Packaging Corp of America (PKG) 10-K risk factor changes: FY2018 vs FY2017

[removed: Prices for all of our products are driven by many factors, including general economic conditions, demand for our products, and competitive conditions in our industry, and we] [added: We] have little influence over the timing and extent of price [removed: changes,] [added: changes of our products,] which may be unpredictable and volatile.

General Economic Conditions - If [removed: business] [added: business, political,] and economic conditions [removed: deteriorate,] [added: change in an adverse manner,] our business, results of operations, liquidity, and financial position may be harmed.

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

If economic conditions deteriorate and result in higher unemployment rates, lower [removed: family] [added: disposable] income, unfavorable currency exchange rates, lower corporate earnings, lower business investment, and lower consumer spending, we may experience lower demand for our [removed: products and] [added: products, which is largely driven by demand for] products of our customers which utilize our products.

[removed: Changes] [added: Further 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.

These conditions are beyond our control and may have a [removed: significant] [added: material] impact on our business, results of operations, liquidity, and financial position.

[removed: Our white] [added: White] paper products compete with electronic data transmission and document storage alternatives.

As a result of such competition, [removed: we are] [added: the industry is] experiencing decreasing demand for [removed: most of our] existing white paper products.

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

In [removed: 2017,] [added: 2018,] our total company costs including cost of sales (COS) and selling, general, and administrative expenses (SG&A) was [removed: $5.5] [added: $5.9] billion, and excluding non-cash costs (depreciation, depletion and amortization, pension and postretirement expense, and share-based compensation expense) was [removed: $5.1] [added: $5.4] billion.

A 1% increase in COS and SG&A costs would increase costs by [removed: $55] [added: $59] million and cash costs by [removed: $51] [added: $54] million.

We purchase recycled fiber for use at [removed: four] [added: five] of our [removed: five] [added: six] containerboard mills [removed: as well as the containerboard machine at our Wallula, Washington mill.][added: and both paper mills.]

In [removed: 2017,] [added: 2018,] we purchased approximately [removed: 670,000] [added: 810,000] tons of recycled fiber, net of the recycled fiber generated by our corrugated box plants.

Periods of higher recycled fiber costs and unusual price volatility have occurred in the past, including during [removed: 2017] [added: 2018] as demand for domestic recycled fiber from [removed: Asian] [added: Chinese] producers [removed: fluctuated] [added: declined] significantly, and may [removed: occur again] [added: fluctuate significantly] in the future, which could result in higher costs and lower earnings.

A $10 per ton price increase in recycled fiber for our containerboard mills, would result in approximately $7 million of additional expense based on [removed: 2017] [added: 2018] consumption.

Fuel prices, in particular prices for oil and natural gas, have fluctuated [removed: dramatically] in the past.

If fuel and chemical prices rise, our production costs and transportation costs will increase and cause higher manufacturing costs and reduced [removed: earnings.][added: earnings if we are unable to recover such increases through higher prices of our products.]

A $0.10 per million MMBTU in natural gas prices would result in approximately $3 million of additional expense, based on [removed: 2017] [added: 2018] usage.

We have experienced lower availability of third-party trucking services and [removed: interruptions or] [added: service issues, interruptions, and] delays in rail services.

[removed: These] [added: If these] factors [added: persist, we] could [removed: lead to] [added: experience] even higher transportation costs in the future and [removed: harm our ability to distribute] [added: difficulties shipping] our products in a timely manner.

| | • | Fires, floods, earthquakes, hurricanes, or other [removed: catastrophes.] [added: catastrophic events.] |

New and more stringent environmental regulations may be adopted and may require us to incur [added: additional operating expenses and/or] significant additional capital expenditures to modify or replace certain of our [removed: boilers.][added: boilers and other equipment.]

We have completed several mergers and acquisitions and investments in recent [removed: years, including our acquisition of Sacramento Container Corporation during 2017.][added: years.]

The agreement requires Office Depot to buy, and us to supply, at least 50% of Office Depot's requirements for commodity office papers through December [removed: 2018.][added: 2019.]

In [removed: 2017,] [added: 2018,] sales to Office Depot represented [removed: 43%] [added: 47%] of our Paper segment sales and 7% of our consolidated sales.

While we believe that we have [removed: 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.

At December 31, [removed: 2017,] [added: 2018,] we had [removed: $2.7] [added: $2.5] billion of debt outstanding and a $326.9 million undrawn revolving credit facility, after deducting letters of credit.

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

Prices for all of our products are driven by many factors, including demand for our products, industry capacity and decisions made by other producers with respect to capacity, and other competitive conditions in our industry.

These factors are affected by general global and domestic economic conditions.

In addition, changes in trade policy, including renegotiating or potentially terminating existing bilateral or multilateral agreements as well as the imposition of tariffs, could impact global markets and demand for our and our customers’ products and the costs associated with certain of our capital investments.

serve, increased competition from overseas producers, our competitors' pricing strategies, changes in customer preferences, and the cost-efficiency of our facilities.

| | • | Equipment or information system breakdowns or failures. |

| | • | A spill or release of pollutants or hazardous substances. |

Failure to comply with these regulations could result in fines, which may be significant, or other adverse regulatory action.

Customer Concentration - We rely on certain large customers.

Our packaging and paper segments each have large customers, the loss of which could adversely affect the segment’s sales and profitability.

In particular, because our businesses operate in highly competitive industry segments, we regularly bid for new business or for renewal of existing business.

The loss of business from our larger customers, or the renewal of business on less favorable terms, may adversely impact our financial results.

Pension Plans – Our pension plans may require additional funding.

We record a liability associated with our pensions equal to the excess of the benefit obligations over the fair value of the assets funding the plans.

The actual required amounts and timing of future cash contributions will be sensitive to changes in the applicable discount rates and returns on plan assets, and could also be impacted by future changes in the laws and regulations applicable to plan funding.

Fluctuations in the market performance of our plan assets will affect our pension plan costs in future periods.

Changes in assumptions regarding expected long-term rate of return on plan assets, our discount rate, expected compensation levels, or mortality will also increase or decrease pension costs.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 and Note 6, Income Taxes, of the Notes to the Consolidated Financial Statements in “Part II, Item 8.

Financial Statements and Supplementary Data” of this Form 10-K, for additional information on the impact of the Tax Cuts and Jobs Act (H.R.1) enacted in December 2017.

| | • | Equipment failure. |

| | • | A chemical spill or release. |

We experienced an explosion at the DeRidder mill during 2017, which resulted in facility downtime and damage.

Net of insurance proceeds, we incurred $5 million of property damage and business interruption losses during the year and we are party to multiple lawsuits relating to alleged injuries resulting from such explosion.

Customer Concentration - Office Depot represents a significant portion of PCA’s paper business.

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

We operate [removed: five] [added: six] containerboard mills, [removed: three] [added: two] paper mills, and [removed: 94] [added: 95] corrugated products manufacturing plants.

Net sales were [removed: $6.44] [added: $7.01] billion for the year ended December 31, [removed: 2017] [added: 2018] and [removed: $5.78] [added: $6.44] billion in [removed: 2016.][added: 2017.]

We reported [removed: $669] [added: $738] million of net income, or [removed: $7.07] [added: $7.80] per diluted share, [added: in 2018,] compared to [removed: $450] [added: $669] million, or [removed: $4.75] [added: $7.07] per [removed: share] [added: diluted share,] in [removed: 2016.][added: 2017.]

Net income included [added: $22 million of expense for special items in 2018, compared to] $100 million of income for special items [removed: (discussed below)] in 2017, including $122 million of estimated income tax benefit related to the enactment in December 2017 of the Tax Cut and Jobs Act [removed: (H.R.1), compared to $12 million of expense in 2016.][added: (H.R.1).]

Excluding special items, we recorded [removed: $569] [added: $760] million of net income, or [removed: $6.02] [added: $8.03] per diluted [removed: share] [added: share,] in [removed: 2017,] [added: 2018,] compared to [removed: $462] [added: $569] million, or [removed: $4.88] [added: $6.02] per diluted share, in [removed: 2016.][added: 2017.]

The increase was driven primarily by higher containerboard and corrugated products prices and mix and sales and production volumes driven by strong demand, [added: and lower recycled fiber costs;] partially offset by [removed: lower sales and production volumes and prices and mix in our Paper segment,] higher [removed: input and] operating [removed: costs, higher annual outage expenses,] and [added: converting costs;] higher [removed: depreciation expense] [added: freight] and [added: logistic expense; and] higher [removed: freight costs.][added: annual outage expense.]

For additional detail on special items included in reported GAAP [removed: results,] [added: results and other non-GAAP measures,] see “Item 7.

Packaging segment income from operations was [removed: $944] [added: $1,045] million in [removed: 2017,] [added: 2018,] compared to [removed: $711] [added: $950] million in [removed: 2016.][added: 2017.]

Packaging segment EBITDA excluding special items was [removed: $1,257] [added: $1,401] million in [removed: 2017,] [added: 2018,] compared to [removed: $1,019] [added: $1,264] million in [removed: 2016.][added: 2017.]

The increase was driven primarily by higher containerboard and corrugated products prices and mix and sales and production [removed: volumes driven by strong demand; partially offset by] [added: volumes,] higher [removed: input costs, primarily] [added: paper prices and mix, and lower wood and] recycled fiber [removed: and energy; higher labor costs;] [added: costs, partially offset by lower volumes in our Paper segment] and higher [removed: freight] [added: operating] and [removed: depreciation expense.][added: converting costs.]

Paper segment income from operations was [removed: $62] [added: $98] million in [removed: 2017,] [added: 2018,] compared to [removed: $138] [added: $54] million in [removed: 2016.][added: 2017.]

Paper segment EBITDA excluding special items was [removed: $153] [added: $165] million in [removed: 2017,] [added: 2018,] compared to [removed: $199] [added: $145] million in [removed: 2016.][added: 2017.]

The [removed: decrease] [added: increase] was due primarily to [removed: lower] [added: higher] paper [removed: sales and production volumes and] prices and mix, [removed: higher energy] [added: lower operating] costs, and [removed: higher] [added: lower] annual outage [removed: expenses.][added: expense, partially offset by higher freight and logistic expense and higher fiber costs.]

During the [removed: third] [added: second] quarter of [removed: 2017,] [added: 2018,] the Company [removed: announced that it will discontinue] [added: discontinued] production of uncoated freesheet and coated one-side grades at its Wallula, Washington mill [removed: in the second quarter of 2018 to begin the conversion of] [added: and converted] the No. 3 paper machine to a 400,000 ton-per-year virgin kraft linerboard machine.

The Company incurred charges in the [added: Packaging and] Paper [removed: segment] [added: segments] relating to these activities during 2017 [added: and 2018] as described below under “Special Items and Earnings per Diluted Share, Excluding Special [removed: Items,” and will incur future charges.][added: Items.”]

[removed: Also, to further our corrugated products business growth strategy, on] [added: In] October [removed: 2,] 2017, the Company acquired substantially all of the assets of Sacramento Container Corporation, and 100% of the membership interests of Northern Sheets, LLC and Central California Sheets, LLC (collectively the “Sacramento Container acquisition”) for [removed: $265] [added: $274] million with cash on hand.

The operating results of the companies acquired in the Sacramento Container acquisition are included in our results and reported in the Packaging segment from and after October [removed: 2,] 2017.

These operations have been substantially integrated into our business and have helped drive growth in our corrugated products volumes during [removed: 2017.][added: 2018.]

Earnings per diluted share, excluding special items, in [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] were as follows:

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

| | | 2017 [added: (c)] | | | | 2016 [added: (c)] | | | [added: | Change | | |]

| Earnings per diluted share | | $ | [removed: 7.07] [added: 7.80] | | | $ | [removed: 4.75] [added: 7.07] | |

| Facilities closure and other costs [removed: (a)] [added: (b)] | | | [removed: (0.04] [added: 0.01] | [removed: )] | | | [removed: 0.08] [added: (0.04] | [added: )] |

| Acquisition and integration related costs [removed: (b)] [added: (f)] | | | [removed: 0.01] [added: —] | | | | [removed: 0.03] [added: 0.01] | |

| Wallula mill restructuring [removed: (c)] [added: (a)] | | | [removed: 0.21] [added: 0.24] | | | | [removed: —] [added: 0.21] | |

| Expiration of timberland repurchase option [removed: (d)] [added: (h)] | | | [removed: (0.01] [added: —] | [removed: )] | | | [removed: —] [added: (0.01] | [added: )] |

| Deferred debt issuance costs [removed: (e)] [added: (g)] | | | [removed: 0.01] [added: —] | | | | [removed: —] [added: 0.01] | |

| Tax reform [removed: (f)] [added: (c)] | | | [removed: (1.29] [added: (0.02] | ) | | | [removed: —] [added: (1.29] | [added: )] |

| Internal legal entity consolidation [removed: (g)] [added: (d)] | | | [removed: 0.04] [added: —] | | | | [removed: —] [added: 0.04] | |

| DeRidder mill incident [removed: (h)] [added: (e)] | | | [removed: 0.03] [added: —] | | | | [removed: —] [added: 0.03] | |

| Hexacomb working capital adjustment (i) | | | [removed: (0.01] [added: —] | [removed: )] | | | [removed: —] [added: (0.01] | [added: )] |

| Ceased production of market pulp at Wallula [removed: (j)] | | | — | | | | [removed: 0.02] [added: —] | | [added: | | 0.6 | | |]

| Total special items (income) expense | | | [removed: (1.05] [added: 0.23] | [removed: )] | | | [removed: 0.13] [added: (1.05] | [added: )] |

| Earnings per diluted share, excluding special items | | $ | [removed: 6.02] [added: 8.03] | | | $ | [removed: 4.88] [added: 6.02] | |

| [removed: (a)] [added: (b)] | For [added: 2018, includes $1.8 million of charges consisting of closure costs related to corrugated products facilities and a corporate administration facility. For] 2017, includes $5.8 million of income primarily related to the sale of land corresponding to the closure of a corrugated products facility, partially offset by closure costs related to corrugated products facilities, a paper administration facility, a corporate administration facility, and a lump sum settlement of a multiemployer pension plan withdrawal liability for one of our corrugated products facilities. [removed: For 2016, includes $11.9 million of closure costs related to corrugated product facilities and a paper products facility, and a lump sum settlement of a multiemployer pension plan withdrawal liability for one of our corrugated products facilities.] |

| [removed: (b)] [added: (f)] | [removed: For 2017, includes] [added: Includes] $1.7 million of charges [removed: related to the Sacramento Container Corporation] [added: for] acquisition and integration costs related to [removed: other] recent acquisitions. [removed: For 2016, includes $4.5 million of acquisition-related costs for the TimBar Corporation and Columbus Container, Inc. acquisitions.] |

| [removed: (c)] [added: (a)] | Includes [removed: $33.4 million of] charges related to [removed: our determination to discontinue production] [added: the second quarter 2018 discontinuation] of uncoated free sheet and coated one-side grades at the Wallula, Washington mill [removed: in] [added: associated with] the [removed: second quarter] [added: conversion] of [removed: 2018 and convert] the No. 3 paper machine to a high-performance 100% virgin kraft linerboard machine. |

| [removed: (d)] [added: (h)] | Includes a $2.0 million gain related to the expiration of a repurchase option corresponding to timberland previously sold. |

| [removed: (e)] [added: (g)] | Includes $1.8 million of expense related to the write-off of deferred debt issuance costs in connection with the December 2017 debt [removed: refinancing, described above.] [added: refinancing.] |

Special items in both periods are described later in this section.

The increase was driven primarily by higher prices and mix and volumes in our Packaging segment, higher prices and mix in our Paper segment, lower taxes, and lower wood and recycled fiber costs, partially offset by lower volumes in our Paper segment, higher operating and converting costs, higher freight and logistic expenses, and higher annual outage expense, and other costs.

| (a) | For 2018 and 2017, includes $30.0 million and $33.4 million, respectively, of charges related to the second quarter 2018 discontinuation of uncoated free sheet and coated one-side grades at the Wallula, Washington mill associated with the conversion of the No. 3 paper machine to a high-performance 100% virgin kraft linerboard machine. |

| (c) | For 2018 and 2017, includes $2.0 million and $122.1 million, respectively, of income tax benefit for the re-measurement of our net deferred tax liability for the reduction in the U.S. corporate federal statutory income tax rate related to our 2017 measurement period adjustments in accordance with SEC Staff Accounting Bulletin No. 118 (SAB 118), Income Tax Accounting Implications of the Tax Cuts and Jobs Act. |

In January 2019, trade publications reported a $10 price per ton decrease on corrugating medium.

Looking ahead to the first quarter of 2019, we expect continued strong demand in our Packaging segment for both containerboard volume and corrugated products volume, and we expect strong market conditions in our Paper segment to continue.

We also expect our tax rate to be slightly higher.

Finally, the recent decrease in the published price for domestic medium will have a minimal effect on earnings.

We do not expect special items to be significant during the first quarter of 2019.

| Packaging | | $ | 5,938.5 | | | $ | 5,312.3 | | | $ | 626.2 | |

| Paper | | | 1,002.0 | | | | 1,051.8 | | | | (49.8 | ) |

| Net sales | | $ | 7,014.6 | | | $ | 6,444.9 | | | $ | 569.7 | |

| Packaging | | $ | 1,045.4 | | | $ | 950.3 | | | $ | 95.1 | |

| Paper | | | 97.7 | | | | 54.0 | | | | 43.7 | |

| Corporate and other | | | (75.4 | ) | | | (71.8 | ) | | | (3.6 | ) |

| Income from operations | | | 1,067.7 | | | | 932.5 | | | | 135.2 | |

| Interest expense, net and other | | | (97.2 | ) | | | (103.9 | ) | | | 6.7 | |

| Income before taxes | | | 970.5 | | | | 828.6 | | | | 141.9 | |

| Income tax expense (a) | | | (232.5 | ) | | | (160.0 | ) | | | (72.5 | ) |

| Net income | | $ | 738.0 | | | $ | 668.6 | | | $ | 69.4 | |

| EBITDA (b) | | $ | 1,478.6 | | | $ | 1,323.9 | | | $ | 154.7 | |

| | (a) | The U.S. corporate federal statutory income tax rate in 2018 was 21% and in 2017 was 35%. Income tax expense for 2018 and 2017 included a tax benefit of $2.0 million and $122.1 million, respectively, related to the enactment in December 2017 of the Tax Cuts and Jobs Act (H.R.1). See Note 7, Income Taxes, for more information. |

| | (c) | Effective January 1, 2018, the Company adopted ASU 2017-07, Compensation: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost and applied this standard retrospectively to the |

| | | prior period reflected herein. See Note 2, Summary of Significant Accounting Policies and Note 18, Segment Information, for more information. |

Net sales increased $570 million, or 8.8%, to $7,015 million in 2018, compared to $6,445 million in 2017.

Net sales increased $626 million, or 11.8%, to $5,939 million, compared to $5,312 million in 2017, due to increased containerboard and corrugated products volume ($367 million) and higher domestic and export containerboard and corrugated products prices and mix ($259 million).

In 2018, our domestic containerboard prices increased 6.3% and export prices increased 16.3% compared to 2017.

Containerboard outside shipments increased 10.7%, and total corrugated products shipments were up 5.2% per day and 5.6% in total, compared to 2017.

Prices reported by trade publications increased $50 per ton on linerboard and corrugating medium in March of 2018.

Net sales decreased $50 million, or 4.7%, to $1,002 million, compared to $1,052 million in 2017.

The decrease was due to lower volume ($93 million), primarily as a result of discontinuing the production and sale of the products on the No. 3 machine at the Wallula mill in connection with its conversion to linerboard production, partially offset by higher prices and mix ($43 million).

In 2018, gross profit included special items of $15 million related to the conversion of the No. 3 machine at the Wallula mill, compared to $11 million related to the conversion of the No. 3 machine at the Wallula mill and acquisition-related costs in 2017.

The increase in 2018 was primarily due to higher employee salaries and fringes ($18 million), the Sacramento Container acquisition ($8 million), outside professional services ($6 million) and other administrative expenses individually insignificant ($10 million).

These increases were partially offset by certain expenses that were previously recorded in SG&A for 2017 which are now recorded in cost of sales for 2018 ($25 million).

Effective January 1, 2018, the Company adopted ASU 2014-09 (Topic 606): Revenue from Contracts with Customers using the modified retrospective method.

The new standard provides additional clarity concerning contract fulfillment costs, which resulted in certain costs being classified as cost of sales rather than SG&A for 2018.

| | | 2018 | | | | 2017 | | |

| Insurance deductible for property damage | | | (0.5 | ) | | | — | |

| DeRidder mill incident | | | — | | | | 9.7 | |

| Other | | | (6.7 | ) | | | (3.9 | ) |

The total capital cost of the conversion is expected to be approximately $150 million.

We are in the process of integrating these operations into our business.

During 2016, we made two acquisitions of corrugated products businesses in the Packaging segment: TimBar 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 domestic 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, which we have subsequently refinanced.

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 for 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.

Accordingly, 2016 reflects a partial year of ownership of these operations and 2017 reflects a full year of ownership of these operations.

On December 13, 2017, we issued $1 billion of senior notes, consisting of $500 million of three year notes bearing interest at a fixed rate of 2.45% and $500 million of ten year notes bearing interest at a fixed rate of 3.40%.

We used the net proceeds of the offering to repay all of our outstanding variable-rate term loan debt, which was approximately $976 million at the time of the offering.

As a result, all of our outstanding long-term debt as of December 31, 2017 bears interest at fixed rates.

Corrugating medium increased $50, $20, and $10 per ton in April, July, and August respectively.

Looking ahead to the first quarter of 2018, we expect continued strong demand in our Packaging segment, although our containerboard production and sales volumes will be lower than in the fourth quarter of 2017 due to scheduled outages at three of our mills during the quarter.

We will continue to implement our recently announced price increases in our Paper segment and expect sales volume to be slightly lower.

We expect inflation in almost all areas across our entire cost base.

Our depreciation and interest expense will be slightly higher as well.

We will benefit from a lower tax rate going forward with the passage of the Tax Cuts and Jobs Act during the fourth quarter of 2017.

| Packaging | | $ | 943.7 | | | $ | 711.1 | | | $ | 232.6 | |

| Paper | | | 61.5 | | | | 138.1 | | | | (76.6 | ) |

| Corporate and other | | | (74.0 | ) | | | (68.9 | ) | | | (5.1 | ) |

| Income from operations | | $ | 931.2 | | | $ | 780.3 | | | $ | 150.9 | |

| Interest expense, net | | | (102.6 | ) | | | (91.8 | ) | | | (10.8 | ) |

| EBITDA (a) | | $ | 1,322.6 | | | $ | 1,138.3 | | | $ | 184.3 | |

Special items in 2016 included $9 million of facility closure costs, $4 million of TimBar and Columbus Container acquisition-related costs, and $1 million related to our withdrawal from a multiemployer pension plan for one of our corrugated products facilities.

| | | 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 from operations | | $ | 780.3 | | | $ | 750.0 | | | $ | 30.3 | |

| Interest expense, net | | | (91.8 | ) | | | (85.5 | ) | | | (6.3 | ) |

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

| Income tax expense | | | (238.9 | ) | | | (227.7 | ) | | | (11.2 | ) |

| EBITDA (a) | | $ | 1,138.3 | | | $ | 1,106.5 | | | $ | 31.8 | |

Net sales increased $37 million, or 0.6%, to $5,779 million in 2016, compared to $5,742 million in 2015.

Sales increased $108 million, or 2.4%, to $4,585 million, compared to $4,477 million in 2015.

We were not party to any derivative-based arrangements at December 31, [removed: 2017.][added: 2018.]

For a discussion of derivatives and hedging activities, see Note [removed: 13,] [added: 14,] Derivative Instruments and Hedging Activities, of the Notes to Consolidated Financial Statements in “Part II, Item 8.

At December 31, [removed: 2017,] [added: 2018,] the interest rates on 100% of PCA’s outstanding debt are fixed.

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

We operate [removed: five] [added: six] containerboard mills, [removed: three] [added: two] white paper mills and [removed: 94] [added: 95] corrugated products manufacturing plants.

For segment financial information see Note [removed: 17,] [added: 18,] Segment Information, of the Notes to Consolidated Financial Statements in “Part II, Item 8, Financial Statements and Supplementary Data” of this Form 10-K.

[removed: During the third quarter of 2017, we announced that we would discontinue production of uncoated freesheet and certain types of] [added: Our Wallula, Washington mill produced] pressure sensitive [removed: grades] [added: papers and a variety] of white paper [removed: at our Wallula, Washington mill in] [added: grades on its No. 3 machine, prior to its conversion to kraft linerboard during] the second quarter of 2018.

The following table summarizes the Packaging segment's containerboard production and corrugated products shipments and the Paper segment's [added: white paper and market pulp] production.

| [removed: Containerboard Production] [added: (thousand tons)] | | [removed: PCA] | | | 2017 | | | | 932 | | | | 947 | | | | 996 | | | | 1,006 | | | | 3,881 | |

| [removed: (thousand tons)] | | | | | 2016 | | | | 898 | | | | 926 | | | | 950 | | | | 962 | | | | 3,736 | |

| [removed: Corrugated Shipments (BSF)] | | [removed: PCA] | | | 2017 | | | | 13.6 | | | | 13.9 | | | | 13.7 | | | | 14.5 | | | | 55.7 | |

| [removed: White Paper (UFS) Production] [added: (thousand tons)] | | [removed: PCA] | | | 2017 | | | | 273 | | | | 289 | | | | 278 | | | | 278 | | | | 1,118 | |

| [removed: (thousand tons)] | | | | | 2016 | | | | 283 | | | | 268 | | | | 288 | | | | 288 | | | | 1,127 | |

| Market Pulp Production [removed: (a)] [added: (b)] | | PCA | | | [removed: 2017] [added: 2018] | | | | [removed: \-] [added: —] | | | | [removed: \-] [added: —] | | | | [removed: \-] [added: —] | | | | [removed: \-] [added: —] | | | | [removed: \-] [added: —] | |

| (thousand tons) | | | | | [removed: 2016] [added: 2017] | | | | [removed: 16] [added: —] | | | | [removed: 10] [added: —] | | | | [removed: 12] [added: —] | | | | [removed: 7] [added: —] | | | | [removed: 45] [added: —] | |

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

[removed: ][added: ]

During the year ended December 31, [removed: 2017,] [added: 2018,] our Packaging segment produced [removed: 3.9] [added: 4.1] million tons of containerboard at our mills.

Our corrugated products manufacturing plants sold [removed: 55.7] [added: 58.9] billion square feet (BSF) of corrugated products.

Our net sales to third parties totaled [removed: $5.3] [added: $5.9] billion in [removed: 2017.][added: 2018.]

Total annual [removed: containerboard] [added: white paper] capacity is [removed: 4,111,000] [added: 949,000] tons.

Our Counce, Tennessee mill produces kraft [removed: linerboard.][added: linerboard on two paper machines.]

Our [removed: DeRidder, Louisiana] [added: Wallula, Washington] mill produces [removed: kraft linerboard] [added: semi-chemical corrugating medium] on its No. [removed: 1] [added: 2] machine and [added: kraft] linerboard [removed: and semi-chemical corrugating medium] on its No. 3 machine.

Our Valdosta, Georgia mill produces kraft [removed: linerboard.][added: linerboard on one paper machine.]

Our Tomahawk, Wisconsin mill produces semi-chemical corrugating [removed: medium.][added: medium on two paper machines.]

The [removed: Tomahawk] mill can produce basis weights from 23 lb.

Our Filer City, Michigan mill produces semi-chemical corrugating [removed: medium.][added: medium on three paper machines.]

[removed: Filer City] [added: The mill] can produce [removed: corrugating] medium in basis weights from [removed: 20] [added: 23] lb.

Our [removed: Wallula, Washington] [added: DeRidder, Louisiana] mill [removed: primarily] produces [removed: white paper, but also produces] [added: kraft linerboard and] semi-chemical corrugating medium on [removed: one of its] two paper machines.

[removed: Wallula] [added: The mill] can produce [removed: corrugating medium in] basis weights from [removed: 23] [added: 20] lb.

to [removed: 45] [added: 33] lb.

As described above, [removed: we are converting] the No. 3 machine [removed: at the mill] [added: was converted] from white paper to [removed: kraft linerboard.][added: linerboard in May of 2018.]

We operate [removed: 94] [added: 95] corrugated manufacturing [added: and protective packaging] operations, a technical and development center, [removed: nine] [added: 10] regional design centers, a rotogravure printing operation, and a complement of packaging supplies and distribution centers.

Of the [removed: 94] [added: 95] manufacturing facilities, 61 operate as combining operations, commonly called corrugated plants, which manufacture corrugated sheets and finished corrugated packaging products, [removed: 32] [added: 33] are sheet plants, which procure combined sheets and manufacture finished corrugated packaging products, and one is a corrugated sheet-only manufacturer.

All of our [added: mills can utilize virgin wood fiber and all of our] mills, other than the Valdosta mill, can utilize some recycled fiber in their containerboard production.

In [removed: 2017,] [added: 2018,] our usage of recycled fiber, net of internal generation, represents [removed: 17%] [added: 18%] of our containerboard production.

We procure wood fiber through leases of cutting rights, long-term supply agreements, and market purchases and believe we have adequate sources of fiber [removed: supply.][added: supply for the foreseeable future.]

We participate in the Sustainable Forestry Initiative® (SFI), the Programme for the Endorsement of Forest [removed: Certification] [added: Certification™] (PEFC), as well as the Forest Stewardship [removed: Council] [added: Council®] (FSC), and we are certified under their sourcing [added: and chain of custody] standards.

Energy at our packaging mills is obtained through [removed: purchased or] self-generated [added: or purchased] fuels and electricity.

Fuel sources include [removed: natural gas,] by-products of the containerboard manufacturing and pulping process (including black liquor and wood waste), [added: natural gas,] purchased wood waste, and other purchased fuels.

In [removed: 2017,] [added: 2018,] our packaging mills consumed about [removed: 63] [added: 70] million MMBTU’s of fuel to produce both steam and electricity.

Of the [removed: 63] [added: 24] million MMBTU’s consumed, about 62% was from mill generated by-products and 38% was from purchased fuels.

Of the [removed: 38% in] purchased fuels, [removed: 61%] [added: 65%] was from natural gas, [removed: 33%] [added: 31%] was from purchased wood waste and [removed: 6%] [added: 4%] was from other purchased fuels.

During the second quarter of 2018, we discontinued the production of uncoated free sheet and coated one-side grades at the Wallula, Washington mill and converted the No. 3 machine to a virgin kraft linerboard machine.

Subsequent to the date of conversion in May 2018, operating results for the Wallula mill are primarily included in the Packaging segment.

Before such date, operating results were included in the Paper segment.

| Containerboard Production (a) | | PCA | | | 2018 | | | | 953 | | | | 1,020 | | | | 1,087 | | | | 1,021 | | | | 4,081 | |

| Corrugated Shipments (BSF) | | PCA | | | 2018 | | | | 14.4 | | | | 15.1 | | | | 14.8 | | | | 14.6 | | | | 58.9 | |

| White Paper (UFS) Production (a) | | PCA | | | 2018 | | | | 279 | | | | 252 | | | | 239 | | | | 247 | | | | 1,017 | |

| | | | | | 2016 | | | | 16 | | | | 10 | | | | 12 | | | | 7 | | | | 45 | |

| (a) | In May 2018, PCA ceased production of uncoated free sheet and coated one-side grades at our Wallula, Washington mill and converted the No. 3 machine to a virgin kraft linerboard machine. |

| --- | --- |

We currently manufacture containerboard, which includes a variety of performance and specialty grades, at six containerboard mills.

Total annual containerboard capacity was approximately 4.4 million tons as of December 31, 2018.

We also produce corrugated and protective packaging products at 95 manufacturing locations.

and linerboard in basis weights from 31 lb.

to 52 lb.

We are committed to sourcing wood fiber through environmentally, socially, and economically sustainable practices and promoting resource and conservation stewardship ethics.

These customers include office products distributors and retailers, paper merchants, and envelope and other converters.

From 1998 through June 2010, Mr. Kowlzan led

On October 2, 2017, we acquired substantially all of the assets of Sacramento Container Corporation, and 100% of the membership interests of Northern Sheets, LLC and Central California Sheets, LLC for a cash purchase price of $265 million, funded with cash on hand.

The acquired companies operate two full-line corrugated products operations and sheet feeders in McClellan, California and Kingsburg, California.

We will convert the No. 3 paper machine at the mill to a 400,000 ton-per-year virgin kraft linerboard machine.

After the conversion, the Wallula mill will produce only containerboard.

| | | | | | 2015 | | | | 882 | | | | 938 | | | | 933 | | | | 903 | | | | 3,656 | |

| | | | | | 2015 | | | | 11.9 | | | | 12.4 | | | | 12.5 | | | | 12.1 | | | | 48.9 | |

| | | | | | 2015 | | | | 288 | | | | 273 | | | | 294 | | | | 262 | | | | 1,117 | |

| | | | | | 2015 | | | | 27 | | | | 23 | | | | 25 | | | | 23 | | | | 98 | |

We currently manufacture our Packaging products at five containerboard mills, one containerboard machine (at our Wallula, Washington white paper mill), corrugated manufacturing operations, and protective packaging operations.

The mill also produces a variety of performance and specialty grades of linerboard.

and a variety of performance and specialty grades of corrugating medium.

After the conversion, the Wallula mill will solely produce containerboard.

We have no 100% recycled mills, or mills whose fiber consumption consists solely of recycled fiber.

To reduce our fiber costs, we have invested in processes and equipment to ensure a high degree of fiber flexibility.

Our ability to use various types of virgin and recycled fiber helps mitigate the impact of changes in the prices of various fibers.

Total annual white paper capacity is 990,000 tons.

Our Wallula, Washington mill has the ability, on one machine, to switch production between pressure sensitive papers and a variety of white paper grades.

The mill also produces corrugating medium.

Upon the conversion, the Wallula mill will solely produce containerboard.

We procure all wood fiber for our white paper mills through our certified systems that are managed in accordance with the SFI and FSC standards.

These customers include paper merchants, commercial and financial printers, envelope converters, and customers who use our pressure sensitive paper for specialty applications such as consumer and commercial product labels.

In general, paper production does not rely on proprietary processes or formulas, except in highly specialized or custom grades.

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

10-K 1 [removed: pkg-10k_20171231.htm] [added: pkg-10k_20181231.htm] 10-K

For the fiscal year ended December 31, [removed: 2017][added: 2018]

[removed: ][added: ]

| [removed: 1955 West] [added: 1 North] Field Court, Lake Forest, Illinois | | 60045 |

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

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

| Non-accelerated filer | | ☐ [removed: (Do not check if a smaller reporting company)] | | Smaller reporting company | | ☐ |

At June 30, [removed: 2017,] [added: 2018,] 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: $10,380,184,252] [added: $10,429,672,301] based upon the closing sale price as reported on the New York Stock Exchange.

On February [removed: 23, 2018,] [added: 22, 2019,] there were [removed: 94,349,822] [added: 94,495,930] shares of Common Stock outstanding.

Specified portions of the Proxy Statement for the Registrant's [removed: 2018] [added: 2019] Annual Meeting of Stockholders are incorporated by reference to the extent indicated in Part III of this Form 10-K.

| Item 1B. | [Unresolved Staff Comments](#Item_1B_UNRESOLVED_STAFF_COMMENTS) | [removed: 11] [added: 12] |

| Item 6. | [Selected Financial Data](#ITEM_6_SELECTED_FINANCIAL_DATA) | [removed: 16] [added: 15] |

| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#ITEM_7_MANAGEMENTS_DISCUSSION_ANALYSIS_F) | [removed: 17] [added: 16] |

| | [Overview](#OVERVIEW) | [removed: 17] [added: 16] |

| | [Executive Summary](#EXECUTIVE_SUMMARY) | [removed: 17] [added: 16] |

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

| | [Outlook](#OUTLOOK) | [removed: 19] [added: 18] |

| | [Results of Operations](#RESULTS_OPERATIONS) | [removed: 20] [added: 18] |

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

| | [Commitments](#COMMITMENTS) | [removed: 26] [added: 25] |

| | [Off-Balance-Sheet Arrangements](#FBALANCESHEET_ARRANGEMENTS) | [removed: 27] [added: 26] |

| | [Inflation and Other General Cost Increases](#INFLATION_OR_GENERAL_COST_INCREASES) | [removed: 27] [added: 26] |

| | [Environmental Matters](#EM1) | [removed: 28] [added: 27] |

| | [Critical Accounting Policies and Estimates](#CRITICAL_ACCOUNTING_POLICIES_ESTIMATES) | [removed: 29] [added: 28] |

| | [New and Recently Adopted Accounting Standards](#NEW_RECENTLY_ADOPTED_ACCOUNTING_STARDS) | [removed: 32] [added: 31] |

| | [Reconciliations of Non-GAAP Financial Measures to Reported Amounts](#RECONCILIATIONS_NONGAAP_FINANCIAL_MEASUR) | [removed: 32] [added: 31] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market Risk](#Item_7A_QUANTITATIVE_AND_QUALITATIVE) | [removed: 34] [added: 33] |

| Item 8. | [Financial Statements and Supplementary Data](#ITEM_8_FINANCIAL_STATEMENTS_SUPPLEMENTAR) | [removed: 35] [added: 34] |

| Item 9. | [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](#ITEM_9_CHANGES_IN_DISAGREEMENTS_WITH_ACC) | [removed: 78] [added: 77] |

| Item 9A. | [Controls and Procedures](#ITEM_9A_CONTROLS_PROCEDURES) | [removed: 78] [added: 77] |

| Item 9B. | [Other Information](#ITEM_9B_OR_INFORMATION) | [removed: 79] [added: 77] |

| Item 10. | [Directors, Executive Officers, and Corporate Governance](#ITEM_10_DIRECTORS_EXECUTIVE_FICERS_CORPO) | [removed: 80] [added: 78] |

| Item 11. | [Executive Compensation](#ITEM_11_EXECUTIVE_COMPENSATION) | [removed: 80] [added: 78] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#ITEM_12_SECURITY_OWNERSHIP_CERTAIN_BENEF) | [removed: 80] [added: 78] |

| Item 13. | [Certain Relationships and Related Transactions, and Director Independence](#ITEM_13_CERTAIN_RELATIONSHIPS_RELATED_TR) | [removed: 81] [added: 79] |

| Item 14. | [Principal Accounting Fees and Services](#ITEM_14_PRINCIPAL_ACCOUNTING_FEES_SERVIC) | [removed: 81] [added: 79] |

| Item 15. | [Exhibits, Financial Statement Schedules](#ITEM_15_EXHIBITS_FINANCIAL_STATEMENT_SCH) | [removed: 82] [added: 80] |

| | [Signatures](#SIGNATURES) | [removed: 86] [added: 84] |

(Check one):

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

Additionally, we have [removed: 94] [added: 95] corrugated manufacturing operations, of which the buildings and land for [removed: 56] [added: 51] are owned, including [removed: 46] [added: 43] combining operations, or corrugated plants, one corrugated sheet-only manufacturer, and [removed: nine] [added: seven] sheet plants.

We lease the [removed: building] [added: buildings] for [removed: 11] [added: 18] corrugated plants and [removed: 27] [added: 26] sheet plants.

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

Additionally, we lease approximately [removed: 9,000] [added: 3,000] acres of land for a fiber farm, located near our Wallula mill, where we plant, grow, and harvest fiber.

The headquarter facility is [removed: leased for] [added: owned, and we lease additional neighboring office space through] the next [removed: four] [added: three] years with provisions for two additional five year lease extensions.

We also lease an administrative office in Boise, Idaho, through July 2025.

On February [removed: 23, 2018,] [added: 22, 2019,] there were [removed: 66] [added: 78] holders of record of our common stock.

The Company did not repurchase any shares of its common stock under this authority during the [removed: year] [added: years] ended December 31, [added: 2018 and] 2017.

In 2016, we paid $100.3 million to repurchase 1,987,187 shares of common [removed: stock] [added: stock,] which fully depleted the $93.3 million of repurchase authority under previous authorizations by our board of directors.

As of December 31, [removed: 2017,] [added: 2018,] we are authorized to repurchase $193.0 million of the Company’s common stock.

Total shares withheld in 2017 were 97,946 to cover $10.8 million [removed: in] [added: of] employee tax liabilities.

Total shares withheld in [removed: 2016] [added: 2018] were [removed: 172,438] [added: 69,255] to cover [removed: $11.2] [added: $7.9] million [removed: of] [added: in] employee tax liabilities.

Total shares withheld in [removed: 2015] [added: 2016] were [removed: 129,983] [added: 172,438] for [removed: $8.7] [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: 2017:][added: 2018:]

| October 1-31, [removed: 2017] [added: 2018] | | | — | | | | $ | — | | | | — | | | $ | 193.0 | |

| (a) | [removed: 500] [added: 635] shares were withheld from employees to cover income and payroll taxes on equity awards that vested during the period. |

The graph below compares PCA’s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the S&P 500 index; the S&P Midcap 400 index; [removed: and] a [added: New] Peer Group that includes [added: three publicly-traded companies, which are International Paper Company, WestRock Company, and Domtar Corporation; and an Old Peer Group that includes] two publicly-traded companies, which are International Paper Company and KapStone Paper and Packaging Corporation.

The graph tracks the performance of a $100 investment (including the reinvestment of all dividends) in our common stock, in each index, and in [removed: the] [added: each] peer [removed: groups'] [added: group's] common stock from December 31, [removed: 2012,] [added: 2013,] through December 31, [removed: 2017.][added: 2018.]

[removed: ][added: ]

| | | December [removed: 31] [added: 31,] | | | | | | | | | | | | | | | | | | | | | | |

| | | [removed: 2012 | | | |] 2013 | | | | 2014 | | | | 2015 | | | | 2016 | | | | 2017 | | | [added: | 2018 | | |]

| November 1-30, 2018 | | | 186 | | | | | 88.05 | | | | — | | | | 193.0 | |

| December 1-31, 2018 | | | 449 | | | | | 83.46 | | | | — | | | | 193.0 | |

| Total | | | 635 | | (a) | | $ | 84.80 | | | | — | | | $ | 193.0 | |

Peer group members WestRock Company and Domtar Corporation were added to the New Peer Group because they are primarily

domestic integrated packaging and paper companies who, similar to PCA, produce and sell corrugated and paper products, respectively.

In addition, these two companies are included in the competitive group for executive compensation purposes in PCA’s Proxy Statement.

Old Peer Group member KapStone Paper and Packaging Corporation was acquired by New Peer Group member WestRock Company in 2018.

| Packaging Corporation of America | | $ | 100.00 | | | $ | 126.09 | | | $ | 105.18 | | | $ | 146.29 | | | $ | 212.84 | | | $ | 151.41 | |

| S&P 500 | | | 100.00 | | | | 113.69 | | | | 115.26 | | | | 129.05 | | | | 157.22 | | | | 150.33 | |

| S&P Midcap 400 | | | 100.00 | | | | 109.77 | | | | 107.38 | | | | 129.65 | | | | 150.71 | | | | 134.01 | |

| 2017 Peer Group | | | 100.00 | | | | 114.15 | | | | 83.10 | | | | 122.09 | | | | 138.07 | | | | 99.79 | |

| 2018 Peer Group | | | 100.00 | | | | 111.00 | | | | 83.42 | | | | 113.97 | | | | 136.22 | | | | 93.20 | |

The following table sets forth the high and low sales prices as reported by the NYSE and the cash dividends declared per common share during the last two years.

| | | 2017 | | | | | | | | | | | | 2016 | | | | | | | | | | |

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

| | | Market Price | | | | | | | | Dividends | | | | Market Price | | | | | | | | Dividends | | |

| Quarter Ended | | High | | | | Low | | | | Declared | | | | High | | | | Low | | | | Declared | | |

| March 31 | | $ | 96.87 | | | $ | 84.01 | | | $ | 0.63 | | | $ | 62.67 | | | $ | 44.32 | | | $ | 0.55 | |

| June 30 | | | 113.52 | | | | 89.73 | | | | 0.63 | | | | 71.31 | | | | 58.44 | | | | 0.55 | |

| September 30 | | | 119.43 | | | | 105.81 | | | | 0.63 | | | | 82.77 | | | | 65.12 | | | | 0.63 | |

| December 31 | | | 121.38 | | | | 108.49 | | | | 0.63 | | | | 88.41 | | | | 78.03 | | | | 0.63 | |

Dividend Policy

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

The timing and amount of future dividends are subject to the determination of PCA’s Board of Directors.

On August 31, 2016, PCA announced an increase of its quarterly cash dividend on its common stock from an annual payout of $2.20 per share to an annual payout of $2.52 per share.

The first quarterly dividend of $0.63 per share was paid on October 14, 2016 to shareholders of record as of September 15, 2016.

During the year ended December 31, 2017, we paid $237.6 million of dividends to shareholders.

On December 14, 2017 PCA's Board of Directors approved a regular quarterly cash dividend of $0.63 per share of common stock, which was paid on January 12, 2018 to shareholders of record as of December 26, 2017.

The dividend payment was $59.4 million.

In 2015, we paid $154.7 million to repurchase 2,326,493 shares of common stock.

| November 1-30, 2017 | | | — | | | | | — | | | | — | | | | 193.0 | |

| December 1-31, 2017 | | | 500 | | | | | 117.76 | | | | — | | | | 193.0 | |

| Total | | | 500 | | (a) | | $ | 117.26 | | | | — | | | $ | 193.0 | |

| Packaging Corporation of America | | $ | 100.00 | | | $ | 169.39 | | | $ | 213.59 | | | $ | 178.16 | | | $ | 247.80 | | | $ | 360.53 | |

| S&P 500 | | | 100.00 | | | | 132.39 | | | | 150.51 | | | | 152.59 | | | | 170.84 | | | | 208.14 | |

| S&P Midcap 400 | | | 100.00 | | | | 133.50 | | | | 146.54 | | | | 143.35 | | | | 173.08 | | | | 201.20 | |

| Peer Group | | | 100.00 | | | | 133.53 | | | | 151.13 | | | | 110.96 | | | | 156.68 | | | | 176.03 | |

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

| | | [removed: 2017 (a)] [added: 2018] | | | | [removed: 2016 (a)] [added: 2017] | | | | [removed: 2015 (a)] [added: 2016] | | | | [removed: 2014 (a)] [added: 2015] | | | | [removed: 2013 (a)] [added: 2014] | | |

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

| Net Sales | | $ | [removed: 6,444.9] [added: 7,014.6] | | | $ | [removed: 5,779.0] [added: 6,444.9] | | | $ | [removed: 5,741.7] [added: 5,779.0] | | | $ | [removed: 5,852.6] [added: 5,741.7] | | | $ | [removed: 3,665.3] [added: 5,852.6] | |

| Net Income | | | [removed: 668.6] [added: 738.0] | | | | [removed: 449.6] [added: 668.6] | | | | [removed: 436.8] [added: 449.6] | | | | [removed: 392.6] [added: 436.8] | | | | [removed: 441.3] [added: 392.6] | |

| — basic | | | [removed: 7.09] [added: 7.82] | | | | [removed: 4.76] [added: 7.09] | | | | [removed: 4.47] [added: 4.76] | | | | [removed: 3.99] [added: 4.47] | | | | [removed: 4.57] [added: 3.99] | |

| — diluted | | | [removed: 7.07] [added: 7.80] | | | | [removed: 4.75] [added: 7.07] | | | | [removed: 4.47] [added: 4.75] | | | | [removed: 3.99] [added: 4.47] | | | | [removed: 4.52] [added: 3.99] | |

| — basic | | | [removed: 93.5] [added: 93.7] | | | | 93.5 | | | | [removed: 96.6] [added: 93.5] | | | | [removed: 97.0] [added: 96.6] | | | | [removed: 96.6] [added: 97.0] | |

| — diluted | | | [removed: 93.7] [added: 93.9] | | | | 93.7 | | | | [removed: 96.7] [added: 93.7] | | | | [removed: 97.1] [added: 96.7] | | | | [removed: 97.5] [added: 97.1] | |

| Cash dividends declared per common share | | | [removed: 2.52] [added: 3.00] | | | | [removed: 2.36] [added: 2.52] | | | | [removed: 2.20] [added: 2.36] | | | | [removed: 1.60] [added: 2.20] | | | | [removed: 1.51] [added: 1.60] | |

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

| Total assets | | $ | [removed: 6,197.5] [added: 6,569.7] | | | $ | [removed: 5,777.0] [added: 6,197.5] | | | $ | [removed: 5,272.3] [added: 5,777.0] | | | $ | [removed: 5,258.7] [added: 5,272.3] | | | $ | [removed: 5,182.1] [added: 5,258.7] | |

| Total debt obligations | | | [removed: 2,650.7] [added: 2,502.7] | | | | [removed: 2,667.4] [added: 2,650.7] | | | | [removed: 2,319.7] [added: 2,667.4] | | | | [removed: 2,365.2] [added: 2,319.7] | | | | [removed: 2,558.6] [added: 2,365.2] | |

| Stockholders' equity | | | [removed: 2,182.6] [added: 2,672.4] | | | | [removed: 1,759.8] [added: 2,182.6] | | | | [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: (b)] [added: (a)] | 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. |

Net income and net income per common share are impacted by a lower U.S. corporate federal statutory income tax rate of 21% in 2018 and 35% in in all prior years presented in this table.

In addition, both 2018 and 2017 include a tax benefit of $2.0 million and $122.1 million, respectively, related to the enactment in December 2017 of the Tax Cuts and Jobs Act (H.R.1).

See Note 7, Income Taxes, for more information.

| --- | --- |

| EBITDA(c) | | $ | 1,322.6 | | | $ | 1,138.3 | | | $ | 1,106.5 | | | $ | 1,083.7 | | | $ | 683.7 | |

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

| (c) | EBITDA represents income before interest (interest expense and interest income), income tax provision (benefit), and depreciation, amortization, and depletion. We present EBITDA because it provides a means to evaluate our performance on an ongoing basis using the same measure that is used by our management and because it is frequently used by investors and other interested parties in the evaluation of companies. EBITDA, however, is not a measure of our liquidity or financial performance under generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income, income from operations, or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. Any analysis of non-GAAP financial measures should be done in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such. See “Reconciliations of Non-GAAP Financial Measures to Reported Amounts” included in “Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K for a reconciliation of non-GAAP measures to the most comparable GAAP measure. |

| [Reports of Independent Registered Public Accounting Firm](#REPORT_INDEPENDENT_REGISTERED_PUBLIC_ACC) | [removed: 36] [added: 35] |

| [Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2017, 2016, and 2015](#CONSOLIDATED_STATEMENTS_INCOME_COMPREHEN) | [removed: 39] [added: 37] |

| [Consolidated Balance Sheets as of December 31, 2017 and 2016](#CONSOLIDATED_BALANCE_SHEETS) | [removed: 40] [added: 38] |

| [Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016, and 2015](#CONSOLIDATED_STATEMENTS_CASH_FLOWS) | [removed: 41] [added: 39] |

| [Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 2017, 2016, and 2015](#CONSOLIDATED_STATEMENTS_CHANGES_IN_STOCK) | [removed: 42] [added: 40] |

| [Notes to Consolidated Financial Statements](#NOTES_TO_CONSOLIDATED_FINANCIAL_STATEMEN) | [removed: 43] [added: 41] |

We have audited the accompanying consolidated balance sheets of Packaging Corporation of America and subsidiaries (the [removed: “Company”)] [added: Company)] as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the [removed: three‑year] [added: three-year] period ended December 31, [removed: 2017,] [added: 2018,] and the related notes (collectively, the [removed: “consolidated] [added: consolidated] financial [removed: statements”).][added: statements).]

In our opinion, the consolidated financial statements [added: referred to above] present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of its operations and its cash flows for each of the years in the [removed: three‑year] [added: three-year] period ended December 31, [removed: 2017,] [added: 2018,] in conformity with U.S. generally accepted accounting principles.

We also have [removed: audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),] [added: audited] the Company’s internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission, and our report dated February 28, 2018 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.][added: Commission.]

Basis for [removed: Opinion][added: Opinions]

Our responsibility is to express an opinion on [removed: these] [added: the Company’s] consolidated financial statements [added: and an opinion on the Company’s internal control over financial reporting] based on our audits.

We are a public accounting firm registered with the [removed: PCAOB] [added: Public Company Accounting Oversight Board (United States) (PCAOB)] and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Those standards require that we plan and perform the [removed: audit] [added: audits] to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or [removed: fraud.][added: fraud, and whether effective internal control over financial reporting was maintained in all material respects.]

Our audits [added: of the consolidated financial statements] included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We believe that our audits provide a reasonable basis for our [removed: opinion.][added: opinions.]

[removed: Opinion] [added: Opinions] on [added: the Consolidated Financial Statements and] Internal Control Over Financial Reporting

[removed: We have audited Packaging Corporation of America and subsidiaries’ (the “Company”)] [added: Also in our opinion, the Company maintained, in all material respects, effective] internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018] based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The Company’s management is responsible for [added: these consolidated financial statements, for] maintaining effective internal control over financial [removed: reporting] [added: reporting,] and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control [removed: Over] [added: over] Financial Reporting.

Our [removed: audit] [added: audits] also included performing such other procedures as we considered necessary in the circumstances.

| | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Net sales | | $ | [removed: 6,444.9] [added: 7,014.6] | | | $ | [removed: 5,779.0] [added: 6,444.9] | | | $ | [removed: 5,741.7] [added: 5,779.0] | |

| Gross profit | | [added: $] | 1,472.2 | | | [added: $] | [removed: 1,275.7] [added: (1.4] | [added: )] | | [added: $] | [removed: 1,208.0] [added: 1,470.8] | |

| Selling and administrative expenses | | | [removed: (522.6] [added: (536.4] | ) | | | [removed: (471.1] [added: (519.9] | ) | | | [removed: (451.3] [added: (468.5] | ) |

| Other expense, net | | | [removed: (18.4] [added: (41.2] | ) | | | [removed: (24.3] [added: (18.4] | ) | | | [removed: (6.7] [added: (24.3] | ) |

| Income from operations | | | 931.2 | | | | [removed: 780.3] [added: 1.3] | | | | [removed: 750.0] [added: 932.5] | |

| Interest expense, net [added: and other] | | | (102.6 | ) | | | [removed: (91.8] [added: (1.3] | ) | | | [removed: (85.5] [added: (103.9] | ) |

| Income before taxes | | | [removed: 828.6] [added: 970.5] | | | | [removed: 688.5] [added: 828.6] | | | | [removed: 664.5] [added: 688.5] | |

| [removed: Provision] [added: (Provision) benefit] for income taxes | | | [removed: (160.0] [added: (232.5] | ) | | | [removed: (238.9] [added: (160.0] | ) | | | [removed: (227.7] [added: (238.9] | ) |

| Net income | | $ | [removed: 668.6] [added: 738.0] | | | $ | [removed: 449.6] [added: 668.6] | | | $ | [removed: 436.8] [added: 449.6] | |

| Basic | | $ | [removed: 7.09] [added: 7.82] | | | $ | [removed: 4.76] [added: 7.09] | | | $ | [removed: 4.47] [added: 4.76] | |

| Diluted | | $ | [removed: 7.07] [added: 7.80] | | | $ | [removed: 4.75] [added: 7.07] | | | $ | [removed: 4.47] [added: 4.75] | |

| Dividends declared per common share | | $ | [removed: 2.52] [added: 3.00] | | | $ | [removed: 2.36] [added: 2.52] | | | $ | [removed: 2.20] [added: 2.36] | |

| Foreign currency translation adjustment | | $ | [removed: (0.2] [added: (0.1] | ) | | $ | [removed: —] [added: (0.2] | [added: )] | | $ | [removed: 2.7] [added: —] | |

| Reclassification adjustments to cash flow hedges included in net income, net of tax of [removed: $2.2] [added: $1.3] million, $2.2 million, and $2.2 million for [added: 2018,] 2017, [removed: 2016,] and [removed: 2015,] [added: 2016,] respectively | | | [removed: 3.5] [added: 4.0] | | | | 3.5 | | | | 3.5 | |

| Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of [removed: $4.9] [added: $4.0] million, [removed: $4.2] [added: $4.9] million, and [removed: $5.6] [added: $4.2] million for [added: 2018,] 2017, [removed: 2016,] and [removed: 2015,] [added: 2016,] respectively | | | [removed: 8.2] [added: 11.8] | | | | [removed: 6.7] [added: 8.2] | | | | [removed: 8.8] [added: 6.7] | |

| Changes in unfunded employee benefit obligations, net of tax of [removed: $18.0] [added: ($0.8)] million, [removed: $15.7] [added: $18.0] million, and [removed: ($8.9)] [added: $15.7] million for [added: 2018,] 2017, [removed: 2016,] and [removed: 2015,] [added: 2016,] respectively | | | [removed: (28.8] [added: 2.4] | [removed: )] | | | [removed: (24.9] [added: (28.8] | ) | | | [removed: 14.0] [added: (24.9] | [added: )] |

| Other comprehensive income (loss) | | | [removed: (17.3] [added: 18.1] | [removed: )] | | | [removed: (14.7] [added: (17.3] | ) | | | [removed: 29.0] [added: (14.7] | [added: )] |

| Comprehensive income | | $ | [removed: 651.3] [added: 756.1] | | | $ | [removed: 434.9] [added: 651.3] | | | $ | [removed: 465.8] [added: 434.9] | |

| | | December [removed: 31] [added: 31,] | | | | | | |

| | | [added: 2018 | | | |] 2017 | | | | 2016 | | |

| | February 28, 2019 |

| Cost of sales | | | (5,369.3 | ) | | | (4,974.1 | ) | | | (4,502.9 | ) |

| Gross profit | | | 1,645.3 | | | | 1,470.8 | | | | 1,276.1 | |

| Income from operations | | | 1,067.7 | | | | 932.5 | | | | 783.3 | |

| Interest expense, net and other | | | (97.2 | ) | | | (103.9 | ) | | | (94.8 | ) |

| Net income | | $ | 738.0 | | | $ | 668.6 | | | $ | 449.6 | |

| Net income | | $ | 738.0 | | | $ | 668.6 | | | $ | 449.6 | |

| Adoption of ASC 606 | | | — | | | | — | | | | — | | | | 1.6 | | | | — | | | | | 1.6 | |

| Other | | | — | | | | — | | | | 0.3 | | | | 0.2 | | | | — | | | | | 0.5 | |

| Comprehensive income | | | — | | | | — | | | | — | | | | 738.0 | | | | 18.1 | | | | | 756.1 | |

| Balance at December 31, 2018 | | | 94,497 | | | $ | 0.9 | | | $ | 494.5 | | | $ | 2,315.8 | | | $ | (138.8 | ) | | | $ | 2,672.4 | |

Subsequent to the date of the conversion in May 2018, operating results for the Wallula mill are primarily included in the Packaging segment.

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

We recognize revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration expected to be received in exchange for those goods or services.

The timing of revenue recognition for most goods and services occurs when performance obligations under the terms of a contract with the customer are satisfied.

This occurs with the transfer of control of our products at a specific point in time.

For most packaging and paper products, revenue is recognized when the product is shipped from the mill or from our manufacturing facility to our customer.

Shipping and handling fees billed to a customer are recorded on a gross basis in “Net sales”, with the corresponding shipping and handling costs included in “Cost of sales” in the concurrent period as the revenue is recorded.

In January 2018, the Company adopted ASU 2014-09 (Topic 606): Revenue from Contracts with Customers.

See Note 3, Revenue, for more information.

Assets that are measured at fair value using the net asset value (NAV) per share as a practical expedient are not categorized within the fair value hierarchy.

| | | 2018 | | | | 2017 | | |

| | | 2018 | | | | 2017 | | |

The guidance of ASU 2016-02 is effective for the Company beginning in January 2019.

In January 2018, the Company adopted ASU 2017-07, Compensation – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires the presentation of non-service cost components of net periodic benefits expense to be shown separately outside the subtotal of operating income in the Consolidated Statements of Income and Comprehensive Income.

This ASU supersedes the revenue recognition requirements in Topic 605 Revenue Recognition (Topic 605) and requires entities to recognize revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The ASU requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates, and changes in those estimates.

The adoption of the standard did not have a material effect on the Company’s financial position or results of operations; however, the following adjustment and reclassification of certain costs were made in 2018:

a.

b.

The new revenue standard also provides additional clarity concerning contract fulfillment costs, which resulted in certain costs being classified as cost of sales rather than selling, general and administrative expenses beginning January 1, 2018.

For the year ended December 31, 2018, this amount totaled $28.2 million.

See Note 3, Revenue, for more information.

The adoption of this ASU retrospectively resulted in a $1.3 million and $3.0 million reclassification between cost of sales and selling, general and administrative expenses (both components of income from operations) and interest expense, net and other (a component outside of income from operations) for the years ended December 31, 2017 and 2016, respectively.

New Accounting Standards Not Yet Adopted

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02 (Topic 842): Leases, which requires lessees to recognize a right-of-use (“ROU”) asset and a lease liability on the balance sheet for all leases, with the exception of short-term leases, and expands disclosures about leasing arrangements for both lessees and lessors, among other items.

The new standard is effective for the Company beginning January 1, 2019.

In July 2018, the FASB issued ASU No. 2018-11, which provides a modified retrospective transition method where an entity can elect to apply the transition provisions at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

Under this method, comparative prior period financial information is not restated.

Effective January 1, 2019, the Company will adopt the new lease accounting standard using the modified retrospective transition method at the adoption date with prior periods not restated.

To the stockholders and board of directors

Packaging Corporation of America:

Opinion on the Consolidated Financial Statements

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

| | /s/ KPMG LLP |

| | |

| | Chicago, Illinois |

| | February 28, 2018 |

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

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, and the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and related notes (collectively, the consolidated financial statements), and our report dated February 28, 2018 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Sacramento Container Corporation, Northern Sheets LLC and Central California Sheets LLC (collectively, Sacramento Container) during 2017, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017, Sacramento Container’s internal control over financial reporting.

As of and for the year ended December 31, 2017, Sacramento Container accounted for approximately 5% of the Company’s consolidated total assets and 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 Sacramento Container.

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

We conducted our audit in accordance with the standards of the PCAOB.

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

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

| Cost of sales | | | (4,972.7 | ) | | | (4,503.3 | ) | | | (4,533.7 | ) |

| Proceeds from sale of a business | | | — | | | | — | | | | 23.0 | |

| Balance at January 1, 2015 | | | 98,368 | | | $ | 1.0 | | | $ | 432.1 | | | $ | 1,242.2 | | | $ | (153.9 | ) | | | $ | 1,521.4 | |

| Common stock repurchases and retirements | | | (2,326 | ) | | | — | | | | (15.6 | ) | | | (139.1 | ) | | | — | | | | | (154.7 | ) |

| Restricted stock/performance unit grants and cancellations | | | 218 | | | | — | | | | 6.0 | | | | — | | | | — | | | | | 6.0 | |

| Comprehensive income | | | — | | | | — | | | | — | | | | 436.8 | | | | 29.0 | | | | | 465.8 | |

After the acquisition of Boise, we became a large diverse manufacturer of both packaging and paper products.

We recognize revenue when the following criteria are met: persuasive evidence of an agreement exists, the customer takes title and assumes risks and rewards of ownership or services have been rendered, our price to the buyer is fixed or determinable, and collectability is reasonably assured.

The timing of revenue recognition is dependent on transfer of title, which is normally either on exit from our plants (i.e., shipping point) or on arrival at customer’s location (i.e., destination point).

Shipping and handling billings to a customer are included in net sales.

Shipping and handling costs, such as freight to our customers' destinations, are included in cost of sales.

During the year ended December 31, 2015, we recognized $9.0 million of incremental depreciation expense primarily related to shortening the useful lives of assets related to the restructuring at the DeRidder, Louisiana, mill.

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

This ASU amends the guidance for revenue recognition to replace numerous industry-specific requirements.

The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control as opposed to transfer of risk and rewards.

The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers.

We established a transition team to analyze the impact of the standard on our revenue contracts by reviewing our current accounting policies and practices and identifying potential differences that would result from applying the requirements of the new standard.

Specifically, we identified significant revenue streams within each of our reportable segments and reviewed representative contracts to identify corresponding purchase obligations, variable consideration, acquisition costs and fulfillment costs.

This team has reported its findings and progress of the project to management and the Audit Committee on a periodic basis.

During our assessment, the Company considered whether the adoption would require a transition from point-in-time revenue recognition to an over-time approach for products produced by the Company without an alternative use, which would result in acceleration of revenue.

Therefore, the Company remains at a point-in-time approach and records revenue at the point control transfers to the customer.

While the adoption of ASU 2014-09 on January 1, 2018 will not have a material effect on the Company’s financial position or results of operations, the new standard requires additional disclosures around revenue recognition in the notes to the financial statements, which the Company will comply with beginning in 2018.

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: 2017.][added: 2018.]

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: 2017.][added: 2018.]

[removed: Except as may relate to] [added: During] the [removed: Sacramento Container acquisition,] [added: quarter ended December 31, 2018,] there were no [removed: other] changes in [removed: our] internal [removed: control] [added: controls] over financial reporting [removed: (as defined in Rule 13a-15(f) under the Exchange Act)] that [removed: occurred during the most recent fiscal quarter ended December 31, 2017 that] have materially affected, or are reasonably likely to materially affect, [removed: our] [added: PCA’s] 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: 2017,] [added: 2018,] 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 and excluding the operations acquired from Sacramento Container,] [added: assessment,] PCA’s management concluded that its internal control over financial reporting was effective as of December 31, [removed: 2017,] [added: 2018,] based on the specified criteria.

Changes in Internal Control over Financial Reporting

On October 2, 2017, PCA acquired Sacramento Container Corporation, Northern Sheets LLC and Central California Sheets LLC (collectively, “Sacramento Container”).

We are currently in the process of evaluating and integrating Sacramento Container’s 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 Sacramento Container from the assessment of internal control over financial reporting at December 31, 2017.

As of and for the year ended December 31, 2017, Sacramento Container accounted for approximately 5% of the Company's consolidated total assets and approximately 1% of consolidated net sales.

The following information required by this Item 10 will be included in PCA’s Proxy Statement for the [removed: 2018] [added: 2019] Annual Meeting of Stockholders and is incorporated by reference herein:

| | • | Information regarding PCA’s stockholder nominating procedures included under the captions “Election of Directors - Nominating and Governance Committee,” “Other Information - Recommendations for Board - Nominated Director Nominees,” and “Other Information - Procedures for Nominating Directors or Bringing Business Before the [removed: 2018] [added: 2019] Annual Meeting” |

Authorization of Securities under Equity Compensation Plans — Securities authorized for issuance under our equity compensation plans at December 31, [removed: 2017] [added: 2018] are as follows:

| Equity compensation plans approved by securityholders | | | — | | | $ | — | | | | [removed: 1,008,690] [added: 741,765] | |

| (a) | Does not include [removed: 966,290] [added: 1,010,295] shares of unvested restricted stock and performance units granted pursuant to our Amended and Restated 1999 Long-Term Equity Incentive Plan. |

| Total | | | — | | | $ | — | | | | 741,765 | |

| Total | | | — | | | $ | — | | | | 1,008,690 | |

| [removed: 4.4] [added: 10.19] | | [Form of [removed: Rule 144A Global Note.] [added: Performance Unit Agreement for executive officer awards made in June 2015.] (Incorporated [removed: herein] by reference to Exhibit [removed: 4.5] [added: 10.1] to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, [removed: 2003,] [added: 2015,] File No. [removed: 1-15399.)](http://www.sec.gov/Archives/edgar/data/75677/000104746903027375/a2115637zex-4_5.txt)] [added: 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000007567715000018/formofexecutiveofficerperf.htm)] |

| 4.5 | | [Officers’ Certificate, dated [removed: March 25, 2008,] [added: as of October 22, 2013,] pursuant to Section 301 of the [removed: Indenture filed herewith as Exhibit 4.2] [added: Indenture.] (Incorporated herein by reference to Exhibit 4.1 to PCA’s Current Report on Form 8-K filed [removed: March 25, 2008,] [added: October 22, 2013,] File [removed: No. 1-15399.)](http://www.sec.gov/Archives/edgar/data/75677/000110465908019379/a08-8881_1ex4d1.htm)] [added: No 1-15399.)](http://www.sec.gov/Archives/edgar/data/75677/000119312513406139/d615313dex42.htm)] |

| 4.6 | | [removed: [6.50%] [added: [4.500%] Senior Notes due [removed: 2018.] [added: 2023.] (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report on Form 8-K filed [removed: March 25, 2008,] [added: October 22, 2013,] File [removed: No. 1-15399.)](http://www.sec.gov/Archives/edgar/data/75677/000110465908019379/a08-8881_1ex4d2.htm)] [added: No 1-15399.)](http://www.sec.gov/Archives/edgar/data/75677/000119312513406139/d615313dex42.htm)] |

| [removed: 4.7] [added: 4.4] | | [Officers’ Certificate, dated as of June 26, 2012, pursuant to Section 301 of the Indenture [removed: 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.)](http://www.sec.gov/Archives/edgar/data/75677/000119312512283981/d373098dex42.htm) |

| [removed: 4.8] [added: 4.7] | | [Officers’ Certificate, dated [removed: as of October 22, 2013,] [added: September 5, 2014,] pursuant to Section 301 of the [removed: Indenture filed herewith as Exhibit 4.2.] [added: Indenture.] (Incorporated herein by reference to Exhibit 4.1 to PCA’s Current Report on Form 8-K filed [removed: October 22, 2013,] [added: September 5, 2014,] File [removed: No 1-15399.)](http://www.sec.gov/Archives/edgar/data/75677/000119312513406139/d615313dex42.htm)] [added: No. 1-15399).](http://www.sec.gov/Archives/edgar/data/75677/000119312514333019/d784171dex42.htm)] |

| [removed: 4.9] [added: 4.8] | | [removed: [4.500%] [added: [3.650%] Senior Notes due [removed: 2023.] [added: 2024] (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report on Form 8-K filed [removed: October 22, 2013,] [added: September 5, 2014,] File [removed: No 1-15399.)](http://www.sec.gov/Archives/edgar/data/75677/000119312513406139/d615313dex42.htm)] [added: No. 1-15399).](http://www.sec.gov/Archives/edgar/data/75677/000119312514333019/d784171dex42.htm)] |

| [removed: 4.10] [added: 4.9] | | [removed: [Officers’] [added: [Officer’s] Certificate, dated [removed: September 5, 2014,] [added: December 13, 2017,] pursuant to Section 301 of the [removed: Indenture filed herewith as Exhibit 4.2] [added: Indenture.] (Incorporated herein by reference to Exhibit 4.1 to PCA’s Current Report on Form 8-K filed [removed: September 5, 2014,] [added: December 13, 2017,] File No. [removed: 1-15399).](http://www.sec.gov/Archives/edgar/data/75677/000119312514333019/d784171dex42.htm)] [added: 1-15399).](http://www.sec.gov/Archives/edgar/data/75677/000119312517367914/d496380dex41.htm)] |

| 4.11 | | [removed: [3.650%] [added: [3.400%] Senior Notes due [removed: 2024] [added: 2027] (Incorporated herein by reference to Exhibit [removed: 4.2] [added: 4.3] to PCA’s Current Report on Form 8-K filed [removed: September 5, 2014,] [added: December 13, 2017,] File No. [removed: 1-15399).](http://www.sec.gov/Archives/edgar/data/75677/000119312514333019/d784171dex42.htm)] [added: 1-15399).](http://www.sec.gov/Archives/edgar/data/75677/000119312517367914/d496380dex43.htm)] |

| [removed: 4.12] [added: 4.10] | | [removed: [Officer’s Certificate, dated December 13, 2017, pursuant to Section 301 of the Indenture filed herewith as Exhibit 4.2] [added: [2.450% Senior Notes due 2020] (Incorporated herein by reference to Exhibit [removed: 4.1] [added: 4.2] to PCA’s Current Report on Form 8-K filed December 13, 2017, File No. [removed: 1-15399).](http://www.sec.gov/Archives/edgar/data/75677/000119312517367914/d496380dex41.htm)] [added: 1-15399).](http://www.sec.gov/Archives/edgar/data/75677/000119312517367914/d496380dex42.htm)] |

| 10.2 | | [Packaging Corporation of America Thrift Plan for Hourly Employees and First Amendment of Packaging Corporation of America Thrift Plan for Hourly Employees, effective February 1, 2000. (Incorporated herein by reference to Exhibit 4.5 to PCA’s Registration Statement on Form S-8, Registration No. [removed: 333-33176.)*](http://www.sec.gov/Archives/edgar/data/75677/000091205700013220/0000912057-00-013220.txt)] [added: 333-33176.)](http://www.sec.gov/Archives/edgar/data/75677/000091205700013220/0000912057-00-013220.txt)] |

| [removed: 10.4] [added: 10.7] | | [removed: [Form of Restricted Stock Award Agreement for employees and non-employee directors under the Amended] [added: [Amended] and Restated 1999 [removed: Long-term] [added: Long-Term] Equity Incentive [removed: Plan.] [added: Plan, effective as of May 1, 2013, conformed to incorporate all amendments.] (Incorporated herein by reference to Exhibit [removed: 10.3] [added: 10.8] to PCA’s [removed: Current] [added: Annual] Report on Form [removed: 8-K, filed March 14, 2006,] [added: 10-K for the year ended December 31, 2016,] File No. [removed: 1-15399.)*](http://www.sec.gov/Archives/edgar/data/75677/000110465906016492/a06-6699_1ex10d3.htm)] [added: 1-15399.)*](http://www.sec.gov/Archives/edgar/data/75677/000007567717000004/pkg12312016-exx108.htm)] |

| [removed: 10.5] [added: 10.4] | | [Packaging Corporation of America Supplemental Executive Retirement Plan, as Amended and Restated Effective as of January 1, 2005. (Incorporated herein by reference to Exhibit 10.31 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2006, File No. 1-15399.)*](http://www.sec.gov/Archives/edgar/data/75677/000110465907015513/a07-3305_1ex10d31.htm) |

| [removed: 10.6] [added: 10.5] | | [Packaging Corporation of America Deferred Compensation Plan, effective as of January 1, 2009, conformed to incorporate all amendments. (Incorporated herein by reference to Exhibit 10.6 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2016, File No. 1-15399.)*](http://www.sec.gov/Archives/edgar/data/75677/000007567717000004/pkg12312016-exx106.htm) |

| [removed: 10.7] [added: 10.6] | | [First Amendment of Packaging Corporation of America Supplemental Executive Retirement Plan, effective as of January 1, 2008. (Incorporated herein by reference to Exhibit 10.17 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2008, file No. 1-15399.)*](http://www.sec.gov/Archives/edgar/data/75677/000095013709001376/c49472exv10w17.htm) |

| 10.8 | | [Amended and Restated [removed: 1999 Long-Term Equity] [added: Executive] Incentive [added: Compensation] Plan, effective as of [removed: May 1, 2013, conformed to incorporate all amendments.] [added: December 29, 2017.] (Incorporated herein by reference to Exhibit [removed: 10.8] [added: 10.10] to [removed: PCA’s] [added: PCA's] Annual Report on Form 10-K for the year ended December 31, [removed: 2016,] [added: 2017,] File No. [removed: 1-15399.)*](http://www.sec.gov/Archives/edgar/data/75677/000007567717000004/pkg12312016-exx108.htm)] [added: 1-15399.)*](http://www.sec.gov/Archives/edgar/data/75677/000156459018003690/pkg-ex1010_155.htm)] |

| [removed: 10.11] [added: 10.9] | | [Second Amendment of Packaging Corporation of America Supplemental Executive Retirement Plan, effective as of February 28, 2013. (Incorporated herein by reference to Exhibit 10.22 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2012, File No. 1-15399.)*](http://www.sec.gov/Archives/edgar/data/75677/000119312513083569/d450554dex1022.htm) |

| [removed: 10.12] [added: 10.10] | | [Third Amendment of Packaging Corporation of America Supplemental Executive Retirement Plan, effective as of February 28, 2013. (Incorporated herein by reference to Exhibit 10.23 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2012, File No. 1-15399.) *](http://www.sec.gov/Archives/edgar/data/75677/000119312513083569/d450554dex1023.htm) |

| [removed: 10.13] [added: 10.11] | | [Form of Restricted Stock Agreement for executive officer awards made in June 2017. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2017, File No. 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000156459017015560/pkg-ex101_300.htm) |

| [removed: 10.14] [added: 10.12] | | [Form of Performance Unit Agreement for executive officer awards made in June 2017. (Incorporated by reference to Exhibit 10.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2017, File No. 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000156459017015560/pkg-ex102_301.htm) |

| [removed: 10.15] [added: 10.13] | | [Performance Based Equity Award Pool for Executive Officers relating to awards made in June 2017. (Incorporated by reference to Exhibit 10.3 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2017, File No. 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000156459017015560/pkg-ex103_302.htm) |

| [removed: 10.16] [added: 10.14] | | [Paper Purchase Agreement, dated June 25, 2011 (the “Paper Purchase Agreement”), between Boise White Paper, L.L. C. and OfficeMax Incorporated (Incorporated by reference to Exhibit 10.1 to Boise, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-33541)](http://www.sec.gov/Archives/edgar/data/1391390/000139139013000056/bz-06302013xexx101.htm) |

| [removed: 10.17] [added: 10.15] | | [First Amendment to Paper Purchase Agreement, dated June 20, 2013, between Boise White Paper, L.L.C. and OfficeMax Incorporated (Incorporated by reference to Exhibit 10.2 to Boise, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-33541)](http://www.sec.gov/Archives/edgar/data/1391390/000139139013000056/bz-06302013xexx102.htm) |

| [removed: 10.18] [added: 10.16] | | [Second Amendment to Paper Purchase Agreement, effective January 1, 2015 and executed and delivered August 19, 2015, between Boise White Paper, L.L.C. and Office Depot Inc. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, File No. 1-33541)](http://www.sec.gov/Archives/edgar/data/75677/000007567715000024/ex101finalapprovedredact.htm) |

| [removed: 10.19] [added: 10.17] | | [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).*](http://www.sec.gov/Archives/edgar/data/75677/000007567714000033/pkg-06302014xexx101.htm) |

| [removed: 10.20] [added: 10.18] | | [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).*](http://www.sec.gov/Archives/edgar/data/75677/000007567714000033/pkg-06302014xexx102.htm) |

| 10.21 | | [Form of Performance Unit Agreement for executive officer awards made in June [removed: 2015.] [added: 2016.] (Incorporated by reference to Exhibit [removed: 10.1] [added: 10.2] to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, [removed: 2015,] [added: 2016,] File No. [removed: 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000007567715000018/formofexecutiveofficerperf.htm)] [added: 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000007567716000039/pkg-06302016xexx102formofe.htm)] |

| [removed: 10.22] [added: 10.20] | | [Form of Restricted Stock Agreement for executive officer awards made in June 2015. (Incorporated by reference to Exhibit 10.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, [removed: 2014,] [added: 2015,] File No. 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000007567714000033/pkg-06302014xexx102.htm) |

| [removed: 10.23] [added: 10.22] | | [Form of [removed: Performance Unit] [added: Restricted Stock] Agreement for executive officer awards made in June 2016. (Incorporated by reference to Exhibit [removed: 10.2] [added: 10.1] to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2016, File No. [removed: 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000007567716000039/pkg-06302016xexx102formofe.htm)] [added: 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000007567716000039/pkg-06302016xexx101formofe.htm)] |

| [removed: 10.24] [added: 10.25] | | [Form of Restricted Stock Agreement for executive officer awards made in [added: and after] June [removed: 2016.] [added: 2018.] (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, [removed: 2016,] [added: 2018,] File No. [removed: 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000007567716000039/pkg-06302016xexx101formofe.htm)] [added: 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000156459018020254/pkg-ex101_55.htm)] |

| 21.1 | | [Subsidiaries of the [removed: Registrant.](https://www.sec.gov/Archives/edgar/data/75677/000156459018003690/pkg-ex211_153.htm)†] [added: Registrant.](https://www.sec.gov/Archives/edgar/data/75677/000156459019005284/pkg-ex211_216.htm)†] |

| 23.1 | | [Consent of KPMG [removed: LLP.](https://www.sec.gov/Archives/edgar/data/75677/000156459018003690/pkg-ex231_152.htm)†] [added: LLP.](https://www.sec.gov/Archives/edgar/data/75677/000156459019005284/pkg-ex231_305.htm)†] |

| 24.1 | | [Powers of [removed: Attorney.](https://www.sec.gov/Archives/edgar/data/75677/000156459018003690/pkg-ex241_151.htm)†] [added: Attorney.](https://www.sec.gov/Archives/edgar/data/75677/000156459019005284/pkg-ex241_215.htm)†] |

| 31.1 | | [Certification of Chief Executive Officer, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/75677/000156459018003690/pkg-ex311_150.htm)†] [added: 2002.†](https://www.sec.gov/Archives/edgar/data/75677/000156459019005284/pkg-ex311_214.htm)] |

| 31.2 | | [Certification of Chief Financial Officer, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/75677/000156459018003690/pkg-ex312_148.htm)†] [added: 2002.](https://www.sec.gov/Archives/edgar/data/75677/000156459019005284/pkg-ex312_213.htm)†] |

| 32 | | [Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002.†](https://www.sec.gov/Archives/edgar/data/75677/000156459018003690/pkg-ex32_149.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/75677/000156459019005284/pkg-ex32_212.htm)†] |

| 101 | | The following financial information from Packaging Corporation of America’s Annual Report on Form 10-K for the year ended December 31, [removed: 2017,] [added: 2018,] formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Income for the years ended December 31, [added: 2018,] 2017, [removed: 2016,] and [removed: 2015,] [added: 2016,] (ii) Consolidated Balance Sheets at December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] (iii) Consolidated Statements of Cash Flows for the years ended December 31, [added: 2018,] 2017, [removed: 2016,] and [removed: 2015,] [added: 2016,] (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, [added: 2018,] 2017, [removed: 2016,] and [removed: 2015,] [added: 2016,] (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 28, [removed: 2018.][added: 2019.]

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 28, [removed: 2018,] [added: 2019,] by the following persons on behalf of the registrants and in the capacities indicated.

| 10.23 | | [Form of Return on Invested Capital Performance Unit Agreement for executive officer awards made in June 2018. (Incorporated by reference to Exhibit 10.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2018, File No. 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000156459018020254/pkg-ex102_54.htm) |

| 10.24 | | [Form of Total Shareholder Return Performance Unit Agreement for executive officer awards made in June 2018. (Incorporated by reference to Exhibit 10.3 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2018, File No. 1-15399).*](http://www.sec.gov/Archives/edgar/data/75677/000156459018020254/pkg-ex103_53.htm) |

| | | |

| 4.13 | | [2.450% Senior Notes due 2020 (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report on Form 8-K filed December 13, 2017, File No. 1-15399).](http://www.sec.gov/Archives/edgar/data/75677/000119312517367914/d496380dex42.htm) |

| 4.14 | | [3.400% Senior Notes due 2027 (Incorporated herein by reference to Exhibit 4.3 to PCA’s Current Report on Form 8-K filed December 13, 2017, File No. 1-15399).](http://www.sec.gov/Archives/edgar/data/75677/000119312517367914/d496380dex43.htm) |

| 10.9 | | [PCA Amended and Restated Performance Incentive Plan, effective as of May 12, 2015. (Incorporated herein by reference to Appendix A to PCA’s Definitive Proxy Statement on Schedule 14A, filed with the SEC on March 27, 2015, File No. 1-15399.)*](http://www.sec.gov/Archives/edgar/data/75677/000119312515107251/d868967ddef14a.htm) |

| 10.10 | | [Amended and Restated Executive Incentive Compensation Plan, effective as of December 29, 2017.](https://www.sec.gov/Archives/edgar/data/75677/000156459018003690/pkg-ex1010_155.htm)† |

| 12.1 | | [Statement Regarding Computation of Ratio of Earnings to Fixed Charges.](https://www.sec.gov/Archives/edgar/data/75677/000156459018003690/pkg-ex121_154.htm)† |