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 July 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:



	2017						2016
	Second Quarter			Six Months			Second Quarter			Six Months
Restructuring/Asset impairment:
2017 Actions	$	3,884		$	6,188		$	—		$	—
2016 Actions	729			1,884			19,632			26,045
2015 and Earlier Actions	2,946			3,598			3,646			6,461
Other asset impairments	338			338			—			—
Restructuring/Asset impairment charges	$	7,897		$	12,008		$	23,278		$	32,506
Income tax benefit	$	(2,338	)	(3,636		)	$	(5,425	)	(8,345		)
Less: Costs attributable to noncontrolling interests, net of tax	(12		)	(14		)	(38		)	(45		)
Restructuring/asset impairment charges attributable to Sonoco, net of tax	$	5,547		$	8,358		$	17,815		$	24,116

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 $1,600 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

During 2017, the Company announced the closure of an expanded foam protective packaging plant in North Carolina (part of the Protective Solutions segment) and eliminated approximately 95 positions 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.



2017 Actions	Second Quarter 2017		Total Incurred to Date		Estimated Total Cost
Severance and Termination Benefits
Consumer Packaging	$	349	$	1,316	$	1,616
Display and Packaging	66		172		172
Paper and Industrial Converted Products	1,663		$	2,204	2,204
Protective Solutions	899		974		1,124
Corporate	—		456		456
Asset Impairment / Disposal of Assets
Protective Solutions	777		777		777
Other Costs
Consumer Packaging	92		251		251
Paper and Industrial Converted Products	38		38		88
Protective Solutions	—		—		700
Total Charges and Adjustments	$	3,884	$	6,188	$	7,388

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:



2017 Actions	Severance and Termination Benefits			Asset Impairment/ Disposal of Assets			Other Costs			Total
Accrual Activity 2017 Year to Date	Severance and Termination Benefits			Asset Impairment/ Disposal of Assets			Other Costs			Total
Liability at December 31, 2016	$	—		$	—		$	—		$	—
2017 charges	5,122			777			289			6,188
Cash payments	(2,254		)	—			(289		)	(2,543		)
Asset write downs/disposals	—			(777		)	—			(777		)
Foreign currency translation	9			—			—			9
Liability at July 2, 2017	$	2,877		$	—		$	—		$	2,877

The "Asset Impairment/Disposal of Assets" loss of $777 above relates to the impairment of fixed assets resulting from the planned closure of an expanded foam protective packaging plant in North Carolina.

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.



	2017					2016					Total Incurred to Date			Estimated Total Cost
2016 Actions	Second Quarter			Six Months		Second Quarter		Six Months			Total Incurred to Date			Estimated Total Cost
Severance and Termination Benefits
Consumer Packaging	$	—		$	1	$	487	$	1,452		$	2,408		$	2,408
Display and Packaging	17			4		1,277		2,653			4,308			4,308
Paper and Industrial Converted Products	316			414		1,730		4,141			6,301			6,301
Protective Solutions	1			—		38		360			678			678
Corporate	—			—		10		1,439			1,550			1,550
Asset Impairment / Disposal of Assets
Consumer Packaging	$	—		—		—		(306		)	(306		)	(306		)
Display and Packaging	—			96		2,237		2,237			2,808			2,808
Paper and Industrial Converted Products	45			45		13,279		13,279			13,345			13,345
Other Costs
Consumer Packaging	$	28		28		104		302			759			759
Display and Packaging	139			368		11		11			654			704
Paper and Industrial Converted Products	188			878		459		477			2,176			2,226
Protective Solutions	(5		)	50		—		—			200			200
Total Charges and Adjustments	$	729		$	1,884	$	19,632	$	26,045		$	34,881		$	34,981

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



2016 Actions	Severance and Termination Benefits			Asset Impairment/ Disposal of Assets			Other Costs			Total
Accrual Activity 2017 Year to Date	Severance and Termination Benefits			Asset Impairment/ Disposal of Assets			Other Costs			Total
Liability at December 31, 2016	$	3,558		$	—		$	640		$	4,198
2017 charges	419			141			1,324			1,884
Adjustments	—			—			—			—
Cash payments	(2,585		)	—			(1,271		)	(3,856		)
Asset write downs/disposals	—			(141		)	(252		)	(393		)
Foreign currency translation	9			—			21			30
Liability at July 3, 2017	$	1,401		$	—		$	462		$	1,863

“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 $300 associated with 2015 and Earlier Actions.

Below is a summary of expenses incurred by segment for 2015 and Earlier Actions for the three- and six- month periods ended July 2, 2017 and July 3, 2016.



	2017				2016
2015 and Earlier Actions	Second Quarter		Six Months		Second Quarter		Six Months
Consumer Packaging	$	2,591	$	2,564	$	2,982	$	5,137
Display and Packaging	—		83		560		566
Paper and Industrial Converted Products	326		891		21		624
Protective Solutions	29		53		83		134
Corporate	—		7		—		—
Total Charges and Adjustments	$	2,946	$	3,598	$	3,646	$	6,461

The accrual for 2015 and Earlier Actions totaled $3,925 and $3,608 at July 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 and building lease terminations. 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.

Other asset impairments

As a result of the continued devaluation of the Venezuelan Bolivar, the Company recognized impairment charges against inventories and certain long-term nonmonetary assets totaling $338 in the second quarter of 2017. The assets were deemed to be impaired as the U.S. dollar value of the projected cash flows from these assets was no longer sufficient to recover their U.S. dollar carrying values.