for the first nine months of 2015 was 28.6% and 31.5%, respectively, compared with a 31.7% and 31.5%, respectively, in the prior year period. The GAAP rate for the current year period was less than the prior year period due primarily to the release of a valuation allowance against tax loss carry forwards in Spain and the recognition of beneficial tax attributes associated with the sale of the two metal ends and closures plants. These favorable effects in the current year period were partially offset by the impact of the foreign currency translation related impairment charges of Venezuelan assets for which no tax benefit was recorded.

~~REPORTABLE SEGMENTS~~

~~The following table recaps net sales for the first nine months of 2015 and 2014 ($ in thousands~~):

Nine Months Ended
September 27,
2015 September 28,
2014 % Change
Net sales:
Consumer Packaging $ 1,572,490
$ 1,418,200
10.9 %
Display and Packaging 450,334
497,543
(9.5 )%
Paper and Industrial Converted Products 1,298,940
1,426,367
(8.9 )%
Protective Solutions 375,470
358,041
4.9 %
Consolidated $ 3,697,234
$ 3,700,151
(0.1 )%

~~Consolidated operating profits, also referred to as “Income before interest and income taxes” on the Company’s Condensed Consolidated Statements of Income, are comprised of the following ($ in thousands~~):

Nine Months Ended
September 27,
2015 September 28,
2014 % Change
Income before interest and income taxes:
Segment operating profit
Consumer Packaging $ 166,840
$ 140,783
18.5 %
Display and Packaging 7,278
9,549
(23.8 )%
Paper and Industrial Converted Products 99,052
125,289
(20.9 )%
Protective Solutions 36,200
25,204
43.6 %
Restructuring/Asset impairment charges (29,637 ) (11,571 ) 156.1 %
Other, net 22,816
(382 ) (6,072.8 )%
Consolidated $ 302,549
$ 288,872
4.7 %

~~SONOCO PRODUCTS COMPANY~~

~~The following table recaps restructuring/asset impairment charges attributable to each of the Company’s segments during the first nine months of 2015 and 2014 ($ in thousands~~):

Nine Months Ended
September 27,
2015 September 28,
2014
Restructuring/Asset impairment charges:
Consumer Packaging $ 4,444
$ 877
Display and Packaging 1,053
3,847
Paper and Industrial Converted Products 21,100
6,239
Protective Solutions 620
635
Corporate 2,420
(27 )
Total $ 29,637
$ 11,571

~~Consumer Packaging~~

Year-to-date segment sales were up 11% as the Weidenhammer and Graffo acquisitions along with volume increases, particularly in flexible packaging and blow-molded plastics, more than offset the negative impacts of foreign currency translation, lower selling prices in the plastics businesses, and the divestiture of two metal ends businesses in the first quarter of 2015.

Segment operating profit in the first nine months of 2015 increased 18.5% over the same period last year due largely to the Weidenhammer and Graffo acquisitions, strong manufacturing productivity, a favorable price/cost relationship, and volume increases in the Company's plastics and flexible packaging businesses. These favorable factors were partially offset by an unfavorable mix of sales in our global rigid paper containers business, the unfavorable effect of foreign currency translation, and higher pension, labor and other costs.

~~Display and Packaging~~

~~Sales in the first nine months of 2015 declined~~ ~~9.5%~~ ~~compared with 2014 as volume increases in the display and packaging businesses were more than offset by the negative impact of foreign currency translation from the strengthening U.S. dollar.~~

~~Operating profit in the first nine months of 2015 declined $2.3 million over the same period last year~~ due to the unfavorable effect of foreign currency translation, and higher pension, labor and other costs, which more than offset a positive price/cost relationship and productivity improvements. Also contributing to the decline was the previously announced closure of a contract packaging facility in the U.S. at the end of 2014 and the translation effect of the strengthening U.S. dollar, which lowered operating profits approximately 19% year over year.

~~Paper and Industrial Converted Products~~

Sales in the first nine months of 2015 were 8.9% lower than in the same period last year, primarily due to the negative impact of foreign currency translation, lower selling prices stemming from lower average market costs for old corrugated containers (OCC), and lower volumes in tubes and cores, recycling, and reels. These negative factors were partially offset by higher paper and corrugating volume, favorable changes in the mix of business, and the year-over-year impact of the Dalton Paper Tube acquisition.

Operating profits decreased 20.9% year over year as a positive price/cost relationship and productivity improvements were more than offset by lower volume, an unfavorable mix of business, the unfavorable effect of foreign currency translation, and higher pension, maintenance, labor and other costs.

~~Protective Solutions~~

The 4.9% increase in segment sales in the first nine months of 2015 was 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 from a strengthening U.S. dollar.

Operating profits in the first nine months of 2015 increased 43.6% due primarily to a favorable price/cost relationship, higher volume and manufacturing productivity. These favorable factors were partially offset by higher pension, labor and other costs.

~~SONOCO PRODUCTS COMPANY~~

OTHER ITEMS

~~Critical Accounting Policies and Estimates~~

~~Goodwill Impairment Evaluation~~

The Company completed its most recent annual goodwill impairment testing during the third quarter of 2015. For testing purposes, the Company performed an assessment of each reporting unit using either a qualitative evaluation or a quantitative test. The qualitative evaluation considered 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 considered 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. As a result of its qualitative and quantitative assessments, the Company concluded that there was no impairment of goodwill for any of its reporting units.

When the Company estimates the fair value of its reporting units, it does so using a discounted cash flow model based on projections of future years’ operating results and associated cash flows, together with comparable trading and transaction multiples. The Company’s model discounts projected future cash flows, forecasted over a ten-year period, with an estimated residual growth rate. The Company’s projections incorporate management’s best estimates of 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. Projected future cash flows are discounted to present value using a discount rate management believes is commensurate with the risks inherent in the cash flows.

The Company’s assessments, whether qualitative or quantitative, incorporate management’s expectations for the future, including forecasted growth rates and/or margin improvements. Therefore, should there be changes in the relevant facts and circumstances and/or expectations, management’s assessment 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, product expansion, improved price/cost relationship, productivity gains, fixed cost leverage, improvement in general economic conditions, increased operational capacity, and customer retention.

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. Management does not consider any of its assumptions to be either aggressive or conservative, but rather its best estimate based on available evidence at the time of the assessment. Other than in Display and Packaging, which is discussed below, there is no specific singular event or single change in circumstances management has identified that it believes could reasonably result in a change to expected future results in any of its reporting units sufficient to result in goodwill impairment. In management’s opinion, a change of such magnitude would more likely be the result of changes to some combination of the factors identified above, a general deterioration in competitive position, introduction of a superior technology, significant unexpected changes in customer preferences, an inability to pass through significant raw material cost increases, and other such items as identified in "Item 1A. Risk Factors" on pages 9-13 of the Company's 2014 Annual Report on Form 10-K.

Although no reporting units failed the testing noted above, in management’s opinion, the reporting units having the greatest risk of a significant future impairment if actual results fall short of expectations are Plastics - Blowmolding, Display and Packaging, and Paper and Industrial Converted Products - Europe. Total goodwill associated with these reporting units was approximately $116 million, $205 million and $89 million, respectively, at September 27, 2015.

Plastics - Blowmolding manufactures blow-molded plastic containers primarily for use in nonfood applications. This reporting unit is the result of the purchase of Matrix Packaging in May 2007, which was acquired to be a growth platform for the Company and to provide an avenue into the health and beauty market. In order for the unit to achieve its growth potential, the Company has continued to invest significantly in the business. As a result, current projections for this reporting unit reflect revenue growth as well as a slight improvement in operating margins due largely to expected execution improvements. Sales growth is expected to be driven by the continued return of volume that was shifted to competitors in 2013 due to production down time, new business from key nonfood customers, expansion into more food-based applications and collaboration with large-scale packaging service providers. Margins are expected to hold steady as a result of future productivity improvements and the leveraging of new sales volume to offset inflation. Should the sales growth and/or margin improvements not materialize, a goodwill impairment charge may be incurred. Based on the valuation work performed for the current year test, the estimated fair value of Plastics - Blowmolding exceeded its

~~SONOCO PRODUCTS COMPANY~~

carrying value by approximately 26%, compared with approximately 32% in the prior year. The decrease from the prior year is due to lower volume and selling price projections and the exchange rate impact of a stronger U.S. dollar.

The Display and Packaging reporting unit designs, manufactures, assembles, packs and distributes temporary, semipermanent and permanent point-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. In 2015, management found major accounting irregularities at its Irapuato, Mexico packaging center spanning back to 2011 which resulted in the restatement of prior period results. Management is working to make changes to restore the profitability of this packaging center, including renegotiating customer contract terms. Although the Company's goodwill impairment analysis assumes management will be successful in those efforts, an inability to do so, by itself, would not trigger an impairment. The goodwill analysis of this reporting unit reflects projected revenue growth based on expected price increases from such contract renegotiations and new business driven by synergies between retail packaging manufacturing and packaging services. In addition, the analysis reflects expected productivity gains will improve the bottom line of the reporting unit. A large portion of sales in this reporting unit is concentrated in one customer and management expects to retain this business. However, if a significant amount of business is lost and not replaced, or the expected Irapuato improvements and other synergies and productivity gains are not realized, it is possible that a goodwill impairment charge may be incurred. Total goodwill associated with this reporting unit was approximately $205 million at September 27, 2015. Based on the valuation work performed for the current year's test, the estimated fair value of Display and Packaging exceeded its carrying value by approximately 45%.

Paper and Industrial Converted Products - Europe manufactures paperboard tubes and cores, fiber-based construction tubes and forms and recycled paperboard and linerboard. Over the past few years, persistently high unemployment and a slowdown in China and other developing countries, geo-political developments/conflicts in Eastern Europe and the Middle East, and continuing economic turmoil in Greece has negatively affected European demand in both the continental and export markets. Although the operations of this reporting unit have been under pressure as a result, management has been able to hold local currency financial performance relatively steady. In addition to its ongoing efforts to optimize the plant footprint and cost structure within Europe, management believes the Company should be able to grow at or above the Eurozone’s projected GPD growth rates and continue to mitigate the impact of these factors. However, if economic conditions were to continue to deteriorate in a sustained fashion and/or management is unable to fully mitigate the impacts, it is possible that a goodwill impairment charge may be incurred. Based on the valuation work performed for the current year test, the estimated fair value of Paper and Industrial Converted Products - Europe exceeded its carrying value by approximately 31%.

In its 2015 analysis, projected future cash flows were discounted at 9.9%, 10.2% and 8.1% for Plastics - Blowmolding, Display and Packaging and Paper and Industrial Converted Products - Europe, respectively. Holding other valuation assumptions constant, Plastics - Blowmolding projected operating profits across all future periods would have to be reduced approximately 18%, or the discount rate increased to 12.0%, in order for the estimated fair value to fall below the reporting unit’s carrying value. The corresponding percentages for Display and Packaging are 29% or 14.4% and for Paper and Industrial Converted Products - Europe are 19% and 10.1%.

~~Other~~

On October 23, 2015, ~~subsequent to the end of the quarter,~~ the Company announced its intention to offer for sale its paper mill in Schweighouse-sur-Moder, France. The two paper machines at this facility are capable of producing approximately 95,000 metric tons of recycled paperboard annually and generate approximately $34 million of annual sales. During the first quarter of 2016, the Company received a non-binding proposal from a prospective buyer for the purchase of this business. The ~~Company’s net investment~~proposal is subject to the results of an environmental review and other due diligence. If a sale is consummated under the current terms of this proposal, the Company estimates it would recognize a loss of approximately $12 million. Should the sale not occur, the Company expects to pursue the closure of this facility in ~~this operation is approximately $9.8~~which case the Company estimates it would incur additional severance, liquidation and other closing-related costs in excess of $15 million.

Financial Position, Liquidity and Capital Resources

Cash flows provided by operations totaled ~~$318.1~~$66.4 million in the first ~~nine~~three months of ~~2015~~2016 compared with ~~$267.4~~$60.3 million during the same period last year, an increase of ~~$50.7~~$6.1 million. The year-over-year ~~increase~~decrease in net income of ~~$16.6~~$25.5 million ~~included~~was largely due to a $32.5 million ~~pre-tax~~pretax, $19.9 million after tax, non-cash benefit ~~$19.9 million after-tax,~~ from the reversal of Fox River environmental ~~reserves. In addition, net income~~reserves in ~~2015~~the first quarter of 2015. Last year's first quarter also included a ~~pre-tax gain of $7.2~~$9.2 million ~~from~~net tax benefit related to the sale of two metal ends and closures plants for which there was no cash impact, and a ~~$9.2~~pretax gain of $7.3 million ~~net tax benefit related to~~on the ~~sale.~~sale of the metal ends and closures plants. Non-cash depreciation and amortization charges were ~~$12.5~~$1.7 million higher year over ~~year due primarily to the October 2014 acquisition of Weidenhammer. Lower~~year. Higher year-over-year contributions to the Company's pension and postretirement plans, combined with ~~higher~~lower non-cash pension and

~~SONOCO PRODUCTS COMPANY~~

postretirement plan expense, ~~increased~~decreased operating cash flow by a total of ~~$42.1~~$17.4 million in the first ~~nine~~three months of ~~2015~~2016 from the same period last year. Trade accounts receivable increased in both the current and prior year ~~nine-month~~three-month periods, reflecting higher levels of business activity from their respective prior year ends; however, the magnitude of the increase was not as great in ~~2015,~~2016, resulting in the year-over-year use of cash being ~~$29.2~~$7.3 million lower in ~~2015.~~2016. Changes in inventories used ~~$12.0~~$11.2 million of cash in the first ~~nine~~three months of ~~2015~~2016 compared to ~~providing $1.0~~using $6.1 million in the first ~~nine~~three months of ~~2014.~~ 2015. Inventory levels typically increase during the first ~~nine~~three months of the year following a normal seasonal slowdown at year end. ~~However, in 2014 inventory~~Inventory levels ~~were virtually flat in the period because there had been a build up of certain raw materials late in 2013 in anticipation of price increases taking effect~~ at the ~~beginning~~end of ~~2014. Because~~2015 were lower than at the end of ~~this, September~~ 2014 as a result of a more significant seasonal slowdown in 2015. As such, the seasonal increase in inventories to normal levels ~~were flat with 2013 year-end levels.~~ during the first three months resulted in an additional use of cash of $5.2 million during the first three months of 2016 compared to the same period in 2015.

SONOCO PRODUCTS COMPANY

Trade accounts payable ~~provided $26.6~~used $17.2 million of cash in the first ~~nine~~three months of ~~2015~~2016 compared with ~~$28.4~~providing $7.1 million in the first ~~nine~~three months of ~~2014. The year-over-year change is virtually flat as~~2015. Run rate increases were much less significant in 2016 from 2015 compared to 2015 from 2014, ~~saw atypical accounts payable growth in spite~~especially during the final month of ~~stable inventory levels due to supplier terms extensions and a shift in~~each quarter which has the ~~make-up of inventory to more raw materials in 2014 which more directly correlate with~~most direct influence on ending accounts payable balances. Accrued expenses ~~provided $45.3~~used $6.2 million of cash in the first ~~nine~~three months of ~~2015~~2016 compared with ~~$24.7~~$4.0 million in the same period last year. The ~~increase~~increased consumption of ~~$20.6~~$2.1 million is primarily due to ~~an increase in accrued expenses in 2015 for legal and professional fees related to~~ the ~~Irapuato Packaging Services investigation and resulting restatement of financial statements, increases in restructuring reserves, and higher accruals for value added taxes due to~~ timing of ~~payments.~~payments for payroll-related taxes and withholdings. Changes in income tax related items ~~reduced the~~increased year-over-year ~~increase in~~ operating cash flows by ~~$8.7~~$13.1 million, driven in large part by ~~higher~~lower tax payments made in the first ~~nine~~three months of 2016 compared to the 2015 period. Changes in other assets and liabilities provided $17.0 million of additional cash in 2016 compared to 2015, driven by receipts of cash related to rebates, value added taxes, and customer reimbursable costs in 2016, which were higher than 2015. Additionally, in 2015 increases to other receivables related to insurance gains were recorded in the first three months of 2015 ~~compared to the 2014~~that did not provide cash in that period. In addition, operating cash flows in the prior year were reduced by a $14.7 million payment made in April 2014 to fund the settlement of certain environmental claims and litigation associated with Fox River.

Cash used in investing activities was ~~$129.8~~$53.0 million in the first ~~nine~~three months of ~~2015,~~2016, compared with ~~$144.3~~$13.1 million in the same period last year. The ~~decrease~~$40.0 million increase in the net use of cash is ~~primarily~~ due in part to ~~higher~~a $14.7 million increase in year-over-year spending for property, plant, and equipment due largely to increased capital investment in the Company's rigid paper operations in Europe. Proceeds from the sale of assets were $28.1 million lower year over year as the last year's first quarter included $29.1 million of cash proceeds ~~in the current year~~ from the ~~February 2015~~ sale of two metal ends and closures plants for which the Company received cash proceeds of approximately $29.1 million. Partially offsetting the higher cash proceeds was a $6.5 million year-over-year increase in acquisition spending and slightly higher year-over-year capital spending.plants. The change in "investment in affiliates and other, net" is primarily due to the purchase of long-term investment properties in Venezuela in 2015 using locally available cash. Additional capital spending of approximately ~~$60~~$150 million is expected during the remainder of ~~2015.~~2016.

Cash used by financing activities totaled ~~$156.3~~$40.0 million in the first ~~nine~~three months of ~~2015,~~2016, compared with ~~$104.6~~$25.2 million in the same period last year, an increase of ~~$51.6~~$14.8 million. This change was almost exclusively due to the Company's use of $15.3 million to repurchase approximately 354 thousand shares of outstanding stock under a $100 million repurchase program announced in December 2015. The Company expects to spend an additional $85 million to repurchase its common shares on the open market during the remaining nine months of 2016. Outstanding debt was ~~$1.20~~$1.13 billion at ~~September 27, 2015~~April 3, 2016 compared with ~~$1.02~~$1.13 billion at ~~September 28, 2014.~~December 31, 2015. These balances reflect net ~~repayments~~borrowings of ~~$48.1~~$2.8 million during the first ~~nine~~three months of ~~2015,~~2016, compared with net borrowings of ~~$36.3~~$1.3 million during the same period last year. The Company paid cash dividends of ~~$102.7~~$35.4 million during the first ~~nine~~three months of ~~2015,~~2016, an ~~increase~~increased use of ~~$6.3~~cash of $3.1 million over the same period last ~~year reflecting increases in the regular quarterly dividend approved by the Board of Directors in April 2014 and 2015.~~year. Net proceeds from the exercise of stock awards were ~~$1.3~~$0.6 million in the ~~nine~~three months ended ~~September 27, 2015,~~April 3, 2016, compared with ~~$2.5~~$1.2 million in the same period last year, a decrease of ~~$1.2~~$0.6 million. ~~Cash used to repurchase shares was $41.0 million lower year over year due primarily to the completion of an announced stock buyback in 2014.~~

The Company operates a $350 million commercial paper program, supported by a bank credit facility of the same amount. The revolving bank credit facility is committed through October 2019. There was no commercial paper outstanding at ~~September 27, 2015~~April 3, 2016 or December 31, ~~2014.~~2015. The Company has $75.3 million of outstanding 5.625% debentures due June 15, 2016. These debentures ~~which are included in "Notes payable and current portion of long-term debt" on the Company's Condensed Consolidated Balance Sheet at September 27, 2015,~~ are expected to be settled atupon maturity with a combination of available cash ~~on hand or refinanced with other~~and short-term borrowings.

Cash and cash equivalents totaled ~~$193.4~~$152.3 million and ~~$161.2~~$182.4 million at ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014,~~2015, respectively. Of these totals, ~~$77.9~~$77.0 million and ~~$118.5~~$96.3 million, respectively, were held outside of the United States by the Company’s 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 current law, cash repatriated to the United States is subject to federal income taxes, less applicable foreign tax credits. As the Company has 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 balances to be indefinitely invested outside the United States and ~~accordingly,~~we currently have no plans to repatriate cash balances. Accordingly, as of April 3, 2016, the Company is not ~~provided~~providing for U.S. ~~federal~~ tax liability on these amounts for financial reporting purposes. ~~The Company currently has no plans to repatriate any of the cash balances held outside the United States.~~ However, if any such balances were to be repatriated, additional U.S. federal income tax payments could result. Computation of the potential deferred tax liability associated with unremitted earnings deemed to be indefinitely reinvested is not practicable. ~~The~~

~~SONOCO PRODUCTS COMPANY~~

~~Company utilizes a variety of tax planning and financing strategies to ensure that our worldwide cash is available in the locations where it is needed. In addition, the~~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 subsidiaries favorable interest terms on both. During the ~~nine~~three months ended ~~September 27, 2015,~~April 3, 2016, the Company recognized a net ~~increase~~decrease in cash and cash equivalents of ~~$0.2~~$3.5 million due to exchange rates as the ~~favorable~~unfavorable impact of the ~~strengthening~~weakening U.S. dollar

SONOCO PRODUCTS COMPANY

on euro-denominated borrowings under this pooling arrangement was ~~virtually~~only partially offset by the ~~unfavorable~~favorable impact of the ~~strengthening~~weakening U.S. dollar on other foreign-denominated cash balances, most notably the Brazilian real, the Canadian dollar, ~~the euro, the Mexican peso,~~ and the ~~Venezuelan bolivar.~~euro.

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 covenant currently requires the Company to maintain a minimum level of interest coverage, and a minimum level of net worth, as defined in the agreements. As of ~~September 27, 2015,~~April 3, 2016, the Company’s interest coverage and net worth were substantially above the minimum levels required under these covenants.

The Company anticipates making additional contributions to its pension and postretirement plans of approximately $6$22 million during the remainder of ~~2015,~~2016, which would result in total ~~2015~~2016 contributions of approximately ~~$36~~$54 million. Future funding requirements beyond ~~2015~~the current year will vary depending largely on actual investment returns, future actuarial assumptions, and legislative actions.

Fair Value Measurements, Foreign Exchange Exposure and Risk Management

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

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

In January 2003, the Venezuelan government suspended the free exchange of bolivars (BsF) for foreign currency. Since that time, the Company has consistently used the Venezuela central bank official rate to report results of its Venezuela operations. The official rate has been devalued from 1.6 BsF/US$ in January 2003 to 6.3 BsF/US$ presentlycurrency and, ~~access to U.S dollars at the official rate is extremely limited. Since~~since January 1, 2010, the Company has considered Venezuela to be a hyperinflationary economy and has accounted for its operations accordingly.

~~In addition~~ Prior to the official rate, the Venezuelan government now supports two alternative foreign exchange mechanisms. However, due to program limitations preventing the Company's participation and/or a lack of transparency or consistent availability,July 1, 2015, the Company ~~had continued to use the~~used Venezuela's official exchange rate to report the results of its operations in Venezuela. ~~However, during the third quarter, as a result of recent significant inflationary increases and to avoid distortion of the consolidated results from translation of its Venezuelan operations,~~Effective July 1, 2015, the Company ~~concluded that it was an appropriate time to begin~~began translating its Venezuelan operations using an alternative exchange rate. As a result, ~~third quarter~~first-quarter 2016 Venezuela operating results and all monetary assets and liabilities in Venezuela as of April 3, 2016 and December 31, 2015 are reflected in the consolidated financial statements using SIMADI-based rates; the SIMADI rate at the end of ~~September~~March 2016 was ~~198~~270 bolivars to the dollar compared to the official rate of 6.3 to ~~1 that had been used previously. This resulted in a foreign exchange remeasurement loss on net monetary assets. In addition,~~1. At April 3, 2016, the ~~use~~carrying value of the ~~SIMADI rate resulted~~Company's net investment in the need to evaluate, and ultimately record impairment charges against, inventories and certain long-term nonmonetary assets as the US dollar value of projected future cash flows from these assets was no longer sufficient to recover their US dollar carrying values. The total impact on current quarter results of the impairment charges together with the remeasurement loss was $12.1 million ~~on both a before and after-tax basis. The Company's remaining exposure in~~its Venezuela operations is approximately $2.5 million.

~~SONOCO PRODUCTS COMPANY~~

At ~~September 27, 2015,~~April 3, 2016, the Company had commodity contracts outstanding to fix the cost of a portion of anticipated raw materials and natural gas purchases. The total net fair market value of these instruments was an unfavorable position of ~~$(4.1)~~$(3.8) million at ~~September 27, 2015,~~April 3, 2016, and an unfavorable position of ~~$(6.1)~~$(3.6) million at December 31, ~~2014.~~2015. Natural gas, aluminum, and OCC hedge contracts covering an equivalent of ~~5.9~~4.9 MMBTUs, ~~1,224~~3,340 metric tons, and ~~660~~1,980 short tons, respectively, were outstanding at ~~September 27, 2015.~~April 3, 2016. Additionally, the Company had various currency contracts outstanding to fix the exchange rate on certain anticipated foreign currency cash flows. The total market value of these instruments was a net unfavorable position of ~~$(3.2)~~$(1.1) million at ~~September 27, 2015,~~April 3, 2016, compared with a net unfavorable position of ~~$(3.5)~~$(4.6) million at December 31, ~~2014.~~2015. These contracts qualify as cash flow hedges and mature within twelve months of their respective reporting dates.

In addition, at ~~September 27, 2015,~~April 3, 2016, the Company had various currency contracts outstanding to fix the exchange rate on certain foreign currency assets and liabilities. Although placed as an economic hedge, the Company does not apply hedge accounting to these contracts. The fair value of these currency contracts was a net unfavorable position of ~~$(2.5)~~$(0.8) million at ~~September 27, 2015~~April 3, 2016 and ~~$(1.1)~~$(2.2) million at December 31, ~~2014.~~2015.

At ~~September 27, 2015,~~April 3, 2016, the U.S. dollar had ~~strengthened~~weakened against most of the functional currencies of the Company's foreign operations compared to December 31, ~~2014,~~2015, resulting in a translation ~~loss~~gain of ~~$114.8~~$30.8 million being recorded in accumulated other comprehensive ~~income~~loss during the ~~nine~~three months ended ~~September 27, 2015.~~April 3, 2016.

SONOCO PRODUCTS COMPANY

Restructuring and Impairment

Information regarding restructuring charges and restructuring-related asset impairment charges is provided in Note 65 to the Company’s Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.

New Accounting Pronouncements

Information regarding new accounting pronouncements is provided in Note 32 to the Company’s Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Form 10-Q.



Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

Information about the Company’s exposure to market risk is discussed under Part I, Item 2 in this report and was disclosed in its Annual Report on Form 10-K for the year ended December 31, ~~2014,~~2015, which was filed with the Securities and Exchange Commission on ~~March 2, 2015.~~February 29, 2016. There have been no other material quantitative or qualitative changes in market risk exposure since the date of that filing.



Item 4.	Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision, and with the participation of our management, including our Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), we conducted an evaluation pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, (the "Exchange Act") of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, ~~the~~our CEO and CFO concluded that, due to the material ~~weaknesses~~weakness in internal control over financial reporting described in Part II, Item 9A of the ~~2014~~2015 Form ~~10-K/A,~~10-K, filed on ~~August 26, 2015,~~February 29, 2016, the Company's disclosure controls and procedures were not effective as of ~~September 27, 2015~~April 3, 2016, to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. For this purpose, disclosure controls and procedures include controls and procedures designed to ensure that information that is required to be disclosed under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Notwithstanding ~~the~~this material ~~weaknesses identified,~~weakness, each of the Company's CEO and CFO has certified that, based on his knowledge, the financial statements, and other financial information included in this report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report.

~~SONOCO PRODUCTS COMPANY~~

Changes in Internal Control Over Financial Reporting

The Company is continuously seeking to improve the efficiency and effectiveness of its operations and of its internal ~~controls. This~~controls, which routinely results in refinements to processes throughout the Company. However, there have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting other than as described in the following paragraph.

Remediation

~~During the third quarter of 2015, the Company began implementing each of the items set forth in the remediation plan~~As previously described in Part II, Item 9A of the ~~2014~~2015 Form ~~10-K/A,~~10-K, filed on ~~August 26, 2015,~~February 29, 2016, the Company has implemented a redesigned division-level balance sheet review process for its domestic operations to address the weakness referred to above. We are in the process of testing the newly implemented process and related procedures. The material weakness cannot be considered remediated until the control has operated for a sufficient period of time and until management has concluded, through testing, that the control is operating effectively. We expect to complete our testing of the control and remediate the material ~~weaknesses referenced above, and will continue to evaluate the remediation and plans to implement additional measures in the future.~~weakness during fiscal 2016.

SONOCO PRODUCTS COMPANY

PART II. OTHER INFORMATION



Item 1.	Legal Proceedings.

Information with respect to legal proceedings and other exposures appears in Part I - Item 3 - “Legal Proceedings” and Part II - Item 8 - “Financial Statements and Supplementary Data” (Note 1514 - “Commitments and Contingencies”) in the Company’s amended Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2014,~~2015, and in Part I - Item 1 - “Financial Statements” (Note 1413 - “Commitments and Contingencies”) of this report.

Environmental Matters

The Company has been named as a potentially responsible party (PRP) at several environmentally contaminated sites not owned by the Company. All of the sites are also the responsibility of other parties. The Company's liability, if any, is shared with such other parties, but the Company's share has not been finally determined in most cases. In some cases, the Company has cost-sharing arrangements with other PRPs with respect to a particular site. Such agreements relate to the sharing of legal defense costs or cleanup costs, or both. The Company has assumed, for purposes of estimating amounts to be accrued, that the other parties to such cost-sharing agreements will perform as agreed. It appears that final resolution of some of the sites is years away, and actual costs to be incurred for these environmental matters in future periods is likely to vary from current estimates because of the inherent uncertainties in evaluating environmental exposures. Accordingly, the ultimate cost to the Company with respect to such sites, beyond what has been accrued at ~~September 27, 2015,~~April 3, 2016, cannot be determined. As of ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014,~~2015, the Company had accrued ~~$25.6~~$24.8 million and ~~$59.3~~$25.2 million, respectively, related to environmental contingencies. The Company periodically reevaluates the assumptions used in determining the appropriate reserves for environmental matters as additional information becomes available and, when warranted, makes appropriate adjustments.

Fox River Settlement and Remaining Claim

In March 2014, the Company’s wholly owned subsidiary, U. S. Paper Mills Corp. (U.S. Mills) reached a conditional agreement with the U. S. Environmental Protection Agency (EPA) and the Wisconsin Department of Natural Resources (WDNR) to settle claims made by those agencies against U. S. Mills regarding the environmental cleanup of the lower Fox River in Wisconsin and related natural resource damages. U.S. Mills’ portion of the settlement was $14.7 million and was paid in April 2014. The settlement was subject to approval by the United States District Court for the Eastern District of Wisconsin, (District Court). The District Court approved the settlement on February 6, 2015 and the time for appeal of the court’s order expired on April 7, 2015, with no appeal having been taken. The settlement protects U.S. Mills from claims by other parties relating to natural resource damages and the cleanup of the lower Fox River, except claims pursuant to Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).

The finalization of the settlement leaves intact a claim by Appvion, Inc., under Section 107 of CERCLA against eight defendants, including U.S. Mills, to recover response costs allegedly incurred by Appvion consistent with the national contingency plan for responding to release or threatened release of hazardous substances into the lower Fox River. Appvion’s claim is made in Civil Action No. 8-CV-16-WCG pending in the District Court. The claim is asserted for approximately $200 million. Although the Company believes that the maximum amount for which the defendants could be liable is substantially less, the court has not yet ruled on the issue. The case is presently set for trial in ~~June 2016.~~2017. U.S. Mills plans to continue to defend its interests in the Appvion lawsuit vigorously. The Company also believes that all of its exposure to any liability for the Fox River is contained within its wholly owned subsidiary, U.S. Mills.

~~As a result of~~At December 31, 2015, the ~~settlement becoming final, in the first quarter of 2015 U.S. Mills reversed approximately $32.5~~Company had reserves totaling $3.9 million ~~of the reserves it had previously established for the related claims, leaving $5.0 million reserved~~ for the Section 107 claim that remains in litigation. Through ~~September 27, 2015,~~April 3, 2016, approximately ~~$0.6~~$0.3 million has been spent on legal fees related to ~~the Section 107~~this claim, leaving a total of ~~$4.4~~$3.6 million reserved as of ~~September 27, 2015.~~April 3, 2016.

Village of Rockton ~~Illinois~~

~~SONOCO PRODUCTS COMPANY~~

set aside for that purpose. The actions relate to a paper plant in the Village closed by the Company in 2008 that the Company is in the process of remediating through the Illinois Environmental Protection Agency's "brownfields" program. The Company has removed the casesno impact to the United States District Court for the Northern District of Illinois (Civil Action No. 14-cv-50228) and plans to vigorously defend its interests while continuing to participate in the "brownfields" program.Company’s financial statements.

Other legal matters

Additional information regarding legal proceedings is provided in Note 1413 to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

SONOCO PRODUCTS COMPANY



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

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
6/29/15 - 8/02/15 10
$ 42.93
—
2,867,500
8/03/15 - 8/30/15 —
$ —
—
2,867,500
8/31/15 - 9/27/15 93
$ 40.00
—
2,867,500
Total 103
$ 40.28
—
2,867,500



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
1/01/16 - 2/07/16	3,197	$	38.89	—	2,867,500
2/08/16 - 3/06/16	382,724	$	42.55	305,824	4,694,176
3/07/16 - 4/03/16	54,964	$	45.85	47,898	4,646,278
Total	440,885	$	42.94	353,722	4,646,278



1	A total of ~~103~~87,163 common shares were repurchased in the ~~third~~first quarter of ~~2015~~2016 related to shares withheld to satisfy employee tax withholding obligations in association with certain share-based compensation awards. These shares were not repurchased as part of a publicly announced plan or program.



2	On April 19, 2006, the Company’s Board of Directors authorized the repurchase of up to 5,000,000 shares of the Company’s common stock. This authorization rescinded all previous existing authorizations and does not have a specific expiration date. A total of 2,132,500 shares have been repurchased under this authorization - 2,000,000 in 2014 and 132,500 in 2013. No shares have been repurchased in 2015. Accordingly, at September 27,At December 31, 2015, a total of 2,867,500 shares remained available for repurchase under an authorization approved by the Company’s Board of Directors (the Board) on April 20, 2011. On February 10, 2016, the Board restored the original share repurchase authorization to 5,000,000 shares. A total of 353,722 shares were repurchased under this authorization during the first quarter of 2016; accordingly, a total of 4,646,278 shares remain available for repurchase ~~under this authorization.~~at April 3, 2016.



Item 6.	Exhibits.



3-2.	By-Laws, as amended through February 10, 2016

15.	Letter re: unaudited interim financial information

31.	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(a)

32.	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(b)

101.	The following materials from Sonoco Products Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 27, 2015,~~April 3, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014,~~2015, (ii) Condensed Consolidated Statements of Income for the three ~~and nine~~ months ended ~~September 27,~~April 3, 2016 and March 29, 2015, ~~and September 28, 2014,~~ (iii) Condensed Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 27,~~April 3, 2016 and March 29, 2015, ~~and September 28, 2014,~~ (iv) Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 27,~~April 3, 2016 and March 29, 2015, ~~and September 28, 2014,~~ and (v) Notes to Condensed Consolidated Financial Statements.

SONOCO PRODUCTS COMPANY

SIGNATURE

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



	SONOCO PRODUCTS COMPANY
	(Registrant)

Date: ~~October 28, 2015~~May 6, 2016	By:	/s/ Barry L. Saunders
	Barry L. Saunders
	Senior Vice President and Chief Financial Officer
	(principal financial officer and principal accounting officer)

SONOCO PRODUCTS COMPANY

EXHIBIT INDEX



Exhibit Number			Description
3-2			By-Laws, as amended through February 10, 2016

15			Letter re: unaudited interim financial information

31			Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(a)

32			Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 17 C.F.R. 240.13a-14(b)

101			The following materials from Sonoco Products Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 27, 2015,~~April 3, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at ~~September 27, 2015~~April 3, 2016 and December 31, ~~2014~~2015, (ii) Condensed Consolidated Statements of Income for the three ~~and nine~~ months ended ~~September 27,~~April 3, 2016 and March 29, 2015, ~~and September 28, 2014,~~ (iii) Condensed Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 27,~~April 3, 2016 and March 29, 2015, ~~and September 28, 2014,~~ (iv) Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 27,~~April 3, 2016 and March 29, 2015, ~~and September 28, 2014,~~ and (v) Notes to Condensed Consolidated Financial Statements.

5437



CONDENSED CONSOLIDATED STATEMENT OF INCOME
	Three Months Ended
	September 28, 2014 as Previously Reported			Effect of Restatement			September 28, 2014 as Restated
Net sales	$	1,263,574		$	(1,071	)	$	1,262,503
Cost of sales	1,035,910			4,149			1,040,059
Gross profit	227,664			(5,220		)	222,444
Selling, general and administrative expenses	110,507			—			110,507
Restructuring/Asset impairment charges	5,908			—			5,908
Income before interest and income taxes	111,249			(5,220		)	106,029
Interest expense	13,620			—			13,620
Interest income	702			—			702
Income before income taxes	98,331			(5,220		)	93,111
Provision for income taxes	28,891			(1,352		)	27,539
Income before equity in earnings of affiliates	69,440			(3,868		)	65,572
Equity in earnings of affiliates, net of tax	2,294			—			2,294
Net income	$	71,734		$	(3,868	)	$	67,866
Net (income) attributable to noncontrolling interests	(810		)	—			(810		)
Net income attributable to Sonoco	$	70,924		$	(3,868	)	$	67,056
Weighted average common shares outstanding:
Basic	102,128			—			102,128
Diluted	103,087			—			103,087
Per common share:
Net income attributable to Sonoco:
Basic	$	0.69		$	(0.03	)	$	0.66
Diluted	$	0.69		$	(0.04	)	$	0.65
Cash dividends	$	0.32		$	—		$	0.32



CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	Nine Months Ended
	September 28, 2014 as Previously Reported			Effect of Restatement			September 28, 2014 as Restated
Net income	$	185,568		$	(7,818	)	$	177,750
Other comprehensive income/(loss):
Foreign currency translation adjustments	(46,854		)	311			(46,543		)
Changes in defined benefit plans, net of tax	387			11,516			11,903
Changes in derivative financial instruments, net of tax	80			—			80
Other comprehensive income/(loss)	(46,387		)	11,827			(34,560		)
Comprehensive income	139,181			4,009			143,190
Net (income) attributable to noncontrolling interests	(858		)	—			(858		)
Other comprehensive loss attributable to noncontrolling interests	115			—			115
Comprehensive income attributable to Sonoco	$	138,438		$	4,009		$	142,447



	September 27, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, net of current portion	$	1,073,043	$	1,153,067	$	1,200,885	$	1,322,795



	For the three months ended September 28, 2014
Dollars in thousands, except per share data	GAAP (as Restated)			Restructuring/ Asset Impairment			Other Adjustments ⁽¹⁾			Base (as Restated)
Income before interest and income taxes	$	106,029		$	5,908		$	(888	)	$	111,049
Interest expense, net	12,918			—			—			12,918
Income before income taxes	93,111			5,908			(888		)	98,131
Provision for income taxes	27,539			1,954			(129		)	29,364
Income before equity in earnings of affiliates	65,572			3,954			(759		)	68,767
Equity in earnings of affiliates, net of tax	2,294			—			—			2,294
Net income	67,866			3,954			(759		)	71,061
Net (income) attributable to noncontrolling interests	(810		)	(11		)	533			(288		)
Net income attributable to Sonoco	$	67,056		$	3,943		$	(226	)	$	70,773
Per diluted common share	$	0.65		$	0.04		$	0.00		$	0.69

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨(do not check if a smaller reporting company)

Smaller reporting company