ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2016
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Commission file number 1-15399
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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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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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Title of Each Class
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Name of Each Exchange On Which Registered
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Common Stock, $0.01 par value
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New York Stock Exchange
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Large accelerated filer
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x
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Accelerated filer
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¨
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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 1A.
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Item 1B.
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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 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 1.
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BUSINESS
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First Quarter
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Second Quarter
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Third Quarter
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Fourth Quarter
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Full Year
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Containerboard Production (a)
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PCA
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2016
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898
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926
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950
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962
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3,736
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(thousand tons)
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2015
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882
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938
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933
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903
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3,656
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2014
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821
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846
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858
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927
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3,452
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Corrugated Shipments (BSF)
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PCA
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2016
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12.3
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12.7
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13.1
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13.2
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51.3
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2015
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11.9
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12.4
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12.5
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12.1
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48.9
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2014
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11.6
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12.1
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12.4
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12.1
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48.2
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Newsprint Production (a)
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PCA
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2016
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—
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—
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—
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—
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—
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(thousand tons)
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2015
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—
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—
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—
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—
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—
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2014
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56
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56
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50
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—
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162
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White Paper (UFS) Production
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PCA
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2016
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283
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268
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288
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288
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1,127
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(thousand tons)
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2015
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288
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273
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294
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262
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1,117
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2014
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286
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275
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296
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287
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1,144
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Market Pulp Production (b)
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PCA
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2016
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16
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10
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12
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7
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45
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(thousand tons)
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2015
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27
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23
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25
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23
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98
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2014
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26
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23
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26
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25
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100
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(a)
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PCA ceased production of newsprint and converted the No.3 newsprint machine at our DeRidder, Louisiana mill to containerboard in the third quarter of 2014. Sales of newsprint were recorded in the Packaging segment.
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(b)
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On December 1, 2016, PCA ceased production of softwood market pulp at our Wallula, Washington mill and permanently shut down the No.1 machine.
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Item 1A.
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RISK FACTORS
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•
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Unscheduled maintenance outages.
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•
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Prolonged power failures.
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•
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Equipment failure.
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•
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Explosion of a boiler or other major facilities.
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Disruption in the supply of raw materials, such as wood fiber, energy, or chemicals.
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A chemical spill or release.
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Closure or curtailment related to environmental concerns.
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Labor difficulties.
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Disruptions in the transportation infrastructure, including roads, bridges, railroad tracks, and tunnels.
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Fires, floods, earthquakes, hurricanes, or other catastrophes.
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•
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Terrorism or threats of terrorism.
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Other operational problems.
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Result in significant cash requirements to make interest and maturity payments on our outstanding indebtedness;
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Increase our vulnerability to adverse changes in our business or industry conditions;
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Increase our vulnerability to increases in interest rates;
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Limit our ability to obtain additional financing for working capital, capital expenditures, general corporate, and other purposes;
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•
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Limit our flexibility in planning for, or reacting to, changes in our business and our industry; and
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•
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Limit our flexibility to make acquisitions.
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Item 1B.
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UNRESOLVED STAFF COMMENTS
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Item 2.
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PROPERTIES
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Item 3.
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LEGAL PROCEEDINGS
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Item 5.
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
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2016
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2015
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Sales Price
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Dividends Declared
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Sales Price
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Dividends Declared
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Quarter Ended
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High
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Low
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High
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Low
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March 31
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$
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62.67
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$
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44.32
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$
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0.55
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$
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84.88
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$
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73.03
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$
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0.55
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June 30
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71.31
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58.44
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0.55
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78.98
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62.48
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0.55
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September 30
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82.77
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65.12
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0.63
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73.60
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58.29
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0.55
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December 31
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88.41
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78.03
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0.63
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70.04
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59.54
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0.55
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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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October 1-31, 2016
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—
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$
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—
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—
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$
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193.0
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November 1-30, 2016
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—
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—
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—
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193.0
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December 1-31, 2016
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11,429
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86.28
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—
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193.0
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Total
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11,429
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(a)
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$
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86.28
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—
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$
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193.0
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(a)
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11,429 shares were withheld from employees to cover income and payroll taxes on equity awards that vested during the period.
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Cumulative Total Return
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||||||||||||||||||||||
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December 31
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2011
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2012
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2013
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2014
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2015
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2016
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Packaging Corporation of America
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$
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100.00
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$
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157.35
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$
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266.53
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$
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336.07
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$
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280.32
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$
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389.91
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S&P 500
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100.00
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116.00
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153.58
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174.60
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177.01
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198.18
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S&P Midcap 400
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100.00
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117.88
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157.37
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172.74
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168.98
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204.03
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Peer Group
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100.00
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139.99
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186.93
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211.57
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155.34
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219.34
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Item 6.
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SELECTED FINANCIAL DATA
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Year Ended December 31
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2016 (a)
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2015 (a)
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2014 (a)
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2013 (a)
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2012
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Statement of Income Data (b):
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Net Sales
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$
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5,779.0
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$
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5,741.7
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$
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5,852.6
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$
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3,665.3
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$
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2,843.9
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Net Income
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449.6
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436.8
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392.6
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441.3
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160.2
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Net income per common share:
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— basic
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4.76
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4.47
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3.99
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4.57
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1.66
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|||||
— diluted
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4.75
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4.47
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3.99
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4.52
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1.64
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|||||
Weighted average common shares outstanding:
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||||||||||
— basic
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93.5
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96.6
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|
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97.0
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96.6
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|
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96.4
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|||||
— diluted
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93.7
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96.7
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97.1
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97.5
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97.5
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|||||
EBITDA(c)
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$
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1,138.3
|
|
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$
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1,106.5
|
|
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$
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1,083.7
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$
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683.7
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$
|
608.3
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Cash dividends declared per common share
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2.36
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2.20
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|
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1.60
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1.51
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1.00
|
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|||||
Balance Sheet Data (b):
|
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||||||||||
Total assets
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$
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5,777.0
|
|
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$
|
5,272.3
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|
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$
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5,258.7
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$
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5,182.1
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|
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$
|
2,490.1
|
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Total debt obligations
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2,667.4
|
|
|
2,319.7
|
|
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2,365.2
|
|
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2,558.6
|
|
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814.7
|
|
|||||
Stockholders' equity
|
1,759.8
|
|
|
1,633.3
|
|
|
1,521.4
|
|
|
1,356.8
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|
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1,008.2
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(a)
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On October 25, 2013, we acquired Boise Inc. (Boise). Our financial results include Boise subsequent to acquisition.
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(b)
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Effective January 1, 2016, the Company adopted Accounting Standards Update (ASU) 2015-03 (Topic 835):
Simplifying the Presentation of Debt Issuance Costs
. We applied this guidance retrospectively, as required, and reclassified the debt issuance costs from "Other long-term assets" to "Long-term debt" on our Consolidated Balance Sheet to conform with current period presentation. Total assets for all periods presented have been updated to reflect this adoption.
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(c)
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EBITDA represents income before interest (interest expense and interest income), income tax provision (benefit), and depreciation, amortization, and depletion. We present EBITDA because it provides a means to evaluate our performance on an ongoing basis using the same measure that is used by our management and because it is frequently used by investors and other interested parties in the evaluation of companies. EBITDA, however, is not a measure of our liquidity or financial performance under generally accepted accounting principles (GAAP) and should not be considered as an alternative to net income, income from operations, or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. Any analysis of non-GAAP financial measures should be done in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such. See "Reconciliations of Non-GAAP Financial Measures to Reported Amounts" included in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K for a reconciliation of non-GAAP measures to the most comparable GAAP measure.
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Item 7.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Year Ended December 31
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||||||
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2016
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2015
|
||||
Earnings per diluted share
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$
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4.75
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|
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$
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4.47
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Special items:
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||||
Facilities closure costs (a)
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0.07
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—
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Acquisition-related costs (b)
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0.03
|
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—
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Wallula mill restructuring (c)
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0.02
|
|
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—
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Multiemployer pension withdrawal (d)
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0.01
|
|
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—
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DeRidder restructuring (e)
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—
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0.01
|
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||
Integration-related and other costs (f)
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—
|
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0.10
|
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||
Sale of St. Helens paper mill site (g)
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—
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(0.05
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)
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Total special items
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0.13
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|
0.06
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Earnings per diluted share, excluding special items
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$
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4.88
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$
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4.53
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(a)
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Includes $11.0 million of closure costs related to corrugated product facilities and a paper products facility.
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(b)
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Includes $4.5 million of acquisition-related costs for the TimBar Corporation and Columbus Container, Inc. acquisitions.
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(c)
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Includes $2.7 million of costs related to ceased production of softwood market pulp operations at our Wallula, Washington mill and the permanent shutdown of the No.1 machine.
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(d)
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Includes $0.9 million of costs related to our withdrawal from a multiemployer pension plan for one of our corrugated products facilities.
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(e)
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Includes $2.0 million of restructuring activities at our mill in DeRidder, Louisiana, including costs related to the conversion of the No. 3 newsprint machine to containerboard, our exit from the newsprint business, and other improvements. The restructuring charges primarily related to accelerated depreciation.
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(f)
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Includes $13.4 million of Boise acquisition integration-related and other costs. These costs primarily relate to professional fees, severance, retention, relocation, travel, and other integration-related costs.
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(g)
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In September 2015, we sold the remaining land, buildings, and equipment at our paper mill site in St. Helens, Oregon, where we ceased paper production in December 2012. We recorded a $6.7 million gain on the sale.
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Year Ended December 31
|
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||||||||
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2016
|
|
2015
|
|
Change
|
||||||
Packaging
|
$
|
4,584.8
|
|
|
$
|
4,477.3
|
|
|
$
|
107.5
|
|
Paper
|
1,093.9
|
|
|
1,143.1
|
|
|
(49.2
|
)
|
|||
Corporate and other and eliminations
|
100.3
|
|
|
121.3
|
|
|
(21.0
|
)
|
|||
Net sales
|
$
|
5,779.0
|
|
|
$
|
5,741.7
|
|
|
$
|
37.3
|
|
|
|
|
|
|
|
||||||
Packaging
|
$
|
711.1
|
|
|
$
|
714.9
|
|
|
$
|
(3.8
|
)
|
Paper
|
138.1
|
|
|
112.5
|
|
|
25.6
|
|
|||
Corporate and other
|
(68.9
|
)
|
|
(77.4
|
)
|
|
8.5
|
|
|||
Income from operations
|
$
|
780.3
|
|
|
$
|
750.0
|
|
|
$
|
30.3
|
|
Interest expense, net
|
(91.8
|
)
|
|
(85.5
|
)
|
|
(6.3
|
)
|
|||
Income before taxes
|
688.5
|
|
|
664.5
|
|
|
24.0
|
|
|||
Income tax expense
|
(238.9
|
)
|
|
(227.7
|
)
|
|
(11.2
|
)
|
|||
Net income
|
$
|
449.6
|
|
|
$
|
436.8
|
|
|
$
|
12.8
|
|
Net income excluding special items (a)
|
$
|
462.0
|
|
|
$
|
442.6
|
|
|
$
|
19.4
|
|
EBITDA (a)
|
$
|
1,138.3
|
|
|
$
|
1,106.5
|
|
|
$
|
31.8
|
|
EBITDA excluding special items (a)
|
$
|
1,154.5
|
|
|
$
|
1,106.2
|
|
|
$
|
48.3
|
|
(a)
|
See "Reconciliations of Non-GAAP Financial Measures to Reported Amounts" included in this Item 7 for a reconciliation of non-GAAP measures to the most comparable GAAP measure.
|
|
Year Ended December 31
|
|
|
||||||||
|
2015
|
|
2014
|
|
Change
|
||||||
Packaging
|
$
|
4,477.3
|
|
|
$
|
4,540.3
|
|
|
$
|
(63.0
|
)
|
Paper
|
1,143.1
|
|
|
1,201.4
|
|
|
(58.3
|
)
|
|||
Corporate and other and eliminations
|
121.3
|
|
|
110.9
|
|
|
10.4
|
|
|||
Net sales
|
$
|
5,741.7
|
|
|
$
|
5,852.6
|
|
|
$
|
(110.9
|
)
|
|
|
|
|
|
|
||||||
Packaging
|
$
|
714.9
|
|
|
$
|
663.2
|
|
|
$
|
51.7
|
|
Paper
|
112.5
|
|
|
135.4
|
|
|
(22.9
|
)
|
|||
Corporate and other
|
(77.4
|
)
|
|
(95.9
|
)
|
|
18.5
|
|
|||
Income from operations
|
$
|
750.0
|
|
|
$
|
702.7
|
|
|
$
|
47.3
|
|
Interest expense, net
|
(85.5
|
)
|
|
(88.4
|
)
|
|
2.9
|
|
|||
Income before taxes
|
664.5
|
|
|
614.3
|
|
|
50.2
|
|
|||
Income tax expense
|
(227.7
|
)
|
|
(221.7
|
)
|
|
(6.0
|
)
|
|||
Net income
|
$
|
436.8
|
|
|
$
|
392.6
|
|
|
$
|
44.2
|
|
Net income excluding special items (a)
|
$
|
442.6
|
|
|
$
|
458.6
|
|
|
$
|
(16.0
|
)
|
EBITDA (a)
|
$
|
1,106.5
|
|
|
$
|
1,083.7
|
|
|
$
|
22.8
|
|
EBITDA excluding special items (a)
|
$
|
1,106.2
|
|
|
$
|
1,143.6
|
|
|
$
|
(37.4
|
)
|
(a)
|
See "Reconciliations of Non-GAAP Financial Measures to Reported Amounts" included in this Item 7 for a reconciliation of non-GAAP measures to the most comparable GAAP measure.
|
|
Year Ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by (used for):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
801.2
|
|
|
$
|
762.6
|
|
|
$
|
736.1
|
|
Investing activities
|
(769.6
|
)
|
|
(298.1
|
)
|
|
(451.1
|
)
|
|||
Financing activities
|
23.5
|
|
|
(405.2
|
)
|
|
(351.1
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
55.1
|
|
|
$
|
59.3
|
|
|
$
|
(66.1
|
)
|
|
|
Year Ended December 31
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Packaging
|
|
$
|
239.9
|
|
|
$
|
250.3
|
|
|
$
|
362.1
|
|
Paper
|
|
31.6
|
|
|
58.5
|
|
|
51.7
|
|
|||
Corporate and Other
|
|
2.8
|
|
|
5.7
|
|
|
6.4
|
|
|||
|
|
$
|
274.3
|
|
|
$
|
314.5
|
|
|
$
|
420.2
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More Than
5 Years
|
||||||||||
Term loan, due October 2020
|
$
|
630.5
|
|
|
$
|
6.5
|
|
|
$
|
13.0
|
|
|
$
|
611.0
|
|
|
$
|
—
|
|
Term loan, due August 2021
|
380.2
|
|
|
19.3
|
|
|
38.5
|
|
|
322.4
|
|
|
—
|
|
|||||
6.50% Senior Notes, due March 2018
|
150.0
|
|
|
—
|
|
|
150.0
|
|
|
—
|
|
|
—
|
|
|||||
3.90% Senior Notes, due June 2022
|
400.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400.0
|
|
|||||
4.50% Senior notes, due November 2023
|
700.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
700.0
|
|
|||||
3.65% Senior notes, due September 2024
|
400.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400.0
|
|
|||||
Total short-term and long-term debt (a)
|
2,660.7
|
|
|
25.8
|
|
|
201.5
|
|
|
933.4
|
|
|
1,500.0
|
|
|||||
Interest on long-term debt (b)
|
515.3
|
|
|
94.5
|
|
|
170.0
|
|
|
146.3
|
|
|
104.5
|
|
|||||
Capital lease obligations, including interest
|
31.2
|
|
|
2.7
|
|
|
5.4
|
|
|
5.4
|
|
|
17.7
|
|
|||||
Operating leases (c)
|
254.3
|
|
|
64.4
|
|
|
96.2
|
|
|
45.3
|
|
|
48.4
|
|
|||||
Capital commitments
|
94.7
|
|
|
94.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase commitments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Raw materials (d)
|
201.3
|
|
|
61.2
|
|
|
55.3
|
|
|
39.1
|
|
|
45.7
|
|
|||||
Energy related (e)
|
38.7
|
|
|
32.2
|
|
|
6.5
|
|
|
—
|
|
|
—
|
|
|||||
Other liabilities reflected on our Consolidated Balance Sheet (f):
|
|
|
|
|
|
|
|
|
|
||||||||||
Compensation and benefits (g)
|
359.7
|
|
|
45.0
|
|
|
97.5
|
|
|
112.0
|
|
|
105.2
|
|
|||||
Other (h)
|
71.8
|
|
|
18.5
|
|
|
7.1
|
|
|
3.8
|
|
|
42.4
|
|
|||||
|
$
|
4,227.7
|
|
|
$
|
439.0
|
|
|
$
|
639.5
|
|
|
$
|
1,285.3
|
|
|
$
|
1,863.9
|
|
(a)
|
The table assumes our long-term debt is held to maturity and includes the current portion of long-term debt. See Note
9
,
Debt
, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of this Form 10-K. Amounts are reported gross and do not include unamortized debt discounts of $2.5 million at
December 31, 2016
.
|
(b)
|
Amounts represent estimated future interest payments as of
December 31, 2016
, assuming our long-term debt is held to maturity and using interest rates in effect at
December 31, 2016
. See "Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for the impact of changes in interest rates on PCA’s future cash flows.
|
(c)
|
We enter into operating leases in the normal course of business. We lease some of our operating facilities, as well as other property and equipment, under operating leases. Some lease agreements provide us with the option to renew the lease or purchase the leased property. Our operating lease obligations would change if we exercised these renewal options and/or if we entered into additional operating lease agreements.
|
(d)
|
Included among our raw materials purchase obligations are contracts to purchase approximately
$171.7 million
of wood fiber. Purchase prices under most of these agreements are set quarterly, semiannually, or annually based on regional market prices, and the estimate is based on contract terms or first quarter
2017
pricing. Except for deposits required pursuant to wood supply contracts, these obligations are not recorded in our consolidated financial statements until contract payment terms take effect. Our log, fiber, and wood chip obligations are subject to change based on, among other things, the effect of governmental laws and regulations, disruptions to our manufacturing operations, and log and fiber availability.
|
(e)
|
We enter into utility contracts for the purchase of electricity and natural gas. We also purchase these services under utility tariffs. The contractual and tariff arrangements include multiple-year commitments and minimum annual purchase requirements. Our payment obligations were based upon prices in effect on
December 31, 2016
, or contract language, if available.
|
(f)
|
Long-term deferred income taxes of
$334.7 million
and unrecognized tax benefits of $6.3 million, including interest and penalties, are excluded from this table, because the timing of their future cash outflows are uncertain.
|
(g)
|
Amounts primarily consist of pension and postretirement obligations, including current portion of
$2.5 million
. We have minimum qualified pension contributions of approximately $8 million in
2017
. See Note
10
,
Employee Benefit Plans and Other Postretirement Benefits
, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of this Form 10-K, for additional information.
|
(h)
|
Amounts primarily consist of workers compensation, environmental, and asset retirement obligations.
|
|
|
2016 Fuel Purchased (millions of MMBTU's)
|
|
2016 Avg.
|
|||||||||||||||
Fuel Type
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
Full Year
|
|
Cost / MMBTU
|
|||||||
Natural gas
|
|
6.86
|
|
|
6.09
|
|
|
5.71
|
|
|
6.36
|
|
|
25.02
|
|
|
$
|
3.08
|
|
Purchased bark
|
|
2.31
|
|
|
1.99
|
|
|
1.87
|
|
|
2.34
|
|
|
8.51
|
|
|
2.32
|
|
|
Other purchased fuels
|
|
0.45
|
|
|
0.39
|
|
|
0.40
|
|
|
0.31
|
|
|
1.55
|
|
|
3.81
|
|
|
Total Mills
|
|
9.62
|
|
|
8.47
|
|
|
7.98
|
|
|
9.01
|
|
|
35.08
|
|
|
$
|
2.93
|
|
|
|
2016 Purchased Electricity (millions of CkWh)
|
|
2016 Avg.
|
|||||||||||||||
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
Full Year
|
|
Cost / CkWh
|
|||||||
Purchased electricity
|
|
5.12
|
|
|
5.17
|
|
|
5.67
|
|
|
5.63
|
|
|
21.59
|
|
|
$
|
5.49
|
|
•
|
Resource Conservation and Recovery Act (RCRA);
|
•
|
Clean Water Act (CWA);
|
•
|
Clean Air Act (CAA);
|
•
|
The Emergency Planning and Community Right-to-Know-Act (EPCRA);
|
•
|
Toxic Substance Control Act (TSCA); and
|
•
|
Safe Drinking Water Act (SDWA).
|
|
Year Ending December 31, 2017
|
|
Year Ended December 31
|
||||||||
|
2016
|
|
2015
|
||||||||
Pension expense
|
$
|
25.3
|
|
|
$
|
27.4
|
|
|
$
|
31.3
|
|
|
|
|
|
|
|
||||||
Assumptions
|
|
|
|
|
|
||||||
Discount rate
|
4.24
|
%
|
|
4.49
|
%
|
|
4.14
|
%
|
|||
Expected rate of return on plan assets
|
6.55
|
%
|
|
6.57
|
%
|
|
6.73
|
%
|
|
Base Expense
|
|
Increase (Decrease) in Pension Expense (a)
|
||||||||
|
0.25% Increase
|
|
0.25% Decrease
|
||||||||
2016 Expense (b)
|
|
|
|
|
|
||||||
Discount rate
|
$
|
27.4
|
|
|
$
|
(2.6
|
)
|
|
$
|
3.1
|
|
Expected rate of return on plan assets
|
27.4
|
|
|
(1.9
|
)
|
|
1.9
|
|
|||
|
|
|
|
|
|
||||||
2017 Expense
|
|
|
|
|
|
||||||
Discount rate
|
$
|
25.3
|
|
|
$
|
(1.9
|
)
|
|
$
|
2.2
|
|
Expected rate of return on plan assets
|
25.3
|
|
|
(2.1
|
)
|
|
2.1
|
|
(a)
|
The sensitivities shown above are specific to
2016
and
2017
. The sensitivities may not be additive, so the impact of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities shown.
|
(b)
|
Beginning in 2016, we refined the method used to determine the service and interest cost components of our net periodic benefit cost. Previously, the cost was determined using a single weighted-average discount rate derived from the yield curve. Under the refined method, known as the spot rate approach, we use individual spot rates along the yield curve that correspond with the timing of each benefit payment. We believe this change provides a more precise measurement of service and interest costs by improving the correlation between projected cash outflows and corresponding spot rates on the yield curve. Compared to the previous method, the spot rate approach decreased the service and interest components of our benefit costs by about $8 million in 2016.
|
|
Year Ended December 31
|
|||||||||||||||||||||||
|
2016
|
|
2015
|
|
||||||||||||||||||||
|
Income
before Taxes
|
|
Income taxes
|
|
Net
Income
|
|
Income
before Taxes
|
|
Income Taxes
|
|
Net
Income
|
|
||||||||||||
As reported in accordance with GAAP
|
$
|
688.5
|
|
|
$
|
(238.9
|
)
|
|
$
|
449.6
|
|
|
$
|
664.5
|
|
|
$
|
(227.7
|
)
|
|
$
|
436.8
|
|
|
Special items:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Facilities closure costs (a)
|
11.0
|
|
|
(3.9
|
)
|
|
7.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
Acquisition-related costs (b)
|
4.5
|
|
|
(1.6
|
)
|
|
2.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
Wallula mill restructuring (c)
|
2.7
|
|
|
(0.9
|
)
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
Multiemployer pension withdrawal (d)
|
0.9
|
|
|
(0.3
|
)
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
DeRidder restructuring (e)
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
|
(0.7
|
)
|
|
1.3
|
|
|
||||||
Integration-related and other costs (f)
|
—
|
|
|
—
|
|
|
—
|
|
|
13.4
|
|
|
(4.5
|
)
|
|
8.9
|
|
|
||||||
Sale of St. Helens paper mill site (g)
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.7
|
)
|
|
2.3
|
|
|
(4.4
|
)
|
|
||||||
Total special items
|
19.1
|
|
|
(6.7
|
)
|
|
12.4
|
|
|
8.7
|
|
|
(2.9
|
)
|
|
5.8
|
|
|
||||||
Excluding special items
|
$
|
707.6
|
|
|
$
|
(245.6
|
)
|
|
$
|
462.0
|
|
|
$
|
673.2
|
|
|
$
|
(230.6
|
)
|
|
$
|
442.6
|
|
|
|
|
Year Ended December 31
|
||||||||||
|
|
2014
|
||||||||||
|
|
Income
before Taxes |
|
Income Taxes
|
|
Net
Income |
||||||
As reported in accordance with GAAP
|
|
$
|
614.3
|
|
|
$
|
(221.7
|
)
|
|
$
|
392.6
|
|
Special items:
|
|
|
|
|
|
|
||||||
DeRidder restructuring (e)
|
|
65.8
|
|
|
(23.7
|
)
|
|
42.1
|
|
|||
Integration-related and other costs (f)
|
|
19.9
|
|
|
(7.2
|
)
|
|
12.7
|
|
|||
Class action lawsuit settlement (h)
|
|
17.6
|
|
|
(6.4
|
)
|
|
11.2
|
|
|||
Total special items
|
|
103.3
|
|
|
(37.3
|
)
|
|
66.0
|
|
|||
Excluding special items
|
|
$
|
717.6
|
|
|
$
|
(259.0
|
)
|
|
$
|
458.6
|
|
(a)
|
Includes closure costs related to corrugated facilities and a paper products facility.
|
(b)
|
Includes acquisition-related costs for the TimBar Corporation and Columbus Container, Inc. acquisitions.
|
(c)
|
Includes costs related to ceased softwood market pulp operations at our Wallula, Washington mill and the permanent shutdown of the No.1 machine.
|
(d)
|
Includes costs related to our withdrawal from a multiemployer pension plan for one of our corrugated products facilities.
|
(e)
|
2015 and 2014 include amounts from restructuring activities at our mill in DeRidder, Louisiana including costs related to the conversion of the No. 3 newsprint machine to containerboard, our exit from the newsprint business, and other improvements.
|
(f)
|
2015 and 2014 include Boise acquisition integration-related and other costs, primarily for severance, retention, travel, and professional fees. 2014 also includes $1.5 million of expense related to the write-off of deferred financing costs in connection with the debt refinancing.
|
(g)
|
In September 2015, we sold the remaining land, buildings, and equipment at our paper mill site in St. Helens, Oregon where we ceased paper production in December 2012. We recorded a $6.7 million gain on the sale.
|
(h)
|
Includes $17.6 million of costs for the settlement of the
Kleen Products LLC v Packaging Corp. of America et al
class action lawsuit. See Note
18
,
Commitments, Guarantees, Indemnifications, and Legal Proceedings
, for more information.
|
|
Year Ended December 31
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Net income
|
$
|
449.6
|
|
|
$
|
436.8
|
|
|
$
|
392.6
|
|
|
$
|
441.3
|
|
|
$
|
160.2
|
|
Interest expense, net
|
91.8
|
|
|
85.5
|
|
|
88.4
|
|
|
58.3
|
|
|
62.9
|
|
|||||
Provision (benefit) for income taxes
|
238.9
|
|
|
227.7
|
|
|
221.7
|
|
|
(17.7
|
)
|
|
214.5
|
|
|||||
Depreciation, amortization, and depletion
|
358.0
|
|
|
356.5
|
|
|
381.0
|
|
|
201.8
|
|
|
170.8
|
|
|||||
EBITDA
|
$
|
1,138.3
|
|
|
$
|
1,106.5
|
|
|
$
|
1,083.7
|
|
|
$
|
683.7
|
|
|
$
|
608.4
|
|
Special items:
|
|
|
|
|
|
|
|
|
|
||||||||||
Facilities closure costs
|
$
|
10.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.0
|
|
Acquisition-related costs
|
4.5
|
|
|
—
|
|
|
—
|
|
|
17.2
|
|
|
—
|
|
|||||
Wallula mill restructuring
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Multiemployer pension withdrawal
|
0.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
DeRidder restructuring
|
—
|
|
|
(7.0
|
)
|
|
23.9
|
|
|
—
|
|
|
—
|
|
|||||
Integration-related and other costs
|
—
|
|
|
13.4
|
|
|
18.4
|
|
|
17.4
|
|
|
—
|
|
|||||
Sale of St. Helens paper mill site
|
—
|
|
|
(6.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Class action lawsuit settlement
|
—
|
|
|
—
|
|
|
17.6
|
|
|
—
|
|
|
—
|
|
|||||
Acquisition inventory step-up
|
—
|
|
|
—
|
|
|
—
|
|
|
21.5
|
|
|
—
|
|
|||||
Pension curtailment charges
|
—
|
|
|
—
|
|
|
—
|
|
|
10.9
|
|
|
—
|
|
|||||
Alternative energy tax credits
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95.5
|
)
|
|||||
EBITDA excluding special items
|
$
|
1,154.5
|
|
|
$
|
1,106.2
|
|
|
$
|
1,143.6
|
|
|
$
|
750.7
|
|
|
$
|
514.9
|
|
|
Year Ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Packaging
|
|
|
|
|
|
||||||
Segment income
|
$
|
711.1
|
|
|
$
|
714.9
|
|
|
$
|
663.2
|
|
Depreciation, amortization, and depletion
|
293.3
|
|
|
297.3
|
|
|
323.0
|
|
|||
EBITDA
|
1,004.4
|
|
|
1,012.2
|
|
|
986.2
|
|
|||
Facilities closure costs
|
9.3
|
|
|
—
|
|
|
—
|
|
|||
Acquisition-related costs
|
4.2
|
|
|
—
|
|
|
—
|
|
|||
Multiemployer pension withdrawal
|
0.9
|
|
|
—
|
|
|
—
|
|
|||
DeRidder restructuring
|
—
|
|
|
(7.0
|
)
|
|
23.9
|
|
|||
Integration-related and other costs
|
—
|
|
|
4.1
|
|
|
4.9
|
|
|||
EBITDA excluding special items
|
$
|
1,018.8
|
|
|
$
|
1,009.3
|
|
|
$
|
1,015.0
|
|
|
|
|
|
|
|
||||||
Paper
|
|
|
|
|
|
||||||
Segment income
|
$
|
138.1
|
|
|
$
|
112.5
|
|
|
$
|
135.4
|
|
Depreciation, amortization, and depletion
|
59.6
|
|
|
54.9
|
|
|
50.6
|
|
|||
EBITDA
|
197.7
|
|
|
167.4
|
|
|
186.0
|
|
|||
Wallula mill restructuring
|
0.6
|
|
|
—
|
|
|
—
|
|
|||
Facilities closure costs
|
0.9
|
|
|
—
|
|
|
—
|
|
|||
Sale of St. Helens paper mill site
|
—
|
|
|
(6.7
|
)
|
|
—
|
|
|||
EBITDA excluding special items
|
$
|
199.2
|
|
|
$
|
160.7
|
|
|
$
|
186.0
|
|
|
|
|
|
|
|
||||||
Corporate and Other
|
|
|
|
|
|
||||||
Segment income (loss)
|
$
|
(68.9
|
)
|
|
$
|
(77.4
|
)
|
|
$
|
(95.9
|
)
|
Depreciation, amortization, and depletion
|
5.1
|
|
|
4.3
|
|
|
7.4
|
|
|||
EBITDA
|
(63.8
|
)
|
|
(73.1
|
)
|
|
(88.5
|
)
|
|||
Acquisition-related costs
|
0.3
|
|
|
—
|
|
|
—
|
|
|||
Integration-related and other costs
|
—
|
|
|
9.3
|
|
|
13.5
|
|
|||
Class action lawsuit settlement
|
—
|
|
|
—
|
|
|
17.6
|
|
|||
EBITDA excluding special items
|
$
|
(63.5
|
)
|
|
$
|
(63.8
|
)
|
|
$
|
(57.4
|
)
|
|
|
|
|
|
|
||||||
EBITDA
|
$
|
1,138.3
|
|
|
$
|
1,106.5
|
|
|
$
|
1,083.7
|
|
|
|
|
|
|
|
||||||
EBITDA excluding special items
|
$
|
1,154.5
|
|
|
$
|
1,106.2
|
|
|
$
|
1,143.6
|
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Packaging Corporation of America Consolidated Financial Statements
|
|
|
Year Ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Statements of Income:
|
|
|
|
|
|
||||||
Net sales
|
$
|
5,779.0
|
|
|
$
|
5,741.7
|
|
|
$
|
5,852.6
|
|
Cost of sales
|
(4,503.3
|
)
|
|
(4,533.7
|
)
|
|
(4,623.1
|
)
|
|||
Gross profit
|
1,275.7
|
|
|
1,208.0
|
|
|
1,229.5
|
|
|||
Selling, general, and administrative expenses
|
(471.1
|
)
|
|
(451.3
|
)
|
|
(469.5
|
)
|
|||
Other expense, net
|
(24.3
|
)
|
|
(6.7
|
)
|
|
(57.3
|
)
|
|||
Income from operations
|
780.3
|
|
|
750.0
|
|
|
702.7
|
|
|||
Interest expense, net
|
(91.8
|
)
|
|
(85.5
|
)
|
|
(88.4
|
)
|
|||
Income before taxes
|
688.5
|
|
|
664.5
|
|
|
614.3
|
|
|||
Provision for income taxes
|
(238.9
|
)
|
|
(227.7
|
)
|
|
(221.7
|
)
|
|||
Net income
|
$
|
449.6
|
|
|
$
|
436.8
|
|
|
$
|
392.6
|
|
|
|
|
|
|
|
||||||
Net income per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
4.76
|
|
|
$
|
4.47
|
|
|
$
|
3.99
|
|
Diluted
|
$
|
4.75
|
|
|
$
|
4.47
|
|
|
$
|
3.99
|
|
Dividends declared per common share
|
$
|
2.36
|
|
|
$
|
2.20
|
|
|
$
|
1.60
|
|
|
|
|
|
|
|
||||||
Statements of Comprehensive Income:
|
|
|
|
|
|
||||||
Net income
|
$
|
449.6
|
|
|
$
|
436.8
|
|
|
$
|
392.6
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
2.7
|
|
|
(2.6
|
)
|
|||
Reclassification adjustments to cash flow hedges included in net income, net of tax of
$2.2 million
,
$2.2 million,
and $
2.2 million
for 2016, 2015, and 2014, respectively
|
3.5
|
|
|
3.5
|
|
|
3.5
|
|
|||
Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of
$4.2 million
,
$5.6 million
, and
$2.8 million
for 2016, 2015, and 2014, respectively
|
6.7
|
|
|
8.8
|
|
|
4.2
|
|
|||
Changes in unfunded employee benefit obligations, net of tax of
$15.7 million
, (
$8.9) million
, and
$59.2 million
for 2016, 2015, and 2014, respectively
|
(24.9
|
)
|
|
14.0
|
|
|
(94.0
|
)
|
|||
Other comprehensive income (loss)
|
(14.7
|
)
|
|
29.0
|
|
|
(88.9
|
)
|
|||
Comprehensive income
|
$
|
434.9
|
|
|
$
|
465.8
|
|
|
$
|
303.7
|
|
|
December 31
|
||||||
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
239.3
|
|
|
$
|
184.2
|
|
Accounts receivable, net of allowance for doubtful accounts and customer deductions of $10.1 million and $10.3 million as of December 31, 2016 and 2015, respectively
|
689.2
|
|
|
636.5
|
|
||
Inventories
|
723.6
|
|
|
676.8
|
|
||
Prepaid expenses and other current assets
|
30.3
|
|
|
28.8
|
|
||
Federal and state income taxes receivable
|
13.9
|
|
|
28.2
|
|
||
Total current assets
|
1,696.3
|
|
|
1,554.5
|
|
||
Property, plant, and equipment, net
|
2,895.7
|
|
|
2,832.1
|
|
||
Goodwill
|
737.9
|
|
|
544.0
|
|
||
Intangible assets, net
|
367.1
|
|
|
270.8
|
|
||
Other long-term assets
|
80.0
|
|
|
70.9
|
|
||
Total assets
|
$
|
5,777.0
|
|
|
$
|
5,272.3
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt
|
$
|
25.8
|
|
|
$
|
6.5
|
|
Capital lease obligations
|
1.3
|
|
|
1.2
|
|
||
Accounts payable
|
323.8
|
|
|
294.2
|
|
||
Dividends payable
|
59.9
|
|
|
53.4
|
|
||
Accrued liabilities
|
201.2
|
|
|
193.5
|
|
||
Accrued interest
|
13.4
|
|
|
13.1
|
|
||
Total current liabilities
|
625.4
|
|
|
561.9
|
|
||
Long-term liabilities:
|
|
|
|
||||
Long-term debt
|
2,620.0
|
|
|
2,290.4
|
|
||
Capital lease obligations
|
20.3
|
|
|
21.6
|
|
||
Deferred income taxes
|
334.7
|
|
|
347.0
|
|
||
Compensation and benefits
|
357.2
|
|
|
358.6
|
|
||
Other long-term liabilities
|
59.6
|
|
|
59.5
|
|
||
Total long-term liabilities
|
3,391.8
|
|
|
3,077.1
|
|
||
Commitments and contingent liabilities
|
|
|
|
|
|
||
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 December 31, 2016 and 2015, respectively
|
0.9
|
|
|
1.0
|
|
||
Additional paid in capital
|
451.4
|
|
|
439.9
|
|
||
Retained earnings
|
1,447.1
|
|
|
1,317.3
|
|
||
Accumulated other comprehensive loss
|
(139.6
|
)
|
|
(124.9
|
)
|
||
Total stockholders' equity
|
1,759.8
|
|
|
1,633.3
|
|
||
Total liabilities and stockholders' equity
|
$
|
5,777.0
|
|
|
$
|
5,272.3
|
|
|
Year Ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
449.6
|
|
|
$
|
436.8
|
|
|
$
|
392.6
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation, depletion, and amortization of intangibles
|
358.0
|
|
|
356.5
|
|
|
381.6
|
|
|||
Amortization of deferred financing costs
|
7.8
|
|
|
7.8
|
|
|
9.2
|
|
|||
Share-based compensation expense
|
19.7
|
|
|
18.2
|
|
|
15.6
|
|
|||
Deferred income tax provision (benefit)
|
(4.0
|
)
|
|
1.7
|
|
|
2.6
|
|
|||
Loss on disposals of property, plant, and equipment
|
7.3
|
|
|
0.5
|
|
|
7.0
|
|
|||
Pension and post retirement benefits expense, net of contributions
|
(30.5
|
)
|
|
31.2
|
|
|
25.4
|
|
|||
Other, net
|
(5.9
|
)
|
|
(20.3
|
)
|
|
(0.9
|
)
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||||||
Decrease (increase) in assets —
|
|
|
|
|
|
||||||
Accounts receivable
|
(3.6
|
)
|
|
9.5
|
|
|
(8.5
|
)
|
|||
Inventories
|
(25.7
|
)
|
|
(11.9
|
)
|
|
(72.4
|
)
|
|||
Prepaid expenses and other current assets
|
—
|
|
|
4.1
|
|
|
(5.1
|
)
|
|||
Increase (decrease) in liabilities —
|
|
|
|
|
|
||||||
Accounts payable
|
16.6
|
|
|
(37.3
|
)
|
|
(36.0
|
)
|
|||
Accrued liabilities
|
(3.2
|
)
|
|
(15.5
|
)
|
|
7.0
|
|
|||
Federal and state income tax payable/receivable
|
15.1
|
|
|
(18.7
|
)
|
|
18.0
|
|
|||
Net cash provided by operating activities
|
801.2
|
|
|
762.6
|
|
|
736.1
|
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Additions to property, plant, and equipment
|
(274.3
|
)
|
|
(314.5
|
)
|
|
(420.2
|
)
|
|||
Proceeds from sale of a business
|
—
|
|
|
23.0
|
|
|
—
|
|
|||
Acquisitions of businesses, net of cash acquired
|
(485.4
|
)
|
|
—
|
|
|
(20.5
|
)
|
|||
Additions to other long-term assets
|
(10.4
|
)
|
|
(12.3
|
)
|
|
(12.5
|
)
|
|||
Other, net
|
0.5
|
|
|
5.7
|
|
|
2.1
|
|
|||
Net cash used for investing activities
|
(769.6
|
)
|
|
(298.1
|
)
|
|
(451.1
|
)
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of debt
|
385.0
|
|
|
—
|
|
|
398.9
|
|
|||
Repayments of debt
|
(37.5
|
)
|
|
(47.6
|
)
|
|
(592.5
|
)
|
|||
Financing costs paid
|
(2.0
|
)
|
|
—
|
|
|
(3.4
|
)
|
|||
Common stock dividends paid
|
(216.1
|
)
|
|
(200.8
|
)
|
|
(157.4
|
)
|
|||
Repurchases of common stock
|
(100.3
|
)
|
|
(154.7
|
)
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
—
|
|
|
—
|
|
|
3.7
|
|
|||
Excess tax benefits from stock-based awards
|
5.7
|
|
|
6.0
|
|
|
12.2
|
|
|||
Shares withheld to cover employee restricted stock taxes
|
(11.2
|
)
|
|
(8.7
|
)
|
|
(13.2
|
)
|
|||
Other, net
|
(0.1
|
)
|
|
0.6
|
|
|
0.6
|
|
|||
Net cash provided by (used for) financing activities
|
23.5
|
|
|
(405.2
|
)
|
|
(351.1
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
55.1
|
|
|
59.3
|
|
|
(66.1
|
)
|
|||
Cash and cash equivalents, beginning of year
|
184.2
|
|
|
124.9
|
|
|
191.0
|
|
|||
Cash and cash equivalents, end of year
|
$
|
239.3
|
|
|
$
|
184.2
|
|
|
$
|
124.9
|
|
|
Common Stock
|
|
Additional Paid in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders' Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|||||||||||||||||||
Balance at January 1, 2014
|
98,172
|
|
|
$
|
1.0
|
|
|
$
|
401.7
|
|
|
$
|
1,019.1
|
|
|
$
|
(65.0
|
)
|
|
$
|
1,356.8
|
|
Common stock withheld and retired to cover taxes on vested stock awards
|
(183
|
)
|
|
—
|
|
|
(1.2
|
)
|
|
(12.0
|
)
|
|
—
|
|
|
(13.2
|
)
|
|||||
Common stock dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(157.5
|
)
|
|
—
|
|
|
(157.5
|
)
|
|||||
Restricted stock grants and cancellations
|
228
|
|
|
—
|
|
|
9.7
|
|
|
—
|
|
|
—
|
|
|
9.7
|
|
|||||
Exercise of stock options
|
151
|
|
|
—
|
|
|
6.3
|
|
|
—
|
|
|
—
|
|
|
6.3
|
|
|||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
15.6
|
|
|
—
|
|
|
—
|
|
|
15.6
|
|
|||||
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
392.6
|
|
|
(88.9
|
)
|
|
303.7
|
|
|||||
Balance at December 31, 2014
|
98,368
|
|
|
$
|
1.0
|
|
|
$
|
432.1
|
|
|
$
|
1,242.2
|
|
|
$
|
(153.9
|
)
|
|
$
|
1,521.4
|
|
Common stock repurchases and retirements
|
(2,326
|
)
|
|
—
|
|
|
(15.6
|
)
|
|
(139.1
|
)
|
|
—
|
|
|
(154.7
|
)
|
|||||
Common stock withheld and retired to cover taxes on vested stock awards
|
(131
|
)
|
|
—
|
|
|
(0.8
|
)
|
|
(7.9
|
)
|
|
—
|
|
|
(8.7
|
)
|
|||||
Common stock dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(214.7
|
)
|
|
—
|
|
|
(214.7
|
)
|
|||||
Restricted stock/performance unit grants and cancellations
|
218
|
|
|
—
|
|
|
6.0
|
|
|
—
|
|
|
—
|
|
|
6.0
|
|
|||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
18.2
|
|
|
—
|
|
|
—
|
|
|
18.2
|
|
|||||
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
436.8
|
|
|
29.0
|
|
|
465.8
|
|
|||||
Balance at December 31, 2015
|
96,129
|
|
|
$
|
1.0
|
|
|
$
|
439.9
|
|
|
$
|
1,317.3
|
|
|
$
|
(124.9
|
)
|
|
$
|
1,633.3
|
|
Common stock repurchases and retirements
|
(1,987
|
)
|
|
(0.1
|
)
|
|
(13.1
|
)
|
|
(87.1
|
)
|
|
—
|
|
|
(100.3
|
)
|
|||||
Common stock withheld and retired to cover taxes on vested stock awards
|
(172
|
)
|
|
—
|
|
|
(1.1
|
)
|
|
(10.1
|
)
|
|
—
|
|
|
(11.2
|
)
|
|||||
Common stock dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(222.6
|
)
|
|
—
|
|
|
(222.6
|
)
|
|||||
Restricted stock/performance unit grants and cancellations
|
243
|
|
|
—
|
|
|
5.7
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
|||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
19.7
|
|
|
—
|
|
|
—
|
|
|
19.7
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|||||
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
449.6
|
|
|
(14.7
|
)
|
|
434.9
|
|
|||||
Balance at December 31, 2016
|
94,213
|
|
|
$
|
0.9
|
|
|
$
|
451.4
|
|
|
$
|
1,447.1
|
|
|
$
|
(139.6
|
)
|
|
$
|
1,759.8
|
|
|
December 31
|
||||||
|
2016
|
|
2015
|
||||
Raw materials
|
$
|
271.9
|
|
|
$
|
260.6
|
|
Work in process
|
12.9
|
|
|
14.2
|
|
||
Finished goods
|
206.5
|
|
|
189.7
|
|
||
Supplies and materials
|
232.3
|
|
|
212.3
|
|
||
Inventories
|
$
|
723.6
|
|
|
$
|
676.8
|
|
|
December 31
|
||||||
|
2016
|
|
2015
|
||||
Land and land improvements
|
$
|
149.7
|
|
|
$
|
146.4
|
|
Buildings
|
717.1
|
|
|
640.9
|
|
||
Machinery and equipment
|
4,951.4
|
|
|
4,747.1
|
|
||
Construction in progress
|
125.4
|
|
|
119.1
|
|
||
Other
|
66.7
|
|
|
61.3
|
|
||
Property, plant, and equipment, at cost
|
6,010.3
|
|
|
5,714.8
|
|
||
Less accumulated depreciation
|
(3,114.6
|
)
|
|
(2,882.7
|
)
|
||
Property, plant, and equipment, net
|
$
|
2,895.7
|
|
|
$
|
2,832.1
|
|
Buildings and land improvements
|
5 to 40 years
|
Machinery and equipment
|
3 to 25 years
|
Trucks and automobiles
|
3 to 10 years
|
Furniture and fixtures
|
3 to 20 years
|
Computers and hardware
|
3 to 10 years
|
Leasehold improvements
|
Period of the lease or useful life, if shorter
|
•
|
In March 2016, the FASB issued ASU 2016-08,
Revenue from Contracts with Customers - Principal versus Agent Consideration (Reporting revenue gross versus net)
, which clarifies gross versus net revenue reporting when another party is involved in the transactions.
|
•
|
In April 2016, FASB issued ASU 2016-10,
Revenue from Contracts with Customers - Identifying Performance Obligations and Licensing
, which amends the revenue guidance on identifying performance obligations and accounting for licenses of intellectual property.
|
•
|
In May 2016, the FASB issued ASU 2016-12,
Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients
, which provides narrow-scope improvements to the guidance on collectability, non-cash consideration, and completed contracts at transition
|
•
|
In December 2016, the FASB issued ASU 2016-20,
Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers
, which provides additional guidance and clarification for application and interpretation of the new standard. The ASU makes technical corrections and improvements to the new revenue standard and to other Codification topics to address unintended consequences from applying the new guidance.
|
|
Initial Allocation
|
|
Adjustments
|
|
Revised Allocation
|
||||||
Goodwill
|
$
|
148.1
|
|
|
$
|
9.2
|
|
|
$
|
157.3
|
|
Other intangible assets
|
101.6
|
|
|
(7.2
|
)
|
|
94.4
|
|
|||
Property, plant and equipment
|
96.9
|
|
|
(1.6
|
)
|
|
95.3
|
|
|||
Other net assets
|
39.0
|
|
|
(0.4
|
)
|
|
38.6
|
|
|||
Net assets acquired
|
$
|
385.6
|
|
|
$
|
—
|
|
|
$
|
385.6
|
|
|
Year Ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
449.6
|
|
|
$
|
436.8
|
|
|
$
|
392.6
|
|
Less: distributed and undistributed earnings allocated to participating securities
|
(4.4
|
)
|
|
(5.2
|
)
|
|
(5.7
|
)
|
|||
Net income attributable to common shareholders
|
$
|
445.2
|
|
|
$
|
431.6
|
|
|
$
|
386.9
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|||
Weighted average basic common shares outstanding
|
93.5
|
|
|
96.6
|
|
|
97.0
|
|
|||
Effect of dilutive securities
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|||
Diluted common shares outstanding
|
93.7
|
|
|
96.7
|
|
|
97.1
|
|
|||
Basic income per common share
|
$
|
4.76
|
|
|
$
|
4.47
|
|
|
$
|
3.99
|
|
Diluted income per common share
|
$
|
4.75
|
|
|
$
|
4.47
|
|
|
$
|
3.99
|
|
|
Year Ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Asset disposals and write-offs
|
$
|
(11.9
|
)
|
|
$
|
(14.0
|
)
|
|
$
|
(10.1
|
)
|
Facilities closure costs (a)
|
(9.4
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition-related costs (b)
|
(3.3
|
)
|
|
—
|
|
|
—
|
|
|||
Multiemployer pension withdrawal (c)
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|||
Wallula mill restructuring (d)
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|||
Integration-related and other costs (e)
|
—
|
|
|
(12.9
|
)
|
|
(20.0
|
)
|
|||
DeRidder restructuring (f)
|
—
|
|
|
7.1
|
|
|
(7.3
|
)
|
|||
Sale of St. Helens paper mill site (g)
|
—
|
|
|
6.7
|
|
|
—
|
|
|||
Refundable state tax credit (h)
|
—
|
|
|
3.6
|
|
|
—
|
|
|||
Class action lawsuit settlement (i)
|
—
|
|
|
—
|
|
|
(17.6
|
)
|
|||
Other
|
1.8
|
|
|
2.8
|
|
|
(2.3
|
)
|
|||
Total
|
$
|
(24.3
|
)
|
|
$
|
(6.7
|
)
|
|
$
|
(57.3
|
)
|
(a)
|
Includes facilities closure costs related to corrugated products facilities and a paper products facility.
|
(b)
|
Includes acquisition-related costs for the TimBar Corporation and Columbus Container, Inc. acquisitions.
|
(c)
|
Includes costs related to our withdrawal from a multiemployer pension plan for one of our corrugated products facilities.
|
(d)
|
Includes costs related to ceased softwood market pulp operations at our Wallula, Washington mill and the permanent shutdown of the No. 1 machine.
|
(e)
|
Includes Boise acquisition integration-related and other costs, which primarily relate to severance, retention, travel, and professional fees.
|
(f)
|
2015 and 2014 include amounts from restructuring activities at our mill in DeRidder, Louisiana including costs related to the conversion of the No. 3 newsprint machine to containerboard, our exit from the newsprint business, and other improvements. We completed the restructuring activities in first quarter 2015. In 2015, we recorded
$7.1 million
of income from vendor settlements.
|
(g)
|
In September 2015, we sold the remaining land, buildings, and equipment at our paper mill site in St. Helens, Oregon where we ceased paper production in December 2012. We recorded a
$6.7 million
gain on the sale.
|
(h)
|
Includes a
$3.6 million
tax credit from the State of Louisiana related to our recent capital investment and the jobs retained at the DeRidder, Louisiana mill, which was recorded as a benefit.
|
(i)
|
Includes
$17.6 million
of costs for the settlement of the
Kleen Products LLC v Packaging Corp. of America et al
class action lawsuit. See Note
18
,
Commitments, Guarantees, Indemnifications, and Legal Proceedings
, for more information.
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current income tax provision (benefit) -
|
|
|
|
|
|
||||||
U.S. Federal
|
$
|
213.6
|
|
|
$
|
205.1
|
|
|
$
|
185.1
|
|
State and local
|
29.1
|
|
|
20.5
|
|
|
33.1
|
|
|||
Foreign
|
0.2
|
|
|
0.4
|
|
|
0.9
|
|
|||
Total current provision for taxes
|
242.9
|
|
|
226.0
|
|
|
219.1
|
|
|||
Deferred -
|
|
|
|
|
|
||||||
U.S. Federal
|
(1.2
|
)
|
|
(3.8
|
)
|
|
(5.0
|
)
|
|||
State and local
|
(3.0
|
)
|
|
5.6
|
|
|
7.6
|
|
|||
Foreign
|
0.2
|
|
|
(0.1
|
)
|
|
—
|
|
|||
Total deferred provision (benefit) for taxes
|
(4.0
|
)
|
|
1.7
|
|
|
2.6
|
|
|||
Total provision (benefit) for taxes
|
$
|
238.9
|
|
|
$
|
227.7
|
|
|
$
|
221.7
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Provision computed at U.S. Federal statutory rate of 35%
|
$
|
241.0
|
|
|
$
|
232.6
|
|
|
$
|
215.0
|
|
State and local taxes, net of federal benefit
|
19.8
|
|
|
20.0
|
|
|
20.5
|
|
|||
Domestic manufacturers deduction
|
(21.1
|
)
|
|
(19.9
|
)
|
|
(16.5
|
)
|
|||
Other
|
(0.8
|
)
|
|
(5.0
|
)
|
|
2.7
|
|
|||
Total
|
$
|
238.9
|
|
|
$
|
227.7
|
|
|
$
|
221.7
|
|
|
2017 Through 2026
|
|
2027 Through 2036
|
|
Indefinite
|
|
Total
|
||||||||
U.S. federal and foreign NOLs
|
$
|
—
|
|
|
$
|
65.3
|
|
|
$
|
—
|
|
|
$
|
65.3
|
|
State taxing jurisdiction NOLs
|
1.3
|
|
|
0.8
|
|
|
—
|
|
|
2.1
|
|
||||
U.S. federal, foreign, and state tax credit carryforwards
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
U.S. federal capital loss carryforwards
|
5.2
|
|
|
—
|
|
|
—
|
|
|
5.2
|
|
||||
Total
|
$
|
6.5
|
|
|
$
|
66.2
|
|
|
$
|
—
|
|
|
$
|
72.7
|
|
|
December 31
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
|
|
||
Accrued liabilities
|
$
|
18.1
|
|
|
$
|
18.3
|
|
Employee benefits and compensation
|
45.9
|
|
|
32.5
|
|
||
Inventories
|
9.9
|
|
|
3.9
|
|
||
Net operating loss carryforwards
|
67.4
|
|
|
73.2
|
|
||
Stock options and restricted stock
|
11.7
|
|
|
10.7
|
|
||
Pension and postretirement benefits
|
136.5
|
|
|
148.2
|
|
||
Derivatives
|
11.5
|
|
|
13.7
|
|
||
Capital loss, general business, foreign, and AMT credit carryforwards
|
5.3
|
|
|
5.2
|
|
||
Gross deferred tax assets
|
$
|
306.3
|
|
|
$
|
305.7
|
|
Valuation allowance (a)
|
(5.2
|
)
|
|
(5.1
|
)
|
||
Net deferred tax assets
|
$
|
301.1
|
|
|
$
|
300.6
|
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
|
||
Property, plant, and equipment
|
$
|
(537.0
|
)
|
|
$
|
(545.8
|
)
|
Goodwill and intangible assets
|
(98.8
|
)
|
|
(101.8
|
)
|
||
Total deferred tax liabilities
|
$
|
(635.8
|
)
|
|
$
|
(647.6
|
)
|
Net deferred tax liabilities (b)
|
$
|
(334.7
|
)
|
|
$
|
(347.0
|
)
|
(a)
|
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 2016 and 2015 valuation allowance relates 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.
|
(b)
|
As of December 31, 2016, we did not recognize U.S. deferred income taxes on our cumulative total of undistributed foreign earnings for our foreign subsidiaries. We indefinitely reinvest our earnings in operations outside the United States. It is not practicable to determine the amount of unrecognized deferred tax liability on these undistributed earnings because the actual tax liability, if any, is dependent on circumstances existing when the repatriation occurs.
|
|
2016
|
|
2015
|
|
2014
|
||||||
Balance as of January 1
|
$
|
(5.8
|
)
|
|
$
|
(4.4
|
)
|
|
$
|
(5.4
|
)
|
Increases related to prior years’ tax positions
|
—
|
|
|
(2.8
|
)
|
|
(1.0
|
)
|
|||
Increases related to current year tax positions
|
(0.5
|
)
|
|
(0.4
|
)
|
|
(0.3
|
)
|
|||
Decreases related to prior years' tax positions
|
0.1
|
|
|
—
|
|
|
0.9
|
|
|||
Settlements with taxing authorities
|
0.3
|
|
|
0.7
|
|
|
0.5
|
|
|||
Expiration of the statute of limitations
|
0.7
|
|
|
1.1
|
|
|
0.9
|
|
|||
Balance at December 31
|
$
|
(5.2
|
)
|
|
$
|
(5.8
|
)
|
|
$
|
(4.4
|
)
|
|
Packaging
|
|
Paper
|
|
Goodwill
|
||||||
Balance at January 1, 2015
|
$
|
491.6
|
|
|
$
|
55.2
|
|
|
$
|
546.8
|
|
Sale of Hexacomb Europe and Mexico (a)
|
(2.8
|
)
|
|
—
|
|
|
(2.8
|
)
|
|||
Balance at December 31, 2015
|
488.8
|
|
|
55.2
|
|
|
544.0
|
|
|||
Acquisitions (b)
|
193.9
|
|
|
—
|
|
|
193.9
|
|
|||
Balance at December 31, 2016
|
$
|
682.7
|
|
|
$
|
55.2
|
|
|
$
|
737.9
|
|
(a)
|
During 2015, we sold the assets of Hexacomb Europe and Mexico, a corrugated products manufacturer, for
$23.0 million
and reduced goodwill in our Packaging segment by
$2.8 million
.
|
(b)
|
In connection with the August 2016 acquisition of TimBar Corporation (TimBar), the Company recoded
$157.3 million
of goodwill in the Packaging segment. In November 2016, we acquired Columbus Container and recorded
$36.6 million
of goodwill in the Packaging segment. See Note
3
,
Acquisitions and Dispositions
, for more information.
|
|
As of December 31, 2016
|
|
As of 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 (c)
|
13.1
|
|
$
|
424.5
|
|
|
$
|
79.8
|
|
|
13.3
|
|
$
|
311.5
|
|
|
$
|
57.3
|
|
Trademarks and trade names (c)
|
10.5
|
|
27.7
|
|
|
8.1
|
|
|
12.5
|
|
21.8
|
|
|
5.2
|
|
||||
Other (c)
|
4.3
|
|
4.2
|
|
|
1.4
|
|
|
1.2
|
|
0.2
|
|
|
0.2
|
|
||||
Total intangible assets (excluding goodwill)
|
12.9
|
|
$
|
456.4
|
|
|
$
|
89.3
|
|
|
13.3
|
|
$
|
333.5
|
|
|
$
|
62.7
|
|
(c)
|
In connection with the August 2016 acquisition of TimBar, the Company recorded intangible assets of
$88.0 million
for customer relationships,
$4.9 million
for trade names, and
$1.5 million
for other intangibles. In November 2016, we acquired Columbus Container, Inc. and recorded intangible assets of
$25.0 million
for customer relationships,
$1.0 million
for trade names, and
$0.3 million
for other intangibles. See Note
3
,
Acquisitions and Dispositions
, for more information.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Compensation and benefits
|
$
|
120.4
|
|
|
$
|
106.4
|
|
Medical insurance and workers’ compensation
|
28.8
|
|
|
31.1
|
|
||
Customer volume discounts and rebates
|
18.9
|
|
|
15.3
|
|
||
Franchise, property, sales and use taxes
|
16.7
|
|
|
16.0
|
|
||
Environmental liabilities and asset retirement obligations
|
6.4
|
|
|
7.9
|
|
||
Severance, retention, and relocation
|
3.0
|
|
|
7.3
|
|
||
Other
|
7.0
|
|
|
9.5
|
|
||
Total
|
$
|
201.2
|
|
|
$
|
193.5
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||
|
Amount
|
|
Interest Rate
|
|
Amount
|
|
Interest Rate
|
||||||
Revolving Credit Facility, due August 2021
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Five-Year Term Loan, due October 2018
|
—
|
|
|
—
|
|
|
25.0
|
|
|
1.80
|
|
||
Five-Year Term Loan, due August 2021
|
380.2
|
|
|
2.02
|
|
|
—
|
|
|
—
|
|
||
Seven-Year Term Loan, due October 2020
|
630.5
|
|
|
2.40
|
|
|
637.0
|
|
|
2.05
|
|
||
6.50% Senior Notes due March 2018
|
150.0
|
|
|
6.50
|
|
|
150.0
|
|
|
6.50
|
|
||
3.90% Senior Notes, net of discounts of $0.2 million and $0.3 million as of December 31, 2016 and 2015, respectively, due June 2022
|
399.8
|
|
|
3.90
|
|
|
399.7
|
|
|
3.90
|
|
||
4.50% Senior Notes, net of discount of $1.4 million and $1.5 million as of December 31, 2016 and 2015, respectively, due November 2023
|
698.6
|
|
|
4.50
|
|
|
698.5
|
|
|
4.50
|
|
||
3.65% Senior Notes, net of discount of $0.9 million and $1.0 million as of December 31, 2016 and 2015, due September 2024
|
399.1
|
|
|
3.65
|
|
|
399.0
|
|
|
3.65
|
|
||
Total
|
2,658.2
|
|
|
3.54
|
|
|
2,309.2
|
|
|
3.67
|
|
||
Less current portion
|
25.8
|
|
|
2.11
|
|
|
6.5
|
|
|
2.05
|
|
||
Less unamortized debt issuance costs
|
12.4
|
|
|
|
|
12.3
|
|
|
|
||||
Total long-term debt
|
$
|
2,620.0
|
|
|
3.57
|
%
|
|
$
|
2,290.4
|
|
|
3.69
|
%
|
•
|
Senior Unsecured Credit Agreement
. On October 18, 2013, we entered into a
$1.65 billion
senior unsecured credit facility. Loans bear interest at LIBOR plus a margin that is determined based upon our credit ratings. On August 29, 2016, we amended and restated our five-year credit agreement dated October 18, 2013, to finance the acquisition of TimBar Corporation. The financing consisted of:
|
◦
|
Revolving Credit Facility
: An extended
$350.0 million
unsecured revolving credit facility with variable interest (LIBOR plus a margin) due August 2021. During
2016
, we did not borrow under the Revolving Credit Facility. At
December 31, 2016
, we had
$25.1 million
of outstanding letters of credit that were considered outstanding on the revolving credit facility, resulting in
$324.9 million
of unused borrowing capacity. 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.
|
◦
|
Five-Year Term Loan:
A new
$385.0 million
unsecured
five
-year term loan with variable interest (LIBOR plus
1.250%
), payable quarterly, due August 2021. The balance outstanding at December 31, 2016 was
$380.2 million
.
|
◦
|
Seven-Year Term Loan
: A
$650.0 million
unsecured term loan with variable interest (LIBOR plus
1.625%
), payable quarterly, due October 2020. The balance outstanding at
December 31, 2016
was
$630.5 million
.
|
•
|
6.50% Senior Notes.
On March 25, 2008, we issued
$150.0 million
of
6.50%
senior notes due March 15, 2018, through a registered public offering.
|
•
|
3.90% Senior Notes.
On June 26, 2012, we issued
$400.0 million
of
3.90%
senior notes due June 15, 2022, through a registered public offering.
|
•
|
4.50% Senior Notes
. On October 22, 2013, we issued
$700.0 million
of
4.50%
senior notes due November 1, 2023, through a registered public offering.
|
•
|
3.65% Senior Notes.
On September 5, 2014, we issued
$400.0 million
of
3.65%
senior notes due September 15, 2024, through a registered public offering.
|
|
Pension Plans
|
|
Postretirement Plans
|
||||||||||||
|
Year Ended December 31
|
|
Year Ended December 31
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Change in Benefit Obligation
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of period
|
$
|
1,092.5
|
|
|
$
|
1,129.6
|
|
|
$
|
21.4
|
|
|
$
|
31.9
|
|
Service cost
|
24.5
|
|
|
24.0
|
|
|
0.5
|
|
|
1.7
|
|
||||
Interest cost
|
40.9
|
|
|
46.2
|
|
|
0.6
|
|
|
1.2
|
|
||||
Plan amendments
|
1.8
|
|
|
3.0
|
|
|
(5.3
|
)
|
|
—
|
|
||||
Actuarial (gain) loss (a)
|
35.3
|
|
|
(75.7
|
)
|
|
3.7
|
|
|
(11.4
|
)
|
||||
Participant contributions
|
—
|
|
|
—
|
|
|
1.3
|
|
|
1.2
|
|
||||
Benefits paid
|
(36.6
|
)
|
|
(34.6
|
)
|
|
(2.7
|
)
|
|
(3.2
|
)
|
||||
Benefit obligation at plan year end
|
$
|
1,158.4
|
|
|
$
|
1,092.5
|
|
|
$
|
19.5
|
|
|
$
|
21.4
|
|
Accumulated benefit obligation portion of above
|
$
|
1,116.6
|
|
|
$
|
1,048.5
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Change in Fair Value of Plan Assets
|
|
|
|
|
|
|
|
||||||||
Plan assets at fair value at beginning of period
|
$
|
764.4
|
|
|
$
|
805.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual return on plan assets
|
44.4
|
|
|
(8.1
|
)
|
|
—
|
|
|
—
|
|
||||
Company contributions
|
58.2
|
|
|
1.2
|
|
|
1.4
|
|
|
2.0
|
|
||||
Participant contributions
|
—
|
|
|
—
|
|
|
1.3
|
|
|
1.2
|
|
||||
Benefits paid
|
(36.6
|
)
|
|
(34.6
|
)
|
|
(2.7
|
)
|
|
(3.2
|
)
|
||||
Fair value of plan assets at plan year end
|
$
|
830.4
|
|
|
$
|
764.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Underfunded status
|
$
|
(328.0
|
)
|
|
$
|
(328.1
|
)
|
|
$
|
(19.5
|
)
|
|
$
|
(21.4
|
)
|
|
|
|
|
|
|
|
|
||||||||
Amounts Recognized on Consolidated Balance Sheets
|
|
|
|
|
|
|
|
||||||||
Current liabilities
|
$
|
(1.3
|
)
|
|
$
|
(0.9
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(1.1
|
)
|
Noncurrent liabilities
|
(326.7
|
)
|
|
(327.2
|
)
|
|
(18.3
|
)
|
|
(20.3
|
)
|
||||
Accrued obligation recognized at December 31
|
$
|
(328.0
|
)
|
|
$
|
(328.1
|
)
|
|
$
|
(19.5
|
)
|
|
$
|
(21.4
|
)
|
Amounts Recognized in Accumulated Other Comprehensive (Income) Loss (Pre-Tax)
|
|
|
|
|
|
|
|
||||||||
Prior service cost (credit)
|
$
|
21.1
|
|
|
$
|
25.1
|
|
|
$
|
(5.0
|
)
|
|
$
|
0.2
|
|
Actuarial loss (gain)
|
183.9
|
|
|
149.4
|
|
|
(1.9
|
)
|
|
(6.0
|
)
|
||||
Total
|
$
|
205.0
|
|
|
$
|
174.5
|
|
|
$
|
(6.9
|
)
|
|
$
|
(5.8
|
)
|
(a)
|
The actuarial loss in 2016 was due primarily to a decrease in the weighted average discount rate used to estimate our pension benefit obligations, and updated mortality assumptions from the Society of Actuaries. In 2015, the increase in the weighted average
|
|
Pension Plans
|
|
Postretirement Plans
|
||||||||||||||||||||
|
Year Ended December 31
|
|
Year Ended December 31
|
||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Service cost
|
$
|
24.5
|
|
|
$
|
24.0
|
|
|
$
|
22.7
|
|
|
$
|
0.5
|
|
|
$
|
1.7
|
|
|
$
|
1.6
|
|
Interest cost
|
40.9
|
|
|
46.2
|
|
|
45.9
|
|
|
0.6
|
|
|
1.2
|
|
|
1.2
|
|
||||||
Expected return on plan assets
|
(49.5
|
)
|
|
(53.1
|
)
|
|
(50.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Special termination benefits
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net amortization of unrecognized amounts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Prior service cost (credit)
|
5.7
|
|
|
5.5
|
|
|
6.5
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
(0.2
|
)
|
||||||
Actuarial loss
|
5.8
|
|
|
8.7
|
|
|
0.6
|
|
|
(0.4
|
)
|
|
0.1
|
|
|
0.1
|
|
||||||
Net periodic benefit cost
|
$
|
27.4
|
|
|
$
|
31.3
|
|
|
$
|
25.3
|
|
|
$
|
0.6
|
|
|
$
|
3.1
|
|
|
$
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Actuarial net (gain) loss
|
$
|
40.4
|
|
|
$
|
(14.5
|
)
|
|
$
|
146.4
|
|
|
$
|
3.6
|
|
|
$
|
(11.4
|
)
|
|
$
|
4.2
|
|
Prior service cost (credit)
|
1.8
|
|
|
3.0
|
|
|
2.6
|
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost
|
(5.7
|
)
|
|
(5.5
|
)
|
|
(6.5
|
)
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
0.2
|
|
||||||
Amortization of actuarial loss
|
(5.8
|
)
|
|
(8.7
|
)
|
|
(0.6
|
)
|
|
0.8
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||
Total recognized in other comprehensive (income) loss (a)
|
30.7
|
|
|
(25.7
|
)
|
|
141.9
|
|
|
(1.2
|
)
|
|
(11.6
|
)
|
|
4.3
|
|
||||||
Total recognized in net periodic benefit cost and other comprehensive (income) loss - pretax
|
$
|
58.1
|
|
|
$
|
5.6
|
|
|
$
|
167.2
|
|
|
$
|
(0.6
|
)
|
|
$
|
(8.5
|
)
|
|
$
|
7.0
|
|
(a)
|
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 seven to ten years) and over average remaining lifetime of inactive participants of Boise plans (which is between 26 and 29 years), to the extent that losses are not offset by gains in subsequent years. The estimated net loss and prior service cost that will be amortized from "Accumulated other comprehensive loss" into net periodic benefit in
2017
is
$12.7 million
.
|
|
Pension Plans
|
|
Postretirement Plans
|
||||||||
|
December 31
|
|
December 31
|
||||||||
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
4.24%
|
|
4.51%
|
|
4.14%
|
|
3.91%
|
|
4.35%
|
|
3.95%
|
Rate of compensation increase
|
4.00%
|
|
4.00%
|
|
4.00%
|
|
N/A
|
|
N/A
|
|
N/A
|
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for the Years Ended December 31
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
4.49%
|
|
4.14%
|
|
5.00%
|
|
4.17%
|
|
3.95%
|
|
4.85%
|
Expected return on plan assets
|
6.57%
|
|
6.73%
|
|
6.69%
|
|
N/A
|
|
N/A
|
|
N/A
|
Rate of compensation increase
|
4.00%
|
|
4.00%
|
|
4.00%
|
|
N/A
|
|
N/A
|
|
N/A
|
|
2016
|
|
2015
|
|
2014
|
Health care cost trend rate assumed for next year
|
7.35%
|
|
7.60%
|
|
7.75%
|
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
|
4.50%
|
|
4.50%
|
|
5.00%
|
Year that the rate reaches the ultimate trend rate
|
2025
|
|
2024
|
|
2023
|
|
1-Percentage
Point Increase
|
|
1-Percentage
Point Decrease
|
||||
Effect on postretirement benefit obligation
|
$
|
1.0
|
|
|
$
|
(0.9
|
)
|
Effect on net postretirement benefit cost
|
0.1
|
|
|
(0.1
|
)
|
|
Percentage
of Fair Value
|
||||
|
2016
|
|
2015
|
||
Fixed income securities
|
54
|
%
|
|
55
|
%
|
International equity securities
|
23
|
|
|
22
|
|
Domestic equity securities
|
21
|
|
|
20
|
|
Real estate securities
|
1
|
|
|
1
|
|
Other
|
1
|
|
|
2
|
|
|
Fair Value Measurements at December 31, 2016
|
||||||||||||||
Asset Category
|
Quoted Prices in Active Markets for Identical
Assets (Level 1) |
|
Significant Other Observable
Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
Total
|
||||||||
Short-term investments (a)
|
$
|
—
|
|
|
$
|
1.5
|
|
|
$
|
—
|
|
|
$
|
1.5
|
|
Mutual funds (b):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Domestic equities
|
65.7
|
|
|
—
|
|
|
—
|
|
|
65.7
|
|
||||
International equities
|
68.7
|
|
|
—
|
|
|
—
|
|
|
68.7
|
|
||||
Real estate
|
9.6
|
|
|
—
|
|
|
—
|
|
|
9.6
|
|
||||
Fixed income
|
108.4
|
|
|
64.8
|
|
|
—
|
|
|
173.2
|
|
||||
Common/collective trust funds (a):
|
|
|
|
|
|
|
|
||||||||
Domestic equities
|
—
|
|
|
107.9
|
|
|
—
|
|
|
107.9
|
|
||||
International equities
|
—
|
|
|
124.5
|
|
|
—
|
|
|
124.5
|
|
||||
Fixed income
|
—
|
|
|
271.6
|
|
|
—
|
|
|
271.6
|
|
||||
Private equity securities (c)
|
—
|
|
|
—
|
|
|
5.7
|
|
|
5.7
|
|
||||
Total securities at fair value
|
$
|
252.4
|
|
|
$
|
570.3
|
|
|
$
|
5.7
|
|
|
$
|
828.4
|
|
Receivables and accrued expenses
|
|
|
|
|
|
|
2.0
|
|
|||||||
Total fair value of plan assets
|
|
|
|
|
|
|
$
|
830.4
|
|
|
Fair Value Measurements at December 31, 2015
|
||||||||||||||
Asset Category
|
Quoted Prices in Active Markets for Identical
Assets (Level 1) |
|
Significant Other Observable
Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
Total
|
||||||||
Short-term investments (a)
|
$
|
—
|
|
|
$
|
4.1
|
|
|
$
|
—
|
|
|
$
|
4.1
|
|
Mutual funds (b):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Domestic equities
|
47.1
|
|
|
—
|
|
|
—
|
|
|
47.1
|
|
||||
International equities
|
50.7
|
|
|
—
|
|
|
—
|
|
|
50.7
|
|
||||
Real estate
|
8.5
|
|
|
—
|
|
|
—
|
|
|
8.5
|
|
||||
Fixed income
|
156.5
|
|
|
—
|
|
|
—
|
|
|
156.5
|
|
||||
Common/collective trust funds (a):
|
|
|
|
|
|
|
|
||||||||
Domestic equities
|
—
|
|
|
104.4
|
|
|
—
|
|
|
104.4
|
|
||||
International equities
|
—
|
|
|
121.6
|
|
|
—
|
|
|
121.6
|
|
||||
Fixed income
|
—
|
|
|
263.0
|
|
|
—
|
|
|
263.0
|
|
||||
Private equity securities (c)
|
—
|
|
|
—
|
|
|
6.4
|
|
|
6.4
|
|
||||
Total securities at fair value
|
$
|
262.8
|
|
|
$
|
493.1
|
|
|
$
|
6.4
|
|
|
$
|
762.3
|
|
Receivables and accrued expenses
|
|
|
|
|
|
|
2.1
|
|
|||||||
Total fair value of plan assets
|
|
|
|
|
|
|
$
|
764.4
|
|
(a)
|
Investments in common/collective trust funds valued using net asset values (NAV) provided by the administrator of the funds. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of units outstanding. While the underlying assets are actively traded on an exchange, the funds are not. There are currently no redemption restrictions on these investments. There are certain funds with one-day redeemable notice.
|
(b)
|
Investments in mutual funds valued at quoted market values on the last business day of the fiscal year.
|
(c)
|
Investments in this category are invested in the Pantheon Global Secondary Fund IV, LP. The fund specializes in investments in the private equity secondary market and occasionally directly in private companies to maximize capital growth. Fund investments are carried at fair value as determined quarterly using the market approach to estimate the fair value of private investments. The market approach utilizes prices and other relevant information generated by market transactions, type of security, size of the position, degree of liquidity, restrictions on the disposition, latest round of financing data, current financial position, and operating results, among other factors. In circumstances where fair values are not provided with respect to any of the company's fund investments, the investment advisor will seek to determine the fair value of such investments based on information provided by the general partners or managers of such funds or from other sources. Audited financial statements are provided by fund management annually. Notwithstanding the above, the variety of valuation bases adopted and quality of management data of the ultimate underlying investee companies means that there are inherent difficulties in determining the value of the investments. Amounts realized on the sale of these investments may differ from the calculated values. Boise had originally committed to a
$15.0 million
investment, with
$5.0 million
of the commitment unfunded at
December 31, 2016
.
|
|
2016
|
||
Balance, beginning of year
|
$
|
6.4
|
|
Sales
|
(0.7
|
)
|
|
Balance, end of year
|
$
|
5.7
|
|
|
Pension Plans
|
|
Postretirement
Plans
|
||||
2017
|
$
|
41.1
|
|
|
$
|
1.2
|
|
2018
|
45.0
|
|
|
1.3
|
|
||
2019
|
48.9
|
|
|
1.3
|
|
||
2020
|
52.6
|
|
|
1.4
|
|
||
2021
|
56.2
|
|
|
1.3
|
|
||
2021 - 2025
|
327.7
|
|
|
6.1
|
|
|
Year Ended December 31
|
||||||
|
2016
|
|
2015
|
||||
Asset retirement obligation at beginning of period
|
$
|
26.2
|
|
|
$
|
37.0
|
|
Accretion expense
|
2.3
|
|
|
2.1
|
|
||
Payments
|
(2.2
|
)
|
|
(1.6
|
)
|
||
Revisions in estimated cash flows
|
1.2
|
|
|
0.2
|
|
||
Liabilities incurred
|
0.5
|
|
|
(0.3
|
)
|
||
Sale of St. Helens (a)
|
—
|
|
|
(11.2
|
)
|
||
Asset retirement obligation at end of period
|
$
|
28.0
|
|
|
$
|
26.2
|
|
(a)
|
In September 2015, we sold the remaining land, buildings, and equipment at our paper mill site in St. Helens, Oregon where we ceased paper production in December 2012. We recorded a
$6.7 million
gain on the sale. In connection with the sale, we eliminated
$11.2 million
of asset retirement obligations that were assumed by the buyer.
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
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
|
1,007,794
|
|
|
$
|
49.47
|
|
|
1,184,299
|
|
|
$
|
41.71
|
|
|
1,463,694
|
|
|
$
|
31.48
|
|
Granted
|
242,835
|
|
|
67.48
|
|
|
218,957
|
|
|
65.16
|
|
|
229,489
|
|
|
70.24
|
|
|||
Vested (a)
|
(443,627
|
)
|
|
34.11
|
|
|
(389,481
|
)
|
|
32.77
|
|
|
(507,222
|
)
|
|
26.29
|
|
|||
Forfeitures
|
(20,923
|
)
|
|
59.63
|
|
|
(5,981
|
)
|
|
66.42
|
|
|
(1,662
|
)
|
|
61.05
|
|
|||
Restricted stock at December 31
|
786,079
|
|
|
$
|
63.44
|
|
|
1,007,794
|
|
|
$
|
49.47
|
|
|
1,184,299
|
|
|
$
|
41.71
|
|
(a)
|
The total fair value of awards upon vesting for the years ended
December 31, 2016
,
2015
, and
2014
was
$28.8 million
,
$26.3 million
, and
$36.4 million
, respectively
.
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
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
|
175,675
|
|
|
$
|
59.94
|
|
|
127,489
|
|
|
$
|
58.25
|
|
|
70,600
|
|
|
$
|
47.83
|
|
Granted
|
77,017
|
|
|
67.57
|
|
|
53,102
|
|
|
65.04
|
|
|
56,889
|
|
|
71.19
|
|
|||
Vested (a)
|
(20,604
|
)
|
|
57.58
|
|
|
(4,916
|
)
|
|
71.19
|
|
|
—
|
|
|
—
|
|
|||
Performance units at December 31
|
232,088
|
|
|
$
|
62.68
|
|
|
175,675
|
|
|
$
|
59.94
|
|
|
127,489
|
|
|
$
|
58.25
|
|
(a)
|
The total fair value of awards upon vesting for the year ended
December 31, 2016
was
$1.1 million
. Upon vesting of the awards, PCA issued
21,111
shares of its common stock, which included
507
shares for dividends accrued during the vesting period.
|
|
Year Ended December 31
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Restricted stock
|
$
|
15.8
|
|
|
$
|
15.2
|
|
|
$
|
13.8
|
|
Performance units
|
3.9
|
|
|
3.0
|
|
|
1.8
|
|
|||
Impact on income before income taxes
|
19.7
|
|
|
18.2
|
|
|
15.6
|
|
|||
Income tax benefit
|
(7.7
|
)
|
|
(7.1
|
)
|
|
(6.1
|
)
|
|||
Impact on net income
|
$
|
12.0
|
|
|
$
|
11.1
|
|
|
$
|
9.5
|
|
|
December 31, 2016
|
||||
|
Unrecognized Compensation Expense
|
|
Remaining Weighted Average Recognition Period (in years)
|
||
Restricted stock
|
$
|
27.1
|
|
|
2.7
|
Performance units
|
8.1
|
|
|
2.8
|
|
Total unrecognized share-based compensation expense
|
$
|
35.2
|
|
|
2.7
|
|
Net
Loss Recognized in Accumulated OCI (Effective Portion) December 31 |
||||||
|
2016
|
|
2015
|
||||
Treasury locks, net of tax
|
$
|
(17.7
|
)
|
|
$
|
(21.2
|
)
|
|
Gain (Loss) Reclassified
from Accumulated OCI into Income (Effective Portion) Year Ended December 31 |
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Amortization of treasury locks (included in interest expense, net)
|
$
|
(5.7
|
)
|
|
$
|
(5.7
|
)
|
|
$
|
(5.7
|
)
|
|
Shares
|
|
Weighted Average Price Per Share
|
|
Total
|
|||||
2015
|
2,326,493
|
|
|
$
|
66.50
|
|
|
$
|
154.7
|
|
2016
|
1,987,187
|
|
|
$
|
50.49
|
|
|
$
|
100.3
|
|
|
|
Unrealized Loss On Treasury Locks, Net
|
|
Unrealized Loss on Foreign Exchange Contracts
|
|
Unfunded Employee Benefit Obligations
|
|
Total
|
||||||||
Balance at December 31, 2015
|
|
$
|
(21.2
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(103.3
|
)
|
|
$
|
(124.9
|
)
|
Other comprehensive income (loss) before reclassifications, net of tax
|
|
—
|
|
|
—
|
|
|
(24.9
|
)
|
|
(24.9
|
)
|
||||
Amounts reclassified from AOCI, net of tax
|
|
3.5
|
|
|
—
|
|
|
6.7
|
|
|
10.2
|
|
||||
Net current-period other comprehensive income (loss)
|
|
3.5
|
|
|
—
|
|
|
(18.2
|
)
|
|
(14.7
|
)
|
||||
Balance at December 31, 2016
|
|
$
|
(17.7
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(121.5
|
)
|
|
$
|
(139.6
|
)
|
|
|
Amounts Reclassified from AOCI
Year Ended December 31
|
|
|
||||||
Details about AOCI Components
|
|
2016
|
|
2015
|
|
Affected Line Item in the Statement Where Net Income is Presented
|
||||
Foreign currency translation adjustments
|
|
$
|
—
|
|
|
$
|
(4.2
|
)
|
|
Other expense, net
|
|
|
—
|
|
|
—
|
|
|
Tax benefit
|
||
|
|
$
|
—
|
|
|
$
|
(4.2
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
||||
Unrealized loss on treasury locks, net
|
|
$
|
(5.7
|
)
|
|
$
|
(5.7
|
)
|
|
See (a) below
|
|
|
2.2
|
|
|
2.2
|
|
|
Tax benefit
|
||
|
|
$
|
(3.5
|
)
|
|
$
|
(3.5
|
)
|
|
Net of tax
|
|
|
|
|
|
|
|
||||
Unfunded employee benefit obligations
|
|
|
|
|
|
|
||||
Amortization of prior service costs
|
|
$
|
(5.5
|
)
|
|
$
|
(5.6
|
)
|
|
See (b) below
|
Amortization of actuarial gains / (losses)
|
|
(5.4
|
)
|
|
(8.8
|
)
|
|
See (b) below
|
||
|
|
(10.9
|
)
|
|
(14.4
|
)
|
|
Total before tax
|
||
|
|
4.2
|
|
|
5.6
|
|
|
Tax benefit
|
||
|
|
$
|
(6.7
|
)
|
|
$
|
(8.8
|
)
|
|
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
13
,
Derivative Instruments and Hedging Activities
, for additional information.
|
(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.
|
|
Year Ended December 31
|
||||||||||
2016
|
|
2015
|
|
2014
|
|||||||
Packaging sales
|
$
|
4,584.8
|
|
|
$
|
4,477.3
|
|
|
$
|
4,540.3
|
|
|
|
|
|
|
|
||||||
Paper sales
|
|
|
|
|
|
||||||
White papers
|
1,065.8
|
|
|
1,089.6
|
|
|
1,138.5
|
|
|||
Market pulp
|
28.1
|
|
|
53.5
|
|
|
62.9
|
|
|||
|
1,093.9
|
|
|
1,143.1
|
|
|
1,201.4
|
|
|||
Corporate and Other
|
100.3
|
|
|
121.3
|
|
|
110.9
|
|
|||
|
$
|
5,779.0
|
|
|
$
|
5,741.7
|
|
|
$
|
5,852.6
|
|
|
|
Sales, net
|
|
Operating Income (Loss)
|
|
Depreciation,
Amortization, and Depletion |
|
Capital
Expenditures (j) |
|
Assets
|
||||||||||||||||||
Year Ended December 31, 2016
|
|
Trade
|
|
Inter-
segment |
|
Total
|
|
|
|
|
||||||||||||||||||
Packaging
|
|
$
|
4,577.4
|
|
|
$
|
7.4
|
|
|
$
|
4,584.8
|
|
|
$
|
711.1
|
|
(a)
|
$
|
293.3
|
|
|
$
|
239.9
|
|
|
$
|
4,530.5
|
|
Paper
|
|
1,093.9
|
|
|
—
|
|
|
1,093.9
|
|
|
138.1
|
|
(b)
|
59.6
|
|
|
31.6
|
|
|
946.2
|
|
|||||||
Corporate and Other
|
|
107.7
|
|
|
139.2
|
|
|
246.9
|
|
|
(68.9
|
)
|
(c)
|
5.1
|
|
|
2.8
|
|
|
300.3
|
|
|||||||
Intersegment eliminations
|
|
—
|
|
|
(146.6
|
)
|
|
(146.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
|
$
|
5,779.0
|
|
|
$
|
—
|
|
|
$
|
5,779.0
|
|
|
780.3
|
|
|
$
|
358.0
|
|
|
$
|
274.3
|
|
|
$
|
5,777.0
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
(91.8
|
)
|
|
|
|
|
|
|
|||||||||||||
Income before taxes
|
|
|
|
|
|
|
|
$
|
688.5
|
|
|
|
|
|
|
|
|
|
Sales, net
|
|
Operating Income (Loss)
|
|
Depreciation,
Amortization, and Depletion |
|
Capital
Expenditures (j) |
|
Assets
|
||||||||||||||||||
Year Ended December 31, 2015
|
|
Trade
|
|
Inter-
segment |
|
Total
|
|
|
|
|
||||||||||||||||||
Packaging
|
|
$
|
4,474.1
|
|
|
$
|
3.2
|
|
|
$
|
4,477.3
|
|
|
$
|
714.9
|
|
(d)
|
$
|
297.3
|
|
|
$
|
250.3
|
|
|
$
|
4,027.9
|
|
Paper
|
|
1,143.1
|
|
|
—
|
|
|
1,143.1
|
|
|
112.5
|
|
(e)
|
54.9
|
|
|
58.5
|
|
|
976.5
|
|
|||||||
Corporate and Other
|
|
124.5
|
|
|
133.8
|
|
|
258.3
|
|
|
(77.4
|
)
|
(f)
|
4.3
|
|
|
5.7
|
|
|
267.9
|
|
|||||||
Intersegment eliminations
|
|
—
|
|
|
(137.0
|
)
|
|
(137.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
|
$
|
5,741.7
|
|
|
$
|
—
|
|
|
$
|
5,741.7
|
|
|
750.0
|
|
|
$
|
356.5
|
|
|
$
|
314.5
|
|
|
$
|
5,272.3
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
(85.5
|
)
|
|
|
|
|
|
|
|||||||||||||
Income before taxes
|
|
|
|
|
|
|
|
$
|
664.5
|
|
|
|
|
|
|
|
|
|
Sales, net
|
|
Operating Income (Loss)
|
|
Depreciation,
Amortization, and Depletion |
|
Capital
Expenditures (j) |
|
Assets
|
||||||||||||||||||
Year Ended December 31, 2014
|
|
Trade
|
|
Inter-
segment |
|
Total
|
|
|
|
|
||||||||||||||||||
Packaging
|
|
$
|
4,534.5
|
|
|
$
|
5.8
|
|
|
$
|
4,540.3
|
|
|
$
|
663.2
|
|
(g)
|
$
|
323.0
|
|
|
$
|
362.1
|
|
|
$
|
4,105.3
|
|
Paper
|
|
1,201.4
|
|
|
—
|
|
|
1,201.4
|
|
|
135.4
|
|
|
50.6
|
|
|
51.7
|
|
|
968.6
|
|
|||||||
Corporate and Other
|
|
116.7
|
|
|
144.9
|
|
|
261.6
|
|
|
(95.9
|
)
|
(h)
|
7.4
|
|
|
6.4
|
|
|
184.8
|
|
|||||||
Intersegment eliminations
|
|
—
|
|
|
(150.7
|
)
|
|
(150.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
|
$
|
5,852.6
|
|
|
$
|
—
|
|
|
$
|
5,852.6
|
|
|
702.7
|
|
|
$
|
381.0
|
|
|
$
|
420.2
|
|
|
$
|
5,258.7
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
(88.4
|
)
|
(i)
|
|
|
|
|
|
|||||||||||||
Income before taxes
|
|
|
|
|
|
|
|
$
|
614.3
|
|
|
|
|
|
|
|
(a)
|
Includes
$9.3 million
of closure costs related to corrugated product facilities.
|
(b)
|
Includes
$2.7 million
of costs related to ceased softwood market pulp operations at our Wallula, Washington mill and the permanent shut down of the No.1 machine.
|
(c)
|
Includes
$0.3 million
of acquisition-related costs for the TimBar Corporation acquisition.
|
(d)
|
Includes net charges of
$2.0 million
primarily related to restructuring activities at our mill in DeRidder, Louisiana and
$4.1 million
of Boise acquisition integration-related and other costs.
|
(e)
|
In September 2015, we sold the remaining land, buildings, and equipment at our paper mill site in St. Helens, Oregon where we ceased paper production in December 2012. We recorded a
$6.7 million
gain on the sale.
|
(f)
|
Includes
$9.3 million
of Boise acquisition integration-related and other costs. These costs primarily relate to professional fees, severance, retention, relocation, travel, and other integration-related costs.
|
(g)
|
Includes
$65.8 million
of costs related primarily to the conversion of the No. 3 newsprint machine at our DeRidder, Louisiana mill to produce lightweight linerboard and corrugating medium, and our exit from the newsprint business in September 2014. Includes
$4.9 million
of Boise acquisition integration-related and other costs.
|
(h)
|
Includes
$13.5 million
of Boise acquisition integration-related and other costs and
$17.6 million
of costs for the settlement of the
Kleen Products LLC v Packaging Corp. of America et al
class action lawsuit. See Note
18
,
Commitments, Guarantees, Indemnifications, and Legal Proceedings
, for more information.
|
(i)
|
Includes
$1.5 million
of expense related to the write-off of deferred financing costs in connection with the debt refinancing discussed in Note
9
,
Debt
.
|
(j)
|
Includes "Additions to property, plant, and equipment" and excludes cash used for "Acquisitions of businesses, net of cash acquired" as reported on our Consolidated Statements of Cash Flows.
|
2017
|
$
|
64.4
|
|
2018
|
54.4
|
|
|
2019
|
41.8
|
|
|
2020
|
26.2
|
|
|
2021
|
19.1
|
|
|
Thereafter
|
48.4
|
|
|
Total
|
$
|
254.3
|
|
|
Year Ended December 31
|
||||||
|
2016
|
|
2015
|
||||
Buildings
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Machinery and equipment
|
28.5
|
|
|
28.5
|
|
||
Total
|
28.8
|
|
|
28.8
|
|
||
Less accumulated amortization
|
(13.7
|
)
|
|
(12.2
|
)
|
||
Total
|
$
|
15.1
|
|
|
$
|
16.6
|
|
2017
|
$
|
2.7
|
|
2018
|
2.7
|
|
|
2019
|
2.7
|
|
|
2020
|
2.7
|
|
|
2021
|
2.7
|
|
|
Thereafter
|
17.7
|
|
|
Total minimum capital lease payments
|
31.2
|
|
|
Less amounts representing interest
|
(9.6
|
)
|
|
Present value of net minimum capital lease payments
|
21.6
|
|
|
Less current maturities of capital lease obligations
|
(1.3
|
)
|
|
Total long-term capital lease obligations
|
$
|
20.3
|
|
2017
|
$
|
93.4
|
|
2018
|
34.0
|
|
|
2019
|
27.8
|
|
|
2020
|
21.4
|
|
|
2021
|
17.7
|
|
|
Thereafter
|
45.7
|
|
|
Total
|
$
|
240.0
|
|
19
.
|
Quarterly Results of Operations
(unaudited, dollars in millions, except per-share and stock price information)
|
|
Quarter
|
||||||||||||||||||
2016:
|
First (a)
|
|
Second (b)
|
|
Third (c)
|
|
Fourth (d)
|
|
Total
|
||||||||||
Net sales
|
$
|
1,401.0
|
|
|
$
|
1,417.4
|
|
|
$
|
1,484.0
|
|
|
$
|
1,476.6
|
|
|
$
|
5,779.0
|
|
Gross profit
|
299.0
|
|
|
320.1
|
|
|
329.5
|
|
|
327.1
|
|
|
1,275.7
|
|
|||||
Income from operations
|
180.8
|
|
|
200.2
|
|
|
206.4
|
|
|
192.9
|
|
|
780.3
|
|
|||||
Net income
|
103.7
|
|
|
115.9
|
|
|
119.4
|
|
|
110.6
|
|
|
449.6
|
|
|||||
Basic earnings per share
|
1.09
|
|
|
1.23
|
|
|
1.27
|
|
|
1.17
|
|
|
4.76
|
|
|||||
Diluted earnings per share
|
1.09
|
|
|
1.23
|
|
|
1.26
|
|
|
1.17
|
|
|
4.75
|
|
|||||
Stock price - high
|
62.67
|
|
|
71.31
|
|
|
82.77
|
|
|
88.41
|
|
|
88.41
|
|
|||||
Stock price - low
|
44.32
|
|
|
58.44
|
|
|
65.12
|
|
|
78.03
|
|
|
44.32
|
|
|||||
|
Quarter
|
||||||||||||||||||
2015:
|
First (e)
|
|
Second (f)
|
|
Third (g)
|
|
Fourth (h)
|
|
Total
|
||||||||||
Net sales
|
$
|
1,425.7
|
|
|
$
|
1,454.3
|
|
|
$
|
1,470.8
|
|
|
$
|
1,390.9
|
|
|
$
|
5,741.7
|
|
Gross profit
|
277.0
|
|
|
317.6
|
|
|
328.3
|
|
|
285.0
|
|
|
1,208.0
|
|
|||||
Income from operations
|
157.1
|
|
|
197.6
|
|
|
219.4
|
|
|
175.9
|
|
|
750.0
|
|
|||||
Net income
|
90.8
|
|
|
114.0
|
|
|
127.8
|
|
|
104.3
|
|
|
436.8
|
|
|||||
Basic earnings per share
|
0.92
|
|
|
1.16
|
|
|
1.31
|
|
|
1.07
|
|
|
4.47
|
|
|||||
Diluted earnings per share
|
0.92
|
|
|
1.16
|
|
|
1.31
|
|
|
1.07
|
|
|
4.47
|
|
|||||
Stock price - high
|
84.88
|
|
|
78.98
|
|
|
73.60
|
|
|
70.04
|
|
|
84.88
|
|
|||||
Stock price - low
|
73.03
|
|
|
62.48
|
|
|
58.29
|
|
|
59.54
|
|
|
58.29
|
|
(a)
|
Includes
$2.8 million
of closure costs related to a corrugated products facility and a paper products facility. (
$1.9 million
after-tax or
$0.02
per diluted share).
|
(b)
|
Includes
$1.7 million
of closure costs related to a corrugated products facility and a paper products facility (
$1.0 million
after-tax or
$0.01
per diluted share),
$0.3 million
of acquisition-related costs for TimBar Corporation (
$0.2 million
after-tax or
$0.0
per diluted share), and
$0.9 million
related to our withdrawal from a multiemployer pension plan for one of our corrugated products facilities (
$0.6 million
after-tax or
$0.01
per diluted share).
|
(c)
|
Includes
$2.0 million
of closure costs related to a corrugated products facility and a paper products facility (
$1.4 million
after-tax or
$0.02
per diluted share) and
$2.9 million
of acquisition-related costs for TimBar Corporation and Columbus Container, Inc. acquisitions (
$1.9 million
after-tax or
$0.02
per diluted share).
|
(d)
|
Includes
$4.5 million
of closure costs related to a corrugated products facility and a paper products facility (
$2.9 million
after-tax or
$0.03
per diluted share),
$2.7 million
of costs related to ceased production of softwood market pulp operations at our Wallula, Washington mill and the permanent shutdown of the No.1 machine (
$1.8 million
after-tax or
$0.02
per diluted share), and
$1.2 million
of acquisition-related costs for TimBar Corporation and Columbus Container, Inc. acquisitions (
$0.8 million
after-tax or
$0.01
per diluted share).
|
(e)
|
Includes
$10.3 million
of DeRidder restructuring charges (
$6.6 million
after-tax or
$0.07
per diluted share) and
$3.5 million
of integration-related and other costs (
$2.2 million
after-tax or
$0.02
per diluted share). Also includes a
$3.6 million
tax credit from the State of Louisiana related to our capital investment and the jobs retained at the DeRidder, Louisiana mill.
|
(f)
|
Includes
$1.0 million
of income from DeRidder restructuring (
$0.7 million
after-tax or
$0.01
per diluted share) and
$3.7 million
of integration-related and other costs (
$2.3 million
after-tax or
$0.03
per diluted share).
|
(g)
|
Includes
$3.8 million
of income from DeRidder restructuring (
$2.3 million
after-tax or
$0.02
per diluted share) and
$2.4 million
of integration-related and other costs (
$1.7 million
after-tax or
$0.02
per diluted share). Also includes
$6.7 million
gain from the sale of our paper mill site at St. Helens, Oregon (
$4.4 million
after tax or
$0.05
per diluted share).
|
(h)
|
Includes
$3.5 million
of income from DeRidder restructuring (
$2.2 million
after-tax or
$0.02
per diluted share) and
$3.8 million
of integration-related and other costs (
$2.6 million
after-tax or
$0.03
per diluted share).
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
Item 9B.
|
OTHER INFORMATION
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
|
•
|
Information regarding PCA’s directors included under the caption "Election of Directors"
|
•
|
Information regarding PCA’s Audit Committee and financial experts included under the caption "Election of Directors - Audit Committee"
|
•
|
Information regarding PCA’s code of ethics included under the caption "Election of Directors - Code of Ethics"
|
•
|
Information regarding PCA’s stockholder nominating procedures included under the captions "Election of Directors - Nominating and Governance Committee," "Other Information - Recommendations for Board - Nominated Director Nominees," and "Other Information - Procedures for Nominating Directors or Bringing Business Before the 2017 Annual Meeting"
|
•
|
Information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 included under the caption "Section 16(a) Beneficial Ownership Reporting Compliance"
|
Item 11.
|
EXECUTIVE COMPENSATION
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
|
Column
|
||||||||
|
A
|
|
B
|
|
C
|
||||
Plan Category
|
Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (a)
|
|
Weighted Average Exercise Price of
Outstanding Options, Warrants, and Rights
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A)
|
||||
Equity compensation plans approved by securityholders
|
—
|
|
|
$
|
—
|
|
|
1,238,703
|
|
Equity compensation plans not approved by securityholders
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Total
|
—
|
|
|
$
|
—
|
|
|
1,238,703
|
|
(a)
|
Does not include 1,018,311 shares of unvested restricted stock and performance units granted pursuant to our Amended and Restated 1999 Long-Term Equity Incentive Plan.
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Item 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
Item 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
Exhibit
Number
|
|
Description
|
2.1
|
|
Contribution Agreement, dated as of January 25, 1999, among Pactiv Corporation (formerly known as Tenneco Packaging Inc.) ("Pactiv"), PCA Holdings LLC ("PCA Holdings") and Packaging Corporation of America ("PCA"). (Incorporated herein by reference to Exhibit 2.1 to PCA’s registration Statement on Form S-4, Registration No. 333-79511).
|
2.2
|
|
Letter Agreement Amending the Contribution Agreement, dated as of April 12, 1999, among Pactiv, PCA Holdings and PCA. (Incorporated herein by reference to Exhibit 2.2 to PCA’s Registration Statement on Form S-4, Registration No. 333-79511).
|
2.3
|
|
Agreement and Plan of Merger, dated September 16, 2013, between PCA, Bee Acquisition Corp. and Boise Inc. (Incorporated herein by reference to Exhibit 2.1 to PCA’s Current Report on Form 8-K filed September 17, 2013, File No. 1-15399). PCA will furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request; provided, however, that PCA may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished.
|
3.1
|
|
Restated Certificate of Incorporation of PCA. (Incorporated herein by reference to Exhibit 3.1 to PCA’s Registration Statement on Form S-4, Registration No. 333-79511).
|
3.2
|
|
Certificate of Amendment to Restated Certificate of Incorporation of PCA. (Incorporated herein by reference to Exhibit 3.2 to PCA’s Registration Statement on Form S-4, Registration No. 333-109437.)
|
3.3
|
|
Amended and Restated By-laws of PCA. (Incorporated herein by reference to Exhibit 3.1 to PCA’s Current Report on Form 8-K filed December 7, 2012, File No. 1-15399.)
|
4.1
|
|
Form of certificate representing shares of common stock. (Incorporated herein by reference to Exhibit 4.9 to PCA’s Registration Statement on Form S-1, Registration No. 333-86963.)
|
4.2
|
|
Indenture, dated as of July 21, 2003, between PCA and U.S. Bank National Association. (Incorporated herein by reference to Exhibit 4.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2003, File No. 1-15399.)
|
4.3
|
|
First Supplemental Indenture, dated as of July 21, 2003, between PCA and U.S. Bank National Association. (Incorporated herein by reference to Exhibit 4.3 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2003, File No. 1-15399.)
|
4.4
|
|
Form of Rule 144A Global Note. (Incorporated herein by reference to Exhibit 4.5 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2003, File No. 1-15399.)
|
4.5
|
|
Officers’ Certificate, dated March 25, 2008, pursuant to Section 301 of the Indenture filed herewith as Exhibit 4.2 (Incorporated herein by reference to Exhibit 4.1 to PCA’s Current Report on Form 8-K filed March 25, 2008, File No. 1-15399.)
|
4.6
|
|
6.50% Senior Notes due 2018. (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report on Form 8-K filed March 25, 2008, File No. 1-15399.)
|
4.7
|
|
Officers’ Certificate, dated as of June 26, 2012, pursuant to Section 301 of the Indenture filed herewith as Exhibit 4.2 and 3.90% Senior Notes due 2022. (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report on Form 8-K filed June 26, 2012, File No. 1-15399.)
|
4.8
|
|
Officers’ Certificate, dated as of October 22, 2013, pursuant to Section 301 of the Indenture filed herewith as Exhibit 4.2. (Incorporated herein by reference to Exhibit 4.1 to PCA’s Current Report on Form 8-K filed October 22, 2013, File No 1-15399.)
|
4.9
|
|
4.500% Senior Notes due 2023. (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report on Form 8-K filed October 22, 2013, File No 1-15399.)
|
4.10
|
|
Officers’ Certificate, dated September 5, 2014, pursuant to Section 301 of the Indenture filed herewith as Exhibit 4.2 (Incorporated herein by reference to Exhibit 4.1 to PCA’s Current Report on Form 8-K filed September 5, 2014, File No. 1-15399).
|
4.11
|
|
3.650% Senior Notes due 2024 (Incorporated herein by reference to Exhibit 4.2 to PCA’s Current Report on Form 8-K filed September 5, 2014, File No. 1-15399).
|
10.1
|
|
Amended and Restated Credit Agreement, dated as of August 29, 2016, by and among PCA and the lenders and agents named therein. (Incorporated herein by reference to Exhibit 10.1 to PCA’s Current Report on Form 8-K filed September 1, 2016, File No. 1-15399.)
|
10.2
|
|
Packaging Corporation of America Thrift Plan for Hourly Employees and First Amendment of Packaging Corporation of America Thrift Plan for Hourly Employees, effective February 1, 2000. (Incorporated herein by reference to Exhibit 4.5 to PCA’s Registration Statement on Form S-8, Registration No. 333-33176.)*
|
10.3
|
|
Packaging Corporation of America Retirement Savings Plan, effective February 1, 2000. (Incorporated herein by reference to Exhibit 4.6 to PCA’s Registration Statement on Form S-8, Registration No. 333-33176.)*
|
10.4
|
|
Form of Restricted Stock Award Agreement for employees and non-employee directors under the Amended and Restated 1999 Long-term Equity Incentive Plan. (Incorporated herein by reference to Exhibit 10.3 to PCA’s Current Report on Form 8-K, filed March 14, 2006, File No. 1-15399.)*
|
10.5
|
|
Packaging Corporation of America Supplemental Executive Retirement Plan, as Amended and Restated Effective as of January 1, 2005. (Incorporated herein by reference to Exhibit 10.31 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2006, File No. 1-15399.)*
|
10.6
|
|
Packaging Corporation of America Deferred Compensation Plan, effective as of January 1, 2009, conformed to incorporate all amendments.
†
|
10.7
|
|
First Amendment of Packaging Corporation of America Supplemental Executive Retirement Plan, effective as of January 1, 2008. (Incorporated herein by reference to Exhibit 10.17 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2008, file No. 1-15399.)*
|
10.8
|
|
Amended and Restated 1999 Long-Term Equity Incentive Plan, effective as of May 1, 2013, conformed to incorporate all amendments.
†
|
10.9
|
|
PCA Amended and Restated Performance Incentive Plan, effective as of May 12, 2015. (Incorporated herein by reference to Appendix A to PCA’s Definitive Proxy Statement on Schedule 14A, filed with the SEC on March 27, 2015, File No. 1-15399.)*
|
10.10
|
|
Amended and Restated Agreement, dated February 26, 2015, between Packaging Corporation of America and Paul T. Stecko. (Incorporated herein by reference to Exhibit 10.12 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2014, File No. 1-15399).
|
10.11
|
|
Second Amendment of Packaging Corporation of America Supplemental Executive Retirement Plan, effective as of February 28, 2013. (Incorporated herein by reference to Exhibit 10.22 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2012, File No. 1-15399.)*
|
10.12
|
|
Third Amendment of Packaging Corporation of America Supplemental Executive Retirement Plan, effective as of February 28, 2013. (Incorporated herein by reference to Exhibit 10.23 to PCA’s Annual Report on Form 10-K for the year ended December 31, 2012, File No. 1-15399.) *
|
10.13
|
|
Form of Restricted Stock Agreement for executive officer awards made in June 2013. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-15399).*
|
10.14
|
|
Form of Performance Unit Agreement for executive officer awards made in June 2013. (Incorporated by reference to Exhibit 10.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-15399).*
|
10.15
|
|
Performance Based Equity Award Pool for Executive Officers relating to awards made in June 2013. (Incorporated by reference to Exhibit 10.3 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-15399).*
|
10.16
|
|
Paper Purchase Agreement, dated June 25, 2011 (the "Paper Purchase Agreement"), between Boise White Paper, L.L. C. and OfficeMax Incorporated (Incorporated by reference to Exhibit 10.1 to Boise, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-33541)
|
10.17
|
|
First Amendment to Paper Purchase Agreement, dated June 20, 2013, between Boise White Paper, L.L.C. and OfficeMax Incorporated (Incorporated by reference to Exhibit 10.2 to Boise, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2013, File No. 1-33541)
|
10.18
|
|
Second Amendment to Paper Purchase Agreement, effective January 1, 2015 and executed and delivered August 19, 2015, between Boise White Paper, L.L.C. and Office Depot Inc. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, File No. 1-33541)
|
10.19
|
|
Form of Performance Unit Agreement for executive officer awards made in June 2014. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2014, File No. 1-15399).*
|
10.20
|
|
Form of Restricted Stock Agreement for executive officer awards made in June 2014. (Incorporated by reference to Exhibit 10.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2014, File No. 1-15399).*
|
10.21
|
|
Form of Performance Unit Agreement for executive officer awards made in 2015. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2015, File No. 1-15399).*
|
10.22
|
|
Form of Restricted Stock Agreement for executive officer awards made in 2015. (Incorporated by reference to Exhibit 10.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2014, File No. 1-15399).*
|
10.23
|
|
Agreement, dated December 16, 2015, between Packaging Corporation of America and Paul T. Stecko, director and Senior Advisor (Incorporated by reference to Exhibit 10.2 to PCA’s Current Report on Form 8-K filed on December 17, 2015, File No. 1-15399).
|
10.24
|
|
Form of Performance Unit Agreement for executive officer awards made in 2016. (Incorporated by reference to Exhibit 10.2 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2016, File No. 1-15399).*
|
10.25
|
|
Form of Restricted Stock Agreement for executive officer awards made in 2016. (Incorporated by reference to Exhibit 10.1 to PCA’s Quarterly Report on Form 10-Q for the period ended June 30, 2016, File No. 1-15399).*
|
12.1
|
|
Statement Regarding Computation of Ratio of Earnings to Fixed Charges†
|
21.1
|
|
Subsidiaries of the Registrant.†
|
23.1
|
|
Consent of KPMG LLP.†
|
24.1
|
|
Powers of Attorney.†
|
31.1
|
|
Certification of Chief Executive Officer, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.†
|
31.2
|
|
Certification of Chief Financial Officer, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.†
|
32
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
|
101
|
|
The following financial information from Packaging Corporation of America’s Annual Report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Income for the years ended December 31, 2016, 2015, and 2014, (ii) Consolidated Balance Sheets at December 31, 2016 and 2015, (iii) Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015, and 2014, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2016, 2015, and 2014, (v) the Notes to Consolidated Financial Statements, and (vi) Financial Statement Schedule-Valuation and Qualifying Accounts.
|
*
|
Management contract or compensatory plan or arrangement.
|
†
|
Filed herewith.
|
|
|
Packaging Corporation of America
|
|
|
|
|
|
/s/ M
ARK
W. K
OWLZAN
|
|
|
Mark W. Kowlzan
|
|
|
Chairman of the Board and Chief Executive Officer
|
|
|
|
|
|
/s/ R
OBERT
P. M
UNDY
|
|
|
Robert P. Mundy
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
Signature
|
|
Capacity
|
|
|
|
|
|
|
|
/s/ MARK W. KOWLZAN
|
|
|
|
|
Mark W. Kowlzan
|
|
Chairman of the Board and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
|
|
/s/ ROBERT P. MUNDY
|
|
|
|
|
Robert P. Mundy
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Cheryl K. Beebe
|
|
Director
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Duane Farrington
|
|
Director
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Hasan Jameel
|
|
Director
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Robert C. Lyons
|
|
Director
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Thomas P. Maurer
|
|
Director
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Samuel M. Mencoff
|
|
Director
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Roger B. Porter
|
|
Director
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Thomas S. Souleles
|
|
Director
|
|
|
|
|
|
|
|
*
|
|
|
|
|
Paul T. Stecko
|
|
Director
|
|
|
|
|
|
|
|
*
|
|
|
|
|
James D. Woodrum
|
|
Director
|
|
|
|
|
|
|
|
/s/ ROBERT P. MUNDY
|
|
|
|
|
Robert P. Mundy
|
|
|
|
|
(Attorney-In-Fact)
|
|
|
(a)
|
Deferrals of EICP Bonus
. A Participant may elect in a written Participation Election to defer receipt of all or a specified portion of his or her EICP Bonus to be received on account of a calendar year. The Participation Election must be submitted to the Administrator pursuant to such procedures as may be established
|
(b)
|
by the Administrator from time to time, and specify (i) such portions of his or her EICP Bonus to be credited to his Deferred Compensation Account under the Plan as a Deferral Credit (instead of receiving current payments), and (ii) the time or events upon which such Deferred Amounts shall be distributed pursuant to Section 7(a) below.
|
1.
|
Purpose
.
|
2.
|
Definitions
.
|
(a)
|
“
Award
” means any award granted under the Plan in accordance with the terms hereof.
|
(b)
|
“
Board
” mean the board of directors of the Company.
|
(c)
|
“
Cash Incentive Award
” has the meaning set forth in Section 7(b).
|
(d)
|
“
Cause
” means, unless otherwise provided by the Committee, the occurrence of one or more of the following events:
|
(i)
|
a Participant’s theft or embezzlement, or attempted theft or embezzlement, of money or property of the Company or its Subsidiaries, perpetration or attempted perpetration of fraud, or participation in a fraud or attempted fraud, on the Company or its Subsidiaries or unauthorized appropriation of, or attempt to misappropriate, any tangible or intangible assets or property of the Company or its Subsidiaries;
|
(ii)
|
any act or acts of disloyalty, misconduct or moral turpitude by a Participant injurious to the interest, property, operations, business or reputation of the Company or its Subsidiaries or conviction of a Participant of a crime the commission of which results in injury to the Company or its Subsidiaries; or
|
(iii)
|
a Participant’s failure or inability (other than by reason of his or her permanent disability) to carry out effectively his or her duties and obligations to the Company or its Subsidiaries or to participate effectively and actively in the management of the Company or its Subsidiaries, as determined in the reasonable judgment of the Board.
|
(e)
|
“
Change in Control
” means the occurrence of one of the following events:
|
(iv)
|
if any “person” or “group” as those terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successors thereto, other than an Exempt Person, is or becomes the “beneficial owner” (as defined in Rule 13d‑3 under the Exchange Act or any successor thereto), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities; or
|
(v)
|
during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved by at least two‑thirds of the directors then still in office who either were directors at the beginning of the period or whose election was previously so approved, cease for any reason to constitute a majority thereof; or
|
(vi)
|
consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation (A) which would result in all or a portion of the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (B) by which the corporate existence
|
(vii)
|
consummation of a plan of complete liquidation of the Company or a sale or disposition by the Company of all or substantially all the Company’s assets, other than a sale to an Exempt Person.
|
(f)
|
“
Code
” means the Internal Revenue Code of 1986, as amended.
|
(g)
|
“
Committee
” means the Compensation Committee of the Board, which shall consist solely of two or more members of the Board; provided, however, that the Committee with respect to Awards to Non-Employee Directors shall be the Board. Notwithstanding the foregoing (other than the proviso applicable to Non-Employee Directors), (i) as long as the Company is subject to Section 16 of the Exchange Act, the Committee for purpose of the Plan shall consist of not fewer than two members of the Board or such greater number as may be required for compliance with Rule 16b-3 issued under the Exchange Act and shall be comprised of persons who are independent for purposes of applicable stock exchange listing requirements, and (ii) any Award granted under the Plan which is intended to constitute Performance-Based Compensation (including Options and SARs) shall be granted by a Committee consisting solely of two or more “outside directors” within the meaning of Section 162(m) of the Code and applicable regulations.
|
(h)
|
“
Common Stock
” means the Common Stock, par value $0.01 per share, of the Company, and any other shares into which such stock may be changed by reason of a recapitalization, reorganization, merger, consolidation or any other change in the corporate structure or capital stock of the Company.
|
(i)
|
“
Competition
” is deemed to occur if a person whose employment with the Company or its Subsidiaries has terminated obtains a position as a full‑time or part‑time employee of, as a member of the board of directors of, or as a consultant or advisor with or to, or acquires an ownership interest in excess of 5% of, a corporation, partnership, firm or other entity that engages in any of the businesses of the Company or any Subsidiary with which the person was involved in a management role at any time during his or her last five years of employment with or other service for the Company or any Subsidiaries.
|
(j)
|
“
Disability
” means, except as otherwise provided by the Committee, a disability that would entitle an eligible Participant to payment of monthly disability payments under any Company disability plan. "Disability" means, except as otherwise provided by the Committee, the Participant's inability, by reason of a medically determinable physical or mental impairment, to engage in the material and substantial duties of his position for the Company and its Subsidiaries, which condition is expected to be permanent; provided, however, that in the case of a Non-Employee Director, "Disability" means an injury or illness which, as determined by the Committee, renders the Participant unable to serve as a director of the Company.
|
(k)
|
“
Effective Date
” has the meaning set forth in Section 17.
|
(l)
|
“
Eligible Individual
” means any directors, officer or employee of the Company or any Subsidiary, any individual who perform services for the Company or any Subsidiary, or any individual for whom an offer of employment has been extended by the Company and its Subsidiaries; provided, however, that an Award to a person to whom an offer of employment has been extended shall not be effective until such individual begins to provide services to the Company or any Subsidiary.
|
(m)
|
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended.
|
(n)
|
“
Exempt Person
” means any employee benefit plan of the Company or a trustee or other administrator or fiduciary holding securities under an employee benefit plan of the Company.
|
(o)
|
“
Exercise Price
” has the meaning set forth in Section 6(a).
|
(p)
|
“
Expiration Date
” has the meaning set forth in Section 6(c).
|
(q)
|
“
Family Member
” has the meaning given to such term in General Instruction A.1(a)(5) to Form S‑8 under the Securities Act of 1933, as amended, and any successor thereto.
|
(r)
|
“
Fair Market Value
” of a share of Common Stock means, as of the date in question, the officially‑quoted closing selling price of the stock (or if no selling price is quoted, the bid price) on the principal securities exchange on which the Common Stock is then listed for trading (the “Market”) for the applicable trading day or, if the Common Stock is not then listed or quoted in the Market, the Fair Market Value shall be the fair market value of the Common Stock determined in good faith by the Board; provided, however, that when Shares received upon exercise of an Option are immediately sold in the open market, the net sale price received may be used to determine the Fair Market Value of any Shares used to pay the Exercise Price and applicable withholding taxes and to compute the withholding taxes.
|
(s)
|
“
Full Value Award
” has the meaning set forth in Section 7(a).
|
(t)
|
“
Good Reason
” means, unless otherwise provided by the Committee, the occurrence of one or more of the following events:
|
(viii)
|
a substantial adverse alteration in the nature of the Participant’s status or responsibilities from those in effect immediately prior to the Change in Control; or
|
(ix)
|
a material reduction in the Participant’s annual base salary and target bonus, if any, or, in the case of a Participant who is a Non-Employee Director, the Participant’s annual compensation, as in effect immediately prior to the Change in Control.
|
(u)
|
“
Incentive Stock Option
” means an Option conforming to the requirements of Section 422 of the Code and any successor thereto.
|
(v)
|
“
Non‑Employee Director
” has the meaning given to such term in Rule 16b‑3 under the Exchange Act and any successor thereto.
|
(w)
|
“
Non‑Qualified Stock Option
” means any Option other than an Incentive Stock Option.
|
(x)
|
“
Option
” means the grant of an Award under the Plan that entitles the Participant to purchase Shares at an Exercise Price established by the Committee at the time of grant. Options may be either Incentive Stock Options or Non-Qualified Stock Options, as determined by the Committee; provided, however, that an Incentive Stock Option may only be granted to an employee of the Company or a Subsidiary. An Option will be deemed to be a Non-Qualified Stock Option unless it is specifically designated by the Committee as an Incentive Stock Option.
|
(y)
|
“
Participant
” means any person to whom an Award is granted under the Plan.
|
(z)
|
“
Performance-Based Compensation
” has the meaning specified in Section 8.
|
(aa)
|
"
Performance Criteria
" means performance targets based on one or more of the following criteria (i) earnings including pre-tax income or after-tax income, operating income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or book value per share or net earnings; (ii) earnings per share (basic or diluted); (iii) operating profit; (iv) revenue, revenue growth or rate of revenue growth; (v) return on assets (gross or net), return on investment, return on capital (including return on total capital or return on invested capital), or return on equity; (vi) returns on sales or revenues; (vii) operating expenses; (viii) stock price appreciation or total shareholder return; (ix) cash flow (before or after dividends), free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, cash flow in excess of cost of capital or cash flow per share (before or after dividends); (x) implementation or completion of critical projects or processes; (xi) economic profit; (xii) cumulative earnings per share growth; (xiii) operating margin or profit margin (including any of the earnings measures described in clause (i) above as a percentage of revenues); (xiv) cost targets, reductions and savings, productivity and efficiencies; (xv) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation, information technology, and goals relating to acquisitions, divestitures, joint ventures and similar transactions, and budget comparisons; (xvi) personal professional objectives, including any of the foregoing performance targets, the implementation of policies and plans, the negotiation of transactions, the development of long term business goals, formation of joint ventures, research or development collaborations, and the completion of other corporate transactions; (xvii) improvement in or attainment of expense levels or working capital levels; or (xviii) any combination of, or a specified increase in, any of the foregoing. Where applicable, the performance targets may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company, a Subsidiary, or a division or strategic business unit of the Company or any Subsidiary, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee. The performance targets may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur). Each of the foregoing performance targets shall be determined in accordance with generally accepted accounting principles, if applicable, and shall be subject to certification by the Committee; provided that the Committee shall have the authority to exclude, impact of charges for restructurings, discontinued operations, extraordinary items and other unusual or non-recurring events and the cumulative effects of tax or accounting principles and identified in financial statements, notes to financial statements, management’s discussion and analysis or other SEC filings.
|
(ab)
|
“
Retirement
” means retirement as defined under any Company pension plan or retirement program or termination of one’s employment or service on retirement with the approval of the Committee.
|
(ac)
|
“
Share
” has the meaning specified in Section 4(a).
|
(ad)
|
“
SAR
” means an Award granted under the Plan that entitles the Participant to receive that number of Shares having a Fair Market Value equal to the excess of (i) the Fair Market Value of a specified number of Shares at the time of exercise, over (ii) an Exercise Price established by the Committee at the time of grant.
|
(ae)
|
“
Subsidiary
” means a corporation or other entity of which outstanding shares or ownership interests representing 50% or more of the combined voting power of such corporation or other entity entitled to elect the management thereof, or such lesser percentage as may be approved by the Committee, are owned directly or indirectly by the Company; provided, however, that for purpose of Incentive Stock Options, a “Subsidiary” will be limited to a corporation that is a subsidiary of the Company within the meaning of Section 424(f) of the Code.
|
(af)
|
“
Substitute Award
” means an Award of Shares issued by the Company in assumption of, or in substitution or exchange for, an award previously granted, or the right or obligation to make a future award, in all cases by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines. In no event shall the issuance of Substitute Awards change the terms of such previously granted awards such that the change, if applied to a current Award, would be prohibited under Section 6(e).
|
(ag)
|
“
Termination Date
” means the date on which a Participant both ceases to be an employee of the Company and the Subsidiaries and ceases to perform material services for the Company and the Subsidiaries, regardless of the reason for the cessation; provided, however, that a “Termination Date” shall not be considered to have occurred during the period in which the reason for the cessation of services is a leave of absence approved by the Company or the Subsidiary which was the recipient of the Participant’s services; and provided further that with respect to a Non-Employee Directors, “Termination Date” means the date on which the Non-Employee Director’s service as a Non-Employee Director terminates for any reason. The transfer of an employee from the Company to a Subsidiary, from a Subsidiary to the Company, or from one Subsidiary to another shall not be considered a termination of employment; nor shall it be considered a termination of employment if an employee is placed on military or sick leave or such other leave of absence which is considered by the Committee as continuing intact the employment relationship.
|
3.
|
Administration
.
|
(a)
|
Administration Generally
. The Plan shall be administered by the Committee; provided that the Board may, in its discretion, at any time and from time to time, resolve to administer the Plan, in which case the term “Committee” shall be deemed to mean the Board.
|
(b)
|
Rights and Powers of Committee
. Subject to the provisions of the Plan, the Committee shall be authorized to (i) select Eligible Individuals who will receive Awards under the Plan, (ii) determine the time, form and substance of Awards made under the Plan to each Participant, and the terms, conditions, performance targets, restrictions and other provisions applicable to any Award, (iii) certify that the conditions and restrictions applicable to any Award have been met, (iv) modify the terms of, cancel or suspend Awards made under the Plan, (v) conclusively interpret the Plan and Awards made thereunder, (vi) accelerate the vesting or exercisability of any Award, (vii) make any adjustments necessary or desirable in connection with Awards made under the Plan to Eligible Individuals located outside the United States, and (viii) adopt, amend, or rescind such rules and regulations relating the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan and to and make such all determinations, for carrying out the Plan as it may deem appropriate. Subject to the terms and conditions of the Plan, the Committee will have the authority and discretion to determine the extent to which Awards under the Plan will be structured to conform to the requirements for Performance-Based Compensation, and to take such actions, establish such procedures and impose such restrictions at the time such Awards are granted as the Committee determines to be necessary or appropriate to conform to such requirements. Without limiting the generality of the foregoing, it is the intention of the Company that, to the extent that any provisions of this Plan or any Awards granted hereunder are subject to Section 409A of the Code, the Plan and the Awards comply with the requirements of Section 409A of the Code and that the Plan and Awards be administered in accordance with such requirements and the Committee shall have the authority to amend any outstanding Awards to conform to the requirements of Section 409A.
|
(c)
|
Decisions Binding
. Decisions of the Committee on all matters relating to the Plan shall be in the Committee’s sole discretion and shall be conclusive and binding on all parties. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with applicable federal and state laws and rules and regulations promulgated pursuant thereto and the rules and regulations of the principal securities exchange on which the Common Stock is then listed for trading.
|
(d)
|
Delegation
. Except to the extent prohibited by applicable law or the rules of any stock exchange on which the Common Stock is listed, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.
|
(e)
|
Furnishing of Information
. The Company and its Subsidiaries shall furnish the Committee such data and information as may be required for it to discharge its duties. The records of the Company and the Subsidiaries as to an individual’s or Participant’s employment or provision of services, termination of employment or cessation of the provision of services, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee consider desirable to carry out the terms of the Plan.
|
(f)
|
Liability of Committee Members
. No member of the Committee and no officer of the Company shall be liable for any action taken or omitted to be taken by such member, by any other member of the Committee or by any officer of the Company in connection with the performance of duties under the Plan, except for such person’s own willful misconduct or as expressly provided by statute. The Committee, the individual members thereof, and persons acting as the authorized delegates of the Committee under the Plan, shall be indemnified by the Company against any and all liabilities, losses, costs and expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Committee or its members or authorized delegates by reason of the performance of a Committee function if the Committee or its members or authorized delegates did not act dishonestly or in willful violation of the law or regulation under which such liability, loss, cost or expense arises. This indemnification shall not duplicate but may supplement any coverage available under any applicable insurance.
|
(g)
|
Expenses and Funding
. The expenses of the Plan shall be borne by the Company. The Plan shall not be required to establish any special or separate fund or make any other segregation of assets to assume the payment of any award under the Plan.
|
4.
|
Shares Reserved and Limitations
.
|
(a)
|
Generally
. Subject to adjustments as provided in Section 4(d), an aggregate of [10,550,000] shares of Common Stock (the “Shares”) may be issued pursuant to the Plan. Such Shares may be in whole or in part authorized and unissued or held by the Company as treasury shares. If any grant under the Plan expires or terminates unexercised, becomes unexercisable or is forfeited as to any Shares, then such unpurchased or forfeited Shares shall thereafter be available for further grants under the Plan. Substitute Awards shall not reduce the number of Shares that may be issued under the Plan or that may be covered by Awards granted to any one Participant during any period pursuant to Section 4(b).
|
(b)
|
Limitations
.
|
(i)
|
Incentive Stock Options
. Subject to the terms and conditions of the Plan, the maximum number of Shares that may be delivered to Participants and their Beneficiaries with respect to Incentive Stock Options under the Plan shall be [10,550,000]; provided, however, that to the extent that shares not delivered must be counted against this limit as a condition of satisfying the rules applicable to Incentive Stock Options, such rules shall apply to the limit on Incentive Stock Options granted under the Plan.
|
(ii)
|
Limits on Options and SARs
. The maximum number of Shares that may be covered by Awards granted to any one Participant during any one calendar-year period pursuant to Section 6 (relating to Options and SARs) shall not exceed 400,000. For purposes of this Section 4(b)(ii), if an Option is in tandem with an SAR, such that the exercise of the Option or SAR with respect to a share of Common Stock cancels the tandem SAR or Option right, respectively, with respect to such share, the tandem Option and SAR rights with respect to each share of Common Stock shall be counted as covering only one share of Stock for purposes of applying the limitations of this Section 4(b)(ii).
|
(iii)
|
Limits on Full Value Awards
. For Full Value Awards that are intended to be Performance-Based Compensation, no more than 400,000 Shares may be delivered pursuant to such Awards granted to any one Participant during any one calendar‑year period (regardless of whether settlement of the Award is to occur prior to, at the time of, or after the time of vesting); provided that Awards described in this Section 4(b)(iii) shall be subject to the following:
|
(A)
|
If the Awards are denominated in Shares but an equivalent amount of cash is delivered in lieu of delivery of Shares, the foregoing limit shall be applied based on the methodology used by the Committee to convert the number of Shares into cash.
|
(B)
|
If delivery of Shares or cash is deferred until after the Shares have been earned, any adjustment in the amount delivered to reflect actual or deemed investment experience after the date the Stock is earned shall be disregarded.
|
(iv)
|
Limits on Cash Incentive Awards
. For Cash Incentive Awards that are intended to be Performance-Based Compensation, the maximum amount payable to any Participant with respect to any twelve month performance period shall equal $5,500,000.00 (pro rated for performance periods that are greater or lesser than twelve months); provided that Awards described in this Section 4(b)(iv), shall be subject to the following:
|
(A)
|
If the Awards are denominated in cash but an equivalent amount of Common Stock is delivered in lieu of delivery of cash, the foregoing limit shall be applied to the cash based on the methodology used by the Committee to convert the cash into Common Stock.
|
(B)
|
If delivery of Common Stock or cash is deferred until after cash has been earned, any adjustment in the amount delivered to reflect actual or deemed investment experience after the date the cash is earned shall be disregarded.
|
(c)
|
Form of Award
. To the extent provided by the Committee, any Award may be settled in cash rather than in Shares.
|
(d)
|
Adjustments
. In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, distribution of assets, or any other change in the corporate structure or shares of the Company, the Committee shall, in its sole discretion (i) adjust in the number and kind of shares or other property available for issuance under the Plan (including, without limitation, the total number of Shares available for issuance under the Plan pursuant to Section 4(a) and 4(b), including number of shares that may be delivered to an individual during any specified time as described in Section 4(b)), (ii) adjust the number and kind of shares or other property subject to outstanding Awards under the Plan, (iii) adjust the Exercise Price of outstanding Options and SARs, and (iv) make any other adjustments that the Committee determines to be equitable (which may include, without limitation, (A) replacement of Awards with other awards which the Committee determines have comparable value and which are based on stock of a company resulting from the transaction, and (B) cancellation of the Award in return for cash payment of the current value of the Award, determined as though the Award is fully vested at the time of payment, provided that in the case of an Option or SAR, the amount of such payment may be the excess of value of the shares of Common Stock subject to the Option or SAR at the time of the transaction over the Exercise Price (or for no consideration if the Exercise Price exceeds the value of the Shares); provided, however, that the Committee shall not be required to make any adjustment that would (I) require the inclusion of any compensation deferred pursuant to provisions of the Plan (or an award thereunder) in a Participant’s gross income pursuant to Section 409A of the Code and the regulations issued thereunder from time to time and/or (II) cause any award made pursuant to the Plan to be treated as providing for the deferral of compensation pursuant to such Code section and regulations. Any such adjustment shall be final, conclusive and binding for all purposes of the Plan. In the event of any merger, consolidation or other reorganization in which the Company is not the surviving or continuing corporation or in which a Change in Control is to occur, all of the Company’s obligations regarding Awards that are outstanding on the date of such event shall, on such terms as may be approved by the Committee prior to such event, be (1) canceled in exchange for cash or other property or (2) assumed by the surviving or continuing corporation
|
5.
|
Participation
.
|
6.
|
Options and SARs
.
|
(a)
|
Exercise Price
. The “Exercise Price” per Share of an Option or SAR shall be established at the time of grant; provided, however, that in no event shall the Exercise Price be less than 100% of the Fair Market Value of a share of Common Stock as of the date of grant (or, if greater, par value). In the case of the grant of any Incentive Stock Option to an employee who, at the time of the grant, owns more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, the Exercise Price
|
(b)
|
Exercise and Vesting
. The terms and conditions relating to exercise and vesting of an Option or SAR shall be established by the Committee to the extent not inconsistent with the Plan. No Option or SAR may be exercised prior to the date on which it is exercisable (or vested) or after the Expiration Date thereof and no SAR may be exercised unless, on the date of exercise, the Fair Market Value of a Share exceeds the Exercise Price.
|
(i)
|
Special Exercise Rules
. Unless otherwise provided by the Committee:
|
(A)
|
If a Participant’s Termination Date occurs due to death or Disability, all of the Participant’s Options and SARs shall become fully vested and exercisable as of the Participant’s Termination Date.
|
(B)
|
If there is a Change in Control of the Company and a Participant’s Termination Date occurs on or within one year after such Change in Control by reason of termination by the Participant for Good Reason or by Company other than for Cause, all of the Participant’s Options and SARs shall become fully vested and exercisable upon the Termination Date.
|
(C)
|
If a Participant’s Termination Date occurs for any reason other than death or Disability (including Retirement) or by reason of a termination on or following a Change in Control as described in Section 6(b)(i)(B)), all of the Participant’s Options and SARs that were not exercisable on the Termination Date shall be forfeited immediately upon the Termination Date.
|
(ii)
|
Method of Exercise
. Options may be exercised, in whole or in part, upon payment of the Exercise Price of the Shares to be acquired in accordance with procedures established by the Committee. An SAR shall be exercised upon notification by the Participant to the Company in accordance with procedures established by the Committee; provided, however, that all SARs will be exercised automatically on the last day prior to the Expiration Date of the SAR so long as the Fair Market Value of a Share on that date exceeds the Exercise Price of the SAR.
|
(iii)
|
Payment of Exercise Price
. Subject to the following provisions of this Section 6(b)(iii), the full Exercise Price of each Share purchased upon exercise of an Option shall be paid at the time of exercise. Payment of the Exercise Price shall be made (A) in cash (including check, bank draft, money order or wire transfer of immediately available funds), (B) by delivery of outstanding shares of Common Stock with a Fair Market Value on the date of exercise equal to the aggregate Exercise Price payable with respect to the Options’ exercise, (C) by simultaneous sale through a broker reasonably acceptable to the Committee of Shares acquired on exercise, as permitted under Regulation T of the Federal Reserve Board, or (D) by any combination of the foregoing.
|
(iv)
|
Payment of Exercise Price with Shares
. In the event a Participant elects to pay the Exercise Price payable with respect to an Option pursuant to Section 6(b)(iii)(B) above (relating to delivery of Common Stock), (A) only a whole number of share(s) of Common Stock (and not fractional shares of Common Stock) may be tendered in payment, (B) the Participant must present evidence acceptable to the Company that he or she has owned any such shares of Common Stock tendered in payment of the Exercise Price (and that such tendered shares of Common Stock have not been subject to any substantial risk of forfeiture) for at least six months prior to the date of exercise, and (C) Common Stock must be delivered to the Company. Delivery for this purpose may, at the election of the Participant, be made either by (I) physical delivery of the certificate(s) for all such shares of Common Stock tendered in payment of the price, accompanied by duly executed instruments of transfer in a form acceptable to the Company, or (II) direction to the Participant’s broker to transfer, by book entry, such shares of Common Stock from a brokerage account of the Participant to a brokerage account specified by the Company. When payment of the Exercise Price is made by delivery of Common Stock, the difference, if any, between the aggregate Exercise Price payable with respect to the Option being exercised and the Fair Market Value of the shares of Common Stock tendered in payment (plus any applicable taxes) shall be paid in cash. No Participant may tender shares of Common Stock having a Fair Market Value exceeding the aggregate Exercise Price payable with respect to the Option being exercised (plus any applicable taxes).
|
(c)
|
Expiration Date
. The “Expiration Date” with respect to an Option or SAR means the date established as the Expiration Date by the Committee at the time of the grant (as the same may be modified in accordance with the terms of the Plan); provided, however, that unless determined otherwise by the Committee, the Expiration Date with respect to any Option or SAR
shall not be later than the earliest to occur of:
|
(i)
|
the ten-year anniversary of the date on which the Option or SAR
is granted;
|
(ii)
|
if the Participant’s Termination Date occurs by reason of death or Disability, 180 days after the Termination Date;
|
(iii)
|
if the Participant’s Termination Date occurs on or within one year following a Change in Control by reason of termination by the Participant for Good Reason or by the Company for reasons other than for Cause, the first anniversary of the Termination Date;
|
(iv)
|
if the Participant’s Termination Date occurs by reason of Retirement or for any reason other than death, Disability or termination for Cause, 90 days after the Termination Date provided that the Participant does not engage in Competition during such 90-day period unless he or she receives written consent to do so from the Board or the Committee; and
|
(v)
|
if the Participant’s Termination Date occurs for reasons of Cause, the day preceding the Termination Date.
|
(d)
|
Limitations on Incentive Stock Options
. If required by the Code, the aggregate Fair Market Value (determined as of the grant date) of Shares for which an Incentive Stock Option is exercisable for the first time during any calendar year under all equity incentive plans of the Company and its Subsidiaries (as defined in Section 422 of the Code or any successor thereto) may not exceed $100,000.
|
(e)
|
No Repricing
. Except for either adjustments pursuant to Section 4(d) (relating to the adjustment of Shares), or reductions of the Exercise Price approved by the Company’s stockholders, the Exercise Price for any outstanding Option or SAR
may not be decreased after the date of grant nor may an outstanding Option or SAR
granted under the Plan be surrendered to the Company as consideration for the grant of a replacement Option or SAR
with a lower Exercise Price. Except as approved by the Company’s stockholders, in no event shall any Option or SAR granted under the Plan be surrendered to the Company in consideration for a cash payment if, at the time of such surrender, the Exercise Price of the Option or SAR is greater than the then current Fair Market Value of a share of Common Stock. In addition, no repricing of an Option or SAR shall be permitted without the approval of the Company’s stockholders if such approval is required under the rules of any stock exchange on which Common Stock is listed.
|
7.
|
Full Value Awards
.
|
(a)
|
Definitions
.
|
(i)
|
Full Value Award
. A “Full Value Award” is a grant of one or more shares of Common Stock or a right to receive one or more shares of Common Stock in the future (including restricted stock, restricted stock units, deferred stock units, performance stock and performance stock units). Such grants may be subject to one or more of the following, as determined by the Committee:
|
(A)
|
The grant may be in consideration of a Participant’s previously performed services or surrender of other compensation that may be due.
|
(B)
|
The grant may be contingent on the achievement of performance or other objectives (including completion of service) during a specified period.
|
(C)
|
The grant may be subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or more goals relating to completion of service by the Participant or achievement of performance or other objectives.
|
(ii)
|
Cash Incentive Award
. A “Cash Incentive Award” is the grant of a right to receive a payment of cash (or in the discretion of the Committee, shares of Common Stock having value equivalent to the cash otherwise payable) that is contingent on achievement of performance objectives over a specified period established by the Committee. The grant of Cash Incentive Awards may also be subject to such other conditions, restrictions and contingencies, as determined by the Committee, including provisions relating to deferred payment.
|
(b)
|
Special Vesting Rules
. Except for (i) awards granted in lieu of other compensation, and (ii) grants that are a form of payment of earned performance awards or other incentive compensation, if an employee’s right to become vested in a Full Value Award is conditioned on the completion of a specified period of service with Company or the Subsidiaries, without achievement of performance targets or other performance objectives (whether or not related to performance measures) being required as a condition of vesting, then the required period of service for full vesting shall be not less than three years (subject, to the extent provided by the Committee, to pro rated vesting over the course of such three year period and to acceleration of vesting in the
|
8.
|
Performance-Based Compensation
.
|
(a)
|
Establishment of Performance Targets
. The performance targets established for the performance period established by the Committee shall be objective (as that term is described in regulations under Section 162(m) of the Code), and shall be established in writing by the Committee not later than 90 days after the beginning of the performance period (but in no event after 25% of the performance period has elapsed), and while the outcome as to the performance targets is substantially uncertain. The performance targets established by the Committee may be with respect to corporate performance, operating group or sub-group performance, individual company performance, other group or individual performance, or division performance, and shall be based on one or more of the Performance Criteria.
|
(b)
|
Committee Certification Required
. A Participant otherwise entitled to receive a Full Value Award or Cash Incentive Award for any performance period shall not receive a settlement or payment of the Award until the Committee has determined that the applicable performance target(s) have been attained. To the extent that the Committee exercises discretion in making the determination required by this Section 8(b), such exercise of discretion may not result in an increase in the amount of the payment.
|
(c)
|
Termination Prior to End of Performance Period
. If a Participant's employment terminates because of death or Disability, or if a Change in Control occurs prior to the Participant's Termination Date, the Participant's Full Value Award or Cash Incentive Award may, to the extent provided by the Committee, become vested without regard to whether the Full Value Award or Cash Incentive Award would be Performance-Based Compensation.
|
9.
|
Withholding Taxes
.
|
10.
|
Written Agreement
.
|
11.
|
Transferability
.
|
12.
|
Listing, Registration, Restrictions and Certification
.
|
13.
|
Liability for Cash Payments
.
|
14.
|
Notices
.
|
15.
|
Form and Time of Elections
.
|
16.
|
Amendment and Termination of the Plan
.
|
17.
|
Effective Date and Termination Date
.
|
18.
|
Severability
.
|
19.
|
Governing Law
.
|
|
Year Ended December 31
|
|
|||||||||||||
Amounts in millions, except ratios
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
|||||
Ratio of Earnings to Fixed Charges
|
6.5
|
|
x
|
6.7
|
|
x
|
6.1
|
|
x
|
6.4
|
|
x
|
4.0
|
|
x
|
|
Year Ended December 31,
|
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
||||||||||
Earnings
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before taxes
|
$
|
688.5
|
|
|
$
|
664.5
|
|
|
$
|
614.3
|
|
|
$
|
423.6
|
|
|
$
|
244.8
|
|
|
Add: Fixed charges
|
123.7
|
|
|
116.8
|
|
|
119.7
|
|
|
78.7
|
|
|
80.2
|
|
|
|||||
Subtotal
|
812.2
|
|
|
781.3
|
|
|
734.0
|
|
|
502.3
|
|
|
325.0
|
|
|
|||||
Less: Capitalized interest
|
(2.5
|
)
|
|
(2.0
|
)
|
|
(2.8
|
)
|
|
(1.7
|
)
|
|
(0.8
|
)
|
|
|||||
Total
|
$
|
809.7
|
|
|
$
|
779.3
|
|
|
$
|
731.2
|
|
|
$
|
500.6
|
|
|
$
|
324.2
|
|
|
Fixed Charges
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
$
|
91.8
|
|
|
$
|
85.5
|
|
|
$
|
88.4
|
|
|
$
|
58.3
|
|
|
$
|
62.9
|
|
|
Capitalized interest
|
2.5
|
|
|
2.0
|
|
|
2.8
|
|
|
1.7
|
|
|
0.8
|
|
|
|||||
Interest portion of rent expense (1)
|
29.4
|
|
|
29.3
|
|
|
28.5
|
|
|
18.7
|
|
|
16.5
|
|
|
|||||
Total
|
$
|
123.7
|
|
|
$
|
116.8
|
|
|
$
|
119.7
|
|
|
$
|
78.7
|
|
|
$
|
80.2
|
|
|
Ratio of Earnings to Fixed Charges
|
6.5
|
|
x
|
6.7
|
|
x
|
6.1
|
|
x
|
6.4
|
|
x
|
4.0
|
|
x
|
(1)
|
The interest portion of rent expense represents the estimated interest component of such rental payments.
|
|
State or Other Jurisdiction of
Incorporation or Organization
|
||||||||||
Packaging Corporation of America (100%)
|
Delaware
|
||||||||||
|
|
||||||||||
|
PCA Corrugated and Display, LLC (100%)
|
Delaware
|
|||||||||
|
Polywoven Distributors PA, LLC (51%)
|
Pennsylvania
|
|||||||||
|
|
||||||||||
|
PCA International Inc. (100%)
|
Delaware
|
|||||||||
|
PCA International Services, LLC (100%)
|
Delaware
|
|||||||||
|
|
||||||||||
|
PCA Hydro Inc. (100%)
|
Delaware
|
|||||||||
|
|
||||||||||
|
Packaging Corporation of Asia, Limited (100%)
|
Hong Kong
|
|||||||||
|
|
||||||||||
|
PCA Southern Indiana Corrugated, LLC (100%)
|
Delaware
|
|||||||||
|
|
||||||||||
|
Boise Inc. (100%)
|
Delaware
|
|||||||||
|
Boise Paper Holdings, LLC (100%)
|
Delaware
|
|||||||||
|
Boise Packaging & Newsprint, LLC (100%)
|
Delaware
|
|||||||||
|
Boise Packaging Holdings Corp. (100%)
|
Delaware
|
|||||||||
|
Hexacomb Corporation (100%)
|
Illinois
|
|||||||||
|
Hexacomb Canada Holdings Corporation (100%)
|
Canada
|
|||||||||
|
Hexacomb Canada Corporation (100%)
|
Canada
|
|||||||||
|
Louisiana Timber Procurement Company, LLC (50%)
|
Delaware
|
|||||||||
|
Boise White Paper, LLC (100%)
|
Delaware
|
|||||||||
|
International Falls Power Company (100%)
|
Delaware
|
|||||||||
|
Minnesota, Dakota & Western Railway Company (100%)
|
Minnesota
|
|||||||||
|
B C T, Incorporated (100%)
|
Delaware
|
*
|
The names of some of our foreign subsidiaries have been omitted. These unnamed subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary, as defined in Regulation S-X, Rule 1-02(w).
|
|
|
/s/ MARK W. KOWLZAN
|
|
|
Mark W. Kowlzan
Chairman of the Board and Chief Executive Officer
|
|
|
/s/ ROBERT P. MUNDY
|
|
|
Robert P. Mundy
Senior Vice President and Chief Financial Officer
|
|
|
/s/ M
ARK
W. K
OWLZAN
|
|
|
Mark W. Kowlzan
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Chairman of the Board and Chief Executive Officer
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/s/ R
OBERT P. MUNDY
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Robert P. Mundy
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Senior Vice President and Chief Financial Officer
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