ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Incorporated under the laws of South Carolina | I.R.S. Employer Identification No. 57-0248420 |
Large accelerated filer | ý | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨(do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
Item 1. | ||
Condensed Consolidated Balance Sheets - April 2, 2017 (unaudited) and December 31, 2016 (unaudited) | ||
Condensed Consolidated Statements of Income – Three Months Ended April 2, 2017 (unaudited) and April 3, 2016 (unaudited) | ||
Condensed Consolidated Statements of Comprehensive Income – Three Months Ended April 2, 2017(unaudited) and April 3, 2016 (unaudited) | ||
Condensed Consolidated Statements of Cash Flows – Three Months Ended April 2, 2017 (unaudited) and April 3, 2016 (unaudited) | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 2. | ||
Item 6. |
April 2, 2017 | December 31, 2016* | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 212,790 | $ | 257,226 | ||||
Trade accounts receivable, net of allowances | 663,312 | 625,411 | ||||||
Other receivables | 43,003 | 43,553 | ||||||
Inventories: | ||||||||
Finished and in process | 172,149 | 127,446 | ||||||
Materials and supplies | 258,210 | 245,368 | ||||||
Prepaid expenses | 41,831 | 49,764 | ||||||
1,391,295 | 1,348,768 | |||||||
Property, Plant and Equipment, Net | 1,155,192 | 1,060,017 | ||||||
Goodwill | 1,156,674 | 1,092,215 | ||||||
Other Intangible Assets, Net | 273,894 | 224,958 | ||||||
Deferred Income Taxes | 47,371 | 42,130 | ||||||
Other Assets | 165,979 | 155,115 | ||||||
Total Assets | $ | 4,190,405 | $ | 3,923,203 | ||||
Liabilities and Equity | ||||||||
Current Liabilities | ||||||||
Payable to suppliers | $ | 521,784 | $ | 477,831 | ||||
Accrued expenses and other | 265,818 | 273,996 | ||||||
Notes payable and current portion of long-term debt | 76,712 | 32,045 | ||||||
Accrued taxes | 18,086 | 18,744 | ||||||
882,400 | 802,616 | |||||||
Long-term Debt, Net of Current Portion | 1,177,188 | 1,020,698 | ||||||
Pension and Other Postretirement Benefits | 419,180 | 447,339 | ||||||
Deferred Income Taxes | 63,467 | 59,753 | ||||||
Other Liabilities | 39,303 | 38,092 | ||||||
Commitments and Contingencies | ||||||||
Sonoco Shareholders’ Equity | ||||||||
Common stock, no par value | ||||||||
Authorized 300,000 shares 99,384 and 99,193 shares issued and outstanding at April 2, 2017 and December 31, 2016, respectively | 7,175 | 7,175 | ||||||
Capital in excess of stated value | 319,365 | 321,050 | ||||||
Accumulated other comprehensive loss | (699,874 | ) | (738,380 | ) | ||||
Retained earnings | 1,958,577 | 1,942,513 | ||||||
Total Sonoco Shareholders’ Equity | 1,585,243 | 1,532,358 | ||||||
Noncontrolling Interests | 23,624 | 22,347 | ||||||
Total Equity | 1,608,867 | 1,554,705 | ||||||
Total Liabilities and Equity | $ | 4,190,405 | $ | 3,923,203 |
* | 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. |
Three Months Ended | ||||||||
April 2, 2017 | April 3, 2016 | |||||||
Net sales | $ | 1,172,324 | $ | 1,226,276 | ||||
Cost of sales | 952,102 | 981,023 | ||||||
Gross profit | 220,222 | 245,253 | ||||||
Selling, general and administrative expenses | 126,138 | 134,193 | ||||||
Restructuring/Asset impairment charges | 4,111 | 9,228 | ||||||
Income before interest and income taxes | 89,973 | 101,832 | ||||||
Interest expense | 13,085 | 14,189 | ||||||
Interest income | 1,027 | 402 | ||||||
Income before income taxes | 77,915 | 88,045 | ||||||
Provision for income taxes | 25,539 | 29,194 | ||||||
Income before equity in earnings of affiliates | 52,376 | 58,851 | ||||||
Equity in earnings of affiliates, net of tax | 1,954 | 1,339 | ||||||
Net income | $ | 54,330 | $ | 60,190 | ||||
Net (income) attributable to noncontrolling interests | (597 | ) | (276 | ) | ||||
Net income attributable to Sonoco | $ | 53,733 | $ | 59,914 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 100,112 | 101,628 | ||||||
Diluted | 100,980 | 102,329 | ||||||
Per common share: | ||||||||
Net income attributable to Sonoco: | ||||||||
Basic | $ | 0.54 | $ | 0.59 | ||||
Diluted | $ | 0.53 | $ | 0.59 | ||||
Cash dividends | $ | 0.37 | $ | 0.35 |
Three Months Ended | |||||||||
April 2, 2017 | April 3, 2016 | ||||||||
Net income | $ | 54,330 | $ | 60,190 | |||||
Other comprehensive income/(loss): | |||||||||
Foreign currency translation adjustments | 30,836 | 30,828 | |||||||
Changes in defined benefit plans, net of tax | 11,299 | 5,948 | |||||||
Changes in derivative financial instruments, net of tax | (2,949 | ) | 1,900 | ||||||
Other comprehensive income | 39,186 | 38,676 | |||||||
Comprehensive income | 93,516 | 98,866 | |||||||
Net (income) attributable to noncontrolling interests | (597 | ) | (276 | ) | |||||
Other comprehensive (income) attributable to noncontrolling interests | (680 | ) | (1,412 | ) | |||||
Comprehensive income attributable to Sonoco | $ | 92,239 | $ | 97,178 |
Three Months Ended | ||||||||
April 2, 2017 | April 3, 2016 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 54,330 | $ | 60,190 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Asset impairment | 337 | — | ||||||
Depreciation, depletion and amortization | 49,008 | 53,572 | ||||||
Share-based compensation expense | 3,026 | 4,840 | ||||||
Equity in earnings of affiliates | (1,954 | ) | (1,339 | ) | ||||
Cash dividends from affiliated companies | 1,950 | 1,150 | ||||||
Net (gain) on disposition of assets | (46 | ) | (1,242 | ) | ||||
Pension and postretirement plan expense | 12,353 | 10,657 | ||||||
Pension and postretirement plan contributions | (43,557 | ) | (32,042 | ) | ||||
Tax effect of share-based compensation exercises | — | 1,120 | ||||||
Excess tax benefit of share-based compensation | — | (1,161 | ) | |||||
Net increase in deferred taxes | 463 | 220 | ||||||
Change in assets and liabilities, net of effects from acquisitions, dispositions, and foreign currency adjustments: | ||||||||
Trade accounts receivable | (10,002 | ) | (41,623 | ) | ||||
Inventories | (9,752 | ) | (11,218 | ) | ||||
Payable to suppliers | 14,684 | (17,213 | ) | |||||
Prepaid expenses | (1,224 | ) | 4,427 | |||||
Accrued expenses | (11,550 | ) | (6,171 | ) | ||||
Income taxes payable and other income tax items | 10,283 | 28,415 | ||||||
Other assets and liabilities | (951 | ) | 13,805 | |||||
Net cash provided by operating activities | 67,398 | 66,387 | ||||||
Cash Flows from Investing Activities: | ||||||||
Purchase of property, plant and equipment | (50,455 | ) | (55,685 | ) | ||||
Cost of acquisitions, net of cash acquired | (221,417 | ) | — | |||||
Proceeds from the sale of assets | 1,481 | 2,592 | ||||||
Investment in affiliates and other, net | 133 | 46 | ||||||
Net cash used in investing activities | (270,258 | ) | (53,047 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of debt | 170,297 | 13,787 | ||||||
Principal repayment of debt | (17,637 | ) | (10,993 | ) | ||||
Net change in commercial paper | 41,000 | — | ||||||
Net increase in outstanding checks | 2,742 | 9,841 | ||||||
Excess tax benefit of share-based compensation | — | 1,161 | ||||||
Cash dividends | (36,840 | ) | (35,396 | ) | ||||
Shares acquired | (5,539 | ) | (18,931 | ) | ||||
Shares issued | — | 559 | ||||||
Net cash used in financing activities | 154,023 | (39,972 | ) | |||||
Effects of Exchange Rate Changes on Cash | 4,401 | (3,464 | ) | |||||
Net Decrease in Cash and Cash Equivalents | (44,436 | ) | (30,096 | ) | ||||
Cash and cash equivalents at beginning of period | 257,226 | 182,434 | ||||||
Cash and cash equivalents at end of period | $ | 212,790 | $ | 152,338 |
Trade accounts receivable | $ | 14,535 | |
Inventories | 42,428 | ||
Property plant and equipment | 77,267 | ||
Goodwill | 60,018 | ||
Other intangible assets | 54,000 | ||
Trade accounts payable | (21,655 | ) | |
Other net tangible assets /(liabilities) | (5,176 | ) | |
Net assets | $ | 221,417 | |
Three Months Ended | ||||||||
April 2, 2017 | April 3, 2016 | |||||||
Numerator: | ||||||||
Net income attributable to Sonoco | $ | 53,733 | $ | 59,914 | ||||
Denominator: | ||||||||
Weighted average common shares outstanding: | ||||||||
Basic | 100,112 | 101,628 | ||||||
Dilutive effect of stock-based compensation | 868 | 701 | ||||||
Diluted | 100,980 | 102,329 | ||||||
Net income attributable to Sonoco per common share: | ||||||||
Basic | $ | 0.54 | $ | 0.59 | ||||
Diluted | $ | 0.53 | $ | 0.59 |
Three Months Ended | ||||||
April 2, 2017 | April 3, 2016 | |||||
Anti-dilutive stock appreciation rights | 356 | 1,430 |
Three Months Ended | ||||||||
April 2, 2017 | April 3, 2016 | |||||||
Restructuring/Asset impairment: | ||||||||
2017 Actions | $ | 2,304 | $ | — | ||||
2016 Actions | 1,155 | 6,413 | ||||||
2015 and Earlier Actions | 652 | 2,815 | ||||||
Restructuring/Asset impairment charges | $ | 4,111 | $ | 9,228 | ||||
Income tax benefit | (1,298 | ) | (2,920 | ) | ||||
Less: Costs attributable to noncontrolling interests, net of tax | (2 | ) | (7 | ) | ||||
Restructuring/asset impairment charges attributable to Sonoco, net of tax | $ | 2,811 | $ | 6,301 |
2017 Actions | First Quarter 2017 | Estimated Total Cost | ||||||
Severance and Termination Benefits | ||||||||
Consumer Packaging | $ | 967 | $ | 1,467 | ||||
Display and Packaging | 106 | 106 | ||||||
Paper and Industrial Converted Products | 541 | 630 | ||||||
Protective Solutions | 75 | 75 | ||||||
Corporate | 456 | 456 | ||||||
Other Costs | ||||||||
Consumer Packaging | 159 | 159 | ||||||
Paper and Industrial Converted Products | — | 6 | ||||||
Total Charges and Adjustments | $ | 2,304 | $ | 2,899 |
2017 Actions | Severance and Termination Benefits | Asset Impairment/ Disposal of Assets | Other Costs | Total | ||||||||||||
Accrual Activity 2017 Year to Date | ||||||||||||||||
Liability at December 31, 2016 | $ | — | $ | — | $ | — | $ | — | ||||||||
2017 charges | 2,145 | — | 159 | 2,304 | ||||||||||||
Cash payments | (1,147 | ) | — | (159 | ) | (1,306 | ) | |||||||||
Asset write downs/disposals | — | — | — | — | ||||||||||||
Foreign currency translation | — | — | — | — | ||||||||||||
Liability at April 2, 2017 | $ | 998 | $ | — | $ | — | $ | 998 |
2016 Actions | First Quarter 2017 | First Quarter 2016 | Total Incurred to Date | Estimated Total Cost | ||||||||||||
Severance and Termination Benefits | ||||||||||||||||
Consumer Packaging | $ | 1 | $ | 965 | $ | 2,408 | $ | 2,408 | ||||||||
Display and Packaging | (13 | ) | 1,376 | 4,291 | 4,291 | |||||||||||
Paper and Industrial Converted Products | 98 | 2,411 | 5,985 | 6,183 | ||||||||||||
Protective Solutions | (1 | ) | 322 | 677 | 677 | |||||||||||
Corporate | — | 1,429 | 1,550 | 1,550 | ||||||||||||
Asset Impairment / Disposal of Assets | ||||||||||||||||
Consumer Packaging | $ | — | (306 | ) | (306 | ) | (306 | ) | ||||||||
Display and Packaging | 96 | — | 2,808 | 2,808 | ||||||||||||
Paper and Industrial Converted Products | — | — | 13,300 | 13,300 | ||||||||||||
Other Costs | ||||||||||||||||
Consumer Packaging | $ | — | 198 | 731 | 731 | |||||||||||
Display and Packaging | 229 | — | 515 | 515 | ||||||||||||
Paper and Industrial Converted Products | 690 | 18 | 1,988 | 2,188 | ||||||||||||
Protective Solutions | 55 | — | 205 | 205 | ||||||||||||
Total Charges and Adjustments | $ | 1,155 | $ | 6,413 | $ | 34,152 | $ | 34,550 |
2016 Actions | Severance and Termination Benefits | Asset Impairment/ Disposal of Assets | Other Costs | Total | ||||||||||||
Accrual Activity 2017 Year to Date | ||||||||||||||||
Liability at December 31, 2016 | $ | 3,558 | $ | — | $ | 640 | $ | 4,198 | ||||||||
2017 charges | 85 | 96 | 974 | 1,155 | ||||||||||||
Adjustments | — | — | — | — | ||||||||||||
Cash payments | (1,661 | ) | — | (945 | ) | (2,606 | ) | |||||||||
Asset write downs/disposals | — | (96 | ) | (318 | ) | (414 | ) | |||||||||
Foreign currency translation | 2 | — | 6 | 8 | ||||||||||||
Liability at April 2, 2017 | $ | 1,984 | $ | — | $ | 357 | $ | 2,341 |
2015 and Earlier Actions | First Quarter 2017 | First Quarter 2016 | ||||||
Consumer Packaging | $ | (27 | ) | $ | 2,155 | |||
Display and Packaging | 83 | 6 | ||||||
Paper and Industrial Converted Products | 565 | 603 | ||||||
Protective Solutions | 24 | 51 | ||||||
Corporate | 7 | — | ||||||
Total Charges and Adjustments | $ | 652 | $ | 2,815 |
Gains and Losses on Cash Flow Hedges | Defined Benefit Pension Items | Foreign Currency Items | Accumulated Other Comprehensive Loss | |||||||||||||
Balance at December 31, 2016 | $ | 1,939 | $ | (453,821 | ) | $ | (286,498 | ) | $ | (738,380 | ) | |||||
Other comprehensive income/(loss) before reclassifications | (2,626 | ) | 4,924 | 30,156 | 32,454 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss to net income | (365 | ) | 6,375 | — | 6,010 | |||||||||||
Amounts reclassified from accumulated other comprehensive loss to fixed assets | 42 | — | — | 42 | ||||||||||||
Other comprehensive income/(loss) | (2,949 | ) | 11,299 | 30,156 | 38,506 | |||||||||||
Balance at April 2, 2017 | $ | (1,010 | ) | $ | (442,522 | ) | $ | (256,342 | ) | $ | (699,874 | ) | ||||
Balance at December 31, 2015 | $ | (5,152 | ) | $ | (444,244 | ) | $ | (253,137 | ) | $ | (702,533 | ) | ||||
Other comprehensive income 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 | ) | ||||||||||
Other comprehensive income | 1,900 | 5,948 | 30,828 | 38,676 | ||||||||||||
Balance at April 3, 2016 | $ | (3,252 | ) | $ | (438,296 | ) | $ | (222,309 | ) | $ | (663,857 | ) | ||||
Amount Reclassified from Accumulated Other Comprehensive Loss | |||||||||
Three Months Ended | |||||||||
Details about Accumulated Other Comprehensive Loss Components | April 2, 2017 | April 3, 2016 | Affected Line Item in the Condensed Consolidated Statements of Net Income | ||||||
Gains and losses on cash flow hedges | |||||||||
Foreign exchange contracts | $ | 1,040 | $ | (2,240 | ) | Net sales | |||
Foreign exchange contracts | (725 | ) | 1,045 | Cost of sales | |||||
Commodity contracts | 248 | (1,511 | ) | Cost of sales | |||||
563 | (2,706 | ) | Total before tax | ||||||
(198 | ) | 1,192 | Tax benefit | ||||||
$ | 365 | $ | (1,514 | ) | Net of tax | ||||
Defined benefit pension items | |||||||||
Amortization of defined benefit pension items(a) | $ | (7,588 | ) | $ | (7,143 | ) | Cost of sales | ||
Amortization of defined benefit pension items(a) | (2,529 | ) | (2,381 | ) | Selling, general and administrative | ||||
(10,117 | ) | (9,524 | ) | Total before tax | |||||
3,742 | 3,576 | Tax benefit | |||||||
$ | (6,375 | ) | $ | (5,948 | ) | Net of tax | |||
Total reclassifications for the period | $ | (6,010 | ) | $ | (7,462 | ) | Net of tax |
(a) | See Note 10 for additional details. |
Three months ended April 2, 2017 | Three months ended April 3, 2016 | ||||||||||||||||||||
Before Tax Amount | Tax (Expense) Benefit | After Tax Amount | Before Tax Amount | Tax (Expense) Benefit | After Tax Amount | ||||||||||||||||
Foreign currency items | $ | 30,156 | $ | — | $ | 30,156 | $ | 30,828 | $ | — | $ | 30,828 | |||||||||
Defined benefit pension items: | |||||||||||||||||||||
Other comprehensive income/(loss) before reclassifications | (147 | ) | 5,071 | 4,924 | — | — | — | ||||||||||||||
Amounts reclassified from accumulated other comprehensive income/(loss) to net income | 10,117 | (3,742 | ) | 6,375 | 9,524 | (3,576 | ) | 5,948 | |||||||||||||
Net other comprehensive income/(loss) from defined benefit pension items | 9,970 | 1,329 | 11,299 | 9,524 | (3,576 | ) | 5,948 | ||||||||||||||
Gains and losses on cash flow hedges: | |||||||||||||||||||||
Other comprehensive income/(loss) before reclassifications | (4,048 | ) | 1,422 | (2,626 | ) | 601 | (190 | ) | 411 | ||||||||||||
Amounts reclassified from accumulated other comprehensive income/(loss) to net income | (563 | ) | 198 | (365 | ) | 2,706 | (1,192 | ) | 1,514 | ||||||||||||
Amounts reclassified from accumulated other comprehensive income/(loss) to fixed assets | 42 | — | 42 | (25 | ) | — | (25 | ) | |||||||||||||
Net other comprehensive income/(loss) from cash flow hedges | (4,569 | ) | 1,620 | (2,949 | ) | 3,282 | (1,382 | ) | 1,900 | ||||||||||||
Other comprehensive income/(loss) | $ | 35,557 | $ | 2,949 | $ | 38,506 | $ | 43,634 | $ | (4,958 | ) | $ | 38,676 |
Consumer Packaging | Display and Packaging | Paper and Industrial Converted Products | Protective Solutions | Total | |||||||||||||||
Goodwill at December 31, 2016 | $ | 435,590 | $ | 203,414 | $ | 221,983 | $ | 231,228 | $ | 1,092,215 | |||||||||
Acquisitions | 58,924 | — | — | 161 | 59,085 | ||||||||||||||
Foreign currency translation | 3,157 | — | 2,113 | 104 | 5,374 | ||||||||||||||
Goodwill at April 2, 2017 | $ | 497,671 | $ | 203,414 | $ | 224,096 | $ | 231,493 | $ | 1,156,674 |
April 2, 2017 | December 31, 2016 | |||||||
Other Intangible Assets, gross: | ||||||||
Patents | $ | 28,165 | $ | 13,164 | ||||
Customer lists | 400,545 | 362,162 | ||||||
Trade names | 23,924 | 19,902 | ||||||
Proprietary technology | 20,729 | 20,721 | ||||||
Land use rights | 290 | 288 | ||||||
Other | 1,711 | 1,701 | ||||||
Other Intangible Assets, gross | $ | 475,364 | $ | 417,938 | ||||
Accumulated Amortization: | ||||||||
Patents | (5,112 | ) | (5,647 | ) | ||||
Customer lists | (180,622 | ) | (172,292 | ) | ||||
Trade names | (2,892 | ) | (2,733 | ) | ||||
Proprietary technology | (11,719 | ) | (11,236 | ) | ||||
Land use rights | (42 | ) | (41 | ) | ||||
Other | (1,083 | ) | (1,031 | ) | ||||
Total Accumulated Amortization | $ | (201,470 | ) | $ | (192,980 | ) | ||
Other Intangible Assets, net | $ | 273,894 | $ | 224,958 |
April 2, 2017 | December 31, 2016 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Long-term debt, net of current portion | $ | 1,177,188 | $ | 1,286,950 | $ | 1,020,698 | $ | 1,116,336 |
Currency | Action | Quantity | |
Colombian peso | purchase | 1,553,369 | |
Mexican peso | purchase | 448,498 | |
Canadian dollar | purchase | 42,831 | |
Russian ruble | purchase | 11,964 | |
Turkish lira | purchase | 6,318 | |
British pound | purchase | 2,254 | |
New Zealand dollar | sell | (510 | ) |
Australian dollar | sell | (654 | ) |
Polish zloty | sell | (2,142 | ) |
Euro | sell | (5,244 | ) |
Currency | Action | Quantity | |
Colombian peso | purchase | 2,260,800 | |
Mexican peso | purchase | 231,676 | |
Canadian dollar | purchase | 11,911 |
Description | Balance Sheet Location | April 2, 2017 | December 31, 2016 | |||||||
Derivatives designated as hedging instruments: | ||||||||||
Commodity Contracts | Prepaid expenses | $ | 1,973 | $ | 3,240 | |||||
Commodity Contracts | Other assets | $ | 209 | $ | 527 | |||||
Commodity Contracts | Accrued expenses and other | $ | (51 | ) | $ | (89 | ) | |||
Commodity Contracts | Other liabilities | $ | (208 | ) | $ | (42 | ) | |||
Foreign Exchange Contracts | Prepaid expenses | $ | 197 | $ | 761 | |||||
Foreign Exchange Contracts | Accrued expenses and other | $ | (3,231 | ) | $ | (946 | ) | |||
Derivatives not designated as hedging instruments: | ||||||||||
Foreign Exchange Contracts | Prepaid expenses | $ | 53 | $ | 194 | |||||
Foreign Exchange Contracts | Accrued expenses and other | $ | (686 | ) | $ | (890 | ) |
Description |
Gain or (Loss) Recognized |
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: | ||||||||||||||||
Three months ended April 2, 2017 | ||||||||||||||||
Foreign Exchange Contracts | $ | (2,692 | ) | Net sales | $ | 1,040 | Net sales | $ | — | |||||||
Cost of sales | $ | (725 | ) | |||||||||||||
Commodity Contracts | $ | (1,356 | ) | Cost of sales | $ | 248 | Cost of sales | $ | (335 | ) | ||||||
Three months ended April 3, 2016 | ||||||||||||||||
Foreign Exchange Contracts | $ | 2,317 | Net sales | $ | (2,240 | ) | Net sales | $ | — | |||||||
Cost of sales | $ | 1,045 | ||||||||||||||
Commodity Contracts | $ | (1,766 | ) | Cost of sales | $ | (1,511 | ) | Cost of sales | $ | 110 |
Description | Location of Gain or (Loss) Recognized in Income Statement | Gain or (Loss) Recognized | ||
Derivatives not Designated as Hedging Instruments: | ||||
Three months ended April 2, 2017 | ||||
Foreign Exchange Contracts | Cost of sales | $ | — | |
Selling, general and administrative | $ | (567 | ) | |
Three months ended April 3, 2016 | ||||
Foreign Exchange Contracts | Cost of sales | $ | — | |
Selling, general and administrative | $ | (498 | ) |
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. |
Description | April 2, 2017 | Assets measured at NAV | Level 1 | Level 2 | Level 3 | ||||||||||||||
Hedge derivatives, net: | |||||||||||||||||||
Commodity contracts | $ | 1,923 | $ | — | $ | — | $ | 1,923 | $ | — | |||||||||
Foreign exchange contracts | $ | (3,034 | ) | $ | — | $ | — | $ | (3,034 | ) | $ | — | |||||||
Non-hedge derivatives, net: | |||||||||||||||||||
Foreign exchange contracts | $ | (633 | ) | $ | — | $ | — | $ | (633 | ) | $ | — | |||||||
Deferred compensation plan assets | $ | 364 | $ | — | $ | 364 | $ | — | $ | — | |||||||||
Description | December 31, 2016 | Assets measured at NAV | Level 1 | Level 2 | Level 3 | ||||||||||||||
Hedge derivatives, net: | |||||||||||||||||||
Commodity contracts | $ | 3,636 | $ | — | $ | — | $ | 3,636 | $ | — | |||||||||
Foreign exchange contracts | $ | (185 | ) | $ | — | $ | — | $ | (185 | ) | $ | — | |||||||
Non-hedge derivatives, net: | |||||||||||||||||||
Foreign exchange contracts | $ | (696 | ) | $ | — | $ | — | $ | (696 | ) | $ | — | |||||||
Deferred compensation plan assets | $ | 349 | $ | — | $ | 349 | $ | — | $ | — |
Three Months Ended | |||||||||
April 2, 2017 | April 3, 2016 | ||||||||
Retirement Plans | |||||||||
Service cost | $ | 4,712 | $ | 5,023 | |||||
Interest cost | 14,701 | 15,326 | |||||||
Expected return on plan assets | (20,838 | ) | (22,044 | ) | |||||
Amortization of prior service cost | 231 | 193 | |||||||
Amortization of net actuarial loss | 10,168 | 9,596 | |||||||
Net periodic benefit cost | $ | 8,974 | $ | 8,094 | |||||
Retiree Health and Life Insurance Plans | |||||||||
Service cost | 84 | 85 | |||||||
Interest cost | 120 | 130 | |||||||
Expected return on plan assets | (414 | ) | (404 | ) | |||||
Amortization of prior service credit | (127 | ) | (128 | ) | |||||
Amortization of net actuarial gain | (155 | ) | (137 | ) | |||||
Net periodic benefit income | $ | (492 | ) | $ | (454 | ) |
Three Months Ended | ||||||||
April 2, 2017 | April 3, 2016 | |||||||
Net sales: | ||||||||
Consumer Packaging | $ | 482,181 | $ | 527,338 | ||||
Display and Packaging | 114,635 | 144,267 | ||||||
Paper and Industrial Converted Products | 442,502 | 423,074 | ||||||
Protective Solutions | 133,006 | 131,597 | ||||||
Consolidated | $ | 1,172,324 | $ | 1,226,276 | ||||
Intersegment sales: | ||||||||
Consumer Packaging | $ | 1,223 | $ | 1,332 | ||||
Display and Packaging | 750 | 497 | ||||||
Paper and Industrial Converted Products | 28,373 | 26,381 | ||||||
Protective Solutions | 399 | 586 | ||||||
Consolidated | $ | 30,745 | $ | 28,796 | ||||
Income before interest and income taxes: | ||||||||
Segment operating profit: | ||||||||
Consumer Packaging | $ | 58,010 | $ | 62,865 | ||||
Display and Packaging | 3,183 | 3,281 | ||||||
Paper and Industrial Converted Products | 24,723 | 33,299 | ||||||
Protective Solutions | 10,861 | 12,026 | ||||||
Restructuring/Asset impairment charges | (4,111 | ) | (9,228 | ) | ||||
Other, net | (2,693 | ) | (411 | ) | ||||
Consolidated | $ | 89,973 | $ | 101,832 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
• | 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. |
• | 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; |
• | 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. |
For the three months ended April 2, 2017 | ||||||||||||||||
Dollars in thousands, except per share data | GAAP | Restructuring/ Asset Impairment | Other Adjustments(1) | Base | ||||||||||||
Income before interest and income taxes | $ | 89,973 | $ | 4,111 | $ | 2,693 | $ | 96,777 | ||||||||
Interest expense, net | 12,058 | — | — | 12,058 | ||||||||||||
Income before income taxes | 77,915 | 4,111 | 2,693 | 84,719 | ||||||||||||
Provision for income taxes | 25,539 | 1,298 | (641 | ) | 26,196 | |||||||||||
Income before equity in earnings of affiliates | 52,376 | 2,813 | 3,334 | 58,523 | ||||||||||||
Equity in earnings of affiliates, net of tax | 1,954 | — | — | 1,954 | ||||||||||||
Net income | 54,330 | 2,813 | 3,334 | 60,477 | ||||||||||||
Net (income) attributable to noncontrolling interests | (597 | ) | (2 | ) | — | (599 | ) | |||||||||
Net income attributable to Sonoco | $ | 53,733 | $ | 2,811 | $ | 3,334 | $ | 59,878 | ||||||||
Per diluted common share | $ | 0.53 | $ | 0.03 | $ | 0.03 | $ | 0.59 |
For the three months ended April 3, 2016 | ||||||||||||||||
Dollars in thousands, except per share data | GAAP | Restructuring/ Asset Impairment | Other Adjustments(1) | Base | ||||||||||||
Income before interest and income taxes | $ | 101,832 | $ | 9,228 | $ | 411 | $ | 111,471 | ||||||||
Interest expense, net | 13,787 | — | — | 13,787 | ||||||||||||
Income before income taxes | 88,045 | 9,228 | 411 | 97,684 | ||||||||||||
Provision for income taxes | 29,194 | 2,920 | 104 | 32,218 | ||||||||||||
Income before equity in earnings of affiliates | 58,851 | 6,308 | 307 | 65,466 | ||||||||||||
Equity in earnings of affiliates, net of tax | 1,339 | — | — | 1,339 | ||||||||||||
Net income | 60,190 | 6,308 | 307 | 66,805 | ||||||||||||
Net (income) attributable to noncontrolling interests | (276 | ) | (7 | ) | — | (283 | ) | |||||||||
Net income attributable to Sonoco | $ | 59,914 | $ | 6,301 | $ | 307 | $ | 66,522 | ||||||||
Per diluted common share | $ | 0.59 | $ | 0.06 | $ | 0.00 | $ | 0.65 |
($ in millions) | |||
Volume/mix | $ | (29 | ) |
Selling prices | 33 | ||
Acquisitions and Divestitures | (34 | ) | |
Foreign currency translation and other, net | (24 | ) | |
Total sales decrease | $ | (54 | ) |
Three Months Ended | |||||||||||
April 2, 2017 | April 3, 2016 | % Change | |||||||||
Net sales: | |||||||||||
Consumer Packaging | $ | 482,181 | $ | 527,338 | (8.6 | )% | |||||
Display and Packaging | 114,635 | 144,267 | (20.5 | )% | |||||||
Paper and Industrial Converted Products | 442,502 | 423,074 | 4.6 | % | |||||||
Protective Solutions | 133,006 | 131,597 | 1.1 | % | |||||||
Consolidated | $ | 1,172,324 | $ | 1,226,276 | (4.4 | )% |
Three Months Ended | |||||||||||
April 2, 2017 | April 3, 2016 | % Change | |||||||||
Income before interest and income taxes: | |||||||||||
Segment operating profit: | |||||||||||
Consumer Packaging | $ | 58,010 | $ | 62,865 | (7.7 | )% | |||||
Display and Packaging | 3,183 | 3,281 | (3.0 | )% | |||||||
Paper and Industrial Converted Products | 24,723 | 33,299 | (25.8 | )% | |||||||
Protective Solutions | 10,861 | 12,026 | (9.7 | )% | |||||||
Restructuring/Asset impairment charges | (4,111 | ) | (9,228 | ) | (55.5 | )% | |||||
Other, net | (2,693 | ) | (411 | ) | |||||||
Consolidated | $ | 89,973 | $ | 101,832 | (11.6 | )% |
Three Months Ended | ||||||||
April 2, 2017 | April 3, 2016 | |||||||
Restructuring/Asset impairment charges: | ||||||||
Consumer Packaging | $ | 1,100 | $ | 3,012 | ||||
Display and Packaging | 501 | 1,382 | ||||||
Paper and Industrial Converted Products | 1,894 | 3,032 | ||||||
Protective Solutions | 153 | 373 | ||||||
Corporate | 463 | 1,429 | ||||||
Total | $ | 4,111 | $ | 9,228 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
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 | |||||||||
1/01/17 - 2/05/17 | 9,494 | $ | 53.57 | — | 2,969,611 | ||||||||
2/06/17 - 3/05/17 | 93,507 | $ | 52.75 | — | 2,969,611 | ||||||||
3/06/17 - 4/02/17 | 1,810 | $ | 53.77 | — | 2,969,611 | ||||||||
Total | 104,811 | $ | 52.84 | — | 2,969,611 |
1 | A total of 104,811 common shares were repurchased in the first quarter of 2017 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 February 10, 2016, the Company's Board of Directors authorized the repurchase of up to 5,000,000 shares of the Company's common stock. A total of 2,030,389 shares were repurchased under this authorization during 2016 at a cost of $100.0 million. No shares were repurchased during the three-month period ended April 2, 2017. Accordingly, a total of 2,969,611 shares remain available for repurchase at April 2, 2017. |
Item 6. | Exhibits. |
10. | |
15. | |
31. | |
32. | |
101. | The following materials from Sonoco Products Company’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at April 2, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Income for the three months ended April 2, 2017 and April 3, 2016, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended April 2, 2017 and April 3, 2016, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended April 2, 2017 and April 3, 2016, and (v) Notes to Condensed Consolidated Financial Statements. |
SONOCO PRODUCTS COMPANY | ||||
(Registrant) | ||||
Date: | May 3, 2017 | By: | /s/ Barry L. Saunders | |
Barry L. Saunders | ||||
Senior Vice President and Chief Financial Officer | ||||
(principal financial officer) | ||||
/s/ James W. Kirkland | ||||
James W. Kirkland | ||||
Corporate Controller | ||||
(principal accounting officer) |
Exhibit Number | Description | ||
10 | Three-year Term Loan Agreement dated March 13, 2017 between the Registrant and Bank of America, N.A. | ||
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 April 2, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at April 2, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Income for the three months ended April 2, 2017 and April 3, 2016, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended April 2, 2017 and April 3, 2016, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended April 2, 2017 and April 3, 2016, and (v) Notes to Condensed Consolidated Financial Statements. |
(a) | The Term Loan. Subject to the terms and conditions set forth herein, the Lender agrees to make a term loan to the Borrower (the “Term Loan”), which is due and payable on the Maturity Date, in an aggregate principal amount of $150,000,000, to be advanced on the Closing Date. Amounts repaid on the Term Loan may not be reborrowed. The Term Loan shall be comprised of one or more individual Base Rate Loans and/or Eurodollar Rate Loans as set forth herein. |
(b) | Borrowings, Conversions, Continuations. The Borrower may request that the Term Loan be (i) made as or converted to Base Rate Loans by irrevocable notice to be received by the Lender not later than 1:00 p.m. on the Business Day of the borrowing or conversion, or (ii) made or continued as, or converted to, Eurodollar Rate Loans by irrevocable notice to be received by the Lender not later than 1:00 p.m. three Business Days prior to the Business Day of the borrowing, continuation or conversion. If the Borrower fails to give a notice of conversion or continuation prior to the end of any Interest Period in respect of any Eurodollar Rate Loan, the Borrower shall be deemed to have requested that such Term Loan be converted to a Base Rate Loan on the last day of the applicable Interest Period. If the Borrower requests that a Term Loan be continued as or converted to a Eurodollar Rate Loan, but fails to specify an Interest Period with respect thereto, the Borrower shall be deemed to have selected an Interest Period of one month. Notices pursuant to this Paragraph 1(b) may be given by telephone if promptly confirmed in writing. |
(c) | Interest. At the option of the Borrower, the Term Loan shall bear interest at a rate per annum equal to (i) the Eurodollar Rate plus 1.15%; or (ii) the Base Rate plus 0.15%. |
(d) | Evidence of Loans. The Term Loan and all payments thereon shall be evidenced by the Lender’s loan accounts and records; provided, however, that upon the request of the Lender, the Term Loan may be evidenced by a promissory note in the form of Exhibit B hereto in addition to such loan accounts and records. Such loan accounts, records and promissory note shall be conclusive absent manifest error of the amount of the Term Loan and payments thereon. Any failure to record the Term Loan or payment thereon or any error in doing so shall not limit or otherwise affect the obligation of the Borrower to pay any amount owing with respect to the Term Loan. |
(e) | Repayment. The Borrower promises to pay the Term Loan then outstanding on the Maturity Date. |
(f) | Prepayments. The Borrower may, upon three Business Days’ notice, in the case of Eurodollar Rate Loans, and upon same-day notice in the case of Base Rate Loans, prepay the Term Loan on any Business Day; provided that the Borrower pays all Breakage Costs (if any) associated with such prepayment on the date of such prepayment. Prepayments of Eurodollar Rate Loans must be accompanied by a payment of interest on the amount so prepaid. Prepayments of Eurodollar Rate Loans must in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Prepayments of Base Rate Loans must be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof or, if less, the entire principal amount thereof then outstanding. |
(g) | Application of the Facility. The proceeds of the Term Loan established hereby shall be used by the Borrower and its Subsidiaries solely to consummate the PHI Acquisition. |
(a) | Conditions Precedent to Initial Loan. As a condition precedent to the initial Term Loan hereunder, the Lender must receive the following from the Borrower in form satisfactory to the Lender: |
(i) | the enclosed duplicate of this Agreement duly executed and delivered on behalf of the Borrower; |
(ii) | a certified borrowing resolution or other evidence of the Borrower’s authority to borrow; |
(iii) | a certificate of incumbency; |
(iv) | if requested by the Lender, a promissory note as contemplated in Paragraph 1(d) above; |
(v) | any fees required to be paid on or before the Closing Date; |
(vi) | unless waived by the Lender, payment of all fees, charges and disbursements of counsel to the Lender (directly to such counsel if requested by the Lender) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of fees, charges and disbursements as shall constitute its reasonable estimate of fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Lender); and |
(vii) | such other documents and certificates (including legal opinions) as the Lender may reasonably request. |
(b) | Conditions to Each Borrowing, Continuation and Conversion. As a condition precedent to each borrowing (including the initial borrowing), continuation and conversion of the Term Loan: |
(i) | the Borrower must furnish the Lender with, as appropriate, a notice of borrowing, continuation or conversion; |
(ii) | with respect to a borrowing, each representation and warranty set forth in Paragraph 3 below shall be true and correct in all material respects as if made on the date of such borrowing; and |
(iii) | no Default shall have occurred and be continuing on the date of such borrowing, continuation or conversion. |
(a) | all references to “this Agreement” shall be deemed to be references to this Agreement; |
(b) | all references to “the Borrower” shall be deemed to be references to the Borrower; |
(c) | all references to “the Administrative Agent”, “the Lenders” and the “Required Lenders” shall be deemed to be references to the Lender; |
(d) | all references to “Default” and “Event of Default” shall be deemed to be references to a Default and an Event of Default, respectively; and |
(e) | all references to “Loans” shall be deemed to be references to the Term Loan. |
(a) | The Borrower fails to pay any principal of the Term Loan as and on the date when due; or |
(b) | The Borrower fails to pay any interest on the Term Loan, or any fee due hereunder, or any portion thereof, within three days after the date when due; or the Borrower fails to pay any other fee or amount payable to the Lender under any Loan Document, or any portion thereof, within five days after the date due; or |
(c) | The Borrower fails to comply with (i) any covenant or agreement incorporated herein by reference pursuant to Paragraph 4 above, subject to any applicable grace period and/or notice requirement set forth in Section 8.01(c) of the Incorporated Agreement (it being understood and agreed that any such notice requirement shall be met by the Lender’s giving the applicable notice to the Borrower hereunder) or (ii) any other provision of such Paragraph 4; or |
(d) | Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower herein, in any other Loan Document, or in any document |
(e) | Any “Event of Default” specified in Article VIII of the Incorporated Agreement (including for purposes of this Paragraph 5(e) each Additional Incorporated Agreement Event of Default) occurs and is continuing, without giving effect to any waiver or amendment thereof pursuant to the Incorporated Agreement, it being agreed that each such “Event of Default” shall survive any termination, cancellation, discharge or replacement of the Incorporated Agreement. |
(a) | The parties hereto hereby agree that the provisions set forth in Sections 1.02 1.03, 1.04 and 1.05 and Article III (other than Section 3.06) of the Incorporated Agreement (the “Additional Incorporated Provisions”) are incorporated by reference (with such adjustments or modifications as necessary to maintain the substance of the provisions contained therein) and shall be binding on the parties hereto as if set forth fully herein. The incorporation by reference to the Incorporated Agreement of the Incorporated Representations, the Incorporated Covenants, the Incorporated Events of Default and the Additional Incorporated Provisions shall survive the termination of the Incorporated Agreement. The Incorporated Representations, the Incorporated Covenants, the Incorporated Events of Default and the Additional Incorporated Provisions (including all exhibits, schedules and defined terms referred to therein) are hereby incorporated herein by reference as if set forth in full herein with appropriate substitutions, including the following (with such adjustments or modifications as necessary to maintain the substance of the provisions contained therein): (a) all references to “this Agreement” shall be deemed to be references to this Agreement; (b) all references to “the Administrative Agent” shall be deemed to be references to the Lender, (c) all references to “the Lenders” shall be deemed to be references to the Lender, (d) all references to “the Required Lenders” shall be deemed to be references to the Lender; (e) all references to “Default” and “Event of Default” shall be deemed to be references to a Default and an Event of Default, respectively; (f) all references to “the Loans” shall be deemed to be references to the Term Loan; (g) all references to “Revolving Loans” shall be deemed to be references to the Term Loan; (h) all references to “Eurodollar Rate Loan” shall be deemed to be references to Eurodollar Rate Loan as defined herein; and (i) all references |
(b) | No amendment or waiver of any provision of this Agreement (including any provision of the Incorporated Agreement incorporated herein by reference pursuant to Paragraph 4 above and any waiver of Paragraph 5(d) or Paragraph 5(e) above) or of any other Loan Document and no consent by the Lender to any departure therefrom by the Borrower shall be effective unless such amendment, waiver or consent shall be in writing and signed by a duly authorized officer of the Lender, and any such amendment, waiver or consent shall then be effective only for the period and on the conditions and for the specific instance specified in such writing. No failure or delay by the Lender in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other rights, power or privilege. |
(c) | Except as otherwise expressly provided herein, notices and other communications to each party provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, to the address provided from time to time by such party. Any such notice or other communication sent by overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). All notices and other communications sent by the other means listed in the first sentence of this paragraph shall be effective upon receipt. Notwithstanding anything to the contrary contained herein, all notices (by whatever means) to the Lender pursuant to Paragraph 1(b) hereof shall be effective only upon receipt. Notices and other communications to the Lender hereunder may be delivered or furnished by electronic communication (including e mail, FpML messaging, and Internet or intranet websites) pursuant to procedures approved by the Lender. The Lender or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless the Lender otherwise prescribes, notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient. Any notice or other communication permitted to be given, made or confirmed by telephone hereunder shall be given, made or confirmed by means of a telephone call to the intended recipient at the number specified in writing by such Person for such purpose, it being understood and agreed that a voicemail message shall in no event be effective as a notice, communication or confirmation hereunder. |
(d) | This Agreement shall inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign its rights and obligations hereunder. The Lender may at any time, at its own expense, (i) assign all or any part of its rights and obligations hereunder to any other Person with the consent of the Borrower, such consent not to be unreasonably withheld, provided that no such consent shall be required if the assignment is to an affiliate of the Lender or if a Default exists, and (ii) grant to any other Person participating interests in all or part of its rights and obligations hereunder without notice to the Borrower. The Borrower agrees to execute any documents reasonably requested by the Lender in connection with any such assignment. All information provided by or on behalf of the Borrower to the Lender or its affiliates may be furnished by the Lender to its affiliates and to any actual or proposed assignee or participant. |
(e) | The Borrower shall pay the Lender, on demand, all reasonable out-of-pocket expenses and legal fees (including the allocated costs for in-house legal services) incurred by the Lender in connection with the enforcement of this Agreement or any instruments or agreements executed in connection herewith. |
(f) | The Borrower shall indemnify the Lender, its affiliates, and their respective partners, directors, officers, employees, agents and advisors (collectively the “Indemnitees”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, or the consummation of the transactions contemplated hereby or thereby, (ii) the Term Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any Subsidiary, or any Environmental Liability related in any way to the Borrower or any Subsidiary, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity |
(g) | To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Term Loan or the use of the proceeds thereof. Nothing contained in this Paragraph 6(g) shall be deemed to restrict the Borrower’s right to pursue any and all legal remedies available to the Borrower for breach of any representation, covenant, warranty or other agreement set forth in any Loan Document. |
(h) | If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. |
(i) | This Agreement may be executed in one or more counterparts, and each counterpart, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument. |
(j) | THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLTED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE LENDER OR ANY affiliates, partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of the Lender IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN THIS PARAGRAPH 6(j). EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN PARAGRAPH 6(j). NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO |
(k) | THE BORROWER AND THE LENDER EACH HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. |
(l) | The Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), the Lender is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lender to identify the Borrower in accordance with the Act. The Borrower shall, promptly following a request by the Lender, provide all documentation and other information that the Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act. |
(m) | The words “execute, “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation amendments or other modifications, notices of borrowing, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Lender, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Lender is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Lender pursuant to procedures approved by it. |
(n) | If an Event of Default shall have occurred and be continuing, the Lender and each of its affiliates is hereby authorized at any time and from time to time, to the fullest extent |
permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Lender or any such affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to the Lender, irrespective of whether or not the Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of the Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights of the Lender and its affiliates under this paragraph are in addition to other rights and remedies (including other rights of setoff) that the Lender or its affiliates may have. The Lender agrees to notify the Borrower promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. |
(o) | THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE CONTRACT AMONG THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY AND ALL PREVIOUS AGREEMENTS AND UNDERSTANDINGS, ORAL OR WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF. |
Additional Incorporated Agreement Covenant: | A covenant or agreement that is added to Articles VI (Affirmative Covenants) or VII (Negative Covenants) of the Incorporated Agreement after the date hereof, as such covenant or agreement is in effect on the date so added, without giving effect to any subsequent amendment or other modification thereof. |
Additional Incorporated Agreement Event of Default: | An “Event of Default” that is added to Article VIII of the Incorporated Agreement after the date hereof, as such “Event of Default” is in effect on the date so added, without giving effect to any subsequent amendment or other modification thereof. |
Agreement: | This letter agreement, as amended, restated, extended, supplemented or otherwise modified in writing from time to time. |
Base Rate: | For any day, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by the Lender as its “prime rate” and (c) the Eurodollar Rate plus 1.00%; provided, that, if the Base Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement The Lender’s prime rate is a rate set by the Lender based upon various factors including the Lender’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in the prime rate announced by the Lender shall take effect at the opening of business on the day specified in the public announcement of such change. |
Base Rate Loan: | A Loan bearing interest based on the Base Rate. |
Breakage Costs: | Any loss, cost or expense incurred by the Lender (including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by the Lender to maintain the relevant Eurodollar Rate Loan or from fees payable to terminate the deposits from which such funds were obtained) as a result of (i) any continuation, conversion, payment or prepayment of any Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or (ii) any failure by the Borrower (for a reason other than the failure of the Lender to make the Term Loan when all conditions to making such Term Loan have been met by the Borrower in accordance with the terms hereof) to prepay, borrow, continue or convert any Eurodollar Rate Loan on a date or in the amount notified by the Borrower. The certificate of the Lender as to its costs of funds, losses and expenses incurred shall be conclusive absent manifest error. |
Business Day: | Any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, the State of New York or the state where the Lender’s lending office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market. |
Closing Date | March 13, 2017. |
Code: | The Internal Revenue Code of 1986. |
Default: | Any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default. |
Dollar or $: | The lawful currency of the United States of America. |
Environmental Laws: | Any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. |
Environmental Liability: | Any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. |
Eurodollar Rate: | (a) For any Interest Period with respect to any Eurodollar Rate Loan, the rate per annum equal to the London Interbank Offered Rate or a comparable or successor rate, which rate is approved by the Lender (“LIBOR”), as published on the applicable Bloomberg screen page (or such other commercially available source providing quotations as may be designated by the Lender from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period; and (b) For any interest rate calculation with respect to a Base Rate Loan on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m. London time determined two Business Days prior to such date for U.S. Dollar deposits with a term of one month commencing that day; provided that to the extent a comparable or successor rate is approved by the Lender in connection herewith, the approved rate shall be applied in a manner |
consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Lender, such approved rate shall be applied in a manner as otherwise reasonably determined by the Lender; provided, further that if the Eurodollar Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement. | |
Eurodollar Rate Loan: | A Loan bearing interest based on the Eurodollar Rate. |
Event of Default: | Has the meaning set forth in Paragraph 5. |
Federal Funds Rate: | For any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Lender on such day on such transactions as determined by the Lender; provided that if the Federal Funds Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement. |
Hazardous Materials: | All explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. |
Incorporated Agreement: | The Credit Agreement, dated as of October 2, 2014, among the Borrower, each lender from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer. Unless otherwise specified herein, all references to the Incorporated Agreement shall mean the Incorporated Agreement as in effect on the date hereof, without giving effect to any amendment, supplement or other modification thereto or thereof after the date hereof. |
Indemnitee: | Has the meaning set forth in Paragraph 6(f). |
Interest Period: | For each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter (in each case, subject to availability), as selected by the Borrower in its notice to the Lender; provided that: (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; |
(ii) any Interest Period pertaining to a Eurodollar Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (iii) no Interest Period shall extend beyond the Maturity Date. | |
Loan Documents: | This Agreement, the promissory note and fee letter, if any, delivered in connection with this Agreement. |
Material Adverse Effect: | (a) A material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Borrower or the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Borrower to perform its obligations under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrower of any Loan Document. |
Maturity Date: | March 13, 2020. |
Person: | Any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity. |
PHI Acquisition: | The Acquisition of Packaging Holdings by Sonoco Plastics, Inc., a Pennsylvania corporation (“Sonoco Plastics”), on terms and conditions and pursuant to the Agreement and Plan of Merger dated February 15, 2017 (the “PHI Merger Agreement”) by and among Sonoco Plastics, as acquirer, Sequoia 2017, Inc., a Delaware corporation, as merger sub, Packing Holdings, as company, Odyssey Investment Partners, LLC, a Delaware limited liability company, in its capacity as holder representative, and the Borrower, as parent guarantor. |
Packaging Holdings: | Packaging Holdings, Inc., a Delaware corporation. |
Subsidiary: | With respect to any Person, a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” refer to a Subsidiary or Subsidiaries of the Borrower. |
1. | I have reviewed this quarterly report on Form 10-Q of Sonoco Products Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my 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 registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 3, 2017 | By: | /s/ M. Jack Sanders | ||
M. Jack Sanders | |||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Sonoco Products Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my 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 registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 3, 2017 | By: | /s/ Barry L. Saunders | |||
Barry L. Saunders | ||||||
Senior Vice President and Chief Financial | ||||||
Officer |
/s/ M. Jack Sanders | ||
M. Jack Sanders | ||
Chief Executive Officer | ||
/s/ Barry L. Saunders | ||
Barry L. Saunders | ||
Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Apr. 20, 2017 |
|
Document Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 02, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | SON | |
Entity Registrant Name | SONOCO PRODUCTS CO | |
Entity Central Index Key | 0000091767 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 99,384,318 |
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands |
Apr. 02, 2017 |
Dec. 31, 2016 |
|||
---|---|---|---|---|---|
Current Assets | |||||
Cash and cash equivalents | $ 212,790 | $ 257,226 | [1] | ||
Trade accounts receivable, net of allowances | 663,312 | 625,411 | [1] | ||
Other receivables | 43,003 | 43,553 | [1] | ||
Inventories: | |||||
Finished and in process | 172,149 | 127,446 | [1] | ||
Materials and supplies | 258,210 | 245,368 | [1] | ||
Prepaid expenses | 41,831 | 49,764 | [1] | ||
Total Current Assets | 1,391,295 | 1,348,768 | |||
Property, Plant and Equipment, Net | 1,155,192 | 1,060,017 | [1] | ||
Goodwill | 1,156,674 | 1,092,215 | [1] | ||
Other Intangible Assets, Net | 273,894 | 224,958 | [1] | ||
Deferred Income Taxes | 47,371 | 42,130 | [1] | ||
Other Assets | 165,979 | 155,115 | [1] | ||
Total Assets | 4,190,405 | 3,923,203 | [1] | ||
Current Liabilities | |||||
Payable to suppliers | 521,784 | 477,831 | [1] | ||
Accrued expenses and other | 265,818 | 273,996 | [1] | ||
Notes payable and current portion of long-term debt | 76,712 | 32,045 | [1] | ||
Accrued taxes | 18,086 | 18,744 | [1] | ||
Total Current Liabilities | 882,400 | 802,616 | [1] | ||
Long-term Debt, Net of Current Portion | 1,177,188 | 1,020,698 | [1] | ||
Pension and Other Postretirement Benefits | 419,180 | 447,339 | [1] | ||
Deferred Income Taxes | 63,467 | 59,753 | [1] | ||
Other Liabilities | 39,303 | 38,092 | [1] | ||
Commitments and Contingencies | [1] | ||||
Sonoco Shareholders’ Equity | |||||
Authorized 300,000 shares 99,384 and 99,193 shares issued and outstanding at April 2, 2017 and December 31, 2016, respectively | 7,175 | 7,175 | [1] | ||
Capital in excess of stated value | 319,365 | 321,050 | [1] | ||
Accumulated other comprehensive loss | (699,874) | (738,380) | [1] | ||
Retained earnings | 1,958,577 | 1,942,513 | [1] | ||
Total Sonoco Shareholders’ Equity | 1,585,243 | 1,532,358 | [1] | ||
Noncontrolling Interests | 23,624 | 22,347 | [1] | ||
Total Equity | 1,608,867 | 1,554,705 | [1] | ||
Total Liabilities and Equity | $ 4,190,405 | $ 3,923,203 | [1] | ||
|
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - shares |
Apr. 02, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, number of shares authorized | 300,000,000 | 300,000,000 |
Common stock, number of shares issued | 99,384,000 | 99,193,000 |
Common stock, number of shares outstanding | 99,384,000 | 99,193,000 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 54,330 | $ 60,190 |
Other comprehensive income/(loss): | ||
Foreign currency translation adjustments | 30,836 | 30,828 |
Changes in defined benefit plans, net of tax | 11,299 | 5,948 |
Changes in derivative financial instruments, net of tax | (2,949) | 1,900 |
Other comprehensive income | 39,186 | 38,676 |
Comprehensive income | 93,516 | 98,866 |
Net (income) attributable to noncontrolling interests | (597) | (276) |
Other comprehensive (income) attributable to noncontrolling interests | (680) | (1,412) |
Comprehensive income attributable to Sonoco | $ 92,239 | $ 97,178 |
Basis of Interim Presentation |
3 Months Ended |
---|---|
Apr. 02, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Interim Presentation | 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 months ended April 2, 2017, are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016. With respect to the unaudited condensed consolidated financial information of the Company for the three-month periods ended April 2, 2017 and April 3, 2016 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 May 3, 2017 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. |
New Accounting Pronouncements |
3 Months Ended |
---|---|
Apr. 02, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In March 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires an employer to report service cost in the same line item as other compensation costs arising from employees during the period. The other components of net benefit cost as defined are required to be presented separately from the service cost component and outside a subtotal of income from operations, if one is presented, or disclosed. This update also allows only the service cost component to be eligible for capitalization when applicable and is effective for periods beginning after December 15, 2017. The amendments should be applied retrospectively for the presentation of the components of net benefit cost in the income statement and prospectively for the capitalization of the service cost component. The Company does not expect the implementation of ASU 2017-07 to have a material effect on its financial position or results of operations. In February 2017, the FASB issued ASU 2017-05, “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets,” which defined the term "in-substance nonfinancial asset" and clarified that an entity should identify each distinct nonfinancial asset or in-substance nonfinancial asset promised to a counterparty who is a noncustomer and derecognize each asset when a counterparty obtains control of it. The update also clarifies the applicable accounting treatment for certain transactions involving a partial sale of a nonfinancial asset (or in-substance nonfinancial asset) and the exchange or retaining of noncontrolling interests. This update is effective for periods beginning after December 15, 2017, and should be applied at the same time as the amendments in ASU 2014-09, which is discussed later in this Note. The Company does not expect the implementation of ASU 2017-05 to have a material effect on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” eliminating the requirement to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. Under ASU 2017-04, goodwill impairment testing will be performed by comparing the fair value of the reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The new standard is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. The Company does not expect the implementation of ASU 2017-04 to have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business," providing guidance to entities to assist with evaluating when a set of transferred assets and activities (collectively, the "set") is a business and provides a screen to determine when a set is not a business. Under the new guidance, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset, or group of similar assets, the assets acquired would not represent a business. Also, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to produce outputs. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied on a prospective basis to any transactions occurring within the period of adoption. The Company does not expect the implementation of ASU 2017-01 to have a material impact on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, "Restricted Cash," requiring that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in ASU 2016-18 do not provide a definition of restricted cash or restricted cash equivalents. The guidance is effective for periods beginning after December 15, 2017, on a retrospective basis. The Company does not expect the implementation of ASU 2016-18 to have a material impact on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory" as part of its simplification initiative to reduce complexity in accounting standards. This update requires that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for periods beginning after December 15, 2017 on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company does not expect the implementation of ASU 2016-16 to have a material effect on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," providing clarification on eight cash flow classification issues, including 1) debt prepayment or debt extinguishment costs, 2) settlement of relatively insignificant debt instruments, 3) contingent consideration payments, 4) insurance claim settlements, 5) life insurance settlements, 6) distributions received from equity method investees, 7) beneficial interests in securitization transactions, and 8) separately identifiable cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company does not expect the implementation of ASU 2016-15 to have a material effect on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses," which requires measurement and recognition of expected versus incurred credit losses for financial assets held. The guidance is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods. The Company does not expect the implementation of ASU 2016-13 to have a material effect on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," which impacts several aspects of the accounting for share-based payment transactions, including among others, the classification of excess tax benefits in the statements of income and cash flows and accounting for forfeitures. The Company's adoption of this update effective January 1, 2017 resulted in the recognition of $1,632 of excess tax benefits in the income statement during the quarter ended April 2, 2017. In accordance with the provisions of this ASU, excess tax benefits have also been recognized on a prospective basis within the operating section of the consolidated statement of cash flows for the period ended April 2, 2017, rather than the financing section. Pursuant to adoption of the new ASU, the Company recorded a cumulative charge to retained earning of $318 for the elimination of estimated forfeitures associated with the Company's share-based compensation. The Company has elected to recognize forfeitures prospectively as they occur beginning January 1, 2017. In March 2016, the FASB issued 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 15, 2018, including interim periods within those fiscal years and requires retrospective application. The Company is still assessing the impact of ASU 2016-02 on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, "Revenue From Contracts With Customers," which changes the definitions/criteria used to determine when revenue should be recognized from being based on risks and rewards to being based on control. Among other changes, 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. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017. Although the Company will not complete its final assessment and quantification of the impact of ASU 2014-09 on its consolidated financial statements until adoption, it expects the adoption to have the effect of accelerating the timing of revenue recognition compared to current standards for those arrangements under which the Company is producing customer-specific products without alternative use and would be entitled to payment for work completed, including a reasonable margin. The Company plans to adopt ASU 2014-09 in the first quarter of fiscal 2018 following the modified retrospective transition method. During the three-month period ended April 2, 2017, 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 April 2, 2017, there were no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions On March 14, 2017, the Company completed the acquisition of Packaging Holdings, Inc. and subsidiaries, including Peninsula Packaging LLC ("Packaging Holdings"), for $221,417, net of cash acquired. Final consideration will be subject to an adjustment for the change in working capital to the date of close. Packaging Holdings manufactures thermoformed packaging for a wide range of whole fresh fruits, pre-cut fruits and produce, prepared salad mixes, as well as baked goods in retail supermarkets from five manufacturing facilities, including four in the United States and one in Mexico. The Company financed the transaction with a combination of cash and borrowings from a new $150,000 three-year term loan. The provisional fair values of the assets acquired and liabilities assumed in connection with the acquisition of Packaging Holdings are as follows:
The allocation of the purchase price to the assets acquired and liabilities assumed was based on the Company’s preliminary estimates of their fair value, based on information currently available. Factors comprising goodwill, a portion of which is expected to be deductible for income tax purposes, include increased access to certain markets as well as the value of the assembled workforce. As the acquisition was completed close to the end of the reporting period, management is continuing to finalize its valuation of certain assets and liabilities including, but not limited to: identifiable intangible assets; property, plant and equipment; deferred income taxes; and capital leases. Management expects to complete its valuations in the second or third quarter of 2017. Packaging Holding's financial results are included in the Company's Consumer Packaging segment and the business will operate as the Peninsula brand of thermoformed packaging products within the Company's global plastics division. The Company has accounted for this acquisition as a business combination under the acquisition method of accounting, in accordance with the business combinations subtopic of the Accounting Standards Codification and, accordingly, has included its results of operations in the Company’s consolidated statements of net income from the date of acquisition. The Company does not believe this acquisition is a material transaction subject to the disclosures and supplemental pro-forma information required by ASC 805. Accordingly, this information is not presented. During the period ended April 2, 2017, the Company finalized its valuations of the assets and liabilities acquired in conjunction with the 2016 acquisitions of Plastic Packaging Inc. (“PPI”) and Laminar Medica (“Laminar”) based on information obtained about facts and circumstances that existed as of their respective acquisition dates. As a result, measurement period adjustments were made to the previously disclosed provisional fair values of PPI's net assets that increased identifiable intangibles by $1,400, increased property, plant and equipment by $400, increased the deferred tax liability by $706, and decreased goodwill by $1,094. The measurement period adjustments to the previously disclosed provisional fair values of Laminar's net assets increased goodwill by $161 and decreased property, plant and equipment by $161. Acquisition-related costs of $4,325 and $326 were incurred in the three months ended April 2, 2017 and April 3, 2016, 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. |
Shareholders' Equity |
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Shareholders' Equity | Shareholders' Equity Earnings per Share The following table sets forth the computation of basic and diluted earnings per share (dollars and shares in thousands, except per share data):
Potentially dilutive securities are calculated in accordance with the treasury stock method, which assumes the proceeds from the exercise of all dilutive stock appreciation rights (SARs) are used to repurchase the Company’s common stock. Certain SARs are not dilutive because either the exercise price is greater than the average market price of the stock during the reporting period or assumed repurchases from proceeds from the exercise of the SARs were antidilutive. These stock appreciation rights may become dilutive in the future if the market price of the Company's common stock appreciates. The average number of stock appreciation rights that were not dilutive and therefore not included in the computation of diluted earnings per share during the three-month periods ended April 2, 2017 and April 3, 2016 was as follows (in thousands):
No adjustments were made to net income attributable to Sonoco in the computations of earnings per share. Stock Repurchases On February 10, 2016, the Company’s Board of Directors authorized the repurchase of up to 5,000 shares of the Company's common stock. A total of 2,030 shares were purchased during 2016 at a cost of $100,000, leaving a total of 2,970 shares remaining available for repurchase at December 31, 2016. No shares were repurchased under this authorization during the three months ended April 2, 2017. At April 2, 2017, a total of 2,970 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 105 shares in the three months ended April 2, 2017 at a cost of $5,539, and 87 shares in the three months ended April 3, 2016 at a cost of $3,613. Dividend Declarations On February 8, 2017, the Board of Directors declared a regular quarterly dividend of $0.37 per share. This dividend was paid on March 10, 2017 to all shareholders of record as of February 22, 2017. On April 19, 2017, the Board of Directors declared a regular quarterly dividend of $0.39 per share. This dividend is payable June 9, 2017 to all shareholders of record as of May 12, 2017. |
Restructuring and Asset Impairment |
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Restructuring and Asset Impairment | Restructuring and Asset Impairment The Company has engaged in a number of restructuring actions over the past several years. Actions initiated in 2017 and 2016 are reported as “2017 Actions” and “2016 Actions,” respectively. Actions initiated prior to 2016, all of which were substantially complete at April 2, 2017, are reported as “2015 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:
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 $1,500 in connection with previously announced restructuring actions. The Company believes that the majority of these charges will be incurred and paid by the end of 2017. The Company continually evaluates its cost structure, including its manufacturing capacity, and additional restructuring actions are likely to be undertaken. 2017 Actions The Company eliminated approximately 32 positions in the first quarter of 2017 in conjunction with its ongoing organizational effectiveness efforts. Below is a summary of 2017 Actions and related expenses by segment and by type incurred and estimated to be incurred through completion.
The following table sets forth the activity in the 2017 Actions restructuring accrual included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets:
The Company expects to pay the majority of the remaining 2017 Actions restructuring costs by the end of 2017 using cash generated from operations. 2016 Actions During 2016, the Company closed four tubes and cores plants - one in the United States, one in Canada, one in Ecuador, and one in Switzerland (all part of the Paper and Industrial Converted Products segment), a packaging services center in Mexico (part of the Display and Packaging segment) and a fulfillment service center in Brazil (part of the Display and Packaging segment). The Company also began manufacturing rationalization efforts in its Reels division (part of the Paper and Industrial Converted Products segment) and completed the sales of a paper mill in France (part of the Paper and Industrial Converted Products segment) and a retail security packaging plant in Puerto Rico (part of the Display and Packaging segment). In addition, the Company continued to realign its cost structure, resulting in the elimination of approximately 180 positions. Below is a summary of 2016 Actions and related expenses by segment and by type incurred and estimated to be incurred through completion.
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:
“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 2017 using cash generated from operations. 2015 and Earlier Actions 2015 and Earlier Actions are comprised of a number of plant closures and workforce reductions initiated prior to 2016. Charges for these actions in both 2017 and 2016 relate primarily to the cost of plant closures including severance, asset impairment, equipment removal, plant security, property taxes and insurance. The Company expects to recognize future pretax charges of approximately $500 associated with 2015 and Earlier Actions. Below is a summary of expenses/(income) incurred by segment for 2015 and Earlier Actions for the three month periods ended April 2, 2017 and April 3, 2016.
The accrual for 2015 and Earlier Actions totaled $1,992 and $3,608 at April 2, 2017 and December 31, 2016, respectively, and is included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets. The accrual relates primarily to unpaid severance. The Company expects the majority of the liability associated with 2015 and Earlier Actions to be paid by the end of 2017 using cash generated from operations. |
Accumulated Other Comprehensive Loss |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | 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 three months ended April 2, 2017 and April 3, 2016:
"Other comprehensive income before reclassifications" during the three months ended April 2, 2017, includes $5,071 of "Defined Benefit Pension Items" related to the release of a portion of the valuation allowance on deferred tax assets related to the pension plan of a foreign subsidiary. The following table summarizes the effects on net income of significant amounts reclassified from each component of accumulated other comprehensive loss for the three-month periods ended April 2, 2017 and April 3, 2016:
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill A summary of the changes in goodwill by segment for the three months ended April 2, 2017 is as follows:
The acquisition of Packaging Holdings, Inc. ("Packaging Holdings") in March 2017 resulted in the recognition of $60,018 of goodwill. In addition, measurement period adjustments were made in the first quarter of 2017 to the provisional fair values of the assets acquired and the liabilities assumed in the November 2016 acquisition of Plastic Packaging, Inc. ("PPI") and the September 2016 acquisition of Laminar Medica ("Laminar"). These measurement period adjustments resulted in a $1,094 reduction in the goodwill associated with PPI and a $161 increase in the goodwill associated with Laminar. See Note 3 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 2016. As part of this testing, the Company analyzed certain qualitative and quantitative factors in determining goodwill impairment. During this most recent testing, management concluded that goodwill associated with the Company's Paper and Industrial Converted Products - Brazil reporting unit had become impaired as a result of the continued deterioration of economic conditions in Brazil. Accordingly, as previously disclosed, an impairment charge totaling $2,617, the entire amount of goodwill associated with this reporting unit, was recognized during the third quarter of 2016. Based on its assessments, the Company concluded that there was no impairment of goodwill for any of its other reporting units. The assessments reflected a number of significant management assumptions and estimates including the Company's forecast of sales volumes and prices, profit margins, income taxes, capital expenditures and changes in working capital requirements. Changes in these assumptions and/or discount rates could materially impact the Company's conclusions. Although no other 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 Display and Packaging, and Paper and Industrial Converted Products - Europe. Total goodwill associated with these reporting units was $203,414 and $88,073, respectively, at April 2, 2017. A large portion of sales in the Display and Packaging reporting unit is concentrated in one customer, the majority of which is under contract until 2021. There have been no triggering events identified between the most recent annual impairment test and April 2, 2017. Other Intangible Assets A summary of other intangible assets as of April 2, 2017 and December 31, 2016 is as follows:
The Packaging Holdings acquisition in March 2017 resulted in the addition of $54,000 of intangible assets, the majority of which related to customer lists. In addition, measurement period adjustments were made in the first quarter of 2017 to the provisional fair values of the assets acquired and the liabilities assumed in the November 2016 acquisition of PPI which resulted in the recognition of an additional $1,400 of intangible assets, all of which related to customer lists. These intangible assets will be amortized over an expected average useful life of 9.1 years. 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. Aggregate amortization expense was $7,211 and $8,336 for the three months ended April 2, 2017 and April 3, 2016, respectively. Amortization expense on other intangible assets is expected to total approximately $33,800 in 2017, $34,700 in 2018, $33,600 in 2019, $31,900 in 2020 and $29,900 in 2021. |
Financial Instruments and Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments and Derivatives | 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.
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 At April 2, 2017 and December 31, 2016, 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 to December 2019, 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 April 2, 2017, natural gas swaps covering approximately 8.3 MMBTUs were outstanding. These contracts represent approximately 92%, 55%, and 35% of anticipated U.S. and Canadian usage for the remainder of 2017, 2018 and 2019, respectively. Additionally, the Company had swap contracts covering 3,629 metric tons of aluminum, representing approximately 61% of anticipated usage for the remainder of 2017. The fair values of the Company’s commodity cash flow hedges netted to gain positions of $1,923 at April 2, 2017 and $3,636 at December 31, 2016. The amount of the gain included in Accumulated Other Comprehensive Loss at April 2, 2017, that is expected to be reclassified to the income statement during the next twelve months is $1,671. 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 2017. The net positions of these contracts at April 2, 2017 were as follows (in thousands):
The fair value of these foreign currency cash flow hedges netted to loss positions of $(3,034) at April 2, 2017 and $(185) at December 31, 2016. During the three months ended April 2, 2017, certain foreign currency cash flow hedges related to construction in progress were settled as the related capital expenditures were made. Losses from these hedges totaling $42 were reclassified from accumulated other comprehensive loss and included in the carrying value of the assets acquired. During the next twelve months, losses of $(3,043) are 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 April 2, 2017, were as follows (in thousands):
The fair value of the Company’s other derivatives was $(633) and $(696) at April 2, 2017 and December 31, 2016, respectively. The following table sets forth the location and fair values of the Company’s derivative instruments at April 2, 2017 and December 31, 2016:
While certain of the Company’s derivative contract arrangements with its counterparties provide for the ability to settle contracts on a net basis, the Company reports its derivative positions on a gross basis. There are no collateral arrangements or requirements in these agreements.
The following tables set forth the effect of the Company’s derivative instruments on financial performance for the three months ended April 2, 2017 and April 3, 2016:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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:
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:
As discussed in Note 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 non-financial assets or liabilities that are recognized or disclosed at fair value on a recurring basis. None of the Company’s financial assets or liabilities are measured at fair value using significant unobservable inputs. There were no transfers in or out of Level 1 or Level 2 fair value measurements during the three-month period ended April 2, 2017. |
Employee Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | 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. 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 for newly hired salaried and non-union hourly employees effective December 31, 2003. To replace this benefit, the Company provides non-union U.S. employees hired on or after January 1, 2004, with an annual contribution, called the Sonoco Retirement Contribution (SRC), to their participant accounts in the Sonoco Retirement and Savings Plan. The SRC is equal to 4% of the participant's eligible pay plus 4% of eligible pay in excess of the social security wage base. Also eligible for the SRC are former participants of the U.S. qualified defined benefit pension plan who elected to transfer out of that plan under a one-time option effective January 1, 2010. On February 4, 2009, the U.S. qualified defined benefit pension plan was amended to freeze plan benefits for all active participants effective December 31, 2018. Remaining active participants in the U.S. qualified plan will become eligible for SRC contributions effective January 1, 2019. The components of net periodic benefit cost include the following:
The Company made aggregate contributions of $29,491 and $18,690 to its defined benefit retirement and retiree health and life insurance plans during the three months ended April 2, 2017 and April 3, 2016, respectively. The Company anticipates that it will make additional aggregate contributions of approximately $14,000 to its defined benefit retirement and retiree health and life insurance plans over the remainder of 2017. In February 2017, the Company initiated a program through which it offered certain terminated vested participants in the U.S. qualified retirement plans the opportunity to receive their benefits early as either a lump sum or an annuity. This population comprises approximately 15% of the projected benefit obligation of these plans. At the close of the election period, approximately 51% of the eligible participants elected to take the early payment. These payments will be distributed from plan assets in May and June 2017. As a result of settling these obligations, the Company expects that it will be required to recognize a non-cash pre-tax settlement charge of approximately $34,000 in the second quarter of 2017. Sonoco Retirement Contribution (SRC) The Sonoco Retirement Contribution, which is funded annually in the first quarter, totaled $14,066 during the three months ended April 2, 2017, and $13,352 during the three months ended April 3, 2016. No additional SRC contributions are expected during the remainder of 2017. The Company recognized expense related to the SRC of $3,871 and $3,018 for the quarters ended April 2, 2017 and April 3, 2016, respectively. |
Income Taxes |
3 Months Ended |
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Apr. 02, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three-month periods ending April 2, 2017 and April 3, 2016 was 32.8%, and 33.2%, respectively. The rates for both of these periods 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 2017 quarter also varied from the statutory rate due to the Company's January 1, 2017, adoption of ASU 2016-09 regarding accounting for share-based compensation, which requires excess tax benefits to be utilized as an offset to tax expense. 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 2012, with few exceptions. The Company is currently under audit by the Internal Revenue Service for the 2012 and 2013 tax years. The Company’s reserve for uncertain tax benefits has decreased by approximately $2,400 since December 31, 2016, due to the agreement to settle a prior year's audit. The anticipated payment has been accrued for as a current payable and should be fully settled in the second quarter. The Company has $0 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. As previously disclosed, the Company received a draft Notice of Proposed Adjustment (“NOPA”) from the Internal Revenue Service (IRS) in February 2017 proposing an adjustment to income for the 2013 tax year based on the IRS's recharacterization of a distribution of an intercompany note made in 2012, and the subsequent repayment of the note over the course of 2013, as if it were a cash distribution made in 2013. In March 2017, the Company received a draft NOPA proposing penalties of $18,000 associated with the IRS’s recharacterization, as well as an Information Document Request (“IDR”) requesting the Company’s analysis of why such penalties should not apply. The Company responded to this IDR in April 2017. At the time the distribution was paid in 2012, it was characterized as a dividend to the extent of earnings and profits, with the remainder as a tax free return of basis and taxable capital gain. As the IRS proposes to recharacterize the distribution, the entire distribution would be characterized as a dividend. The incremental tax liability associated with the income adjustment proposed in the NOPA would be approximately $84,000, excluding interest and the previously referenced penalties. Should a final NOPA be issued, the Company intends to file a protest to the proposed deficiency with the IRS, which will cause the matter to be referred to the Appeals Division of the IRS. The Company strongly believes the position of the IRS with regard to this matter is inconsistent with applicable tax laws and existing Treasury regulations, and that the Company's previously reported income tax provision for the year in question is appropriate. However, there can be no assurance that this matter will be resolved in the Company's favor. Regardless of whether the matter is resolved in the Company's favor, the final resolution of this matter could be expensive and time consuming to defend and/or settle. While the Company believes that the amount of tax originally paid with respect to this distribution is correct, and accordingly has not provided additional reserve for tax uncertainty, there is still a possibility that an adverse outcome of the matter could have a material effect on its results of operations and financial condition. |
Segment Reporting |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | 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); extruded and injection-molded plastic products; printed flexible packaging; global brand artwork management; and metal and peelable membrane ends and closures. This segment also included blow-molded plastic bottles and jars through November 7, 2016, when the Company completed the sale of its rigid plastics blow molding operations. The Display and Packaging segment includes the following products and services: point-of-purchase displays; supply chain management services; retail packaging, including printed backer cards, thermoformed blisters and heat sealing equipment; and paperboard specialties, 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 business. General corporate expenses have been allocated as operating costs to each of the Company’s reportable segments. SEGMENT FINANCIAL INFORMATION
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Commitments and Contingencies |
3 Months Ended |
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Apr. 02, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 In January 2017, U.S. Paper Mills Corp. (U.S. Mills), a wholly owned subsidiary of the Company, obtained Court approval of a final settlement of cost recovery claims made by Appvion, Inc. for $3,334. The settlement, as well as related legal and professional fees totaling $315, were funded during the first quarter of 2017. As a result of the settlement becoming final, the Company and U.S. Mills have resolved all pending or threatened legal proceedings related to the Fox River matter, as well as any such proceedings known to be contemplated by government authorities. Spartanburg In connection with its acquisition of Tegrant in November 2011, the Company identified potential environmental contamination at a site in Spartanburg, South Carolina. The total remediation cost of the Spartanburg site was estimated to be $17,400 at the time of 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 $701 on remediation of the Spartanburg site. During previous years, the Company has increased its reserves for this site by a total of $117 in order to reflect its best estimate of what it is likely to pay in order to complete the remediation. At April 2, 2017 and December 31, 2016, the Company's accrual for environmental contingencies related to the Spartanburg site totaled $16,816 and $16,821, respectively. The Company cannot currently estimate its potential liability, damages or range of potential loss, if any, beyond the amounts accrued with respect to this exposure. However, the Company does not believe that the resolution of this matter has a reasonable possibility of having a material adverse effect on the Company's financial statements. Other environmental matters The Company has been named as a potentially responsible party at several other environmentally contaminated sites. All of the sites are also the responsibility of other parties. The 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. Summary As of April 2, 2017 and December 31, 2016, the Company (and its subsidiaries) had accrued $20,828 and $24,515, 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. |
New Accounting Pronouncements (Policies) |
3 Months Ended |
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Apr. 02, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In March 2017, the Financial Accounting Standards Board (FASB) issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires an employer to report service cost in the same line item as other compensation costs arising from employees during the period. The other components of net benefit cost as defined are required to be presented separately from the service cost component and outside a subtotal of income from operations, if one is presented, or disclosed. This update also allows only the service cost component to be eligible for capitalization when applicable and is effective for periods beginning after December 15, 2017. The amendments should be applied retrospectively for the presentation of the components of net benefit cost in the income statement and prospectively for the capitalization of the service cost component. The Company does not expect the implementation of ASU 2017-07 to have a material effect on its financial position or results of operations. In February 2017, the FASB issued ASU 2017-05, “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets,” which defined the term "in-substance nonfinancial asset" and clarified that an entity should identify each distinct nonfinancial asset or in-substance nonfinancial asset promised to a counterparty who is a noncustomer and derecognize each asset when a counterparty obtains control of it. The update also clarifies the applicable accounting treatment for certain transactions involving a partial sale of a nonfinancial asset (or in-substance nonfinancial asset) and the exchange or retaining of noncontrolling interests. This update is effective for periods beginning after December 15, 2017, and should be applied at the same time as the amendments in ASU 2014-09, which is discussed later in this Note. The Company does not expect the implementation of ASU 2017-05 to have a material effect on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” eliminating the requirement to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. Under ASU 2017-04, goodwill impairment testing will be performed by comparing the fair value of the reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The new standard is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. The Company does not expect the implementation of ASU 2017-04 to have a material impact on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business," providing guidance to entities to assist with evaluating when a set of transferred assets and activities (collectively, the "set") is a business and provides a screen to determine when a set is not a business. Under the new guidance, when substantially all of the fair value of gross assets acquired (or disposed of) is concentrated in a single identifiable asset, or group of similar assets, the assets acquired would not represent a business. Also, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to produce outputs. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied on a prospective basis to any transactions occurring within the period of adoption. The Company does not expect the implementation of ASU 2017-01 to have a material impact on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, "Restricted Cash," requiring that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in ASU 2016-18 do not provide a definition of restricted cash or restricted cash equivalents. The guidance is effective for periods beginning after December 15, 2017, on a retrospective basis. The Company does not expect the implementation of ASU 2016-18 to have a material impact on its consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory" as part of its simplification initiative to reduce complexity in accounting standards. This update requires that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The guidance is effective for periods beginning after December 15, 2017 on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company does not expect the implementation of ASU 2016-16 to have a material effect on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," providing clarification on eight cash flow classification issues, including 1) debt prepayment or debt extinguishment costs, 2) settlement of relatively insignificant debt instruments, 3) contingent consideration payments, 4) insurance claim settlements, 5) life insurance settlements, 6) distributions received from equity method investees, 7) beneficial interests in securitization transactions, and 8) separately identifiable cash flows. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company does not expect the implementation of ASU 2016-15 to have a material effect on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses," which requires measurement and recognition of expected versus incurred credit losses for financial assets held. The guidance is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods. The Company does not expect the implementation of ASU 2016-13 to have a material effect on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting," which impacts several aspects of the accounting for share-based payment transactions, including among others, the classification of excess tax benefits in the statements of income and cash flows and accounting for forfeitures. The Company's adoption of this update effective January 1, 2017 resulted in the recognition of $1,632 of excess tax benefits in the income statement during the quarter ended April 2, 2017. In accordance with the provisions of this ASU, excess tax benefits have also been recognized on a prospective basis within the operating section of the consolidated statement of cash flows for the period ended April 2, 2017, rather than the financing section. Pursuant to adoption of the new ASU, the Company recorded a cumulative charge to retained earning of $318 for the elimination of estimated forfeitures associated with the Company's share-based compensation. The Company has elected to recognize forfeitures prospectively as they occur beginning January 1, 2017. In March 2016, the FASB issued 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 15, 2018, including interim periods within those fiscal years and requires retrospective application. The Company is still assessing the impact of ASU 2016-02 on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, "Revenue From Contracts With Customers," which changes the definitions/criteria used to determine when revenue should be recognized from being based on risks and rewards to being based on control. Among other changes, 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. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017. Although the Company will not complete its final assessment and quantification of the impact of ASU 2014-09 on its consolidated financial statements until adoption, it expects the adoption to have the effect of accelerating the timing of revenue recognition compared to current standards for those arrangements under which the Company is producing customer-specific products without alternative use and would be entitled to payment for work completed, including a reasonable margin. The Company plans to adopt ASU 2014-09 in the first quarter of fiscal 2018 following the modified retrospective transition method. During the three-month period ended April 2, 2017, 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 April 2, 2017, there were no other pronouncements pending adoption that are expected to have a material impact on the Company’s consolidated financial statements. |
Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Fair values of assets acquired and liabilities assumed in connection with acquisition | The provisional fair values of the assets acquired and liabilities assumed in connection with the acquisition of Packaging Holdings are as follows:
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Shareholders' Equity (Tables) |
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Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share (dollars and shares in thousands, except per share data):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The average number of stock appreciation rights that were not dilutive and therefore not included in the computation of diluted earnings per share during the three-month periods ended April 2, 2017 and April 3, 2016 was as follows (in thousands):
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Restructuring and Asset Impairment (Tables) |
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Total Restructuring and Asset Impairment Charges Net | 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:
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Actions and Related Expenses by Segment and by Type Incurred and Estimated for Given Years | Below is a summary of 2017 Actions and related expenses by segment and by type incurred and estimated to be incurred through completion.
Below is a summary of 2016 Actions and related expenses by segment and by type incurred and estimated to be incurred through completion.
Below is a summary of expenses/(income) incurred by segment for 2015 and Earlier Actions for the three month periods ended April 2, 2017 and April 3, 2016.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Accrual Activity for Given Years | The following table sets forth the activity in the 2017 Actions restructuring accrual included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets:
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:
|
Accumulated Other Comprehensive Loss (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 02, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of 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 three months ended April 2, 2017 and April 3, 2016:
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Effects on Net Income of Significant Amounts Reclassified from Accumulated Other Comprehensive Loss | The following table summarizes the effects on net income of significant amounts reclassified from each component of accumulated other comprehensive loss for the three-month periods ended April 2, 2017 and April 3, 2016:
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Comprehensive Income (Loss) |
|
Goodwill and Other Intangible Assets (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 02, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Goodwill by Segment | A summary of the changes in goodwill by segment for the three months ended April 2, 2017 is as follows:
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Summary of Other Intangible Assets | A summary of other intangible assets as of April 2, 2017 and December 31, 2016 is as follows:
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Financial Instruments and Derivatives (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 02, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amounts and Fair Values of Financial Instruments | 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.
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Net Positions of Foreign Contracts | The Company has entered into forward contracts to hedge certain anticipated foreign currency denominated sales and purchases forecast to occur in 2017. The net positions of these contracts at April 2, 2017 were as follows (in thousands):
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Net Positions of Other Derivatives Contract | The net positions of these contracts at April 2, 2017, were as follows (in thousands):
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Location and Fair Values of Derivative Instruments | The following table sets forth the location and fair values of the Company’s derivative instruments at April 2, 2017 and December 31, 2016:
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Effect of Derivative Instruments on Financial Performance |
The following tables set forth the effect of the Company’s derivative instruments on financial performance for the three months ended April 2, 2017 and April 3, 2016:
|
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 02, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured on Recurring Basis | 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:
|
Employee Benefit Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 02, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | The components of net periodic benefit cost include the following:
|
Segment Reporting (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 02, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Financial Information | SEGMENT FINANCIAL INFORMATION
|
New Accounting Pronouncements - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Dec. 31, 2016 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Excess tax benefit | $ 1,632 | |
Retained Earnings | ASU 2016-09 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect if new accounting pronouncement | $ (318) |
Acquisitions - Narrative (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 14, 2017
USD ($)
facility
|
Apr. 02, 2017
USD ($)
|
Apr. 03, 2016
USD ($)
|
|
Business Acquisition [Line Items] | |||
Consideration transferred | $ 221,417 | $ 0 | |
Acquisition related costs | 4,325 | $ 326 | |
Packaging Holdings, Inc. | |||
Business Acquisition [Line Items] | |||
Consideration transferred | $ 221,417 | ||
Number of manufacturing facilities | facility | 5 | ||
Plastic Packaging Inc. | |||
Business Acquisition [Line Items] | |||
Adjustment to intangibles | 1,400 | ||
Adjustment to PP&E | 400 | ||
Adjustment to deferred tax liability | (706) | ||
Goodwill accounting adjustments | (1,094) | ||
Laminar Medica | |||
Business Acquisition [Line Items] | |||
Adjustment to PP&E | (161) | ||
Goodwill accounting adjustments | $ 161 | ||
Loans Payable | |||
Business Acquisition [Line Items] | |||
Proceeds from issuance of debt | $ 150,000 | ||
Debt term | 3 years | ||
United States | Packaging Holdings, Inc. | |||
Business Acquisition [Line Items] | |||
Number of manufacturing facilities | facility | 4 | ||
Mexico | Packaging Holdings, Inc. | |||
Business Acquisition [Line Items] | |||
Number of manufacturing facilities | facility | 1 |
Acquisitions - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
Apr. 02, 2017 |
Mar. 14, 2017 |
Dec. 31, 2016 |
[1] | ||
---|---|---|---|---|---|---|
Business Acquisition [Line Items] | ||||||
Goodwill | $ 1,156,674 | $ 1,092,215 | ||||
Packaging Holdings, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Trade accounts receivable | $ 14,535 | |||||
Inventories | 42,428 | |||||
Property plant and equipment | 77,267 | |||||
Goodwill | 60,018 | |||||
Other intangible assets | 54,000 | |||||
Trade accounts payable | (21,655) | |||||
Other net tangible assets /(liabilities) | (5,176) | |||||
Net assets | $ 221,417 | |||||
|
Shareholders' Equity - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Numerator: | ||
Net income attributable to Sonoco | $ 53,733 | $ 59,914 |
Denominator: | ||
Basic (in shares) | 100,112 | 101,628 |
Dilutive effect of stock-based compensation (in shares) | 868 | 701 |
Diluted (in shares) | 100,980 | 102,329 |
Reported net income attributable to Sonoco per common share: | ||
Basic (in usd per share) | $ 0.54 | $ 0.59 |
Diluted (in usd per share) | $ 0.53 | $ 0.59 |
Shareholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Apr. 20, 2017 |
Feb. 08, 2017 |
Apr. 02, 2017 |
Apr. 03, 2016 |
Dec. 31, 2016 |
Feb. 10, 2016 |
|
Class of Stock [Line Items] | ||||||
Number of securities excluded from computation of dilutive earning per share | 356,000 | 1,430,000 | ||||
Number of shares authorized for repurchase | 5,000,000 | |||||
Number of shares repurchased | 0 | 2,030,000 | ||||
Cost of shares repurchased | $ 100,000 | |||||
Number of shares available for repurchase | 2,970,000 | |||||
Dividend declared date | Feb. 08, 2017 | |||||
Dividend declared and payable (in usd per share) | $ 0.37 | |||||
Dividend payable date | Mar. 10, 2017 | |||||
Dividend payable date of record | Feb. 22, 2017 | |||||
Tax Withholding Obligations | ||||||
Class of Stock [Line Items] | ||||||
Number of shares repurchased | 105,000 | 87,000 | ||||
Cost of shares repurchased | $ 5,539 | $ 3,613 | ||||
Subsequent Event | ||||||
Class of Stock [Line Items] | ||||||
Dividend declared date | Apr. 19, 2017 | |||||
Dividend declared and payable (in usd per share) | $ 0.39 | |||||
Dividend payable date | Jun. 09, 2017 | |||||
Dividend payable date of record | May 12, 2017 |
Restructuring and Asset Impairment - Restructuring and Asset Impairment (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | $ 4,111 | $ 9,228 |
Income tax benefit | (1,298) | (2,920) |
Less: Costs attributable to noncontrolling interests, net of tax | (2) | (7) |
Restructuring/asset impairment charges attributable to Sonoco, net of tax | 2,811 | 6,301 |
2017 Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 2,304 | 0 |
2016 Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 1,155 | 6,413 |
2015 and Earlier Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | $ 652 | $ 2,815 |
Restructuring and Asset Impairment - Additional Information (Details) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Apr. 02, 2017
USD ($)
position
|
Dec. 31, 2016
USD ($)
facility
|
|
Restructuring Cost and Reserve [Line Items] | ||
Expected future charges associated with previous restructuring on earnings | $ | $ 1,500 | |
United States | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of facilities closed | 1 | |
Canada | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of facilities closed | 1 | |
Ecuador | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of facilities closed | 1 | |
Switzerland | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of facilities closed | 1 | |
2017 Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Elimination of positions due to realign in cost structure | position | 32 | |
2016 Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Elimination of positions due to realign in cost structure | position | 180 | |
2015 and Earlier Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Expected future charges associated with previous restructuring on earnings | $ | $ 500 | |
Remaining restructuring accrual | $ | $ 1,992 | $ 3,608 |
Restructuring and Asset Impairment - Actions and Related Expenses by Segment and by Type Incurred and Estimated for Given Years (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | $ 4,111 | $ 9,228 |
2017 Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 2,304 | 0 |
Estimated Total Cost | 2,899 | |
2017 Actions | Other Costs | Consumer Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 159 | |
Estimated Total Cost | 159 | |
2017 Actions | Other Costs | Paper And Industrial Converted Products | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 0 | |
Estimated Total Cost | 6 | |
2016 Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 1,155 | 6,413 |
Total Incurred to Date | 34,152 | |
Estimated Total Cost | 34,550 | |
2016 Actions | Asset Impairment / Disposal of Assets | Consumer Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 0 | (306) |
Total Incurred to Date | (306) | |
Estimated Total Cost | (306) | |
2016 Actions | Asset Impairment / Disposal of Assets | Display and Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 96 | 0 |
Total Incurred to Date | 2,808 | |
Estimated Total Cost | 2,808 | |
2016 Actions | Asset Impairment / Disposal of Assets | Paper And Industrial Converted Products | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 0 | 0 |
Total Incurred to Date | 13,300 | |
Estimated Total Cost | 13,300 | |
2016 Actions | Other Costs | Consumer Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 0 | 198 |
Total Incurred to Date | 731 | |
Estimated Total Cost | 731 | |
2016 Actions | Other Costs | Display and Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 229 | 0 |
Total Incurred to Date | 515 | |
Estimated Total Cost | 515 | |
2016 Actions | Other Costs | Paper And Industrial Converted Products | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 690 | 18 |
Total Incurred to Date | 1,988 | |
Estimated Total Cost | 2,188 | |
2016 Actions | Other Costs | Protective Solutions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 55 | 0 |
Total Incurred to Date | 205 | |
Estimated Total Cost | 205 | |
2015 and Earlier Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 652 | 2,815 |
Operating Segments | 2017 Actions | Severance and Termination Benefits | Consumer Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 967 | |
Estimated Total Cost | 1,467 | |
Operating Segments | 2017 Actions | Severance and Termination Benefits | Display and Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 106 | |
Estimated Total Cost | 106 | |
Operating Segments | 2017 Actions | Severance and Termination Benefits | Paper And Industrial Converted Products | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 541 | |
Estimated Total Cost | 630 | |
Operating Segments | 2017 Actions | Severance and Termination Benefits | Protective Solutions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 75 | |
Estimated Total Cost | 75 | |
Operating Segments | 2016 Actions | Severance and Termination Benefits | Consumer Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 1 | 965 |
Total Incurred to Date | 2,408 | |
Estimated Total Cost | 2,408 | |
Operating Segments | 2016 Actions | Severance and Termination Benefits | Display and Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | (13) | 1,376 |
Total Incurred to Date | 4,291 | |
Estimated Total Cost | 4,291 | |
Operating Segments | 2016 Actions | Severance and Termination Benefits | Paper And Industrial Converted Products | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 98 | 2,411 |
Total Incurred to Date | 5,985 | |
Estimated Total Cost | 6,183 | |
Operating Segments | 2016 Actions | Severance and Termination Benefits | Protective Solutions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | (1) | 322 |
Total Incurred to Date | 677 | |
Estimated Total Cost | 677 | |
Operating Segments | 2015 and Earlier Actions | Consumer Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | (27) | 2,155 |
Operating Segments | 2015 and Earlier Actions | Display and Packaging | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 83 | 6 |
Operating Segments | 2015 and Earlier Actions | Paper And Industrial Converted Products | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 565 | 603 |
Operating Segments | 2015 and Earlier Actions | Protective Solutions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 24 | 51 |
Corporate | 2017 Actions | Severance and Termination Benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 456 | |
Estimated Total Cost | 456 | |
Corporate | 2016 Actions | Severance and Termination Benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | 0 | 1,429 |
Total Incurred to Date | 1,550 | |
Estimated Total Cost | 1,550 | |
Corporate | 2015 and Earlier Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring/Asset impairment charges | $ 7 | $ 0 |
Restructuring and Asset Impairment - Restructuring Accrual Activity for Given Years (Details) $ in Thousands |
3 Months Ended |
---|---|
Apr. 02, 2017
USD ($)
| |
2017 Actions | |
Restructuring Reserve [Roll Forward] | |
Liability, Beginning Balance | $ 0 |
Current year charges | 2,304 |
Cash receipts/(payments) | (1,306) |
Asset write downs/disposals | 0 |
Foreign currency translation | 0 |
Liability, Ending Balance | 998 |
2016 Actions | |
Restructuring Reserve [Roll Forward] | |
Liability, Beginning Balance | 4,198 |
Current year charges | 1,155 |
Adjustments | 0 |
Cash receipts/(payments) | (2,606) |
Asset write downs/disposals | (414) |
Foreign currency translation | 8 |
Liability, Ending Balance | 2,341 |
Severance and Termination Benefits | 2017 Actions | |
Restructuring Reserve [Roll Forward] | |
Liability, Beginning Balance | 0 |
Current year charges | 2,145 |
Cash receipts/(payments) | (1,147) |
Foreign currency translation | 0 |
Liability, Ending Balance | 998 |
Severance and Termination Benefits | 2016 Actions | |
Restructuring Reserve [Roll Forward] | |
Liability, Beginning Balance | 3,558 |
Current year charges | 85 |
Adjustments | 0 |
Cash receipts/(payments) | (1,661) |
Foreign currency translation | 2 |
Liability, Ending Balance | 1,984 |
Asset Impairment / Disposal of Assets | 2017 Actions | |
Restructuring Reserve [Roll Forward] | |
Liability, Beginning Balance | 0 |
Current year charges | 0 |
Cash receipts/(payments) | 0 |
Asset write downs/disposals | 0 |
Liability, Ending Balance | 0 |
Asset Impairment / Disposal of Assets | 2016 Actions | |
Restructuring Reserve [Roll Forward] | |
Liability, Beginning Balance | 0 |
Current year charges | 96 |
Adjustments | 0 |
Cash receipts/(payments) | 0 |
Asset write downs/disposals | (96) |
Liability, Ending Balance | 0 |
Other Asset Impairment [Member] | 2016 Actions | |
Restructuring Reserve [Roll Forward] | |
Asset write downs/disposals | (318) |
Other Costs | 2017 Actions | |
Restructuring Reserve [Roll Forward] | |
Liability, Beginning Balance | 0 |
Current year charges | 159 |
Cash receipts/(payments) | (159) |
Foreign currency translation | 0 |
Liability, Ending Balance | 0 |
Other Costs | 2016 Actions | |
Restructuring Reserve [Roll Forward] | |
Liability, Beginning Balance | 640 |
Current year charges | 974 |
Adjustments | 0 |
Cash receipts/(payments) | (945) |
Foreign currency translation | 6 |
Liability, Ending Balance | $ 357 |
Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Apr. 02, 2017 |
Apr. 03, 2016 |
|||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | [1] | $ 1,554,705 | ||
Other comprehensive income | 39,186 | $ 38,676 | ||
Ending Balance | 1,608,867 | |||
Gains and Losses on Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | 1,939 | (5,152) | ||
Other comprehensive income/(loss) before reclassifications | (2,626) | 411 | ||
Amounts reclassified from accumulated other comprehensive loss | (365) | 1,514 | ||
Other comprehensive income | (2,949) | 1,900 | ||
Ending Balance | (1,010) | (3,252) | ||
Defined Benefit Pension Items | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | (453,821) | (444,244) | ||
Other comprehensive income/(loss) before reclassifications | 4,924 | 0 | ||
Amounts reclassified from accumulated other comprehensive loss | 6,375 | 5,948 | ||
Other comprehensive income | 11,299 | 5,948 | ||
Ending Balance | (442,522) | (438,296) | ||
Foreign Currency Items | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | (286,498) | (253,137) | ||
Other comprehensive income/(loss) before reclassifications | 30,156 | 30,828 | ||
Other comprehensive income | 30,156 | 30,828 | ||
Ending Balance | (256,342) | (222,309) | ||
AOCI Attributable to Parent | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning Balance | (738,380) | (702,533) | ||
Other comprehensive income/(loss) before reclassifications | 32,454 | 31,239 | ||
Amounts reclassified from accumulated other comprehensive loss | 6,010 | 7,462 | ||
Other comprehensive income | 38,506 | 38,676 | ||
Ending Balance | (699,874) | (663,857) | ||
Fixed Assets | Gains and Losses on Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Amounts reclassified from accumulated other comprehensive loss | 42 | (25) | ||
Fixed Assets | AOCI Attributable to Parent | ||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Amounts reclassified from accumulated other comprehensive loss | $ 42 | $ (25) | ||
|
Accumulated Other Comprehensive Loss - Additional Information (Details) $ in Thousands |
3 Months Ended |
---|---|
Apr. 02, 2017
USD ($)
| |
Subsidiaries [Member] | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Other comprehensive income/(loss) before reclassifications | $ 5,071 |
Accumulated Other Comprehensive Loss - Effects on Net Income of Significant Amounts Reclassified from Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Net sales | $ 1,172,324 | $ 1,226,276 |
Cost of sales | (952,102) | (981,023) |
Selling, general and administrative | (126,138) | (134,193) |
Income before income taxes | 77,915 | 88,045 |
Tax benefit | (25,539) | (29,194) |
Reclassification out of Accumulated Other Comprehensive Income | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Income before equity in earnings of affiliates | (6,010) | (7,462) |
Reclassification out of Accumulated Other Comprehensive Income | Gains and Losses on Cash Flow Hedges | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Income before income taxes | 563 | (2,706) |
Tax benefit | (198) | 1,192 |
Income before equity in earnings of affiliates | 365 | (1,514) |
Reclassification out of Accumulated Other Comprehensive Income | Gains and Losses on Cash Flow Hedges | Foreign Exchange Contracts | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Net sales | 1,040 | (2,240) |
Cost of sales | (725) | 1,045 |
Reclassification out of Accumulated Other Comprehensive Income | Gains and Losses on Cash Flow Hedges | Commodity Contracts | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Cost of sales | 248 | (1,511) |
Reclassification out of Accumulated Other Comprehensive Income | Defined Benefit Pension Items | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Cost of sales | (7,588) | (7,143) |
Selling, general and administrative | (2,529) | (2,381) |
Income before income taxes | (10,117) | (9,524) |
Tax benefit | 3,742 | 3,576 |
Income before equity in earnings of affiliates | $ (6,375) | $ (5,948) |
Accumulated Other Comprehensive Loss - Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Foreign currency translation adjustments | $ 30,836 | $ 30,828 |
Defined benefit pension items: | ||
Net other comprehensive income (loss) from defined benefit pension items, after tax | 11,299 | 5,948 |
Gains and losses on cash flow hedges: | ||
Net other comprehensive income (loss) from cash flow hedges, after tax | (2,949) | 1,900 |
AOCI Attributable to Parent | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Foreign currency items, before tax | 30,156 | 30,828 |
Foreign currency items, tax (expense) benefit | 0 | 0 |
Foreign currency translation adjustments | 30,156 | 30,828 |
Defined benefit pension items: | ||
Other comprehensive (income) loss, before tax | (147) | 0 |
Other comprehensive (income) loss, tax (expense) benefit | 5,071 | 0 |
Other comprehensive (income) loss after tax | 4,924 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss) to net income, before tax | 10,117 | 9,524 |
Amounts reclassified from accumulated other comprehensive income (loss) to net income, tax (expense) benefit | (3,742) | (3,576) |
Amounts reclassified from accumulated other comprehensive income (loss) to net income, after tax | 6,375 | 5,948 |
Net other comprehensive income (loss) from defined benefit pension items, before tax | 9,970 | 9,524 |
Net other comprehensive income (loss) from defined benefit pension items, tax (expense) benefit | 1,329 | (3,576) |
Net other comprehensive income (loss) from defined benefit pension items, after tax | 11,299 | 5,948 |
Gains and losses on cash flow hedges: | ||
Other comprehensive income (loss) before reclassifications, before tax | (4,048) | 601 |
Other comprehensive income (loss) before reclassifications, tax (expense) benefit | 1,422 | (190) |
Other comprehensive income (loss) before reclassifications, after tax | (2,626) | 411 |
Amounts reclassified from accumulated other comprehensive income (loss), before tax | (563) | 2,706 |
Amounts reclassified from accumulated other comprehensive income (loss), tax (expense) benefit | 198 | (1,192) |
Amounts reclassified from accumulated other comprehensive income (loss), after tax | (365) | 1,514 |
Net other comprehensive income (loss) from cash flow hedges, before tax | (4,569) | 3,282 |
Net other comprehensive income (loss) from cash flow hedges, tax (expense) benefit | 1,620 | (1,382) |
Net other comprehensive income (loss) from cash flow hedges, after tax | (2,949) | 1,900 |
Other comprehensive income (loss), before tax | 35,557 | 43,634 |
Other comprehensive income (loss), tax (expense) benefit | 2,949 | (4,958) |
Other comprehensive income (loss), after tax | 38,506 | 38,676 |
Fixed Assets | AOCI Attributable to Parent | ||
Gains and losses on cash flow hedges: | ||
Amounts reclassified from accumulated other comprehensive income (loss), before tax | 42 | (25) |
Amounts reclassified from accumulated other comprehensive income (loss), tax (expense) benefit | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income (loss), after tax | $ 42 | $ (25) |
Goodwill and Other Intangible Assets - Changes in Goodwill by Segment (Details) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Apr. 02, 2017
USD ($)
| ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | $ 1,092,215 | [1] | ||
Acquisitions | 59,085 | |||
Foreign currency translation | 5,374 | |||
Goodwill, ending balance | 1,156,674 | |||
Consumer Packaging | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 435,590 | |||
Acquisitions | 58,924 | |||
Foreign currency translation | 3,157 | |||
Goodwill, ending balance | 497,671 | |||
Display and Packaging | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 203,414 | |||
Acquisitions | 0 | |||
Foreign currency translation | 0 | |||
Goodwill, ending balance | 203,414 | |||
Paper and Industrial Converted Products | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 221,983 | |||
Acquisitions | 0 | |||
Foreign currency translation | 2,113 | |||
Goodwill, ending balance | 224,096 | |||
Protective Solutions | ||||
Goodwill [Roll Forward] | ||||
Goodwill, beginning balance | 231,228 | |||
Acquisitions | 161 | |||
Foreign currency translation | 104 | |||
Goodwill, ending balance | $ 231,493 | |||
|
Goodwill and Other Intangible Assets - Additional Information (Details) |
1 Months Ended | 3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017
USD ($)
|
Apr. 02, 2017
USD ($)
customer
|
Oct. 02, 2016
USD ($)
|
Apr. 03, 2016
USD ($)
|
Mar. 14, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
||||
Goodwill [Line Items] | |||||||||
Goodwill | $ 1,156,674,000 | $ 1,092,215,000 | [1] | ||||||
Expected average useful life | 9 years 1 month | ||||||||
Aggregate amortization expenses | $ 7,211,000 | $ 8,336,000 | |||||||
Amortization expense on other intangible assets in 2017 | 33,800,000 | ||||||||
Amortization expense on other intangible assets in 2018 | 34,700,000 | ||||||||
Amortization expense on other intangible assets in 2019 | 33,600,000 | ||||||||
Amortization expense on other intangible assets in 2020 | 31,900,000 | ||||||||
Amortization expense on other intangible assets in 2021 | 29,900,000 | ||||||||
Tubes and Cores/Paper - Brazil Reporting Unit | |||||||||
Goodwill [Line Items] | |||||||||
Goodwill | 88,073,000 | ||||||||
Paper and Industrial Converted Products | |||||||||
Goodwill [Line Items] | |||||||||
Goodwill | 224,096,000 | 221,983,000 | |||||||
Goodwill, impairment loss | $ 2,617,000 | ||||||||
Other Segments | |||||||||
Goodwill [Line Items] | |||||||||
Goodwill, impairment loss | 0 | ||||||||
Display and Packaging | |||||||||
Goodwill [Line Items] | |||||||||
Goodwill | 203,414,000 | $ 203,414,000 | |||||||
Display and Packaging | Display and Packaging Reporting Unit | |||||||||
Goodwill [Line Items] | |||||||||
Goodwill | $ 203,414,000 | ||||||||
Number of customers | customer | 1 | ||||||||
Minimum | |||||||||
Goodwill [Line Items] | |||||||||
Useful lives of other intangible assets | 3 years | ||||||||
Maximum | |||||||||
Goodwill [Line Items] | |||||||||
Useful lives of other intangible assets | 40 years | ||||||||
Packaging Holdings, Inc. | |||||||||
Goodwill [Line Items] | |||||||||
Goodwill | $ 60,018,000 | ||||||||
Intangible assets acquired | $ 54,000,000 | ||||||||
Plastic Packaging Inc. | |||||||||
Goodwill [Line Items] | |||||||||
Goodwill accounting adjustments | $ (1,094,000) | ||||||||
Adjustment to intangibles | 1,400,000 | ||||||||
Laminar Medica | |||||||||
Goodwill [Line Items] | |||||||||
Goodwill accounting adjustments | $ 161,000 | ||||||||
|
Goodwill and Other Intangible Assets - Summary of Other Intangible Assets (Details) - USD ($) $ in Thousands |
Apr. 02, 2017 |
Dec. 31, 2016 |
|||
---|---|---|---|---|---|
Other Intangible Assets, gross: | |||||
Other Intangible Assets, gross | $ 475,364 | $ 417,938 | |||
Accumulated Amortization | (201,470) | (192,980) | |||
Other Intangible Assets, net | 273,894 | 224,958 | [1] | ||
Patents | |||||
Other Intangible Assets, gross: | |||||
Other Intangible Assets, gross | 28,165 | 13,164 | |||
Accumulated Amortization | (5,112) | (5,647) | |||
Customer Lists | |||||
Other Intangible Assets, gross: | |||||
Other Intangible Assets, gross | 400,545 | 362,162 | |||
Accumulated Amortization | (180,622) | (172,292) | |||
Trade Names | |||||
Other Intangible Assets, gross: | |||||
Other Intangible Assets, gross | 23,924 | 19,902 | |||
Accumulated Amortization | (2,892) | (2,733) | |||
Proprietary Technology | |||||
Other Intangible Assets, gross: | |||||
Other Intangible Assets, gross | 20,729 | 20,721 | |||
Accumulated Amortization | (11,719) | (11,236) | |||
Land Use Rights | |||||
Other Intangible Assets, gross: | |||||
Other Intangible Assets, gross | 290 | 288 | |||
Accumulated Amortization | (42) | (41) | |||
Other | |||||
Other Intangible Assets, gross: | |||||
Other Intangible Assets, gross | 1,711 | 1,701 | |||
Accumulated Amortization | $ (1,083) | $ (1,031) | |||
|
Financial Instruments and Derivatives - Carrying Amount and Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands |
Apr. 02, 2017 |
Dec. 31, 2016 |
|||
---|---|---|---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||
Long-term debt, net of current portion, Carrying Amount | $ 1,177,188 | $ 1,020,698 | [1] | ||
Long-term debt, net of current portion, Fair Value | $ 1,286,950 | $ 1,116,336 | |||
|
Financial Instruments and Derivatives - Additional Information (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Apr. 02, 2017
USD ($)
MMBTU
t
|
Apr. 03, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Derivative [Line Items] | |||
Fair value of commodity cash flow hedges | $ 1,923 | $ 3,636 | |
Commodity gain (loss) expected to be reclassified to the income statement during the next 12 months | 1,671 | ||
Fair value of foreign currency cash flow hedges | (3,034) | (185) | |
Foreign currency gain (loss) expected to be reclassified to the income statement during the next 12 months | (3,043) | ||
Total fair value of other derivatives not designated as hedging instruments | $ (633) | $ (696) | |
Natural Gas Swaps | |||
Derivative [Line Items] | |||
Approximate amount of commodity covered by swap contracts outstanding | MMBTU | 8.3 | ||
Anticipated usage percentage covered by a swap contract for the current fiscal year | 92.00% | ||
Anticipated usage percentage covered by a swap contract for the second succeeding fiscal year (less than) | 55.00% | ||
Anticipated usage percentage covered by a swap contract for the third succeeding fiscal year (less than) | 35.00% | ||
Aluminum Swaps | |||
Derivative [Line Items] | |||
Anticipated usage percentage covered by a swap contract for the current fiscal year | 61.00% | ||
Approximate amount of commodity covered by swap contracts outstanding | t | 3,629 | ||
AOCI Attributable to Parent | |||
Derivative [Line Items] | |||
Amounts reclassified from accumulated other comprehensive loss | $ 6,010 | $ 7,462 | |
AOCI Attributable to Parent | Fixed Assets | |||
Derivative [Line Items] | |||
Amounts reclassified from accumulated other comprehensive loss | $ 42 | $ (25) |
Financial Instruments and Derivatives - Net Positions of Foreign Contracts (Details) - Apr. 02, 2017 € in Thousands, £ in Thousands, TRY in Thousands, RUB in Thousands, PLN in Thousands, NZD in Thousands, MXN in Thousands, COP in Thousands, CAD in Thousands, AUD in Thousands |
AUD |
PLN |
TRY |
RUB |
CAD |
EUR (€) |
COP |
GBP (£) |
MXN |
NZD |
---|---|---|---|---|---|---|---|---|---|---|
Purchase | Cash Flow Hedging | ||||||||||
Derivative [Line Items] | ||||||||||
Net position | CAD 42,831 | COP 1,553,369 | MXN 448,498 | |||||||
Cash Flow Hedging | Purchase | ||||||||||
Derivative [Line Items] | ||||||||||
Net position | TRY 6,318 | RUB 11,964 | £ 2,254 | |||||||
Cash Flow Hedging | Sell | ||||||||||
Derivative [Line Items] | ||||||||||
Net position | AUD 654 | PLN 2,142 | € 5,244 | NZD 510 |
Financial Instruments and Derivatives - Net Positions of Other Derivatives Contract (Details) - Apr. 02, 2017 MXN in Thousands, COP in Thousands, CAD in Thousands |
CAD |
COP |
MXN |
---|---|---|---|
Purchase | Derivatives Not Designated as Hedging Instruments | |||
Derivative [Line Items] | |||
Net position | CAD 11,911 | COP 2,260,800 | MXN 231,676 |
Financial Instruments and Derivatives - Location and Fair Values of Derivative Instruments (Details) - USD ($) $ in Thousands |
Apr. 02, 2017 |
Dec. 31, 2016 |
---|---|---|
Derivatives Designated as Hedging Instruments | Commodity Contracts | Prepaid Expenses | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid expenses, accrued expenses, and other liabilities | $ 1,973 | $ 3,240 |
Derivatives Designated as Hedging Instruments | Commodity Contracts | Other Assets | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid expenses, accrued expenses, and other liabilities | 209 | 527 |
Derivatives Designated as Hedging Instruments | Commodity Contracts | Accrued Expenses and Other | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid expenses, accrued expenses, and other liabilities | 51 | 89 |
Derivatives Designated as Hedging Instruments | Commodity Contracts | Other Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid expenses, accrued expenses, and other liabilities | 208 | 42 |
Derivatives Designated as Hedging Instruments | Foreign Exchange Contracts | Prepaid Expenses | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid expenses | 197 | 761 |
Derivatives Designated as Hedging Instruments | Foreign Exchange Contracts | Accrued Expenses and Other | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid expenses, accrued expenses, and other liabilities | 3,231 | 946 |
Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contracts | Prepaid Expenses | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid expenses | 53 | 194 |
Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contracts | Accrued Expenses and Other | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid expenses, accrued expenses, and other liabilities | $ 686 | $ 890 |
Financial Instruments and Derivatives - Effect of Derivative Instruments on Financial Performance (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Foreign Exchange Contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | $ (2,692) | $ 2,317 |
Foreign Exchange Contracts | Net Sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain or (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion) | 1,040 | (2,240) |
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) | 0 | 0 |
Foreign Exchange Contracts | Cost of Sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain or (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion) | (725) | 1,045 |
Commodity Contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) | (1,356) | (1,766) |
Commodity Contracts | Cost of Sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain or (Loss) Reclassified from Accumulated OCI Into Income (Effective Portion) | 248 | (1,511) |
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion) | (335) | 110 |
Not Designated as Hedging Instrument | Foreign Exchange Contracts | Cost of Sales | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain or (Loss) Recognized | 0 | 0 |
Not Designated as Hedging Instrument | Foreign Exchange Contracts | Selling, General and Administrative | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain or (Loss) Recognized | $ (567) | $ (498) |
Fair Value Measurements - Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands |
Apr. 02, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at NAV | $ 0 | |
Deferred compensation plan assets | $ 364 | 349 |
Derivatives Designated as Hedging Instruments | Commodity Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | 1,923 | 3,636 |
Assets measured at NAV | 0 | |
Derivatives Designated as Hedging Instruments | Foreign Exchange Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | (3,034) | (185) |
Assets measured at NAV | 0 | |
Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | (633) | (696) |
Assets measured at NAV | 0 | |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation plan assets | 364 | 349 |
Level 1 | Derivatives Designated as Hedging Instruments | Commodity Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Level 1 | Derivatives Designated as Hedging Instruments | Foreign Exchange Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Level 1 | Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation plan assets | 0 | 0 |
Level 2 | Derivatives Designated as Hedging Instruments | Commodity Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | 1,923 | 3,636 |
Level 2 | Derivatives Designated as Hedging Instruments | Foreign Exchange Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | (3,034) | (185) |
Level 2 | Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | (633) | (696) |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation plan assets | 0 | 0 |
Level 3 | Derivatives Designated as Hedging Instruments | Commodity Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Level 3 | Derivatives Designated as Hedging Instruments | Foreign Exchange Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | 0 | 0 |
Level 3 | Derivatives Not Designated as Hedging Instruments | Foreign Exchange Contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives | $ 0 | $ 0 |
Employee Benefit Plans - Additional Information (Details) - USD ($) |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2017 |
Jul. 02, 2017 |
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Contribution to defined benefit retirement and retiree health and life insurance plans | $ 43,557,000 | $ 32,042,000 | ||
Retiree Health And Life Insurance Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Contribution to defined benefit retirement and retiree health and life insurance plans | 29,491,000 | 18,690,000 | ||
Projected contributions to retirement plan | $ 14,000,000 | |||
Sonoco Investment And Retirement Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer matching contribution, percent of employees' gross pay | 4.00% | |||
Employer matching contribution, percent of employees' gross pay in excess of social security | 4.00% | |||
Contribution to defined benefit retirement and retiree health and life insurance plans | $ 14,066,000 | 13,352,000 | ||
Projected contributions to retirement plan | 0 | |||
Recognized expense related to the plan | $ 3,871,000 | $ 3,018,000 | ||
U.S. Defined Benefit Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Terminated vested participants (as a percent) | 15.00% | |||
Election rate (as a percent) | 51.00% | |||
U.S. Defined Benefit Plan | Forecast | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Non-cash settlement charge | $ 34,000,000 |
Employee Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Retirement Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 4,712 | $ 5,023 |
Interest cost | 14,701 | 15,326 |
Expected return on plan assets | (20,838) | (22,044) |
Amortization of prior service cost (credit) | 231 | 193 |
Amortization of net actuarial loss | 10,168 | 9,596 |
Net periodic benefit cost (income) | 8,974 | 8,094 |
Retiree Health and Life Insurance Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 84 | 85 |
Interest cost | 120 | 130 |
Expected return on plan assets | (414) | (404) |
Amortization of prior service cost (credit) | (127) | (128) |
Amortization of net actuarial loss | (155) | (137) |
Net periodic benefit cost (income) | $ (492) | $ (454) |
Income Taxes - Additional Information (Details) - USD ($) |
1 Months Ended | 3 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Income Tax Contingency [Line Items] | |||
Effective tax rate | 32.80% | 33.20% | |
Increase (decrease) in unrecognized tax benefit | $ (2,400,000) | ||
Reserves for uncertain tax benefits | 0 | ||
Internal Revenue Service (IRS) | |||
Income Tax Contingency [Line Items] | |||
Penalties expense | $ 18,000,000 | ||
Tax examination, possible loss | $ 84,000,000 |
Segment Reporting - Additional Information (Details) |
3 Months Ended |
---|---|
Apr. 02, 2017
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 4 |
Segment Reporting - Segment Financial Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Apr. 02, 2017 |
Apr. 03, 2016 |
|
Segment Reporting Information [Line Items] | ||
Net sales | $ 1,172,324 | $ 1,226,276 |
Income before interest and income taxes | 89,973 | 101,832 |
Restructuring/Asset impairment charges | (4,111) | (9,228) |
Operating Segments | Consumer Packaging | ||
Segment Reporting Information [Line Items] | ||
Net sales | 482,181 | 527,338 |
Income before interest and income taxes | 58,010 | 62,865 |
Operating Segments | Display and Packaging | ||
Segment Reporting Information [Line Items] | ||
Net sales | 114,635 | 144,267 |
Income before interest and income taxes | 3,183 | 3,281 |
Operating Segments | Paper And Industrial Converted Products | ||
Segment Reporting Information [Line Items] | ||
Net sales | 442,502 | 423,074 |
Income before interest and income taxes | 24,723 | 33,299 |
Operating Segments | Protective Solutions | ||
Segment Reporting Information [Line Items] | ||
Net sales | 133,006 | 131,597 |
Income before interest and income taxes | 10,861 | 12,026 |
Intersegment Sales | ||
Segment Reporting Information [Line Items] | ||
Net sales | 30,745 | 28,796 |
Intersegment Sales | Consumer Packaging | ||
Segment Reporting Information [Line Items] | ||
Net sales | 1,223 | 1,332 |
Intersegment Sales | Display and Packaging | ||
Segment Reporting Information [Line Items] | ||
Net sales | 750 | 497 |
Intersegment Sales | Paper And Industrial Converted Products | ||
Segment Reporting Information [Line Items] | ||
Net sales | 28,373 | 26,381 |
Intersegment Sales | Protective Solutions | ||
Segment Reporting Information [Line Items] | ||
Net sales | 399 | 586 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Restructuring/Asset impairment charges | (4,111) | (9,228) |
Other, net | $ (2,693) | $ (411) |
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 24 Months Ended | ||
---|---|---|---|---|---|
Jan. 31, 2017 |
Apr. 02, 2017 |
Dec. 31, 2015 |
Dec. 31, 2016 |
Nov. 08, 2011 |
|
Site Contingency [Line Items] | |||||
Environmental accrual | $ 20,828 | $ 24,515 | |||
Tegrant Holding Corporation | |||||
Site Contingency [Line Items] | |||||
Environmental accrual | 16,816 | $ 16,821 | $ 17,400 | ||
Payment towards remediation of sites | 701 | ||||
Increase (decrease) due to revision of estimates | $ 117 | ||||
Appvion, Inc. | U.S. Mills | Lower Fox River | |||||
Site Contingency [Line Items] | |||||
Settlement amount against Entity | $ 3,334 | ||||
Environmental remediation spent | $ 315 |
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