Packaging Corp of America (PKG) 10-K risk factor changes: FY2013 vs FY2012

[removed: Industry Risks][added: Industry Risks]

If supply exceeds demand, prices for [removed: containerboard and corrugated] [added: our] products could decline, resulting in decreased earnings and cash generated from operations.

[removed: _Competition —] [added: Competition -] The intensity of competition in the [removed: containerboard and corrugated packaging industry] [added: industries in which we operate] could result in downward pressure on pricing and volume, which could lower earnings and cash generated from [removed: operations._][added: operations.]

[removed: The containerboard and corrugated products industry is] [added: Our industries are] highly competitive, with no single [removed: containerboard or] [added: containerboard,] corrugated packaging [added: or white paper] producer having a dominant position.

Containerboard [added: and commodity white paper products] cannot generally be differentiated by producer, which tends to intensify price competition.

The corrugated packaging industry is also sensitive to changes in economic conditions, as well as other factors including innovation, design, [removed: quality] [added: quality,] and service.

Our [added: packaging] products also compete, to some extent, with various other packaging materials, including products made of paper, plastics, wood and various types of metal.

[removed: Company Risks][added: Company Risks]

[removed: _Cost] [added: Cost] of Fiber [removed: —] [added: -] An increase in the cost of fiber could increase our manufacturing costs and lower our [removed: earnings._][added: earnings.]

The market price of wood fiber varies based upon availability, [removed: source] [added: source,] and the costs of fuels used in the harvesting and transportation of wood fiber.

The cost and availability of wood fiber can also be impacted by [removed: weather and] [added: weather,] general logging [removed: conditions.][added: conditions, and geography.]

[removed: These periods] [added: Periods] of supply and demand imbalance have tended to create significant price volatility.

[removed: _Cost] [added: Cost] of Purchased Energy and Chemicals [removed: —] [added: -] An increase in the cost of purchased energy and chemicals could lead to higher manufacturing costs, resulting in reduced [removed: earnings._][added: earnings.]

[removed: PCA has] [added: We have] the [removed: capability] [added: ability] to use various types of purchased fuels in [removed: its] [added: our] manufacturing operations, including coal, bark, natural gas and oil.

[removed: These] fluctuations impact our manufacturing costs and result in earnings volatility.

If energy and chemical prices rise, our production costs and transportation costs will [removed: increase, which will lead to] [added: increase and cause] higher manufacturing costs and reduced earnings.

[removed: _Material] [added: Material] Disruption of Manufacturing [removed: —] [added: -] A material disruption at one of our manufacturing facilities could prevent us from meeting customer demand, reduce our sales and/or negatively [removed: impact] [added: affect] our results of operations and financial [removed: condition._][added: condition.]

Any of our manufacturing facilities, or any of our machines within such facilities, could cease operations unexpectedly for a [removed: long] [added: significant] period of time due to a number of events, [removed: including unscheduled maintenance outages; prolonged power failures; an equipment failure; fire; explosion of a boiler; labor difficulties; natural catastrophes; terrorism; governmental regulations; and other operational problems.][added: including:]

These events could [removed: cause us to be unable] [added: harm our ability] to [removed: service] [added: serve] our customers and lead to higher costs and reduced earnings.

[removed: _Environmental] [added: Environmental] Matters [removed: —] [added: -] PCA may incur significant environmental liabilities with respect to both past and future [removed: operations._][added: operations.]

“Management’s Discussion and Analysis of Financial Condition and Results of Operations [removed: —] [added: -] Environmental Matters” for [removed: certain] estimates of expenditures we expect to make for environmental compliance in the next few years.

[removed: _Market] [added: Market] Price of our Common Stock [removed: —] [added: -] The market price of our common stock may be volatile, which could cause the value of your investment to [removed: decline._][added: decline.]

In addition to the risks and uncertainties we discuss elsewhere in this Form 10-K (particularly in "Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations") or in our other filings with the

Securities and Exchange Commission (SEC), the following are important factors that could cause our actual results to differ materially from those we project in any forward-looking statement.

Industry Cyclicality - Changes in the prices of our products could materially affect our financial condition, results of operations, and liquidity.

Macroeconomic conditions and fluctuations in industry capacity create changes in prices, sales volumes, and margins for most of our products, particularly commodity grades of packaging and paper products.

Prices for all of our products are driven by many factors, including general economic conditions, demand for our products, and competitive conditions in our industry, and we have little influence over the timing and extent of price changes, which are often volatile.

Additionally, market conditions beyond our control can affect the prices for our commodity products.

Our ability to achieve acceptable operating performance and margins depends primarily upon managing our cost structure and general operating conditions.

If the prices for our products decline or if we are unable to control our costs, it could have a material adverse effect on our operating cash flows, profitability, and liquidity.

Our white paper products compete with electronic data transmission and document storage alternatives.

Increasing shifts to these alternatives have had and will continue to have an adverse effect on usage of these products.

Several of our competitors are larger than we are and may have greater financial and other resources, greater manufacturing economies of scale, greater energy self sufficiency, or lower operating costs, compared with our company.

We may be unable to compete with these companies particularly during economic downturns.

Some of the factors that may adversely affect our ability to compete in the markets in which we participate include the entry of new competitors (including overseas producers) into the markets we serve, our competitors' pricing strategies, our inability to anticipate and respond to changing customer preferences, and our inability to maintain the cost-efficiency of our facilities.

The availability and cost of recycled fiber depends heavily on recycling rates and the domestic and global demand for recycled products.

We purchase recycled fiber for use at seven of our eight mills.

In 2013, including Boise's operations as if we had acquired Boise on January 1, 2013, we would have purchased approximately 480,000 tons of recycled fiber, net of the recycled fiber generated by our corrugated box plants.

These

| | |

| --- | --- |

| • | Unscheduled maintenance outages. |

| | |

| --- | --- |

| • | Prolonged power failures. |

| | |

| --- | --- |

| • | Equipment failure. |

| | |

| --- | --- |

| • | Explosion of a boiler. |

| | |

| --- | --- |

| • | Disruption in the supply of raw materials, such as wood fiber, energy, or chemicals. |

| | |

| --- | --- |

| • | A chemical spill or release. |

| | |

| --- | --- |

| • | Closure related to environmental concerns. |

| | |

_Industry Cyclicality — Imbalances of supply and demand for containerboard could affect the price at which we can sell containerboard and corrugated products, and as a result, could result in lower selling prices and earnings._

The price of containerboard could fall if the supply of containerboard available for sale in the market exceeds the demand.

The demand for containerboard is driven by market needs for containerboard in the United States and abroad to manufacture corrugated shipping containers.

Market needs or demand are driven by both global and U.S. business conditions.

##### [Table of Contents](#toc)

PCA has supply agreements at market prices for wood fiber to be consumed at our Counce, Tennessee and Valdosta, Georgia mills on approximately 318,000 acres of timberland.

In addition to these supply agreements, PCA also secures wood fiber from various other sources at market prices.

PCA purchases recycled fiber for use at three of its four containerboard mills.

PCA currently purchases, net of recycled fiber generated at its box plants, 350,000 to 450,000 tons of recycled fiber per year.

The increase in demand of products manufactured, in whole or in part, from recycled fiber, on a global basis, has caused an occasional tightening in the supply of recycled fiber.

Investment Risks

General Risks

_Economic Conditions — Our earnings and cash generated from operations could be lower if the economy weakens._

Our operations and financial performance are directly impacted by changes in the U.S. economy, and to a lesser extent, by global economic conditions.

A weakening in the economy could reduce the demand for our products and ultimately lower our earnings and cash flows.

Lower earnings and reduced cash flow could impact our ability to fund operations, capital requirements, and common stock dividend payments.

The following discussion [added: and analysis] of historical results of operations and financial condition should be read in conjunction with the audited financial statements and the notes thereto which appear elsewhere in this [removed: report.][added: Form 10-K.]

[removed: Overview][added: Overview]

[removed: PCA] [added: PCA, with the acquisition of Boise Inc.,] is the fourth largest producer of containerboard in the United [removed: States,] [added: States and the third largest producer of white papers in North America,] based on production capacity.

We operate [removed: four containerboard] [added: eight] mills and [removed: 71] [added: 98] corrugated products manufacturing [removed: plants throughout the United States.][added: plants.]

The [removed: U.S.] [added: U. S.] economy [removed: improved modestly] [added: continued to slowly improve] in [removed: 2012 as] [added: 2013, with an annual basis] real GDP [removed: increased 2.2%] [added: increase of 1.9%,] compared [removed: to] [added: with] a [removed: 1.8%] [added: 2.8%] increase in [removed: 2011] [added: 2012] as reported by the [removed: U. S.] [added: U.S.] Department of Commerce.

Trade publications reported that industry-wide corrugated products shipments [removed: increased 0.2%] [added: were unchanged] in [removed: 2012] [added: 2013] compared to [removed: 2011] [added: 2012] and containerboard production was [removed: 0.6%] [added: 1.2%] higher than [removed: in 2011.][added: 2012.]

Management excludes [removed: these] special items and uses non-GAAP measures to focus on PCA’s on-going operations and assess its operating performance and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results.

[removed: Reconciliations] [added: | (b) | See "Reconciliations] of [removed: non-GAAP measures used] [added: Non-GAAP Financial Measures to Reported Amounts" included] in this Item 7 [added: for a reconciliation of non-GAAP measures] to the most comparable [removed: measure reported in accordance with] GAAP [removed: are included elsewhere in Item 7 under “Reconciliations of Non-GAAP Financial Measures to Reported Amounts.”][added: measure. |]

Considering all of these items, we expect first quarter [removed: earnings] [added: earnings, excluding special items,] to be [removed: lower than] [added: comparable to our] fourth quarter [removed: 2012] [added: 2013] earnings, excluding special [removed: items, of $0.61 per diluted share.][added: items.]

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

[removed: _Year] [added: Year] Ended December 31, [removed: 2012] [added: 2012,] Compared to Year Ended December 31, [removed: 2011_][added: 2011]

The historical results of operations of PCA for the years ended December 31, 2012 and 2011 are set forth [removed: below:][added: below (dollars in millions):]

| | [removed: | For the] Year [removed: Ended December 31,] [added: Ended December 31] | | | | | | | | | | |

| | [removed: | 2012] [added: 2012] | | | | [removed: 2011] [added: 2011] | | | | [removed: Change] [added: Change] | | |

| Net sales | [removed: |] $ | 2,843.9 | | | $ | 2,620.1 | | | $ | 223.8 | |

| Income from operations | [removed: | $ |] 443.4 | | | [removed: $] | 272.7 | | | [removed: $] | 170.7 | | [added: |]

| Interest expense, net | [removed: | |] (62.9 | [removed: )] | [added: )] | | (29.2 | [removed: )] | [added: )] | | (33.7 | [added: |] ) |

| Income before taxes | [removed: | |] 380.5 | | | | 243.5 | | | | 137.0 | | [added: |]

| Provision for income taxes | [removed: | |] (216.7 | [removed: )] | [added: )] | | (85.5 | [removed: )] | [added: )] | | (131.2 | [added: |] ) |

| Net income | [removed: |] $ | 163.8 | | | $ | 158.0 | | | $ | 5.8 | |

[removed: _Net Sales_][added: Net Sales]

Net sales increased [removed: by] $223.8 million, or 8.5%, for the year ended December 31, [removed: 2012] [added: 2012,] from the year ended December 31, 2011.

Containerboard sales volume to external domestic and export customers decreased [removed: 6.0%] [added: 6.0%,] to 482,000 tons for the year ended December 31, [removed: 2012] [added: 2012,] from 513,000 tons in 2011.

[removed: _Income] [added: Income] from [removed: Operations_][added: Operations]

Income from operations increased [removed: by] $170.7 million, or 62.6%, for the year ended December 31, [removed: 2012] [added: 2012,] compared to 2011.

[removed: As noted in Note 15 — Alternative Energy Tax Credits to the “Notes to Consolidated] Financial [removed: Statements,”] [added: Statements and Supplementary Data" of this Form 10-K,] PCA amended its 2009 federal income tax return to reallocate gallons from the cellulosic biofuel producer credits to the alternative fuel mixture credits.

This increase was primarily attributable to increased sales volumes ($50.7 million), higher sales prices ($9.0 million) and lower costs for energy ($26.5 million), recycled fiber ($18.6 [removed: million)] [added: million),] and chemicals ($7.5 million).

Gross profit increased $97.7 million, or 18.0%, for the year ended December 31, [removed: 2012] [added: 2012,] from the year ended December 31, 2011.

Gross profit as a percentage of net sales increased from 20.7% of net sales in the year ended [added: December 31, 2011, to 22.5% of net sales in the year ended December 31, 2012, primarily due to increased volume and prices and reduced costs described above.]

[removed: Selling] [added: Selling, general,] and administrative expenses increased [removed: $16.8] [added: $22.3] million, or [removed: 8.7%,] [added: 8.6%,] for the year ended December 31, [removed: 2012] [added: 2012,] from the year ended December 31, 2011, primarily as a result of increased costs for salaries [removed: ($8.3 million), depreciation ($3.3] [added: ($11.4] million), fringe benefits [removed: ($3.0] [added: ($3.8] million), [removed: and] incentive compensation [removed: ($2.5] [added: ($3.4 million), and depreciation ($2.8] million).

[removed: Corporate overhead] [added: Other expense, net, increased $1.1 million, or 9.9%] for the year ended December 31, [removed: 2012 increased $4.6 million, or 7.1%, from] [added: 2012, compared with] the year ended December 31, 2011.

[removed: Other expense, net,] [added: Net interest expense] increased [removed: $1.1] [added: $33.7] million, or [removed: 9.9%] [added: 115.4%,] for the year ended December 31, [removed: 2012] [added: 2012,] compared [removed: to] [added: with] the year ended December 31, 2011.

The increase was primarily due to [removed: increased fixed asset disposal] [added: plant closure] costs [removed: ($1.1] [added: ($0.8] million).

[removed: _Interest] [added: Interest] Expense, [removed: Net] [added: Net,] and Income [removed: Taxes_][added: Taxes]

Net [removed: interest expense increased $33.7 million, or 115.4%,] [added: cash used] for [added: investing activities for] the year ended December 31, [removed: 2012 compared] [added: 2012, decreased $242.7 million, or 69.3%,] to [added: $107.5 million, compared with] the year ended December 31, 2011.

The higher interest expense included a $21.3 million premium paid as part of the July 2012 redemption of the Company’s 5.75% notes due in 2013 [removed: (see Note 8—Debt contained in the “Notes to Consolidated Financial Statements”)] and a $3.4 million charge from settling the Company’s 2011 treasury lock prior to its [removed: maturity (see Note 9—Derivative Instruments and Hedging Activities contained in the “Notes to Consolidated Financial Statements”).][added: maturity.]

PCA’s effective tax rate was 57.0% for the year ended December 31, 2012, which included a 22.5% higher rate from amending our 2009 tax return in 2012 related to alternative energy tax credits as described in Note [removed: 15] [added: 6, Alternative Energy Tax Credits,] of the [removed: consolidated financial statements.][added: Notes to Consolidated Financial Statements in "Part II, Item 8.]

PCA had no material changes to its reserve for unrecognized tax benefits under ASC 740, “Income Taxes,” during [removed: 2012 but does expect a significant change within the next twelve months as described in Note 14 to the consolidated financial statements.][added: 2012.]

[removed: Year] [added: Year] Ended December 31, [removed: 2011] [added: 2013,] Compared to Year Ended December 31, [removed: 2010][added: 2012]

The historical results of operations of PCA for the years ended December 31, [removed: 2011] [added: 2013] and [removed: 2010] [added: 2012] are set forth [removed: below:][added: below (dollars in millions):]

This discussion includes statements regarding our expectations with respect to our future performance, liquidity, and capital resources.

Such statements, along with any other nonhistorical statements in the discussion, are forward-looking.

These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in "Part I, Item 1A.

Risk Factors" of this Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission (SEC).

We do not assume any obligation to update any forward-looking statements.

Our actual results may differ materially from those contained in or implied by any of the forward-looking statements in this Form 10-K.

Acquisition of Boise Inc.

On October 25, 2013, we acquired Boise Inc. ("Acquisition," "Boise," or "Boise Acquisition"), a large manufacturer of packaging and paper products for $2.1 billion.

We paid $12.55 per share to shareholders, or $1.2 billion, net of $121.7 million of cash acquired, and assumed the fair value of Boise's debt, or $829.8 million.

PCA entered into $2.35 billion of new borrowings, including a $1.65 billion senior unsecured credit agreement, which included a $350.0 million undrawn revolver, and $700.0 million of 4.5% ten-year notes, which in connection with cash on hand, was used to finance the acquisition of Boise, repay certain PCA indebtedness, and for general corporate purposes.

The acquisition expands our corrugated products geographic reach and offerings, provides additional containerboard capacity for continued growth in the packaging business, and provides meaningful opportunities in the white paper business.

The acquisition of Boise increased PCA’s containerboard capacity, at year-end 2013, to approximately 3.4 million tons from its prior level of 2.6 million tons.

The results of Boise's operations are included in PCA’s results for periods on and after October 25, 2013.

Due to the size of the transaction, a significant part of our variances to 2012 are driven by the acquisition.

We discuss this acquisition in more detail in Note 3, Acquisitions, and Note 8, Debt, of the Notes to Consolidated Financial Statements in "Part II, Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

Prior to the acquisition of Boise on October 25, 2013, we manufactured and sold packaging products and reported our results in one reportable segment.

With the acquisition, we report our financial information in three reportable segments: Packaging, Paper, and Corporate and Other.

Our Packaging segment produces a wide variety of corrugated packaging products.

The Paper segment manufactures and sells a range of white papers, including communication papers, pressure-sensitive papers, and market pulp.

The Corporate and other segment includes support staff services and related assets and liabilities, transportation assets, and activity related to other ancillary support operations.

In this Item 7, some amounts in prior periods' consolidated financial statements have been reclassified to conform with the current period segment presentation.

For more information, see Note 19, Segment Information.

In addition, we reclassified amounts previously included in "Corporate overhead" in the 2012 and 2011 Consolidated Statements of Income into "Selling, general, and administrative expenses" to conform with the current period presentation.

None of the reclassifications affected our results of operations, financial position, or cash flows.

Our mills are comprised of five containerboard mills and three paper mills.

Our corrugated products manufacturing plants produce a wide variety of corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays with strong visual appeal that help to merchandise the packaged product in retail locations, and honeycomb protective packaging.

In addition, we are a large producer of packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.

We operate primarily in the United States and have some converting operations in Europe, Mexico, and Canada.

Executive Summary

In 2013, sales grew 28.9% to a record $3,665.3 million.

We reported $436.3 million of net income, or $4.47 per diluted share in 2013, compared with $163.8 million, or $1.68 per share in 2012.

Excluding special items, we recorded $320.2 million of net income, or a record $3.28 per diluted share in 2013, compared with $200.8 million and $2.06 per diluted share in 2012.

In 2013, income included $87.4 million of income from special items including $166.0 million from the reversal of previously established tax reserves, partially offset by $67.8 million of pretax costs primarily related to the acquisition of Boise on October 25, 2013, and $10.9 million of pension plan curtailment charges.

Excluding these special items, the increase in earnings was driven by improvement in PCA's earnings and two months and five days of results from the acquisition of Boise operations.

PCA's earnings improvement related primarily to increased pricing and higher demand, partially offset by higher costs for labor and benefits, energy, fiber, repairs, freight, and interest expense.

Earnings per diluted share, excluding special items, in 2013 and 2012 were as follows:

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| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | |

Approximately 83% of the containerboard tons produced at our mills is consumed in our corrugated products manufacturing plants.

The remaining 17% is sold to domestic customers or the export market.

We produce a wide variety of corrugated products ranging from basic corrugated shipping containers to specialized packaging such as wax-coated boxes for the agriculture industry.

We also have multi-color printing capabilities to make high-impact graphics boxes and displays that offer our customers more attractive packaging.

In analyzing our operating performance, we focus on the following factors that affect our business and are important to consider when reviewing our financial and operating results:

| | • | | containerboard and corrugated products demand; |

| --- | --- | --- | --- |

| | • | | corrugated products and containerboard pricing and mix; |

##### [Table of Contents](#toc)

| | • | | cost trends and volatility for our major costs, including wood and recycled fiber, purchased fuels, electricity, labor and fringe benefits and transportation costs; and |

| | • | | cash flow from operations and capital expenditures. |

Historically, supply and demand, as well as industry-wide inventory levels, have influenced prices of containerboard and corrugated products.

In addition to U.S. shipments, approximately 10% of domestically produced containerboard has been exported for use in other countries.

PCA benefitted from improved demand that exceeded the industry average, as well as the acquisition of four corrugated products plants made during 2011 and 2012, and for the year, our corrugated products shipments were up 6.6% compared to 2011.

PCA also set a new record for annual production at its mills, with containerboard production increasing by 4.0%, from 2,499,000 tons in 2011 to 2,600,000 tons in 2012.

Trade publications reported that industry containerboard inventories at the end of December 2012 were 2.18 million tons, the second lowest year-ending level since 1980.

Average prices for containerboard and corrugated products were higher during 2012 compared to 2011.

Published containerboard prices increased by $50 per ton in September 2012.

Increased pricing and higher demand along with lower costs for energy and recycled fiber improved PCA’s 2012 earnings compared to 2011.

However, these positive factors were partially offset by higher costs for labor and benefits, transportation, depreciation and interest expense.

Energy costs were lower, reflecting the benefits of our completed major energy projects as well as lower prices paid for purchased fuels and electricity which decreased approximately 10% in 2012 compared to the 2011 average.

Published recycled fiber costs decreased in 2012, on average, approximately 30% compared to 2011.

Wood fiber costs in 2012 were essentially unchanged from 2011 levels.

Transportation costs increased 3% from prior year levels as average diesel prices, as reported by the U.S. Department of Energy, increased 3% from the 2011 average price.

Labor related costs increased reflecting annual merit increases and higher costs for medical insurance, pensions and incentives.

Special items impacting 2012 earnings included (a) net charges of $19.6 million, or $0.21 per share, relating to alternative energy tax credits described in Note 15 to the consolidated financial statements, (b) charges of $16.0 million, or $0.16 per share, from the Company’s debt refinancing completed in July 2012, and (c) charges of $1.4 million, or $0.01 per share, from plant closures.

Excluding these special items, PCA earned net income of $200.7 million ($2.06 per diluted share) for the full year 2012.

This compares with $161.8 million ($1.61 per diluted share) for 2011, which excludes charges of $4.8 million, or $0.05 per share, from asset disposals related to major energy projects and $1.0 million of income, or $0.01 per share, from an adjustment related to medical benefits reserves.

In the first quarter of 2013, our containerboard production should be lower and operating costs higher compared to the fourth quarter with two less mill production days and mill annual maintenance downtime.

We also expect higher energy costs with colder weather, and a pattern of extremely wet weather put pressure on wood costs and availability in the U.S. South during January.

Corrugated products volume will be seasonally lower, and we expect higher costs for recycled fiber and labor and benefits.

These items will be partially offset

by higher average corrugated products prices with a full quarter’s realization of fourth quarter price increases.

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | (In millions) | | | | | | | | | | |

Shipments-per-workday is calculated by dividing our total corrugated products volume during the year by the number of workdays within the year.

December 31, 2011 to 22.5% of net sales in the year ended December 31, 2012 primarily due to increased volume and prices and reduced costs described above.

The increase was primarily attributable to increased salary and fringe benefits expense ($3.8 million) and higher depreciation ($0.6 million).

| | | 2011 | | | | 2010 | | | | Change | | |

For a discussion of derivatives and hedging activities, see Note [removed: 9 —] [added: 11,] Derivative Instruments and Hedging [removed: Activities to] [added: Activities, of] the [removed: “Notes] [added: Notes] to Consolidated Financial [removed: Statements” included elsewhere] [added: Statements] in [removed: the report.][added: "Part II, Item 8.]

The interest rates on approximately [removed: 69%] [added: 49%] of PCA’s debt are fixed.

A one percent increase in interest rates related to variable rate debt would have resulted in an increase in interest expense and a corresponding decrease in income before taxes of [removed: $2.4] [added: $13.0] million annually.

Financial Statements and Supplementary Data" of this Form 10-K.

| | |

| --- | --- |

Packaging Corporation of America (“we”, “us”, “our”, “PCA” or the “Company”) is the fourth largest producer of containerboard in the United [removed: States in terms of] [added: States, based on] production capacity.

Our corrugated products manufacturing plants sold about [removed: 34.7] [added: 38.4] billion square feet (BSF) of corrugated products.

Our net sales to third parties totaled [removed: $2.8] [added: $3.7] billion in [removed: 2012.][added: 2013.]

[removed: Containerboard] Production and [removed: Corrugated Shipments][added: Shipments]

| | | | [removed: | | | First Quarter | | | | Second Quarter |] [added: First Quarter] | | | [removed: Third Quarter] [added: Second Quarter] | | | [added: Third Quarter] | [removed: Fourth Quarter] | | [added: Fourth Quarter (a)] | | [removed: Full Year] | [added: Full Year] | |

| [removed: Containerboard Production] (thousand tons) | | [removed: |] 2012 | [removed: | | |] 640 | | | [removed: |] 638 | | | [removed: |] 670 | | | [removed: |] 652 | | | [removed: |] 2,600 | |

| [removed: Corrugated Shipments (BSF)] | | [removed: |] 2012 | [removed: | | |] 8.5 | | | [removed: |] 8.8 | | | [removed: |] 8.6 | | | [removed: |] 8.8 | | | [removed: |] 34.7 | |

The primary end-use markets [added: in the United States] for corrugated products are shown below [removed: (as] [added: as] reported in the [removed: most recent 2011] [added: 2012] Fibre Box Association annual [removed: report):][added: report:]

| Food, [removed: beverages] [added: beverages,] and agricultural products | [removed: | | 52] [added: 42] | % |

| Paper products | [removed: | | 16] [added: 21] | % |

| Petroleum, plastic, [removed: synthetic] [added: synthetic,] and rubber products | [removed: | | 11] [added: 8] | % |

| [removed: General retail] [added: General, retail,] and wholesale trade | [removed: | | 6] [added: 18] | % |

| Miscellaneous manufacturing | [removed: | |] 6 | % |

| Appliances, vehicles, and metal products | [removed: | | 5] [added: 3] | % |

| Textile mill products and apparel | [removed: | |] 2 | % |

to [removed: 96] [added: 69] lb.

[removed: Our two semi-chemical] [added: Wallula can produce] corrugating medium [removed: mills can manufacture] grades ranging in [added: basis] weight from [removed: 20] [added: 23] lb.

to [removed: 47] [added: 38] lb.

[removed: _Counce._] Our Counce, [removed: Tennessee] [added: Tennessee,] mill is one of the largest kraft linerboard mills in the United States.

Its year-end [removed: 2012] [added: 2013] annual estimated production capacity, as reported to the American Forest and Paper Association (“AF&PA”), [removed: is 1,057,000] [added: was 1,065,000] tons.

In [removed: 2012, we] [added: 2013, the mill] produced [removed: 1,056,000] [added: 1,063,000] tons of kraft linerboard on two paper [removed: machines at Counce.][added: machines.]

The mill [removed: produces] [added: can produce] a broad range of basis weights from 26 lb.

[removed: _Valdosta._] Our Valdosta, [removed: Georgia] [added: Georgia,] mill is a kraft linerboard mill.

Its year-end [removed: 2012] [added: 2013] annual estimated production capacity, as reported to the AF&PA, [removed: is 559,000] [added: was 560,000] tons.

In [removed: 2012,] [added: 2013,] our single paper machine at Valdosta produced [removed: 561,000] [added: 557,000] tons of kraft linerboard.

[removed: Valdosta produces] [added: The mill can produce] a range of basis weights from 35 lb.

[removed: _Tomahawk._] Our Tomahawk, [removed: Wisconsin] [added: Wisconsin,] mill is one of the largest semi-chemical corrugating medium mills in the United States.

Its year-end [removed: 2012] [added: 2013] annual estimated production capacity, as reported to the AF&PA, [removed: is 545,000] [added: was 550,000] tons.

In [removed: 2012, we] [added: 2013, the mill] produced [removed: 543,000] [added: 547,000] tons of semi-chemical corrugating medium on two paper [removed: machines at Tomahawk.][added: machines.]

The Tomahawk mill [removed: produces] [added: can produce] a broad range of basis weights from 23 lb.

[removed: _Filer City._] Our Filer City, [removed: Michigan] [added: Michigan,] mill is a semi-chemical corrugating medium mill.

Its year-end [removed: 2012] [added: 2013] annual estimated production capacity on three paper machines, as reported to the AF&PA [removed: is 439,000] [added: was 445,000] tons.

In [removed: 2012, we] [added: 2013, the mill] produced [removed: 440,000] [added: 441,000] tons of corrugating medium on three paper machines at Filer City.

Filer City [removed: produces] [added: can produce] corrugating medium grades ranging in basis weight from 20 lb.

We operate [removed: 71] [added: 98] corrugated manufacturing operations, a technical and development center, [removed: seven] [added: eight] regional [removed: graphic] design centers, a rotogravure printing [removed: operation] [added: operation,] and a complement of packaging supplies and distribution centers.

Of the [removed: 71] [added: 98] manufacturing facilities, [removed: 41] [added: 64] operate as combining operations, commonly called corrugated plants, which manufacture corrugated sheets and finished corrugated [removed: containers.][added: containers, 33 are sheet plants which procure combined sheets and manufacture finished corrugated containers, and one is a corrugated sheet-only manufacturer.]

These leased cutting rights agreements have terms with about [removed: 11] [added: 10] years remaining, on average.

[removed: PCA also participates] [added: We participate] in the Sustainable Forestry Initiative (SFI) and [removed: is] [added: we are] certified under the SFI sourcing standards.

[removed: PCA is] [added: We are] committed to sourcing wood fiber through environmentally, socially and economically sustainable practices and promoting resource and conservation stewardship ethics.

[removed: Sales] [added: Sales, Marketing,] and [removed: Marketing][added: Distribution]

We are headquartered in Lake Forest, Illinois and have approximately 13,600 employees.

We operate primarily in the United States and have some converting operations in Europe, Mexico, and Canada.

On October 25, 2013, PCA acquired Boise Inc. ("Boise") for $2.1 billion, including the fair value of assumed debt.

The acquisition expands PCA's corrugated products geographic reach and offerings, provides additional containerboard capacity for continued growth in the packaging business, and provides meaningful opportunities in the white paper business as the third largest producer of white papers in North America in terms of production capacity.

Boise's results are included in our results for the period of October 25, 2013, through December 31, 2013.

We historically reported our financial information in one reportable segment.

After the acquisition, we began reporting in three reportable segments: Packaging, Paper, and Corporate and Other.

We present information pertaining to each of our segments and the geographic areas in which they operate in Note 19, Segment Information, of the Notes to Consolidated Financial Statements in "Part II, Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

For more information about our acquisition of Boise, see Note 3, Acquisitions, and Note 8, Debt, of the Notes to Consolidated Financial Statements.

The following table summarizes the Packaging segment's containerboard production and corrugated products shipments and the Paper segment's production, including Boise Inc. Boise's historical data for periods prior to the acquisition on October 25, 2013, are included for comparative purposes only, and are not included in PCA's historical results.

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | |

| Containerboard Production | PCA | 2013 | 646 | | | 629 | | | 671 | | | 803 | | | 2,749 | |

| | Boise | 2013 | 171 | | | 188 | | | 196 | | | 50 | | | 605 | |

| | | 2012 | 186 | | | 180 | | | 189 | | | 193 | | | 748 | |

| | | | | | | | | | | | | | | | | |

| Corrugated Shipments (BSF) | PCA | 2013 | 8.8 | | | 9.4 | | | 9.3 | | | 10.9 | | | 38.4 | |

| | Boise | 2013 | 2.4 | | | 2.5 | | | 2.4 | | | 0.7 | | | 8.0 | |

| | | 2012 | 2.3 | | | 2.4 | | | 2.5 | | | 2.4 | | | 9.6 | |

| | | | | | | | | | | | | | | | | |

| Newsprint Production | PCA | 2013 | — | | | — | | | — | | | 44 | | | 44 | |

| (thousand tons) | Boise | 2013 | 53 | | | 58 | | | 60 | | | 15 | | | 186 | |

| | | 2012 | 55 | | | 58 | | | 60 | | | 60 | | | 233 | |

| | | | | | | | | | | | | | | | | |

| White Paper (UFS) Production | PCA | 2013 | — | | | — | | | — | | | 208 | | | 208 | |

| (thousand tons) | Boise | 2013 | 303 | | | 301 | | | 323 | | | 76 | | | 1,003 | |

| | | 2012 | 320 | | | 313 | | | 323 | | | 293 | | | 1,249 | |

| | | | | | | | | | | | | | | | | |

| Market Pulp Production | PCA | 2013 | — | | | — | | | — | | | 20 | | | 20 | |

| (thousand tons) | Boise | 2013 | 24 | | | 24 | | | 29 | | | 5 | | | 82 | |

| | | 2012 | 39 | | | 30 | | | 26 | | | 25 | | | 120 | |

____________

| | |

| (a) | Production and shipments activity prior to the acquisition of Boise on October 25, 2013, is included in the "Boise" fourth quarter production and shipments. Activity subsequent to the acquisition of Boise is included in the "PCA" fourth quarter production and shipments. |

Below is a map of our locations following the acquisition:


Packaging

Packaging Products

General

During 2012, we produced 2.6 million tons of containerboard at our mills, of which about 83% was consumed in PCA’s corrugated products manufacturing plants, 10% was sold in the export market and 7% was sold to domestic customers.

| | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | 2011 | | | | 602 | | | | 606 | | | | 650 | | | | 641 | | | | 2,499 | |

| | | | 2010 | | | | 569 | | | | 589 | | | | 646 | | | | 639 | | | | 2,443 | |

| | | | 2011 | | | | 7.8 | | | | 8.2 | | | | 8.3 | | | | 8.2 | | | | 32.5 | |

| | | | 2010 | | | | 7.6 | | | | 7.9 | | | | 7.8 | | | | 7.7 | | | | 31.0 | |

In 2012, we produced 1.6 million tons of kraft linerboard at our mills in Counce, Tennessee and Valdosta, Georgia, and 1.0 million tons of semi-chemical corrugating medium at our mills in Tomahawk, Wisconsin and Filer City, Michigan.

In addition, we are a large producer of meat boxes and wax-coated boxes for the agricultural industry.

Industry Overview

| | | | | |

| --- | --- | --- | --- | --- |

| Other | | | 2 | % |

Containerboard, which includes both linerboard and corrugating medium, is the principal raw material used to manufacture corrugated products.

Linerboard is used as the inner and outer facings, or liners, of corrugated

##### [Table of Contents](#toc)

products.

Corrugating medium is fluted and laminated to linerboard to produce corrugated sheets.

The sheets are subsequently printed, cut, folded and glued to produce corrugated products.

Containerboard may be manufactured from both softwood and hardwood fibers, as well as from recycled fibers from used corrugated and waste from converting operations in corrugated products plants.

Kraft linerboard is made predominantly from softwoods like pine.

Semi-chemical corrugating medium is made from hardwoods such as oak.

The finished paper product is wound into large rolls, which are slit to size as required, and shipped to converters.

PCA Operations and Products

_Containerboard Mills_

Our two linerboard mills can manufacture a broad range of linerboard grades ranging from 26 lb.

Mill capacities described below are estimated based on expected mix of paper basis weights, and production can exceed estimated capacity if a higher-than-estimated mix of heavier grade paper is produced.

All four of our mills have completed an extensive independent review process to become ISO 9002 certified.

ISO 9002 is an international quality certification that verifies a facility maintains and follows stringent procedures for manufacturing, sales and customer service.

The following four paragraphs describe our containerboard mills’ annual practical maximum capacity, 2012 actual production and production capabilities.

_Corrugated Products_

The remaining 30 manufacturing facilities, commonly called sheet plants, procure combined sheets and manufacture finished corrugated containers.

We have corrugated manufacturing operations in 26 states in the U.S., with no manufacturing facilities outside of the continental U.S. Each corrugated plant, for the most part, serves a market radius of around 150 miles.

_Timberland_

In addition, we have in place supply agreements covering approximately 318,000 acres with the majority of the acreage covered by the supply agreements located in close proximity to our Counce mill.

Distribution

Our individual mills do not own or maintain outside warehousing facilities.

During 2012, our containerboard mills consumed approximately 564,000 tons of recycled fiber, and our corrugated converting operations generated approximately 197,000 tons of recycled fiber.

As a result, PCA was a net recycled fiber buyer of 367,000 tons, or 14% of PCA’s total mill fiber requirements.

Information concerning legal proceedings can be found in Note 20, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in "Part II, Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

| | |

During September and October 2010, PCA and eight other U.S. and Canadian containerboard producers were named as defendants in five purported class action lawsuits filed in the United States District Court for the Northern District of Illinois, alleging violations of the Sherman Act.

The lawsuits have been consolidated in a single complaint under the caption _Kleen Products LLC v Packaging Corp. of America et al._ The consolidated complaint alleges that the defendants conspired to limit the supply of containerboard, and that the purpose and effect of the alleged conspiracy was to artificially increase prices of containerboard products during the period from August 2005 to the time of filing of the complaint.

The complaint was filed as a purported class action suit on behalf of all purchasers of containerboard products during such period.

The complaint seeks treble damages and costs, including attorney’s fees.

The defendants’ motions to dismiss the complaint were denied by the court in April 2011.

PCA believes the allegations are without merit and will defend this lawsuit vigorously.

However, as the lawsuit is in the document production phase of discovery, PCA is unable to predict the ultimate outcome or estimate a range of reasonably possible losses.

PCA is a party to various other legal actions arising in the ordinary course of our business.

These legal actions cover a broad variety of claims spanning our entire business.

As of the date of this filing, we believe it is not reasonably possible that the resolution of these legal actions will, individually or in the aggregate, have a material adverse effect on our financial condition, results of operations or cash flows.

[removed: 10-K 1 d450554d10k.htm FORM] [added: Form] 10-K

[removed: ##### [Table] [added: Table] of [removed: Contents](#toc)][added: Contents]

[removed: UNITED] [added: UNITED] STATES SECURITIES AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

[removed: ANNUAL] [added: | ANNUAL] REPORT PURSUANT TO SECTION 13 OR [removed: 15(d)][added: 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |]

[removed: For] [added: | For] the fiscal year ended December 31, [removed: 2012][added: 2013 |]

[removed: Commission] [added: | Commission] file number [removed: 1-15399][added: 1-15399 |]

[removed: _(Exact] [added: (Exact] Name of Registrant as Specified in its [removed: Charter)_][added: Charter)]

| [removed: Delaware] [added: Delaware] | | [removed: 36-4277050] [added: 36-4277050] |

| [removed: _(State] [added: (State] or Other Jurisdiction of Incorporation or [removed: Organization)_] [added: Organization)] | | [removed: _(I.R.S.] [added: (I.R.S.] Employer Identification [removed: No.)_] [added: No.)] |

| [removed: 1955] [added: 1955] West Field Court, Lake Forest, [removed: Illinois] [added: Illinois] | | [removed: 60045] [added: 60045] |

| [removed: _(Address] [added: (Address] of [removed: Principal] [added: Prinicpal] Executive [removed: Offices)_] [added: Offices)] | | [removed: _(Zip Code)_] [added: (Zip Code)] |

[removed: Registrant’s] [added: Registrant's] telephone number, including area [removed: code][added: code]

[removed: (847) 482-3000][added: (847) 482-3000]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] of Each [removed: Class] [added: Class] | | [removed: Name] [added: Name] of Each [removed: Exchange on] [added: Exchange On] Which [removed: Registered] [added: Registered] |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the [removed: Act:][added: Act:]

[removed: None][added: None]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T [added: (§232.405 of this chapter)] during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K [added: (§229.405 of this chapter)] is not contained herein, and will not be contained, to the best of [removed: Registrant’s] [added: registrant's] knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

See the definitions of [removed: “large] [added: "large] accelerated [removed: filer,” “accelerated filer”] [added: filer," "accelerated filer,"] and [removed: “smaller] [added: "smaller] reporting [removed: company”] [added: company"] in Rule 12b-2 of the Exchange Act.

[removed: |] Large accelerated filer þ [removed: | |] Accelerated filer ¨ [removed: | |] Non-accelerated filer ¨ [removed: | |] Smaller reporting company ¨ [removed: |]

[removed: | | |] (Do not check if a smaller reporting company) [removed: | | | | |]

At June 30, [removed: 2012,] [added: 2013,] the last [removed: business] day of the [removed: Registrant’s] [added: Registrant's] most recently completed second fiscal quarter, the aggregate market value of [removed: the Registrant’s] [added: Registrant's] common equity held by [removed: nonaffiliates] [added: non-affiliates] was approximately [removed: $2,713,990,063] [added: $4,735,149,656] based [removed: on] [added: upon] the closing sale price as reported on the New York Stock Exchange.

On [removed: February 22, 2013,] [added: January 31, 2014,] there were [removed: 98,175,675] [added: 98,206,211] shares of Common Stock outstanding.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Specified portions of the Proxy Statement for the [removed: Registrant’s 2013] [added: Registrant's 2014] Annual Meeting of Stockholders are incorporated by reference to the extent indicated in Part III of this Form 10-K.

| | [removed: | PART I | | |] [added: PART I] | |

| Item 1. | [removed: | [Business](#tx450554_1) | | | 3] [added: [Business](#sDEB9286A1BB3D5372436ACC93CD31F88)] | [added: [1](#sDEB9286A1BB3D5372436ACC93CD31F88)] |

| Item 1A. | [removed: |] [Risk [removed: Factors](#tx450554_2) | | | 8] [added: Factors](#s16B67F54A74B4A6405B6ACC93EE9475F)] | [added: [8](#s16B67F54A74B4A6405B6ACC93EE9475F)] |

| Item 1B. | [removed: |] [Unresolved Staff [removed: Comments](#tx450554_3) | | | 10] [added: Comments](#sB13BEAFFAD14EEC13FE7ACC93F1BC060)] | [added: [11](#sB13BEAFFAD14EEC13FE7ACC93F1BC060)] |

| Item 2. | [removed: | [Properties](#tx450554_4) | | | 11] [added: [Properties](#s4FAD430E9777878534FCACC93F3D60FD)] | [added: [12](#s4FAD430E9777878534FCACC93F3D60FD)] |

| Item 3. | [removed: |] [Legal [removed: Proceedings](#tx450554_5) | | | 11] [added: Proceedings](#s349F7A1A2E2E0B16ABC4ACC93F6F9463)] | [added: [12](#s349F7A1A2E2E0B16ABC4ACC93F6F9463)] |

| Item 4. | [removed: |] [Mine Safety [removed: Disclosures](#tx450554_6) | | | 11] [added: Disclosure](#s0312F7CC184E16546245ACC93F8F32AE)] | [added: [12](#s0312F7CC184E16546245ACC93F8F32AE)] |

| [removed: Item 4.1] | [removed: |] [Executive Officers of the [removed: Registrant](#tx450554_7) | | | 12] [added: Registrant](#sC2FCA7DDDBD8C7FD42AFACC93EC7B8F9)] | [added: [7](#sC2FCA7DDDBD8C7FD42AFACC93EC7B8F9)] |

| [removed: | | PART II | |] [added: PART II] | | |

| Item 5. | [removed: |] [Market for [removed: Registrant’s] [added: Registrant's] Common Equity, Related Stockholder [removed: Matters] [added: Matters,] and Issuer Purchases of Equity [removed: Securities](#tx450554_8) | | | 13] [added: Securities](#sF379BAE299C271FB7C2EACC9307E3618)] | [added: [13](#sF379BAE299C271FB7C2EACC9307E3618)] |

| Item 6. | [removed: |] [Selected Financial [removed: Data](#tx450554_9) | | | 16] [added: Data](#sBE45A1C0468C7E11FCECACC92D904EE6)] | [added: [16](#sBE45A1C0468C7E11FCECACC92D904EE6)] |

| Item 7. | [removed: | [Management’s] [added: [Management's] Discussion and Analysis of Financial Condition and Results of [removed: Operations](#tx450554_10) | | | 16] [added: Operations](#s0BD472FDE5CDEA87140CACC9404E2104)] | [added: [17](#s0BD472FDE5CDEA87140CACC9404E2104)] |

| Item 7A. | [removed: |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#tx450554_11) | | | 31] [added: Risk](#s81ED37525B79B972DD8BACC9427D5418)] | [added: [34](#s81ED37525B79B972DD8BACC9427D5418)] |

10-K 1 pkg1231201310k.htm 10-K

______________________________________

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______________________________________


_____________________________________

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_____________________________________

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| --- | --- | --- |

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| | | |

| | [Packaging](#sCFE41B095088CF669533ACC93D27512C) | [2](#sCFE41B095088CF669533ACC93D27512C) |

| | [Paper](#s4C540C792B275A2EBECEACC93D4AD2B4) | [5](#s4C540C792B275A2EBECEACC93D4AD2B4) |

| | [Corporate and Other](#sD940F0E612CAC14885DDACC93D7C39D2) | [7](#sD940F0E612CAC14885DDACC93D7C39D2) |

| | [Employees](#s40D378E3D727E8D18598ACC93E954BA6) | [7](#s40D378E3D727E8D18598ACC93E954BA6) |

| | [Environmental Matters](#s358F49DF10D9DB2E9217ACC93DCD159D) | [7](#s358F49DF10D9DB2E9217ACC93DCD159D) |

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| | | |

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| | | |

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| | | |

| | | |

| | | |

| | [Overview](#s6E419BED7AD681471AF7ACC94069FF73) | [17](#s6E419BED7AD681471AF7ACC94069FF73) |

| | [Executive Summary](#s771558BC40A75031B1B5ACC940890920) | [18](#s771558BC40A75031B1B5ACC940890920) |

| | [Results of Operations](#s26EE6F3B72DC0C0323B5ACC9410FD1EE) | [20](#s26EE6F3B72DC0C0323B5ACC9410FD1EE) |

| | [Liquidity and Capital Resources](#s83C8ECA2DF237DD2AF90ACC9415BF5D6) | [23](#s83C8ECA2DF237DD2AF90ACC9415BF5D6) |

| | [Commitments](#sD143A2AF9609D06D7F45ACC94187947A) | [27](#sD143A2AF9609D06D7F45ACC94187947A) |

| | [Off-Balance-Sheet Activities](#sA3C3EC8886520717E9D4ACC941A0AD56) | [28](#sA3C3EC8886520717E9D4ACC941A0AD56) |

| | [Environmental Matters](#sC742086EB7EB8D879D8BACC9420834E6) | [28](#sC742086EB7EB8D879D8BACC9420834E6) |

| | [Critical Accounting Estimates](#sECFAE4DEDF0868F5A2A1ACC9422BC97F) | [29](#sECFAE4DEDF0868F5A2A1ACC9422BC97F) |

| | [New and Recently Adopted Accounting Standards](#sFDFCC850691265EC69FEACC9425D28C1) | [32](#sFDFCC850691265EC69FEACC9425D28C1) |

| | [Reconciliations of Non-GAAP Financial Measures to Reported Amounts](#s52f091d9a67f46bcbef968200db94a69) | [33](#s52f091d9a67f46bcbef968200db94a69) |

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| | | |

Form 10-K

OF THE SECURITIES EXCHANGE ACT OF 1934

PACKAGING CORPORATION OF AMERICA

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

INDEX

| | | | | Page | | |

| [SIGNATURES](#tx450554_22) | | | | | 38 | |

| [INDEX TO FINANCIAL STATEMENTS](#tx450554_23) | | | | | F-1 | |

| | |

##### [Table of Contents](#toc)

[removed: We currently] [added: Additionally, we] have [removed: 71] [added: 98] corrugated manufacturing operations, of which [removed: 44] [added: 54] are owned, including [removed: 37] [added: 46] combining operations, or corrugated plants, [added: one corrugated sheet-only manufacturer,] and seven sheet plants.

[removed: Four] [added: 18] corrugated plants and [removed: 23] [added: 26] sheet plants are leased.

We [removed: also] own one warehouse and miscellaneous other properties, including sales offices and woodlands management offices.

[removed: PCA leases] [added: We lease] the space for regional design centers and numerous other distribution centers, [removed: warehouses] [added: warehouses,] and facilities.

The equipment in these leased facilities is, in virtually all cases, owned by [removed: PCA,] [added: us,] except for forklifts and other rolling stock which are generally leased.

On average, these cutting rights agreements have terms with approximately [removed: 11] [added: 10] years remaining.

The headquarters facility is leased for the next [removed: nine] [added: eight] years with provisions for two additional five year lease extensions.

We own and lease properties in our business.

All of our leases are noncancelable and, are primarily accounted for as operating leases.

These leases are not subject to early termination except for standard nonperformance clauses.

Information concerning capacity and utilization of our principal operating facilities, the segments that use those facilities, and a map of geographical locations is presented in "Part I, Item 1.

Business" of this Form 10-K.

We assess the condition and capacity of our manufacturing, distribution, and other facilities needed to meet our operating requirements.

Our properties have been generally well maintained and are in good operating condition.

In general, our facilities have sufficient capacity and are adequate for our production and distribution requirements.

We currently own five containerboard mills and three white paper mills.

Additionally, we lease approximately 9,000 acres of land for a fiber farm, located near our Wallula mill, where we plant, grow and harvest fiber.

We also lease an office in Boise, Idaho, which is leased through March 2018.

| | |

The table below provides a summary of our four owned containerboard mills, the principal products produced and each mill’s year-end 2012 annual practical maximum capacity based upon all of our paper machines’ production capabilities, as reported to the AF&PA:

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| Location | | Function | | Capacity (tons) | | |

| Counce, TN | | Kraft linerboard mill | | | 1,057,000 | |

| Valdosta, GA | | Kraft linerboard mill | | | 559,000 | |

| Tomahawk, WI | | Semi-chemical medium mill | | | 545,000 | |

| Filer City, MI | | Semi-chemical medium mill | | | 439,000 | |

| Total | | | | | 2,600,000 | |

These sales offices and woodlands management offices generally have one to four employees and serve as administrative offices.

[removed: PART II][added: PART II]

Not applicable.

| | |

| --- | --- |

None.

##### [Table of Contents](#toc)

| Item 4.1 | _EXECUTIVE OFFICERS OF THE REGISTRANT_ |

Brief statements setting forth the age at February 28, 2013, the principal occupation, employment during the past five years, the year in which such person first became an officer of PCA, and other information concerning each of our executive officers appears below.

_Paul T.

Stecko_ is 68 years old and has served as Executive Chairman of PCA since July 2010.

He served as Chief Executive Officer from January 1999 through June 2010 and has been Chairman of PCA’s Board of Directors since March 1999.

From November 1998 to April 1999, Mr. Stecko served as President and Chief Operating Officer of Tenneco Inc. From January 1997 to November 1998, Mr. Stecko served as Chief Operating Officer of Tenneco.

From December 1993 through January 1997, Mr. Stecko served as President and Chief Executive Officer of Tenneco Packaging Inc. Prior to joining Tenneco Packaging, Mr. Stecko spent 16 years with International Paper Company.

Mr. Stecko is a member of the board of directors of Tenneco Inc., Smurfit Kappa Group Limited and State Farm Mutual Insurance Company.

_Mark W.

Kowlzan_ is 57 years old and has served as Chief Executive Officer and a director of PCA since July 2010.

From 1998 through June 2010, Mr. Kowlzan led the company’s containerboard mill system, first as Vice President and General Manager and then as Senior Vice President — Containerboard.

From 1996 through 1998, Mr. Kowlzan served in various senior mill-related operating positions with PCA and Tenneco Packaging, including as manager of the Counce linerboard mill.

Prior to joining Tenneco Packaging, Mr. Kowlzan spent 15 years at International Paper Company, where he held a series of operational and managerial positions within its mill organization.

Mr. Kowlzan is a member of the board of American Forest and Paper Association.

_Thomas A.

Hassfurther_ is 57 years old and has served as Executive Vice President — Corrugated Products of PCA since September 2009.

From February 2005 to September 2009, Mr. Hassfurther served as Senior Vice President — Sales and Marketing, Corrugated Products.

Prior to this he held various senior-level management and sales positions at PCA and Tenneco Packaging.

Mr. Hassfurther joined the company in 1977.

_Richard B.

West_ is 60 years old and has served as Chief Financial Officer of PCA since March 1999 and as Senior Vice President since March 2002.

From April 1999 to June 2007, Mr. West also served as Corporate Secretary.

From 1995 through April 1999, Mr. West served in various senior financial positions with PCA and Tenneco Packaging.

Prior to joining Tenneco Packaging, Mr. West spent 20 years with International Paper Company in various financial positions.

_Thomas W.H. Walton_ is 53 years old and has served as Senior Vice President — Sales and Marketing, Corrugated Products since October 2009.

Prior to this, he served as a Vice President and Area General Manager within the Corrugated Products Group since 1998.

Mr. Walton joined the company in 1981 and has also held plant positions in production, sales and general management.

_Kent A.

Pflederer_ is 42 years old and has served as Senior Vice President — Legal and Administration since January 2013 and Corporate Secretary since June 2007.

He served as Vice President and General Counsel from June 2007 to January 2013.

Prior to joining PCA, Mr. Pflederer served as Senior Counsel, Corporate and Securities, at Hospira, Inc. from 2004 to 2007 and served in the corporate and securities practice at Mayer Brown, LLP from 1996 to 2004.

_Stephen T.

Calhoun_ is 67 years old and has served as Vice President — Human Resources of PCA since November 2002.

Prior to this, he served in a variety of human resource positions at both the operational and corporate level.

Prior to joining the company in 1989, Mr. Calhoun spent 15 years with American Can Company where he held several human resources and manufacturing positions.

Mr. Calhoun will retire from PCA on March 31, 2013.

_Charles J.

[removed: Market Information][added: Market Information]

PCA’s common stock is listed on the New York Stock Exchange [added: (NYSE)] under the symbol “PKG”.

The following table sets forth the high and low [removed: sale] [added: sales] prices [removed: and dividends] as reported by the [removed: New York Stock Exchange] [added: NYSE and the cash dividends declared per common share] during the last two years.

| | [removed: | Sales Price] [added: Sales Price] | | | | | | | | [removed: Dividends Declared] [added: Dividends Declared] | | | | [removed: Sales Price] [added: Sales Price] | | | | | | | | [removed: Dividends Declared] [added: Dividends Declared] | | |

| [removed: Quarter Ended |] [added: Quarter Ended] | [removed: High] [added: High] | | | | [removed: Low] [added: Low] | | | | | [removed: High] [added: High] | | | | [removed: Low] [added: Low] | | | | | | | | | |

| March 31 | [removed: |] $ | [removed: 30.62] [added: 44.93] | | | $ | [removed: 24.82] [added: 37.86] | | | $ | [removed: 0.25] [added: 0.31] | | | $ | [removed: 30.69] [added: 30.62] | | | $ | [removed: 25.96] [added: 24.82] | | | $ | [removed: 0.20] [added: 0.25] | |

| June 30 | [removed: |] [added: 50.78] | [removed: 29.80] | | | [added: 42.36] | [removed: 25.77] | | | [added: 0.40] | [removed: 0.25] | | | [added: 29.80] | [removed: 29.88] | | | [added: 25.77] | [removed: 26.26] | | | [added: 0.25] | [removed: 0.20] | |

| September 30 | [removed: |] [added: 61.32] | [removed: 36.68] | | | [added: 48.45] | [removed: 27.59] | | | [added: 0.40] | [removed: 0.25] | | | [added: 36.68] | [removed: 29.19] | | | [added: 27.59] | [removed: 21.05] | | | [added: 0.25] | [removed: 0.20] | |

| December 31 | [removed: |] [added: 64.39] | [removed: 38.67] | | | [added: 55.66] | [removed: 33.89] | | | [added: 0.40] | [removed: 0.25] | | | [added: 38.67] | [removed: 27.16] | | | [added: 33.89] | [removed: 21.75] | | | [added: 0.25] | [removed: 0.20] | |

[removed: Stockholders][added: Stockholders]

[removed: As of February 22, 2013,] [added: On January 31, 2014,] there were [removed: 79] [added: 76] holders of record of our common stock.

[removed: Dividend Policy][added: Dividend Policy]

PCA expects to continue to pay regular cash dividends, although there is no assurance as to the timing or level of future dividend payments because these depend on future earnings, capital [removed: requirements] [added: requirements,] and financial condition.

On [removed: February 21, 2012,] [added: January 14, 2013,] PCA announced an increase in its quarterly cash dividend on its company stock from an annual payout of [removed: $0.80] [added: $1.00] per share to [removed: $1.00] [added: $1.25] per share.

The first quarterly dividend of [removed: $0.25] [added: $0.3125] per share was paid to stockholders on April [removed: 13, 2012.][added: 15, 2013.]

On [removed: January 14,] [added: May 15,] 2013, PCA announced another increase in its quarterly cash dividend on its company stock from an annual payout of [removed: $1.00] [added: $1.25] per share to [removed: $1.25] [added: $1.60] per share.

The first quarterly dividend of [removed: $0.3125] [added: $0.40] per share [removed: will be] [added: was] paid [removed: to stockholders] on [removed: April] [added: July] 15, 2013.

[removed: Purchases] [added: Purchases] of Equity [removed: Securities][added: Securities]

[removed: _Stock] [added: Stock] Repurchase [removed: Program_][added: Program]

All [removed: repurchased] shares [added: repurchased under this authorization] were retired prior to [removed: March 31, 2012.][added: the end of the year.]

[removed: Through December 31, 2012,] [added: In 2013,] the Company repurchased [removed: 1,472,096] [added: 171,263] shares of common stock for [removed: $44.1] [added: $7.8] million, or an average price of [removed: $29.97] [added: $45.54] per share.

As of December 31, [removed: 2012, $105.9] [added: 2013, $98.1] million of the $150.0 million authorization remained available for repurchase of the Company’s common stock.

| [removed: Period |] [added: Period] | [removed: Total Number of Shares Purchased] | [added: Total Number of Shares Purchased (a)] | | | [removed: Average Price Paid per Share] [added: Average Price Paid Per Share] | | | | [removed: Total Number of Shares Purchased as Part] [added: Total Number] of [removed: Publicly Announced Plans] [added: Shares Purchased as Part of Publicly Announced Plans] or [removed: Programs |] [added: Programs] | | | [removed: Approximate Dollar Value of] [added: Approximate Dollar Value of] Shares [removed: that may yet be Purchased Under the Plan or Program] [added: That May Yet Be Purchased Under the Plans or Programs] | | |

[removed: Performance Graph][added: Performance Graph]

The graph tracks the performance of a $100 investment [added: (including the reinvestment of all dividends)] in our common stock, in each index, and in the peer [removed: group (including the reinvestment of all dividends)] [added: groups' common stock] from December 31, [removed: 2007] [added: 2008] through December 31, [removed: 2012.][added: 2013.]

[removed: ][added: ]

| | [removed: | Cumulative] [added: Cumulative] Total [removed: Return] [added: Return] | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | |

| | 2013 | | | | | | | | | | | | 2012 | | | | | | | | | | |

PCA did not repurchase any shares of its common stock during the fourth quarter of 2013.

Beginning in 2013, the Company began withholding shares from vesting equity awards to cover employee tax liabilities.

Total shares withheld in 2013 were 223,995 at an average price of $48.91, or $11.0 million.

The following table presents information related to our repurchases of common stock made under our plan announced on December 14, 2011, and shares withheld to cover taxes on vesting of equity awards, during the three months ended December 31, 2013:

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| Issuer Purchases of Equity Securities | | | | | | | | | | | | | | |

| October 1-31, 2013 | | — | | | $ | — | | | — | | | $ | 98,086 | |

| November 1-30, 2013 | | — | | | — | | | | — | | | 98,086 | | |

| December 1-31, 2013 | | 1,297 | | | 62.61 | | | | — | | | 98,086 | | |

| Total | | 1,297 | | | $ | 62.61 | | (a) | — | | | $ | 98,086 | |

____________

| | |

| (a) | 1,297 shares were withheld from employees to cover income and payroll taxes on equity awards that vested during the period. |

The graph below compares PCA’s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the S&P 500 index; the S&P Midcap 400 index; and two customized peer groups.

The companies included in our Old Peer Group are International Paper Company and Rock-Tenn Company.

PCA has revised its Peer Group due to acquiring Boise Inc. on October 25, 2013.

The companies included in our New Peer Group are International Paper Company, Kapstone Paper & Packaging Corp., and Rock-Tenn Company.

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | |

| | December 31 | | | | | | | | | | | | | | | | | | | | | | |

| | 2008 | | | | 2009 | | | | 2010 | | | | 2011 | | | | 2012 | | | | 2013 | | |

| Packaging Corporation of America | $ | 100.00 | | | $ | 177.39 | | | $ | 204.19 | | | $ | 205.56 | | | $ | 323.44 | | | $ | 547.88 | |

| S&P 500 | 100.00 | | | | 126.46 | | | | 145.51 | | | | 148.59 | | | | 172.37 | | | | 228.19 | | |

| S&P Midcap 400 | 100.00 | | | | 137.38 | | | | 173.98 | | | | 170.96 | | | | 201.53 | | | | 269.04 | | |

| Old Peer Group | 100.00 | | | | 218.00 | | | | 227.06 | | | | 253.93 | | | | 343.57 | | | | 453.68 | | |

| New Peer Group | $ | 100.00 | | | $ | 220.05 | | | $ | 232.81 | | | $ | 259.36 | | | $ | 353.05 | | | $ | 484.88 | |

| | |

| --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2012 | | | | | | | | | | | | 2011 | | | | | | | | | | |

Sales of Unregistered Securities

No equity securities of PCA were sold by PCA during fiscal year 2012 that were not registered under the Securities Act of 1933.

##### [Table of Contents](#toc)

On February 22, 2011, PCA announced that its Board of Directors had authorized the repurchase of $100.0 million of the Company’s outstanding common stock, which it completed in the first quarter of 2012.

Through March 31, 2012, the Company repurchased 3,996,118 shares of common stock, with 35,563 shares repurchased for $1.0 million, or $29.40 per share, during the first quarter of 2012.

All shares repurchased under this authorization were retired prior to December 31, 2012.

The following table summarizes the Company’s stock repurchases in the fourth quarter of 2012:

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | (In Thousands) | | |

| October 1, 2012 to October 31, 2012 | | | 100,000 | | | $ | 35.35 | | | | 100,000 | | | $ | 105,987 | |

| November 1, 2012 to November 30, 2012 | | | 2,900 | | | | 35.47 | | | | 2,900 | | | | 105,884 | |

| December 1, 2012 to December 31, 2012 | | | — | | | | — | | | | — | | | | 105,884 | |

| Total | | | 102,900 | | | $ | 35.35 | | | | 102,900 | | | | | |

The graph below compares PCA’s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the S&P 500 index; the S&P Midcap 400 index; and a Peer Group that includes three publicly-traded companies, which are International Paper Company, Rock-Tenn Company and Boise Inc. Temple Inland, Inc., which had been included in the peer group in previous years, was acquired in 2012 by International Paper Company and is now excluded from the peer group.

* $100 invested on 12/31/07 in stock or index, including reinvestment of dividends.

Fiscal year ending December 31.

Copyright© 2013 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

| | | 12/07 | | | | 12/08 | | | | 12/09 | | | | 12/10 | | | | 12/11 | | | | 12/12 | | |

| Packaging Corporation of America | | | 100.00 | | | | 50.77 | | | | 90.06 | | | | 103.67 | | | | 104.36 | | | | 164.21 | |

| S&P 500 | | | 100.00 | | | | 63.00 | | | | 79.67 | | | | 91.67 | | | | 93.61 | | | | 108.59 | |

| S&P Midcap 400 | | | 100.00 | | | | 63.77 | | | | 87.61 | | | | 110.94 | | | | 109.02 | | | | 128.51 | |

| Peer Group | | | 100.00 | | | | 43.13 | | | | 96.37 | | | | 102.02 | | | | 113.25 | | | | 152.95 | |

The following table sets forth [removed: the] selected historical financial data of [removed: PCA.][added: PCA (dollars in thousands, except per share data).]

| | [removed: | For The] Year Ended December [removed: 31,] [added: 31] | | | | | | | | | | | | | | | | | | |

| | [removed: | 2012] [added: 2013 (a)] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | | [removed: 2009] [added: 2010] | | | | [removed: 2008] [added: 2009] | | |

| [removed: Statement] [added: Statement] of Income [removed: Data: |] [added: Data:] | | | | | | | | | | | | | | | | | | | |

| Net [removed: sales |] [added: Sales] | $ | [removed: 2,843,877] [added: 3,665,308] | | | $ | [removed: 2,620,111] [added: 2,843,877] | | | $ | [removed: 2,435,606] [added: 2,620,111] | | | $ | [removed: 2,147,589] [added: 2,435,606] | | | $ | [removed: 2,360,493] [added: 2,147,589] | |

| Net [removed: income] [added: Income] | [added: 436,283] | | [added: | |] 163,820 | | | | 158,027 | | | | 205,435 | | | | 265,895 | | | [removed: | 135,609 | |]

| Net income per common share: | | | | | | | | | | | | | | | | | | | | [removed: |]

| — basic | [added: 4.52] | | [added: | |] 1.70 | | | | 1.59 | | | | 2.02 | | | | 2.62 | | | [removed: | 1.32 | |]

| — diluted | [added: 4.47] | | [added: | |] 1.68 | | | | 1.57 | | | | 2.00 | | | | 2.60 | | | [removed: | 1.31 | |]

| Weighted average common shares outstanding: | | | | | | | | | | | | | | | | | | | | [removed: |]

| — basic | [added: 96,579] | | [added: | |] 96,384 | | | | 99,281 | | | | 101,678 | | | | 101,577 | | | [removed: | 102,753 | |]

| — diluted | [added: 97,547] | | [added: | |] 97,497 | | | | 100,376 | | | | 102,608 | | | | 102,358 | | | [removed: | 103,593 | |]

| Cash dividends declared per common share | [added: 1.51] | | [added: | |] 1.00 | | | | 0.80 | | | | 0.60 | | | | 0.60 | | | [removed: | 1.20 | |]

| [removed: Balance] [added: Balance] Sheet [removed: Data: |] [added: Data:] | | | | | | | | | | | | | | | | | | | |

| Total assets | [removed: |] $ | [removed: 2,453,768] [added: 5,199,974] | | | $ | [removed: 2,412,499] [added: 2,453,768] | | | $ | [removed: 2,225,910] [added: 2,412,499] | | | $ | [removed: 2,152,840] [added: 2,225,910] | | | $ | [removed: 1,939,741] [added: 2,152,840] | |

| Total debt [removed: obligations(1)] [added: obligations] | [added: 2,572,749] | | [added: | |] 819,498 | | | | 830,280 | | | | 680,601 | | | | 680,878 | | | [removed: | 681,135 | |]

| [removed: Stockholders’] [added: Stockholders'] equity | [added: 1,313,015] | | [added: | |] 969,461 | | | | 928,910 | | | | 1,009,001 | | | | 898,845 | | | [removed: | 683,949 | |]

The information contained in the table should be read in conjunction with the disclosures in "Part II, Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Part II, Item 8.

Financial Statements and Supplementary Data" of this Form 10-K.

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| Earnings, before interest, taxes, depreciation, and amortization (EBITDA) (b) | $ | 675,400 | | | $ | 614,201 | | | $ | 436,383 | | | $ | 341,680 | | | $ | 503,671 | |

____________

| | |

| (a) | On October 25, 2013, we acquired Boise Inc. (Boise). The 2013 consolidated earnings results include Boise for the period of October 25 through December 31, 2013. |

| | |

| (b) | EBITDA represents income before interest (interest expense and interest income), income tax provision (benefit), and depreciation, amortization, and depletion. We present EBITDA because it provides a means to evaluate our performance on an ongoing basis using the same measure that is used by our management and because it is frequently used by investors and other interested parties in the evaluation of companies. EBITDA, however, is not a measure of our liquidity or financial performance under generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income, income from operations, or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. The use of EBITDA instead of net income has limitations as an analytical tool, including the inability to determine profitability; the exclusion of interest expense, interest income, and associated significant cash requirements; and the exclusion of depreciation, amortization, and depletion, which represent significant and unavoidable operating costs, given the level of our indebtedness and the capital expenditures needed to maintain our businesses. Our measures of EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation. Any analysis of non-GAAP financial measures should be done in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such. See "Reconciliations of Non-GAAP Financial Measures to Reported Amounts" included in this Item 7 for a reconciliation of non-GAAP measures to the most comparable GAAP measure. |

| | |

| --- | --- |

The information contained in the table should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements of PCA, including the notes thereto, contained elsewhere in this report.

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | (In thousands, except per share data) | | | | | | | | | | | | | | | | | | |

| (1) | Total debt obligations include long-term debt, capital lease obligations, short-term debt and current maturities of long-term debt and capital lease obligations. |

INDEX TO FINANCIAL STATEMENTS

| | |

| | |

| Packaging Corporation of America Consolidated Financial Statements | |

| [Report of independent registered public accounting firm](#sBC43173C2DE97A062885ACC948E45200) | [36](#sBC43173C2DE97A062885ACC948E45200) |

| [Consolidated statements of income and comprehensive income for the years ended December 31, 2013, 2012 and 2011](#s81AB4BCEB46158E97C9DACC91A4F3074) | [38](#s81AB4BCEB46158E97C9DACC91A4F3074) |

| [Consolidated balance sheets as of December 31, 2013 and 2012](#s3BB321A4E03C6F9E7164ACC91B6E8B51) | [39](#s3BB321A4E03C6F9E7164ACC91B6E8B51) |

| [Consolidated statements of cash flows for the year ended December 31, 2013, 2012 and 2011](#sE40D22EF05CECE29F6A1ACC91A760E67) | [40](#sE40D22EF05CECE29F6A1ACC91A760E67) |

| [Consolidated statement of changes in stockholders' equity for the years ended December 31, 2013, 2012 and 2011](#sD5B5F2AF769FCB04D400ACC91B9CDB66) | [41](#sD5B5F2AF769FCB04D400ACC91B9CDB66) |

| [Notes to Consolidated Financial Statements](#sBA0491834687A3625ECFACC944701151) | [42](#sBA0491834687A3625ECFACC944701151) |

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Packaging Corporation of America

Board of Directors and Stockholders

We have audited the accompanying consolidated balance sheets of Packaging Corporation of America (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of income and comprehensive income, changes in stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2013.

Our audits also included the financial statement schedule listed in the index at Item 15(a).

These financial statements and schedule are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We did not audit the consolidated financial statements of Boise Inc., a wholly-owned subsidiary, which statements reflect total assets constituting 52% in 2013 and total revenues and net income constituting 12% and 14%, respectively in 2013 of the related consolidated totals.

Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Boise Inc., is based solely on the report of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Packaging Corporation of America at December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Packaging Corporation of America's internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework), and our report dated February 28, 2014 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Chicago, Illinois

February 28, 2014

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Packaging Corporation of America

Board of Directors and Stockholders

We have audited Packaging Corporation of America’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 framework) (the COSO criteria).

Packaging Corporation of America’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

The response to this item is included in a separate section of this report beginning on page F-1, which is incorporated by reference herein.

Not applicable

| | |

None.

[removed: Controls] [added: Controls] and [removed: Procedures][added: Procedures]

Prior to filing this report, PCA completed an evaluation under the supervision and with the participation of PCA’s management, including PCA’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of PCA’s disclosure controls and procedures as of December 31, [removed: 2012.][added: 2013.]

The evaluation of PCA’s disclosure controls and procedures included a review of the controls’ objectives and design, PCA’s implementation of the controls and the effect of the controls on the information generated for use in this [removed: report.][added: report, but excluded the operations acquired from Boise.]

Based on this evaluation, PCA’s Chief Executive Officer and Chief Financial Officer concluded that PCA’s disclosure controls and procedures were effective at the reasonable assurance level as of December 31, [removed: 2012.][added: 2013.]

[removed: During] [added: Except as it relates to] the [removed: quarter ended December 31, 2012,] [added: acquisition of Boise on October 25, 2013,] there [removed: were] [added: have been] no changes in [added: our] internal [removed: controls] [added: control] over financial reporting [added: during the quarter ended December 31, 2013,] that have materially affected, or are reasonably likely to materially affect, [removed: PCA’s] [added: our] internal control over financial reporting.

[removed: Management’s] [added: Management’s] Report on Internal Control Over Financial [removed: Reporting][added: Reporting]

[added: Internal control over financial reporting includes those policies and procedures that (1) pertain to] the [added: maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the] Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only with proper authorizations; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

PCA’s management, under the supervision of and with the participation of the Chief Executive Officer and Chief Financial Officer, assessed the Company’s internal control over financial reporting as of December 31, [removed: 2012,] [added: 2013,] based on criteria [removed: for effective control over financial reporting described] [added: established] in [removed: “Internal] [added: Internal] Control [removed: —] [added: -] Integrated [removed: Framework”] [added: Framework (1992)] issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission.][added: Commission (COSO).]

Based on this [removed: assessment,] [added: assessment and excluding the operations acquired from Boise,] PCA’s management concluded that its internal control over financial reporting was effective as of December 31, [removed: 2012,] [added: 2013,] based on the specified criteria.

On October 25, 2013, PCA acquired Boise Inc. ("Boise").

PCA is in the process of integrating Boise into its operations.

PCA is analyzing, evaluating, and where necessary, will implement changes in controls and procedures relating to the Boise business as such integration proceeds.

As a result, this process may result in additions or changes to PCA's internal control over financial reporting.

Except as it relates to the acquisition of Boise, there was no change in PCA's internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect PCA's internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

Due to the timing of the acquisition, we excluded Boise from our evaluation of the effectiveness of internal control over financial reporting.

Boise’s net sales, net income, and total assets represented approximately 12% of PCA’s 2013 consolidated net sales, 14% of 2013 consolidated net income, and 52% of total consolidated assets at December 31, 2013, respectively.

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Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of

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[removed: PART III][added: PART III]

None.

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Because this Annual Report on Form 10-K is being filed within four business days after the applicable triggering event, the below disclosure is being made under Part II, Item 9B of this Annual Report on From 10-K instead of under Item 5.02 (Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers) of Form 8-K.

On February 28, 2013, PCA approved amendments to PCA’s Supplemental Executive Retirement Plan.

The amended plan replaces the 35-year service cap applicable to payment of benefits to Thomas A.

Hassfurther and Thomas W.H. Walton with a 45-year cap.

The amendments to the plan are filed herewith as Exhibits 10.22 and 10.23 hereto, which are incorporated by reference herein.

Information regarding PCA’s executive officers required by this Item 10 is set forth in Item [removed: 4.1] [added: 1] of Part I of this [removed: report.][added: report under the caption "Executive Officers of the Registrant."]

| [removed: |] • | [removed: |] Information regarding PCA’s directors included under the caption “Election of Directors” |

| [removed: |] • | [removed: |] Information regarding PCA’s Audit Committee and financial experts included under the caption “Election of Directors [removed: —] [added: -] Audit Committee” |

| [removed: |] • | [removed: |] Information regarding PCA’s code of ethics included under the caption “Election of Directors [removed: —] [added: -] Code of Ethics” |

| [removed: |] • | [removed: |] Information regarding PCA’s stockholder nominating procedures included under the captions “Election of Directors [removed: —] [added: -] Nominating and Governance Committee,” “Other Information [removed: —] [added: -] Recommendations for Board [removed: —] [added: -] Nominated Director Nominees,” and “Other Information [removed: —] [added: -] Procedures for Nominating Directors or Bringing Business Before the 2014 Annual Meeting” |

| [removed: |] • | [removed: |] Information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 included under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” |

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Information with respect to executive compensation required by this Item 11 will be included in PCA’s Proxy Statement under the captions “Compensation Discussion and Analysis,” “Executive Officer and Director Compensation” (including all subcaptions and tables thereunder) and “Board Committees [removed: —] [added: -] Compensation Committee” and is incorporated herein by reference.

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[removed: _Authorization] [added: Authorization] of Securities under Equity Compensation [removed: Plans._] [added: Plans —] Securities authorized for issuance under [added: our] equity compensation plans at December 31, [removed: 2012] [added: 2013] are as follows:

| [removed: Plan Category |] [added: Plan Category] | [removed: Number of Securities to be Issued Upon] [added: Number of Securities to Be Issued Upon] Exercise [removed: of Outstanding Options and Rights(a) | |] [added: of Outstanding Options, Warrants, and Rights (a)] | | [removed: Weighted Average Exercise Price of Outstanding Options and Rights] | [added: Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights] | | | [removed: Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans(b)] | [added: Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A)] | |

| Equity compensation plans not approved by [removed: security holders | | | —] [added: securityholders] | [added: N/A] | | | [removed: —] [added: N/A] | | | | [removed: —] [added: N/A] | |

| (a) | Does not include [removed: 1,771,664] [added: 1,534,294] shares of unvested restricted stock [added: and performance units] granted pursuant to our Amended and Restated 1999 Long-Term Equity Incentive Plan. |

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| | Column | | | | | | | | |

| | A | | | B | | | | C | |

| Equity compensation plans approved by securityholders | 151,945 | | | $ | 24.61 | | | 2,140,954 | |

| Total | 151,945 | | | $ | 24.61 | | | 2,140,954 | |

____________

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| Equity compensation plans approved by security holders | | | 278,580 | | | $ | 23.65 | | | | 509,042 | |

| Total | | | 278,580 | | | $ | 23.65 | | | | 509,042 | |

| (b) | Excludes securities reflected in the first column, “Number of securities to be issued upon exercise of outstanding options and rights.” |

Information with respect to certain relationships and related transactions and director independence required by this Item 13 will be included in PCA’s Proxy Statement under the captions “Transactions with Related Persons” and “Election of Directors [removed: —] [added: -] Determination of Director Independence,” respectively, and is incorporated herein by reference.

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Information with respect to fees and services of the principal accountant required by this Item 14 will be included in PCA’s Proxy Statement under the caption “Ratification of Appointment of the Independent [added: Registered Public Accounting Firm” under the subcaptions “- Fees to the Independent Registered Public Accounting Firm” and “- Audit Committee Preapproval Policy for Audit and Non-Audit Fees” and are incorporated herein by reference.]

[removed: PART IV][added: PART IV]

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Registered Public Accounting Firm” under the subcaptions “— Fees to the Independent Registered Public Accounting Firm” and “— Audit Committee Preapproval Policy for Audit and Non-Audit Fees” and are incorporated herein by reference.

The following consolidated financial statement schedule of PCA for the years ended December 31, [added: 2013,] 2012, [removed: 2011] and [removed: 2010] [added: 2011] is included in this report.

Schedule II [removed: —] [added: -] Packaging Corporation of America [removed: —] [added: -] Valuation and Qualifying [removed: Accounts.][added: Accounts (dollars in thousands).]

| [removed: Description] [added: Description] | [added: Balance Beginning of Year] | [removed: Balance Beginning of Year] | | | [added: Acquired Reserves] | [removed: Charged to Expenses] | | | [added: Charged to Expenses] | [removed: Deductions] | | | [added: Deductions] | [removed: Balance End of Year] | | | [added: Balance End of Year | | |]

| Year ended December 31, 2012: | | | | | | | | | | | | | | | | | [added: | | |]

| Deducted from assets accounts: | | | | | | | | | | | | | | | | | [added: | | |]

| Allowance for doubtful accounts | [removed: |] $ | 1,906 | | | $ | [added: — | | | $ |] 1,043 | | | $ | (1,040 | [removed: )(1)] [added: )] | [added: (a)] | $ | 1,909 | |

| Reserve for customer deductions | [added: 3,128] | | [removed: 3,128] | | [added: —] | | [added: | |] 31,045 | | | | (30,729 | [removed: )(2)] | [added: )] | [added: (b)] | 3,444 | | [added: |]

| Total | [removed: |] $ | 5,034 | | | $ | [added: — | | | $ |] 32,088 | | | $ | (31,769 | ) | | $ | 5,353 | |

| Year ended December 31, 2011: | | | | | | | | | | | | | | | | | [added: | | |]

| Allowance for doubtful accounts | [removed: |] $ | 2,493 | | | $ | [added: — | | | $ |] 143 | | | $ | (730 | [removed: )(1)] [added: )] | [added: (a)] | $ | 1,906 | |

| Reserve for customer deductions | [added: 2,920] | | [removed: 2,920] | | [added: —] | | [added: | |] 30,009 | | | | (29,801 | [removed: )(2)] | [added: )] | [added: (b)] | 3,128 | | [added: |]

| Total | [removed: |] $ | 5,413 | | | $ | [added: — | | | $ |] 30,152 | | | $ | (30,531 | ) | | $ | 5,034 | |

| Year ended December 31, [removed: 2010:] [added: 2013:] | | | | | | | | | | | | | | | | | [added: | | |]

| Allowance for doubtful accounts | [added: $] | [added: 1,909 | | |] $ | [removed: 3,909] [added: —] | | | $ | [removed: (937] [added: 2,812] | [removed: )] | | $ | [removed: (479] [added: (821] | [removed: )(1)] [added: )] | [added: (a)] | $ | [removed: 2,493] [added: 3,900] | |

| [removed: (1)] [added: (a)] | Consists primarily of uncollectable accounts written off, net of recoveries, during the year. |

| [removed: (2)] [added: (b)] | Consists primarily of discounts taken by customers during the year. |

[removed: | (b) | Exhibits |][added: (2) Exhibits]

| [removed: Exhibit Number | |] [added: Exhibit Number] | | [removed: Description] [added: Description] |

| [removed: |] 2.1 | | [removed: |] Contribution Agreement, dated as of January 25, 1999, among Pactiv Corporation (formerly known as Tenneco Packaging Inc.) (“Pactiv”), PCA Holdings LLC (“PCA Holdings”) and Packaging Corporation of America (“PCA”). (Incorporated herein by reference to Exhibit 2.1 to PCA’s registration Statement on Form S-4, Registration No. 333-79511). |

| [removed: |] 2.2 | | [removed: |] Letter Agreement Amending the Contribution Agreement, dated as of April 12, 1999, among Pactiv, PCA Holdings and PCA. (Incorporated herein by reference to Exhibit 2.2 to PCA’s Registration Statement on Form S-4, Registration No. 333-79511). |

| [removed: |] 3.1 | | [removed: |] Restated Certificate of Incorporation of PCA. (Incorporated herein by reference to Exhibit 3.1 to PCA’s Registration Statement on Form S-4, Registration No. 333-79511). |

| [removed: |] 3.2 | | [removed: |] Certificate of Amendment to Restated Certificate of Incorporation of PCA. (Incorporated herein by reference to Exhibit 3.2 to PCA’s Registration Statement on Form S-4, Registration No. 333-109437.) |

| [removed: |] 3.3 | | [removed: |] Amended and Restated By-laws of PCA. (Incorporated herein by reference to Exhibit 3.1 to PCA’s Current Report on Form 8-K filed December 7, 2012, File No. 1-15399.) |

| [removed: |] 4.1 | | [removed: |] Form of certificate representing shares of common stock. (Incorporated herein by reference to Exhibit 4.9 to PCA’s Registration Statement on Form S-1, Registration No. 333-86963.) |

| [removed: |] 4.2 | | [removed: |] Indenture, dated as of July 21, 2003, between PCA and U.S. Bank National Association. (Incorporated herein by reference to Exhibit 4.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2003, File No. 1-15399.) |

| [removed: |] 4.3 | | [removed: |] First Supplemental Indenture, dated as of July 21, 2003, between PCA and U.S. Bank National Association. (Incorporated herein by reference to Exhibit 4.3 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2003, File No. 1-15399.) |

| [removed: |] 4.4 | | [removed: |] Form of Rule 144A Global Note. (Incorporated herein by reference to Exhibit 4.5 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2003, File No. 1-15399.) |

| [removed: |] 4.5 | | [removed: |] Officers’ Certificate, dated March 25, 2008, pursuant to Section 301 of the [removed: Indenture, dated July 21, 2003, by and between PCA and U.S. Bank National Association] [added: Indenture filed herewith as Exhibit 4.2] (Incorporated herein by reference to Exhibit 4.1 to PCA’s Current Report on Form 8-K filed March 25, 2008, File No. 1-15399.) |

| [removed: |] 4.6 | | [removed: |] 6.50% Senior Notes due 2018. (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report on Form 8-K filed March 25, 2008, File No. 1-15399.) |

| [removed: |] 4.7 | | [removed: |] Officers’ Certificate and 3.90% Senior Notes due 2022. (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report [removed: of] [added: on] Form 8-K filed June 26, 2012, File No. [removed: 1-15399)] [added: 1-15399.)] |

| [removed: |] 10.1 | | [removed: | Five Year] Credit Agreement, dated as of October [removed: 11, 2011,] [added: 18, 2013,] by and among PCA and the lenders and agents named therein. (Incorporated herein by reference to Exhibit 10.1 to PCA’s Current Report on Form 8-K filed October [removed: 12, 2011,] [added: 22, 2013,] File No. [removed: 1-15399.)] [added: 1-15399, which incorporates by reference Exhibit (b)(2) to Amendment No. 6 to PCA’s Schedule filed October 21, 2013).] |

| [removed: | 10.3 |] [added: 10.12] | | [removed: Amendment No. 1 to Amended and Restated Credit and Security] Agreement, dated [removed: as] [added: June 24, 2013, between Packaging Corporation] of [removed: April 14, 2009, by and among PCA and the lenders] [added: America] and [removed: agents named therein.] [added: Paul T. Stecko.] (Incorporated herein by reference to Exhibit 10.1 to PCA’s Current Report on Form [removed: 8-K] [added: 8-K,] filed [removed: April 16, 2009,] [added: June 27, 2013,] File No. [removed: 1-15399.)] [added: 1-15399.)*] |