filings.toolsItem 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
178K characters. Original on sec.gov · Markdown
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGIST****ERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Packaging Corporation of America:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Packaging Corporation of America and subsidiaries (the Company) as of December 31, 2025 and 2024, 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, 2025, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
The Company acquired the containerboard business of Greif, Inc. during 2025, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, the containerboard business of Greif, Inc.’s internal control over financial reporting associated with approximately 18% of the Company’s consolidated total assets and approximately 4% of the Company’s consolidated net sales included in the consolidated financial statements of the Company as of and for the year ended December 31, 2025. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of the containerboard business of Greif, Inc.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements 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 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.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of the value of the pension benefit obligation
As discussed in Notes 2 and 13 to the consolidated financial statements, the Company’s estimated pension benefit obligation totaled $1,145 million as of December 31, 2025. The pension benefit obligation is measured at the actuarial present value as of a date of all benefits attributed by the pension benefit formula to employee service rendered before that date. The determination of the Company’s pension benefit obligation is dependent, in part, on the selection of certain actuarial assumptions, including the discount rate.
We identified the evaluation of the value of the pension benefit obligation as a critical audit matter because of the specialized skills required to evaluate the measurement of the pension benefit obligation. In particular, the measurement of the pension benefit obligation is sensitive to minor changes in the discount rate assumption.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s pension benefit obligation valuation process, including a control related to the development of the discount rate. We involved an actuarial professional with specialized skills and knowledge, who assisted in understanding and assessing the actuarial methods and assumptions used to measure the pension benefit obligation. In addition, the actuarial professional assisted with our evaluation of the discount rate by assessing:
changes in the discount rate from the prior year against changes in published indices;
the pattern of cash flows, including consideration of the plan type and plan provisions;
the selected yield curve and its consistency with the prior year and spot rates.
Fair value of acquired customer relationships intangible asset
As discussed in Note 5 to the consolidated financial statements, the Company acquired the containerboard business of Greif, Inc. on September 2, 2025, for a total purchase consideration of $1.8 billion. In connection with the acquisition, the Company recorded intangible assets with an acquisition-date fair value of $460.0 million as of December 31, 2025, of which $420.0 million related to customer relationships. Management estimated the fair value of the customer relationships intangible asset using the income approach.
We identified the evaluation of the acquisition-date fair value of the customer relationships intangible asset as a critical audit matter. Subjective auditor judgment was required to evaluate certain assumptions used to determine the fair value of the customer relationships intangible asset, including the forecasted revenues, forecasted earnings before interest, tax, depreciation and amortization (EBITDA) margins, and discount rate because of limited observable market information. Changes to those assumptions could have had a significant effect on the determination of the fair value of the customer relationships intangible asset. In addition, involvement of professionals with specialized skills and knowledge was required to evaluate the discount rate.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls over the development of the assumptions as described above. We evaluated the Company’s forecasted revenues and forecasted EBITDA margins by comparing them to the Company’s historical results, actual results subsequent to the acquisition date, and available industry reports. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the discount rate by comparing it to a discount rate range that was independently developed using publicly available market data for peer entities.
| /s/ KPMG LLP | |
| We have served as the Company’s auditor since 2014*.* | |
| Chicago, Illinois | |
| February 26, 2026 |
Packaging Corporation of America
Consolidated Statements of In****come and Comprehensive Income
(dollars in millions, except per-share data)
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Statements of Income: | ||||||||||||
| Net sales | $ | 8,989.3 | $ | 8,383.3 | $ | 7,802.4 | ||||||
| Cost of sales | (7,099.7 | ) | (6,600.2 | ) | (6,103.5 | ) | ||||||
| Gross profit | 1,889.6 | 1,783.1 | 1,698.9 | |||||||||
| Selling, general and administrative expenses | (634.2 | ) | (610.3 | ) | (580.9 | ) | ||||||
| Other expense, net | (148.4 | ) | (71.5 | ) | (42.9 | ) | ||||||
| Income from operations | 1,107.0 | 1,101.3 | 1,075.1 | |||||||||
| Non-operating pension (expense) income | (0.1 | ) | 4.5 | (7.7 | ) | |||||||
| Interest expense, net | (79.1 | ) | (41.4 | ) | (53.3 | ) | ||||||
| Income before taxes | 1,027.8 | 1,064.4 | 1,014.1 | |||||||||
| Provision for income taxes | (253.7 | ) | (259.3 | ) | (248.9 | ) | ||||||
| Net income | $ | 774.1 | $ | 805.1 | $ | 765.2 | ||||||
| Net income per common share: | ||||||||||||
| Basic | $ | 8.61 | $ | 8.97 | $ | 8.52 | ||||||
| Diluted | $ | 8.58 | $ | 8.93 | $ | 8.48 | ||||||
| Dividends declared per common share | $ | 5.00 | $ | 5.00 | $ | 5.00 | ||||||
| Statements of Comprehensive Income: | ||||||||||||
| Net income | $ | 774.1 | $ | 805.1 | $ | 765.2 | ||||||
| Other comprehensive income, net of tax: | ||||||||||||
| Foreign currency translation adjustment | $ | — | $ | — | $ | 0.1 | ||||||
| Changes in unrealized gains on marketable debt securities, net of tax of $0.0 million, ($0.1) million, and ($0.6) million for 2025, 2024, and 2023, respectively | 0.1 | 0.3 | 1.8 | |||||||||
| Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of ($1.3) million, ($1.4) million, and ($2.1) million for 2025, 2024, and 2023, respectively | 3.8 | 4.1 | 6.4 | |||||||||
| Changes in unfunded employee benefit obligations, net of tax of $0.7 million, ($7.6) million, and ($7.8) million for 2025, 2024, and 2023, respectively | (2.1 | ) | 23.1 | 23.2 | ||||||||
| Other comprehensive income | 1.8 | 27.5 | 31.5 | |||||||||
| Comprehensive income | $ | 775.9 | $ | 832.6 | $ | 796.7 |
See notes to consolidated financial statements.
Packaging Corporation of America
Consolidated B****alance Sheets
(dollars and shares in millions, except per-share data)
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 529.0 | $ | 685.0 | ||||
| Short-term marketable debt securities | 71.8 | 102.0 | ||||||
| Accounts receivable, net of allowance for credit losses and customer deductions of $17.0 million and $20.6 million as of December 31, 2025 and December 31, 2024, respectively | 1,255.8 | 1,144.0 | ||||||
| Inventories | 1,243.2 | 1,124.9 | ||||||
| Prepaid expenses and other current assets | 85.8 | 166.9 | ||||||
| Federal and state income taxes receivable | 28.1 | 10.2 | ||||||
| Total current assets | 3,213.7 | 3,233.0 | ||||||
| Property, plant, and equipment, net | 4,985.1 | 4,039.0 | ||||||
| Goodwill | 1,372.3 | 922.4 | ||||||
| Other intangible assets, net | 602.3 | 191.9 | ||||||
| Operating lease right-of-use assets | 376.0 | 276.9 | ||||||
| Long-term marketable debt securities | 67.0 | 65.2 | ||||||
| Other long-term assets | 109.1 | 104.8 | ||||||
| Total assets | $ | 10,725.5 | $ | 8,833.2 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Operating lease obligations | $ | 99.8 | $ | 80.5 | ||||
| Finance lease obligations | 2.3 | 2.1 | ||||||
| Accounts payable | 471.4 | 430.3 | ||||||
| Dividends payable | 116.1 | 116.3 | ||||||
| Accrued liabilities | 302.1 | 362.9 | ||||||
| Accrued interest | 23.4 | 9.5 | ||||||
| Total current liabilities | 1,015.1 | 1,001.6 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt | 3,967.3 | 2,474.2 | ||||||
| Operating lease obligations | 290.6 | 208.0 | ||||||
| Finance lease obligations | 4.9 | 6.7 | ||||||
| Deferred income taxes | 660.1 | 561.9 | ||||||
| Compensation and benefits | 106.2 | 95.9 | ||||||
| Other long-term liabilities | 83.3 | 80.9 | ||||||
| Total long-term liabilities | 5,112.4 | 3,427.6 | ||||||
| Commitments and contingent liabilities (Note 20) | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, par value $0.01 per share, 300.0 million shares authorized,89.2 million and 89.8 million shares issued as of December 31, 2025 and December 31, 2024, respectively | 0.9 | 0.9 | ||||||
| Additional paid in capital | 707.7 | 669.8 | ||||||
| Retained earnings | 3,931.0 | 3,776.7 | ||||||
| Accumulated other comprehensive loss | (41.6 | ) | (43.4 | ) | ||||
| Total stockholders' equity | 4,598.0 | 4,404.0 | ||||||
| Total liabilities and stockholders' equity | $ | 10,725.5 | $ | 8,833.2 |
See notes to consolidated financial statements.
Packaging Corporation of America
Consolidated Statem****ents of Cash Flows
(dollars in millions)
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net income | $ | 774.1 | $ | 805.1 | $ | 765.2 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation, depletion, and amortization of intangibles | 652.8 | 525.6 | 517.7 | |||||||||
| Amortization of deferred financing costs | 5.3 | 2.3 | 2.2 | |||||||||
| Share-based compensation expense | 45.2 | 48.8 | 40.0 | |||||||||
| Deferred income tax provision (benefit) | 97.3 | (4.2 | ) | 5.2 | ||||||||
| Net loss on asset disposals | 29.4 | 19.5 | 9.1 | |||||||||
| Pension and post-retirement benefits expense, net of contributions | 8.0 | (19.5 | ) | (30.8 | ) | |||||||
| Other, net | 0.1 | 24.2 | 13.3 | |||||||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||
| (Increase) decrease in assets — | ||||||||||||
| Accounts receivable | (10.3 | ) | (110.7 | ) | (1.4 | ) | ||||||
| Inventories | 4.4 | (111.8 | ) | (35.8 | ) | |||||||
| Prepaid expenses and other current assets | 82.9 | (104.7 | ) | (4.2 | ) | |||||||
| Increase (decrease) in liabilities — | ||||||||||||
| Accounts payable | (42.5 | ) | 18.3 | 11.4 | ||||||||
| Accrued liabilities | (71.2 | ) | 104.2 | (8.2 | ) | |||||||
| Federal and state income taxes payable/receivable | (18.0 | ) | (5.9 | ) | 31.4 | |||||||
| Net cash provided by operating activities | 1,557.5 | 1,191.2 | 1,315.1 | |||||||||
| Cash Flows from Investing Activities: | ||||||||||||
| Additions to property, plant, and equipment | (828.9 | ) | (669.7 | ) | (469.7 | ) | ||||||
| Acquisition of business, net of cash acquired | (1,804.3 | ) | — | — | ||||||||
| Additions to other long-term assets | (2.4 | ) | (1.9 | ) | (2.6 | ) | ||||||
| Proceeds from asset disposals | 33.4 | 1.3 | 1.6 | |||||||||
| Purchases of held-to-maturity debt securities | — | — | (400.0 | ) | ||||||||
| Proceeds from maturities of held-to-maturity debt securities | — | 400.0 | — | |||||||||
| Purchases of available-for-sale debt securities | (113.5 | ) | (114.3 | ) | (107.2 | ) | ||||||
| Proceeds from sales of available-for-sale debt securities | 41.1 | 8.6 | 5.5 | |||||||||
| Proceeds from maturities of available-for-sale debt securities | 101.7 | 98.2 | 97.3 | |||||||||
| Net cash used for investing activities | (2,572.9 | ) | (277.8 | ) | (875.1 | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||||||
| Repayments of debt and finance lease obligations | (2.2 | ) | (401.9 | ) | (1.9 | ) | ||||||
| Proceeds from issuance of debt, net of discount and lender fees | 1,494.1 | — | 397.1 | |||||||||
| Financing costs paid | (6.3 | ) | — | (1.1 | ) | |||||||
| Common stock dividends paid | (449.6 | ) | (448.8 | ) | (448.9 | ) | ||||||
| Repurchases of common stock | (153.0 | ) | — | (41.5 | ) | |||||||
| Shares withheld to cover employee restricted stock taxes | (23.6 | ) | (25.7 | ) | (15.7 | ) | ||||||
| Net cash provided by (used for) financing activities | 859.4 | (876.4 | ) | (112.0 | ) | |||||||
| Net (decrease) increase in cash and cash equivalents | (156.0 | ) | 37.0 | 328.0 | ||||||||
| Cash and cash equivalents, beginning of year | 685.0 | 648.0 | 320.0 | |||||||||
| Cash and cash equivalents, end of year | $ | 529.0 | $ | 685.0 | $ | 648.0 |
See notes to consolidated financial statements.
Packaging Corporation of America
Consolidated Statements of Ch****anges in Stockholders' Equity
(dollars in millions and shares in thousands)
| Common Stock | Additional Paid in | Retained | Accumulated Other Comprehensive | Total Stockholders' | |||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Loss | Equity | ||||||||||||||||||||
| Balance at January 1, 2023 | 89,695 | $ | 0.9 | $ | 581.8 | $ | 3,186.8 | $ | (102.4 | ) | $ | 3,667.1 | |||||||||||||
| Common stock repurchases and retirements | (286 | ) | — | (2.5 | ) | (39.0 | ) | — | (41.5 | ) | |||||||||||||||
| Common stock withheld and retired to cover taxes on vested stock awards | (121 | ) | — | (1.1 | ) | (14.6 | ) | — | (15.7 | ) | |||||||||||||||
| Common stock dividends declared | — | — | — | (451.2 | ) | — | (451.2 | ) | |||||||||||||||||
| Share-based compensation and other | 337 | — | 41.9 | — | — | 41.9 | |||||||||||||||||||
| Comprehensive income | — | — | — | 765.2 | 31.5 | 796.7 | |||||||||||||||||||
| Balance at December 31, 2023 | 89,625 | 0.9 | 620.1 | 3,447.2 | (70.9 | ) | 3,997.3 | ||||||||||||||||||
| Common stock withheld and retired to cover taxes on vested stock awards | (143 | ) | — | (1.3 | ) | (24.4 | ) | — | (25.7 | ) | |||||||||||||||
| Common stock dividends declared | — | — | — | (451.3 | ) | — | (451.3 | ) | |||||||||||||||||
| Share-based compensation and other | 320 | — | 51.0 | 0.1 | — | 51.1 | |||||||||||||||||||
| Comprehensive income | — | — | — | 805.1 | 27.5 | 832.6 | |||||||||||||||||||
| Balance at December 31, 2024 | 89,802 | 0.9 | 669.8 | 3,776.7 | (43.4 | ) | 4,404.0 | ||||||||||||||||||
| Common stock repurchases and retirements | (761 | ) | — | (7.4 | ) | (145.6 | ) | — | (153.0 | ) | |||||||||||||||
| Common stock withheld and retired to cover taxes on vested stock awards | (118 | ) | — | (1.2 | ) | (22.4 | ) | — | (23.6 | ) | |||||||||||||||
| Common stock dividends declared | — | — | — | (451.9 | ) | — | (451.9 | ) | |||||||||||||||||
| Share-based compensation and other | 291 | — | 46.5 | 0.1 | — | 46.6 | |||||||||||||||||||
| Comprehensive income | — | — | — | 774.1 | 1.8 | 775.9 | |||||||||||||||||||
| Balance at December 31, 2025 | 89,214 | $ | 0.9 | $ | 707.7 | $ | 3,931.0 | $ | (41.6 | ) | $ | 4,598.0 |
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
1.
Nature of Operations and Basis of Presentation
Packaging Corporation of America (“we,” “us,” “our,” “PCA,” or the “Company”) was incorporated on January 25, 1999. In April 1999, PCA acquired the containerboard and corrugated packaging products business of Pactiv Corporation (Pactiv), formerly known as Tenneco Packaging, Inc., a wholly owned subsidiary of Tenneco Inc. We are a large, diverse manufacturer of both packaging and paper products. We are headquartered in Lake Forest, Illinois and we operate primarily in the United States. We have approximately 16,800 employees.
We report our business in three reportable segments: Packaging, Paper, and Corporate and Other. Our Packaging segment produces a wide variety of containerboard and corrugated packaging products. The Paper segment manufactures and sells a range of communication-based papers. Corporate and Other includes support staff services and related assets and liabilities, transportation assets, and activity related to other ancillary support operations. For more information about our segments, see Note 19, Segment Information.
On September 2, 2025, we completed the acquisition of the containerboard business of Greif, Inc. for $1.8 billion in cash. The Greif containerboard business includes two containerboard mills with approximately 800,000 tons of production capacity and eight sheet feeder and corrugated plants located across the United States. The operating results of the Greif Acquisition are included in PCA’s results after the date of acquisition.
On December 3, 2025, the Company approved and announced that it will permanently shut down the No. 2 paper machine and kraft pulping facilities at its Wallula, Washington containerboard mill. The Company will continue to operate the No. 3 paper machine and recycled pulping facilities at the mill. These actions, completed earlier in the first quarter of 2026, are estimated to result in approximately $205 million of pre-tax restructuring charges. In the fourth quarter of 2025, we recorded $128.0 million of expenses associated with this shut down, which included non-cash impairment and accelerated depreciation charges, charges for contract termination, severance, and other costs. These expenses were recorded in “Cost of sales” and “Other expense, net” in the Consolidated Statements of Income.
The consolidated financial statements include the accounts of PCA and its majority-owned subsidiaries after elimination of intercompany balances and transactions.
2.
Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods.
Revenue Recognition
In accordance with Accounting Standards Update (“ASU”) 2014-09 (Topic 606): Revenue from Contracts with Customers, 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 a 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. We present taxes collected from customers and remitted to governmental authorities on a net basis in our Consolidated Statements of Income. See Note 4, Revenue, for more information.
Planned Major Maintenance Costs
The Company accounts for its planned major maintenance activities in accordance with ASC 360, Property, Plant, and Equipment, using the deferral method. All maintenance costs incurred during the year are expensed in the year in which the maintenance activity occurs.
Share-Based Compensation
We recognize compensation expense for awards granted under the PCA long-term equity incentive plans based on the fair value on the grant date. We recognize the cost of the equity awards expected to vest over the period the awards vest and for performance units, compensation expense is recognized regardless of whether the market conditions of the respective performance unit are satisfied. See Note 15, Share-Based Compensation, for more information.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less at the date of purchase. Cash equivalents are stated at cost, which approximates market. Cash and cash equivalents totaled $529.0 million and $685.0 million at December 31, 2025 and 2024, respectively, which included cash equivalents of $487.0 million and $614.7 million, respectively. At December 31, 2025, we had no cash held by operations outside the United States, and at December 31, 2024, such amounts were insignificant.
Marketable Debt Securities
A majority of the Company’s marketable debt securities have been classified and accounted for as available-for-sale (AFS) marketable debt securities in accordance with ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). The Company reports its marketable debt securities at fair value, and they are classified as short-term or long-term based on each security’s underlying contractual maturity date.
The Company’s marketable debt securities are analyzed at the individual debt security level. Changes in the fair value of the debt security have the potential to impact accumulated other comprehensive income (loss) (AOCI), the Company’s earnings, or both.
The Company regularly reviews its investment portfolio to determine if any debt security is impaired. A decline in the fair value of the debt security below its amortized cost results in an impairment of the debt security. If there is an intent to sell the debt security, or if it is more likely than not that the debt security will be sold prior to recovering the amortized cost basis, the Company recognizes the impairment as a realized loss in earnings by writing down the debt security’s amortized cost basis.
Additional analysis is required if there is not an intent to sell the debt security, or if a recovery of the amortized cost basis is expected to be made prior to the sale of the security. If any portion of the impairment is the result of a credit loss, the Company recognizes this portion in earnings through an allowance for credit losses, with the remainder recognized as unrealized loss in AOCI. Subsequent improvements in credit losses are recognized as a reduction in the allowance. Any impairment not attributed to credit loss is recognized as an unrealized loss in AOCI in its entirety.
The Company considers several factors when determining if a portion of an impairment is the result of a credit loss including, but not limited to, adverse conditions related to the financial health and future outlook of the issuer; the credit quality of the issuer, as reported by credit rating agencies; trends present in the issuer’s industry in which it operates; and general market conditions.
For the years ended December 31, 2025 and 2024, we do not consider any of the impairments related to our marketable debt securities to be the result of credit losses. See Note 12, Cash, Cash Equivalents, and Marketable Debt Securities, for more information.
Trade Accounts Receivable, Allowances, and Customer Deductions
Trade accounts receivable are recorded at amortized cost and represent a contractual right to receive payment from a customer. The Company’s trade accounts receivable are short-term receivables, with most requiring payment within 30 to 60 days, and represent the primary class of financing receivables utilized by the Company.
The Company has entered into a number of customer-based supply chain financing programs to accelerate the receipt of payments for outstanding accounts receivable from certain customers. Receivables transferred under these programs meet the requirements to be accounted for as sales in accordance with guidance under Financial Accounting Standards Board (“FASB”) ASC 860, Transfers and Servicing. The receivables are sold without recourse and are reflected as a reduction of accounts receivable on the Consolidated Balance Sheets at the time of sale. The corresponding proceeds are reflected in cash flows from operating activities within the Consolidated Statements of Cash Flows. Receivables involved with these programs constituted about 2% of our 2025 and 2024 net sales, respectively.
In accordance with ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), the Company established an allowance for credit losses, which is a valuation account that estimates the expected credit loss over the lifetime of the asset and is deducted from, or added to, the amortized cost basis of the trade accounts receivable. The allowance for credit losses is based upon a combination of factors such as historical collection experience, aged receivables, current economic conditions, and reasonable and supportable forecasts on future economic conditions. Expected recoveries of amounts previously written off, not to exceed the aggregate of the amount previously written off, are also considered when determining the necessary allowance at the balance sheet date. When determining the allowance for credit losses, management also considers specific customer accounts that may be considered higher risk or uncollectible due to customer industry trends, bankruptcy filings, or substantial downgrades of credit scores.
Current period estimates for the allowance for credit losses are compared against the allowance previously recorded, and all required adjustments are reported as credit loss expense (for expected losses or write offs) or a reversal of credit loss expense (for expected recoveries) in net income. Outstanding trade accounts receivable balances are written off when deemed uncollectible after undergoing reasonable collection efforts. At December 31, 2025 and 2024, the allowance for credit losses was $5.5 million and $9.8 million, respectively.
The customer deductions reserve represents the estimated amount required for customer returns, allowances, and earned discounts. Based on the Company’s experience, customer returns, allowances, and earned discounts have averaged approximately 1% of gross selling price. Accordingly, PCA reserves 1% of its open customer accounts receivable balance for these items. The reserves for customer deductions of $11.5 million and $10.8 million at December 31, 2025 and 2024, respectively, are also included as a reduction of the accounts receivable balance.
Derivative Instruments and Hedging Activities
PCA is exposed to the impact of commodity price changes, interest rate changes, and changes in the market value of its financial instruments. To manage these risks, we may, from time to time, enter into transactions, including certain physical commodity transactions, that are determined to be derivatives. We do not enter into derivative arrangements for trading or speculative purposes.
The Company records its derivatives, if any, in accordance with ASC 815, Derivatives and Hedging. The guidance requires the Company to recognize derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative depends on the intended use and designation of the derivative instrument. For a derivative designated as a fair value hedge, the gain or loss on the derivative is recognized in earnings in the period of change at fair value together with the offsetting gain or loss on the hedged item. For a derivative instrument designated as a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of AOCI and is subsequently recognized in earnings when the hedged exposure affects earnings. The ineffective portion of the gain or loss is recognized in earnings.
For the years ended December 31, 2025 and 2024, PCA has entered into master supply contracts, or physical commodity contracts, with suppliers and distributors of natural gas for several of its manufacturing locations. These physical commodity contracts meet the criteria of derivatives under ASC 815 but qualify for the normal purchase normal sales (“NPNS”) scope exception, which we have elected. As such, PCA is not required to apply derivative accounting treatment as required in ASC 815 to these physical commodity transactions.
Fair Value Measurements
PCA measures the fair value of its financial instruments and marketable debt securities in accordance with ASC 820, Fair Value Measurements and Disclosures. The guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. It is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes the following hierarchy that prioritizes the inputs to valuation methodologies used to measure fair value:
Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Valuations based on unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
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.
Financial instruments and marketable debt securities measured at fair value on a recurring basis include the fair values of our AFS marketable debt securities and our pension and postretirement benefit assets and liabilities. The valuation techniques used to measure the fair value of the Company’s marketable debt securities and pension and postretirement benefit assets and liabilities, which generally have counterparties with high credit ratings, are based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. See Note 12, Cash, Cash Equivalents, and Marketable Debt Securities, and Note 13, Employee Benefit Plans and Other Postretirement Benefits, for more information.
Other assets and liabilities measured and recognized at fair value on a nonrecurring basis include assets acquired and liabilities assumed and our asset retirement obligations. Given the nature of these assets and liabilities, evaluating their fair value from the perspective of a market participant is inherently complex. Assumptions and estimates about future values can be affected by a variety of internal and external factors. Changes in these factors may require us to revise our estimates and could require us to retroactively adjust provisional amounts that we recorded for the fair values of assets acquired and liabilities assumed in connection with business combinations. These adjustments could have a material effect on our financial condition and results of operations. See Note 14, Asset Retirement Obligations, for more information.
Inventory Valuation
We value our raw materials, work in process, and finished goods inventories using lower of cost, as determined by the average cost method, or net realizable value. Supplies and materials, which are used for the repair and maintenance of our machinery and equipment, are valued at the first-in, first-out (FIFO) or average cost methods.
The components of inventories were as follows (dollars in millions):
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Raw materials | $ | 416.6 | $ | 356.6 | ||||
| Work in process | 17.5 | 15.5 | ||||||
| Finished goods | 241.6 | 234.0 | ||||||
| Supplies and materials | 567.5 | 518.8 | ||||||
| Inventories | $ | 1,243.2 | $ | 1,124.9 |
Property, Plant, and Equipment
Property, plant, and equipment are recorded at cost. Cost includes expenditures for major improvements and replacements and the amount of interest cost associated with significant capital additions. Repairs and maintenance costs are expensed as incurred*.* When property and equipment are retired, sold, or otherwise disposed of, the asset’s carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is included in “Other expense, net” in our Consolidated Statements of Income.
Property, plant, and equipment consisted of the following (dollars in millions):
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Land and land improvements | $ | 258.0 | $ | 203.4 | ||||
| Buildings | 1,343.8 | 1,140.0 | ||||||
| Machinery and equipment | 8,271.7 | 7,368.8 | ||||||
| Construction in progress | 552.8 | 397.2 | ||||||
| Other | 217.0 | 195.8 | ||||||
| Property, plant and equipment, at cost | 10,643.3 | 9,305.2 | ||||||
| Less accumulated depreciation | (5,658.2 | ) | (5,266.2 | ) | ||||
| Property, plant, and equipment, net | $ | 4,985.1 | $ | 4,039.0 |
The amount of interest capitalized from construction in progress was $9.8 million, $10.1 million, and $8.1 million for the years ended December 31, 2025, 2024, and 2023, respectively. At December 31, 2025 and December 31, 2024, purchases of property, plant, and equipment included in accounts payable were $50.4 million and $33.8 million, respectively.
Depreciation is computed on the straight-line basis over the estimated useful lives of the related assets. Assets under finance leases are depreciated on the straight-line method over the term of the lease or the useful life, if shorter. The following lives are used for the various categories of assets:
| Buildings and land improvements | 5 to 40 years | |
| Machinery and equipment | 3 to 25 years | |
| Trucks and automobiles | 3 to 20 years | |
| Furniture and fixtures | 3 to 25 years | |
| Computers and hardware | 3 to 10 years | |
| Leasehold improvements | Period of the lease or useful life, if shorter |
The amount of depreciation expense was $600.9 million, $485.3 million, and $475.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. In 2025, we recognized incremental depreciation expense of $49.1 million related to the announced discontinuation of the No. 2 paper machine and kraft pulping facilities at the Wallula, Washington mill and closures of corrugated products facilities. In 2024, and 2023, we recognized incremental depreciation expense of $2.2 million and $14.4 million, respectively, primarily related to Jackson mill conversion-related activities and closures of corrugated products facilities.
Pursuant to the terms of certain industrial and lease revenue bonds, title to certain property, plant, and equipment were transferred to certain municipal development authorities in, respectively, 2009 and 2025, in order to receive certain property tax or sales and use tax abatements. The title of these assets would revert back to PCA upon redemption, retirement or cancellation of the bond in question. The assets are included in the consolidated balance sheets under the caption “Property, plant, and equipment, net,” as all risks and rewards remained with the Company. The industrial revenue bonds issued in 2009 matured during 2024, and there were no items outstanding for the year ended December 31, 2024.
Leases
We determine if an arrangement is, or contains, a lease at the inception date based on the presence of identified assets and our right to obtain substantially all of the economic benefit from or to direct the use of such assets. When we determine a lease exists, we record a right-of-use asset and corresponding lease liability on our consolidated balance sheets. Right-of-use assets represent our right to use an underlying asset for the lease term. Lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets are recognized at commencement date at the value of the lease liability and are adjusted for any prepayments, lease incentives received, and initial direct costs incurred. Lease liabilities are recognized at lease commencement date based on the present value of remaining lease payments over the lease term. As the discount rate implicit in the lease is not readily determinable in most of our leases, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
Operating lease balances are included in Operating lease right-of-use assets with the related liabilities included in Current operating lease obligations and Long-term operating lease obligations. Assets under finance leases are included in Property, plant and equipment, net, with the related liabilities included in Current finance lease obligations and Long-term finance lease obligations.
We do not record lease contracts with a term of 12 months or less on our consolidated balance sheets.
We recognize fixed lease expense for operating leases on a straight-line basis over the lease term. For finance leases, we recognize amortization expense on the right-of-use asset and interest expense on the lease liability over the lease term.
We have lease agreements with non-lease components that relate to lease components (e.g., common area maintenance such as cleaning or landscaping, insurance, etc.). We account for each lease and any non-lease components associated with that lease as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease costs.
Long-Lived Asset Impairment
Long-lived assets other than goodwill and other intangibles are reviewed for impairment in accordance with provisions of ASC 360, Property, Plant and Equipment. In the event that facts and circumstances indicate that the carrying amount of any long-lived assets may be impaired, an evaluation of recoverability is performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset (or group of assets) is compared to the assets (or group of assets) carrying amount to determine if a write-down to fair value is required.
Goodwill and Intangible Assets
The Company has capitalized certain intangible assets, primarily goodwill, customer relationships, and trademarks and trade names, based on their estimated fair value at the date of acquisition. Amortization is provided for customer relationships on a straight-line basis over periods ranging from ten to 40 years and trademarks and trade names over periods ranging from five to 20 years.
Goodwill, which amounted to $1,372.3 million and $922.4 million as of December 31, 2025 and 2024, respectively, is not amortized but is subject to an annual impairment test in accordance with ASC 350, Intangibles – Goodwill and Other. We test goodwill for impairment annually in the fourth quarter or sooner if events or changes in circumstances indicate that the carrying value of the asset may exceed fair value. Additionally, we evaluate the remaining useful lives of our finite-lived purchased intangible assets to determine whether any adjustments to the useful lives are necessary.
The Company concluded that none of the goodwill or intangible assets were impaired during the 2025, 2024, and 2023 annual impairment tests. See Note 9, Goodwill and Intangible Assets, for additional information.
Pension and Postretirement Benefits
Several estimates and assumptions are required to record pension costs and liabilities, including discount rate, return on assets, and longevity and service lives of employees. We review and update these assumptions annually unless a plan curtailment or other event occurs, requiring that we update the estimates on an interim basis. While we believe the assumptions used to measure our pension and postretirement benefit obligations are reasonable, differences in actual experience or changes in assumptions may materially affect our pension and postretirement benefit obligations and future expense. See Note 13, Employee Benefit Plans and Other Postretirement Benefits, for additional information.
For postretirement health care plan accounting, the Company reviews external data and its own historical trends for health care costs to determine the health care cost trend rate assumption.
Environmental Matters
Environmental expenditures that extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. Liabilities are recorded for environmental contingencies when such costs are probable and reasonably estimable. These liabilities are adjusted as further information develops or circumstances change. Environmental expenditures related to existing conditions resulting from past or current operations from which no current or future benefit is discernible are expensed as incurred.
Asset Retirement Obligations
The Company accounts for its retirement obligations related predominantly to landfill closure, wastewater treatment pond dredging, closed-site monitoring costs, and certain leasehold improvements under ASC 410, Asset Retirement and Environmental Obligations, which requires recognition of legal obligations associated with the retirement of long-lived assets whether these assets are owned or leased. These legal obligations are recognized at fair value at the time that the obligations are incurred. When we record the liability, we capitalize the cost by increasing the carrying amount of the related long-lived asset, which is amortized to expense over the useful life of the asset. See Note 14, Asset Retirement Obligations, for additional information.
Deferred Debt Issuance Costs
PCA has capitalized certain costs related to obtaining its financing. These costs are amortized to interest expense using the effective interest rate method over the terms of the related financing, which range from three to 30 years. At December 31, 2025 and 2024, deferred debt issuance costs were $25.2 million and $18.0 million, respectively, all of which were recorded in “Long-term debt” on our Consolidated Balance Sheets.
Cutting Rights
We lease the cutting rights to approximately 41,000 acres of timberland. For our cutting rights, we capitalize the annual lease payments and reforestation costs associated with these leases. Costs are recorded as depletion when the timber or fiber is harvested and used in operations or sold to customers. Capitalized long-term lease costs for our cutting rights, primarily recorded in “Other long-term assets” on our Consolidated Balance Sheets, were $21.5 million and $23.1 million as of December 31, 2025 and 2024, respectively. The amount of depletion expense was $2.0 million, $1.9 million, and $2.5 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Deferred Software Costs
PCA capitalizes costs related to the purchase and development of software, which is used in its business operations. The costs attributable to these software systems are amortized over their estimated useful lives based on various factors such as the effects of obsolescence, technology, and other economic factors. Net capitalized software costs recorded in “Other long-term assets” on our Consolidated Balance Sheets were $0.6 million and $1.0 million for the years ended December 31, 2025 and 2024, respectively. Software amortization expense was $0.3 million, $0.6 million, and $1.4 million for the years ended December 31, 2025, 2024, and 2023, respectively.
The Company accounts for costs incurred to implement a cloud computing arrangement that is a service contract under ASU 2018-15, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU includes guidance on capitalizing costs associated with developing or obtaining internal-use software. For the years ended December 31, 2025 and 2024, we did not have any capitalized costs associated with cloud computing arrangements.
Income Taxes
PCA utilizes the liability method of accounting for income taxes whereby it recognizes deferred tax assets and liabilities for the future tax consequences of temporary differences between the tax basis of assets and liabilities and the reported amounts in the financial statements. Deferred tax assets will be reduced by a valuation allowance if, based upon management’s estimates, it is more likely than not that a portion of the deferred tax assets will not be realized in a future period. The estimates utilized in the recognition of deferred tax assets are subject to revision in future periods based on new facts or circumstances. PCA’s practice is to recognize interest and penalties related to unrecognized tax benefits in income tax expense.
Trade Agreements
PCA regularly trades containerboard with other manufacturers primarily to reduce shipping costs. These agreements are entered into with other producers on an annual basis, pursuant to which both parties agree to ship an identical number of tons of containerboard to each other within the agreement period. These agreements lower transportation costs by allowing each party’s containerboard mills to ship containerboard to the other party’s closer corrugated products plant. PCA tracks each shipment to ensure that the other party’s shipments to PCA match PCA’s shipments to the other party during the agreement period. Such transfers are possible because certain grades of containerboard are commodity products with no distinguishing product characteristics. These transactions are accounted for at carrying value, and revenue is not recorded as the transactions do not represent the culmination of an earnings process. The transactions are recorded into inventory accounts, and no sale or income is recorded until such inventory is converted to a finished product and sold to an end-use customer.
Business Combinations
The Company accounts for acquisitions under ASC 805, Business Combinations, ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, and ASU 2017-01 (Topic 805): Clarifying the Definition of a Business. ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. ASU 2017-01 provides additional guidance to assist entities with evaluating whether transfers of assets and activities should be accounted for as acquisitions of assets or businesses. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and liabilities assumed. During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated financial statements.
Recently Adopted Accounting Standards
Effective January 1, 2025, we adopted ASU 2023-09, Income Taxes (Topic 740): Improvement to the Income Tax Disclosures. This ASU provides for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The new guidance was applied retrospectively in this Annual Report on Form 10-K and did not have a significant impact on the Company’s related disclosure as reflected in Note 8, Income Taxes.
New Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU is intended to enhance transparency into the nature and function of expenses. The amendments require that on an annual and interim basis, entities disclose disaggregated operating expense information about specific categories, including purchases of inventory, employee compensation, depreciation, amortization, and depletion. The update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027 on a prospective basis or with the option for retrospective application. Early adoption is permitted. The Company is currently assessing the impact of the disclosure requirements on its consolidated financial statements.
3.
Leases
We group our leases into two primary lease types, real estate and equipment, and into various asset classes within each type. Real estate leases primarily include manufacturing locations, office space, warehouses, and design centers, while equipment leases primarily include manufacturing equipment.
Leases with an initial term of 12 months or less and certain month-to-month leases are not recorded on the balance sheet. The lease expense for these types of leases is recognized on a straight-line basis over the lease term.
To determine the lease term, we include the non-cancellable period of the lease together with the following: all periods covered by an option to extend the lease if we are reasonably certain to exercise that option; any periods covered by an option to terminate the lease if we are reasonably certain not to exercise that option; and any periods covered by an option to extend or not to terminate the lease that are controlled by the lessor. The exercising of lease renewal options is based on whether future economic benefit is expected to be derived from the renewal. Most of our real estate leases contain at least one renewal option. Renewal options generally range from 3 to 5 years. Although equipment leases may also contain renewal options, we typically do not expect to extend and/or exercise these renewal options unless a compelling business reason is provided to management.
Our leases may contain fixed and variable costs. Fixed costs determine the right-of-use asset. Variable costs are those costs which will vary month to month and are excluded from the calculation of the right-of-use asset. Variable lease costs are recorded to lease expense in the period in which they are incurred.
Our leases do not provide an implicit borrowing rate of return. Therefore, we use our incremental borrowing rate to calculate the present value of lease payments at inception of the lease or when a lease is modified.
Supplemental balance sheet information related to our operating leases was as follows (dollars in millions):
| Year Ended December 31, | |||||||
| 2025 | 2024 | ||||||
| Operating lease right-of-use assets | $ | 376.0 | $ | 276.9 | |||
| Current portion of operating lease obligations | $ | 99.8 | $ | 80.5 | |||
| Long-term portion of operating lease obligations | 290.6 | 208.0 | |||||
| Total operating lease obligations | $ | 390.4 | $ | 288.5 |
Supplemental balance sheet information related to our finance leases was as follows (dollars in millions):
| Year Ended December 31, | |||||||
| 2025 | 2024 | ||||||
| Buildings | $ | 0.3 | $ | 0.3 | |||
| Machinery and equipment | 29.2 | 28.5 | |||||
| Total | 29.5 | 28.8 | |||||
| Less accumulated amortization | (26.1 | ) | (25.0 | ) | |||
| Total | $ | 3.4 | $ | 3.8 | |||
| Current portion of finance lease obligations | $ | 2.3 | $ | 2.1 | |||
| Long-term portion of finance lease obligations | 4.9 | 6.7 | |||||
| Total finance lease obligations | $ | 7.2 | $ | 8.8 |
The Company was obligated under finance leases covering buildings and machinery and equipment in the amount of $7.2 million and $8.8 million at December 31, 2025 and 2024, respectively. Amortization of assets under finance lease obligations is included in depreciation expense.
For both operating and finance leases, the weighted average remaining lease term in years and weighted average discount rates were as follows:
| Year Ended December 31, | |||||||
| 2025 | 2024 | ||||||
| Weighted-average remaining lease term (years): | |||||||
| Operating leases | 5.5 | 5.1 | |||||
| Finance leases | 2.8 | 3.8 | |||||
| Weighted-average discount rate: | |||||||
| Operating leases | 4.68 | % | 4.28 | % | |||
| Finance leases | 6.53 | % | 6.66 | % |
The components of lease expense were as follows (dollars in millions):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Finance lease cost: | |||||||||||
| Amortization of finance lease assets | $ | 1.1 | $ | 1.0 | $ | 1.4 | |||||
| Interest on lease liabilities | 0.5 | 0.7 | 0.8 | ||||||||
| Total finance lease cost | 1.6 | 1.7 | 2.2 | ||||||||
| Operating lease cost | 104.0 | 92.4 | 87.7 | ||||||||
| Short-term lease cost | 27.3 | 25.7 | 24.6 | ||||||||
| Variable lease cost | 26.5 | 22.5 | 21.7 | ||||||||
| Total lease cost | $ | 159.4 | $ | 142.3 | $ | 136.2 |
We had an insignificant amount of sublease rental income for the years ended December 31, 2025, 2024, and 2023.
Supplemental cash flow information related to leases was as follows (dollars in millions):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows for operating leases | $ | (91.8 | ) | $ | (84.3 | ) | $ | (77.6 | ) | ||
| Operating cash flows for finance leases | (1.1 | ) | (1.0 | ) | (1.4 | ) | |||||
| Financing cash flows for finance leases | (0.5 | ) | (0.7 | ) | (0.8 | ) | |||||
| Right-of-use assets obtained in exchange for new lease obligations: | |||||||||||
| Operating leases (a) | $ | (129.7 | ) | $ | (33.6 | ) | $ | (58.9 | ) | ||
| Finance leases | (0.6 | ) | — | — | |||||||
| Supplemental non-cash information on changes in lease liabilities | $ | 63.6 | $ | 45.5 | $ | 1.3 | |||||
| Supplemental non-cash information on changes in right-of-use assets | $ | 29.8 | $ | 37.3 | $ | 77.6 |
(a)
Includes $72.1 million of new operating lease obligations related to the Greif Acquisition.
The future minimum payments under operating and finance lease liabilities at December 31, 2025 were as follows (dollars in millions):
| Operating Leases | Finance Leases | |||||||
| 2026 | $ | 115.4 | $ | 3.0 | ||||
| 2027 | 94.9 | 2.9 | ||||||
| 2028 | 67.1 | 2.0 | ||||||
| 2029 | 46.2 | — | ||||||
| 2030 | 34.4 | — | ||||||
| Thereafter | 87.7 | — | ||||||
| Total lease payments | 445.6 | 7.9 | ||||||
| Less imputed interest (b) | (55.2 | ) | (0.7 | ) | ||||
| Present value of lease liabilities | $ | 390.4 | $ | 7.2 |
(b)
Calculated using the incremental borrowing rate for each lease applied to the future payments.
4.
Revenue
Revenue Recognition
Revenue is recognized 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. Sales, value added, and other taxes collected concurrently with revenue-producing activities are excluded from revenue.
The following table presents our revenues disaggregated by product line (dollars in millions):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Packaging | $ | 8,293.9 | $ | 7,690.9 | $ | 7,135.6 | |||||
| Paper | 615.4 | 624.7 | 595.4 | ||||||||
| Corporate and Other | 80.0 | 67.7 | 71.4 | ||||||||
| Total revenue | $ | 8,989.3 | $ | 8,383.3 | $ | 7,802.4 |
Packaging Revenue
Our containerboard mills produce linerboard and corrugating medium which are papers primarily used in the production of corrugated products. The majority of our containerboard production is used internally by our corrugated products manufacturing facilities. The remaining containerboard is sold to outside domestic and export customers. Our corrugated products manufacturing plants produce a wide variety of corrugated packaging products and retail merchandise displays. We sell corrugated products to national, regional and local accounts, which are broadly diversified across industries and geographic locations.
The Company recognizes revenue for its packaging products when performance obligations under the terms of a contract with a customer are satisfied. This occurs with the transfer of control of our products at a specific point in time. Based on our express terms and conditions of the sale of products to our customers, as well as terms included in contractual arrangements with our customers, we do not have an enforceable right of payment that includes a reasonable profit throughout the duration of the contract for products that do not have an alternative use. Revenue is recognized when the product is shipped from the mill or from our manufacturing facility to our customer. Certain customers may receive volume-based incentives, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized.
Certain customers receive a portion of their packaging products as consigned inventory with billing triggered once the customer uses or consumes the designated product. Prior to invoicing, these amounts are handled as unbilled receivables. Total unbilled receivables, which are immaterial in amount, are included in the accounts receivable financial statement caption.
Paper Revenue
We manufacture and sell a range of communication-based papers. Communication papers consist of cut-size office papers and printing and converting papers.
The Company recognizes revenue for its paper products when performance obligations under the terms of a contract with a customer are satisfied. This occurs with the transfer of control of our products at a specific point in time. Revenue is recognized when the product is shipped from the mill or from our manufacturing facility or distribution center to our customer. Certain customers may receive volume-based incentives, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized.
Corporate and Other Revenue
Revenue in this segment primarily relates to Louisiana Timber Procurement Company, L.L.C. (LTP), a variable-interest entity that is 50% owned by PCA and 50% owned by Boise Cascade Company (Boise Cascade). PCA is the primary beneficiary of LTP and has the power to direct the activities that most significantly affect the economic performance of LTP. Therefore, we consolidate 100% of LTP in our financial statements. See Note 18, Transactions With Related Parties, for more information related to LTP.
The Company recognizes revenue within this segment when performance obligations under the terms of a contract with a customer are satisfied. This occurs with the transfer of control of our products at a specific point in time.
Practical Expedients and Exemption
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. We expense sales commissions when incurred because the amortization period is one year or less. Sales commissions are recorded in “Selling, general, and administrative expenses”.
We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.
5.
Acquisitions
Greif Acquisition
On September 2, 2025, we completed the Greif Acquisition for $1.8 billion in cash. For tax purposes, the acquisition of Greif’s containerboard business was primarily structured as an asset acquisition. The Greif containerboard business includes two containerboard mills with approximately 800,000 tons of production capacity and eight sheet feeder and corrugated plants located across the United States. Greif’s financial results are included in the Packaging segment from the date of acquisition. The following table summarizes the purchase consideration for the Greif Acquisition (in millions):
| Amount | ||||
| Cash paid for Greif Acquisition | $ | 1,804.7 | ||
| Net working capital adjustment (receivable at December 31, 2025) | (3.9 | ) | ||
| Settlement of pre-existing relationships | (0.3 | ) | ||
| Total purchase consideration | $ | 1,800.5 |
For the year ended December 31, 2025, the Company incurred $13.3 million of charges for acquisition and integration costs related to the Greif Acquisition, which were recorded in “Other expense, net” in the Consolidated Statements of Income.
The Company accounted for the Greif Acquisition using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Because the acquisition closed near the end of the quarter ended September 30, 2025, the purchase price allocation reflected in our September 30, 2025 financial statements consisted of provisional amounts. Measurement period adjustments were recorded during the three months ended December 31, 2025 as additional information became available. The following table summarizes the allocation of the purchase price to the assets acquired and the liabilities assumed, based on our current estimates of the fair value at the date of acquisition (dollars in millions):
| 9/30/25 Allocation | Adjustments | Revised Allocation | ||||||||||
| Current Assets: | ||||||||||||
| Cash | $ | 0.1 | $ | — | $ | 0.1 | ||||||
| Accounts receivable | 97.6 | — | 97.6 | |||||||||
| Inventories | 124.2 | (1.4 | ) | 122.8 | ||||||||
| Prepaid expenses and other current assets | 1.4 | — | 1.4 | |||||||||
| Total current assets | 223.3 | (1.4 | ) | 221.9 | ||||||||
| Property, plant, and equipment (a) | 868.7 | (107.1 | ) | 761.6 | ||||||||
| Operating lease right-of-use assets | 57.0 | 15.1 | 72.1 | |||||||||
| Intangible assets (b): | ||||||||||||
| Customer relationships | 460.0 | (40.0 | ) | 420.0 | ||||||||
| Trademarks | 70.0 | (30.0 | ) | 40.0 | ||||||||
| Goodwill (c) | 277.4 | 172.5 | 449.9 | |||||||||
| Assets acquired | 1,956.4 | 9.1 | 1,965.5 | |||||||||
| Accounts payable | 70.1 | (3.0 | ) | 67.1 | ||||||||
| Accrued liabilities | 21.4 | 0.6 | 22.0 | |||||||||
| Current operating lease obligations | 7.6 | 4.3 | 11.9 | |||||||||
| Long-term operating lease obligations | 49.3 | 10.9 | 60.2 | |||||||||
| Long-term finance lease obligations | 0.4 | 0.2 | 0.6 | |||||||||
| Other long-term liabilities | 3.2 | — | 3.2 | |||||||||
| Liabilities assumed | 152.0 | 13.0 | 165.0 | |||||||||
| Net assets acquired | $ | 1,804.4 | $ | (3.9 | ) | $ | 1,800.5 |
(a)
Property, plant and equipment are being depreciated on a straight-line basis over their preliminary estimated useful lives ranging from one to 40 years.
(b)
We are amortizing intangible assets on a straight-line basis for customer relationships and trademarks over our preliminary estimates of their useful lives of 15 years and five years, respectively, in the Packaging segment.
(c)
Goodwill is calculated as the excess of the purchase price over the fair value of the net assets acquired. Goodwill generated from the acquisition is primarily attributable to expected synergies and the assembled workforce. Goodwill recognized in the transaction is deductible for tax purposes.
The purchase price allocation remains preliminary and is subject to the finalization of various valuations and assessments, including working capital adjustments. These may affect the consideration paid and may materially impact the valuations and subsequent assessments. We expect to finalize the valuation within the 12-month period following the acquisition date.
Pro Forma Financial Information
Pro forma results of Greif Acquisition have not been presented as the results were not considered significant to our consolidated financial statements for all periods presented and would not have been significant had the acquisition occurred at the beginning of the year ended December 31, 2024.
6.
Earnings Per Share
The following table sets forth the computation of basic and diluted income per common share for the periods presented (dollars and shares in millions, except per share data).
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Numerator: | ||||||||||||
| Net income | $ | 774.1 | $ | 805.1 | $ | 765.2 | ||||||
| Less: Distributed and undistributed earnings allocated to participating securities | (5.2 | ) | (5.6 | ) | (6.2 | ) | ||||||
| Net income attributable to common shareholders | $ | 768.9 | $ | 799.5 | $ | 759.0 | ||||||
| Denominator: | ||||||||||||
| Weighted average basic common shares outstanding | 89.3 | 89.1 | 89.1 | |||||||||
| Effect of dilutive securities | 0.3 | 0.4 | 0.4 | |||||||||
| Diluted common shares outstanding | 89.6 | 89.5 | 89.5 | |||||||||
| Basic income per common share | $ | 8.61 | $ | 8.97 | $ | 8.52 | ||||||
| Diluted income per common share | $ | 8.58 | $ | 8.93 | $ | 8.48 |
7.
Other Expense, Net
The components of other income (expense), net, were as follows (dollars in millions):
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Asset disposals and write-offs | $ | (40.8 | ) | $ | (39.7 | ) | $ | (31.7 | ) | |||
| Facilities closure and other income (costs) (a) | 19.4 | (1.0 | ) | (7.9 | ) | |||||||
| DeRidder and other litigation (b) | (3.5 | ) | (95.2 | ) | — | |||||||
| DeRidder and other litigation insurance recoveries (b) | 3.5 | 95.2 | — | |||||||||
| Wallula mill restructuring (c) | (87.0 | ) | — | — | ||||||||
| Acquisition and integration-related costs (d) | (13.3 | ) | — | — | ||||||||
| Jackson mill conversion-related activities (e) | — | (7.6 | ) | (1.8 | ) | |||||||
| Other | (26.7 | ) | (23.2 | ) | (1.5 | ) | ||||||
| Total | $ | (148.4 | ) | $ | (71.5 | ) | $ | (42.9 | ) |
(a)
For 2025, includes income consisting of gains on sales of closed corrugated products facilities and a gain on an asset disposal related to a closed corrugated products facility, partially offset by charges related to the closure of certain corrugated products facilities. For 2024, includes charges consisting of closure costs related to corrugated products facilities, partially offset by income primarily related to a favorable lease buyout for a closed corrugated products facility. For 2023, includes charges consisting of closure costs related to corrugated products facilities and design centers, partially offset by a gain on sale of a corrugated products facility.
(b)
For 2025, includes charges and income related to fully insured settlement amounts, and for 2024, includes charges and income related to the DeRidder mill lawsuit for compensatory damages plus interest. For more information, see Note 20, Commitments, Guarantees, Indemnifications, and Legal Proceedings.
(c)
Includes charges related to the announced discontinuation of the No. 2 machine and kraft pulping facilities at the Wallula, Washington containerboard mill.
(d)
Includes charges for acquisition and integration costs related to the September 2025 Greif Acquisition.
(e)
Includes charges related to the announced discontinuation of production of uncoated freesheet paper grades on the No. 3 machine at the Jackson, Alabama mill in the first quarter of 2021 associated with the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities.
8.
Income Taxes
The following is an analysis of the components of the consolidated income tax provision (dollars in millions):
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Income before income tax expense - | ||||||||||||
| U.S. | $ | 1,027.8 | $ | 1,064.4 | $ | 1,014.1 | ||||||
| Total | 1,027.8 | 1,064.4 | 1,014.1 | |||||||||
| Current income tax provision - | ||||||||||||
| U.S. federal | 113.0 | 218.9 | 199.4 | |||||||||
| State and local | 43.4 | 44.6 | 44.3 | |||||||||
| Total current provision for taxes | 156.4 | 263.5 | 243.7 | |||||||||
| Deferred income tax provision (benefit) - | ||||||||||||
| U.S. federal | 91.4 | (5.5 | ) | 3.6 | ||||||||
| State and local | 5.9 | 1.3 | 1.6 | |||||||||
| Total deferred provision (benefit) for taxes | 97.3 | (4.2 | ) | 5.2 | ||||||||
| Total income tax provision - | ||||||||||||
| U.S. federal | 204.4 | 213.4 | 203.0 | |||||||||
| State and local | 49.3 | 45.9 | 45.9 | |||||||||
| Total provision for income taxes | $ | 253.7 | $ | 259.3 | $ | 248.9 |
The effective tax rate varies from the U.S. federal statutory tax rate principally due to the following (dollars in millions):
| Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||||||||||||||||
| Provision computed at U.S. federal statutory tax rate of 21% | $ | 215.8 | 21.0 | % | $ | 223.5 | 21.0 | % | $ | 213.0 | 21.0 | % | ||||||||||||
| Domestic state and local income taxes, net of federal effect (a) | 39.0 | 3.8 | % | 36.3 | 3.4 | % | 36.3 | 3.6 | % | |||||||||||||||
| Foreign tax effects | — | — | % | — | — | % | — | — | % | |||||||||||||||
| Effect of changes in tax laws or rates enacted in current period | — | — | % | — | — | % | — | — | % | |||||||||||||||
| Effect of cross-border tax laws | (0.3 | ) | — | % | (0.7 | ) | (0.1 | )% | (0.8 | ) | (0.1 | )% | ||||||||||||
| Tax Credits | (3.5 | ) | (0.3 | )% | (4.5 | ) | (0.4 | )% | (3.5 | ) | (0.3 | )% | ||||||||||||
| Changes in valuation allowance | 0.1 | — | % | — | — | % | (0.1 | ) | — | % | ||||||||||||||
| Nontaxable and nondeductible items | 6.0 | 0.6 | % | 4.4 | 0.4 | % | 5.2 | 0.5 | % | |||||||||||||||
| Changes in unrecognized tax benefits | (0.3 | ) | — | % | 1.0 | 0.1 | % | 0.7 | 0.1 | % | ||||||||||||||
| Other Adjustments | (3.1 | ) | (0.4 | )% | (0.7 | ) | — | % | (1.9 | ) | (0.3 | )% | ||||||||||||
| Total | $ | 253.7 | 24.7 | % | $ | 259.3 | 24.4 | % | $ | 248.9 | 24.5 | % |
(a)
State and local income taxes in California, Florida, Illinois, Michigan, Minnesota, and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category.
The following details the scheduled expiration dates of our tax effected net operating loss (NOL) and other tax carryforwards at December 31, 2025 (dollars in millions):
| 2026 Through 2035 | 2036 Through 2045 | Indefinite | Total | |||||||||||||
| U.S. federal NOLs | $ | 8.7 | $ | — | $ | — | $ | 8.7 | ||||||||
| State taxing jurisdiction NOLs | 0.2 | 0.2 | — | 0.4 | ||||||||||||
| U.S. federal and non-U.S. capital loss carryforwards | 0.3 | — | — | 0.3 | ||||||||||||
| U.S. federal tax credit carryforwards | 0.1 | — | — | 0.1 | ||||||||||||
| Total | $ | 9.3 | $ | 0.2 | $ | — | $ | 9.5 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Deferred income tax assets and liabilities at December 31 are summarized as follows (dollars in millions):
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets: | ||||||||
| Lease obligations | $ | 97.3 | $ | 71.9 | ||||
| Employee benefits and compensation | 54.0 | 53.3 | ||||||
| Accrued liabilities | 15.9 | 31.6 | ||||||
| Inventories | 11.5 | 8.8 | ||||||
| Restricted stock and performance units | 10.8 | 10.4 | ||||||
| Net operating loss carryforwards | 9.1 | 12.6 | ||||||
| Capital loss and general business credit carryforwards | 0.4 | 0.4 | ||||||
| Derivatives | 0.1 | 0.1 | ||||||
| Pension and postretirement benefits | 0.3 | — | ||||||
| Gross deferred tax assets | 199.4 | 189.1 | ||||||
| Valuation allowance (b) | (0.3 | ) | (0.3 | ) | ||||
| Net deferred tax assets | $ | 199.1 | $ | 188.8 | ||||
| Deferred tax liabilities: | ||||||||
| Property, plant and equipment | $ | (683.2 | ) | $ | (598.8 | ) | ||
| Right-of-use assets | (93.6 | ) | (68.9 | ) | ||||
| Goodwill and intangible assets | (82.4 | ) | (81.8 | ) | ||||
| Pension and postretirement benefits | — | (1.2 | ) | |||||
| Total deferred tax liabilities | $ | (859.2 | ) | $ | (750.7 | ) | ||
| Net deferred tax liabilities | $ | (660.1 | ) | $ | (561.9 | ) |
(b)
Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. Both the 2025 and 2024 valuation allowances relate to capital losses. We do not expect to generate capital gains before the capital losses expire. If or when recognized, the tax benefits relating to the reversal of any or all of the valuation allowance would be recognized as a benefit to income tax expense.
Cash payments for federal, state, and foreign income taxes for the years ended are summarized as follows (dollars in millions):
| 2025 | 2024 | 2023 | ||||||||||
| U.S. federal | $ | 126.6 | $ | 223.0 | $ | 171.0 | ||||||
| U.S. state and local (c) | 47.8 | 46.4 | 41.3 | |||||||||
| Total | $ | 174.4 | $ | 269.4 | $ | 212.3 |
(c)
State and local income tax payments to California, Florida, Illinois, Michigan, Minnesota, and Pennsylvania made up the majority (greater than 50 percent) of the tax payments in this category.
The following table summarizes the changes related to PCA’s gross unrecognized tax benefits excluding interest and penalties (dollars in millions):
| 2025 | 2024 | 2023 | ||||||||||
| Balance as of January 1 | $ | (3.2 | ) | $ | (2.4 | ) | $ | (1.7 | ) | |||
| Increases related to prior years’ tax positions | — | (0.1 | ) | (0.4 | ) | |||||||
| Increases related to current year tax positions | (0.6 | ) | (0.9 | ) | (0.7 | ) | ||||||
| Decreases related to prior years' tax positions | 0.4 | — | — | |||||||||
| Settlements with taxing authorities | — | — | — | |||||||||
| Expiration of the statute of limitations | 0.5 | 0.2 | 0.4 | |||||||||
| Balance at December 31 | $ | (2.9 | ) | $ | (3.2 | ) | $ | (2.4 | ) |
At December 31, 2025, PCA had recorded a $2.9 million gross reserve for unrecognized tax benefits, excluding interest and penalties. Of the total, $2.9 million (net of the federal benefit for state taxes) would impact the effective tax rate if recognized.
PCA recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. For the years ended December 31, 2025 and 2024, we had $0.3 million and $0.2 million of interest and penalties recorded for unrecognized tax benefits, respectively.
PCA is subject to income taxation in the United States, various state and local jurisdictions, and Hong Kong. The tax years 2022-2025 remain open to federal examination. The tax years 2021-2025 remain open to state examinations. Some foreign tax jurisdictions are open to examination for the 2019 tax year forward. Through the Boise acquisition, PCA recorded net operating losses and credit carryforwards from 2008 through 2011 and 2013 that are subject to examinations and adjustments for at least three years following the year in which utilized.
On July 4, 2025, the President signed into law H.R.1, the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes significant tax law changes such as providing for the full expensing of certain depreciable property as well as full expensing of domestic research and development expenditures. The provisions of the OBBBA have various effective dates, with certain provisions effective in 2025 and others through 2027. In accordance with ASC 740, we have recognized the effects of the OBBBA in the period of enactment. The provisions of the OBBBA did not have a material impact on our income tax expense or effective tax rate. However, the provisions of the OBBBA did reduce our 2025 cash tax payments.
9.
Goodwill and Intangible Assets
Goodwill
Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. At December 31, 2025 and 2024, we had $1,372.3 million and $922.4 million of goodwill recorded in our Packaging segment, respectively, which represents the entire goodwill balance reported on our Consolidated Balance Sheets. We did not recognize any adjustments to goodwill during the year ended December 31, 2024.
Changes in the carrying amount of our goodwill are as follows (dollars in millions):
| Goodwill | ||||
| Balance at January 1, 2024 | $ | 922.4 | ||
| Balance at December 31, 2024 | 922.4 | |||
| Acquisitions (a) | 449.9 | |||
| Balance at December 31, 2025 | $ | 1,372.3 |
(a)
In connection with the September 2025 Greif Acquisition, the Company recorded $449.9 million of goodwill in the Packaging segment. See Note 5, Acquisitions, for more information on the September 2025 Greif Acquisition.
Intangible Assets
Intangible assets are primarily comprised of customer relationships and trademarks and trade names. The weighted average useful life, gross carrying amount, and accumulated amortization of our intangible assets were as follows (dollars in millions):
| As of December 31, 2025 | As of December 31, 2024 | |||||||||||||||||||||||
| Weighted Average Remaining Useful Life (in Years) | Gross Carrying Amount | Accumulated Amortization | Weighted Average Remaining Useful Life (in Years) | Gross Carrying Amount | Accumulated Amortization | |||||||||||||||||||
| Customer relationships (b) | 12.4 | $ | 966.0 | $ | 407.2 | 6.6 | $ | 546.0 | $ | 362.4 | ||||||||||||||
| Trademarks and trade names (b) | 4.8 | 81.3 | 37.8 | 6.0 | 41.3 | 33.0 | ||||||||||||||||||
| Other | 0.9 | 4.4 | 4.4 | 1.9 | 4.4 | 4.4 | ||||||||||||||||||
| Total intangible assets (excluding goodwill) | 11.8 | $ | 1,051.7 | $ | 449.4 | 6.6 | $ | 591.7 | $ | 399.8 |
(b)
In connection with the September 2025 Greif Acquisition, the Company recorded intangible assets of $420.0 million for customer relationships and $40.0 million for trademarks. See Note 5, Acquisitions, for additional information.
Amortization expense was $49.6 million, $37.7 million, and $38.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. Estimated amortization expense of intangible assets over the next five years is expected to approximate $73.5 million (2026), $70.7 million (2027), $63.1 million (2028), $49.0 million (2029) and $46.3 million (2030).
Impairment Testing
We test goodwill for impairment annually in the fourth quarter or sooner if events or changes in circumstances indicate that the carrying value of the asset may exceed fair value. Additionally, when we experience changes to our business or operating environment, we evaluate the remaining useful lives and recoverability of our finite-lived purchased intangible assets to determine whether any adjustments to the useful lives or impairment are necessary. We completed our annual qualitative assessment in the fourth quarter, and there was no indication of goodwill or intangible asset impairment.
10.
Accrued Liabilities
The components of accrued liabilities were as follows (dollars in millions):
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Compensation and benefits | $ | 163.5 | $ | 168.5 | ||||
| Medical insurance and workers’ compensation | 36.1 | 29.1 | ||||||
| Customer rebates and other credits | 33.9 | 33.9 | ||||||
| Franchise, property, sales and use taxes | 19.8 | 18.7 | ||||||
| Severance, retention, and relocation | 9.4 | 3.4 | ||||||
| DeRidder and other litigation (a) | 4.5 | 96.2 | ||||||
| Environmental liabilities and asset retirement obligations | 2.7 | 3.2 | ||||||
| Other | 32.2 | 9.9 | ||||||
| Total | $ | 302.1 | $ | 362.9 |
(a)
Amounts included in the Consolidated Balance Sheet for both periods presented relate to fully insured settlement amounts. The previously recorded amounts for DeRidder and other litigation at December 31, 2024 have been paid as of December 31, 2025. For more information, see Note 19, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our 2024 Annual Report on Form 10-K.
11.
Debt
At December 31, 2025 and 2024, our long-term debt and interest rates on that debt were as follows (dollars in millions):
| December 31, 2025 | December 31, 2024 | ||||||||||||||||
| Amount | Interest Rate | Amount | Interest Rate | ||||||||||||||
| Revolving Credit Facility | $ | — | — | % | $ | — | — | % | |||||||||
| Three-Year Term Loan, due September 2028 | 500.0 | 4.84 | % | — | — | % | |||||||||||
| Seven-Year Farm Credit Loan, due September 2032 | 500.0 | 5.69 | % | — | — | % | |||||||||||
| 3.40% Senior Notes, net of discount of $0.4 million and $0.6 million as of December 31, 2025 and 2024, respectively, due December 2027 | 499.6 | 3.40 | % | 499.4 | 3.40 | % | |||||||||||
| 3.00% Senior Notes, net of discount of $0.3 million as of both December 31, 2025 and 2024, due December 2029 | 499.7 | 3.00 | % | 499.7 | 3.00 | % | |||||||||||
| 5.70% Senior Notes, net of discount of $0.3 million as of both December 31, 2025 and 2024, due December 2033 | 399.7 | 5.70 | % | 399.7 | 5.70 | % | |||||||||||
| 5.20% Senior Notes, net of discount of $0.1 million as of December 31, 2025, due August 2035 | 499.9 | 5.20 | % | — | — | % | |||||||||||
| 4.05% Senior Notes, net of discount of $3.1 million and $3.2 million as of December 31, 2025 and 2024, respectively, due December 2049 | 396.9 | 4.05 | % | 396.8 | 4.05 | % | |||||||||||
| 3.05% Senior Notes, net of discount of $3.3 million and $3.4 million as of December 31, 2025 and 2024, respectively, due October 2051 | 696.7 | 3.05 | % | 696.6 | 3.05 | % | |||||||||||
| Total | 3,992.5 | 4.28 | % | 2,492.2 | 3.69 | % | |||||||||||
| Less unamortized debt issuance costs | 25.2 | 18.0 | |||||||||||||||
| Total long-term debt | $ | 3,967.3 | 4.28 | % | $ | 2,474.2 | 3.69 | % |
On August 11, 2025, the Company issued $500 million of 5.20% senior notes due 2035 through a registered public offering. The net proceeds from this transaction were used to finance the Greif Acquisition. The $4.9 million of debt issuance costs associated with the new notes will be amortized to interest expense using the effective interest method over the term of the notes.
On September 15, 2024, the Company used the net proceeds from the November 2023 issuance of the $400.0 million of 5.70% senior notes due 2033, together with a portion of cash on hand, to repay its outstanding 3.65% senior notes due 2024 at maturity. The repayment of these notes was $407.3 million, which included principal and accrued interest.
Credit Agreements
On July 31, 2025, the Company entered into two Credit Agreements (the first credit agreement being the “Commercial Credit Agreement” and the second credit agreement being the “Farm Credit Agreement,” collectively, the “Credit Agreements”). The Commercial Credit Agreement includes (i) a $500.0 million three-year unsecured term loan facility and (ii) a $600.0 million unsecured revolving credit facility. The Farm Credit Agreement includes a $500.0 million seven-year unsecured term loan facility. The proceeds of the term loan facilities under the Credit Agreements were fully drawn upon on September 2, 2025 to finance the Greif Acquisition.
Loans under the Commercial Credit Agreement bear interest at the secured overnight financing rate (SOFR) or the base rate plus a margin, which, under the Commercial Credit Agreement, is determined based upon: (i) in the case of the revolving credit facility, our leverage ratio or debt rating, and (ii) in the case of the term loan facility, our debt rating. Loans under the Farm Credit Agreement bear interest at SOFR or the base rate plus a margin, which is determined based upon our debt rating.
PCA may prepay loans under the Credit Agreements at any time without premium or penalty.
The Commercial Credit Agreement replaces our old Credit Agreement, dated June 8, 2021 and amended on April 27, 2023 (the “Old Credit Agreement”), which was terminated. Revolving loans under the Commercial Credit Agreement have a five-year term and are available for borrowings for working capital and general corporate purposes. Except for approximately $27.5 million of letters of credit, (i) no borrowings were outstanding under the Old Credit Agreement and (ii) no borrowings are outstanding under the revolving credit facility included in the Commercial Credit Agreement.
Borrowings under the Credit Agreements are guaranteed by PCA’s material subsidiaries.
Borrowings
As of December 31, 2025, the details of our borrowings were as follows:
Credit Agreements. On July 31, 2025, the Company entered into the Credit Agreements to finance the Greif Acquisition. The financing consisted of:
Revolving Credit Facility: A $600.0 million unsecured revolving credit facility included under the Commercial Credit Agreement. Loans through the revolving credit facility bear interest at the term SOFR rate plus an applicable margin based on the public ratings of PCA’s senior long-term unsecured debt or PCA’s gross leverage ratio. Revolving loans under the Commercial Credit Agreement have a five-year term and are available for borrowings for working capital and general corporate purposes. At December 31, 2025, unused borrowing capacity was $572.5 million, which includes various outstanding letters of credit. The outstanding letters of credit were primarily for workers compensation. We are required to pay commitment fees on the unused portions of the credit facility.
Three-Year Commercial Term Loan: A new $500.0 million unsecured term loan with variable interest (SOFR or the base rate plus a margin determined upon our debt rating), due September 2028.
Seven-Year Farm Credit Loan: A new $500.0 million unsecured term loan with variable interest (SOFR or the base rate plus a margin determined upon our debt rating), due September 2032.
3.40% Senior Notes. On December 13, 2017, we issued $500.0 million of 3.40% senior notes due December 15, 2027, through a registered public offering.
3.00% Senior Notes. On November 21, 2019, we issued $500.0 million of 3.00% senior notes due December 15, 2029, through a registered public offering.
4.05% Senior Notes. On November 21, 2019, we issued $400.0 million of 4.05% senior notes due December 15, 2049, through a registered public offering.
3.05% Senior Notes. On September 21, 2021, we issued $700.0 million of 3.05% senior notes due October 1, 2051, through a registered public offering.
5.70% Senior Notes. On November 30, 2023, we issued $400.0 million of 5.70% senior notes due December 1, 2033, through a registered public offering.
5.20% Senior Notes. On August 11, 2025, we issued $500.0 million of 5.20% senior notes due August 15, 2035, through a registered public offering.
The instruments governing our indebtedness contain financial and other covenants that limit the ability of PCA and its subsidiaries to enter into sale and leaseback transactions, incur liens, incur indebtedness at the subsidiary level, enter into certain transactions with affiliates, merge or consolidate with any other person or sell or otherwise dispose of all or substantially all of our assets. The Credit Agreements have a financial covenant for maximum leverage ratio calculated on a consolidated basis. Indebtedness as defined in the Credit Agreements includes certain guarantees of third‑party obligations; accordingly, amounts related to guarantees discussed in Note 20, Commitments, Guarantees, Indemnifications and Legal Proceedings, are included in the calculation of this ratio, although such guarantees do not constitute as debt under U.S. GAAP. A failure to comply with these restrictions could lead to an event of default, which could result in an acceleration of any outstanding indebtedness and/or prohibit us from drawing on the revolving credit facility. An acceleration under the revolving credit facility may also constitute an event of default under the senior notes indenture. At December 31, 2025, we were in compliance with this covenant.
At December 31, 2025, we have $2,992.5 million of fixed-rate senior notes and $1,000.0 million of variable-rate notes outstanding. At December 31, 2025, the fair value of our fixed-rate debt was estimated to be $2,679.7 million. The difference between the book value and fair value is due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. We estimated the fair value of our fixed-rate debt using quoted market prices (Level 2 inputs), discussed further in Note 2, Summary of Significant Accounting Policies.
Repayments, Interest, and Other
In 2025, we did not repay any outstanding debt, as we did not have any maturities of our senior notes during 2025.
On September 15, 2024, we used the net proceeds from the November 2023 offering of the 5.70% senior notes due 2033 and cash on hand to repay our outstanding 3.65% senior notes due 2024. The repayment of the old 3.65% notes was $407.3 million, which included principal and accrued interest.
In 2023, we did not repay any outstanding debt, as we did not have any maturities of our senior notes during 2023.
As of December 31, 2025, annual principal maturities for debt, excluding unamortized debt discount, are: none for 2026; $500.0 million for 2027; $500.0 million for 2028; $500.0 million for 2029; and $2.5 billion for 2030 and thereafter.
Interest payments paid in connection with the Company’s debt obligations for the years ended December 31, 2025, 2024, and 2023 were $100.6 million, $107.7 million, and $84.8 million, respectively. As of December 31, 2025, the estimated future interest payments for the Company's debt obligations are: $118.4 million for 2026; $92.4 million for 2027; $75.4 million for 2028 and 2029; and $1,040.9 million, in aggregate, for 2030 and thereafter.
Included in interest expense, net, are amortization of financing costs, which includes the amortization of debt issuance costs and amortization of bond discount. For 2025, 2024, and 2023, amortization of debt issuance costs was $4.9 million, $1.8 million, and $1.6 million, respectively. For 2025, amortization of bond discount was $0.4 million, and for both 2024 and 2023, amortization of bond discount was $0.5 million.
12.
Cash, Cash Equivalents, and Marketable Debt Securities
The following table shows the Company’s cash, cash equivalents, and AFS debt securities by major asset category at December 31, 2025 and 2024 (in millions):
| December 31, 2025 | ||||||||||||||||||||||||||||
| Adjusted Cost Basis | Unrealized Gain | Unrealized Loss | Fair Value | Cash and Cash Equivalents | Short-Term Marketable Debt Securities | Long-Term Marketable Debt Securities | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 492.3 | $ | — | $ | — | $ | 492.3 | $ | 492.3 | $ | — | $ | — | ||||||||||||||
| Level 1 (a): | ||||||||||||||||||||||||||||
| Money market funds | 36.7 | — | — | 36.7 | 36.7 | — | — | |||||||||||||||||||||
| U.S. Treasury securities | 32.7 | 0.1 | — | 32.8 | — | 14.7 | 18.1 | |||||||||||||||||||||
| Subtotal | 69.4 | 0.1 | — | 69.5 | 36.7 | 14.7 | 18.1 | |||||||||||||||||||||
| Level 2 (b): | ||||||||||||||||||||||||||||
| Corporate debt securities | 100.0 | 0.4 | — | 100.4 | — | 55.6 | 44.8 | |||||||||||||||||||||
| U.S. government agency securities | 4.1 | — | — | 4.1 | — | — | 4.1 | |||||||||||||||||||||
| Certificates of deposit | 1.5 | — | — | 1.5 | — | 1.5 | — | |||||||||||||||||||||
| Subtotal | 105.6 | 0.4 | — | 106.0 | — | 57.1 | 48.9 | |||||||||||||||||||||
| Total | $ | 667.3 | $ | 0.5 | $ | — | $ | 667.8 | $ | 529.0 | $ | 71.8 | $ | 67.0 |
| December 31, 2024 | ||||||||||||||||||||||||||||
| Adjusted Cost Basis | Unrealized Gain | Unrealized Loss | Fair Value | Cash and Cash Equivalents | Short-Term Marketable Debt Securities | Long-Term Marketable Debt Securities | ||||||||||||||||||||||
| Cash and cash equivalents | $ | 684.8 | $ | — | $ | — | $ | 684.8 | $ | 684.8 | $ | — | $ | — | ||||||||||||||
| Level 1 (a): | ||||||||||||||||||||||||||||
| U.S. Treasury securities | 30.8 | 0.1 | — | 30.9 | — | 23.0 | 7.9 | |||||||||||||||||||||
| Money market funds | 0.2 | — | — | 0.2 | 0.2 | — | — | |||||||||||||||||||||
| Subtotal | 31.0 | 0.1 | — | 31.1 | 0.2 | 23.0 | 7.9 | |||||||||||||||||||||
| Level 2 (b): | ||||||||||||||||||||||||||||
| Corporate debt securities | 131.2 | 0.3 | — | 131.5 | — | 75.8 | 55.7 | |||||||||||||||||||||
| Certificates of deposit | 2.4 | — | — | 2.4 | — | 2.4 | — | |||||||||||||||||||||
| U.S. government agency securities | 2.4 | — | — | 2.4 | — | 0.8 | 1.6 | |||||||||||||||||||||
| Subtotal | 136.0 | 0.3 | — | 136.3 | — | 79.0 | 57.3 | |||||||||||||||||||||
| Total | $ | 851.8 | $ | 0.4 | $ | — | $ | 852.2 | $ | 685.0 | $ | 102.0 | $ | 65.2 |
(a)
Valuations based on quoted prices for identical assets and liabilities in active markets.
(b)
Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
For the years ended December 31, 2025, 2024 and 2023, net realized gains and losses on the sales and maturities of certain marketable debt securities were insignificant.
The Company invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy requires securities to be investment grade and limits the amount of credit exposure to any one issuer. The maturities of the Company’s long-term marketable debt securities generally range from one to two years.
Fair values were determined for each individual marketable debt security in the investment portfolio. When evaluating a marketable debt security for other-than-temporary impairment, PCA reviews factors such as the duration and extent to which the fair value of the marketable debt security is less than its cost, the financial condition of the issuer and any changes thereto, the general market condition in which the issuer operates, and PCA’s intent to sell or whether it will more likely than not be required to sell, the marketable debt security before recovery of its amortized cost basis.
As of December 31, 2025 and 2024, we do not consider any of the impairments related to our marketable debt securities to be the result of credit losses. Therefore, we have not recorded an allowance for credit losses related to our marketable debt securities. All unrealized gains and losses were recorded in other comprehensive income (OCI).
The following table provides information about the Company’s marketable debt securities that have been in a continuous loss position as of December 31, 2025 and 2024 (in millions, except number of marketable debt securities in a loss position):
| December 31, 2025 | ||||||||||||||||||||||||
| Fair Value of Marketable Debt Securities in a Loss Position < 12 Months | Number of Marketable Debt Securities in a Loss Position < 12 Months | Unrealized Losses**<** 12 Months (c) | Fair Value of Marketable Debt Securities in a Loss Position ≥ 12 Months | Number of Marketable Debt Securities in a Loss Position ≥ 12 Months | Unrealized Losses ≥ 12 Months | |||||||||||||||||||
| Corporate debt securities | $ | 6.2 | 8 | $ | — | $ | — | — | $ | — | ||||||||||||||
| U.S. government agency securities | 1.7 | 2 | — | — | — | — | ||||||||||||||||||
| $ | 7.9 | 10 | $ | — | $ | — | — | $ | — |
| December 31, 2024 | ||||||||||||||||||||||||
| Fair Value of Marketable Debt Securities in a Loss Position < 12 Months | Number of Marketable Debt Securities in a Loss Position < 12 Months | Unrealized Losses**<** 12 Months | Fair Value of Marketable Debt Securities in a Loss Position ≥ 12 Months | Number of Marketable Debt Securities in a Loss Position ≥ 12 Months | Unrealized Losses ≥ 12 Months (c) | |||||||||||||||||||
| Corporate debt securities | $ | 16.5 | 26 | $ | 0.1 | $ | 2.7 | 4 | $ | — | ||||||||||||||
| U.S. Treasury securities | 3.1 | 4 | — | 6.7 | 5 | — | ||||||||||||||||||
| U.S. government agency securities | 0.8 | 1 | — | — | — | — | ||||||||||||||||||
| $ | 20.4 | 31 | $ | 0.1 | $ | 9.4 | 9 | $ | — |
(c)
Unrealized losses were insignificant for the debt securities in a continuous loss position less than 12 months for the period ended December 31, 2025, and for the debt securities in a continuous loss position greater than or equal to 12 months for the period ended December 31, 2024.
13.
Employee Benefit Plans and Other Postretirement Benefits
PCA has defined pension benefit plans for both salaried and hourly employees. The plans covering salaried employees are closed to new entrants with only certain current active participants still accruing benefits. The plans covering certain hourly employees are closed to new participants. We also have a Supplemental Executive Retirement Plan (SERP) and other nonqualified defined benefit pension plans that provide supplemental retirement benefits to certain of our current and former management employees. The SERP provides for incremental pension benefits in excess of those offered in our principal pension plans.
Other Postretirement Benefits
PCA provides postretirement medical and life insurance benefits for certain retired employees.
Obligations and Funded Status of Defined Benefit Pension and Other Postretirement Benefits Plans
The funded status of PCA’s plans change from year to year based on the plan asset investment return, contributions, benefit payments, the discount rate used to measure the liability, and expected participant longevity. The following table, which includes only company-sponsored defined benefit and other postretirement benefit plans, reconciles the beginning and ending balances of the projected benefit obligation and the fair value of plan assets. We recognize the funded status of these plans on the Consolidated Balance Sheets, and we recognize changes in funded status in the year changes occur through the Consolidated Statements of Comprehensive Income (dollars in millions):
| Pension Plans | Postretirement Plans | |||||||||||||||
| Year Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Change in Benefit Obligation: | ||||||||||||||||
| Benefit obligation at beginning of period | $ | 1,118.7 | $ | 1,202.1 | $ | 10.1 | $ | 10.5 | ||||||||
| Service cost | 10.3 | 12.3 | 0.2 | 0.2 | ||||||||||||
| Interest cost | 57.0 | 55.3 | 0.5 | 0.5 | ||||||||||||
| Plan amendments | 1.6 | 2.7 | — | — | ||||||||||||
| Actuarial loss (gain) (a) | 24.9 | (89.8 | ) | 2.1 | 0.2 | |||||||||||
| Participant contributions | — | — | 0.4 | 0.4 | ||||||||||||
| Benefits paid | (68.0 | ) | (63.9 | ) | (1.6 | ) | (1.7 | ) | ||||||||
| Benefit obligation at plan year end | $ | 1,144.5 | $ | 1,118.7 | $ | 11.7 | $ | 10.1 | ||||||||
| Accumulated benefit obligation portion of above | $ | 1,130.8 | $ | 1,098.7 | ||||||||||||
| Change in Fair Value of Plan Assets: | ||||||||||||||||
| Plan assets at fair value at beginning of period | $ | 1,133.4 | $ | 1,161.6 | $ | — | $ | — | ||||||||
| Actual return on plan assets | 88.4 | 9.5 | — | — | ||||||||||||
| Company contributions | 1.3 | 26.2 | 1.2 | 1.3 | ||||||||||||
| Participant contributions | — | — | 0.4 | 0.4 | ||||||||||||
| Benefits paid | (68.0 | ) | (63.9 | ) | (1.6 | ) | (1.7 | ) | ||||||||
| Fair value of plan assets at plan year end | $ | 1,155.1 | $ | 1,133.4 | $ | — | $ | — | ||||||||
| Overfunded (underfunded) status | $ | 10.6 | $ | 14.7 | $ | **(**11.7 | ) | $ | **(**10.1 | ) | ||||||
| Amounts Recognized on Consolidated Balance Sheets: | ||||||||||||||||
| Noncurrent assets | $ | 62.2 | $ | 63.3 | $ | — | $ | — | ||||||||
| Current liabilities | (3.5 | ) | (2.7 | ) | (0.9 | ) | (0.5 | ) | ||||||||
| Noncurrent liabilities | (48.1 | ) | (45.9 | ) | (10.8 | ) | (9.6 | ) | ||||||||
| Accrued asset recognized at December 31 | $ | 10.6 | $ | 14.7 | $ | **(**11.7 | ) | $ | **(**10.1 | ) | ||||||
| Amounts Recognized in Accumulated Other Comprehensive Loss (Pre-Tax) | ||||||||||||||||
| Prior service cost | $ | 22.4 | $ | 26.4 | $ | (3.0 | ) | $ | (3.4 | ) | ||||||
| Actuarial loss | 80.8 | 81.8 | (2.0 | ) | (4.3 | ) | ||||||||||
| Total | $ | 103.2 | $ | 108.2 | $ | **(**5.0 | ) | $ | **(**7.7 | ) |
(a)
For the year ended December 31, 2025, the most significant driver of the increase in the aggregate benefit obligations for the pension and OPEB plans was the actuarial loss due to a decrease in the discount rate assumption. Additional losses were experienced due to updated benefit multipliers in the PCA Hourly Pension Plan, assumption changes resulting from the 2025 experience study, and updated claims and trend assumptions for the Retiree Medical plan. For the year ended December 31, 2024, the most significant driver of the decrease in the aggregate benefit obligations for the pension and OPEB plans was the actuarial gain due to an increase in the discount rate assumption. Additional gains due to participant experience and the decrease in the salary scale were offset by actuarial losses due to increases in the PCA Hourly Pension Plan benefit multipliers and updated medical assumptions to better reflect anticipated future experience.
Components of Net Periodic Benefit Cost and Other Comprehensive Loss (Income)
The components of net periodic benefit cost and other comprehensive loss (income) (pretax) were as follows (dollars in millions):
| Pension Plans | Postretirement Plans | |||||||||||||||||||||||
| Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||
| Service cost | $ | 10.3 | $ | 12.3 | $ | 14.1 | $ | 0.2 | $ | 0.2 | $ | 0.2 | ||||||||||||
| Interest cost | 57.0 | 55.3 | 55.8 | 0.5 | 0.5 | 0.5 | ||||||||||||||||||
| Expected return on plan assets | (62.5 | ) | (65.8 | ) | (57.1 | ) | — | — | — | |||||||||||||||
| Net amortization of unrecognized amounts: | ||||||||||||||||||||||||
| Prior service cost (credit) | 5.7 | 5.6 | 5.2 | (0.4 | ) | (0.5 | ) | (0.4 | ) | |||||||||||||||
| Actuarial gain | — | 0.7 | 4.1 | (0.2 | ) | (0.3 | ) | (0.4 | ) | |||||||||||||||
| Net periodic benefit cost | $ | 10.5 | $ | 8.1 | $ | 22.1 | $ | 0.1 | $ | (0.1 | ) | $ | (0.1 | ) | ||||||||||
| Changes in plan assets and benefit obligations recognized in other comprehensive loss: | ||||||||||||||||||||||||
| Actuarial net (gain) loss | $ | (0.9 | ) | $ | (33.6 | ) | $ | (35.5 | ) | $ | 2.1 | $ | 0.2 | $ | 1.5 | |||||||||
| Prior service cost | 1.6 | 2.7 | 2.9 | — | — | — | ||||||||||||||||||
| Amortization of prior service cost (credit) | (5.7 | ) | (5.6 | ) | (5.2 | ) | 0.4 | 0.5 | 0.4 | |||||||||||||||
| Amortization of actuarial loss | — | (0.7 | ) | (4.1 | ) | 0.2 | 0.3 | 0.4 | ||||||||||||||||
| Total recognized in other comprehensive loss (income) (b) | $ | (5.0 | ) | $ | (37.2 | ) | $ | (41.9 | ) | $ | 2.7 | $ | 1.0 | $ | 2.3 | |||||||||
| Total recognized in net periodic benefit cost and other comprehensive loss (pre-tax) | $ | 5.5 | $ | (29.1 | ) | $ | (19.8 | ) | $ | 2.8 | $ | 0.9 | $ | 2.2 |
(b)
Accumulated losses in excess of 10% of the greater of the projected benefit obligation or the market-related value of assets will be recognized on a straight-line basis over the average remaining service period of active employees in PCA plans (which is between five and eight years) and over the average remaining lifetime of inactive participants in the Boise plan (which is approximately 22 years), to the extent that losses are not offset by gains in subsequent years.
For the years ended December 31, 2025 and 2024, the accumulated benefit obligations for the pension plans with obligations in excess of plan assets is $48.8 million and $44.7 million, respectively, and the pension benefit obligations for the plans with obligations in excess of plan assets is $51.6 million and $48.6 million, respectively. The fair value of plan assets for plans with obligations exceeding plan assets was $0.0 million for both the years ended December 31, 2025 and 2024. For the years ended December 31, 2025 and 2024, the accumulated benefit obligations for the OPEB plans with obligations in excess of plan assets is $11.7 million and $10.1 million, respectively.
Assumptions
The following table presents the assumptions used in the measurement of our benefits obligations:
| Pension Plans | Postretirement Plans | |||||||||||
| December 31, | December 31, | |||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||
| Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31: | ||||||||||||
| Discount rate | 5.35 % | 5.56 % | 4.86 % | 5.45 % | 5.62 % | 4.90 % | ||||||
| Rate of compensation increase | 2.50% - 4.50% | 4.75 % | 4.75 % | N/A | N/A | N/A | ||||||
| Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for the Years Ended December 31: | ||||||||||||
| Discount rate | 5.56 % | 4.86 % | 5.06 % | 5.62 % | 4.90 % | 5.07 % | ||||||
| Expected return on plan assets | 5.71 % | 5.80 % | 5.52 % | N/A | N/A | N/A | ||||||
| Rate of compensation increase | 2.50% - 4.50% | 4.75 % | 4.75 % | N/A | N/A | N/A |
Discount Rate Assumption. The discount rate reflects the current rate at which the pension obligations could be settled on the measurement date: December 31. The discount rate assumption used to calculate the present value of pension and postretirement benefit obligations reflects the rates available on high-quality, fixed-income debt instruments at December 31. In all periods, the bonds included in the models reflect anticipated investments that would be made to match the expected monthly benefit payments over time. The plans’ projected cash flows were duration-matched to these models to develop an appropriate discount rate.
Asset Return Assumption. The expected return on plan assets reflects the expected long-term rates of return for the categories of investments currently held in the plans as well as anticipated returns for additional contributions made in the future. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the plan investments. The weighted-average expected return on plan assets we will use in our calculation of 2026 net periodic pension benefit cost is 5.66%.
Rate of Compensation Increase. The rate of compensation increase is determined by PCA based upon annual reviews. The compensation increase assumption is not applicable for all plans as many of our pension plans are frozen and not accruing benefits.
Health Care Cost Trend Rate Assumptions. PCA assumed health care cost trend rates for its postretirement benefits plans were as follows:
| 2025 | 2024 | 2023 | ||||
| Health care cost trend rate assumed for next year | 7.67 % | 8.09 % | 7.13 % | |||
| Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | 4.45 % | 4.45 % | 4.44 % | |||
| Year that the rate reaches the ultimate trend rate | 2036 | 2035 | 2033 |
Postretirement Health Care Plan Assumptions. For postretirement health care plan accounting, PCA reviews external data and its own historical trends for health care costs to determine the health care cost trend rate assumption.
Investment Policies and Strategies
PCA has retained the services of professional advisors to oversee pension investments and provide recommendations regarding investment strategy. PCA’s overall strategy and related apportionments between equity and debt securities may change from time to time based on market conditions, external economic factors, and the funded status of the plans. The general investment objective for all of our plan assets is to optimize growth of the pension plan trust assets, while minimizing the risk of significant losses to enable the plans to satisfy their benefit payment obligations over time. The objectives take into account the long-term nature of the benefit obligations, the liquidity needs of the plans, and the expected risk/return trade-offs of the asset classes in which the plans may choose to invest. Assets of our pension plans were invested in the following classes of securities at December 31, 2025 and 2024:
| Percentage of Fair Value at December 31, | ||||||||
| 2025 | 2024 | |||||||
| Fixed income securities | 93 | % | 87 | % | ||||
| Domestic equity securities | 3 | % | 7 | % | ||||
| International equity securities | 2 | % | 3 | % | ||||
| Other | 2 | % | 3 | % |
At December 31, 2025, the targeted investment allocations differed between the plans based on funded status. For our pension plans, the weighted average target allocation of plan assets was 94% in fixed income, 5% in equities, and 1% in other. Our retirement committee reviews the investment allocations for reasonableness at a minimum, semi-annually.
Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risk, all of which are subject to change. Due to the level of risk associated with some investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term, and such changes could materially affect the reported amounts.
Fair Value Measurements of Plan Assets
The following tables set forth, by level within the fair value hierarchy, discussed in Note 2, Summary of Significant Accounting Policies, the pension plan assets, by major asset category, at fair value at December 31, 2025 and 2024 (dollars in millions):
| Fair Value Measurements at December 31, 2025 | ||||||||||||||||||||
| Asset Category | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Net Asset Value (NAV) (c) | Total | |||||||||||||||
| Short-term investments | $ | — | $ | 14.1 | $ | — | $ | — | $ | 14.1 | ||||||||||
| Common/collective trust funds: | ||||||||||||||||||||
| Domestic equities | — | 37.9 | — | — | 37.9 | |||||||||||||||
| International equities | 3.9 | 18.1 | — | — | 22.0 | |||||||||||||||
| Corporate and government bonds: | ||||||||||||||||||||
| Corporate bonds | — | 427.8 | — | — | 427.8 | |||||||||||||||
| Fixed income | — | 338.5 | — | — | 338.5 | |||||||||||||||
| Government bonds and agencies | — | 293.8 | — | — | 293.8 | |||||||||||||||
| Municipal bonds | — | 13.9 | — | — | 13.9 | |||||||||||||||
| Private equity securities | — | — | — | 0.3 | 0.3 | |||||||||||||||
| Total securities at fair value | $ | 3.9 | $ | 1,144.1 | $ | — | $ | 0.3 | $ | 1,148.3 | ||||||||||
| Accrued income | 6.8 | |||||||||||||||||||
| Total fair value of plan assets | $ | 1,155.1 |
| Fair Value Measurements at December 31, 2024 | ||||||||||||||||||||
| Asset Category | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Net Asset Value (NAV) (c) | Total | |||||||||||||||
| Short-term investments | $ | — | $ | 29.7 | $ | — | $ | — | $ | 29.7 | ||||||||||
| Common/collective trust funds: | ||||||||||||||||||||
| Domestic equities | — | 76.7 | — | — | 76.7 | |||||||||||||||
| International equities | 25.0 | — | — | 14.2 | 39.2 | |||||||||||||||
| Corporate and government bonds: | ||||||||||||||||||||
| Corporate bonds | — | 407.9 | — | — | 407.9 | |||||||||||||||
| Fixed income | — | 321.7 | — | — | 321.7 | |||||||||||||||
| Government bonds and agencies | — | 239.6 | — | — | 239.6 | |||||||||||||||
| Municipal bonds | — | 12.0 | — | — | 12.0 | |||||||||||||||
| Private equity securities | — | — | — | 0.5 | 0.5 | |||||||||||||||
| Total securities at fair value | $ | 25.0 | $ | 1,087.6 | $ | — | $ | 14.7 | $ | 1,127.3 | ||||||||||
| Accrued income | 6.1 | |||||||||||||||||||
| Total fair value of plan assets | $ | 1,133.4 |
(c)
In accordance with ASC 820, Fair Value Measurement, certain investments that do not have readily determinable fair values are measured at fair value using the net asset value (NAV) per share practical expedient and are not classified within the fair value hierarchy.
Funding and Cash Flows
PCA makes pension plan contributions that are sufficient to fund its actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act (ERISA). From time to time, PCA may make discretionary contributions based on the funded status of the plans, tax deductibility, income from operations, and other factors. In 2025, we did not make any contributions to our qualified pension plans, and for 2024, and 2023, we made contributions of $25.0 million and $50.0 million, respectively. We do not have a required minimum contribution amount established for 2026.
The following are estimated benefit payments to be paid to current plan participants by year (dollars in millions). Qualified pension benefit payments are paid from plan assets, while nonqualified pension benefit payments are paid by the Company.
| Pension Plans | Postretirement Plans | |||||||
| 2026 | $ | 74.7 | $ | 0.8 | ||||
| 2027 | 77.8 | 0.7 | ||||||
| 2028 | 79.9 | 0.8 | ||||||
| 2029 | 82.0 | 0.8 | ||||||
| 2030-2035 | 509.3 | 4.6 |
Defined Contribution Plans
Some of our employees participate in defined contribution savings plans, available to most of our salaried and hourly employees. The defined contribution plans permit participants to make contributions by salary reduction pursuant to Section 401(k) of the Code. PCA made employer-matching contributions of $52.1 million, $48.8 million, and $45.2 million in 2025, 2024, and 2023, respectively. All company-matching contributions to all employees were made in cash. We expense employer matching contributions and charge dividends on shares held by the ESOP to retained earnings. Shares of company stock held by the ESOP are included in basic shares for earnings-per-share computations. At both December 31, 2025 and 2024, the ESOP held 1.1 million shares of Company stock.
Certain salaried and hourly employees that are not participating in a PCA sponsored defined benefit pension plan receive a service-related company retirement contribution to their defined contribution plan account in addition to any employer matching contribution. This contribution increases with years of service and ranges from 3% to 5% of base pay. We contributed $52.5 million, $49.5 million, and $45.4 million for this retirement contribution during the years ended December 31, 2025, 2024, and 2023, respectively.
Deferred Compensation Plans
Key managers can elect to participate in a deferred compensation plan. The deferred compensation plan is unfunded; therefore, benefits are paid from our general assets. At December 31, 2025 and 2024, we had $47.3 million and $40.5 million, respectively, of liabilities attributable to participation in our deferred compensation plan on our Consolidated Balance Sheets.
14.
Asset Retirement Obligations
Our asset retirement obligations relate predominantly to landfill closure, wastewater treatment pond dredging, closed-site monitoring costs, and certain leasehold improvements. In accordance with ASC 410, Asset Retirement and Environmental Obligations, we recognize the fair value of these liabilities as an asset retirement obligation and capitalize that cost as part of the cost basis of the related asset in the period in which the costs are incurred if sufficient information is available to reasonably estimate the fair value of the obligation. Fair value estimates are determined using Level 3 inputs in the fair value hierarchy. The fair value of our asset retirement obligations is measured using expected future cash outflows discounted using the Company’s credit-adjusted risk-free interest rate. Over time, the liability is accreted to its settlement value, and the capitalized cost is depreciated over the useful life of the related asset. These liabilities are based on the best estimate of costs and are updated periodically to reflect current technology, laws and regulations, inflation, and other economic factors. Occasionally, we become aware of events or circumstances that require us to revise our future estimated cash flows. When revisions become necessary, we recalculate our obligation and adjust our asset and liability accounts utilizing appropriate discount rates. No assets are legally restricted for purposes of settling asset retirement obligations. Upon settlement of the liability, we will recognize a gain or loss for any difference between the settlement amount and the liability recorded.
The following table describes changes to the asset retirement obligation liability (dollars in millions):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Asset retirement obligation at beginning of period | $ | 32.4 | $ | 31.4 | ||||
| Accretion expense | 1.5 | 1.5 | ||||||
| Liabilities incurred (a) | 0.4 | — | ||||||
| Payments | (0.1 | ) | (0.3 | ) | ||||
| Revisions in estimated payments | (3.2 | ) | (0.2 | ) | ||||
| Asset retirement obligation at end of period | $ | 31.0 | $ | 32.4 |
(a)
For 2025, includes $0.4 million in new liabilities incurred as a result of the Greif Acquisition.
We have additional asset retirement obligations with indeterminate settlement dates. The fair value of these asset retirement obligations cannot be estimated due to the lack of sufficient information to estimate the settlement dates of the obligations. These asset retirement obligations include, for example, (i) removal and disposal of potentially hazardous materials related to equipment and/or an operating facility if the equipment and/or facilities were to undergo major maintenance, renovation, or demolition and (ii) storage sites or owned facilities for which removal and/or disposal of chemicals and other related materials are required if the operating facility is closed. We will recognize a liability in the period in which sufficient information becomes available to reasonably estimate the fair value of these obligations.
15.
Share-Based Compensation
The Company has a long-term equity incentive plan, which allows for grants of restricted stock, performance awards, stock appreciation rights, and stock options to directors, officers, and employees, as well as others who engage in services for PCA. On February 28, 2024, our board of directors approved, and, on May 8, 2024, our stockholders approved, the amendment and restatement of the plan. The amendment extended the plan’s term to May 8, 2034 and increased the number of shares of common stock available for issuance under the plan by 2.4 million shares. The total number of shares authorized for past and future awards is 14.3 million shares.
As of December 31, 2025, assuming performance units are paid out at the target level of performance, 2.5 million shares were available for future grants under the current plan. Forfeitures are added back to the pool of shares of common stock available to be granted at a future date.
Restricted Stock
Restricted stock awards granted to officers and employees generally vest at the end of a four-year period, and restricted stock awards granted to directors vest immediately. A summary of the Company’s restricted stock activity follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||
| Shares | Weighted Average Grant- Date Fair Value | Shares | Weighted Average Grant- Date Fair Value | Shares | Weighted Average Grant- Date Fair Value | |||||||||||||||||||
| Restricted stock at January 1 | 620,403 | $ | 148.63 | 671,723 | $ | 127.15 | 655,914 | $ | 117.14 | |||||||||||||||
| Granted | 147,265 | 211.53 | 175,956 | 176.60 | 196,821 | 134.68 | ||||||||||||||||||
| Vested (a) | (158,857 | ) | 137.08 | (219,530 | ) | 105.10 | (174,139 | ) | 97.86 | |||||||||||||||
| Forfeitures | (8,015 | ) | 164.95 | (7,746 | ) | 154.95 | (6,873 | ) | 129.74 | |||||||||||||||
| Restricted stock at December 31 | 600,796 | $ | 166.88 | 620,403 | $ | 148.63 | 671,723 | $ | 127.15 |
(a)
The total fair value of awards upon vesting for the years ended December 31, 2025, 2024, and 2023 was $33.0 million, $39.2 million, and $22.7 million, respectively**.**
Performance Units
Performance unit awards granted to certain officers are earned based on the achievement of defined performance rankings of Return on Invested Capital (ROIC) or Total Shareholder Return (TSR) compared to ROIC and TSR for peer companies. ROIC performance unit awards vest four years after the grant date, while TSR performance unit awards vest approximately three years after the grant date. Both ROIC and TSR performance units are paid out entirely in shares of the Company’s common stock. A summary of the Company’s performance unit activity follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||
| Units | Weighted Average Grant- Date Fair Value | Units | Weighted Average Grant- Date Fair Value | Units | Weighted Average Grant- Date Fair Value | |||||||||||||||||||
| Performance units at January 1 | 358,466 | $ | 119.17 | 372,777 | $ | 119.22 | 358,449 | $ | 109.89 | |||||||||||||||
| Granted | 129,853 | 211.72 | 129,923 | 189.01 | 146,331 | 140.09 | ||||||||||||||||||
| Vested (b) | (139,443 | ) | 167.14 | (139,984 | ) | 182.64 | (132,003 | ) | 117.03 | |||||||||||||||
| Forfeitures | — | — | (4,250 | ) | 168.20 | — | — | |||||||||||||||||
| Performance units at December 31 | 348,876 | $ | 171.68 | 358,466 | $ | 119.17 | 372,777 | $ | 119.22 |
(b)
The total fair value of awards upon vesting, including dividends, for the years ended December 31, 2025, 2024, and 2023 was $29.0 million, $27.8 million, and $19.3 million, respectively. Upon vesting of the awards in 2025, 2024, and 2023, PCA issued 151,895 shares, 152,196 shares, and 146,631 shares, respectively. For 2025, 2024, and 2023, these amounts included 12,452 shares, 12,212 shares, and 14,628 shares, respectively, for dividends accrued during the vesting period.
Compensation Expense
Our share-based compensation expense is recorded in “Cost of sales” and “Selling, general, and administrative expenses.” Compensation expense for share-based awards recognized in the Consolidated Statements of Income, net of forfeitures was as follows (dollars in millions):
| Year Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Restricted stock | $ | 28.7 | $ | 30.6 | $ | 25.5 | ||||||
| Performance units | 16.5 | 18.2 | 14.5 | |||||||||
| Total share-based compensation expense | 45.2 | 48.8 | 40.0 | |||||||||
| Income tax benefit | (11.2 | ) | (12.2 | ) | (10.0 | ) | ||||||
| Share-based compensation expense, net of tax benefit | $ | 34.0 | $ | 36.6 | $ | 30.0 |
The fair value of restricted stock is determined based on the closing price of the Company’s stock on the grant date. Compensation expense, net of estimated forfeitures, is recorded over the requisite service period. As PCA’s Board of Directors has the ability to accelerate the vesting of these awards upon an employee’s retirement, the Company accelerates the recognition of compensation expense for certain employees approaching normal retirement age.
For performance unit awards made in 2025, 2024, and 2023, in terms of grant date value, 50% used total shareholder return (TSR) as the performance measure and 50% used return on invested capital (ROIC) as the performance measure. All units awarded before 2018 used ROIC as the performance measure. The ROIC component of performance unit awards is valued based on the closing price of the stock on the grant date. As the ROIC component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest. The TSR component of performance unit awards is valued using a Monte Carlo simulation as the TSR component contains a market condition. The Monte Carlo simulation estimates the fair value of the TSR component based on the expected term of the award, a risk-free interest rate, expected dividends, and expected volatility of the Company’s common stock and the common stock of the peer companies. Compensation expense is recorded ratably over the expected term of the award regardless of whether the market condition is satisfied.
The unrecognized compensation expense for all share-based awards was as follows (dollars in millions):
| December 31, 2025 | ||||||||
| Unrecognized Compensation Expense | Remaining Weighted Average Recognition Period (in years) | |||||||
| Restricted stock | $ | 31.0 | 2.5 | |||||
| Performance units | 25.5 | 2.2 | ||||||
| Total unrecognized share-based compensation expense | $ | 56.5 | 2.4 |
We evaluate share-based compensation expense on a quarterly basis based on our estimate of expected forfeitures, review of recent forfeiture activity, and expected future turnover. We recognize the effect of adjusting the forfeiture rate for all expense amortization in the period that we change the forfeiture estimate. The effect of forfeiture adjustments was insignificant in all periods presented.
16.
Stockholders’ Equity
Dividends
During the year ended December 31, 2025, we paid $449.6 million of dividends to shareholders. On December 3, 2025, PCA’s Board of Directors declared a regular quarterly cash dividend of $1.25 per share of common stock, which was paid on January 14, 2026 to shareholders of record as of December 15, 2025. The dividend payment was $111.9 million.
Share Repurchase Program
On January 26, 2022, PCA announced that its Board of Directors authorized the repurchase of an additional $1 billion of the Company’s outstanding common stock. At the time of the announcement, there was no remaining authority under previously announced programs. Repurchases may be made from time to time in open market or privately negotiated transactions in accordance with applicable securities regulations. The timing and amount of repurchases will be determined by the Company in its discretion based on factors such as PCA’s stock price and market and business conditions.
During the twelve months ended December 31, 2025, we paid $153.0 million, including fees, to repurchase 0.8 million shares of common stock. All shares repurchased have been retired. At December 31, 2025, $283.1 million of the authorized amount remained available for repurchase of the Company’s common stock.
During 2024, the Company did not repurchase any shares of its common stock under this authority, and during 2023, we paid $41.5 million, including fees, to repurchase 0.3 million shares of common stock. All share repurchased have been retired.
Accumulated Other Comprehensive Income (Loss)
Changes in AOCI, net of taxes, by component follows (dollars in millions). Amounts in parentheses indicate losses.
| Unrealized Loss On Foreign Exchange Contracts | Unrealized (Loss) Gain on Marketable Debt Securities | Unfunded Employee Benefit Obligations | Total | |||||||||||||
| Balance at January 1, 2024 | $ | (0.1 | ) | $ | (0.1 | ) | $ | (70.7 | ) | $ | (70.9 | ) | ||||
| Other comprehensive income before reclassifications | — | 0.3 | 23.1 | 23.4 | ||||||||||||
| Amounts reclassified from AOCI | — | — | 4.1 | 4.1 | ||||||||||||
| Net current-period other comprehensive income | — | 0.3 | 27.2 | 27.5 | ||||||||||||
| Balance at December 31, 2024 | $ | (0.1 | ) | $ | 0.2 | $ | (43.5 | ) | $ | (43.4 | ) | |||||
| Other comprehensive income before reclassifications | — | 0.1 | (2.1 | ) | (2.0 | ) | ||||||||||
| Amounts reclassified from AOCI | — | — | 3.8 | 3.8 | ||||||||||||
| Net current-period other comprehensive income | — | 0.1 | 1.7 | 1.8 | ||||||||||||
| Balance at December 31, 2025 | $ | (0.1 | ) | $ | 0.3 | $ | (41.8 | ) | $ | (41.6 | ) |
The following table presents information about reclassifications out of AOCI (dollars in millions). Amounts in parentheses indicate expenses in the Consolidated Statements of Income.
| Amounts Reclassified from AOCI Year Ended December 31, | ||||||||||
| Details about AOCI Components | 2025 | 2024 | ||||||||
| Unfunded employee benefit obligations (a) | ||||||||||
| Amortization of prior service costs | $ | (5.3 | ) | $ | (5.1 | ) | ||||
| Amortization of actuarial gains / (losses) | 0.2 | (0.4 | ) | |||||||
| (5.1 | ) | (5.5 | ) | Total before tax | ||||||
| 1.3 | 1.4 | Tax benefit | ||||||||
| $ | (3.8 | ) | $ | (4.1 | ) | Net of tax |
(a)
These AOCI components are included in the computation of net pension and postretirement benefit costs. See Note 13, Employee Benefit Plans and Other Postretirement Benefits, for additional information.
17.
Concentrations of Risk
Labor
At December 31, 2025, we had approximately 16,800 employees, and approximately 41% of these employees worked pursuant to collective bargaining agreements. Approximately 57% of our hourly employees worked pursuant to collective bargaining agreements. The majority of our unionized employees are represented by the United Steel Workers (USW), the Printing Packaging Production Workers Union (PPPWU), the Association of Western Pulp and Paper Workers (AWPPW), the International Association of Machinists (IAM), and the International Brotherhood of Teamsters (IBT). Of the employees who work pursuant to collective bargaining agreements, approximately 7% work pursuant to collective bargaining agreements that will expire within the next twelve months.
18.
Transactions With Related Parties
Louisiana Timber Procurement Company, L.L.C. (LTP) is a variable-interest entity that is 50% owned by PCA and 50% owned by Boise Cascade Company (Boise Cascade). LTP procures sawtimber, pulpwood, residual chips, and other residual wood fiber to meet the wood and fiber requirements of PCA and Boise Cascade in Louisiana. PCA is the primary beneficiary of LTP and has the power to direct the activities that most significantly affect the economic performance of LTP. Therefore, we consolidate 100% of LTP in our financial statements in our Corporate and Other segment. The carrying amounts of LTP’s assets and liabilities (which relate primarily to non-inventory working capital items) on our Consolidated Balance Sheets were $1.6 million at December 31, 2025 and $3.1 million at December 31, 2024. For 2025, 2024, and 2023, we recorded $71.4 million, $80.9 million, and $80.2 million, respectively, of LTP sales to Boise Cascade in “Net Sales” in the Consolidated Statements of Income and approximately the same amount of expenses in “Cost of Sales”.
Fiber purchases from related parties were $8.7 million for 2025, $10.7 million for 2024, and $11.5 million for 2023. Most of these purchases related to chip and log purchases by LTP from Boise Cascade’s wood products business. These purchases are recorded in “Cost of Sales” in the Consolidated Statements of Income.
19.
Segment Information
Reportable Segments
We report our business in three reportable segments: Packaging, Paper, and Corporate and Other. These segments represent distinct businesses that are managed separately because of differing products and services. Each of these businesses requires distinct operating and marketing strategies.
Packaging. We manufacture and sell a wide variety of containerboard and corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays with strong visual appeal that help to merchandise the packaged product in retail locations. In addition, we are a large producer of packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.
Paper. We manufacture and sell a range of communication-based papers. Our papers can be manufactured as either commodity papers or specialty papers with specialized or custom features, such as colors, coatings, high brightness, or recycled content.
Corporate and Other. Our Corporate and Other segment includes corporate support staff services and related assets and liabilities, and foreign exchange gains and losses. This segment also includes transportation assets, such as rail cars and trucks, which we use to transport our products from some of our manufacturing sites and assets related to LTP. See Note 18, Transactions with Related Parties, for more information related to LTP. Sales in this segment relate primarily to LTP and our rail and truck business. We provide transportation services not only to our own facilities but also, on a limited basis, to third parties when geographic proximity and logistics are favorable. Rail cars and trucks are generally leased.
Each segments’ profits and losses are measured on operating profits before non-operating pension income (expense), interest expense, net, and income taxes. For many of these allocated expenses, the related assets and liabilities remain in the Corporate and Other segment.
At December 31, 2025 and 2024, we did not have any significant long-lived assets held by foreign operations.
On September 2, 2025, we completed the Greif Acquisition for $1.8 billion in cash. The Greif containerboard business includes two containerboard mills with approximately 800,000 tons of production capacity and eight sheet feeder and corrugated plants located across the United States. Greif’s financial results are included in the Packaging segment from the date of acquisition.
Chief Operating Decision Maker
ASC 280-10-50-5 (Topic 280) defines the chief operating decision maker (“CODM”) as an individual or group of individuals responsible for assessing the performance of the operating segments of a public entity and determining the overall resource allocation to those operating segments. Based on these criteria, we deem our Chief Executive Officer as the CODM, as the Chief Executive Officer is responsible for evaluating our operating results and concluding on the overall resource allocation.
Analysis of Operations by Reportable Segment
An analysis of operations by reportable segment is as follows (dollars in millions):
| Year Ended December 31, 2025 | Packaging | Paper | Corporate and Other | Total | ||||||||||||
| Trade sales | $ | 8,293.9 | $ | 615.4 | $ | 80.0 | $ | 8,989.3 | ||||||||
| Intersegment sales | — | — | 154.1 | 154.1 | ||||||||||||
| 8,293.9 | 615.4 | 234.1 | 9,143.4 | |||||||||||||
| Elimination of intersegment sales | (154.1 | ) | ||||||||||||||
| Net sales (a) | 8,989.3 | |||||||||||||||
| Less (b): | ||||||||||||||||
| Variable costs (c) | (4,007.3 | ) | (338.3 | ) | — | — | ||||||||||
| Fixed costs (d) | (1,902.4 | ) | (80.1 | ) | — | — | ||||||||||
| Freight | (843.3 | ) | (66.8 | ) | — | — | ||||||||||
| Other segment items (e) | (415.6 | ) | (0.6 | ) | (382.0 | ) | — | |||||||||
| Income (loss) from operations | 1,125.3 | 129.6 | (147.9 | ) | (f) | 1,107.0 | ||||||||||
| Non-operating pension expense | (0.1 | ) | ||||||||||||||
| Interest expense, net | (79.1 | ) | ||||||||||||||
| Income before taxes | $ | 1,027.8 | ||||||||||||||
| Other segment disclosures: | ||||||||||||||||
| Segment sales to external customers | $ | 8,293.9 | $ | 615.4 | $ | 80.0 | (g) | $ | 8,989.3 | |||||||
| Depreciation, amortization, and depletion | 616.1 | 18.5 | 18.2 | 652.8 | ||||||||||||
| Capital expenditures (h) | 779.3 | 15.4 | 34.2 | 828.9 | ||||||||||||
| Assets | 9,354.8 | 400.5 | 970.2 | 10,725.5 |
| Year Ended December 31, 2024 | Packaging | Paper | Corporate and Other | Total | ||||||||||||
| Trade sales | $ | 7,668.9 | $ | 624.7 | $ | 89.7 | $ | 8,383.3 | ||||||||
| Intersegment sales | 22.0 | — | 157.4 | 179.4 | ||||||||||||
| 7,690.9 | 624.7 | 247.1 | 8,562.7 | |||||||||||||
| Elimination of intersegment sales | (179.4 | ) | ||||||||||||||
| Net sales (a) | 8,383.3 | |||||||||||||||
| Less (b): | ||||||||||||||||
| Variable costs (c) | (3,767.4 | ) | (338.7 | ) | — | — | ||||||||||
| Fixed costs (d) | (1,679.7 | ) | (81.5 | ) | — | — | ||||||||||
| Freight | (798.2 | ) | (69.4 | ) | — | — | ||||||||||
| Other segment items (e) | (344.1 | ) | (5.4 | ) | (377.0 | ) | — | |||||||||
| Income (loss) from operations | 1,101.5 | 129.7 | (129.9 | ) | (f) | 1,101.3 | ||||||||||
| Non-operating pension income | 4.5 | |||||||||||||||
| Interest expense, net | (41.4 | ) | ||||||||||||||
| Income before taxes | $ | 1,064.4 | ||||||||||||||
| Other segment disclosures: | ||||||||||||||||
| Segment sales to external customers | $ | 7,690.9 | $ | 624.7 | $ | 67.7 | (g) | $ | 8,383.3 | |||||||
| Depreciation, amortization, and depletion | 490.1 | 19.5 | 16.0 | 525.6 | ||||||||||||
| Capital expenditures (h) | 626.6 | 15.0 | 28.1 | 669.7 | ||||||||||||
| Assets | 7,253.2 | 375.7 | 1,204.3 | 8,833.2 |
| Year Ended December 31, 2023 | Packaging | Paper | Corporate and Other | Total | ||||||||||||
| Trade sales | $ | 7,116.7 | $ | 595.4 | $ | 90.3 | $ | 7,802.4 | ||||||||
| Intersegment sales | 18.9 | — | 157.6 | 176.5 | ||||||||||||
| 7,135.6 | 595.4 | 247.9 | 7,978.9 | |||||||||||||
| Elimination of intersegment sales | (176.5 | ) | ||||||||||||||
| Net sales (a) | 7,802.4 | |||||||||||||||
| Less (b): | ||||||||||||||||
| Variable costs (c) | (3,406.6 | ) | (317.3 | ) | — | — | ||||||||||
| Fixed costs (d) | (1,592.0 | ) | (94.1 | ) | — | — | ||||||||||
| Freight | (747.3 | ) | (62.9 | ) | — | — | ||||||||||
| Other segment items (e) | (315.4 | ) | (2.2 | ) | (366.0 | ) | — | |||||||||
| Income (loss) from operations | 1,074.3 | 118.9 | (118.1 | ) | (f) | 1,075.1 | ||||||||||
| Non-operating pension expense | (7.7 | ) | ||||||||||||||
| Interest expense, net | (53.3 | ) | ||||||||||||||
| Income before taxes | $ | 1,014.1 | ||||||||||||||
| Other segment disclosures: | ||||||||||||||||
| Segment sales to external customers | $ | 7,135.6 | $ | 595.4 | $ | 71.4 | (g) | $ | 7,802.4 | |||||||
| Depreciation, amortization, and depletion | 472.5 | 29.6 | 15.6 | 517.7 | ||||||||||||
| Capital expenditures (h) | 426.8 | 9.7 | 33.2 | 469.7 | ||||||||||||
| Assets | 6,903.7 | 384.4 | 1,393.0 | 8,681.1 |
(a)
Sales to foreign unaffiliated customers during the years ended December 31, 2025, 2024, and 2023 were $377.9 million, $445.8 million, and $402.6 million, respectively.
(b)
The significant expense categories align with the segment-level information that is regularly provided to the CODM.
(c)
For the Packaging segment, primarily includes expense items for liner consumption, liner board discount, purchased sheets usage, medium consumption, raw materials, and hourly-employee related expenses and benefits. For the Paper segment, primarily includes expense items for chemicals, raw materials, finishing materials, hourly-employee related expenses and benefits, and repair services and materials.
(d)
For the Packaging segment, primarily includes expense items for depreciation and salaried employee-related expenses and benefits. For the Paper segment, primarily includes expense items for depreciation, salaried employee-related expenses, and professional services.
(e)
Other segment items for each reportable segment primarily include:
Packaging: farmout purchases, certain divisional allocations, and other expense/income items.
Paper: other expense/income items.
Corporate and Other: unallocated corporate costs, transportation business activity, and activity related to LTP.
(f)
The significant expense categories reported for the Packaging and Paper segments are not used for Corporate and Other in the segment-level information that is regularly reviewed by the CODM. The CODM makes resource allocation decisions for Corporate and Other based on divisional income (loss) from operations.
(g)
The Corporate and Other segment sales to external customers is presented net of total company intersegment eliminations.
(h)
Includes “Additions to property, plant, and equipment” and excludes cash used for “Acquisition of business, net of cash acquired” as reported on our Consolidated Statements of Cash Flows.
20.
Commitments, Guarantees, Indemnifications, and Legal Proceedings
We have financial commitments and obligations that arise in the ordinary course of our business. These include long-term debt (discussed in Note 11, Debt), lease obligations (discussed in Note 3, Leases), purchase commitments for goods and services, and legal proceedings (discussed below).
Purchase Commitments
In the table below, we set forth our enforceable and legally binding purchase obligations as of December 31, 2025. These obligations relate to various purchase agreements for items such as minimum amounts of energy, fiber, and chemical purchases over periods ranging from one year to 27 years. Some of the amounts are based on management’s estimates and assumptions about these obligations, including their duration, anticipated actions by third parties, and other factors. Because these estimates and assumptions are necessarily subjective, our actual payments may vary from those reflected in the table. Total purchase commitments with obligations greater than one year were as follows (dollars in millions):
| 2026 | $ | 83.6 | ||
| 2027 | 61.7 | |||
| 2028 | 35.8 | |||
| 2029 | 31.3 | |||
| 2030 | 31.6 | |||
| Thereafter | 570.7 | |||
| Total | $ | 814.7 |
The Company purchased a total of $458.0 million, $403.5 million, and $432.6 million during the years ended December 31, 2025, 2024, and 2023, respectively, under these purchase agreements.
During the fourth quarter of 2025, the Company entered into an agreement with a third-party contractor to design, construct, and operate a new woodyard and chip processing facility at the Valdosta, Georgia mill. Upon completion of construction and commencement of operations in 2028, the Company will lease the woodyard and chip processing facility from the third-party contractor and is obligated to deliver a minimum of 1.8 million tons of roundwood logs per year to be processed by the contractor for a contract term of 25 years. If the minimum annual volume is not delivered, the Company will be required to pay the shortfall at an annual fixed price per ton. The annual amounts for this minimum obligation for 2028, 2029, 2030, and Thereafter are $15.4 million, $15.9 million, $16.4 million, and $508.1 million, respectively.
Environmental Matters
The potential costs for various environmental matters are uncertain due to such factors as the unknown magnitude of possible cleanup costs, the complexity and evolving nature of governmental laws and regulations and their interpretations, and the timing, varying costs and effectiveness of alternative cleanup technologies. From 2006 through 2025, there were no significant environmental remediation costs at PCA's mills and corrugated plants. At December 31, 2025, the Company had $30.9 million of environmental-related reserves recorded on its Consolidated Balance Sheet. Of the $30.9 million, approximately $22.5 million related to environmental-related asset retirement obligations discussed in Note 14, Asset Retirement Obligations, and $8.4 million related to our estimate of other environmental contingencies. The Company recorded $2.7 million in “Accrued liabilities” and $28.2 million in “Other long-term liabilities” on the Consolidated Balance Sheet. Liabilities recorded for environmental contingencies are estimates of the probable costs based upon available information and assumptions. Because of these uncertainties, PCA’s estimates may change. The Company believes that it is not reasonably possible that future environmental expenditures for remediation costs and asset retirement obligations above the $30.9 million accrued as of December 31, 2025 will have a material impact on its financial condition, results of operations, or cash flows.
Guarantees and Indemnifications
We provide guarantees, indemnifications, and other assurances to third parties in the normal course of our business. These include tort indemnifications, environmental assurances, and representations and warranties in commercial agreements.
In connection with the agreement described under the “Purchase Commitments” subcaption above, the Company provided a guarantee of certain construction-phase financing obligations of the third-party contractor. The guarantee relates to a delayed-draw term loan facility used to finance construction of the facility and, if triggered, would require us to satisfy the contractor’s obligations under the financing agreement, subject to its terms. At December 31, 2025, we recorded a $6.5 million guarantee liability in accordance with ASC 460, Guarantees, in “Other long-term liabilities” with an offsetting amount recorded in “Other long-term assets” on the Consolidated Balance Sheet. The recorded liability represents the fair value of the guarantee obligation at inception and does not reflect any assessment that a payment under the guarantee is probable.
We evaluate our guarantees and indemnifications on an ongoing basis and accrue additional amounts when a loss is both probable and reasonably estimable. At December 31, 2025, other than the recorded guarantee liability described above, we were not aware of any material liabilities arising from any guarantees, indemnifications, or other assurances we have provided.
DeRidder Mill Incident
Details on the legal proceedings associated with the incident at the Company’s DeRidder, Louisiana mill can be found in Note 19, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our 2024 Annual Report on Form 10-K. As of December 31, 2024, the Company had recorded a liability of $59.2 million in “Accrued Liabilities” and a receivable of $59.2 million in “Prepaids and Other Assets” in the Consolidated Balance Sheets for the settlement amount to be paid to the plaintiffs and related insurance recovery from the Company’s insurers. As of December 31, 2025, the settlement amount has been paid, and no amounts remain outstanding.
Legal Proceedings
On July 29, 2025, PCA and seven other U.S. and Canadian containerboard producers were named as defendants in a purported class action lawsuit, Artuso Pastry Foods Corp v. Packaging Corporation of America, et al, No. 1:25-cv-08856, filed in the United States District Court for the Northern District of Illinois, alleging violations of the Sherman Act and the Clayton Act. The complaint alleges that the defendants conspired to raise prices of containerboard and restrict containerboard capacity, and that the purpose and effect of the alleged conspiracy was to artificially increase prices of containerboard products during the period of November 1, 2020, to the present. The complaint was filed as a purported class action suit on behalf of all purchasers of containerboard products during such period. The complaint seeks treble damages and costs, including attorney’s fees. PCA believes the allegations are without merit and will defend this lawsuit vigorously.
We are also a party to various legal actions arising in the ordinary course of our business. These legal actions include commercial liability claims, premises liability claims, and employment-related claims, among others. As of the date of this filing, we believe it is not reasonably possible that any of the legal actions against us will, either individually or in the aggregate, have a material adverse effect on our financial condition, results of operations, or cash flows.
Previous: Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK · Next: Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE