Packaging Corp of America (PKG) 10-K risk factor changes: FY2017 vs FY2015

[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.

If supply exceeds demand, [added: industry operating conditions deteriorate or other factors result in lower] prices for our [removed: products could decline, and] [added: products,] our earnings and operating cash flows would be [removed: lower.][added: harmed.]

[removed: The intensity of competition could lead] [added: If we are unable] to [removed: a reduction in our] [added: successfully compete, we may lose] market share [removed: as well as] [added: or may be required to charge] lower sales prices for our products, both of which [removed: could] [added: would] reduce our earnings and operating cash flows.

Some of our competitors are larger than we are and may have greater financial and other resources, greater manufacturing economies of scale, greater energy [removed: self sufficiency,] [added: self-sufficiency,] or lower operating costs, compared with our company.

In [removed: 2015,] [added: 2016,] our total company costs including cost of sales (COS) and selling, general, and administrative expenses (SG&A) was $5.0 billion, and excluding non-cash costs (depreciation, [added: depletion and amortization,] pension and postretirement expense, and share-based compensation expense) was $4.6 billion.

[added: In 2016, we purchased approximately 630,000] 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 natural gas, bark, [removed: oil,] and [removed: coal.][added: other purchased fuels.]

These events could harm our ability to [added: produce our products and] serve our customers and [added: may] lead to higher costs and reduced earnings.

The agreement requires Office Depot to buy, and us to supply, at least 50% of Office Depot's requirements for office papers through December [removed: 2017; however, there are circumstances that could cause the agreement to terminate before] 2017.

In [removed: 2015,] [added: 2016,] sales to Office Depot represented [removed: 45%] [added: 42%] of our Paper segment [added: sales and 8% of our consolidated] sales.

If these sales are reduced, [removed: whether as a result of] [added: including if we are unable to renew] the [removed: future acquisition of Office Depot by Staples or otherwise,] [added: agreement at committed volumes,] we would need to find new customers.

Any significant deterioration in the financial condition of Office Depot [removed: (or its ultimate acquirer)] affecting its ability to pay or any other change that [removed: results in its willingness] [added: makes Office Depot less willing] to purchase our products will harm our business and results of operations.

At December 31, [removed: 2015,] [added: 2016,] we had [removed: $2.3] [added: $2.6] billion of long-term debt outstanding and a [removed: $326.5] [added: $324.9] million undrawn revolving credit facility, after deducting letters of credit.

General Economic Conditions - Adverse business and [removed: global] economic conditions [added: or changes in tax laws] may have a material adverse effect on our business, results of operations, liquidity, and financial position.

General global [added: and U.S.] economic conditions adversely affect the demand and production of consumer goods, employment levels, the availability and cost of credit, and ultimately, the profitability of our business.

In addition, our selling prices are influenced by index levels published by trade publications.

Changes in how these index levels are determined or maintained may affect our sales prices.

Changes in tax laws or tax rates may have a material impact on our future cash taxes, effective tax rate or deferred tax assets and liabilities.

We purchase recycled fiber for use at four of our five containerboard mills as well as the containerboard machine at our Wallula, Washington mill.

A $10 per ton price increase in recycled fiber for our containerboard mills, would result in approximately $6 million of additional expense.

A $0.10 per million MMBTU in natural gas prices would result in approximately $3 million of additional expense, based on 2016 usage.

| • | Explosion of a boiler or other major facilities. |

Mergers and Acquisitions - Our acquired businesses may underperform relative to our expectations, and we may not be able to successfully integrate these businesses into our own.

We have completed several mergers and acquisitions and investments in recent years, including our acquisitions of TimBar and Columbus Container during 2016.

Our success will depend in part on our ability to successfully integrate, and receive the intended benefits from these acquisitions.

There may be difficulties, costs and delays involved in the integration of these businesses into ours.

Integration requires modification of operational and financial systems, and may result in significant additional expenses.

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

Labor Relations- If we experience strikes or other work stoppages, our business will be harmed.

Our workforce is highly unionized and operates under various collective bargaining agreements.

We must negotiate to renew or extend any union contracts that have recently expired or are expiring in the near future.

While we believe that we have generally had satisfactory labor relations, we may not be able to successfully negotiate new agreements without work stoppages or labor difficulties in the future or renegotiate them on favorable terms.

If we are unable to successfully renegotiate the terms of any of these agreements, or if we experience any extended interruption of operations at any of our facilities as a result of strikes or other work stoppages, our business, results of operations and financial condition may be harmed.

Our indebtedness includes $1.0 billion with floating interest rates.

An increase in interest rates will increase the amount we must pay to service our indebtedness.

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

Lower prices for our products could have a material adverse effect on our operating cash flows, profitability, and liquidity.

In February 2016, antidumping and countervailing duties were imposed on imports of certain white paper products from Australia, Brazil, China, Indonesia, and Portugal.

While these duties will increase the costs of producers in these countries to sell products in the United States, we are unable to determine if domestic market conditions will improve.

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

In 2015, we purchased approximately 605,000

| • | Explosion of a boiler. |

If this were to occur, Office Depot's purchase obligations under the agreement would phase out.

Office Depot has agreed to be acquired by Staples, Inc. The pending acquisition by Staples is subject to the satisfaction of certain conditions, including regulatory approval, which is uncertain.

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

Our agreement with Office Depot will continue to remain in effect after a merger or acquisition as to the office paper requirements of the legacy Office Depot business.

However, we cannot predict how any merger or acquisition will affect the

financial condition of the ultimate entity, the paper requirements of the legacy Office Depot business, the purchasing decisions of the ultimate entity or the effects on pricing or competition for office papers.

PCA is the fourth largest producer of containerboard [removed: and corrugated packaging] products in the United States and the third largest producer of uncoated freesheet paper in [removed: North America,] [added: the United States,] based on production capacity.

We operate five containerboard mills, three paper mills, and [removed: 93] [added: 94] corrugated products manufacturing plants.

[removed: In 2015, we] [added: We] reported [removed: $436.8] [added: $450] million of net income, or [removed: $4.47] [added: $4.75] per diluted share, compared with [removed: $392.6] [added: $437] million, or [removed: $3.99] [added: $4.47] per share in [removed: 2014.][added: 2015.]

Excluding [removed: the] special [removed: items discussed below,] [added: items,] we recorded [removed: $442.6] [added: $462] million of net income, or [removed: $4.53] [added: $4.88] per diluted share in [removed: 2015,] [added: 2016,] compared with [removed: $458.6] [added: $443] million and [removed: $4.66] [added: $4.53] per diluted share in [removed: 2014.][added: 2015.]

In [removed: 2015,] [added: 2016,] we [added: successfully] completed the [removed: integration] [added: acquisitions] of [removed: Boise Inc.,] [added: TimBar and Columbus Container,] achieved a record [removed: $762.6] [added: $801] million of operating cash flow, and returned [removed: $355.5] [added: $316] million to our shareholders through share repurchases and dividends.

[removed: In our packaging segment, we reported $714.9 million of] [added: Packaging segment] income [removed: in 2015,] [added: from operations was $711 million,] compared with [removed: $663.2] [added: $715] million in [removed: 2014,] [added: 2015,] and earnings before interest, taxes, depreciation, amortization, and depletion (EBITDA) excluding special items was [removed: $1,009.3] [added: $1,019] million, compared with [removed: $1,015.0] [added: $1,009] million in [removed: 2014.][added: 2015.]

Paper segment income [added: from operations] was [removed: $112.5] [added: $138] million, compared with [removed: $135.4] [added: $112] million in [removed: 2014,] [added: 2015,] and EBITDA excluding special items was [removed: $160.7] [added: $199] million, compared with [removed: $186.0] [added: $161] million in [removed: 2014.][added: 2015.]

Earnings per diluted share, excluding special items, in [removed: 2015] [added: 2016] and [removed: 2014] [added: 2015] were as follows:

| | [added: 2016 | | | |] 2015 | | | | 2014 | | |

| Earnings per diluted share | $ | [removed: 4.47] [added: 4.75] | | | $ | [removed: 3.99] [added: 4.47] | |

| DeRidder restructuring [removed: (a)] [added: (e)] | [removed: 0.01] [added: —] | | | | [removed: 0.43] [added: 0.01] | | |

| Integration-related and other costs [removed: (b)] [added: (f)] | [removed: 0.10] [added: —] | | | | [removed: 0.13] [added: 0.10] | | |

| Sale of St. Helens paper mill site [removed: (c)] [added: (g)] | [removed: (0.05] [added: —] | | [removed: )] | | [removed: —] [added: (0.05] | | [added: )] |

| Class action lawsuit settlement [removed: (d)] | — | | | | [removed: 0.11] [added: —] | | | [added: | 17.6 | | | | — | | | | — | | |]

| Total special items | [removed: 0.06] [added: 0.13] | | | | [removed: 0.67] [added: 0.06] | | |

| Earnings per diluted share, excluding special items | $ | [removed: 4.53] [added: 4.88] | | | $ | [removed: 4.66] [added: 4.53] | |

| [removed: (a)] [added: (e)] | Includes [removed: amounts from] [added: $2.0 million of] restructuring activities at our mill in DeRidder, Louisiana, including costs related to the conversion of the No. 3 newsprint machine to containerboard, our exit from the newsprint business, and other improvements. The restructuring charges primarily related to accelerated depreciation. |

| [removed: (b)] [added: (f)] | [removed: Includes] [added: 2015 and 2014 include] Boise acquisition integration-related and other [removed: costs. These costs] [added: costs,] primarily [removed: relate to professional fees,] [added: for] severance, retention, [removed: relocation,] travel, and [removed: other integration-related costs.] [added: professional fees.] 2014 also includes $1.5 million of expense related to [added: the] write-off of deferred financing costs in connection with the debt refinancing. |

| [removed: (c)] [added: (g)] | In September 2015, we sold the remaining land, buildings, and equipment at our paper mill site in St. Helens, Oregon, where we ceased paper production in December 2012. We recorded a $6.7 million gain on the sale. |

| [removed: (d)] [added: (h)] | Includes $17.6 million of costs for the settlement of the Kleen Products LLC v Packaging Corp. of America et al class action lawsuit. [added: See Note 18, Commitments, Guarantees, Indemnifications, and Legal Proceedings, for more information.] |

[removed: Reconciliation] [added: A reconciliation] of diluted EPS to diluted EPS excluding special items is included above and the reconciliations of other non-GAAP measures used in this Management's Discussion and Analysis of Financial Condition and Results of Operations, to the most comparable measure reported in accordance with GAAP, are included later in Item 7 under "Reconciliations of Non-GAAP Financial Measures to Reported Amounts." Any analysis of non-GAAP financial measures should be done in conjunction with results presented in accordance with GAAP.

Trade publications reported that industry corrugated products shipments increased [removed: 1.2%] [added: 2.1%] during [removed: 2015,] [added: 2016,] compared with [removed: 2014 and 1.6% per workday with one less workday in] 2015.

Reported industry containerboard production was [removed: 1.3%] [added: 1.2%] higher than [removed: 2014,] [added: 2015,] with export shipments up [removed: 1.9%.][added: 4.6%.]

Trade publications reported that uncoated freesheet paper shipments were down [removed: 1.0%] [added: 3.4%] in [removed: 2015,] [added: 2016,] compared with [removed: 2014.][added: 2015.]

Trade publication average prices for uncoated freesheet decreased [removed: $26] [added: $19] per ton, or [removed: 2.5%,] [added: 1.9%,] in [removed: 2015,] [added: 2016,] compared with [removed: 2014.][added: 2015.]

[removed: Compared with fourth quarter 2015, we] [added: We] expect [removed: first quarter 2016] [added: higher freight costs as well as higher] labor and benefits costs [removed: to be higher] with annual wage increases and other timing-related [removed: expenses, and seasonally colder weather will increase wood and energy costs.][added: expenses.]

| Corporate and other [removed: and eliminations] | (77.4 | | ) | | (95.9 | | ) | | 18.5 | | |

Net sales decreased [removed: $110.9] [added: $111] million, or 1.9%, to [removed: $5,741.7] [added: $5,742] million in 2015, compared with [removed: $5,852.6] [added: $5,853] million in 2014.

Sales decreased [removed: $63.0] [added: $63] million, or 1.4%, to [removed: $4,477.3] [added: $4,477] million, compared with [removed: $4,540.3] [added: $4,540] million in 2014.

Sales decreased [removed: $115.0] [added: $115] million due to the exit from our newsprint business in third quarter 2014 and the April 1, 2015, sale of our Hexacomb operations in Mexico and Europe.

This decrease was partially offset by increased sales volumes in our corrugated products business [removed: ($17.0] [added: ($17] million) and external containerboard sales [removed: ($31.0] [added: ($31] million).

With a full year of containerboard production on our D3 machine at our DeRidder, Louisiana mill, we increased our outside sales of containerboard, both domestic and export, by 52,000 tons compared with last year and we purchased 174,000 less tons of [removed: containerboard from the outside market in 2015.]

[removed: Our] [added: On average during the year, our] export prices were down 7% compared with 2014, while pricing for domestic containerboard sales was flat with last year.

Sales decreased [removed: $58.3] [added: $58] million, or 4.9%, to [removed: $1,143.1] [added: $1,143] million, compared with [removed: $1,201.4] [added: $1,201] million in 2014.

The decrease was primarily due to [removed: 4.8% lower] [added: unfavorable changes in] sales prices and [removed: changes in] mix [removed: ($57.6] [added: ($58] million).

Gross profit decreased [removed: $21.5] [added: $22] million, or 1.7%, in 2015, compared with 2014.

In 2015 and 2014, gross profit included expenses of [removed: $9.0] [added: $9] million and [removed: $58.1] [added: $58] million of special items, respectively, most of which related to incremental depreciation expense related to changing the estimated useful lives of assets in connection with our DeRidder mill restructuring.

Excluding special items, gross profit decreased [removed: $70.6] [added: $71] million in 2015, compared with 2014.

Selling, general, and administrative expenses decreased [removed: $18.2] [added: $18] million, or 3.9%, in 2015, compared with 2014.

Other expense, net, in 2015 was [removed: $6.7] [added: $7] million, compared with [removed: $57.3] [added: $57] million during 2014.

Our containerboard mills produce linerboard and corrugating medium, which are papers primarily used in the production of corrugated products.

We are headquartered in Lake Forest, Illinois and operate primarily in the United States.

During 2016, we made two acquisitions in our corrugated products business: Tim-Bar Corporation ("TimBar") and Columbus Container, Inc. ("Columbus Container").

On August 29, 2016, we acquired substantially all of the assets of TimBar, a large independent corrugated products producer with six corrugated products production facilities for a purchase price of $386 million.

To finance the acquisition, we borrowed $385 million under a new five-year term loan facility.

TimBar provides solutions to customers in the higher margin retail, industrial packaging and display and fulfillment markets with a focus on multi-color graphics and technical innovation.

On November 30, 2016, we acquired substantially all of the assets of Columbus Container for a purchase price of $100 million.

Columbus Container is a full-service provider of corrugated packaging products, with a full-line corrugated products plant and warehousing facilities and other related operations located in Indiana and Illinois.

We used available cash on hand to pay the purchase price.

The operating results of TimBar and Columbus Container are included in our results and reported in the Packaging segment from and after the respective dates of acquisition.

These acquisitions will accelerate the growth strategy and increase the containerboard integration level in our Packaging segment.

Income included $19 million of pre-tax expense for special items in 2016 compared to $9 million in 2015.

The increase was driven primarily by increased containerboard and corrugated products volumes, improved operating costs, and a lower share count, partially offset by lower containerboard and corrugated products prices and mix and lower paper volumes.

Volumes were up in both our containerboard mills and corrugated products plants in 2016, and we began implementing announced price increases during the fourth quarter.

Higher volumes and improved operating costs were partially offset by unfavorable changes in containerboard and corrugated products price and mix compared with 2015.

The increase was primarily due to improved operating costs and favorable changes in price and mix, partially offset by lower volume as a result of the 2016 shutdown of market pulp operations at our Wallula, Washington mill.

| | 2016 | | | | 2015 | | |

| Facilities closure costs (a) | 0.07 | | | | — | | |

| Wallula mill restructuring (c) | 0.02 | | | | — | | |

| Multiemployer pension withdrawal (d) | 0.01 | | | | — | | |

| (a) | Includes $11.0 million of closure costs related to corrugated product facilities and a paper products facility. |

| (b) | Includes $4.5 million of acquisition-related costs for the TimBar Corporation and Columbus Container, Inc. acquisitions. |

| (c) | Includes $2.7 million of costs related to ceased production of softwood market pulp operations at our Wallula, Washington mill and the permanent shutdown of the No.1 machine. |

| (d) | Includes $0.9 million of costs related to our withdrawal from a multiemployer pension plan for one of our corrugated products facilities. |

| (f) | Includes $13.4 million of Boise acquisition integration-related and other costs. These costs primarily relate to professional fees, severance, retention, relocation, travel, and other integration-related costs. |

Management excludes special items, as it believes these items are not necessarily reflective of the ongoing results of operations of our business.

Published open market containerboard prices for linerboard decreased $15 per ton in January, followed by a $40 per ton increase in October.

Medium decreased $20, $10, and $15 per ton in January, February, and August respectively, followed by a $40 increase in October.

Looking ahead to the first quarter of 2017, we expect to realize the vast majority of our previously announced Packaging segment price increases and we expect higher corrugated products shipments with continuing strong demand.

We expect lower containerboard and paper production volume as we have scheduled maintenance outages on one of our machines at both the Counce and DeRidder containerboard mills and on one of our machines at our Jackson, Alabama paper mill.

We also anticipate continued price inflation on recycled fiber, energy, and certain chemicals, and seasonally colder weather is expected to increase wood and energy costs.

Considering these items, we expect first quarter earnings per share to be higher than fourth quarter 2016.

| | 2016 | | | | 2015 | | | | Change | | |

| Packaging | $ | 4,584.8 | | | $ | 4,477.3 | | | $ | 107.5 | |

| Paper | 1,093.9 | | | | 1,143.1 | | | | (49.2 | | ) |

| Net sales | $ | 5,779.0 | | | $ | 5,741.7 | | | $ | 37.3 | |

| Packaging | $ | 711.1 | | | $ | 714.9 | | | $ | (3.8 | ) |

| Paper | 138.1 | | | | 112.5 | | | | 25.6 | | |

| Corporate and other | (68.9 | | ) | | (77.4 | | ) | | 8.5 | | |

| Income before taxes | 688.5 | | | | 664.5 | | | | 24.0 | | |

We operate primarily in the United States and have some converting and distribution operations in Canada.

Compared with 2014, we performed well, despite lower white papers prices and mix and lower export containerboard prices.

In 2015, we achieved record volumes in both our packaging mills and corrugated products plants.

We achieved full design capacity of 1,000 tons of production per day on the DeRidder No. 3 machine, which was converted to containerboard in 2014.

Compared with 2014, total sales prices were lower and volumes were slightly up in 2015.

We maintained strong margins through improved operations and lower costs in our paper mills which offset some of the impact of lower paper prices.

During the third quarter of 2015, we installed and started up a 53 megawatt turbine generator to replace four older units at our International Falls, Minnesota mill.

With the new turbine generator, the mill is now capable of producing 70% of its electrical power requirements compared to 38% previously.

____________

| | |

| --- | --- |

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

In the first two months of 2016, a trade publication lowered its published prices for domestic linerboard and medium by $15 and $30 per ton, respectively.

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 in violation of international trade rules.

The domestic producers also alleged that Chinese and Indonesian producers are receiving illegal government subsidies.

The agencies conducted their investigations in 2015 and early 2016.

In January 2016, the U.S. Department of Commerce made determinations of antidumping and countervailing duties at rates varying by country and producer and, in February 2016, the International Trade Commission determined that the domestic industry has been materially injured by these imports.

Accordingly, the antidumping and countervailing duties will be imposed on imports from these countries.

Our tax rate will also be higher in the first quarter.

These items will be partially offset by slightly higher corrugated products shipments and containerboard production, and lower scheduled mill outage costs.

Finally, lower published prices for domestic linerboard and medium are expected to adversely affect earnings.

As a result, we expect first quarter 2016 earnings to be lower than fourth quarter 2015.

Excluding expenses of $6.1 million of special items in 2015 and $70.7 million in 2014, segment income decreased $12.9 million to $721.0 million, compared with $733.9 million.

Excluding income of $6.7 million of special items in 2015, segment income decreased $29.6 million to $105.8 million.

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

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

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

| 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 | | |

| Corporate and other and eliminations | (95.9 | | ) | | (85.8 | | ) | | (10.1 | | ) |

| Income from operations | $ | 702.7 | | | $ | 481.9 | | | $ | 220.8 | |

| Income tax (expense) benefit | (221.7 | | ) | | 17.7 | | | | (239.4 | | ) |

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

| (b) | See "Reconciliations of Non-GAAP Financial Measures to Reported Amounts" included in this Item 7 for a reconciliation of non-GAAP measures to the most comparable GAAP measure. |

Net sales increased $2,187.3 million, or 59.7%, to a record $5,852.6 million in 2014, compared with $3,665.3 million in 2013.

The increase in 2014 related to a full year of Boise operations, compared with only two months and five days in 2013 ($1,962.8 million) and increased sales in PCA's historical operations ($224.5), which resulted from higher sales volumes and higher sales prices and mix.

Sales increased $1,108.6 million, or 32.3%, to $4,540.3 million, compared with $3,431.7 million in 2013.

A full year of Boise operations contributed $878.7 million of the increase and the remaining increase related to higher sales volumes ($160.5 million) and higher sales prices and mix ($69.4 million) in PCA's historical operations.

Total corrugated products volume sold in 2014, including Boise, increased 25.5% over 2013 and shipments per workday increased 25.0%.

For a discussion of derivatives and hedging activities, see Note [removed: 14,] [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: 70%] [added: 62%] 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: $6.6] [added: $10.1] million annually.

We were not party to any derivative-based arrangements at December 31, 2016.

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

We operate [removed: eight] [added: five containerboard mills, three paper] mills and [removed: 93] [added: 94] corrugated products manufacturing plants.

We are headquartered in Lake Forest, [removed: Illinois,] [added: Illinois] and [removed: have approximately 13,000 employees.][added: operate primarily in the United States.]

[removed: After the acquisition, we began reporting] [added: We report in] three reportable segments: Packaging, [removed: Paper,] [added: Paper] and Corporate and Other.

[removed: We present] [added: For segment financial] information [removed: pertaining to each of our segments and the geographic areas in which they operate in] [added: see] Note [removed: 18,] [added: 17,] Segment Information, of the Notes to Consolidated Financial Statements in "Part II, Item [removed: 8.][added: 8, Financial Statements and Supplementary Data" of this Form 10-K.]

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

| [removed: Containerboard Production (b)] [added: (thousand tons)] | [removed: PCA] | 2015 | 882 | | [removed: |] 938 | | [removed: |] 933 | | [removed: |] 903 | | [removed: |] 3,656 | [removed: |]

| [removed: (thousand tons)] | | 2014 | 821 | | [removed: |] 846 | | [removed: |] 858 | | [removed: |] 927 | | [removed: |] 3,452 | [removed: |]

| [removed: Corrugated Shipments (BSF)] | [removed: PCA] | 2015 | 11.9 | | [removed: |] 12.4 | | [removed: |] 12.5 | | [removed: |] 12.1 | | [removed: |] 48.9 | [removed: |]

| | | 2014 | 11.6 | | [removed: |] 12.1 | | [removed: |] 12.4 | | [removed: |] 12.1 | | [removed: |] 48.2 | [removed: |]

| Newsprint Production [removed: (b)] [added: (a)] | PCA | [removed: 2015] [added: 2016] | — | | [removed: |] — | | [removed: |] — | | [removed: |] — | | [removed: |] — | [removed: |]

| [removed: (thousand tons)] | | 2014 | 56 | | [removed: |] 56 | | [removed: |] 50 | | [removed: |] — | | [removed: |] 162 | [removed: |]

| [removed: White Paper (UFS) Production] [added: (thousand tons)] | [removed: PCA] | 2015 | 288 | | [removed: |] 273 | | [removed: |] 294 | | [removed: |] 262 | | [removed: |] 1,117 | [removed: |]

| [removed: (thousand tons)] | | 2014 | 286 | | [removed: |] 275 | | [removed: |] 296 | | [removed: |] 287 | | [removed: |] 1,144 | [removed: |]

| Market Pulp Production [added: (b)] | PCA | [removed: 2015 | 27 | | | 23 |] [added: 2016] | [added: 16] | [removed: 25] | [added: 10] | | [removed: 23] [added: 12] | | [added: 7] | [removed: 98] | [added: 45] |

| [removed: (thousand tons)] | | 2014 | 26 | | [removed: |] 23 | | [removed: |] 26 | | [removed: |] 25 | | [removed: |] 100 | [removed: |]

| [removed: (b)] [added: (a)] | PCA ceased production of newsprint and converted the No.3 newsprint machine at our DeRidder, Louisiana mill to containerboard in the third quarter of 2014. Sales of newsprint were recorded in the Packaging segment. |

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

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 [removed: locations.][added: locations, and honeycomb protective packaging.]

During the year ended December 31, [removed: 2015,] [added: 2016,] our Packaging segment produced 3.7 million tons of containerboard at our mills.

Our corrugated products manufacturing plants sold [removed: 48.9] [added: 51.3] billion square feet (BSF) of corrugated products.

Our net sales to third parties totaled [removed: $4.5] [added: $4.6] billion in [removed: 2015.][added: 2016.]

The year-end [removed: 2015] [added: 2016] annual estimated production capacity, as reported to the American Forest and Paper Association (AF&PA), was [removed: 1,105,000] [added: 1,104,000] tons.

In [removed: 2015,] [added: 2016,] the mill produced [removed: 1,087,000] [added: 1,103,000] tons of kraft linerboard on two paper machines.

Our DeRidder, Louisiana mill produces kraft linerboard on its No. 1 machine and linerboard and [added: semi-chemical corrugating] medium on its No. 3 machine.

The year-end [removed: 2015] [added: 2016] annual estimated capacity reported to the AF&PA, on the two machines, was [removed: 995,000] [added: 994,000] tons.

The No. 1 machine produced [removed: 578,000] [added: 645,000] tons of kraft linerboard during [removed: 2015.][added: 2016.]

The No. 3 machine produced [removed: 129,000] [added: 180,000] tons of [removed: medium] [added: linerboard] and [removed: 167,000] [added: 168,000] tons of [removed: linerboard.][added: medium.]

Its year-end [removed: 2015] [added: 2016] annual estimated production capacity, as reported to the AF&PA, was [removed: 605,000] [added: 604,000] tons.

In [removed: 2015,] [added: 2016,] our single paper machine at Valdosta produced [removed: 603,000] [added: 599,000] tons of kraft linerboard.

Its year-end [removed: 2015] [added: 2016] annual estimated production capacity, as reported to the AF&PA, was [removed: 555,000] [added: 556,000] tons.

In [removed: 2015,] [added: 2016,] the mill produced [removed: 534,000] [added: 500,000] tons [removed: of semi-chemical corrugating medium] on two paper machines.

Its year-end [removed: 2015] [added: 2016] annual estimated production capacity, as reported to the AF&PA, was 445,000 tons.

In [removed: 2015,] [added: 2016,] the mill produced [removed: 428,000] [added: 408,000] tons on three paper machines.

Our Wallula, Washington mill primarily produces white paper, but also produces [added: semi-chemical] corrugating medium on one of its paper machines.

Its year-end [removed: 2015] [added: 2016] annual estimated production capacity of medium, as reported to the AF&PA, was [removed: 145,000] [added: 147,000] tons.

In [removed: 2015,] [added: 2016,] the mill produced [removed: 130,000] [added: 133,000] tons of [added: semi-chemical] corrugating medium.

We operate [removed: 93] [added: 94] corrugated manufacturing operations, a technical and development center, eight regional design centers, a rotogravure printing operation, and a complement of packaging supplies and distribution centers.

Of the [removed: 93] [added: 94] manufacturing facilities, 59 operate as combining operations, commonly called corrugated plants, which manufacture corrugated sheets and finished corrugated packaging products, [removed: 33] [added: 34] are sheet [removed: plants] [added: plants,] which procure combined sheets and manufacture finished corrugated packaging products, and one is a corrugated sheet-only manufacturer.

We currently lease the cutting rights to approximately [removed: 83,000] [added: 75,000] acres of timberland located near our Counce, Tennessee and Valdosta, Georgia mills.

During 2016, we made two acquisitions in our corrugated products business: Tim-Bar Corporation ("TimBar") and Columbus Container, Inc. ("Columbus Container").

On August 29, 2016, we acquired substantially all of the assets of TimBar, a large independent corrugated products producer with six corrugated products production facilities for a purchase price of $386 million.

To finance the acquisition, we borrowed $385 million under a new five-year term loan facility.

TimBar provides solutions to customers in the higher-margin retail, industrial packaging and display and fulfillment markets with a focus on multi-color graphics and technical innovation.

On November 30, 2016, we acquired substantially all of the assets of Columbus Container for a purchase price of $100 million.

Columbus Container is a full-service provider of corrugated packaging products, with a full-line corrugated products plant, warehousing facilities, and other related operations located in Indiana and Illinois.

We used available cash on hand to purchase Columbus Container.

The operating results of TimBar and Columbus Container are included in our results and reported in the Packaging segment from and after the respective dates of acquisition.

These acquisitions will accelerate the growth strategy and increase the containerboard integration level in our Packaging segment.

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

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

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

| Containerboard Production (a) | PCA | 2016 | 898 | | 926 | | 950 | | 962 | | 3,736 |

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

| Corrugated Shipments (BSF) | PCA | 2016 | 12.3 | | 12.7 | | 13.1 | | 13.2 | | 51.3 |

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

| (thousand tons) | | 2015 | — | | — | | — | | — | | — |

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

| White Paper (UFS) Production | PCA | 2016 | 283 | | 268 | | 288 | | 288 | | 1,127 |

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

| (thousand tons) | | 2015 | 27 | | 23 | | 25 | | 23 | | 98 |

| (b) | On December 1, 2016, PCA ceased production of softwood market pulp at our Wallula, Washington mill and permanently shut down the No.1 machine. |

Our containerboard mills produce linerboard and semi-chemical corrugating medium, which are papers primarily used in the production of corrugated products.

In 2016, our usage of recycled fiber, net of internal generation, represents 17% of our containerboard production.

We consume various chemicals in the production of containerboard, including caustic soda and sulfuric acid.

Effective December 1, 2016, we ceased softwood market pulp production at our Wallula, Washington mill and permanently shut down the No.1 machine, with pulp capacity of approximately 100,000 tons.

We ceased market pulp production in December 2016.

Chemical supply.

Most of our chemicals are purchased under contracts, which are bid or negotiated periodically.

The agreement will renew automatically through December 2018; however, there are circumstances that could cause the agreement to terminate in 2017.

We also face competition from overseas producers.

Increasing shifts to these alternatives

Approximately 70% of our hourly employees worked pursuant to collective bargaining agreements.

Prior to that, he worked at International Paper Company, from 1983 to 2006, where he was Director of Finance of the Coated and

Our operations are primarily in the United States and we have some converting and distribution operations in Canada.

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

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

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

Boise's historical data for the period prior to the acquisition on October 25, 2013, are included for comparative purposes only, and are not included in PCA's historical results.

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

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

| | | 2013 | 646 | | | 629 | | | 671 | | | 803 | | | 2,749 | |

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

| | | 2013 | 8.8 | | | 9.4 | | | 9.3 | | | 10.9 | | | 38.4 | |

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

| | | 2013 | — | | | — | | | — | | | 44 | | | 44 | |

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

| | | 2013 | — | | | — | | | — | | | 208 | | | 208 | |

| | Boise | 2013 | 303 | | | 301 | | | 323 | | | 76 | | | 1,003 | |

| | | 2013 | — | | | — | | | — | | | 20 | | | 20 | |

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

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

Below is a map of our locations:

In 2015, we were a net recycled fiber buyer of less than 17% of our packaging mills' fiber requirements.

Rail shipments typically represent approximately 65% of the tons shipped and the remaining 35% is shipped by truck.

locations.

Our Paper segment operating under the trade name Boise Paper, was acquired with the acquisition of Boise Inc. on October 25, 2013.

The Paper segment also produces market pulp on one paper machine at our Wallula, Washington mill, which is sold to outside customers to produce paper products.

On a converted basis, from rollstock to cut-size white papers, the mill produced 412,000 tons in 2015.

On a converted basis, from rollstock to cut-size white papers, the mill produced 348,000 tons in 2015.

During the third quarter of 2015, we installed and started up a 53 megawatt turbine generator to replace four older units at our International Falls, Minnesota mill.

With the new turbine generator, the mill is now capable of producing 70% of its electrical power requirements compared to 38% previously.

Office Depot became our largest customer when it acquired OfficeMax Incorporated late in 2013.

We previously had a long standing contractual relationship with OfficeMax Incorporated.

In January 2015, we, along with the United Steel Workers (USW) and other domestic office 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 in violation of international trade rules.

The domestic producers also alleged that Chinese and Indonesian producers are receiving illegal government subsidies.

The agencies conducted their investigations in 2015 and early 2016.

In January 2016, the U.S. Department of Commerce made determinations of antidumping and countervailing duties at rates varying by country and producer and, in February 2016, the International Trade Commission determined that the domestic industry has been materially injured by these imports.

Accordingly, the antidumping and countervailing duties will be imposed on imports from these countries.

For segment financial information see Note 18, Segment Information, of the Notes to Consolidated Financial Statements in "Part II, Item 8.

Approximately 70% of our hourly employees are represented by unions.

Information concerning legal proceedings can be found in Note [removed: 19,] [added: 18,] Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in "Part II, Item 8.

| | |

| --- | --- |

| For the fiscal year ended December 31, [removed: 2015] [added: 2016] |

[removed: ][added: ]

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. [removed: x]

At June 30, [removed: 2015,] [added: 2016,] 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: $6,119,141,093] [added: $6,233,906,649] based upon the closing sale price as reported on the New York Stock Exchange.

On February [removed: 19, 2016,] [added: 24, 2017,] there were [removed: 94,251,749] [added: 94,206,284] shares of Common Stock outstanding.

Specified portions of the Proxy Statement for the Registrant's [removed: 2016] [added: 2017] Annual Meeting of Stockholders are incorporated by reference to the extent indicated in Part III of this Form 10-K.

| Item 1. | [removed: [Business](#s50BC6B7BC7215F74AE3954EF00A7D0B7)] [added: [Business](#s5A9913BB6F9F50CD8015574626046D98)] | [removed: [1](#s50BC6B7BC7215F74AE3954EF00A7D0B7)] [added: [1](#s5A9913BB6F9F50CD8015574626046D98)] |

| | [Corporate and [removed: Other](#s8307F149A2FB59D1B4884A14C50A1E66)] [added: Other](#sF013317897B655039ED3385B5B0CB0A9)] | [removed: [7](#s8307F149A2FB59D1B4884A14C50A1E66)] [added: [7](#sF013317897B655039ED3385B5B0CB0A9)] |

| | [Environmental [removed: Matters](#s92EB8EE7530055399470C084305AF798)] [added: Matters](#s28E65A2910735907AE10E61F603A2023)] | [removed: [7](#s92EB8EE7530055399470C084305AF798)] [added: [7](#s28E65A2910735907AE10E61F603A2023)] |

| | [Executive Officers of the [removed: Registrant](#sBD2C9A92D4F0544287701E5B6D24B11B)] [added: Registrant](#s6767F7F391CF54B7BBBF4A44739125FD)] | [removed: [7](#sBD2C9A92D4F0544287701E5B6D24B11B)] [added: [7](#s6767F7F391CF54B7BBBF4A44739125FD)] |

| Item 1A. | [Risk [removed: Factors](#s9069D68A044457EEBB6E737EDFBAAFCE)] [added: Factors](#s0E37576E4FB95FC78327A50DB53E3FEF)] | [removed: [8](#s9069D68A044457EEBB6E737EDFBAAFCE)] [added: [8](#s0E37576E4FB95FC78327A50DB53E3FEF)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s56268D8787AD5E7F95D194CF37F02B64)] [added: Comments](#s0BF12F9B3A335432AA40D8832275C8EB)] | [removed: [12](#s56268D8787AD5E7F95D194CF37F02B64)] [added: [13](#s0BF12F9B3A335432AA40D8832275C8EB)] |

| Item 2. | [removed: [Properties](#sF25907D1C41457229D7574C6767E25EE)] [added: [Properties](#s543F46C3E5F65D27AB8581058B7175BB)] | [removed: [12](#sF25907D1C41457229D7574C6767E25EE)] [added: [13](#s543F46C3E5F65D27AB8581058B7175BB)] |

| Item 3. | [Legal [removed: Proceedings](#s0181C6A325AC5ED3A00C3414C9841509)] [added: Proceedings](#s08197B09BC0A5A39AC5F82EFA91A9261)] | [removed: [12](#s0181C6A325AC5ED3A00C3414C9841509)] [added: [13](#s08197B09BC0A5A39AC5F82EFA91A9261)] |

| Item 4. | [Mine Safety [removed: Disclosure](#sE120EE4E3BBE543C8E1A8945407D1B7A)] [added: Disclosure](#sDF965D0B7BA15084A0044BC37A9E4B9E)] | [removed: [12](#sE120EE4E3BBE543C8E1A8945407D1B7A)] [added: [13](#sDF965D0B7BA15084A0044BC37A9E4B9E)] |

| Item 5. | [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity [removed: Securities](#sFBDBE09C3D1052818DB032B7AEA516F9)] [added: Securities](#sDE358ECF1E4A5AFA84B06604FFA51220)] | [removed: [13](#sFBDBE09C3D1052818DB032B7AEA516F9)] [added: [14](#sDE358ECF1E4A5AFA84B06604FFA51220)] |

| Item 6. | [Selected Financial [removed: Data](#s071A8A60F54B557DB357C88F734DCE67)] [added: Data](#s09AB9F28B16158FCB1D10A42F21D5300)] | [removed: [16](#s071A8A60F54B557DB357C88F734DCE67)] [added: [17](#s09AB9F28B16158FCB1D10A42F21D5300)] |

| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sE7C46D6D7B8C5DBB9304CB738FF710EB)] [added: Operations](#s622A8E7C25B35A57AC6192655231C896)] | [removed: [17](#sE7C46D6D7B8C5DBB9304CB738FF710EB)] [added: [18](#s622A8E7C25B35A57AC6192655231C896)] |

| | [Executive [removed: Summary](#s017150A3680D52D5A21E5537B11B73A4)] [added: Summary](#s2C8BFE79A85A54F696912E6072E42BA1)] | [removed: [17](#s017150A3680D52D5A21E5537B11B73A4)] [added: [18](#s2C8BFE79A85A54F696912E6072E42BA1)] |

| | [Industry and Business [removed: Conditions](#sB5FC885A11435C56B58137013BE3B4DD)] [added: Conditions](#s8712DC7B2ED255E6927D6B8A228567DB)] | [removed: [18](#sB5FC885A11435C56B58137013BE3B4DD)] [added: [19](#s8712DC7B2ED255E6927D6B8A228567DB)] |

| | [Results of [removed: Operations](#s63A68E7D4D83578CB2D5528E685E4443)] [added: Operations](#sCAC66319788F5F0D895F7DD6E1632173)] | [removed: [19](#s63A68E7D4D83578CB2D5528E685E4443)] [added: [20](#sCAC66319788F5F0D895F7DD6E1632173)] |

| | [Liquidity and Capital [removed: Resources](#s47B2BC2124CF5347BDEB65714E5267BD)] [added: Resources](#s9D9E14D0E71857808E0502F79582D704)] | [removed: [23](#s47B2BC2124CF5347BDEB65714E5267BD)] [added: [24](#s9D9E14D0E71857808E0502F79582D704)] |

| | [Off-Balance-Sheet [removed: Arrangements](#sF171776241435BD3A6D1A5DBE13F51F0)] [added: Arrangements](#s458825B6C350512F94A34DCD3B5B990F)] | [removed: [28](#sF171776241435BD3A6D1A5DBE13F51F0)] [added: [28](#s458825B6C350512F94A34DCD3B5B990F)] |

| | [Inflation and Other General Cost [removed: Increases](#s44208B4D0BE65CC58570E1EB22F0371C)] [added: Increases](#s48267ECCE7075B548DAB6CCB69D59DCF)] | [removed: [28](#s44208B4D0BE65CC58570E1EB22F0371C)] [added: [28](#s48267ECCE7075B548DAB6CCB69D59DCF)] |

| | [Environmental [removed: Matters](#s2BD58116E0D35EFDB73C6C7A41C1C9CD)] [added: Matters](#s6B64CD6E8B565E0790B19173C7F67730)] | [removed: [29](#s2BD58116E0D35EFDB73C6C7A41C1C9CD)] [added: [29](#s6B64CD6E8B565E0790B19173C7F67730)] |

| | [Critical Accounting Policies and [removed: Estimates](#sC166D98050545D4BB6C2ED9948A3F5EA)] [added: Estimates](#s8A7CC9A14976574CA0A50D665E4B85CE)] | [removed: [30](#sC166D98050545D4BB6C2ED9948A3F5EA)] [added: [30](#s8A7CC9A14976574CA0A50D665E4B85CE)] |

| | [New and Recently Adopted Accounting [removed: Standards](#sF0648487A1C9583981714F9AB78AB81B)] [added: Standards](#s0334D672F5D956CEADAAEB4DFBEC032E)] | [removed: [33](#sF0648487A1C9583981714F9AB78AB81B)] [added: [33](#s0334D672F5D956CEADAAEB4DFBEC032E)] |

| | [Reconciliations of Non-GAAP Financial Measures to Reported [removed: Amounts](#sDA5F3755107450C185355E62F5786DD7)] [added: Amounts](#sD5BFFA0A01395413BDD63578BEE76138)] | [removed: [34](#sDA5F3755107450C185355E62F5786DD7)] [added: [34](#sD5BFFA0A01395413BDD63578BEE76138)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s4F2C49C2A01F5A0D81EF30060ED57F15)] [added: Risk](#sABA0A148868253078C93611AD87837EB)] | [removed: [36](#s4F2C49C2A01F5A0D81EF30060ED57F15)] [added: [36](#sABA0A148868253078C93611AD87837EB)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#s97E3F494085D5CFE8B6293E0C4EEA1A1)] [added: Data](#sD389C2301E6154B5BAC8C652F9C77B94)] | [removed: [37](#s97E3F494085D5CFE8B6293E0C4EEA1A1)] [added: [37](#sD389C2301E6154B5BAC8C652F9C77B94)] |

| Item 9. | [Changes In and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#s6608A51E69E55425B9DF0E2607A3A249)] [added: Disclosure](#sC4BE71233A5256E6A508978D487DB18B)] | [removed: [79](#s6608A51E69E55425B9DF0E2607A3A249)] [added: [79](#sC4BE71233A5256E6A508978D487DB18B)] |

| Item 9A. | [Controls and [removed: Procedures](#s9725BC88BD1C5133B193656B4B01B528)] [added: Procedures](#sF6E31C41E4D05444A58B3B9B27CA48C1)] | [removed: [79](#s9725BC88BD1C5133B193656B4B01B528)] [added: [79](#sF6E31C41E4D05444A58B3B9B27CA48C1)] |

| Item 9B. | [Other [removed: Information](#sC481DE4DC5AB5A698183DD9074F5B869)] [added: Information](#s051B38E412325224B7042691F9078B8C)] | [removed: [80](#sC481DE4DC5AB5A698183DD9074F5B869)] [added: [81](#s051B38E412325224B7042691F9078B8C)] |

| Item 10. | [Directors, Executive Officers, and Corporate [removed: Governance](#s86B9008F53EF572B8973965D6C9A1696)] [added: Governance](#sD216E80C3674506A83D84E97599CD677)] | [removed: [81](#s86B9008F53EF572B8973965D6C9A1696)] [added: [82](#sD216E80C3674506A83D84E97599CD677)] |

| Item 11. | [Executive [removed: Compensation](#s95157783E33F5DB3B8DD34F8681793FD)] [added: Compensation](#sFBEC6F270089556EA98C259380C2711A)] | [removed: [81](#s95157783E33F5DB3B8DD34F8681793FD)] [added: [82](#sFBEC6F270089556EA98C259380C2711A)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s973B43F484E15A7286D9D917A10B5D6D)] [added: Matters](#s2E7E8B9A996057C2AA32A7A65A690180)] | [removed: [81](#s973B43F484E15A7286D9D917A10B5D6D)] [added: [82](#s2E7E8B9A996057C2AA32A7A65A690180)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s05CE5E522BF259F7B0BC57887969F503)] [added: Independence](#s162C560081535924B0E1B1362CAC2F53)] | [removed: [82](#s05CE5E522BF259F7B0BC57887969F503)] [added: [83](#s162C560081535924B0E1B1362CAC2F53)] |

| Item 14. | [Principal Accounting Fees and [removed: Services](#s56B82E1896985FDABE20F632994AE208)] [added: Services](#s7F9E4AD9C6A95CDEB15C0A24569755BA)] | [removed: [82](#s56B82E1896985FDABE20F632994AE208)] [added: [83](#s7F9E4AD9C6A95CDEB15C0A24569755BA)] |

| Item 15. | [Exhibits, Financial Statement [removed: Schedules](#sD86D745F37BA5E4E9F91CC90CFC16D17)] [added: Schedules](#s4610251FE9B350D799EC18C8D62338F9)] | [removed: [83](#sD86D745F37BA5E4E9F91CC90CFC16D17)] [added: [84](#s4610251FE9B350D799EC18C8D62338F9)] |

10-K 1 pkg1231201610k.htm 10-K

| | [Packaging](#s0AB0A1873855516E9C3CA7DC94ECD3C4) | [2](#s0AB0A1873855516E9C3CA7DC94ECD3C4) |

| | [Paper](#sFCBADE64A1885E15B568F0D82BBD9063) | [5](#sFCBADE64A1885E15B568F0D82BBD9063) |

| | [Employees](#sEE5B66B89F3B58428A97EAFADADBD135) | [7](#sEE5B66B89F3B58428A97EAFADADBD135) |

| | [Overview](#s95853495743D5A158302AB84CF5DF229) | [18](#s95853495743D5A158302AB84CF5DF229) |

| | [Outlook](#sDB5271DDAE035B71875DE609F03A4B1D) | [20](#sDB5271DDAE035B71875DE609F03A4B1D) |

| | [Commitments](#s58EC1239C7285A43A58FE7DE539A2993) | [27](#s58EC1239C7285A43A58FE7DE539A2993) |

| | [Signatures](#s3C591AF3E2195AEB8EAAA3E8B8E215E1) | [87](#s3C591AF3E2195AEB8EAAA3E8B8E215E1) |

10-K 1 pkg1231201510k.htm FORM 10-K

| | [Packaging](#s112FBDAF4C8558B880609353AB6C7954) | [2](#s112FBDAF4C8558B880609353AB6C7954) |

| | [Paper](#s8B593E42BC505D17865F772AB8707AA4) | [5](#s8B593E42BC505D17865F772AB8707AA4) |

| | [Employees](#s368BB15D49135E99BD2E67ABB8257BBD) | [7](#s368BB15D49135E99BD2E67ABB8257BBD) |

| | [Overview](#sD0227548DB545CB6BFA205F254F4300C) | [17](#sD0227548DB545CB6BFA205F254F4300C) |

| | [Outlook](#s346BB64B40A85E78A798FA0B59320D41) | [19](#s346BB64B40A85E78A798FA0B59320D41) |

| | [Commitments](#s696C9559675B5D45913C052C64BB44BA) | [27](#s696C9559675B5D45913C052C64BB44BA) |

| | [Signatures](#s6DC311A291E65B19A0E1E55E19D203AE) | [87](#s6DC311A291E65B19A0E1E55E19D203AE) |

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

Additionally, we have [removed: 93] [added: 94] corrugated manufacturing operations, of which the buildings and land for [removed: 50] [added: 52] are owned, including [removed: 42] [added: 44] combining operations, or corrugated plants, one corrugated sheet-only manufacturer, and seven sheet plants.

[removed: For 17] [added: We lease the building for 15] corrugated plants and [removed: 26] [added: 27] sheet [removed: plants the buildings and land are leased.][added: plants.]

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

We lease the cutting rights to approximately [removed: 83,000] [added: 75,000] acres of timberland located near our Valdosta mill [removed: (76,000] [added: (68,000] acres) and our Counce mill (7,000 acres).

On average, these cutting rights agreements have terms with approximately [removed: 13] [added: 14] years remaining.

The headquarter facilities are leased for the next [removed: six] [added: five] years with provisions for two additional five year lease extensions.

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

| March 31 | $ | [removed: 84.88] [added: 62.67] | | | $ | [removed: 73.03] [added: 44.32] | | | $ | 0.55 | | | $ | [removed: 75.10] [added: 84.88] | | | $ | [removed: 61.35] [added: 73.03] | | | $ | [removed: 0.40] [added: 0.55] | |

| June 30 | [removed: 78.98] [added: 71.31] | | | | [removed: 62.48] [added: 58.44] | | | | 0.55 | | | | [removed: 72.74] [added: 78.98] | | | | [removed: 65.00] [added: 62.48] | | | | [removed: 0.40] [added: 0.55] | | |

| September 30 | [removed: 73.60] [added: 82.77] | | | | [removed: 58.29] [added: 65.12] | | | | [removed: 0.55] [added: 0.63] | | | | [removed: 72.82] [added: 73.60] | | | | [removed: 63.11] [added: 58.29] | | | | [removed: 0.40] [added: 0.55] | | |

| December 31 | [removed: 70.04] [added: 88.41] | | | | [removed: 59.54] [added: 78.03] | | | | [removed: 0.55] [added: 0.63] | | | | [removed: 80.14] [added: 70.04] | | | | [removed: 57.06] [added: 59.54] | | | | [removed: 0.40] [added: 0.55] | | |

On February [removed: 19, 2016,] [added: 24, 2017,] there were 70 holders of record of our common stock.

On [removed: February 26, 2015,] [added: August 31, 2016,] PCA announced an increase of its quarterly cash dividend on its common stock from an annual payout of [removed: $1.60] [added: $2.20] per share to an annual payout of [removed: $2.20] [added: $2.52] per share.

The first quarterly dividend of [removed: $0.55] [added: $0.63] per share was paid on [removed: April 15, 2015] [added: October 14, 2016] to shareholders of record as of [removed: March 13, 2015.][added: September 15, 2016.]

On [removed: July 21, 2015,] [added: February 25, 2016,] PCA announced that its Board of Directors authorized the repurchase of [removed: an additional $150] [added: $200] million of the [removed: company’s] [added: Company's] outstanding common stock.

[removed: Together with remaining authority under previously announced programs, at] [added: At] the time of the announcement, [removed: the company] [added: there] was [removed: authorized to repurchase approximately $205 million of additional shares.][added: no remaining authority under previously announced programs.]

As of December 31, [removed: 2015, $93.4] [added: 2016, $193.0] million of the authorized amount remained available for repurchase of the Company’s common stock.

Total shares withheld in [removed: 2013] [added: 2016] were [removed: 223,995] [added: 172,438] for [removed: $11.0] [added: $11.2] million.

The following table presents information related to our repurchases of common stock made under repurchase plans authorized by PCA's Board of Directors, and shares withheld to cover taxes on vesting of equity awards, during the three months ended December 31, [removed: 2015:][added: 2016:]

| (a) | [removed: 20,060] [added: 11,429] shares were withheld from employees to cover income and payroll taxes on equity awards that vested during the period. |

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: 2010,] [added: 2011,] through December 31, [removed: 2015.][added: 2016.]

[removed: ][added: ]

| | [removed: 2010 | | | |] 2011 | | | | 2012 | | | | 2013 | | | | 2014 | | | | 2015 | | | [added: | 2016 | | |]

| | 2016 | | | | | | | | | | | | 2015 | | | | | | | | | | |

In 2016, we paid $100.3 million to repurchase 1,987,187 shares of common stock which fully depleted the remaining $93.3 million authorized for repurchase under the July 2015 authorization.

| October 1-31, 2016 | | — | | | $ | — | | | — | | | $ | 193.0 | |

| November 1-30, 2016 | | — | | | — | | | | — | | | 193.0 | | |

| December 1-31, 2016 | | 11,429 | | | 86.28 | | | | — | | | 193.0 | | |

| Total | | 11,429 | | (a) | $ | 86.28 | | | — | | | $ | 193.0 | |

| Packaging Corporation of America | $ | 100.00 | | | $ | 157.35 | | | $ | 266.53 | | | $ | 336.07 | | | $ | 280.32 | | | $ | 389.91 | |

| S&P 500 | 100.00 | | | | 116.00 | | | | 153.58 | | | | 174.60 | | | | 177.01 | | | | 198.18 | | |

| S&P Midcap 400 | 100.00 | | | | 117.88 | | | | 157.37 | | | | 172.74 | | | | 168.98 | | | | 204.03 | | |

| Peer Group | 100.00 | | | | 139.99 | | | | 186.93 | | | | 211.57 | | | | 155.34 | | | | 219.34 | | |

| | 2015 | | | | | | | | | | | | 2014 | | | | | | | | | | |

The timing and amount of repurchases will be determined by the company in its discretion based on factors such as PCA’s stock price and market and business conditions.

In 2013, the Company repurchased 171,263 shares of common stock for $7.8 million.

| October 1-31, 2015 | | 56,684 | | | $ | 59.50 | | | 56,000 | | | $ | 146.7 | |

| November 1-30, 2015 | | 4,854 | | | 69.15 | | | | — | | | 146.7 | | |

| December 1-31, 2015 | | 872,621 | | | 62.14 | | | | 858,099 | | | 93.4 | | |

| Total | | 934,159 | | (a) | $ | 62.01 | | | 914,099 | | | $ | 93.4 | |

Subsequent to year-end, we repurchased 1,868,487 shares of common stock for $93.4 million, fully depleting the July 2015 authorization of $150 million.

On February 25, 2016, PCA announced that its Board of Directors authorized the repurchase of an additional $200 million of the Company's outstanding common stock.

Repurchases may be made from time to time in the open market or privately negotiated transactions in accordance with applicable securities regulations.

| Packaging Corporation of America | $ | 100.00 | | | $ | 100.67 | | | $ | 158.40 | | | $ | 268.32 | | | $ | 338.33 | | | $ | 282.21 | |

| S&P 500 | 100.00 | | | | 102.11 | | | | 118.45 | | | | 156.82 | | | | 178.29 | | | | 180.75 | | |

| S&P Midcap 400 | 100.00 | | | | 98.27 | | | | 115.84 | | | | 154.64 | | | | 169.75 | | | | 166.05 | | |

| Peer Group | 100.00 | | | | 111.91 | | | | 156.67 | | | | 209.20 | | | | 236.78 | | | | 173.84 | | |

| | [removed: 2015] [added: 2016] (a) | | | | [removed: 2014] [added: 2015] (a) | | | | [removed: 2013] [added: 2014] (a) | | | | [removed: 2012] [added: 2013 (a)] | | | | [removed: 2011] [added: 2012] | | |

| Net Sales | $ | [removed: 5,741.7] [added: 5,779.0] | | | $ | [removed: 5,852.6] [added: 5,741.7] | | | $ | [removed: 3,665.3] [added: 5,852.6] | | | $ | [removed: 2,843.9] [added: 3,665.3] | | | $ | [removed: 2,620.1] [added: 2,843.9] | |

| Net Income | [removed: 436.8] [added: 449.6] | | | | [removed: 392.6] [added: 436.8] | | | | [removed: 441.3] [added: 392.6] | | | | [removed: 160.2] [added: 441.3] | | | | [removed: 158.8] [added: 160.2] | | |

| — basic | [removed: 4.47] [added: 4.76] | | | | [removed: 3.99] [added: 4.47] | | | | [removed: 4.57] [added: 3.99] | | | | [removed: 1.66] [added: 4.57] | | | | [removed: 1.60] [added: 1.66] | | |

| — diluted | [removed: 4.47] [added: 4.75] | | | | [removed: 3.99] [added: 4.47] | | | | [removed: 4.52] [added: 3.99] | | | | [removed: 1.64] [added: 4.52] | | | | [removed: 1.58] [added: 1.64] | | |

| — basic | [removed: 96.6] [added: 93.5] | | | | [removed: 97.0] [added: 96.6] | | | | [removed: 96.6] [added: 97.0] | | | | [removed: 96.4] [added: 96.6] | | | | [removed: 99.3] [added: 96.4] | | |

| — diluted | [removed: 96.7] [added: 93.7] | | | | [removed: 97.1] [added: 96.7] | | | | [removed: 97.5] [added: 97.1] | | | | 97.5 | | | | [removed: 100.4] [added: 97.5] | | |

| Cash dividends declared per common share | [removed: 2.20] [added: 2.36] | | | | [removed: 1.60] [added: 2.20] | | | | [removed: 1.51] [added: 1.60] | | | | [removed: 1.00] [added: 1.51] | | | | [removed: 0.80] [added: 1.00] | | |

| Stockholders' equity | [removed: 1,633.3] [added: 1,759.8] | | | | [removed: 1,521.4] [added: 1,633.3] | | | | [removed: 1,356.8] [added: 1,521.4] | | | | [removed: 1,008.2] [added: 1,356.8] | | | | [removed: 971.2] [added: 1,008.2] | | |

[removed: | (b) | Effective December 31, 2015, the Company adopted Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes.] The guidance eliminates the requirement to classify deferred taxes between current and noncurrent and requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. [removed: Our total assets for all periods presented have been updated to reflect this adoption. |]

| EBITDA(c) | $ | 1,138.3 | | | $ | 1,106.5 | | | $ | 1,083.7 | | | $ | 683.7 | | | $ | 608.3 | |

| Total assets | $ | 5,777.0 | | | $ | 5,272.3 | | | $ | 5,258.7 | | | $ | 5,182.1 | | | $ | 2,490.1 | |

| Total debt obligations | 2,667.4 | | | | 2,319.7 | | | | 2,365.2 | | | | 2,558.6 | | | | 814.7 | | |

| (b) | Effective January 1, 2016, the Company adopted Accounting Standards Update (ASU) 2015-03 (Topic 835): Simplifying the Presentation of Debt Issuance Costs. We applied this guidance retrospectively, as required, and reclassified the debt issuance costs from "Other long-term assets" to "Long-term debt" on our Consolidated Balance Sheet to conform with current period presentation. Total assets for all periods presented have been updated to reflect this adoption. |

Effective December 31, 2015, the Company adopted Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes.

Our total assets for all periods presented have been updated to reflect this adoption.

| Earnings, before interest, taxes, depreciation, and amortization (EBITDA) (c) | $ | 1,106.5 | | | $ | 1,083.7 | | | $ | 683.7 | | | $ | 608.3 | | | $ | 437.6 | |

| Total assets | $ | 5,284.6 | | | $ | 5,272.8 | | | $ | 5,196.2 | | | $ | 2,494.9 | | | $ | 2,442.9 | |

| Total debt obligations | 2,332.0 | | | | 2,379.3 | | | | 2,572.7 | | | | 819.5 | | | | 830.3 | | |

| [Reports of Independent Registered Public Accounting [removed: Firms](#sB1A6A637F94C5E848BD96B09C44E5868)] [added: Firms](#s5B9D741893B8597B8C527BCE5EFA2ED5)] | [removed: [38](#sB1A6A637F94C5E848BD96B09C44E5868)] [added: [38](#s5B9D741893B8597B8C527BCE5EFA2ED5)] |

| [Consolidated Statements of Income and Comprehensive Income for the years ended December 31, [removed: 201](#sD44D25DC11595D10871256112D59C670)5, 2014,] [added: 201](#s32178E57B34C5A4DB30C5767F18C9CF9)6, 2015,] and [removed: 2013] [added: 2014] | [removed: [41](#sD44D25DC11595D10871256112D59C670)] [added: [40](#s32178E57B34C5A4DB30C5767F18C9CF9)] |

| [Consolidated Balance Sheets as of December 31, [removed: 201](#sAF6BF4ABDC4750AFA1502896D2C3BB0C)5] [added: 201](#sDA4DEB9916A05CAD9D964C2411F8208D)6] and [removed: 2014] [added: 2015] | [removed: [42](#sAF6BF4ABDC4750AFA1502896D2C3BB0C)] [added: [41](#sDA4DEB9916A05CAD9D964C2411F8208D)] |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 201](#s1BFCEF3BDB1C527687B216F885991E8F)5, 2014,] [added: 201](#s0C99C8570EB15FA4BEE001CCC96DA63C)6, 2015,] and [removed: 2013] [added: 2014] | [removed: [43](#s1BFCEF3BDB1C527687B216F885991E8F)] [added: [42](#s0C99C8570EB15FA4BEE001CCC96DA63C)] |

| [Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, [removed: 201](#sC231AE3DAA565421A9EAFAAABB56EA87)5, 2014,] [added: 201](#s6466FC2A1C7C5B2594F2C787E79AF011)6, 2015,] and [removed: 2013] [added: 2014] | [removed: [44](#sC231AE3DAA565421A9EAFAAABB56EA87)] [added: [43](#s6466FC2A1C7C5B2594F2C787E79AF011)] |

| [Notes to Consolidated Financial [removed: Statements](#s75E15705FDA953928924F5A6C4857D97)] [added: Statements](#sCADD0B2E1B8E5475A39007F4E5FA7D26)] | [removed: [45](#s75E15705FDA953928924F5A6C4857D97)] [added: [44](#sCADD0B2E1B8E5475A39007F4E5FA7D26)] |

We have audited the accompanying consolidated balance sheets of Packaging Corporation of America and subsidiaries as of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015] and the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the [removed: two‑year] [added: three-year] period ended December 31, [removed: 2015.][added: 2016.]

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

Our responsibility is to express an opinion on these consolidated financial statements [removed: and financial statement schedule] based on our audits.

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, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] and the results of their operations and their cash flows for each of the years in the [removed: two‑year] [added: three-year] period ended December 31, [removed: 2015,] [added: 2016,] 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 America’s internal control over financial reporting as of December 31, [removed: 2015,] [added: 2016,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February [removed: 26, 2016] [added: 28, 2017] expressed an unqualified opinion 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: 2015,] [added: 2016,] based on criteria established in Internal [removed: Control - Integrated] [added: Control-Integrated] Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, Packaging Corporation of America maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2015,] [added: 2016,] based on criteria established in Internal [removed: Control - Integrated] [added: Control-Integrated] Framework (2013) issued by [removed: the Committee of Sponsoring Organizations of the Treadway Commission (COSO).][added: COSO.]

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Packaging Corporation of America [removed: and subsidiaries] as of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] and the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the [removed: two-year] [added: three-year] period ended December 31, [removed: 2015,] [added: 2016,] and our report dated February [removed: 26, 2016] [added: 28, 2017] expressed an unqualified opinion on those consolidated financial statements.

| | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Net sales | $ | [removed: 5,741.7] [added: 5,779.0] | | | $ | [removed: 5,852.6] [added: 5,741.7] | | | $ | [removed: 3,665.3] [added: 5,852.6] | |

| Cost of sales | [removed: (4,533.7] [added: (4,503.3] | | ) | | [removed: (4,623.1] [added: (4,533.7] | | ) | | [removed: (2,797.8] [added: (4,623.1] | | ) |

| Gross profit | [removed: 1,208.0] [added: 1,275.7] | | | | [removed: 1,229.5] [added: 1,208.0] | | | | [removed: 867.5] [added: 1,229.5] | | |

| Selling, general, and administrative expenses | [removed: (451.3] [added: (471.1] | | ) | | [removed: (469.5] [added: (451.3] | | ) | | [removed: (326.6] [added: (469.5] | | ) |

| Other expense, net | [removed: (6.7] [added: (24.3] | | ) | | [removed: (57.3] [added: (6.7] | | ) | | [removed: (59.0] [added: (57.3] | | ) |

| Income from operations | [removed: 750.0] [added: 780.3] | | | | [removed: 702.7] [added: 750.0] | | | | [removed: 481.9] [added: 702.7] | | |

| Interest expense, net | [removed: (85.5] [added: (91.8] | | ) | | [removed: (88.4] [added: (85.5] | | ) | | [removed: (58.3] [added: (88.4] | | ) |

| Income before taxes | [removed: 664.5] [added: 688.5] | | | | [removed: 614.3] [added: 664.5] | | | | [removed: 423.6] [added: 614.3] | | |

| [removed: (Provision) benefit] [added: Provision] for income taxes | [removed: (227.7] [added: (238.9] | | ) | | [removed: (221.7] [added: (227.7] | | ) | | [removed: 17.7] [added: (221.7] | | [added: )] |

| Net income | $ | [removed: 436.8] [added: 449.6] | | | $ | [removed: 392.6] [added: 436.8] | | | $ | [removed: 441.3] [added: 392.6] | |

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

| Basic | $ | [removed: 4.47] [added: 4.76] | | | $ | [removed: 3.99] [added: 4.47] | | | $ | [removed: 4.57] [added: 3.99] | |

| Diluted | $ | [removed: 4.47] [added: 4.75] | | | $ | [removed: 3.99] [added: 4.47] | | | $ | [removed: 4.52] [added: 3.99] | |

| Dividends declared per common share | $ | [removed: 2.20] [added: 2.36] | | | $ | [removed: 1.60] [added: 2.20] | | | $ | [removed: 1.51] [added: 1.60] | |

| Foreign currency translation adjustment | [removed: 2.7] [added: —] | | | | [removed: (2.6] [added: 2.7] | | [removed: )] | | [removed: (0.1] [added: (2.6] | | ) |

| Reclassification adjustments to cash flow hedges included in net income, net of tax of $2.2 million, $2.2 million, and $2.2 million for [added: 2016,] 2015, [removed: 2014,] and [removed: 2013,] [added: 2014,] respectively | 3.5 | | | | 3.5 | | | | 3.5 | | |

| Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of [removed: $5.6] [added: $4.2] million, [removed: $2.8] [added: $5.6] million, and [removed: $8.5] [added: $2.8] million for [added: 2016,] 2015, [removed: 2014,] and [removed: 2013,] [added: 2014,] respectively | [removed: 8.8] [added: 6.7] | | | | [removed: 4.2] [added: 8.8] | | | | [removed: 13.4] [added: 4.2] | | |

| Changes in unfunded employee benefit obligations, net of tax of [removed: $8.9] [added: $15.7] million, [removed: $59.2] [added: ($8.9)] million, and [removed: $20.4] [added: $59.2] million for [added: 2016,] 2015, [removed: 2014,] and [removed: 2013,] [added: 2014,] respectively | [removed: 14.0] [added: (24.9] | | [added: )] | | [removed: (94.0] [added: 14.0] | | [removed: )] | | [removed: 32.2] [added: (94.0] | | [added: )] |

| Other comprehensive income (loss) | [removed: 29.0] [added: (14.7] | | [added: )] | | [removed: (88.9] [added: 29.0] | | [removed: )] | | [removed: 49.0] [added: (88.9] | | [added: )] |

| Comprehensive income | $ | [removed: 465.8] [added: 434.9] | | | $ | [removed: 303.7] [added: 465.8] | | | $ | [removed: 490.3] [added: 303.7] | |

| | [added: 2016 | | | |] 2015 | | | | 2014 | | |

| Cash and cash equivalents | $ | [removed: 184.2] [added: 239.3] | | | $ | [removed: 124.9] [added: 184.2] | |

| Accounts receivable, net of allowance for doubtful accounts and customer deductions of [removed: $10.3] [added: $10.1] million and [removed: $11.3] [added: $10.3] million as of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] respectively | [removed: 636.5] [added: 689.2] | | | | [removed: 646.1] [added: 636.5] | | |

| Inventories | [removed: 676.8] [added: 723.6] | | | | [removed: 664.9] [added: 676.8] | | |

| Prepaid expenses and other current assets | [removed: 28.8] [added: 30.3] | | | | [removed: 61.9] [added: 28.8] | | |

February 28, 2017

The Company acquired TimBar Corporation and Columbus Container, Inc. during 2016 and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016, TimBar Corporation and Columbus Container, Inc.’s internal control over financial reporting.

As of and for the year ended December 31, 2016, TimBar Corporation accounted for approximately 7% of the Company’s consolidated total assets and 2% of consolidated net sales, and Columbus Container, Inc. accounted for approximately 2% of the Company’s consolidated total assets and less than 1% of consolidated net sales.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of TimBar Corporation and Columbus Container, Inc.

Chicago, IL

February 28, 2017

| Net income | $ | 449.6 | | | $ | 436.8 | | | $ | 392.6 | |

| Total assets | $ | 5,777.0 | | | $ | 5,272.3 | |

| Net income | $ | 449.6 | | | $ | 436.8 | | | $ | 392.6 | |

| Depreciation, depletion, and amortization of intangibles | 358.0 | | | | 356.5 | | | | 381.6 | | |

| Amortization of deferred financing costs | 7.8 | | | | 7.8 | | | | 9.2 | | |

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

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

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

| Common stock repurchases and retirements | (1,987 | ) | | (0.1 | | ) | | (13.1 | | ) | | (87.1 | | ) | | — | | | | (100.3 | | ) |

| Other | — | | | — | | | | 0.3 | | | | — | | | | — | | | | 0.3 | | |

| Comprehensive income | — | | | — | | | | — | | | | 449.6 | | | | (14.7 | | ) | | 434.9 | | |

| Balance at December 31, 2016 | 94,213 | | | $ | 0.9 | | | $ | 451.4 | | | $ | 1,447.1 | | | $ | (139.6 | ) | | $ | 1,759.8 | |

On December 1, 2016, we ceased softwood market pulp operations at our Wallula, Washington mill and permanently shut down the No. 1 machine, with pulp capacity of 100,000 tons.

The Company records its derivatives, if any, in accordance with ASC 815, Derivatives and Hedging.

PCA measures the fair value of its financial instruments in accordance with ASC 820, Fair Value Measurements and Disclosures.

| | 2016 | | | | 2015 | | |

| | 2016 | | | | 2015 | | |

Assets under

In 2016, we recognized incremental depreciation expense of $2.9 million, primarily related to facilities closure costs and the Wallula mill restructuring.

In the event that facts and circumstances indicate that the carrying amount of any long-lived assets may be impaired, an evaluation of recoverability is performed.

We review and update these assumptions annually unless a plan

Effective January 1, 2016, the Company adopted Accounting Standards Update (ASU) 2015-03 (Topic 835): Simplifying the Presentation of Debt Issuance Costs.

At December 31, 2016 deferred financing costs were $12.4 million.

Business Combinations

The Company accounts for acquisitions under ASC 805, Business Combinations, which requires separate recognition of assets acquired and liabilities assumed from goodwill, at the acquisition date fair values.

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and liabilities assumed.

During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, which adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (disposals) of assets or businesses.

The guidance of ASU 2017-01 is effective for fiscal years beginning after December 15, 2017.

There are two permitted transition methods under the standard: full retrospective method, in which case the cumulative effect of applying the standard would be recognized in the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application.

We have been closely monitoring FASB activity related to the new standard.

The following updates have been made as a result of implementation issues related to the new standard:

| • | In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers - Principal versus Agent Consideration (Reporting revenue gross versus net), which clarifies gross versus net revenue reporting when another party is involved in the transactions. |

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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.

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.

Boise, Idaho

February 26, 2016

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

Packaging Corporation of America

Board of Directors and Stockholders

We have audited the accompanying consolidated statements of income and comprehensive income, changes in stockholders' equity, and cash flows of Packaging Corporation of America (the “Company”) for the year ended December 31, 2013.

Our audit also included the information relating to the year ended December 31, 2013 in the financial statement schedule listed in the index at Item 15(a).

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

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

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

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

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

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

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

/s/ Ernst & Young LLP

February 28, 2014

| Total assets | $ | 5,284.6 | | | $ | 5,272.8 | |

| Depreciation, depletion, and amortization of intangibles and deferred financing costs | 364.3 | | | | 390.8 | | | | 217.9 | | |

| Alternative energy tax credits | — | | | | — | | | | 76.3 | | |

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

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

| Balance at January 1, 2013 | 98,143 | | | $ | 1.0 | | | — | | | $ | — | | | $ | 378.8 | | | $ | 742.5 | | | $ | (114.0 | ) | | $ | 1,008.3 | |

| Common stock repurchases and retirements | (171 | ) | | — | | | | — | | | — | | | | (1.1 | | ) | | (6.7 | | ) | | — | | | | (7.8 | | ) |

| Comprehensive income | — | | | — | | | | — | | | — | | | | — | | | | 441.3 | | | | 49.0 | | | | 490.3 | | |

| Exercise of stock options | 151 | | | — | | | | — | | | — | | | | 6.3 | | | | — | | | | — | | | | 6.3 | | |

In these consolidated financial statements, certain amounts in prior periods' consolidated financial statements have been reclassified to conform with the current period presentation.

Effective December 31, 2015, the Company adopted Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes.

The guidance eliminates the requirement to classify deferred taxes between current and noncurrent and requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet.

Boise's results are included in our results subsequent to October 25, 2013, the date of acquisition.

Foreign Currency

Local currencies are the functional currencies for our operations outside the United States.

Assets and liabilities are remeasured into U.S. dollars using the exchange rates as of the Consolidated Balance Sheet date.

Revenue and expense items are remeasured into U.S. dollars using an average exchange rate prevailing during the period.

Any resulting translation adjustments are recorded in the Consolidated Statements of Comprehensive Income.

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: 2015.][added: 2016.]

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: 2015.][added: 2016.]

[removed: During] [added: Except as may relate to] the [removed: quarter ended December 31, 2015,] [added: TimBar and Columbus acquisitions,] there were no [added: other] changes in [added: our] internal [removed: controls] [added: control] over financial reporting [added: (as defined in Rule 13a-15(f) under the Exchange Act)] that [added: occurred during the most recent fiscal quarter ended December 31, 2016 that] have materially affected, or are reasonably likely to materially affect, [removed: PCA’s] [added: our] internal control over financial reporting.

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: 2015,] [added: 2016,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this [removed: assessment,] [added: assessment and excluding the operations acquired from TimBar and Columbus,] PCA’s management concluded that its internal control over financial reporting was effective as of December 31, [removed: 2015,] [added: 2016,] based on the specified criteria.

Changes in Internal Control over Financial Reporting

On August 29, 2016, PCA acquired TimBar Corporation ("TimBar").

Additionally, on November 30, 2016, PCA acquired Columbus Container, Inc. ("Columbus").

We are currently in the process of evaluating and integrating TimBar’s and Columbus' controls over financial reporting which may result in changes or additions to PCA’s internal control over financial reporting.

Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company.

We excluded TimBar and Columbus from the assessment of internal control over financial reporting at December 31, 2016.

As of and for the year ended December 31, 2016, TimBar accounted for approximately 7% of the Company's consolidated total assets and 2% of consolidated sales, and Columbus accounted for approximately 2% of the Company's consolidated total assets and less than 1% of consolidated net sales.

The following information required by this Item 10 will be included in PCA’s Proxy Statement for the [removed: 2016] [added: 2017] Annual Meeting of Stockholders and is incorporated by reference herein:

Authorization of Securities under Equity Compensation Plans — Securities authorized for issuance under our equity compensation plans at December 31, [removed: 2015] [added: 2016] are as follows:

| Equity compensation plans approved by securityholders | — | | | $ | — | | | [removed: 1,551,452] [added: 1,238,703] | |

| (a) | Does not include [removed: 1,183,469] [added: 1,018,311] shares of unvested restricted stock and performance units granted pursuant to our Amended and Restated 1999 Long-Term Equity Incentive Plan. |

| Total | — | | | $ | — | | | 1,238,703 | |

| Total | — | | | $ | — | | | 1,551,452 | |

All [removed: other] schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, are inapplicable or not material, or the information called for thereby is otherwise included in the financial statements or the accompanying notes to the financial statements and therefore, have been omitted.

[removed: (2)] [added: (3)] Exhibits

| 2.3 | | Agreement and Plan of Merger, dated September 16, 2013, between PCA, Bee Acquisition Corp. and [removed: Boise,] [added: Boise] Inc. (Incorporated herein by reference to Exhibit 2.1 to PCA’s Current Report on Form 8-K filed September 17, 2013, File No. 1-15399). PCA will furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request; provided, however, that PCA may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished. |

| 4.7 | | Officers’ [removed: Certificate] [added: Certificate, dated as of June 26, 2012, pursuant to Section 301 of the Indenture filed herewith as Exhibit 4.2] and 3.90% Senior Notes due 2022. (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report on Form 8-K filed June 26, 2012, File No. 1-15399.) |

| 4.10 | | Officers’ Certificate, dated September 5, 2014, pursuant to Section 301 of the [removed: Indenture, dated July 21, 2003, by and between Packaging Corporation of America and U.S. Bank National Association] [added: Indenture filed herewith as Exhibit 4.2] (Incorporated herein by reference to Exhibit 4.1 to PCA’s Current Report on Form 8-K filed September 5, 2014, File No. 1-15399). |

| 10.1 | | [added: Amended and Restated] Credit Agreement, dated as of [removed: October 18, 2013,] [added: August 29, 2016,] by and among PCA and the lenders and agents named therein. (Incorporated herein by reference to Exhibit 10.1 to PCA’s Current Report on Form 8-K filed [removed: October 22, 2013,] [added: September 1, 2016,] File No. [removed: 1-15399, which incorporates by reference Exhibit (b)(2) to Amendment No. 6 to PCA’s Schedule filed October 21, 2013).] [added: 1-15399.)] |

| [removed: 10.20] [added: 10.19] | | 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).* |

| [removed: 10.21] [added: 10.20] | | 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).* |

| [removed: 10.22] [added: 10.21] | | Form of Performance Unit Agreement for executive officer awards made in 2015. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2015, File No. 1-15399).* |

| [removed: 10.23] [added: 10.22] | | Form of Restricted Stock Agreement for executive officer awards made in 2015. (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).* |

| [removed: 10.24] [added: 10.23] | | Agreement, dated December 16, 2015, between Packaging Corporation of America and Paul T. Stecko, director and Senior Advisor (Incorporated by reference to Exhibit 10.2 to PCA’s Current Report on Form 8-K filed on December 17, 2015, File No. 1-15399). |

| 23.1 | | Consent of KPMG [removed: LLP (2015 & 2014).†] [added: LLP.†] |

| 101 | | The following financial information from Packaging Corporation of America’s Annual Report on Form 10-K for the year ended December 31, [removed: 2015,] [added: 2016,] formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Income for the years ended December 31, [added: 2016,] 2015, [removed: 2014,] and [removed: 2013,] [added: 2014,] (ii) Consolidated Balance Sheets at December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] (iii) Consolidated Statements of Cash Flows for the years ended December 31, [added: 2016,] 2015, [removed: 2014,] and [removed: 2013,] [added: 2014,] (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, [added: 2016,] 2015, [removed: 2014,] and [removed: 2013,] [added: 2014,] (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: 26, 2016.][added: 28, 2017.]

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February [removed: 26, 2016,] [added: 28, 2017,] by the following persons on behalf of the registrants and in the capacities indicated.

| 10.6 | | Packaging Corporation of America Deferred Compensation Plan, effective as of January 1, 2009, conformed to incorporate all amendments. † |

| 10.8 | | Amended and Restated 1999 Long-Term Equity Incentive Plan, effective as of May 1, 2013, conformed to incorporate all amendments. † |

| 10.24 | | Form of Performance Unit Agreement for executive officer awards made in 2016. (Incorporated by reference to Exhibit 10.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2016, File No. 1-15399).* |

| 10.25 | | Form of Restricted Stock Agreement for executive officer awards made in 2016. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2016, File No. 1-15399).* |

The following consolidated financial statement schedule of PCA for the years ended December 31, 2015, 2014, and 2013 is included in this report.

Schedule II - Packaging Corporation of America - Valuation and Qualifying Accounts (dollars in millions).

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

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

| Description | Balance Beginning of Year | | | | Acquired Reserves | | | | Charged to Expenses | | | | Deductions | | | | Balance End of Year | | |

| Year ended December 31, 2015: | | | | | | | | | | | | | | | | | | | |

| Deducted from assets accounts: | | | | | | | | | | | | | | | | | | | |

| Allowance for doubtful accounts | $ | 4.9 | | | $ | — | | | $ | 0.9 | | | $ | (1.9 | ) | (a) | $ | 3.9 | |

| Reserve for customer deductions | 6.4 | | | | — | | | | 46.2 | | | | (46.2 | | ) | (b) | 6.4 | | |

| Deferred tax asset valuation allowance | 1.7 | | | | — | | | | 4.5 | | | | (1.1 | | ) | | 5.1 | | |

| Total | $ | 13.0 | | | $ | — | | | $ | 51.6 | | | $ | (49.2 | ) | | $ | 15.4 | |

| Year ended December 31, 2014: | | | | | | | | | | | | | | | | | | | |

| 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 | |

| Year ended December 31, 2013: | | | | | | | | | | | | | | | | | | | |

| 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 | | |

| Deferred tax asset valuation allowance | — | | | | 2.7 | | | | — | | | | — | | | | 2.7 | | |

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

________

| | |

| --- | --- |

| (a) | Consists primarily of uncollectable accounts written off, net of recoveries, during the year. |

| (b) | Consists primarily of discounts taken by customers during the year. |

| 10.6 | | Packaging Corporation of America Deferred Compensation Plan, effective as of January 1, 2009. (Incorporated herein by reference to Exhibit 10.15 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2008, File No. 1-15399.)* |

| 10.8 | | Amended and Restated 1999 Long-Term Equity Incentive Plan, effective as of May 1, 2013. (Incorporated herein by reference to Appendix A to PCA’s Definitive Proxy Statement on Schedule 14A, filed with the SEC on March 22, 2013, File No 1-15399.)* |

| 10.19 | | 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).* |

| 10.25 | | Agreement, dated January 19, 2016, between Packaging Corporation of America and Richard B. West (Incorporated by reference to Exhibit 10.2 to PCA’s Current Report on Form 8-K filed on January 22, 2016, File No. 1-15399)* |

| 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). |

| 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). |

| 23.2 | | Consent of KPMG LLP (2013).† |

| 23.3 | | Consent of Ernst & Young LLP.† |

| 99.1 | | Independent Auditors’ Report (KPMG).† |