Packaging Corp of America (PKG) 10-K risk factor changes: FY2014 vs FY2013

Forward-looking statements include statements about our expectations regarding our future liquidity, earnings, [removed: expenditures] [added: expenditures,] and financial condition.

Our actual results, [removed: performance] [added: performance,] or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, we can give no assurances that any of the events anticipated by the [removed: forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition.][added: forward-]

[added: 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.

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

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

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

Increasing shifts to [removed: these] [added: electronic] alternatives have had and will continue to have an adverse effect on usage of these products.

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 [removed: producers)] [added: producers, who have increased imports of white paper to the United States in recent years and some of whom we believe may be violating international trade rules)] 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 market price of wood fiber varies based upon availability, source, and the costs of fuels used in the harvesting and [removed: transportation of wood fiber.]

In [removed: 2013, including Boise's operations as if we had acquired Boise on January 1, 2013,] [added: 2014,] we [removed: would have] purchased approximately [removed: 480,000] [added: 493,000] tons of recycled fiber, net of the recycled fiber generated by our corrugated box plants.

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

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

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

Although we have established reserves to provide for known environmental [removed: liabilities as of the date of this filing,] [added: liabilities,] these reserves may change over time due to the enactment of new environmental laws or regulations or changes in existing laws or regulations, which might require additional significant environmental expenditures.

Our agreement with OfficeMax [removed: provides that it survives the] [added: will continue to remain in effect after a] merger [removed: with respect] [added: or acquisition as] to the office paper requirements of the legacy OfficeMax business.

[removed: We] [added: However, we] cannot predict how [removed: the] [added: any] merger [added: or acquisition] will affect the financial condition of the [removed: combined company,] [added: ultimate entity,] the paper requirements of the legacy [removed: OfficeMax] [added: Office Max] business, [added: the purchasing decisions of the ultimate entity] or the effects on [removed: the] pricing [removed: and] [added: or] competition for office papers.

Any significant deterioration in the financial condition of the [removed: post-merger] [added: ultimate] entity affecting [removed: the] [added: its] ability to pay or [removed: causing a significant] [added: any other] change [added: that results] in [removed: the] [added: its] willingness to [removed: continue to] purchase our products [removed: could] [added: will] harm our business and results of operations.

Acquisition Integration - The acquired businesses [removed: of Boise] may underperform relative to our expectations, and we may not be able to successfully integrate the businesses.

The acquired businesses [removed: of Boise] may underperform relative to our expectations, which may cause our financial results to differ from our own or the investment community’s expectations.

If the acquired businesses underperform relative to our expectations, or if we fail to successfully integrate the businesses, our business, financial [removed: condition] [added: condition,] and results of operations may be materially and adversely affected.

[added: We rely on] various information technology systems to capture, process, store, and report data and interact with customers, vendors, and employees.

[removed: The increase in indebtedness from the acquisition of Boise,] [added: Our current borrowings,] plus any future borrowings, may affect our future operations, including, without limitation:

| • | Limit our ability to obtain additional financing for working capital, capital expenditures, general [removed: corporate] [added: corporate,] and other purposes; |

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

This market volatility, as well as general economic, [removed: market] [added: market,] or political conditions, could reduce the market price of our common stock in spite of our operating performance.

[removed: High unemployment rates, lower family income, lower corporate earnings, lower business] investment, and lower consumer spending typically result in decreased demand for our products.

looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition.

Inflation and Other General Cost Increases - We are subject to both contractual, inflation, and other general cost increases.

If we are unable to offset these cost increases by price increases, growth, and/or cost reductions in our operations, these inflation and other general cost increases could have a material adverse effect of our operating cash flows, profitability, and liquidity.

In 2014, our total company costs including cost of sales (COS) and selling, general, and administrative expenses (SG&A) was $5.1 billion, and excluding non-cash costs (depreciation, pension, and share-based compensation expense) was $4.7 billion.

A 1% increase in COS and SG&A costs would increase costs by $51 million and cash costs by $47 million.

Certain items of product input costs have historically been subject to more cost volatility including fiber, purchased energy, and chemicals.

transportation of wood fiber.

If this were to occur, OfficeMax's purchase obligations under the agreement would phase out over two years.

OfficeMax was acquired by Office Depot, Inc. late in 2013.

Office Depot has since

agreed to be acquired by Staples, Inc. on February 4, 2015.

The pending acquisition by Staples is subject to the satisfaction of certain conditions.

If the acquisition of Office Depot by Staples is consummated, the risks described below may be intensified.

In 2014, sales to Office Depot (including Office Max) represented 44% of our Paper segment sales.

If these sales are reduced, whether as a result of the pending integration of Office Max into Office Depot, the future acquisition of Office Depot by Staples or otherwise, we would need to find new customers, which could harm our profitability if our prices are lower or costs are higher.

Increased leverage may reduce our operating flexibility.

At December 31, 2014, we had $2.3 billion of long-term debt outstanding and a $350.0 million undrawn revolving credit facility.

High unemployment rates, lower family income, lower corporate earnings, lower business

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

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

These

In November 2013, OfficeMax merged with Office Depot.

In 2013, for the period of October 25, 2013, to December 31, 2013, our sales revenue to Office Depot (including OfficeMax) accounted for 38% of Paper segment sales.

Significant reductions in paper purchases from the post-merger entity would cause our paper business to attempt to expand its customer base and could potentially decrease its profitability if new customer sales required either a decrease in its pricing and/or an increase in its cost of sales.

We rely on

Increased leverage may harm our financial condition and results of operations.

We increased our indebtedness in connection with our acquisition of Boise from $807.6 million (including capital leases) as of September 30, 2013, to approximately $2,572.7 million at December 31, 2013.

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

We operate [removed: eight mills] [added: five containerboard mills, three paper mills,] and [removed: 98] [added: 99] corrugated products manufacturing plants.

In [removed: 2013,] [added: 2014,] sales grew [removed: 28.9%] [added: 59.7%] to a record [removed: $3,665.3] [added: $5,852.6] million.

We reported [removed: $436.3] [added: $392.6] million of net income, or [removed: $4.47] [added: $3.99] per diluted share in [removed: 2013,] [added: 2014,] compared with [removed: $163.8] [added: $441.3] million, or [removed: $1.68] [added: $4.52] per share in [removed: 2012.][added: 2013.]

Excluding [added: the] special [removed: items,] [added: items discussed below,] we recorded [removed: $320.2] [added: $458.6] million of net income, or a record [removed: $3.28] [added: $4.66] per diluted share in [removed: 2013,] [added: 2014,] compared with [removed: $200.8] [added: $325.2] million and [removed: $2.06] [added: $3.33] per diluted share in [removed: 2012.][added: 2013.]

[removed: In 2013, income] [added: Special items in 2013] included [removed: $87.4] [added: $166.0] million of income from [removed: 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 [removed: on October 25, 2013,] and $10.9 million of pension plan curtailment charges.

Earnings per diluted share, excluding special items, in [removed: 2013] [added: 2014] and [removed: 2012] [added: 2013] were as follows:

| | [removed: Years] [added: Year] Ended December [removed: 31,] [added: 31] | | | | | | |

| | [added: 2014 | | | |] 2013 | | | | 2012 | | |

| Earnings per diluted share | $ | [removed: 4.47] [added: 3.99] | | | $ | [removed: 1.68] [added: 4.52] | |

| Alternative energy tax credits [removed: (a)] [added: (d)] | [removed: (1.70] [added: —] | | [removed: )] | | [removed: 0.24] [added: (1.70] | | [added: )] |

| Acquisition-related costs [removed: (b)] [added: (f)] | [removed: 0.11] [added: —] | | | | [removed: —] [added: 0.11] | | |

| Acquisition-related financing costs [removed: (b)] [added: (f)] | [removed: 0.08] [added: —] | | | | [removed: —] [added: 0.08] | | |

| Acquisition inventory step-up [removed: (c)] [added: (e)] | [removed: 0.14] [added: —] | | | | [removed: —] [added: 0.14] | | |

| Integration-related and other costs [removed: (d)] [added: (b)] | [removed: 0.11] [added: 0.13] | | | | [removed: —] [added: 0.11] | | |

| Pension curtailment charges [removed: (e)] [added: (g)] | [removed: 0.07] [added: —] | | | | [removed: —] [added: 0.07] | | |

| State income tax adjustments | — | | | | [removed: (0.03] [added: —] | | [added: | | — | | | | — | | | | — | | | | (3.4 | |] ) |

| Plant closure charges | — | | | | [removed: 0.01] [added: —] | | | [added: | 2.0 | | |]

| Total special items | [removed: (1.19] [added: 0.67] | | [removed: )] | | [removed: 0.38] [added: (1.19] | | [added: )] |

| Earnings per diluted share, excluding special items | $ | [removed: 3.28] [added: 4.66] | | | $ | [removed: 2.06] [added: 3.33] | |

| [removed: (a)] [added: (d)] | 2013 includes $1.70 of income per diluted share for the reversal of $166.0 million of tax reserves related to alternative energy tax credits. Approximately $103.9 million of the reversal is due to the completion of an IRS audit of PCA's Filer City mill's cellulosic biofuel tax credits and $62.1 million is from the reversal of reserves for the taxability of the alternative [removed: fuel mixture credit] [added: energy tax credits] acquired in the acquisition of Boise. |

In first quarter 2012, PCA amended its 2009 tax return to reduce the gallons claimed as cellulosic biofuel producer credits previously recorded as a tax benefit, and increase the gallons claimed for alternative [removed: fuel mixture] [added: energy tax] credits previously recorded as income.

The increase in gallons claimed as alternative [removed: fuel mixture] [added: energy tax] credits resulted in income of $95.5 million, and the decrease in gallons claimed as cellulosic biofuel producer credits resulted in a decrease in tax benefits of $118.5 million, or a net charge of $23.0 million.

| [removed: (b)] [added: (f)] | Includes $28.9 million of acquisition-related costs, primarily for professional fees related to transaction-advisory services and expenses related to financing the acquisition of Boise ($18.3 million after-tax or $0.19 per diluted share). |

| [removed: (c)] [added: (e)] | Generally accepted accounting principles [added: (GAAP)] required us to value the inventory from the acquisition of Boise at fair value, which increased the value of the inventory by $21.5 million. This reduced the profit on the sale of the acquired inventory to that portion attributable to the selling effort. This step-up in value increased expenses by $21.5 million as the acquired inventory was sold and charged to cost of sales ($13.6 million after-tax or $0.14 per diluted share). |

| [removed: (d)] [added: (b)] | [removed: Includes] [added: 2014 includes $19.9 million ($12.7 million after-tax or $0.13 per diluted share) and 2013 includes] $17.4 million [added: ($11.0 million after-tax or $0.11 per diluted share)] of [added: Boise acquisition] integration-related and other costs, primarily for [removed: professional services, employee,] [added: severance, retention, travel,] and [removed: other costs ($11.0 million after-tax or $0.11 per diluted share).] [added: professional fees.] |

| [removed: (e)] [added: (g)] | Includes $10.9 million of non-cash pension curtailment charges related to pension plan changes in which certain hourly corrugated and containerboard mill employees will transition from a defined benefit pension plan to a defined contribution 401k plan ($7.0 million after-tax or $0.07 per diluted share). |

Trade publications reported that industry-wide corrugated products shipments [removed: were unchanged in 2013 compared to 2012 and containerboard production was] [added: increased] 1.2% [removed: higher than 2012.][added: during 2014, compared with 2013.]

Increasing shifts to these alternatives have [removed: had an adverse effect on] [added: reduced usage of] traditional print media and [removed: usage of] communication papers.

[removed: Labor] [added: In addition, labor] and benefit costs [removed: are expected to] [added: will] be higher [removed: in the first quarter,] with annual wage increases and [removed: timing related] [added: timing-related fringe] benefit [removed: payments, and we expect a higher tax rate.][added: increases.]

[removed: Considering all of these items,] [added: As a result,] we expect first quarter earnings, excluding special items, to be [removed: comparable to our] [added: lower than] fourth quarter [removed: 2013 earnings, excluding special items.][added: 2014.]

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

| Income tax (expense) benefit | [removed: 21.0] [added: (221.7] | | [added: )] | | [removed: (216.7] [added: 17.7] | | [removed: )] | | [removed: 237.7] [added: (239.4] | | [added: )] |

| Net income excluding special items (b) | $ | [removed: 320.2] [added: 458.6] | | | $ | [removed: 200.8] [added: 325.2] | | | $ | [removed: 119.4] [added: 133.4] | |

| EBITDA excluding special items [removed: (b)] | $ | [removed: 742.4] [added: 186.0] | | | $ | [removed: 520.7] [added: 24.2] | | | $ | [removed: 221.7] [added: —] | |

The year ended December 31, 2013, included 250 workdays, those days not falling on a weekend or holiday, compared [removed: to] [added: with] 251 workdays in 2012.

Gross profit increased [removed: $218.6] [added: $232.8] million, or [removed: 34.1%,] [added: 36.7%,] in 2013, compared with 2012 due primarily to the sales price and volume increases described above.

Gross profit as a percentage of net sales increased to [removed: 23.4%] [added: 23.7%] of net sales in 2013 compared with [removed: 22.5%] [added: 22.3%] in the same period in 2012.

Excluding the step-up expense, gross profit was [removed: 24.0%] [added: 24.3%] of 2013 net sales.

Selling, general, and administrative expenses increased $45.8 million, or 16.3%, in 2013 compared [removed: to] [added: with] 2012.

We also manufacture and sell white papers, including both commodity and specialty papers, which may have custom or specialized features such as colors, coatings, high brightness, and recycled content.

Packaging segment income was $663.2 million, compared with $554.2 million in 2013, and earnings before interest, taxes, depreciation, amortization, and depletion (EBITDA) excluding special items was $1,015.0 million, compared with $774.7 million in 2013.

Paper segment income was $135.4 million, compared with $13.5 million in 2013, and EBITDA excluding special items was $186.0 million, compared with $24.2 million for the two months and five days after the Boise acquisition in 2013.

Compared with 2013, the improvement in our 2014 financial results excluding special items, was primarily due to the Boise acquisition in October 2013.

The acquisition was significantly accretive to our earnings before special items due to earnings generated by Boise as well as the synergies generated from the integration of its packaging business and operational improvements in the white papers business.

On October 17, 2014, we completed the No. 3 newsprint machine conversion at the DeRidder, Louisiana, mill to produce containerboard, which will provide our containerboard mill system with needed capacity and reduce our outside purchases of containerboard.

After startup, the machine produced 58,000 tons during the fourth quarter.

In 2014, our results included $103.3 million ($47.7 million non-cash and $55.6 million cash) of pre-tax expense from special items, compared with $87.3 million of income from special items in 2013.

The 2014 special items included $65.8 million ($46.1 million non-cash and $19.7 million cash) of expenses related to the DeRidder mill restructuring, $19.9 million ($1.7 million non-cash and $18.2 million cash) of Boise acquisition integration-related, debt-refinancing, and other costs, and $17.6 million of cash expense related to the settlement of a class action lawsuit.

| | 2014 | | | | 2013 | | |

| DeRidder restructuring (a) | 0.43 | | | | — | | |

| Class action lawsuit settlement (c) | 0.11 | | | | — | | |

| (a) | Includes $65.8 million of costs related primarily to the conversion of the No. 3 newsprint machine at our DeRidder, Louisiana, mill and related start-up costs, and our exit from the newsprint business in September 2014 ($42.1 million after-tax or $0.43 per diluted share). |

| (c) | Includes $17.6 million of costs accrued for the settlement of the Kleen Products LLC v Packaging Corp. of America et al class action lawsuit ($11.2 million after-tax or $0.11 per diluted share). |

Industry and Business Conditions

In 2014, our corrugated products shipments, including Boise, increased 25.5% over last year and 25.0% per workday with one more workday in 2014.

Excluding Boise shipments, corrugated products shipments increased 4.7% in total, or 4.3% per workday.

The acquisition of Crockett Packaging in April 2014 contributed about 1.0% to the increase in shipments.

Reported industry containerboard production was 1.8% higher than 2013, with export shipments up 6.3%.

PCA containerboard

mill production in 2014 was 3,452,000 total tons, including 801,000 tons from Boise, compared with 2,749,000 total tons in 2013, which included 141,000 tons from Boise.

With strong internal containerboard demand needed to supply our box plants, we reduced our outside sales of containerboard, both domestic and export, by 46,000 tons compared with last year and we purchased 182,000 tons of containerboard from the outside market in 2014.

Our domestic containerboard pricing remained steady throughout 2014, while our export pricing decreased slightly, due, in part, to a stronger U.S. dollar.

In 2014, we elected to exit some business which lowered our office paper shipments.

Our office paper shipments decreased 2.1% or 16,000 tons in 2014, compared with Boise's shipments last year.

Our printing and converting papers and pressure sensitive papers shipments were down about 18.5% or 81,000 tons compared with 2013, as a result of closing two paper machines at the International Falls, Minnesota, mill in fourth quarter 2013.

In 2014, our white paper mills produced 1,144,000 tons.

In 2014, our average price for all products produced in our paper segment was $996 per ton compared with the 2013 average price of $984 per ton.

In the first quarter of 2015, we expect lost containerboard production of about 60,000 tons and higher operating costs from annual maintenance outages at Counce and DeRidder, our two largest containerboard mills, and two less production days compared with the fourth quarter of 2014.

Corrugated products shipments are expected to be seasonally lower, and white paper prices are expected to be lower from the impact of published price decreases in November and December 2014 and changes in mix.

Seasonally colder weather will increase wood, energy, and chemical costs.

These items will be partially offset by higher production on the DeRidder No. 3 paper machine.

Year Ended December 31, 2014, Compared with Year Ended December 31, 2013

| | 2014 (a) | | | | 2013 (a) | | | | Change | | |

| Packaging | $ | 4,540.3 | | | $ | 3,431.7 | | | $ | 1,108.6 | |

| Paper | 1,201.4 | | | | 216.9 | | | | 984.5 | | |

| Corporate and other and eliminations | 110.9 | | | | 16.7 | | | | 94.2 | | |

| Net sales | $ | 5,852.6 | | | $ | 3,665.3 | | | $ | 2,187.3 | |

| Packaging | $ | 663.2 | | | $ | 554.2 | | | $ | 109.0 | |

| Paper | 135.4 | | | | 13.5 | | | | 121.9 | | |

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.

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.

| Debt refinancing charges (f) | — | | | | 0.16 | | |

| (f) | Includes $24.8 million of debt refinancing charges ($16.0 million after-tax or $0.16 per diluted share). |

Markets

The market for containerboard and corrugated products is generally subject to changes in the U.S. economy.

The U. S. economy continued to slowly improve in 2013, with an annual basis real GDP increase of 1.9%, compared with a 2.8% increase in 2012 as reported by the U.S. Department of Commerce.

In 2013, PCA’s corrugated products shipments increased 5.7%, excluding Boise shipments, and increased 10.7% including Boise shipments during the partial fourth quarter.

PCA containerboard production for 2013 was 2,607,000 tons, excluding Boise, compared to 2,600,000 tons in 2012.

Including PCA’s ownership of Boise during the partial quarter, PCA’s containerboard production was 2,749,000 tons in 2013.

According to the American Forest & Paper Association (AF&PA), U.S. industry uncoated freesheet shipments declined 1.9% in 2013, compared to 2012.

In the first quarter of 2014, we expect earnings to benefit, compared to the fourth quarter of 2013, from a full quarter of Boise's results, including synergies, and lower amortization of annual mill outage costs.

Our largest containerboard mill in Counce, Tennessee will be down in March for its annual maintenance outage which will reduce production and increase operating costs.

We also expect higher energy costs across the company with colder weather.

In addition, our mills were impacted by extreme cold and significant snowfalls in January and February resulting in higher than normal cost increases for energy, wood, and transportation.

Costs at our converting plants were also impacted and we did have some plant closures as a result of weather.

| Packaging | $ | 545.9 | | | $ | 389.7 | | | $ | 156.2 | |

| Income from operations | $ | 473.6 | | | $ | 443.4 | | | $ | 30.2 | |

| Income before taxes | 415.3 | | | | 380.5 | | | | 34.8 | | |

| Net income | $ | 436.3 | | | $ | 163.8 | | | $ | 272.5 | |

For a discussion of derivatives and hedging activities, see Note [removed: 11,] [added: 13,] Derivative Instruments and Hedging Activities, of the Notes to Consolidated Financial Statements in "Part II, Item 8.

The interest rates on approximately [removed: 49%] [added: 70%] 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: $13.0] [added: $7.1] million annually.

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

We are headquartered in Lake Forest, [removed: Illinois] [added: Illinois,] and have approximately [removed: 13,600] [added: 14,000] employees.

[removed: We operate] [added: Our operations are] primarily in the United States and [added: we] have some converting operations in Europe, Mexico, and Canada.

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

We present information pertaining to each of our segments and the geographic areas in which they operate in Note [removed: 19,] [added: 18,] Segment Information, of the Notes to Consolidated Financial Statements in "Part II, Item 8.

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

| [removed: Containerboard Production] [added: (thousand tons)] | [removed: PCA] | 2013 | 646 | | | 629 | | | 671 | | | 803 | | | 2,749 | |

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

| [removed: Corrugated Shipments (BSF)] | [removed: PCA] | 2013 | 8.8 | | | 9.4 | | | 9.3 | | | 10.9 | | | 38.4 | |

| Newsprint Production | PCA | [removed: 2013] [added: 2014] | [removed: —] [added: 56] | | | [removed: —] [added: 56] | | | [removed: —] [added: 50] | | | [removed: 44] [added: —] | | | [removed: 44] [added: 162] | |

| (thousand tons) | [removed: Boise] | 2013 | [removed: 53] [added: —] | | | [removed: 58] [added: —] | | | [removed: 60] [added: —] | | | [removed: 15] [added: 44] | | | [removed: 186] [added: 44] | |

| [removed: (thousand tons)] | Boise | 2013 | 303 | | | 301 | | | 323 | | | 76 | | | 1,003 | |

| Market Pulp Production | PCA | [removed: 2013] [added: 2014] | [removed: —] [added: 26] | | | [removed: —] [added: 23] | | | [removed: —] [added: 26] | | | [removed: 20] [added: 25] | | | [removed: 20] [added: 100] | |

| (thousand tons) | [removed: Boise] | 2013 | [removed: 24] [added: —] | | | [removed: 24] [added: —] | | | [removed: 29] [added: —] | | | [removed: 5] [added: 20] | | | [removed: 82] [added: 20] | |

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

Below is a map of our [removed: locations following the acquisition:][added: locations:]

[removed: ][added: ]

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 [removed: boxes] [added: boxes,] and displays with strong visual appeal that help to merchandise the packaged product in retail locations.

During the year ended December 31, [removed: 2013,] [added: 2014,] our Packaging segment produced [removed: 2.7] [added: 3.5] million tons of containerboard at our mills.

Our corrugated products manufacturing plants sold about [removed: 38.4] [added: 48.2] billion square feet (BSF) of corrugated products.

Our net sales to third parties totaled [removed: $3.7] [added: $4.5] billion in [removed: 2013.][added: 2014.]

We manufacture our Packaging products at five containerboard mills, one containerboard machine [removed: at] [added: (at] our Wallula, Washington, white paper [removed: mill,] [added: mill),] corrugated manufacturing operations, [added: and] protective packaging [removed: operations, and one newsprint machine.][added: operations.]

Its year-end [removed: 2013] [added: 2014] annual estimated production capacity, as reported to the American Forest and Paper Association [removed: (“AF&PA”),] [added: (AF&PA),] was [removed: 1,065,000] [added: 1,070,000] tons.

In [removed: 2013,] [added: 2014,] the mill produced [removed: 1,063,000] [added: 1,079,000] tons of kraft linerboard on two paper machines.

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

Its year-end [removed: 2013] [added: 2014] annual estimated production capacity, as reported to the AF&PA, was [removed: 610,000 tons of linerboard and 230,000 tons of newsprint.][added: 570,000 tons.]

[removed: DeRidder's linerboard machine] [added: The mill] can produce [removed: a broad range of] [added: linerboard in] basis weights [removed: from] [added: of] 26 lb.

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

Its year-end [removed: 2013] [added: 2014] annual estimated production capacity, as reported to the AF&PA, was [removed: 560,000] [added: 555,000] tons.

In [removed: 2013,] [added: 2014,] our single paper machine at Valdosta produced [removed: 557,000] [added: 573,000] tons of kraft linerboard.

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

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

Its year-end [removed: 2013] [added: 2014] annual estimated production capacity, as reported to the AF&PA, was [removed: 550,000] [added: 440,000] tons.

In [removed: 2013,] [added: 2014,] the mill produced [removed: 547,000] [added: 555,000] tons of semi-chemical corrugating medium on two paper machines.

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

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

Its year-end [removed: 2013] [added: 2014] annual estimated production capacity [added: of white papers] on [removed: three] [added: two] paper machines, as reported to the [removed: AF&PA] [added: AF&PA,] was [removed: 445,000] [added: 490,000] tons.

In [removed: 2013,] [added: 2014,] the mill produced [removed: 441,000] [added: 444,000] tons [removed: of corrugating medium] on three paper [removed: machines at Filer City.][added: machines.]

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

[removed: It is] [added: Our Wallula, Washington, mill, acquired as part of the Boise acquisition,] primarily [removed: a] [added: produces] white [removed: paper mill,] [added: paper,] but also produces corrugating medium on one of its paper machines.

We operate eight mills and 99 corrugated products manufacturing plants.

| Containerboard Production | PCA | 2014 | 821 | | | 846 | | | 858 | | | 927 | | | 3,452 | |

| Corrugated Shipments (BSF) | PCA | 2014 | 11.6 | | | 12.1 | | | 12.4 | | | 12.1 | | | 48.2 | |

| | Boise | 2013 | 53 | | | 58 | | | 60 | | | 15 | | | 186 | |

| White Paper (UFS) Production | PCA | 2014 | 286 | | | 275 | | | 296 | | | 287 | | | 1,144 | |

| (thousand tons) | | 2013 | — | | | — | | | — | | | 208 | | | 208 | |

| | Boise | 2013 | 24 | | | 24 | | | 29 | | | 5 | | | 82 | |

On October 17, 2014, we completed the No. 3 newsprint machine conversion at the DeRidder, Louisiana, mill to produce containerboard.

After startup, the converted machine produced 58,000 tons of containerboard during the fourth quarter.

We stopped producing newsprint in September 2014.

The following provides more details of our operations:

Our Counce, Tennessee, mill produces kraft linerboard.

Our DeRidder, Louisiana, mill, acquired as part of the Boise acquisition, produces kraft linerboard on its No. 1 machine and linerboard and medium on its newly-converted No. 3 machine.

The No. 1 machine produced 601,000 tons of kraft linerboard during 2014.

The No. 3 machine, which was converted from a newsprint machine and began operation as a containerboard machine on October 17, 2014, produced 46,000 tons of medium and 12,000 tons of linerboard after conversion.

and medium in basis weights of 23 lb.

to 45 lb.

locations.

| Furniture and related products | 3 | % |

and 100,000 tons, respectively.

Chemical supply.

We have over 200 customers in approximately 500 locations.

OfficeMax Incorporated (OfficeMax), a wholly-owned subsidiary of Office Depot, Inc., is our largest customer in the Paper segment.

OfficeMax was acquired by Office Depot, Inc. late in 2013.

In January 2015, we, along with the United Steel Workers (USW) and other domestic paper producers, filed a petition before the United States International Trade Commission and the United States Department of Commerce, alleging that paper producers in China, Indonesia, Australia, Brazil, and Portugal are selling products in the United States and/or receiving government subsidies in violation of international trade rules.

The agencies will investigate the claims over the next 12 to 15 months.

If the investigations determine that trade rules were violated, then antidumping and/or countervailing duties will be imposed on imports from the countries found in violation.

We cannot provide any assurance as to the ultimate outcome of these investigations.

Prior to November 2010, she served in a number of capacities with Boise Cascade Corporation, Boise Cascade, L.L.C. and Boise Inc.

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.

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

After the acquisition of Boise, we are also a producer of newsprint with one machine located at our DeRidder, Louisiana, mill.

We sell primarily to newspaper publishers in the southern and southwestern United States.

Newsprint operations are reported in the Packaging segment.

The following paragraphs describe the mills at which we produce containerboard:

Our Counce, Tennessee, mill is one of the largest kraft linerboard mills in the United States.

We acquired the DeRidder, Louisiana, mill in the acquisition of Boise.

It is a mill that produces both linerboard and newsprint on two paper machines.

During the twelve months of 2013, it produced 607,000 tons of linerboard and 230,000 tons of newsprint.

We acquired the Wallula, Washington, mill with the acquisition of Boise.

The U.S. corrugated products industry consists of approximately 570 companies and 1,240 plants.

We produce a wide variety of 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 customers more attractive packaging.

| Appliances, vehicles, and metal products | 3 | % |

| Textile mill products and apparel | 2 | % |

In October 2013, two machines were shut down which reduced annual capacity by 115,000 tons.

OfficeMax is our Paper segment's largest customer.

In November 2013, OfficeMax merged with its competitor, Office Depot.

Our agreement with OfficeMax survived the merger with respect to the office paper requirements of the legacy OfficeMax business.

In response to lower demand, two machines were shut down at our International Falls, Minnesota mill in October 2013.

Rail cars and trucks are typically leased.

and Tenneco Packaging.

From February 2008 to October 2010, Ms. Lassa served as Vice President of Boise's Packaging segment.

From October 2004 to February 2008, Ms. Lassa served as Vice President, Packaging, of Boise Cascade, L.L.C. Prior to 2004, Ms. Lassa served in a number of capacities with Boise Cascade Corporation, including Vice President, Packaging, and packaging business leader.

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

[removed: UNITED STATES] SECURITIES AND EXCHANGE COMMISSION

| For the fiscal year ended December 31, [removed: 2013] [added: 2014] |

[removed: ][added: ]

Registrant's telephone number, including area [removed: code][added: code: (847) 482-3000]

Yes [removed: þ] [added: x] No ¨

Yes ¨ No [removed: þ][added: x]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of 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. [added: x]

[removed: Large accelerated filer þ Accelerated filer ¨] [added: |] Non-accelerated filer [added: |] ¨ [added: (Do not check if a smaller reporting company) |] Smaller reporting company [added: |] ¨ [added: |]

At June 30, [removed: 2013,] [added: 2014,] the last day of the Registrant's most recently completed second fiscal quarter, the aggregate market value of Registrant's common equity held by non-affiliates was approximately [removed: $4,735,149,656] [added: $6,937,544,233] based upon the closing sale price as reported on the New York Stock Exchange.

On January [removed: 31, 2014,] [added: 30, 2015,] there were [removed: 98,206,211] [added: 98,368,249] shares of Common Stock outstanding.

Specified portions of the Proxy Statement for the Registrant's [removed: 2014] [added: 2015] Annual Meeting of Stockholders are incorporated by reference to the extent indicated in Part III of this Form 10-K.

| Item 1. | [removed: [Business](#sDEB9286A1BB3D5372436ACC93CD31F88)] [added: [Business](#s2685D6092EA99A69987C73226F7C611E)] | [removed: [1](#sDEB9286A1BB3D5372436ACC93CD31F88)] [added: [1](#s2685D6092EA99A69987C73226F7C611E)] |

| | [Corporate and [removed: Other](#sD940F0E612CAC14885DDACC93D7C39D2)] [added: Other](#sDDB5C9FB5DF1831A48CF73227648E8E7)] | [removed: [7](#sD940F0E612CAC14885DDACC93D7C39D2)] [added: [7](#sDDB5C9FB5DF1831A48CF73227648E8E7)] |

| | [Environmental [removed: Matters](#s358F49DF10D9DB2E9217ACC93DCD159D)] [added: Matters](#s2AE9B6138807E7D256F77322769CEFE9)] | [removed: [7](#s358F49DF10D9DB2E9217ACC93DCD159D)] [added: [7](#s2AE9B6138807E7D256F77322769CEFE9)] |

| | [Executive Officers of the [removed: Registrant](#sC2FCA7DDDBD8C7FD42AFACC93EC7B8F9)] [added: Registrant](#s0AE993FA33E332DA12A7732276BDC4F8)] | [removed: [7](#sC2FCA7DDDBD8C7FD42AFACC93EC7B8F9)] [added: [7](#s0AE993FA33E332DA12A7732276BDC4F8)] |

| Item 1A. | [Risk [removed: Factors](#s16B67F54A74B4A6405B6ACC93EE9475F)] [added: Factors](#s850FD1EFAD82F78370247322771065D5)] | [removed: [8](#s16B67F54A74B4A6405B6ACC93EE9475F)] [added: [8](#s850FD1EFAD82F78370247322771065D5)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#sB13BEAFFAD14EEC13FE7ACC93F1BC060)] [added: Comments](#sEE7699A371963FDCA583732277421D58)] | [removed: [11](#sB13BEAFFAD14EEC13FE7ACC93F1BC060)] [added: [12](#sEE7699A371963FDCA583732277421D58)] |

| Item 2. | [removed: [Properties](#s4FAD430E9777878534FCACC93F3D60FD)] [added: [Properties](#s9006409E01570806EDC1732274789C04)] | [removed: [12](#s4FAD430E9777878534FCACC93F3D60FD)] [added: [12](#s9006409E01570806EDC1732274789C04)] |

| Item 3. | [Legal [removed: Proceedings](#s349F7A1A2E2E0B16ABC4ACC93F6F9463)] [added: Proceedings](#s608CB680A4BA1FAC3520732277969DC3)] | [removed: [12](#s349F7A1A2E2E0B16ABC4ACC93F6F9463)] [added: [12](#s608CB680A4BA1FAC3520732277969DC3)] |

| Item 4. | [Mine Safety [removed: Disclosure](#s0312F7CC184E16546245ACC93F8F32AE)] [added: Disclosure](#sE99A2B4726BBAB849361732277B74831)] | [removed: [12](#s0312F7CC184E16546245ACC93F8F32AE)] [added: [12](#sE99A2B4726BBAB849361732277B74831)] |

| Item 5. | [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#sF379BAE299C271FB7C2EACC9307E3618)] [added: Securities](#s52CDDB99252E615843E67322707B9EF0)] | [removed: [13](#sF379BAE299C271FB7C2EACC9307E3618)] [added: [13](#s52CDDB99252E615843E67322707B9EF0)] |

| Item 6. | [Selected Financial [removed: Data](#sBE45A1C0468C7E11FCECACC92D904EE6)] [added: Data](#sC9DE721D4F9EEA09B5F873226F2E1DCC)] | [removed: [16](#sBE45A1C0468C7E11FCECACC92D904EE6)] [added: [16](#sC9DE721D4F9EEA09B5F873226F2E1DCC)] |

| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s0BD472FDE5CDEA87140CACC9404E2104)] [added: Operations](#s07A6356BD6022CD82CC27322785EAAEC)] | [removed: [17](#s0BD472FDE5CDEA87140CACC9404E2104)] [added: [17](#s07A6356BD6022CD82CC27322785EAAEC)] |

| | [Executive [removed: Summary](#s771558BC40A75031B1B5ACC940890920)] [added: Summary](#sC9049B6061F7ED660EA773226FC9E550)] | [removed: [18](#s771558BC40A75031B1B5ACC940890920)] [added: [17](#sC9049B6061F7ED660EA773226FC9E550)] |

| | [Results of [removed: Operations](#s26EE6F3B72DC0C0323B5ACC9410FD1EE)] [added: Operations](#s90157B00FEB87326E44C73226ED6AEE9)] | [removed: [20](#s26EE6F3B72DC0C0323B5ACC9410FD1EE)] [added: [20](#s90157B00FEB87326E44C73226ED6AEE9)] |

| | [Liquidity and Capital [removed: Resources](#s83C8ECA2DF237DD2AF90ACC9415BF5D6)] [added: Resources](#s18B17A3005B89EA3C6A773226EF025E6)] | [removed: [23](#s83C8ECA2DF237DD2AF90ACC9415BF5D6)] [added: [24](#s18B17A3005B89EA3C6A773226EF025E6)] |

| | [Off-Balance-Sheet [removed: Activities](#sA3C3EC8886520717E9D4ACC941A0AD56)] [added: Arrangements](#s6BE3204F7F1B177B420173227958093A)] | [removed: [28](#sA3C3EC8886520717E9D4ACC941A0AD56)] [added: [28](#s6BE3204F7F1B177B420173227958093A)] |

| | [Environmental [removed: Matters](#sC742086EB7EB8D879D8BACC9420834E6)] [added: Matters](#s3BFCC14A96809068D4627322798AC42B)] | [removed: [28](#sC742086EB7EB8D879D8BACC9420834E6)] [added: [29](#s3BFCC14A96809068D4627322798AC42B)] |

| | [Critical Accounting [removed: Estimates](#sECFAE4DEDF0868F5A2A1ACC9422BC97F)] [added: Policies and Estimates](#s0B8FF21674372546359E732279AB4FC4)] | [removed: [29](#sECFAE4DEDF0868F5A2A1ACC9422BC97F)] [added: [30](#s0B8FF21674372546359E732279AB4FC4)] |

| | [New and Recently Adopted Accounting [removed: Standards](#sFDFCC850691265EC69FEACC9425D28C1)] [added: Standards](#s662B14E94064C7848BF2732279DD893F)] | [removed: [32](#sFDFCC850691265EC69FEACC9425D28C1)] [added: [33](#s662B14E94064C7848BF2732279DD893F)] |

| | [Reconciliations of Non-GAAP Financial Measures to Reported [removed: Amounts](#s52f091d9a67f46bcbef968200db94a69)] [added: Amounts](#s4CD1D79E5298E8312C98732279FEDFC0)] | [removed: [33](#s52f091d9a67f46bcbef968200db94a69)] [added: [34](#s4CD1D79E5298E8312C98732279FEDFC0)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s81ED37525B79B972DD8BACC9427D5418)] [added: Risk](#sB5BD97AB3E041ADA6AC373227A3018AC)] | [removed: [34](#s81ED37525B79B972DD8BACC9427D5418)] [added: [36](#sB5BD97AB3E041ADA6AC373227A3018AC)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#s370ED7263441E5889031ACC942AF0D28)] [added: Data](#s6D833C69B2B06064C52873227A5262F1)] | [removed: [35](#s370ED7263441E5889031ACC942AF0D28)] [added: [37](#s6D833C69B2B06064C52873227A5262F1)] |

| Item 9. | [Changes In and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#s16FFE0644ACB1D71CCFBACC949348E9B)] [added: Disclosure](#s023C35CC1912844DF4B77322808375F8)] | [removed: [78](#s16FFE0644ACB1D71CCFBACC949348E9B)] [added: [81](#s023C35CC1912844DF4B77322808375F8)] |

| Item 9A. | [Controls and [removed: Procedures](#sD4AE47C97685120B1F31ACC94954A7D9)] [added: Procedures](#sC530464E908D1753211F732280B37262)] | [removed: [78](#sD4AE47C97685120B1F31ACC94954A7D9)] [added: [81](#sC530464E908D1753211F732280B37262)] |

| Item 9B. | [Other [removed: Information](#s1D9B2B0E0346242D2CBBACC949A8B421)] [added: Information](#sE9686F4E1C8501362F04732280D4B006)] | [removed: [79](#s1D9B2B0E0346242D2CBBACC949A8B421)] [added: [82](#sE9686F4E1C8501362F04732280D4B006)] |

| Item 10. | [Directors, Executive Officers, and Corporate [removed: Governance](#s7F48E071C5F0DC87F9B1ACC949FCD93B)] [added: Governance](#sAF5A6A7342702C57A975732281288DD5)] | [removed: [80](#s7F48E071C5F0DC87F9B1ACC949FCD93B)] [added: [83](#sAF5A6A7342702C57A975732281288DD5)] |

| Item 11. | [Executive [removed: Compensation](#sEDE8F93CC58841694A8DACC94A2EE810)] [added: Compensation](#sD74819FAA9F7438EA1E57322815A8A74)] | [removed: [80](#sEDE8F93CC58841694A8DACC94A2EE810)] [added: [83](#sD74819FAA9F7438EA1E57322815A8A74)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sDBDA3A88788B94B6CD30ACC94A4E9B87)] [added: Matters](#s98F4D4907708E1C07FF17322817B5B13)] | [removed: [80](#sDBDA3A88788B94B6CD30ACC94A4E9B87)] [added: [83](#s98F4D4907708E1C07FF17322817B5B13)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s364339DEA4869910A042ACC94A802EF9)] [added: Independence](#s343A38746F4823D3364B732281AD47B3)] | [removed: [81](#s364339DEA4869910A042ACC94A802EF9)] [added: [84](#s343A38746F4823D3364B732281AD47B3)] |

10-K 1 pkg1231201410k.htm FORM 10-K

UNITED STATES

Yes x No ¨

Yes x No ¨

| | | | |

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

| | | | |

| Large accelerated filer | x | Accelerated filer | ¨ |

Yes ¨ No x

| | [Packaging](#sB668A59FF73ED117B12F732275F557AA) | [2](#sB668A59FF73ED117B12F732275F557AA) |

| | [Paper](#sD9074280C8390A37BE8873227616B877) | [5](#sD9074280C8390A37BE8873227616B877) |

| | [Employees](#sD154736C3ED9E7B9A3037322766A1F07) | [7](#sD154736C3ED9E7B9A3037322766A1F07) |

| | [Overview](#s69663945532F2BA91310732278908C99) | [17](#s69663945532F2BA91310732278908C99) |

| | [Industry and Business Conditions](#s8181c4e7560540a780e55259e6c01aff) | [18](#s8181c4e7560540a780e55259e6c01aff) |

| | [Outlook](#se929e431c84449f29cc7a632f650c6ff) | [19](#se929e431c84449f29cc7a632f650c6ff) |

| | [Commitments](#sAD5462AF31A0B3DD859973227936A109) | [27](#sAD5462AF31A0B3DD859973227936A109) |

| | [Inflation and Other General Cost Increases](#s664a6661b4f44906a46635a14a05dadf) | [28](#s664a6661b4f44906a46635a14a05dadf) |

| | [Signatures](#s108ECB45F1BC84742030732282552AF8) | [89](#s108ECB45F1BC84742030732282552AF8) |

10-K 1 pkg1231201310k.htm 10-K

(847) 482-3000

(Do not check if a smaller reporting company)

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

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

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

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

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

| | [Signatures](#sACC88B3A6275B53AC5D0ACC94B282C3A) | [86](#sACC88B3A6275B53AC5D0ACC94B282C3A) |

All of our leases are noncancelable [removed: and,] [added: and] are primarily accounted for as operating leases.

We currently own [added: buildings and land for] five containerboard mills and three white paper mills.

Additionally, we have [removed: 98] [added: 99] corrugated manufacturing operations, of which [removed: 54] [added: the buildings and land for 53] are owned, including [removed: 46] [added: 45] combining operations, or corrugated plants, one corrugated sheet-only manufacturer, and seven sheet plants.

[removed: 18] [added: For 20] corrugated plants and 26 sheet plants [added: the buildings and land] are leased.

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

On average, these cutting rights agreements have terms with approximately [removed: 10] [added: 14] years remaining.

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

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

We also lease an [added: administrative] office in Boise, Idaho, which is leased through March 2018.

| March 31 | $ | [removed: 44.93] [added: 75.10] | | | $ | [removed: 37.86] [added: 61.35] | | | $ | [removed: 0.31] [added: 0.40] | | | $ | [removed: 30.62] [added: 44.93] | | | $ | [removed: 24.82] [added: 37.86] | | | $ | [removed: 0.25] [added: 0.31] | |

| June 30 | [removed: 50.78] [added: 72.74] | | | | [removed: 42.36] [added: 65.00] | | | | 0.40 | | | | [removed: 29.80] [added: 50.78] | | | | [removed: 25.77] [added: 42.36] | | | | [removed: 0.25] [added: 0.40] | | |

| September 30 | [removed: 61.32] [added: 72.82] | | | | [removed: 48.45] [added: 63.11] | | | | 0.40 | | | | [removed: 36.68] [added: 61.32] | | | | [removed: 27.59] [added: 48.45] | | | | [removed: 0.25] [added: 0.40] | | |

| December 31 | [removed: 64.39] [added: 80.14] | | | | [removed: 55.66] [added: 57.06] | | | | 0.40 | | | | [removed: 38.67] [added: 64.39] | | | | [removed: 33.89] [added: 55.66] | | | | [removed: 0.25] [added: 0.40] | | |

On January [removed: 31, 2014,] [added: 30, 2015,] there were [removed: 76] [added: 73] holders of record of our common stock.

On [removed: January 14, 2013,] [added: February 26, 2015,] PCA announced an increase [removed: in] [added: of] its quarterly cash dividend on its [removed: company] [added: common] stock from an annual payout of [removed: $1.00] [added: $1.60] per share to [removed: $1.25] [added: an annual payout of $2.20] per share.

The first quarterly dividend of [removed: $0.3125] [added: $0.55] per share [removed: was] [added: will be] paid [removed: to stockholders] on April 15, [removed: 2013.][added: 2015 to shareholders of record as of March 13, 2015.]

All shares repurchased under this authorization were retired prior to the end of [removed: the year.][added: 2013.]

As of December 31, [removed: 2013,] [added: 2014,] $98.1 million of the $150.0 million authorization remained available for repurchase of the Company’s common stock.

[removed: PCA] [added: In 2014, the Company] did not repurchase any shares of [removed: its] common [removed: stock during the fourth quarter of 2013.][added: stock.]

[removed: Beginning in 2013, the] [added: The] Company [removed: began withholding] [added: withholds] shares from vesting [added: employee] equity awards to cover employee tax liabilities.

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, [removed: 2013:][added: 2014:]

| October 1-31, [removed: 2013] [added: 2014] | | — | | | $ | — | | | — | | | $ | 98,086 | |

| November 1-30, [removed: 2013] [added: 2014] | | — | | | — | | | | — | | | 98,086 | | |

| (a) | [removed: 1,297] [added: 14,706] 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 [removed: two customized peer groups.][added: a Peer Group that includes three publicly-traded companies, which are International Paper Company, Kapstone Paper and Packaging Corporation, and Rock-Tenn Company.]

The graph tracks the performance of a $100 investment (including the reinvestment of all dividends) in our common stock, in each index, and in the peer groups' common stock from December 31, [removed: 2008] [added: 2009,] through December 31, [removed: 2013.][added: 2014.]

[removed: ][added: ]

| | [removed: 2008 | | | |] 2009 | | | | 2010 | | | | 2011 | | | | 2012 | | | | 2013 | | | [added: | 2014 | | |]

| | 2014 | | | | | | | | | | | | 2013 | | | | | | | | | | |

All shares repurchased under this authorization have been retired.

Total shares withheld in 2014 were 183,170 at an average price of $71.94, or $13.2 million.

| December 1-31, 2014 | | 14,706 | | | 76.55 | | | | — | | | 98,086 | | |

| Total | | 14,706 | | (a) | $ | 76.55 | | | — | | | $ | 98,086 | |

| Packaging Corporation of America | $ | 100.00 | | | $ | 115.11 | | | $ | 115.88 | | | $ | 182.34 | | | $ | 308.86 | | | $ | 389.45 | |

| S&P 500 | 100.00 | | | | 115.06 | | | | 117.49 | | | | 136.30 | | | | 180.44 | | | | 205.14 | | |

| S&P Midcap 400 | 100.00 | | | | 126.64 | | | | 124.45 | | | | 146.69 | | | | 195.84 | | | | 214.97 | | |

| Peer Group | 100.00 | | | | 105.80 | | | | 117.87 | | | | 160.44 | | | | 220.35 | | | | 251.79 | | |

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

On May 15, 2013, PCA announced another increase in its quarterly cash dividend on its company stock from an annual payout of $1.25 per share to $1.60 per share.

The first quarterly dividend of $0.40 per share was paid on July 15, 2013.

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

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

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.

| 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 | |

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

| | [removed: 2013] [added: 2014] (a) | | | | [removed: 2012] [added: 2013 (a)] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | | [removed: 2009] [added: 2010] | | |

| Statement of Income [removed: Data:] [added: Data (b):] | | | | | | | | | | | | | | | | | | | |

| Cash dividends declared per common share | [removed: 1.51] [added: 1.60] | | | | [removed: 1.00] [added: 1.51] | | | | [removed: 0.80] [added: 1.00] | | | | [removed: 0.60] [added: 0.80] | | | | 0.60 | | |

| Balance Sheet [removed: Data:] [added: Data (b):] | | | | | | | | | | | | | | | | | | | |

| [removed: (b)] [added: (c)] | 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. [removed: 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 [removed: this] [added: "Part II,] Item [removed: 7] [added: 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K] for a reconciliation of non-GAAP measures to the most comparable GAAP measure. |

| Net Sales | $ | 5,852.6 | | | $ | 3,665.3 | | | $ | 2,843.9 | | | $ | 2,620.1 | | | $ | 2,435.6 | |

| Net Income | 392.6 | | | | 441.3 | | | | 160.2 | | | | 158.8 | | | | 210.0 | | |

| — basic | 3.99 | | | | 4.57 | | | | 1.66 | | | | 1.60 | | | | 2.07 | | |

| — diluted | 3.99 | | | | 4.52 | | | | 1.64 | | | | 1.58 | | | | 2.05 | | |

| — basic | 97.0 | | | | 96.6 | | | | 96.4 | | | | 99.3 | | | | 101.7 | | |

| — diluted | 97.1 | | | | 97.5 | | | | 97.5 | | | | 100.4 | | | | 102.6 | | |

| Earnings, before interest, taxes, depreciation, and amortization (EBITDA) (c) | $ | 1,083.7 | | | $ | 683.7 | | | $ | 608.4 | | | $ | 437.6 | | | $ | 349.2 | |

| Total assets | $ | 5,348.5 | | | $ | 5,243.8 | | | $ | 2,494.9 | | | $ | 2,454.8 | | | $ | 2,267.5 | |

| Total debt obligations | 2,379.3 | | | | 2,572.7 | | | | 819.5 | | | | 830.3 | | | | 680.6 | | |

| Stockholders' equity | 1,521.4 | | | | 1,356.8 | | | | 1,008.2 | | | | 971.2 | | | | 1,050.6 | | |

| (a) | On October 25, 2013, we acquired Boise Inc. (Boise). Our financial results include Boise subsequent to acquisition. |

| (b) | Effective January 1, 2014, the Company changed its method of accounting for inventories from lower of cost, as determined by the LIFO method, or market, to lower of cost, as determined by the average cost method, or market. The Company applied the change retrospectively to all prior periods presented herein in accordance with US generally accepted accounting principles (GAAP) relating to accounting changes. For more information, see Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of this Form 10-K. |

| | |

| --- | --- |

| Net Sales | $ | 3,665,308 | | | $ | 2,843,877 | | | $ | 2,620,111 | | | $ | 2,435,606 | | | $ | 2,147,589 | |

| Net Income | 436,283 | | | | 163,820 | | | | 158,027 | | | | 205,435 | | | | 265,895 | | |

| — basic | 4.52 | | | | 1.70 | | | | 1.59 | | | | 2.02 | | | | 2.62 | | |

| — diluted | 4.47 | | | | 1.68 | | | | 1.57 | | | | 2.00 | | | | 2.60 | | |

| — basic | 96,579 | | | | 96,384 | | | | 99,281 | | | | 101,678 | | | | 101,577 | | |

| — diluted | 97,547 | | | | 97,497 | | | | 100,376 | | | | 102,608 | | | | 102,358 | | |

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

| Total assets | $ | 5,199,974 | | | $ | 2,453,768 | | | $ | 2,412,499 | | | $ | 2,225,910 | | | $ | 2,152,840 | |

| Total debt obligations | 2,572,749 | | | | 819,498 | | | | 830,280 | | | | 680,601 | | | | 680,878 | | |

| Stockholders' equity | 1,313,015 | | | | 969,461 | | | | 928,910 | | | | 1,009,001 | | | | 898,845 | | |

| (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. |

[removed: | [Report of independent registered public accounting firm](#sBC43173C2DE97A062885ACC948E45200) | [36](#sBC43173C2DE97A062885ACC948E45200) |][added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM]

| [Consolidated [removed: statements] [added: Statements] of [removed: income] [added: Income] and [removed: comprehensive income] [added: Comprehensive Income] for the years ended December 31, [added: 2014,] 2013, [removed: 2012] and [removed: 2011](#s81AB4BCEB46158E97C9DACC91A4F3074)] [added: 2012](#s4D4BFBF14EE19CB5A4AC732266E26568)] | [removed: [38](#s81AB4BCEB46158E97C9DACC91A4F3074)] [added: [41](#s4D4BFBF14EE19CB5A4AC732266E26568)] |

| [Consolidated [removed: balance sheets] [added: Balance Sheets] as of December 31, [removed: 2013] [added: 2014] and [removed: 2012](#s3BB321A4E03C6F9E7164ACC91B6E8B51)] [added: 2013](#sFDCF513927E693A907AA732266F7BB84)] | [removed: [39](#s3BB321A4E03C6F9E7164ACC91B6E8B51)] [added: [42](#sFDCF513927E693A907AA732266F7BB84)] |

| [Consolidated [removed: statements] [added: Statements] of [removed: cash flows] [added: Cash Flows] for the [removed: year] [added: years] ended December 31, [added: 2014,] 2013, [removed: 2012] and [removed: 2011](#sE40D22EF05CECE29F6A1ACC91A760E67)] [added: 2012](#s82CCF44DA4ADB8A8300C732267088959)] | [removed: [40](#sE40D22EF05CECE29F6A1ACC91A760E67)] [added: [43](#s82CCF44DA4ADB8A8300C732267088959)] |

| [Consolidated [removed: statement] [added: Statement] of [removed: changes] [added: Changes] in [removed: stockholders' equity] [added: Stockholders' Equity] for the years ended December 31, [added: 2014,] 2013, [removed: 2012] and [removed: 2011](#sD5B5F2AF769FCB04D400ACC91B9CDB66)] [added: 2012](#s333691037A551BC525487322671F61C6)] | [removed: [41](#sD5B5F2AF769FCB04D400ACC91B9CDB66)] [added: [44](#s333691037A551BC525487322671F61C6)] |

| [Notes to Consolidated Financial [removed: Statements](#sBA0491834687A3625ECFACC944701151)] [added: Statements](#sC32EECB4484CB49A14B273227BF6AD10)] | [removed: [42](#sBA0491834687A3625ECFACC944701151)] [added: [45](#sC32EECB4484CB49A14B273227BF6AD10)] |

Packaging Corporation of [removed: America][added: America:]

[added: The] Board of Directors and Stockholders

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

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, [removed: 2013 and 2012,] [added: 2013,] and the consolidated results of its operations and its cash flows for the [added: two] years then ended in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Packaging Corporation of [removed: America's] [added: America’s] internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on [added: the] criteria established in Internal [removed: Control-Integrated] [added: Control - Integrated] Framework [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (1992 framework),] [added: (COSO),] and our report dated February [removed: 28, 2014] [added: 27, 2015] expressed an unqualified opinion [removed: thereon.][added: on the effectiveness of the Company’s internal control over financial reporting.]

We have audited Packaging Corporation of America’s internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on criteria established in Internal [removed: Control-Integrated] [added: Control - Integrated] Framework [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (1992 framework) (the COSO criteria).][added: (COSO).]

Packaging Corporation of America’s management is responsible for maintaining effective internal control over financial [removed: reporting,] [added: reporting] and for its assessment of the effectiveness of internal control over financial [removed: reporting] [added: reporting,] included in [removed: Management’s Report] [added: the accompanying management’s report] on [removed: Internal Control Over Financial Reporting.][added: internal control over financial reporting included in Item 9A.]

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

In our opinion, Packaging Corporation of America maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on [added: criteria established in Internal Control - Integrated Framework (2013) issued by] the [removed: COSO criteria.][added: Committee of Sponsoring Organizations of the Treadway Commission (COSO).]

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance [removed: sheets] [added: sheet] of Packaging Corporation of America [added: and subsidiaries] as of December 31, [removed: 2013 and 2012,] [added: 2014,] and the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows for [removed: each of] the [removed: three years in the period] [added: year] ended December 31, [removed: 2013,] [added: 2014,] and our report dated February [removed: 28, 2014] [added: 27, 2015] expressed an unqualified opinion [removed: thereon.][added: on those consolidated financial statements.]

(dollars in [removed: thousands,] [added: millions,] except per-share data)

| | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |

| Alternative energy tax credits | — | | | | [removed: 95,500] [added: —] | | | | [removed: —] [added: 95.5] | | |

| Interest expense, net | [removed: (58,275] | | [removed: )] | | [removed: (62,900] | | [removed: )] | | [removed: (29,245] | | [added: | | | (88.4 | |] ) | [added: (d) | | | | | | | | | | | |]

| (Provision) benefit for income taxes | [removed: 20,951] [added: (221.7] | | [added: )] | | [removed: (216,739] [added: 17.7] | | [removed: )] | | [removed: (85,477] [added: (214.5] | | ) |

| Weighted average [added: basic] common shares outstanding | [added: 97.0] | | | | [added: 96.6] | | | | [added: 96.4] | | |

| Dividends declared per common share | $ | [removed: 1.51] [added: 1.60] | | | $ | [removed: 1.00] [added: 1.51] | | | $ | [removed: 0.80] [added: 1.00] | |

| Foreign currency translation adjustment | [removed: (136] [added: (2.6] | | ) | | [removed: —] [added: (0.1] | | [added: )] | | — | | |

| Fair value adjustments to cash flow hedges, net of tax of [removed: $0.0 million,] $6.5 [removed: million, and $15.3] million for [removed: 2013, 2012, and 2011, respectively] [added: 2012] | — | | | | [removed: (10,183] [added: —] | | [removed: )] | | [removed: (24,134] [added: (10.2] | | ) |

| Reclassification adjustments to cash flow hedges included in net income, net of tax of $2.2 million, [removed: $1.2] [added: $2.2] million, and [removed: $0.7] [added: $1.2] million for [added: 2014,] 2013, [removed: 2012,] and [removed: 2011,] [added: 2012,] respectively | [removed: 3,481] [added: 3.5] | | | | [removed: 1,842] [added: 3.5] | | | | [removed: (1,125] [added: 1.8] | | [removed: )] |

| Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of [removed: $8.5] [added: $2.8] million, [removed: $4.3] [added: $8.5] million, and [removed: $2.4] [added: $4.3] million for [added: 2014,] 2013, [removed: 2012,] and [removed: 2011,] [added: 2012,] respectively | [removed: 13,409] [added: 4.2] | | | | [removed: 6,689] [added: 13.4] | | | | [removed: 3,806] [added: 6.7] | | |

| Changes in unfunded employee benefit obligations, net of tax of [removed: $20.4] [added: $59.2] million, [removed: $9.3] [added: $20.4] million, and [removed: $20.3] [added: $9.3] million for [added: 2014,] 2013, [removed: 2012,] and [removed: 2011,] [added: 2012,] respectively | [removed: 32,264] [added: (94.0] | | [added: )] | | [removed: (14,612] [added: 32.2] | | [removed: )] | | [removed: (31,944] [added: (14.5] | | ) |

| Other comprehensive income (loss) | [removed: 49,018] [added: (88.9] | | [added: )] | | [removed: (16,264] [added: 49.0] | | [removed: )] | | [removed: (53,397] [added: (16.2] | | ) |

(dollars and shares in [removed: thousands,] [added: millions,] except per-share data)

| | [added: 2014 | | | |] 2013 | | | | 2012 | | |

| Accounts receivable, net of allowance for doubtful accounts and customer deductions of [removed: $10,567] [added: $11.3 million] and [removed: $5,353] [added: $10.6 million] as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] respectively | [removed: 643,083] [added: 646.1] | | | | [removed: 352,142] [added: 643.1] | | |

| Prepaid expenses and other current assets | [removed: 32,101] [added: 61.9] | | | | [removed: 20,915] [added: 32.0] | | |

| Federal and state income taxes receivable | [removed: 22,958] [added: 5.1] | | | | [removed: 65,488] [added: 23.0] | | |

| Deferred income taxes | [removed: 75,579] [added: 75.7] | | | | [removed: 22,328] [added: 47.6] | | |

| Property, plant, and equipment, net | [removed: 2,805,704] [added: 2,857.6] | | | | [removed: 1,366,069] [added: 2,805.7] | | |

| Other long-term assets | [removed: 69,738] [added: 72.0] | | | | [removed: 45,223] [added: 69.7] | | |

| Current maturities of long-term debt | $ | [removed: 39,000] [added: 6.5] | | | $ | [removed: 15,000] [added: 39.0] | |

| Capital lease obligations | [removed: 1,030] [added: 1.1] | | | | [removed: 964] [added: 1.0] | | |

| Dividends payable | [removed: 39,297] [added: 39.4] | | | | [removed: —] [added: 39.3] | | |

| [Reports of Independent Registered Public Accounting Firms](#s1248A697B34D10EF7D1973227AA5822A) | [38](#s1248A697B34D10EF7D1973227AA5822A) |

We have audited the accompanying consolidated balance sheet of Packaging Corporation of America and subsidiaries as of December 31, 2014, and the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows for the year ended December 31, 2014.

In connection with our audit of the consolidated financial statements, we also have audited financial statement Schedule II - Valuation and Qualifying accounts.

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

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Packaging Corporation of America and subsidiaries as of December 31, 2014, and the results of their operations and their cash flows for the year ended December 31, 2014, 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 consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the Company has elected to change its method of accounting for certain inventories in 2014.

/s/ KPMG LLP

Boise, Idaho

February 27, 2015

The Board of Directors and Stockholders

Packaging Corporation of America:

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

Our audit also included performing such other procedures as we considered necessary in the circumstances.

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

/s/ KPMG LLP

Boise, Idaho

February 27, 2015

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.

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for inventory in 2014.

February 28, 2014 except for Note 2, as to which the date is May 9, 2014

| Net sales | $ | 5,852.6 | | | $ | 3,665.3 | | | $ | 2,843.9 | |

| Cost of sales | (4,623.1 | | ) | | (2,797.8 | | ) | | (2,209.2 | | ) |

| Gross profit | 1,229.5 | | | | 867.5 | | | | 634.7 | | |

| Selling, general, and administrative expenses | (469.5 | | ) | | (326.6 | | ) | | (280.8 | | ) |

| Other expense, net | (57.3 | | ) | | (59.0 | | ) | | (11.8 | | ) |

| Income from operations | 702.7 | | | | 481.9 | | | | 437.6 | | |

| Income before taxes | 614.3 | | | | 423.6 | | | | 374.7 | | |

| Net income | $ | 392.6 | | | $ | 441.3 | | | $ | 160.2 | |

| Basic | $ | 3.99 | | | $ | 4.57 | | | $ | 1.66 | |

| Diluted | $ | 3.99 | | | $ | 4.52 | | | $ | 1.64 | |

| Net income | $ | 392.6 | | | $ | 441.3 | | | $ | 160.2 | |

| Comprehensive income | $ | 303.7 | | | $ | 490.3 | | | $ | 144.0 | |

| Inventories | 664.9 | | | | 594.3 | | |

| Goodwill | 546.8 | | | | 526.8 | | |

| Total assets | $ | 5,348.5 | | | $ | 5,243.8 | |

| Accounts payable | 330.5 | | | | 357.5 | | |

/s/ Ernst & Young LLP

Chicago, Illinois

February 28, 2014

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Boise Inc., a wholly-owned subsidiary, which is included in the 2013 consolidated financial statements of Packaging Corporation of America and constituted 52% of total assets as of December 31, 2013 and 12% and 14% of revenues and net income, respectively for the year then ended.

Our audit of internal control over financial reporting also did not include an evaluation of the internal control over financial reporting of Boise Inc.

| Net sales | $ | 3,665,308 | | | $ | 2,843,877 | | | $ | 2,620,111 | |

| Cost of sales | (2,806,121 | | ) | | (2,203,286 | | ) | | (2,078,088 | | ) |

| Gross profit | 859,187 | | | | 640,591 | | | | 542,023 | | |

| Selling, general, and administrative expenses | (326,602 | | ) | | (280,843 | | ) | | (258,551 | | ) |

| Other expense, net | (58,978 | | ) | | (11,789 | | ) | | (10,723 | | ) |

| Income from operations | 473,607 | | | | 443,459 | | | | 272,749 | | |

| Income before taxes | 415,332 | | | | 380,559 | | | | 243,504 | | |

| Net income | $ | 436,283 | | | $ | 163,820 | | | $ | 158,027 | |

| Basic | 96,579 | | | | 96,384 | | | | 99,281 | | |

| Diluted | 97,547 | | | | 97,497 | | | | 100,376 | | |

| Basic | $ | 4.52 | | | $ | 1.70 | | | $ | 1.59 | |

| Diluted | $ | 4.47 | | | $ | 1.68 | | | $ | 1.57 | |

| Comprehensive income | $ | 485,301 | | | $ | 147,556 | | | $ | 104,630 | |

| | | | | | | | |

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

| Cash and cash equivalents | $ | 190,960 | | | $ | 207,393 | |

| Inventories | 522,523 | | | | 268,767 | | |

| Total current assets | 1,487,204 | | | | 937,033 | | |

| Goodwill | 526,789 | | | | 67,160 | | |

| Intangible assets, net | 310,539 | | | | 38,283 | | |

| Total assets | $ | 5,199,974 | | | $ | 2,453,768 | |

| Accounts payable | 357,432 | | | | 117,510 | | |

| Accrued liabilities | 214,058 | | | | 122,696 | | |

| Accrued interest | 9,722 | | | | 3,676 | | |

| Total current liabilities | 660,539 | | | | 259,846 | | |

| Long-term debt | 2,508,845 | | | | 778,630 | | |

| Deferred income taxes | 434,835 | | | | 125,109 | | |

| Compensation and benefits | 193,548 | | | | 164,538 | | |

| Additional paid in capital | 401,761 | | | | 378,794 | | |

| Retained earnings | 975,296 | | | | 703,728 | | |

| Total stockholders' equity | 1,313,015 | | | | 969,461 | | |

| Depreciation, depletion, and amortization | 217,918 | | | | 175,384 | | | | 162,839 | | |

| Deferred income tax provision (benefit) | (163,550 | | ) | | 183,202 | | | | 27,347 | | |

| Alternative energy tax credits | 76,281 | | | | (76,281 | | ) | | — | | |

| Other, net | (1,008 | | ) | | (3,090 | | ) | | (4,761 | | ) |

Not applicable.

Not applicable

[removed: Except as it relates to] [added: During] the [removed: acquisition of Boise,] [added: quarter ended December 31, 2014,] there [removed: was] [added: were] no [removed: change] [added: changes] in [removed: PCA's] internal [removed: control] [added: controls] over financial reporting [removed: during the most recent fiscal quarter] that [removed: has] [added: have] materially affected, or [removed: is] [added: are] reasonably likely to materially [removed: affect PCA's] [added: affect, PCA’s] internal control over financial reporting.

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: 2013.][added: 2014.]

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, but excluded the operations acquired from Boise.][added: report.]

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: 2013.][added: 2014.]

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: 2013,] [added: 2014,] based on criteria established in Internal Control - Integrated Framework [removed: (1992)] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this [removed: assessment and excluding the operations acquired from Boise,] [added: assessment,] PCA’s management concluded that its internal control over financial reporting was effective as of December 31, [removed: 2013,] [added: 2014,] based on the specified criteria.

[removed: Ernst & Young] [added: KPMG] LLP, the independent registered public accounting firm that audited PCA’s financial statements included in this Form 10-K, has also audited the effectiveness of the Company’s internal control over financial reporting.

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.

Changes in Internal Control Over Financial Reporting

Except as it relates to the acquisition of Boise on October 25, 2013, there have been no changes in our internal control over financial reporting during the quarter ended December 31, 2013, that have materially affected, or are reasonably likely to materially affect, our 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.

Because this Annual Report on Form 10-K is being filed within four business days after the applicable triggering event, the following disclosure is being made under "Part II, Item 9B.

Other Information" of this Annual Report on Form 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 26, 2015, PCA amended and restated its June 24, 2013, agreement with Paul T.

Stecko, chairman of its board of directors.

Under the amended and restated agreement, PCA’s board may determine to pay additional fees to Mr. Stecko for services provided under the agreement that were not contemplated at the time the original agreement was executed.

On February 26, 2015, the board determined to pay Mr. Stecko an additional $1.6 million of fees for 2014, primarily for services related to PCA’s integration of its acquisition of Boise Inc. The amended and restated agreement is filed herewith as Exhibit 10.12 and incorporated by reference herein.

None.

The following information required by this Item 10 will be included in PCA’s Proxy Statement for the [removed: 2013] [added: 2014] Annual Meeting of Stockholders and is incorporated by reference herein:

| • | Information regarding PCA’s stockholder nominating procedures included under the captions [removed: “Election] [added: "Election] of Directors - Nominating and Governance [removed: Committee,” “Other] [added: Committee," "Other] Information - Recommendations for Board - Nominated Director [removed: Nominees,”] [added: Nominees,"] and [removed: “Other] [added: "Other] Information - Procedures for Nominating Directors or Bringing Business Before the [removed: 2014] [added: 2015] Annual [removed: Meeting”] [added: Meeting"] |

Authorization of Securities under Equity Compensation Plans — Securities authorized for issuance under our equity compensation plans at December 31, [removed: 2013] [added: 2014] are as follows:

| Equity compensation plans approved by securityholders | [removed: 151,945] [added: —] | | | $ | [removed: 24.61] [added: —] | | | [removed: 2,140,954] [added: 1,856,238] | |

| (a) | Does not include [removed: 1,534,294] [added: 1,311,788] shares of unvested restricted stock and performance units granted pursuant to our Amended and Restated 1999 Long-Term Equity Incentive Plan. |

| Total | — | | | $ | — | | | 1,856,238 | |

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

The following consolidated financial statement schedule of PCA for the years ended December 31, [added: 2014,] 2013, [removed: 2012,] and [removed: 2011] [added: 2012] is included in this report.

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

| Allowance for doubtful accounts | $ | [removed: 1,909] [added: 1.9] | | | $ | — | | | $ | [removed: 2,812] [added: 1.0] | | | $ | [removed: (821] [added: (1.0] | ) | (a) | $ | [removed: 3,900] [added: 1.9] | |

| Deferred tax asset valuation allowance | — | | | | [removed: 2,715] [added: 2.7] | | | | — | | | | — | | | | [removed: 2,715] [added: 2.7] | | |

| Year ended December 31, [removed: 2011:] [added: 2014:] | | | | | | | | | | | | | | | | | | | |

| [removed: 10.13] [added: 10.20] | | Form of Restricted Stock Award Agreement for [removed: February 22, 2011 Retention Awards] [added: December 16, 2013 awards] to Mark W. [removed: Kowlzan and] [added: Kowlzan,] Thomas A. [removed: Hassfurther.] [added: Hassfurther and Richard B. West.] (Incorporated herein by reference to Exhibit [removed: 10.22] [added: 10.1] to PCA’s [removed: Annual] [added: Current] Report on Form [removed: 10-K for the year ended] [added: 8-K, filed] December [removed: 31, 2010,] [added: 17, 2013,] File No. [removed: 1-15399.)*] [added: 1-15399).*] |

| [removed: 10.14] [added: 10.13] | | Second Amendment of Packaging Corporation of America Supplemental Executive Retirement Plan, effective as of February 28, 2013. (Incorporated herein by reference to Exhibit 10.22 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2012, File No. 1-15399.)* |

| [removed: 10.15] [added: 10.14] | | Third Amendment of Packaging Corporation of America Supplemental Executive Retirement Plan, effective as of February 28, 2013. (Incorporated herein by reference to Exhibit 10.23 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2012, File No. 1-15399.) * |

| [removed: 10.16] [added: 10.15] | | Form of Restricted Stock Agreement for executive officer awards made in June 2013. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-15399).* |

| [removed: 10.17] [added: 10.16] | | Form of Performance Unit Agreement for executive officer awards made in June 2013. (Incorporated by reference to Exhibit 10.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-15399).* |

| [removed: 10.18] [added: 10.17] | | Performance Based Equity Award Pool for Executive Officers relating to awards made in June 2013. (Incorporated by reference to Exhibit 10.3 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-15399).* |

| [removed: 10.19] [added: 10.18] | | Paper Purchase Agreement, dated June 25, 2011 (the "Paper Purchase Agreement"), between Boise White Paper, L.L. C. and OfficeMax Incorporated (Incorporated by reference to Exhibit 10.1 to Boise, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-33541) |

| [removed: 10.20] [added: 10.19] | | First Amendment to Paper Purchase Agreement, dated June 20, 2013, between Boise White Paper, L.L.C. and OfficeMax Incorporated (Incorporated by reference to Exhibit 10.2 to Boise, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-33541) |

| [removed: 16] [added: 16.1] | | Letter from Ernst & Young LLP dated November 15, 2013. (Incorporated herein by reference to Exhibit 16 to PCA’s Current Report on Form 8-K, filed November 15, 2013, File No. 1-15399). |

| [removed: 23.1] [added: 23.3] | | Consent of Ernst & Young LLP.† |

| 23.2 | | Consent of KPMG [removed: LLP.†] [added: LLP (2013).†] |

| 99.1 | | Independent [removed: Auditors'] [added: Auditors’] Report [removed: of KPMG.†] [added: (KPMG).†] |

| 101 | | The following financial information from Packaging Corporation of America’s Annual Report on Form 10-K for the year ended December 31, [removed: 2013,] [added: 2014,] formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated [removed: Balance Sheets at December 31, 2013 and 2012, (ii) Consolidated] Statements of Income for the years ended December 31, [added: 2014,] 2013, [removed: 2012] and [removed: 2011,] [added: 2012, (ii) Consolidated Balance Sheets at December 31, 2014 and 2013,] (iii) Consolidated Statements of [removed: Changes in Stockholders’ Equity] [added: Cash Flows] for the years ended December 31, [added: 2014,] 2013, [removed: 2012] and [removed: 2011,] [added: 2012,] (iv) Consolidated Statements of [removed: Cash Flows] [added: Changes in Stockholders’ Equity] for the years ended December 31, [added: 2014,] 2013, [removed: 2012] and [removed: 2011,] [added: 2012,] (v) the Notes to Consolidated Financial Statements, and (vi) Financial Statement Schedule-Valuation and Qualifying Accounts. |

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized on February [removed: 28, 2014.][added: 27, 2015.]

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February [removed: 28, 2014,] [added: 27, 2015,] by the following persons on behalf of the registrants and in the capacities indicated.

| Allowance for doubtful accounts | $ | 3.9 | | | $ | — | | | $ | 2.2 | | | $ | (1.2 | ) | (a) | $ | 4.9 | |

| Reserve for customer deductions | 6.7 | | | | — | | | | 44.5 | | | | (44.8 | | ) | (b) | 6.4 | | |

| Deferred tax asset valuation allowance | 2.7 | | | | — | | | | 0.1 | | | | (1.1 | | ) | | 1.7 | | |

| Total | $ | 13.3 | | | $ | — | | | $ | 46.8 | | | $ | (47.1 | ) | | $ | 13.0 | |

| Allowance for doubtful accounts | $ | 1.9 | | | $ | — | | | $ | 2.8 | | | $ | (0.8 | ) | (a) | $ | 3.9 | |

| Reserve for customer deductions | 3.4 | | | | 3.4 | | | | 39.5 | | | | (39.6 | | ) | (b) | 6.7 | | |

| Total | $ | 5.3 | | | $ | 6.1 | | | $ | 42.3 | | | $ | (40.4 | ) | | $ | 13.3 | |

| Reserve for customer deductions | 3.1 | | | | — | | | | 31.0 | | | | (30.7 | | ) | (b) | 3.4 | | |

| Total | $ | 5.0 | | | $ | — | | | $ | 32.0 | | | $ | (31.7 | ) | | $ | 5.3 | |

| 4.10 | | Officers’ Certificate, dated September 5, 2014, pursuant to Section 301 of the Indenture, dated July 21, 2003, by and between Packaging Corporation of America and U.S. Bank National Association (Incorporated herein by reference to Exhibit 4.1 to PCA’s Current Report on Form 8-K filed September 5, 2014, File No. 1-15399). |

| 4.11 | | 3.650% Senior Notes due 2024 (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report on Form 8-K filed September 5, 2014, File No. 1-15399). |

| 10.12 | | Amended and Restated Agreement, dated February 26, 2015, between Packaging Corporation of America and Paul T. Stecko.† |

| 10.21 | | Form of Performance Unit Agreement for executive officer awards made in June 2014. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2014, File No. 1-15399).* |

| 10.22 | | Form of Restricted Stock Agreement for executive officer awards made in June 2014. (Incorporated by reference to Exhibit 10.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2014, File No. 1-15399).* |

| 16.2 | | Letter from Ernst & Young LLP dated March 3, 2014. (Incorporated herein by reference to Exhibit 16.1 to PCA’s Current Report on Form 8-K, filed March 3, 2014, File No. 1-15399). |

| 23.1 | | Consent of KPMG LLP (2014).† |

| | | Thomas P. Maurer | | Director |

| | | * | | |

| | | | | |

| Reserve for customer deductions | 3,444 | | | | 3,369 | | | | 39,510 | | | | (39,656 | | ) | (b) | 6,667 | | |

| Total | $ | 5,353 | | | $ | 6,084 | | | $ | 42,322 | | | $ | (40,477 | ) | | $ | 13,282 | |

| Allowance for doubtful accounts | $ | 1,906 | | | $ | — | | | $ | 1,043 | | | $ | (1,040 | ) | (a) | $ | 1,909 | |

| Reserve for customer deductions | 3,128 | | | | — | | | | 31,045 | | | | (30,729 | | ) | (b) | 3,444 | | |

| Total | $ | 5,034 | | | $ | — | | | $ | 32,088 | | | $ | (31,769 | ) | | $ | 5,353 | |

| Allowance for doubtful accounts | $ | 2,493 | | | $ | — | | | $ | 143 | | | $ | (730 | ) | (a) | $ | 1,906 | |

| Reserve for customer deductions | 2,920 | | | | — | | | | 30,009 | | | | (29,801 | | ) | (b) | 3,128 | | |

| Total | $ | 5,413 | | | $ | — | | | $ | 30,152 | | | $ | (30,531 | ) | | $ | 5,034 | |

| 10.12 | | Agreement, dated June 24, 2013, between Packaging Corporation of America and Paul T. Stecko. (Incorporated herein by reference to Exhibit 10.1 to PCA’s Current Report on Form 8-K, filed June 27, 2013, File No. 1-15399.)* |

| 10.21 | | Form of Restricted Stock Award Agreement for December 16, 2013 awards to Mark W. Kowlzan, Thomas A. Hassfurther and Richard B. West. (Incorporated herein by reference to Exhibit 10.1 to PCA’s Current Report on Form 8-K, filed December 17, 2013, File No. 1-15399).* |