x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2016
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ____________ to ____________
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Delaware
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36-4277050
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer Identification No.)
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|
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1955 West Field Court, Lake Forest, Illinois
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60045
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(Address of Prinicpal Executive Offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
|
¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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PART I
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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FINANCIAL STATEMENTS
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Three Months Ended June 30
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Six Months Ended June 30
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||||||||||||
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2016
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2015
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2016
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2015
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||||||||
Statements of Income:
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|
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|
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||||||||
Net sales
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$
|
1,417.4
|
|
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$
|
1,454.3
|
|
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$
|
2,818.4
|
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$
|
2,880.0
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Cost of sales
|
(1,097.3
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)
|
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(1,136.6
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)
|
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(2,199.3
|
)
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(2,285.3
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)
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||||
Gross profit
|
320.1
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|
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317.7
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|
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619.1
|
|
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594.7
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||||
Selling, general, and administrative expenses
|
(114.8
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)
|
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(115.9
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)
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(229.1
|
)
|
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(233.2
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)
|
|
||||
Other expense, net
|
(5.1
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)
|
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(4.2
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)
|
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(9.0
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)
|
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(6.8
|
)
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||||
Income from operations
|
200.2
|
|
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197.6
|
|
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381.0
|
|
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354.7
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|
|
||||
Interest expense, net
|
(22.5
|
)
|
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(22.2
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)
|
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(44.1
|
)
|
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(41.4
|
)
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||||
Income before taxes
|
177.7
|
|
|
175.4
|
|
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336.9
|
|
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313.3
|
|
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||||
Income tax provision
|
(61.8
|
)
|
|
(61.4
|
)
|
|
(117.3
|
)
|
|
(108.5
|
)
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|
||||
Net income
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$
|
115.9
|
|
|
$
|
114.0
|
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$
|
219.6
|
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$
|
204.8
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||||||||
Net income per common share:
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||||||||
Basic
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$
|
1.23
|
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$
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1.16
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$
|
2.32
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$
|
2.09
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Diluted
|
$
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1.23
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$
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1.16
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$
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2.32
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$
|
2.08
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Dividends declared per common share
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$
|
0.55
|
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$
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0.55
|
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$
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1.10
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$
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1.10
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||||||||
Statements of Comprehensive Income:
|
|
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||||||||
Net income
|
$
|
115.9
|
|
|
$
|
114.0
|
|
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$
|
219.6
|
|
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$
|
204.8
|
|
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Other comprehensive income, net of tax:
|
|
|
|
|
|
|
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|
||||||||
Foreign currency translation adjustment
|
—
|
|
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4.2
|
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—
|
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2.8
|
|
|
||||
Reclassification adjustments to cash flow hedges included in net income, net of tax of $0.6 million, $0.5 million, $1.1 million, and $1.1 million
|
0.8
|
|
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0.9
|
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1.7
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1.7
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||||
Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of $1.0 million, $1.4 million, $2.0 million, and $2.8 million
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1.6
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2.2
|
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3.2
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4.4
|
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||||
Changes in unfunded employee benefit obligations net of tax of $2.0 million and $2.0 million
|
3.1
|
|
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—
|
|
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3.1
|
|
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—
|
|
|
||||
Other comprehensive income
|
5.5
|
|
|
7.3
|
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8.0
|
|
|
8.9
|
|
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||||
Comprehensive income
|
$
|
121.4
|
|
|
$
|
121.3
|
|
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$
|
227.6
|
|
|
$
|
213.7
|
|
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June 30,
2016 |
|
December 31,
2015 |
||||
ASSETS
|
|
|
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Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
213.6
|
|
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$
|
184.2
|
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Accounts receivable, net of allowance for doubtful accounts and customer deductions of $9.7 million and $10.3 million as of June 30, 2016 and December 31, 2015, respectively
|
663.4
|
|
|
636.5
|
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||
Inventories
|
671.3
|
|
|
676.8
|
|
||
Prepaid expenses and other current assets
|
60.3
|
|
|
28.8
|
|
||
Federal and state income taxes receivable
|
1.3
|
|
|
28.2
|
|
||
Total current assets
|
1,609.9
|
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|
1,554.5
|
|
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Property, plant, and equipment, net
|
2,809.9
|
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2,832.1
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Goodwill
|
544.0
|
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544.0
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Intangible assets, net
|
259.5
|
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270.8
|
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Other long-term assets
|
72.8
|
|
|
70.9
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|
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Total assets
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$
|
5,296.1
|
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$
|
5,272.3
|
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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|
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|
||||
Current maturities of long-term debt
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$
|
6.5
|
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$
|
6.5
|
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Capital lease obligations
|
1.2
|
|
|
1.2
|
|
||
Accounts payable
|
308.4
|
|
|
294.2
|
|
||
Dividends payable
|
52.1
|
|
|
53.4
|
|
||
Accrued interest
|
13.1
|
|
|
13.1
|
|
||
Accrued liabilities
|
170.2
|
|
|
193.5
|
|
||
Total current liabilities
|
551.5
|
|
|
561.9
|
|
||
Long-term liabilities:
|
|
|
|
||||
Long-term debt
|
2,288.1
|
|
|
2,290.4
|
|
||
Capital lease obligations
|
21.0
|
|
|
21.6
|
|
||
Deferred income taxes
|
353.9
|
|
|
347.0
|
|
||
Compensation and benefits
|
357.4
|
|
|
358.6
|
|
||
Other long-term liabilities
|
61.9
|
|
|
59.5
|
|
||
Total long-term liabilities
|
3,082.3
|
|
|
3,077.1
|
|
||
Commitments and contingent liabilities
|
|
|
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|
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Stockholders' equity:
|
|
|
|
||||
Common stock, par value $0.01 per share, 300.0 million shares authorized, 94.2 million and 96.1 million shares issued as of June 30, 2016 and December 31, 2015, respectively
|
0.9
|
|
|
1.0
|
|
||
Additional paid in capital
|
441.1
|
|
|
439.9
|
|
||
Retained earnings
|
1,337.2
|
|
|
1,317.3
|
|
||
Accumulated other comprehensive loss
|
(116.9
|
)
|
|
(124.9
|
)
|
||
Total stockholders' equity
|
1,662.3
|
|
|
1,633.3
|
|
||
Total liabilities and stockholders' equity
|
$
|
5,296.1
|
|
|
$
|
5,272.3
|
|
|
Six Months Ended June 30
|
||||||
|
2016
|
|
2015
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
219.6
|
|
|
$
|
204.8
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, depletion, and amortization of intangibles
|
176.3
|
|
|
180.2
|
|
||
Amortization of deferred financing costs
|
3.8
|
|
|
3.8
|
|
||
Share-based compensation expense
|
10.3
|
|
|
9.1
|
|
||
Deferred income tax provision
|
1.3
|
|
|
7.0
|
|
||
Pension and postretirement benefits expense, net of contributions
|
8.7
|
|
|
15.6
|
|
||
Other, net
|
4.2
|
|
|
(4.1
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Decrease (increase) in assets —
|
|
|
|
||||
Accounts receivable
|
(26.9
|
)
|
|
(61.9
|
)
|
||
Inventories
|
5.5
|
|
|
(2.6
|
)
|
||
Prepaid expenses and other current assets
|
(27.5
|
)
|
|
(24.8
|
)
|
||
Increase (decrease) in liabilities —
|
|
|
|
||||
Accounts payable
|
(4.0
|
)
|
|
(10.4
|
)
|
||
Accrued liabilities
|
(23.3
|
)
|
|
(20.1
|
)
|
||
Federal and state income taxes payable / receivable
|
23.1
|
|
|
7.9
|
|
||
Net cash provided by operating activities
|
371.1
|
|
|
304.5
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Additions to property, plant, and equipment
|
(121.8
|
)
|
|
(141.9
|
)
|
||
Proceeds from sale of a business
|
—
|
|
|
23.0
|
|
||
Additions to other long-term assets
|
(6.2
|
)
|
|
(6.1
|
)
|
||
Other
|
0.3
|
|
|
1.1
|
|
||
Net cash used for investing activities
|
(127.7
|
)
|
|
(123.9
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Repayments of debt and capital lease obligations
|
(3.8
|
)
|
|
(3.8
|
)
|
||
Common stock dividends paid
|
(104.9
|
)
|
|
(93.5
|
)
|
||
Repurchases of common stock
|
(100.3
|
)
|
|
(43.3
|
)
|
||
Excess tax benefits from stock-based awards
|
5.1
|
|
|
5.4
|
|
||
Shares withheld to cover employee restricted stock taxes
|
(10.1
|
)
|
|
(7.4
|
)
|
||
Other
|
—
|
|
|
0.8
|
|
||
Net cash used for financing activities
|
(214.0
|
)
|
|
(141.8
|
)
|
||
Net increase in cash and cash equivalents
|
29.4
|
|
|
38.8
|
|
||
Cash and cash equivalents, beginning of period
|
184.2
|
|
|
124.9
|
|
||
Cash and cash equivalents, end of period
|
$
|
213.6
|
|
|
$
|
163.7
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
115.9
|
|
|
$
|
114.0
|
|
|
$
|
219.6
|
|
|
$
|
204.8
|
|
Less: distributed and undistributed earnings allocated to participating securities
|
(1.2
|
)
|
|
(1.4
|
)
|
|
(2.3
|
)
|
|
(2.6
|
)
|
||||
Net income attributable to common shareholders
|
$
|
114.7
|
|
|
$
|
112.6
|
|
|
$
|
217.3
|
|
|
$
|
202.2
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average basic common shares outstanding
|
93.2
|
|
|
96.8
|
|
|
93.6
|
|
|
97.0
|
|
||||
Effect of dilutive securities
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
||||
Weighted average diluted common shares outstanding
|
93.3
|
|
|
96.9
|
|
|
93.7
|
|
|
97.1
|
|
||||
Basic income per common share
|
$
|
1.23
|
|
|
$
|
1.16
|
|
|
$
|
2.32
|
|
|
$
|
2.09
|
|
Diluted income per common share
|
$
|
1.23
|
|
|
$
|
1.16
|
|
|
$
|
2.32
|
|
|
$
|
2.08
|
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Facilities closure costs (a)
|
$
|
(1.4
|
)
|
|
$
|
—
|
|
|
$
|
(3.3
|
)
|
|
$
|
—
|
|
Acquisition-related costs (b)
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
||||
Multiemployer pension withdrawal (c)
|
(0.9
|
)
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
||||
Asset disposals and write-offs
|
(1.1
|
)
|
|
(3.7
|
)
|
|
(2.9
|
)
|
|
(4.7
|
)
|
||||
Integration-related and other costs (d)
|
—
|
|
|
(3.6
|
)
|
|
—
|
|
|
(6.7
|
)
|
||||
DeRidder restructuring (e)
|
—
|
|
|
1.0
|
|
|
—
|
|
|
(0.2
|
)
|
||||
Refundable state tax credit (f)
|
—
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
||||
Other
|
(1.4
|
)
|
|
2.1
|
|
|
(1.6
|
)
|
|
1.2
|
|
||||
Total
|
$
|
(5.1
|
)
|
|
$
|
(4.2
|
)
|
|
$
|
(9.0
|
)
|
|
$
|
(6.8
|
)
|
(a)
|
The three and six months ended June 30, 2016 include facilities closure costs related to corrugated products facilities and a paper products facility.
|
(b)
|
The three and six months ended June 30, 2016 include acquisition-related costs for the announced TimBar Corporation acquisition.
|
(c)
|
The three and six months ended June 30, 2016 include costs related to our withdrawal from a multiemployer pension plan for one of our corrugated products facilities.
|
(d)
|
The three and six months ended June 30, 2015 include Boise acquisition integration-related and other costs. These costs primarily relate to professional fees, severance, retention, relocation, travel, and other integration-related costs.
|
(e)
|
The three and six months ended June 30, 2015 include amounts from restructuring activities at our mill in DeRidder, Louisiana.
|
(f)
|
The six months ended June 30, 2015 include a tax credit from the State of Louisiana related to our capital investment and the jobs retained at the DeRidder, Louisiana mill.
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Raw materials
|
$
|
256.5
|
|
|
$
|
260.6
|
|
Work in process
|
11.9
|
|
|
14.2
|
|
||
Finished goods
|
182.2
|
|
|
189.7
|
|
||
Supplies and materials
|
220.7
|
|
|
212.3
|
|
||
Inventories
|
$
|
671.3
|
|
|
$
|
676.8
|
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Land and land improvements
|
$
|
147.8
|
|
|
$
|
146.4
|
|
Buildings
|
645.5
|
|
|
640.9
|
|
||
Machinery and equipment
|
4,800.0
|
|
|
4,747.1
|
|
||
Construction in progress
|
172.8
|
|
|
119.1
|
|
||
Other
|
63.7
|
|
|
61.3
|
|
||
Property, plant, and equipment, at cost
|
5,829.8
|
|
|
5,714.8
|
|
||
Less accumulated depreciation
|
(3,019.9
|
)
|
|
(2,882.7
|
)
|
||
Property, plant, and equipment, net
|
$
|
2,809.9
|
|
|
$
|
2,832.1
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||
|
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
|
12.9
|
|
$
|
311.5
|
|
|
$
|
67.5
|
|
|
13.3
|
|
$
|
311.5
|
|
|
$
|
57.3
|
|
Trademarks and trade names
|
13.5
|
|
21.8
|
|
|
6.3
|
|
|
13.6
|
|
21.8
|
|
|
5.2
|
|
||||
Other
|
0.7
|
|
0.2
|
|
|
0.2
|
|
|
1.2
|
|
0.2
|
|
|
0.2
|
|
||||
Total intangible assets (excluding goodwill)
|
12.9
|
|
$
|
333.5
|
|
|
$
|
74.0
|
|
|
13.6
|
|
$
|
333.5
|
|
|
$
|
62.7
|
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Compensation and benefits
|
$
|
88.7
|
|
|
$
|
106.4
|
|
Medical insurance and workers’ compensation
|
30.1
|
|
|
31.1
|
|
||
Franchise, property, and sales and use taxes
|
17.7
|
|
|
16.0
|
|
||
Customer volume discounts and rebates
|
16.4
|
|
|
15.3
|
|
||
Environmental liabilities and asset retirement obligations
|
7.4
|
|
|
7.9
|
|
||
Severance, retention, and relocation
|
2.7
|
|
|
7.3
|
|
||
Other
|
7.2
|
|
|
9.5
|
|
||
Total
|
$
|
170.2
|
|
|
$
|
193.5
|
|
|
Pension Plans
|
||||||||||||||
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Service cost
|
$
|
6.1
|
|
|
$
|
6.0
|
|
|
$
|
12.2
|
|
|
$
|
11.8
|
|
Interest cost
|
10.2
|
|
|
11.5
|
|
|
20.4
|
|
|
23.0
|
|
||||
Expected return on plan assets
|
(12.4
|
)
|
|
(13.3
|
)
|
|
(24.8
|
)
|
|
(26.6
|
)
|
||||
Net amortization of unrecognized amounts
|
|
|
|
|
|
|
|
||||||||
Prior service cost
|
1.4
|
|
|
1.4
|
|
|
2.8
|
|
|
2.8
|
|
||||
Actuarial loss
|
1.4
|
|
|
2.2
|
|
|
2.8
|
|
|
4.3
|
|
||||
Net periodic benefit cost
|
$
|
6.7
|
|
|
$
|
7.8
|
|
|
$
|
13.4
|
|
|
$
|
15.3
|
|
|
Postretirement Plans
|
||||||||||||||
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Service cost
|
$
|
0.2
|
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
$
|
0.8
|
|
Interest cost
|
0.2
|
|
|
0.3
|
|
|
0.4
|
|
|
0.6
|
|
||||
Net amortization of unrecognized amounts
|
|
|
|
|
|
|
|
||||||||
Prior service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Actuarial loss
|
(0.2
|
)
|
|
—
|
|
|
(0.4
|
)
|
|
0.1
|
|
||||
Net periodic benefit cost
|
$
|
0.2
|
|
|
$
|
0.7
|
|
|
$
|
0.4
|
|
|
$
|
1.5
|
|
|
Restricted Stock
|
|
Performance Units
|
||||||||||
|
Shares
|
|
Weighted Average Grant- Date Fair Value
|
|
Shares
|
|
Weighted Average Grant- Date Fair Value
|
||||||
Outstanding at January 1, 2016
|
1,007,794
|
|
|
$
|
49.47
|
|
|
175,675
|
|
|
$
|
59.94
|
|
Granted
|
242,835
|
|
|
67.48
|
|
|
77,017
|
|
|
67.57
|
|
||
Vested (a)
|
(409,815
|
)
|
|
32.64
|
|
|
(20,604
|
)
|
|
57.58
|
|
||
Forfeitures
|
(14,440
|
)
|
|
56.69
|
|
|
—
|
|
|
—
|
|
||
Outstanding at June 30, 2016
|
826,374
|
|
|
$
|
62.99
|
|
|
232,088
|
|
|
$
|
62.68
|
|
(a)
|
Upon vesting of the performance unit awards, PCA issued
21,111
shares of its common stock, which included
507
shares for dividends accrued during the vesting period.
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Restricted stock
|
$
|
3.9
|
|
|
$
|
4.4
|
|
|
$
|
8.8
|
|
|
$
|
8.0
|
|
Performance units
|
0.8
|
|
|
0.5
|
|
|
1.5
|
|
|
1.1
|
|
||||
Total share-based compensation expense
|
4.7
|
|
|
4.9
|
|
|
10.3
|
|
|
9.1
|
|
||||
Income tax benefit
|
(1.8
|
)
|
|
(1.9
|
)
|
|
(4.0
|
)
|
|
(3.5
|
)
|
||||
Share-based compensation expense, net of tax benefit
|
$
|
2.9
|
|
|
$
|
3.0
|
|
|
$
|
6.3
|
|
|
$
|
5.6
|
|
|
June 30, 2016
|
||||
|
Unrecognized Compensation Expense
|
|
Remaining Weighted Average Recognition Period (in years)
|
||
Restricted stock
|
$
|
34.4
|
|
|
3.0
|
Performance units
|
10.0
|
|
|
3.2
|
|
Total unrecognized share-based compensation expense
|
$
|
44.4
|
|
|
3.1
|
|
|
Unrealized Loss On Treasury Locks, Net
|
|
Unrealized Loss on Foreign Exchange Contracts
|
|
Unfunded Employee Benefit Obligations
|
|
Total
|
||||||||
Balance at January 1, 2016
|
|
$
|
(21.2
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(103.3
|
)
|
|
$
|
(124.9
|
)
|
Other comprehensive income (loss) before reclassifications, net of tax
|
|
—
|
|
|
—
|
|
|
3.1
|
|
|
3.1
|
|
||||
Amounts reclassified from AOCI, net of tax
|
|
1.7
|
|
(a)
|
—
|
|
|
3.2
|
|
(b)
|
4.9
|
|
||||
Balance at June 30, 2016
|
|
$
|
(19.5
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(97.0
|
)
|
|
$
|
(116.9
|
)
|
|
|
Amounts Reclassified from AOCI
|
|
|
||||||||||||||
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
|
Affected Line Item in the Statement Where Net Income is Presented
|
||||||||||||
Details about AOCI Components
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||||||||
Foreign currency translation adjustments
|
|
$
|
—
|
|
|
$
|
(4.2
|
)
|
|
$
|
—
|
|
|
$
|
(4.2
|
)
|
|
Other expense, net
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Tax benefit
|
||||
|
|
$
|
—
|
|
|
$
|
(4.2
|
)
|
|
$
|
—
|
|
|
$
|
(4.2
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Unrealized loss on treasury locks, net
|
|
$
|
(1.4
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(2.8
|
)
|
|
$
|
(2.8
|
)
|
|
See (a) below
|
|
|
0.6
|
|
|
0.5
|
|
|
1.1
|
|
|
1.1
|
|
|
Tax benefit
|
||||
|
|
$
|
(0.8
|
)
|
|
$
|
(0.9
|
)
|
|
$
|
(1.7
|
)
|
|
$
|
(1.7
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Unfunded employee benefit obligations
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of prior service costs
|
|
$
|
(1.4
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(2.8
|
)
|
|
$
|
(2.8
|
)
|
|
See (b) below
|
Amortization of actuarial losses
|
|
(1.2
|
)
|
|
(2.2
|
)
|
|
(2.4
|
)
|
|
(4.4
|
)
|
|
See (b) below
|
||||
|
|
(2.6
|
)
|
|
(3.6
|
)
|
|
(5.2
|
)
|
|
(7.2
|
)
|
|
Total before tax
|
||||
|
|
1.0
|
|
|
1.4
|
|
|
2.0
|
|
|
2.8
|
|
|
Tax benefit
|
||||
|
|
$
|
(1.6
|
)
|
|
$
|
(2.2
|
)
|
|
$
|
(3.2
|
)
|
|
$
|
(4.4
|
)
|
|
Net of tax
|
(a)
|
This AOCI component is included in interest expense, net. Amount relates to the amortization of the effective portion of treasury lock derivative instruments recorded in AOCI. The net amount of settlement gains or losses on derivative instruments included in AOCI to be amortized over the next 12 months is a net loss of
$5.7 million
(
$3.5 million
after tax). For a discussion of treasury lock derivative instrument activity, see Note 14, Derivative Instruments and Hedging Activities, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of our
2015
Annual Report on Form 10-K.
|
(b)
|
These AOCI components are included in the computation of net pension and postretirement benefit costs. See Note
10
,
Employee Benefit Plans and Other Postretirement Benefits
, for additional information.
|
|
|
Sales, net
|
|
Operating Income (Loss)
|
|
||||||||||||
Three Months Ended June 30, 2016
|
|
Trade
|
|
Inter-
segment |
|
Total
|
|
|
|||||||||
Packaging
|
|
$
|
1,123.6
|
|
|
$
|
1.7
|
|
|
$
|
1,125.3
|
|
|
$
|
192.4
|
|
(a)
|
Paper
|
|
266.8
|
|
|
—
|
|
|
266.8
|
|
|
24.4
|
|
(a)
|
||||
Corporate and Other
|
|
27.0
|
|
|
33.0
|
|
|
60.0
|
|
|
(16.6
|
)
|
|
||||
Intersegment eliminations
|
|
—
|
|
|
(34.7
|
)
|
|
(34.7
|
)
|
|
—
|
|
|
||||
|
|
$
|
1,417.4
|
|
|
$
|
—
|
|
|
$
|
1,417.4
|
|
|
200.2
|
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
(22.5
|
)
|
|
|||||||
Income before taxes
|
|
|
|
|
|
|
|
$
|
177.7
|
|
|
|
|
Sales, net
|
|
Operating Income (Loss)
|
|
||||||||||||
Three Months Ended June 30, 2015
|
|
Trade
|
|
Inter-
segment |
|
Total
|
|
|
|||||||||
Packaging
|
|
$
|
1,140.9
|
|
|
$
|
1.3
|
|
|
$
|
1,142.2
|
|
|
$
|
194.6
|
|
(b)
|
Paper
|
|
281.1
|
|
|
—
|
|
|
281.1
|
|
|
23.4
|
|
|
||||
Corporate and Other
|
|
32.3
|
|
|
34.1
|
|
|
66.4
|
|
|
(20.4
|
)
|
(c)
|
||||
Intersegment eliminations
|
|
—
|
|
|
(35.4
|
)
|
|
(35.4
|
)
|
|
—
|
|
|
||||
|
|
$
|
1,454.3
|
|
|
$
|
—
|
|
|
$
|
1,454.3
|
|
|
197.6
|
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
(22.2
|
)
|
|
|||||||
Income before taxes
|
|
|
|
|
|
|
|
$
|
175.4
|
|
|
|
|
Sales, net
|
|
Operating Income (Loss)
|
|
||||||||||||
Six Months Ended June 30, 2016
|
|
Trade
|
|
Inter- segment
|
|
Total
|
|
|
|||||||||
Packaging
|
|
$
|
2,217.4
|
|
|
$
|
3.4
|
|
|
$
|
2,220.8
|
|
|
$
|
353.9
|
|
(a)
|
Paper
|
|
547.3
|
|
|
—
|
|
|
547.3
|
|
|
60.5
|
|
(a)
|
||||
Corporate and Other
|
|
53.7
|
|
|
69.0
|
|
|
122.7
|
|
|
(33.4
|
)
|
|
||||
Intersegment eliminations
|
|
—
|
|
|
(72.4
|
)
|
|
(72.4
|
)
|
|
—
|
|
|
||||
|
|
$
|
2,818.4
|
|
|
$
|
—
|
|
|
$
|
2,818.4
|
|
|
381.0
|
|
|
|
Interest expense
|
|
|
|
|
|
|
|
(44.1
|
)
|
|
|||||||
Income before taxes
|
|
|
|
|
|
|
|
$
|
336.9
|
|
|
|
|
Sales, net
|
|
Operating Income (Loss)
|
|
||||||||||||
Six Months Ended June 30, 2015
|
|
Trade
|
|
Inter-segment
|
|
Total
|
|
|
|||||||||
Packaging
|
|
$
|
2,238.8
|
|
|
$
|
2.7
|
|
|
$
|
2,241.5
|
|
|
$
|
335.7
|
|
(b)
|
Paper
|
|
578.4
|
|
|
—
|
|
|
578.4
|
|
|
59.0
|
|
|
||||
Corporate and Other
|
|
62.8
|
|
|
64.6
|
|
|
127.4
|
|
|
(40.0
|
)
|
(c)
|
||||
Intersegment eliminations
|
|
—
|
|
|
(67.3
|
)
|
|
(67.3
|
)
|
|
—
|
|
|
||||
|
|
$
|
2,880.0
|
|
|
$
|
—
|
|
|
$
|
2,880.0
|
|
|
354.7
|
|
|
|
Interest expense
|
|
|
|
|
|
|
|
(41.4
|
)
|
|
|||||||
Income before taxes
|
|
|
|
|
|
|
|
$
|
313.3
|
|
|
(a)
|
The three and six months ended June 30, 2016 include
$1.7 million
and
$4.5 million
, respectively, of closure costs related to corrugated products facilities and a paper products facility. The closure costs are recorded within "Other expense, net" and "Cost of sales", as appropriate.
|
(b)
|
The three and six months ended June 30, 2015 include
$1.0 million
of income and
$9.3 million
of expense, respectively, related to restructuring charges at our mill in DeRidder, Louisiana, which were recorded in "Other expense, net" and "Cost of sales", as appropriate.
|
(c)
|
The three and six months ended June 30, 2015 include
$2.0 million
and
$4.6 million
, respectively, of Boise acquisition integration-related and other costs, mostly recorded in "Other expense, net". Boise acquisition integration-related and other costs, primarily recorded in "Other expense, net".
|
Item 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Earnings per diluted share, as reported
|
$
|
1.23
|
|
|
$
|
1.16
|
|
|
$
|
2.32
|
|
|
$
|
2.08
|
|
Special items (a):
|
|
|
|
|
|
|
|
||||||||
Facilities closure costs
|
0.01
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
||||
Multiemployer pension plan withdrawal
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
||||
Acquisition-related costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
DeRidder restructuring
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|
0.06
|
|
||||
Integration-related and other costs
|
—
|
|
|
0.03
|
|
|
—
|
|
|
0.05
|
|
||||
Total special items
|
0.02
|
|
|
0.02
|
|
|
0.04
|
|
|
0.11
|
|
||||
Earnings per diluted share, excluding special items
|
$
|
1.25
|
|
|
$
|
1.18
|
|
|
$
|
2.36
|
|
|
$
|
2.19
|
|
(a)
|
See "Reconciliations of Non-GAAP Financial Measures to Reported Amounts" in this Management's Discussion and Analysis of Financial Condition and Results of Operations for more information on the special items.
|
|
Three Months Ended June 30
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
||||||
Packaging
|
$
|
1,125
|
|
|
$
|
1,142
|
|
|
$
|
(17
|
)
|
Paper
|
267
|
|
|
281
|
|
|
(14
|
)
|
|||
Corporate and Other
|
60
|
|
|
66
|
|
|
(6
|
)
|
|||
Intersegment eliminations
|
(35
|
)
|
|
(35
|
)
|
|
—
|
|
|||
Net sales
|
$
|
1,417
|
|
|
$
|
1,454
|
|
|
$
|
(37
|
)
|
|
|
|
|
|
|
||||||
Packaging
|
$
|
192
|
|
|
$
|
195
|
|
|
$
|
(3
|
)
|
Paper
|
24
|
|
|
23
|
|
|
1
|
|
|||
Corporate and Other
|
(16
|
)
|
|
(21
|
)
|
|
5
|
|
|||
Income from operations
|
$
|
200
|
|
|
$
|
197
|
|
|
$
|
3
|
|
Interest expense, net
|
(22
|
)
|
|
(22
|
)
|
|
—
|
|
|||
Income before taxes
|
178
|
|
|
175
|
|
|
3
|
|
|||
Income tax provision
|
(62
|
)
|
|
(61
|
)
|
|
(1
|
)
|
|||
Net income
|
$
|
116
|
|
|
$
|
114
|
|
|
$
|
2
|
|
Non-GAAP Measures (a)
|
|
|
|
|
|
||||||
Net income excluding special items
|
$
|
118
|
|
|
$
|
116
|
|
|
$
|
2
|
|
Consolidated EBITDA
|
288
|
|
|
284
|
|
|
4
|
|
|||
Consolidated EBITDA excluding special items
|
290
|
|
|
287
|
|
|
3
|
|
|||
Packaging EBITDA
|
264
|
|
|
267
|
|
|
(3
|
)
|
|||
Packaging EBITDA excluding special items
|
267
|
|
|
267
|
|
|
—
|
|
|||
Paper EBITDA
|
39
|
|
|
37
|
|
|
2
|
|
|||
Paper EBITDA excluding special items
|
39
|
|
|
37
|
|
|
2
|
|
(a)
|
See "Reconciliations of Non-GAAP Financial Measures to Reported Amounts" included in this Item 2 for a reconciliation of non-GAAP measures to the most comparable GAAP measure.
|
|
Six Months Ended June 30
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
||||||
Packaging
|
$
|
2,221
|
|
|
$
|
2,242
|
|
|
$
|
(21
|
)
|
Paper
|
547
|
|
|
578
|
|
|
(31
|
)
|
|||
Corporate and Other
|
122
|
|
|
127
|
|
|
(5
|
)
|
|||
Intersegment eliminations
|
(72
|
)
|
|
(67
|
)
|
|
(5
|
)
|
|||
Net sales
|
$
|
2,818
|
|
|
$
|
2,880
|
|
|
$
|
(62
|
)
|
|
|
|
|
|
|
||||||
Packaging
|
$
|
354
|
|
|
$
|
336
|
|
|
$
|
18
|
|
Paper
|
61
|
|
|
59
|
|
|
2
|
|
|||
Corporate and Other
|
(34
|
)
|
|
(40
|
)
|
|
6
|
|
|||
Income from operations
|
$
|
381
|
|
|
$
|
355
|
|
|
$
|
26
|
|
Interest expense, net
|
(44
|
)
|
|
(42
|
)
|
|
(2
|
)
|
|||
Income before taxes
|
337
|
|
|
313
|
|
|
24
|
|
|||
Income tax provision
|
(117
|
)
|
|
(108
|
)
|
|
(9
|
)
|
|||
Net income
|
$
|
220
|
|
|
$
|
205
|
|
|
$
|
15
|
|
Non-GAAP Measures (a)
|
|
|
|
|
|
||||||
Net income excluding special items
|
$
|
223
|
|
|
$
|
215
|
|
|
$
|
8
|
|
Consolidated EBITDA
|
557
|
|
|
535
|
|
|
22
|
|
|||
Consolidated EBITDA excluding special items
|
563
|
|
|
542
|
|
|
21
|
|
|||
Packaging EBITDA
|
499
|
|
|
487
|
|
|
12
|
|
|||
Packaging EBITDA excluding special items
|
503
|
|
|
489
|
|
|
14
|
|
|||
Paper EBITDA
|
89
|
|
|
86
|
|
|
3
|
|
|||
Paper EBITDA excluding special items
|
90
|
|
|
86
|
|
|
4
|
|
(a)
|
See "Reconciliations of Non-GAAP Financial Measures to Reported Amounts" included in this Item 2 for a reconciliation of non-GAAP measures to the most comparable GAAP measure.
|
|
Six Months Ended June 30
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
||||||
Net cash provided by (used for):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
371
|
|
|
$
|
305
|
|
|
$
|
66
|
|
Investing activities
|
(128
|
)
|
|
(124
|
)
|
|
(4
|
)
|
|||
Financing activities
|
(214
|
)
|
|
(142
|
)
|
|
(72
|
)
|
|||
Net increase in cash and cash equivalents
|
$
|
29
|
|
|
$
|
39
|
|
|
$
|
(10
|
)
|
|
Three Months Ended June 30
|
||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||
|
Income before Taxes
|
Income Taxes
|
Net
Income
|
|
Income
before Taxes
|
Income Taxes
|
Net
Income
|
||||||||||||
As reported in accordance with GAAP
|
$
|
177.7
|
|
$
|
(61.8
|
)
|
$
|
115.9
|
|
|
$
|
175.4
|
|
$
|
(61.4
|
)
|
$
|
114.0
|
|
Special items:
|
|
|
|
|
|
|
|
||||||||||||
Facilities closure costs (a)
|
1.7
|
|
(0.7
|
)
|
1.0
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Acquisition-related costs (b)
|
0.3
|
|
(0.1
|
)
|
0.2
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Multiemployer pension plan withdrawal (c)
|
0.9
|
|
(0.3
|
)
|
0.6
|
|
|
—
|
|
—
|
|
—
|
|
||||||
DeRidder restructuring (d)
|
—
|
|
—
|
|
—
|
|
|
(1.0
|
)
|
0.3
|
|
(0.7
|
)
|
||||||
Integration-related and other costs (e)
|
—
|
|
—
|
|
—
|
|
|
3.7
|
|
(1.4
|
)
|
2.3
|
|
||||||
Total special items
|
2.9
|
|
(1.1
|
)
|
1.8
|
|
|
2.7
|
|
(1.1
|
)
|
1.6
|
|
||||||
Excluding special items
|
$
|
180.6
|
|
$
|
(62.9
|
)
|
$
|
117.7
|
|
|
$
|
178.1
|
|
$
|
(62.5
|
)
|
$
|
115.6
|
|
|
Six Months Ended June 30
|
||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||
|
Income before Taxes
|
Income Taxes
|
Net
Income
|
|
Income
before Taxes
|
Income Taxes
|
Net
Income
|
||||||||||||
As reported in accordance with GAAP
|
$
|
336.9
|
|
$
|
(117.3
|
)
|
$
|
219.6
|
|
|
$
|
313.3
|
|
$
|
(108.5
|
)
|
$
|
204.8
|
|
Special items:
|
|
|
|
|
|
|
|
||||||||||||
Facilities closure costs (a)
|
4.5
|
|
(1.6
|
)
|
2.9
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Acquisition-related costs (b)
|
0.3
|
|
(0.1
|
)
|
0.2
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Multiemployer pension plan withdrawal (c)
|
0.9
|
|
(0.3
|
)
|
0.6
|
|
|
—
|
|
—
|
|
—
|
|
||||||
DeRidder restructuring (d)
|
—
|
|
—
|
|
—
|
|
|
9.3
|
|
(3.4
|
)
|
5.9
|
|
||||||
Integration-related and other costs (e)
|
—
|
|
—
|
|
—
|
|
|
7.2
|
|
(2.7
|
)
|
4.5
|
|
||||||
Total special items
|
5.7
|
|
(2.0
|
)
|
3.7
|
|
|
16.5
|
|
(6.1
|
)
|
10.4
|
|
||||||
Excluding special items
|
$
|
342.6
|
|
$
|
(119.3
|
)
|
$
|
223.3
|
|
|
$
|
329.8
|
|
$
|
(114.6
|
)
|
$
|
215.2
|
|
(a)
|
The three and six months ended June 30, 2016 include facilities closure costs related to a corrugated products facility and a paper products facility. The closure costs are recorded within "Other expense, net" and "Cost of sales", as appropriate.
|
(b)
|
The three and six months ended June 30, 2016 include acquisition-related costs for the announced TimBar Corporation acquisition, which we recorded in "Other expense, net".
|
(c)
|
The three and six months ended June 30, 2016 include costs related to our withdrawal from a multiemployer pension plan for one of our corrugated products facilities. The costs are recorded in "Other expense, net".
|
(d)
|
The three and six months ended June 30, 2015 include restructuring charges at our mill in DeRidder, Louisiana. The restructuring charges primarily related to accelerated depreciation and were mostly recorded in "Cost of sales".
|
(e)
|
The three and six months ended June 30, 2015 include Boise acquisition integration-related and other costs, mostly recorded in "Other income (expense), net". These costs primarily relate to professional fees, severance, retention, relocation, travel, and other integration-related costs.
|
|
Three Months Ended June 30
|
|
Six Months Ended
June 30 |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
115.9
|
|
|
$
|
114.0
|
|
|
$
|
219.6
|
|
|
$
|
204.8
|
|
Interest expense, net
|
22.5
|
|
|
22.2
|
|
|
44.1
|
|
|
41.4
|
|
||||
Income tax provision
|
61.8
|
|
|
61.4
|
|
|
117.3
|
|
|
108.5
|
|
||||
Depreciation, amortization, and depletion
|
87.6
|
|
|
86.8
|
|
|
176.3
|
|
|
180.2
|
|
||||
EBITDA
|
$
|
287.8
|
|
|
$
|
284.4
|
|
|
$
|
557.3
|
|
|
$
|
534.9
|
|
Special items:
|
|
|
|
|
|
|
|
||||||||
Facilities closure costs
|
1.4
|
|
|
—
|
|
|
4.1
|
|
|
—
|
|
||||
Acquisition-related costs
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
||||
Multiemployer pension plan withdrawal
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||||
DeRidder restructuring
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
|
0.3
|
|
||||
Integration-related and other costs
|
—
|
|
|
3.7
|
|
|
—
|
|
|
7.2
|
|
||||
EBITDA excluding special items
|
$
|
290.4
|
|
|
$
|
287.1
|
|
|
$
|
562.6
|
|
|
$
|
542.4
|
|
|
Three Months Ended June 30
|
|
Six Months Ended
June 30 |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Packaging
|
|
|
|
|
|
|
|
||||||||
Segment income
|
$
|
192.4
|
|
|
$
|
194.6
|
|
|
$
|
353.9
|
|
|
$
|
335.7
|
|
Depreciation, amortization, and depletion
|
72.0
|
|
|
72.1
|
|
|
145.3
|
|
|
150.8
|
|
||||
EBITDA
|
264.4
|
|
|
266.7
|
|
|
499.2
|
|
|
486.5
|
|
||||
Facilities closure costs
|
1.4
|
|
|
—
|
|
|
3.3
|
|
|
—
|
|
||||
Multiemployer pension plan withdrawal
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||||
DeRidder restructuring
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
|
0.3
|
|
||||
Integration-related and other costs
|
—
|
|
|
1.7
|
|
|
—
|
|
|
2.6
|
|
||||
EBITDA excluding special items
|
$
|
266.7
|
|
|
$
|
267.4
|
|
|
$
|
503.4
|
|
|
$
|
489.4
|
|
|
|
|
|
|
|
|
|
||||||||
Paper
|
|
|
|
|
|
|
|
||||||||
Segment income
|
$
|
24.4
|
|
|
$
|
23.4
|
|
|
$
|
60.5
|
|
|
$
|
59.0
|
|
Depreciation, amortization, and depletion
|
14.3
|
|
|
13.7
|
|
|
28.5
|
|
|
27.4
|
|
||||
EBITDA
|
38.7
|
|
|
37.1
|
|
|
89.0
|
|
|
86.4
|
|
||||
Facilities closure costs
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
||||
EBITDA excluding special items
|
$
|
38.7
|
|
|
$
|
37.1
|
|
|
$
|
89.8
|
|
|
$
|
86.4
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate and Other
|
|
|
|
|
|
|
|
||||||||
Segment loss
|
$
|
(16.6
|
)
|
|
$
|
(20.4
|
)
|
|
$
|
(33.4
|
)
|
|
$
|
(40.0
|
)
|
Depreciation, amortization, and depletion
|
1.3
|
|
|
1.0
|
|
|
2.5
|
|
|
2.0
|
|
||||
EBITDA
|
(15.3
|
)
|
|
(19.4
|
)
|
|
(30.9
|
)
|
|
(38.0
|
)
|
||||
Acquisition-related costs
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
||||
Integration-related and other costs
|
—
|
|
|
2.0
|
|
|
—
|
|
|
4.6
|
|
||||
EBITDA excluding special items
|
$
|
(15.0
|
)
|
|
$
|
(17.4
|
)
|
|
$
|
(30.6
|
)
|
|
$
|
(33.4
|
)
|
|
|
|
|
|
|
|
|
||||||||
EBITDA excluding special items
|
$
|
290.4
|
|
|
$
|
287.1
|
|
|
$
|
562.6
|
|
|
$
|
542.4
|
|
•
|
the impact of general economic conditions;
|
•
|
the impact of acquired businesses and risks and uncertainties regarding operation, expected benefits and integration of such businesses;
|
•
|
containerboard, corrugated products, and white paper general industry conditions, including competition, product demand, product pricing, and input costs;
|
•
|
fluctuations in wood fiber and recycled fiber costs;
|
•
|
fluctuations in purchased energy costs;
|
•
|
the possibility of unplanned outages or interruptions at our principal facilities; and
|
•
|
legislative or regulatory actions or requirements, particularly concerning environmental or tax matters.
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
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Item 1A.
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RISK FACTORS
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Item 2.
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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Issuer Purchases of Equity Securities
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Period
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Total
Number of Shares Purchased (a) |
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Average Price Paid Per Share
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Total Number
of Shares Purchased as Part of Publicly Announced Plans or Programs |
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Approximate
Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
(in millions)
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April 1-30, 2016
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2,344
|
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$
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60.18
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|
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—
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$
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193.0
|
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May 1-31, 2016
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551
|
|
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64.90
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—
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|
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193.0
|
|
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June 1-30, 2016
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114,263
|
|
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68.14
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—
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193.0
|
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Total
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117,158
|
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$
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67.97
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—
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$
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193.0
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(a)
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All shares were withheld from employees to cover income and payroll taxes on equity awards that vested during the period.
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Item 3.
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DEFAULTS UPON SENIOR SECURITIES
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Item 4.
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MINE SAFETY DISCLOSURES
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Item 5.
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OTHER INFORMATION
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Item 6.
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EXHIBITS
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Exhibit
Number |
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Description
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10.1
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Form of executive officer restricted stock award (June 20, 2016)†
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10.2
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Form of executive officer performance unit award (June 20, 2016)†
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31.1
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Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †
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31.2
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Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †
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32
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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †
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101
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The following financial information from Packaging Corporation of America’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Income and Comprehensive Income for the three months ended June 30, 2016 and 2015, (ii) Consolidated Balance Sheets at June 30, 2016 and December 31, 2015, (iii) Consolidated Statements of Cash Flows for the three months ended June 30, 2016 and 2015, and (iv) the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements. †
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†
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Filed herewith.
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Packaging Corporation of America
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/s/ M
ARK
W. K
OWLZAN
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Mark W. Kowlzan
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Chief Executive Officer
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/s/ R
OBERT
P. M
UNDY
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Robert P. Mundy
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Senior Vice President and Chief Financial Officer
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Grant Date:
June 20, 2016
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Number of Restricted Shares Awarded
:
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Fair Market Value at Grant
:
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Restriction expires
: June 20, 2020
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Packaging Corporation of America
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By:
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Accepted and Agreed:
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Title:
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Date:
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Participant
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Percentage of Award Pool Shares
|
Maximum for Restricted Stock Awards (in shares)
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Maximum for Performance Units (in shares)*
|
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Mark W. Kowlzan
|
40
|
%
|
33,469
|
40,163
|
Thomas A. Hassfurther
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25
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%
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21,459
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25,751
|
Robert P. Mundy
|
10
|
%
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6,660
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7,992
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Charles J. Carter
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12.5
|
%
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6,913
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8,296
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Thomas W.H. Walton
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6.25
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%
|
4,255
|
5,106
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Kent A. Pflederer
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6.25
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%
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4,255
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5,106
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PARTICIPANT:
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DATE OF GRANT:
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June 20, 2016
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NUMBER OF PERFORMANCE UNITS:
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PERFORMANCE PERIOD:
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2017-2019
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VESTING DATE
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June 20, 2020
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1.
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Grant of Performance Units
. Subject to the restrictions, terms and conditions of this Agreement and the Plan Documents (as hereafter defined), the Company hereby awards to the Participant the number of performance units stated above (the “Performance Units”).
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2.
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Governing Documents
. This Agreement and the Performance Units awarded hereby are subject to all the restrictions, terms and provisions of the Amended and Restated 1999 Long-Term Equity Incentive Plan (the “Plan”) and the 2016 Performance-Based Equity Award Pool for Executive Officers (the “Award Pool”) adopted by the Section 162(m) Subcommittee of the Compensation Committee on June 20, 2016 (together with the Plan, the “Plan Documents”) which are herein incorporated by reference and to the terms of which the Participant hereby agrees. Capitalized terms used in this Agreement that are not defined herein shall have the meaning set forth in the Plan Documents.
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3.
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No Stockholder Rights
. The Performance Units will be a book entry credited in the name of the Participant representing a Full Value Award under the Plan and are not actual Shares. The Participant will not have the right to vote the Performance Units.
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4.
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Vesting
. Except as otherwise provided in the Plan Documents and subject to paragraphs 6 and 8 hereof, all of the Participant’s Performance Units covered hereby shall (to the extent not previously forfeited) vest as of the occurrence of a Vesting Date (as defined on Exhibits A and B). The terms and conditions of vesting shall be as provided on Exhibit A and Exhibit B, which are separate and independent from each other, with the amount of Shares being paid out on vesting to equal the sum of: (i) the number of Shares vesting pursuant to Exhibit A; and (ii) the number of Shares vesting pursuant to Exhibit B. Payout on any vesting shall be in the form of Shares.
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5.
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Forfeiture Upon Separation from Service
. Except as provided by the Company’s Compensation Committee or the Board of Directors, upon the Participant’s cessation of employment (or provision of other services as permitted under the Plan Documents) prior to a Vesting Date for any reason, all Performance Units granted hereunder shall be forfeited.
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6.
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Recovery of Unearned Compensation
. The Performance Units are subject to the Company’s compensation recovery policy as shall be in effect from time to time.
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7.
8.
9.
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Dividend Equivalents
. Dividend equivalents are hereby granted on the Performance Units, which shall accrue to the extent that dividends are declared on the Shares of the Company’s common stock. Accrued dividend equivalents shall be paid out on the Vesting Date in Shares equal in value to the amount of dividends declared between the date of award and the Vesting Date on the number of Shares actually paid out pursuant to these Performance Units on such Vesting Date pursuant to Exhibits A and B (howsoever such vesting occurs).
Pool Provisions
. This award is subject to the Award Pool. The number of Shares to be awarded on any Vesting Date may in no event exceed the number of Shares to which Participant is entitled under the Award Pool for this Award as certified by the Committee in accordance with the Award Pool (the “Certified Share Amount”). In the event the number of Performance Units awarded hereby exceeds the Certified Share Amount, then such excess will be forfeited as of the date of such certification.
Miscellaneous
. The Committee may from time to time modify or amend this Agreement in accordance with the provisions of the Plan Documents. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns and shall be binding upon and inure to the benefit of the Participant and his or her legatees, distributees and personal representatives. By signing this Agreement, the Participant acknowledges and expressly agrees that the Participant has read the Agreement and the Plan Documents and agrees to their terms. This Agreement may be executed by the Company and the Participant by means of electronic or digital signatures, which shall have the same force and effect as manual signatures. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
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10.
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Section 409A Compliance
. It is the intention that this Agreement conform and be administered in all respects in a manner that complies with Section 409A of the Code; provided, however, that the Company does not make any representations or guarantees of the tax treatment of the award under Section 409A or otherwise.
Notwithstanding any provision contained in this Agreement to the contrary, if (i) any payment hereunder is subject to Section 409A of the Code, (ii) such payment is to be paid on account of the Participant’s separation from service (within the meaning of Section 409A of the Code) and (iii) the Participant is a “
specified employee
” (within the meaning of Section 409A(a)(2)(B) of the Code), then such payment shall be delayed, if necessary, until the first day of the seventh month following the Participant’s separation from service (or, if later, the date on which such payment is otherwise to be paid under this Agreement). With respect to any payments hereunder that are subject to Section 409A of the Code and that are payable on account of a separation from service, the determination of whether the Recipient has had a separation from service shall be determined in accordance with Section 409A of the Code.
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PACKAGING CORPORATION OF AMERICA
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BY:
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Participant
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Peer Group Ranking
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Applicable Percentage
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Top quartile
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Up to 20% of the Performance Units
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Second quartile
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Up to 20% of the Performance Units
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Third quartile
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Up to 40% of the Performance Units
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Fourth quartile
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No Performance Units may be vested under this Exhibit B
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Participant
|
Percentage of Award Pool Shares
|
Maximum for Restricted Stock Awards (in shares)
|
Maximum for Performance Units (in shares)*
|
|
Mark W. Kowlzan
|
40
|
%
|
33,469
|
40,163
|
Thomas A. Hassfurther
|
25
|
%
|
21,459
|
25,751
|
Robert P. Mundy
|
10
|
%
|
6,660
|
7,992
|
Charles J. Carter
|
12.5
|
%
|
6,913
|
8,296
|
Thomas W.H. Walton
|
6.25
|
%
|
4,255
|
5,106
|
Kent A. Pflederer
|
6.25
|
%
|
4,255
|
5,106
|
|
|
/s/ Mark W. Kowlzan
|
|
|
Mark W. Kowlzan
Chief Executive Officer
|
|
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/s/ Robert P. Mundy
|
|
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Robert P. Mundy
Senior Vice President and Chief Financial Officer
|
|
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/s/ Mark W. Kowlzan
|
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Mark W. Kowlzan
|
|
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Chief Executive Officer
|
|
|
/s/ Robert P. Mundy
|
|
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Robert P. Mundy
|
|
|
Senior Vice President and Chief Financial Officer
|