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

or

¨ 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.

Large accelerated filer	ý	Accelerated filer	¨
Non-accelerated filer	¨(do not check if a smaller reporting company)	Smaller reporting company	¨

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:

Common stock, no par value: 100,938,184

SONOCO PRODUCTS COMPANY

INDEX

PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements:	3
	Condensed Consolidated Balance Sheets - September 27, 2015 (unaudited) and December 31, 2014 (unaudited)	3
	Condensed Consolidated Statements of Income – Three and Nine Months Ended September 27, 2015 (unaudited) and September 28, 2014 (Restated)(unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 27, 2015 (unaudited) and September 28, 2014 (Restated)(unaudited)	5
	Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 27, 2015 (unaudited) and September 28, 2014 (Restated)(unaudited)	6
	Notes to Condensed Consolidated Financial Statements	7
	Report of Independent Registered Public Accounting Firm	32
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	48
Item 4.	Controls and Procedures.	48
PART II. OTHER INFORMATION		50
Item 1.	Legal Proceedings.	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	52
Item 6.	Exhibits.	52

2

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*
Assets
Current Assets
Cash and cash equivalents	$	193,423		$	161,168
Trade accounts receivable, net of allowances	688,476			653,737
Other receivables	38,063			38,580
Inventories:
Finished and in process	145,835			151,150
Materials and supplies	250,974			269,126
Prepaid expenses	53,920			61,071
Deferred income taxes	32,481			38,957
	1,403,172			1,373,789
Property, Plant and Equipment, Net	1,102,472			1,148,607
Goodwill	1,145,919			1,177,962
Other Intangible Assets, Net	256,143			280,935
Long-term Deferred Income Taxes	44,594			45,442
Other Assets	161,336			167,176
Total Assets	$	4,113,636		$	4,193,911
Liabilities and Equity
Current Liabilities
Payable to suppliers	$	510,173		$	517,228
Accrued expenses and other	324,401			334,086
Notes payable and current portion of long-term debt	129,022			52,280
Accrued taxes	11,117			8,599
	974,713			912,193
Long-term Debt, Net of Current Portion	1,073,043			1,200,885
Pension and Other Postretirement Benefits	438,724			444,231
Deferred Income Taxes	89,813			91,157
Other Liabilities	38,057			41,598
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
Capital in excess of stated value	399,736			396,980
Accumulated other comprehensive loss	(710,248		)	(608,851		)
Retained earnings	1,783,384			1,692,891
Total Sonoco Shareholders’ Equity	1,480,047			1,488,195
Noncontrolling Interests	19,239			15,652
Total Equity	1,499,286			1,503,847
Total Liabilities and Equity	$	4,113,636		$	4,193,911

* 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

3

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
				(as Restated)						(as Restated)
Net sales	$	1,242,592		$	1,262,503		$	3,697,234		$	3,700,151
Cost of sales	1,013,219			1,040,059			3,007,155			3,038,996
Gross profit	229,373			222,444			690,079			661,155
Selling, general and administrative expenses	130,341			110,507			357,893			360,712
Restructuring/Asset impairment charges	19,551			5,908			29,637			11,571
Income before interest and income taxes	79,481			106,029			302,549			288,872
Interest expense	14,340			13,620			42,352			40,574
Interest income	653			702			1,843			1,878
Income before income taxes	65,794			93,111			262,040			250,176
Provision for income taxes	24,775			27,539			75,019			79,322
Income before equity in earnings of affiliates	41,019			65,572			187,021			170,854
Equity in earnings of affiliates, net of tax	2,976			2,294			7,291			6,896
Net income	$	43,995		$	67,866		$	194,312		$	177,750
Net (income) attributable to noncontrolling interests	(81		)	(810		)	(239		)	(858		)
Net income attributable to Sonoco	$	43,914		$	67,056		$	194,073		$	176,892
Weighted average common shares outstanding:
Basic	101,548			102,128			101,454			102,451
Diluted	102,405			103,087			102,387			103,425
Per common share:
Net income attributable to Sonoco:
Basic	$	0.43		$	0.66		$	1.91		$	1.73
Diluted	$	0.43		$	0.65		$	1.90		$	1.71
Cash dividends	$	0.35		$	0.32		$	1.02		$	0.95

See accompanying Notes to Condensed Consolidated Financial Statements

4

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
				(as Restated)						(as Restated)
Net income	$	43,995		$	67,866		$	194,312		$	177,750
Other comprehensive income/(loss):
Foreign currency translation adjustments	(55,520		)	(47,645		)	(114,766		)	(46,543		)
Changes in defined benefit plans, net of tax	6,767			4,386			11,915			11,903
Changes in derivative financial instruments, net of tax	210			(1,229		)	1,454			80
Other comprehensive income/(loss)	(48,543		)	(44,488		)	(101,397		)	(34,560		)
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

See accompanying Notes to Condensed Consolidated Financial Statements

5

SONOCO PRODUCTS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Dollars in thousands)

	Nine Months Ended
	September 27, 2015			September 28, 2014
				(as Restated)
Cash Flows from Operating Activities:
Net income	$	194,312		$	177,750
Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairment	14,773			4,139
Depreciation, depletion and amortization	157,216			144,728
Gain on reversal of Fox River environmental reserves	(32,543		)	—
Share-based compensation expense	4,783			11,789
Equity in earnings of affiliates	(7,291		)	(6,896		)
Cash dividends from affiliated companies	5,480			5,494
Net gain on disposition of assets	(6,473		)	(1,173		)
Pension and postretirement plan expense	42,844			29,780
Pension and postretirement plan contributions	(29,416		)	(58,421		)
Tax effect of share-based compensation exercises	3,515			2,341
Excess tax benefit of share-based compensation	(3,525		)	(2,511		)
Net (decrease)/increase in deferred taxes	(7,709		)	16,715
Change in assets and liabilities, net of effects from acquisitions, dispositions, and foreign currency adjustments:
Trade accounts receivable	(70,794		)	(100,006		)
Inventories	(11,982		)	1,018
Payable to suppliers	26,581			28,362
Prepaid expenses	(9,053		)	(10,772		)
Accrued expenses	45,346			24,743
Income taxes payable and other income tax items	3,717			12,406
Fox River environmental reserve spending	(796		)	(15,000		)
Other assets and liabilities	(845		)	2,911
Net cash provided by operating activities	318,140			267,397
Cash Flows from Investing Activities:
Purchase of property, plant and equipment	(140,869		)	(135,287		)
Cost of acquisitions, net of cash acquired	(17,447		)	(10,964		)
Proceeds from the sale of assets	31,310			6,451
Investment in affiliates and other, net	(2,773		)	(4,520		)
Net cash used in investing activities	(129,779		)	(144,320		)
Cash Flows from Financing Activities:
Proceeds from issuance of debt	57,311			30,526
Principal repayment of debt	(105,388		)	(30,267		)
Net increase in commercial paper	—			36,000
Net decrease in outstanding checks	(2,609		)	(712		)
Excess tax benefit of share-based compensation	3,525			2,511
Cash dividends	(102,702		)	(96,446		)
Shares acquired	(7,729		)	(48,731		)
Shares issued	1,307			2,482
Net cash used in financing activities	(156,285		)	(104,637		)
Effects of Exchange Rate Changes on Cash	179			(4,451		)
Net Increase in Cash and Cash Equivalents	32,255			13,989
Cash and cash equivalents at beginning of period	161,168			217,567
Cash and cash equivalents at end of period	$	193,423		$	231,556

See accompanying Notes to Condensed Consolidated Financial Statements

6

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.

7

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.

8

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

9

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

10

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

11

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Note 2: 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, are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. 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 for the fiscal year ended December 31, 2014.

With respect to the unaudited condensed consolidated financial information of the Company for the three- and nine-month periods ended September 27, 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 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: New Accounting Pronouncements

In July 2015, the Financial Accounting Standards Board (FASB) issued ASU 2015-11, "Simplifying the Measurement 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 in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventory measured using last-in, first-out or the retail inventory method are excluded from the scope of this update which is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 31, 2017. The new guidance does not represent a change from the Company’s current policy to measure inventory at lower of cost or net realizable value; therefore, implementation of ASU 2015-11 will not have a material impact on the Company's consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03 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 is effective for reporting periods beginning after December 15, 2015, and is to be applied on a retrospective basis. The Company plans to adopt ASU 2015-03 in the first quarter of 2016. As the Company's debt issuance costs are not material, implementation of this update will not have a material impact on the Company's consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue From Contracts With Customers." ASU 2014-09 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 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 ended September 27, 2015, 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, there were no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements. 

12

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Note 4: 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 and $1,680 were incurred in the three months ended September 27, 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 primarily of legal and professional fees and are included in "Selling, general and administrative expenses" in the Company's Condensed Consolidated Statements of Income.

13

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Note 5: 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
			(as Restated)				(as Restated)
Numerator:
Net income attributable to Sonoco	$	43,914	$	67,056	$	194,073	$	176,892
Denominator:
Weighted average common shares outstanding:
Basic	101,548,000		102,128,000		101,454,000		102,451,000
Dilutive effect of stock-based compensation	857,000		959,000		933,000		974,000
Diluted	102,405,000		103,087,000		102,387,000		103,425,000
Reported net income attributable to Sonoco per common share:
Basic	$	0.43	$	0.66	$	1.91	$	1.73
Diluted	$	0.43	$	0.65	$	1.90	$	1.71

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 and 718,845 during the three- and nine-month periods ended September 27, 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 Company’s Board of Directors has authorized the repurchase of up to 5,000,000 shares of the Company’s common stock. A total of 2,000,000 and 132,500 shares were repurchased under this authorization in 2014 and 2013, respectively. During the nine months ended September 27, 2015, no additional shares were purchased; accordingly, at September 27, 2015, a total of 2,867,500 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 shares in the nine months endedSeptember 27, 2015 at a cost of $7,729, and 87,583 shares in the nine months endedSeptember 28, 2014 at a cost of $3,718.

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.

14

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Note 6: Restructuring and Asset Impairment

The Company has engaged in a number of restructuring actions over the past several years. Actions initiated in 2015 and 2014 are reported as “2015 Actions” and “2014 Actions,” respectively. Actions initiated prior to 2014, all of which were substantially complete at September 27, 2015, are reported as “2013 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
Restructuring/Asset impairment:
2015 Actions	$	7,125		$	15,033		$	—		$	—
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
Restructuring/Asset impairment charges	$	19,551		$	29,637		$	5,908		$	11,571
Income tax benefit	$	(1,574	)	$	(16,850	)	$	(1,954	)	$	(3,342	)
Costs attributable to noncontrolling interests, net of tax	(5		)	(75		)	(11		)	(26		)
Total impact of restructuring/asset impairment charges, net of tax	$	17,972		$	12,712		$	3,943		$	8,203

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 in connection with announced restructuring actions, and believes that the majority of these charges will be incurred by the end of 2015 and paid by mid-2016. The Company continually evaluates its cost structure, including its manufacturing capacity, and additional restructuring actions may be undertaken.

2015 Actions

During 2015, the Company announced the closure of four rigid paper facilities - two in the United States, one in Canada, and one in the United Kingdom (part of the Consumer Packaging segment). The Company also closed a production line at one of its thermoforming plants in the United States (part of the Consumer Packaging segment) and sold a portion of its metal ends and closures business in the United States (part of the Consumer Packaging segment). The Company announced the closure of a Tubes and Cores plant (part of the Paper and Industrial Converted Products division) and a printed backer card facility (part of the Display and Packaging segment) in the United States. In addition, approximately 210 positions were eliminated in the first three quarters of 2015 in conjunction with the Company's announced ongoing organizational effectiveness efforts.

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

15

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

2015 Actions	Third Quarter 2015			Total Incurred to Date			Estimated Total Cost
Severance and Termination Benefits
Consumer Packaging	$	2,997		$	7,465		$	11,665
Display and Packaging	576			780			880
Paper and Industrial Converted Products	$	2,300		$	7,362		$	7,562
Protective Solutions	39			39			39
Corporate	210			2,409			2,759
Asset Impairment / Disposal of Assets
Consumer Packaging	(53		)	(4,883		)	(4,883		)
Display and Packaging	194			211			211
Paper and Industrial Converted Products	230			451			451
Other Costs
Consumer Packaging	441			936			1,936
Display and Packaging	89			89			289
Paper and Industrial Converted Products	102			163			413
Corporate	—			11			11
Total Charges and Adjustments	$	7,125		$	15,033		$	21,333

The following table sets forth the activity in the 2015 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

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" 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 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.

16

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 and Earlier Actions are comprised of a number of plant closures and workforce reductions initiated prior to 2014. Charges for these actions in both 2015 and 2014 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 and Earlier Actions.

17

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 and Earlier Actions for the three- and nine-month periods ended September 27, 2015 and September 28, 2014. 

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

The accrual for 2013 and Earlier Actions totaled $664 and $1,990 at September 27, 2015 and December 31, 2014, 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 and Earlier Actions to be paid by the end of 2015 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.

18

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Note 7: 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 months ended September 27, 2015 and September 28, 2014:

	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	)
Other comprehensive income/(loss) before reclassifications	1,844			(8,239		)	(114,766		)	(121,161		)
Amounts reclassified from accumulated other comprehensive loss to net income	(153		)	20,154			—			20,001
Amounts reclassified from accumulated other comprehensive loss to fixed assets	(237		)	—			—			(237		)
Net current-period other comprehensive income/(loss)	1,454			11,915			(114,766		)	(101,397		)
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	)

19

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 periods ended September 27, 2015 and September 28, 2014: 

	Amount Reclassified from Accumulated Other Comprehensive Loss
	Three Months Ended						Nine 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
Gains and losses on cash flow hedges
Foreign exchange contracts	$	2,757		$	241		$	4,010		$	(1,669	)	Net sales
Foreign exchange contracts	1,965			232			3,437			2,343			Cost of sales
Commodity contracts	(2,245		)	123			(7,202		)	1,248			Cost of sales
	2,477			596			245			1,922			Total before tax
	(767		)	(303		)	(92		)	(730		)	Tax (provision)/benefit
	$	1,710		$	293		$	153		$	1,192		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
Amortization of defined benefit pension items(a)	(2,686		)	(1,622		)	(7,976		)	(4,826		)	Selling, general and  administrative
	(10,745		)	(6,490		)	(31,907		)	(19,308		)	Total before tax
	3,973			2,195			11,753			6,874			Tax benefit
	$	(6,772	)	$	(4,295	)	$	(20,154	)	$	(12,434	)	Net of tax
Total reclassifications for the period	$	(5,062	)	$	(4,002	)	$	(20,001	)	$	(11,242	)	Net of tax

(a) See Note 11 for additional details.

At September 27, 2015, 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 ($4,508 after tax) at September 27, 2015, and net losses of $9,617 ($5,962 after tax) at December 31, 2014.

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

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

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

20

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

Note 8: Goodwill and Other Intangible Assets

Goodwill

A summary of the changes in goodwill by segment for the nine months ended September 27, 2015 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

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 Company completed its most recent annual goodwill impairment testing during 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, the Company concluded that there was no impairment of goodwill for any of its reporting units.

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

When the Company estimates 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.

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, respectively, at September 27, 2015. A large portion of sales in the Display and Packaging reporting unit is concentrated in one customer. Management expects to retain this business; however, if a significant amount were lost and not replaced, it is possible that a goodwill impairment charge would be incurred.

21

SONOCO PRODUCTS COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(unaudited)

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

Other Intangible Assets

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

	September 27, 2015			December 31, 2014
Other Intangible Assets, gross
Patents	$	12,963		$	13,883
Customer lists	385,818			385,466
Trade names	19,271			19,366
Proprietary technology	17,748			17,786
Land use rights	293			320
Other	1,281			1,309
Other Intangible Assets, gross	$	437,374		$	438,130
Accumulated Amortization	$	(181,231	)	$	(157,195	)
Other Intangible Assets, net	$	256,143		$	280,935

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 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.

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

Note 9: Financial Instruments and Derivatives

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

September 27, 2015		December 31, 2014
Carrying Amount	Fair Value	Carrying Amount