# UNITED	STATES	SECURITIES	AND	EXCHANGE	COMMISSION

# ANNUAL	REPORT	PURSUANT	TO	SECTION	13	OR	15(d)

# OF	THE	SECURITIES	EXCHANGE	ACT	OF	1934

# For	the	fiscal	year	ended	December	31,	2013

# Commission	file	number	1-15399

(Exact	Name	of	Registrant	as	Specified	in	its	Charter)

Delaware

(State	or	Other	Jurisdiction	of 	Incorporation	or	Organization)

1955	West	Field	Court,	Lake	Forest,	Illinois

(Address	of	Prinicpal	Executive	Offices)

(I.R.S.	Employer	Identification	No.)

(Zip	Code)

Registrant's	telephone	number,	including	area	code

Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Title	of	Each	Class

Common	Stock,	$0.01	par	value

Name	of	Each	Exchange	On	Which	Registered

# New	York	Stock	Exchange

# Securities	registered	pursuant	to	Section	12(g)	of	the	Act:

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.

Indicate	by	check	mark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.

Indicate	by	check	mark	whether	the	registrant	(1)	has	filed	all	reports	required	to	be	filed	by	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	during	the	preceding 12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	file	such	reports),	and	(2)	has	been	subject	to	such	filing	requirements	for	the	past	90	days.		Yes	þ	No	¨

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	Web	site,	if	any,	every	Interactive	Data	File	required	to	be	submitted and	posted	pursuant	to	Rule	405	of	Regulation	S-T	(§232.405	of	this	chapter)	during	the	preceding	12	months	(or	for	such	shorter	period	that	the	registrant	was	required	to	submit	and post	such	files).	Yes	þ	No	¨

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	(§229.405	of	this	chapter)	is	not	contained	herein,	and	will	not	be contained,	to	the	best	of	registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form 10-K.	þ

Indicate	by	check	mark	whether	the	registrant	is	a	large	accelerated	filer,	an	accelerated	filer,	a	non-accelerated	filer,	or	a	smaller	reporting	company.	See	the	definitions	of "large	accelerated	filer,"	"accelerated	filer,"	and	"smaller	reporting	company"	in	Rule	12b-2	of	the	Exchange	Act.	(Check	one):

Large	accelerated	filer	þ	Accelerated	filer	¨	Non-accelerated	filer	¨	Smaller	reporting	company	¨

(Do	not	check	if	a	smaller	reporting	company)

Indicate	by	check	mark	whether	the	registrant	is	a	shell	company	(as	defined	in	Rule	12b-2	of	the	Exchange	Act).	Yes	¨	No	þ

At	June	30,	2013,	the	last	day	of	the	Registrant's	most	recently	completed	second	fiscal	quarter,	the	aggregate	market	value	of	Registrant's	common	equity	held	by	non- affiliates	was	approximately	$4,735,149,656	based	upon	the	closing	sale	price	as	reported	on	the	New	York	Stock	Exchange.	This	calculation	of	market	value	has	been	made	for	the purposes	of	this	report	only	and	should	not	be	considered	as	an	admission	or	conclusion	by	the	Registrant	that	any	person	is	in	fact	an	affiliate	of	the	Registrant.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Specified	portions	of	the	Proxy	Statement	for	the	Registrant's	2014	Annual	Meeting	of	Stockholders	are	incorporated	by	reference	to	the	extent	indicated	in	Part	III	of	this

# Table	of	Contents

# PART	I

|  | Table	of	Contents<br>PART	I |  |
| :--- | :--- | :--- |
| Item\t1. | Business | 1 |
|  | Packaging | 2 |
|  | Paper | 5 |
|  | Corporate\tand\tOther | 7 |
|  | Employees | 7 |
|  | Environmental\tMatters | 7 |
|  | Executive\tOfficers\tof\tthe\tRegistrant | 7 |
| Item\t1A. | Risk\tFactors | 8 |
| Item\t1B. | Unresolved\tStaff\tComments | 11 |
| Item\t2. | Properties | 12 |
| Item\t3. | Legal\tProceedings | 12 |
| Item\t4. | Mine\tSafety\tDisclosure | 12 |
|  | PART\tII |  |
| Item\t5. | Market\tfor\tRegistrant's\tCommon\tEquity,\tRelated\tStockholder\tMatters,\tand\tIssuer\tPurchases\tof\tEquity\tSecurities | 13 |
| Item\t6. | Selected\tFinancial\tData | 16 |
| Item\t7. | Management's\tDiscussion\tand\tAnalysis\tof\tFinancial\tCondition\tand\tResults\tof\tOperations | 17 |
|  | Overview | 17 |
|  | Executive\tSummary | 18 |
|  | Results\tof\tOperations | 20 |
|  | Liquidity\tand\tCapital\tResources | 23 |
|  | Commitments | 27 |
|  | Off-Balance-Sheet\tActivities | 28 |
|  | Environmental\tMatters | 28 |
|  | Critical\tAccounting\tEstimates | 29 |
|  | New\tand\tRecently\tAdopted\tAccounting\tStandards | 32 |
|  | Reconciliations\tof\tNon-GAAP\tFinancial\tMeasures\tto\tReported\tAmounts | 33 |
| Item\t7A. | Quantitative\tand\tQualitative\tDisclosures\tAbout\tMarket\tRisk | 34 |
| Item\t8. | Financial\tStatements\tand\tSupplementary\tData | 35 |
| Item\t9. | Changes\tIn\tand\tDisagreements\tWith\tAccountants\ton\tAccounting\tand\tFinancial\tDisclosure | 78 |
| Item\t9A. | Controls\tand\tProcedures | 78 |
| Item\t9B. | Other\tInformation | 79 |
|  | PART\tIII |  |
| Item\t10. | Directors,\tExecutive\tOfficers,\tand\tCorporate\tGovernance | 80 |
| Item\t11. | Executive\tCompensation | 80 |
| Item\t12. | Security\tOwnership\tof\tCertain\tBeneficial\tOwners\tand\tManagement\tand\tRelated\tStockholder\tMatters | 80 |
| Item\t13. | Certain\tRelationships\tand\tRelated\tTransactions,\tand\tDirector\tIndependence | 81 |
| Item\t14. | Principal\tAccounting\tFees\tand\tServices | 81 |

# PART	IV

| Item	15. | Exhibits,	Financial	Statement	Schedules | 82 |
| :--- | :--- | :--- |
|  | Signatures | 86 |

# Item	1. BUSINESS

Packaging	Corporation	of	America	("we",	"us",	"our",	"PCA"	or	the	"Company")	is	the	fourth	largest	producer	of	containerboard	in	the	United	States,	based on	production	capacity.	We	are	headquartered	in	Lake	Forest,	Illinois	and	have	approximately	13,600	employees.	We	operate	primarily	in	the	United	States	and	have some	converting	operations	in	Europe,	Mexico,	and	Canada.

On	October	25,	2013,	PCA	acquired	Boise	Inc.	("Boise")	for	$2.1	billion,	including	the	fair	value	of	assumed	debt.	The	acquisition	expands	PCA's	corrugated products	geographic	reach	and	offerings,	provides	additional	containerboard	capacity	for	continued	growth	in	the	packaging	business,	and	provides	meaningful opportunities	in	the	white	paper	business	as	the	third	largest	producer	of	white	papers	in	North	America	in	terms	of	production	capacity.	Boise's	results	are	included	in our	results	for	the	period	of	October	25,	2013,	through	December	31,	2013.	We	historically	reported	our	financial	information	in	one	reportable	segment.	After	the acquisition,	we	began	reporting	in	three	reportable	segments:	Packaging,	Paper,	and	Corporate	and	Other.	We	present	information	pertaining	to	each	of	our	segments	and the	geographic	areas	in	which	they	operate	in	Note	19,	Segment	Information,	of	the	Notes	to	Consolidated	Financial	Statements	in	"Part	II,	Item	8.	Financial	Statements and	Supplementary	Data"	of	this	Form	10-K.	For	more	information	about	our	acquisition	of	Boise,	see	Note	3,	Acquisitions,	and	Note	8,	Debt,	of	the	Notes	to Consolidated	Financial	Statements.

# Production	and	Shipments

The	following	table	summarizes	the	Packaging	segment's	containerboard	production	and	corrugated	products	shipments	and	the	Paper	segment's	production,	including Boise	Inc.	Boise's	historical	data	for	periods	prior	to	the	acquisition	on	October	25,	2013,	are	included	for	comparative	purposes	only,	and	are	not	included	in	PCA's historical	results.

|  |  |  | First	Quarter | Second	Quarter | Third	Quarter | Fourth	Quarter<br>(a) | Full	Year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Containerboard\tProduction | PCA | 2013 | 646 | 629 | 671 | 803 | 2,749 |
| (thousand\ttons) |  | 2012 | 640 | 638 | 670 | 652 | 2,600 |
|  | Boise | 2013 | 171 | 188 | 196 | 50 | 605 |
|  |  | 2012 | 186 | 180 | 189 | 193 | 748 |
| Corrugated\tShipments\t(BSF) | PCA | 2013 | 8.8 | 9.4 | 9.3 | 10.9 | 38.4 |
|  |  | 2012 | 8.5 | 8.8 | 8.6 | 8.8 | 34.7 |
|  | Boise | 2013 | 2.4 | 2.5 | 2.4 | 0.7 | 8.0 |
|  |  | 2012 | 2.3 | 2.4 | 2.5 | 2.4 | 9.6 |
| Newsprint\tProduction | PCA | 2013 | — | — | — | 44 | 44 |
| (thousand\ttons) | Boise | 2013 | 53 | 58 | 60 | 15 | 186 |
|  |  | 2012 | 55 | 58 | 60 | 60 | 233 |
| White\tPaper\t(UFS)\tProduction | PCA | 2013 | — | — | — | 208 | 208 |
| (thousand\ttons) | Boise | 2013 | 303 | 301 | 323 | 76 | 1,003 |
|  |  | 2012 | 320 | 313 | 323 | 293 | 1,249 |
| Market\tPulp\tProduction | PCA | 2013 | — | — | — | 20 | 20 |
| (thousand\ttons) | Boise | 2013 | 24 | 24 | 29 | 5 | 82 |
|  |  | 2012 | 39 | 30 | 26 | 25 | 120 |

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

Below	is	a	map	of	our	locations	following	the	acquisition:

# Packaging

# Packaging	Products

Our	corrugated	products	manufacturing	plants	produce	a	wide	variety	of	corrugated	packaging	products,	including	conventional	shipping	containers	used	to protect	and	transport	manufactured	goods,	multi-color	boxes	and	displays	with	strong	visual	appeal	that	help	to	merchandise	the	packaged	product	in	retail	locations.	In addition,	we	are	a	large	producer	of	packaging	for	meat,	fresh	fruit	and	vegetables,	processed	food,	beverages,	and	other	industrial	and	consumer	products.

During	the	year	ended	December	31,	2013,	our	Packaging	segment	produced	2.7	million	tons	of	containerboard	at	our	mills.	Our	corrugated	products manufacturing	plants	sold	about	38.4	billion	square	feet	(BSF)	of	corrugated	products.	Our	net	sales	to	third	parties	totaled	$3.7	billion	in	2013.

After	the	acquisition	of	Boise,	we	are	also	a	producer	of	newsprint	with	one	machine	located	at	our	DeRidder,	Louisiana,	mill.	We	sell	primarily	to	newspaper publishers	in	the	southern	and	southwestern	United	States.	Newsprint	operations	are	reported	in	the	Packaging	segment.

# Facilities

We	manufacture	our	Packaging	products	at	five	containerboard	mills,	one	containerboard	machine	at	our	Wallula,	Washington,	white	paper	mill,	corrugated manufacturing	operations,	protective	packaging	operations,	and	one	newsprint	machine.	The	following	paragraphs	describe	the	mills	at	which	we	produce containerboard:

Counce.				Our	Counce,	Tennessee,	mill	is	one	of	the	largest	kraft	linerboard	mills	in	the	United	States.	Its	year-end	2013	annual	estimated	production	capacity,	as reported	to	the	American	Forest	and	Paper	Association	("AF&PA"),	was	1,065,000	tons.	In	2013,	the	mill	produced	1,063,000	tons	of	kraft	linerboard	on	two	paper machines.	The	mill	can	produce	a	broad	range	of	basis	weights	from	26	lb.	to	90	lb.	The	mill	also	produces	a	variety	of	performance	and	specialty	grades	of	linerboard.

DeRidder.	We	acquired	the	DeRidder,	Louisiana,	mill	in	the	acquisition	of	Boise.	It	is	a	mill	that	produces	both	linerboard	and	newsprint	on	two	paper	machines. Its	year-end	2013	annual	estimated	production	capacity,	as	reported	to	the	AF&PA,	was	610,000	tons	of	linerboard	and	230,000	tons	of	newsprint.	During	the	twelve months	of	2013,	it	produced	607,000	tons	of	linerboard	and	230,000	tons	of	newsprint.	DeRidder's	linerboard	machine	can	produce	a	broad	range	of	basis	weights	from 26	lb.	to	69	lb.

Valdosta.				Our	Valdosta,	Georgia,	mill	is	a	kraft	linerboard	mill.	Its	year-end	2013	annual	estimated	production	capacity,	as	reported	to	the	AF&PA,	was	560,000 tons.	In	2013,	our	single	paper	machine	at	Valdosta	produced	557,000	tons	of	kraft	linerboard.	The	mill	can	produce	a	range	of	basis	weights	from	35	lb.	to	96	lb.

Tomahawk.				Our	Tomahawk,	Wisconsin,	mill	is	one	of	the	largest	semi-chemical	corrugating	medium	mills	in	the	United	States.	Its	year-end	2013	annual estimated	production	capacity,	as	reported	to	the	AF&PA,	was	550,000	tons.	In	2013,	the	mill	produced	547,000	tons	of	semi-chemical	corrugating	medium	on	two paper	machines.	The	Tomahawk	mill	can	produce	a	broad	range	of	basis	weights	from	23	lb.	to	47	lb.	and	a	variety	of	performance	and	specialty	grades	of	corrugating medium.

Filer	City.				Our	Filer	City,	Michigan,	mill	is	a	semi-chemical	corrugating	medium	mill.	Its	year-end	2013	annual	estimated	production	capacity	on	three	paper machines,	as	reported	to	the	AF&PA	was	445,000	tons.	In	2013,	the	mill	produced	441,000	tons	of	corrugating	medium	on	three	paper	machines	at	Filer	City.	Filer	City can	produce	corrugating	medium	grades	ranging	in	basis	weight	from	20	lb.	to	47	lb.

Wallula.	We	acquired	the	Wallula,	Washington,	mill	with	the	acquisition	of	Boise.	It	is	primarily	a	white	paper	mill,	but	also	produces	corrugating	medium	on	one of	its	paper	machines.	Its	year-end	2013	annual	estimated	production	capacity	of	medium,	as	reported	to	the	AF&PA	was	140,000	tons.	During	the	twelve	months	of 2013,	the	mill	produced	139,000	tons	of	corrugating	medium.	Wallula	can	produce	corrugating	medium	grades	ranging	in	basis	weight	from	23	lb.	to	38	lb.

We	operate	98	corrugated	manufacturing	operations,	a	technical	and	development	center,	eight	regional	design	centers,	a	rotogravure	printing	operation,	and	a complement	of	packaging	supplies	and	distribution	centers.	Of	the	98	manufacturing	facilities,	64	operate	as	combining	operations,	commonly	called	corrugated	plants, which	manufacture	corrugated	sheets	and	finished	corrugated	containers,	33	are	sheet	plants	which	procure	combined	sheets	and	manufacture	finished	corrugated containers,	and	one	is	a	corrugated	sheet-only	manufacturer.

We	have	corrugated	manufacturing	operations	in	32	states	in	the	U.S.	We	also	have	converting	operations	outside	of	the	continental	U.S.,	including	three facilities	in	Europe,	two	in	Mexico,	and	one	in	Canada.

Corrugated	products	plants	tend	to	be	located	in	close	proximity	to	customers	to	minimize	freight	costs.	The	U.S.	corrugated	products	industry	consists	of approximately	570	companies	and	1,240	plants.	Each	of	our	plants	serve	a	market	radius	of	around	150	miles.	Our	sheet	plants	are	generally	located	in	close	proximity to	our	larger	corrugated	plants,	which	enables	us	to	offer	additional	services	and	converting	capabilities	such	as	small	volume	and	quick	turnaround	items.	We	produce	a wide	variety	of	products	ranging	from	basic	corrugated	shipping	containers	to	specialized	packaging	such	as	wax-coated	boxes	for	the	agriculture	industry.	We	also	have multi-color	printing	capabilities	to	make	high-impact	graphics	boxes	and	displays	that	offer	customers	more	attractive	packaging.

# Major	Raw	Materials	Used

Fiber	supply.				Fiber	is	the	single	largest	cost	to	manufacture	containerboard.	We	consume	both	wood	fiber	and	recycled	fiber	in	our	containerboard	mills.	We have	no	100%	recycled	mills,	or	mills	whose	fiber	consumption	consists	solely	of	recycled	fiber.	To	reduce	our	fiber	costs,	we	have	invested	in	processes	and	equipment to	ensure	a	high	degree	of	fiber	flexibility.	Our	mill	system	has	the	capability	to	shift	a	portion	of	its	fiber	consumption	between	softwood,	hardwood,	and	recycled sources.	All	of	our	mills,	other	than	the	Valdosta	mill,	can	utilize	some	recycled	fiber	in	their	containerboard	production.	Our	ability	to	use	various	types	of	virgin	and recycled	fiber	helps	mitigate	the	impact	of	changes	in	the	prices	of	various	fibers.	Our	corrugated	manufacturing	operations	generate	recycled	fiber	as	a	by-product	from the	manufacturing	process,	which	is	sold	to	our	mills	directly	or	through	trade	agreements.	If	we	had	we	owned	Boise	for	the	full	year,	we	would	have	been	a	net recycled	fiber	buyer	of	less	than	15%	of	our	packaging	mills	fiber	requirements.

We	procure	wood	fiber	through	leases	of	cutting	rights,	long-term	supply	agreements	and	market	purchases.	We	currently	lease	the	cutting	rights	to approximately	88,000	acres	of	timberland	located	near	our	Counce,	Tennessee	and	Valdosta,	Georgia	mills.	Virtually	all	of	the	acres	under	cutting	rights	agreements	are located	within	100	miles	of	these	two	mills	which	results	in	lower	wood	transportation	costs	and	provides	a	secure	source	of	wood	fiber.	These	leased	cutting	rights agreements	have	terms	with	about	10	years	remaining,	on	average.

We	participate	in	the	Sustainable	Forestry	Initiative	(SFI)	and	we	are	certified	under	the	SFI	sourcing	standards.	These	standards	are	aimed	at	ensuring	the long-term	health	and	conservation	of	forestry	resources.	We	are	committed	to	sourcing	wood	fiber	through	environmentally,	socially	and	economically	sustainable practices	and	promoting	resource	and	conservation	stewardship	ethics.

Energy	supply.		Energy	at	our	packaging	mills	is	obtained	through	purchased	or	self-generated	fuels	and	electricity.	Fuel	sources	include	natural	gas,	by- products	of	the	containerboard	manufacturing	and	pulping	process,	including	black	liquor	and	wood	waste,	and	purchased	wood	waste,	coal,	and	oil.	Each	of	our	mills self-generates	process	steam	requirements	from	by-products	(black	liquor	and	wood	waste),	as	well	as	from	the	various	purchased	fuels.	The	process	steam	is	used throughout	the	production	process	and	also	to	generate	electricity.

In	2013,	our	packaging	mills,	including	Boise	mills	for	the	full	year	as	if	we	had	acquired	Boise	on	January	1,	2013,	consumed	about	62	million	MMBTU's	of fuel	to	produce	both	steam	and	electricity.	Of	the	62	million	MMBTU's	consumed,	about	64%	was	from	mill	generated	by-products,	and	36%	was	from	purchased	fuels. Of	the	36%	in	purchased	fuels,	39%	was	from	purchased	wood	waste,	33%	was	from	natural	gas,	and	20%	was	from	coal.

# Sales,	Marketing,	and	Distribution

Our	corrugated	products	are	sold	through	a	direct	sales	and	marketing	organization,	independent	brokers,	and	distribution	partners.	We	have	sales representatives	and	a	sales	manager	at	most	of	our	corrugated	manufacturing	operations	and	also	have	corporate	account	managers	who	serve	customer	accounts	with	a national	presence.	Additionally,	our	design	centers	maintain	an	on-site	dedicated	graphics	sales	force.	In	addition	to	direct	sales	and	marketing	personnel,	we	utilize	new product	development	engineers	and	product	graphics	and	design	specialists.	These	individuals	are	located	at	both	the	corrugated	plants	and	the	design	centers.	General marketing	support	is	located	at	our	corporate	headquarters.

Our	containerboard	sales	group	is	responsible	for	the	coordination	of	linerboard	and	corrugating	medium	sales	to	our	corrugated	plants,	to	other	domestic customers,	and	to	export	customers.	This	group	handles	order	processing	for	all	shipments	of	containerboard	from	our	mills	to	our	corrugated	plants.	These	personnel also	coordinate	and	execute	all	containerboard	trade	agreements	with	other	containerboard	manufacturers.

Containerboard	produced	in	our	mills	is	shipped	by	rail	or	truck.	Rail	shipments	typically	represent	approximately	60%	of	the	tons	shipped	and	the	remaining 40%	is	comprised	of	truck	shipments.	Our	corrugated	products	are	delivered	by	truck	due	to	our	large	number	of	customers	and	their	demand	for	timely	service.	Our corrugated	manufacturing	operations	typically	serve	customers	within	a	150	miles	radius.	We	use	third-party	warehouses	for	short-term	storage	of	corrugated	products.

# Customers

We	sell	corrugated	products	to	over	15,000	customers	in	over	25,000	locations.	About	two-thirds	of	our	corrugated	products	sales	are	to	regional	and	local accounts,	which	are	broadly	diversified	across	industries	and	geographic	locations.	The	remaining	one-third	of	our	customer	base	consists	primarily	of	national	accounts that	have	multiple	locations	and	are	served	by	a	number	of	PCA	plants.	No	single	customer	exceeds	10%	of	segment	sales.

| Food,	beverages,	and	agricultural	products | 42% |
| :--- | :--- |
| Paper\tproducts | 21% |
| General,\tretail,\tand\twholesale\ttrade | 18% |
| Petroleum,\tplastic,\tsynthetic,\tand\trubber\tproducts | 8% |
| Miscellaneous\tmanufacturing | 6% |
| Appliances,\tvehicles,\tand\tmetal\tproducts | 3% |
| Textile\tmill\tproducts\tand\tapparel | 2% |

# Competition

As	of	December	31,	2013,	we	believe	we	are	the	fourth	largest	producer	of	containerboard	and	corrugated	products	in	the	United	States	according	to	industry sources	and	our	own	estimates.	According	to	industry	sources,	corrugated	products	are	produced	by	about	570	U.S.	companies	operating	approximately	1,240	plants. The	primary	basis	for	competition	for	most	of	our	packaging	products	includes	quality,	service,	price,	product	design,	and	innovation.	Most	corrugated	products	are manufactured	to	the	customer's	specifications.	Corrugated	producers	generally	sell	within	a	150-mile	radius	of	their	plants	and	compete	with	other	corrugated	producers in	their	local	region.	Competition	in	our	corrugated	product	operations	tends	to	be	regional,	although	we	also	face	competition	from	large	competitors	with	significant national	account	presence,	and	competition	varies	based	on	each	type	of	corrugated	container	we	sell.

On	a	national	level	our	primary	competitors	are	International	Paper	Company,	Rock-Tenn	Company,	and	Georgia-Pacific	LLC.	However,	with	our	strategic focus	on	regional	and	local	accounts,	we	also	compete	with	the	smaller,	independent	converters.

# Paper

Our	Paper	segment	operating	under	the	trade	name	Boise	Paper,	a	Division	of	Packaging	Corporation	of	America,	was	acquired	with	the	acquisition	of	Boise Inc.	on	October	25,	2013.	We	manufacture	and	sell	white	papers,	including	both	commodity	and	specialty	papers,	which	may	have	custom	or	specialized	features	such	as colors,	coatings,	high	brightness,	and	recycled	content.	White	papers	consist	of	communication	papers	(cut-size	office	papers	and	printing	and	converting	papers)	and pressure	sensitive	papers,	including	release	liners,	which	our	customers	use	to	produce	labels	for	use	in	consumer	and	commercially-packaged	products.	We	are	the	third largest	manufacturer	of	white	papers	in	North	America,	according	to	industry	sources	and	our	own	estimates.	The	Paper	segment	also	produces	market	pulp	on	one	paper machine	at	our	Wallula,	Washington,	mill,	which	is	sold	to	outside	customers	to	produce	paper	products.

We	have	three	white	paper	mills	located	in	the	United	States.	The	following	paragraphs	describe	our	white	paper	mills:

Jackson.	Our	Jackson,	Alabama,	mill	produces	both	commodity	and	specialty	papers.	Its	year-end	2013	annual	estimated	production	capacity	of	white	papers on	two	paper	machines,	as	reported	to	the	AF&PA	was	480,000	tons.	The	mill	produced	497,000	tons	of	white	papers	during	the	twelve	months	of	2013.	On	a	converted basis,	from	rollstock	to	cut-size	white	papers,	the	mill	produced	427,000	tons	in	2013.

International	Falls.	Our	International	Falls,	Minnesota,	mill	produces	both	commodity	and	specialty	papers.	Its	year-end	2013	annual	estimated	production capacity	of	white	papers	on	two	paper	machines,	as	reported	to	the	AF&PA	was	425,000	tons.	The	mill	produced	523,000	tons	of	white	papers	during	the	twelve	months of	2013.	In	October	2013,	two	machines	were	shut	down	which	reduced	annual	capacity	by	115,000	tons.	On	a	converted	basis,	from	rollstock	to	cut-size	white	papers, the	mill	produced	325,000	tons	in	2013.

Wallula.	Our	Wallula,	Washington,	mill	has	the	ability,	on	one	machine,	to	switch	production	between	pressure	sensitive	papers	and	a	variety	of	white	paper grades.	The	mill	also	produces	corrugating	medium	and	market	pulp.	Its	year-end	2013	annual	estimated	production	capacity	of	white	paper	grades	and	market	pulp,	as reported	to	the	AF&PA	was	190,000	tons	and	120,000	tons,	respectively.	The	corrugating	medium	produced	at	Wallula	is	included	in	our	Packaging	segment	as discussed	above.	The	mill	produced	192,000	tons	of	white	papers	and	102,000	tons	of	market	pulp	in	2013.

Fiber	supply.			Fiber	is	our	principal	raw	material	in	this	segment,	including	wood	fiber,	recycled	fiber,	and	purchased	pulp.	We	purchase	both	whole	logs	and wood	chips,	which	are	a	byproduct	of	lumber	and	plywood	production.	At	our	mill	in	Jackson,	Alabama,	we	also	purchase	recycled	fiber	to	produce	our	line	of	recycled office	papers.	Our	Jackson	and	International	Falls	paper	mills	also	purchase	pulp	from	third	parties	pursuant	to	contractual	arrangements.	We	negotiate	these arrangements	periodically,	and	terms	can	fluctuate	based	on	prevailing	pulp	market	conditions,	including	pricing	and	supply	dynamics.

We	purchase	wood	fiber	through	contracts	and	open-market	purchases.	Our	contracts	are	generally	with	suppliers	located	in	close	proximity	to	the	specific facility	they	supply,	and	they	commonly	contain	price	adjustment	mechanisms	to	account	for	market	price	and	expense	volatility.

We	participate	in	the	Sustainable	Forestry	Initiative	(SFI)	and	the	Forest	Stewardship	Council	(FSC)	and	are	certified	under	the	SFI	sourcing	standards.	We procure	all	wood	fiber	for	our	white	paper	mills	through	our	certified	systems	that	are	managed	in	accordance	with	the	SFI	and	FSC	standards.	These	standards	are aimed	at	ensuring	the	long-term	health	and	conservation	of	forestry	resources.

Energy	supply.		Our	white	paper	business	consumes	substantial	amounts	of	energy,	obtained	through	purchased	or	self-generated	fuels	and	electricity.	Fuel sources	include	natural	gas,	electricity,	by-products	of	the	manufacturing	and	pulping	process,	including	black	liquor	and	wood	waste,	and	purchased	wood	waste.	Each of	the	paper	mills	self-generates	process	steam	requirements	from	by-products	(black	liquor	and	wood	waste),	as	well	as	from	the	various	purchased	fuels.	The	process steam	is	used	throughout	the	production	process	and	also	to	generate	electricity.

For	the	full	year	2013,	as	if	PCA	had	acquired	Boise	on	January	1,	2013,	the	white	paper	mills	consumed	about	31.5	million	MMBTU's	of	fuel	to	produce	both steam	and	electricity.	Of	the	31.5	million	MMBTU's	consumed,	about	63%	was	from	mill	generated	by-products,	and	37%	was	from	purchased	fuels.	Of	the	37%	in purchased	fuels,	73%	was	from	natural	gas	and	27%	from	purchased	wood	waste.

Chemical	supply	We	consume	a	significant	amount	of	chemicals	in	the	production	of	white	papers,	including	starch,	caustic	soda,	sodium	chlorate,	precipitated calcium	carbonate,	dyestuffs,	and	optical	brighteners.	Most	of	our	chemicals	are	purchased	under	contracts,	which	contain	price	adjustment	mechanisms	designed	to provide	greater	pricing	stability	than	open-market	purchases.	These	contracts	are	negotiated	periodically	at	prevailing	rates.

Our	white	papers	are	sold	primarily	by	our	own	sales	personnel.	We	ship	to	customers	both	directly	from	our	mills	and	through	distribution	centers	and	a network	of	outside	warehouses	by	rail	or	truck.	This	allows	us	to	respond	quickly	to	customer	requirements.	Rail	shipments	typically	represent	approximately	70%	of	the tons	shipped	and	the	remaining	30%	is	comprised	of	truck	shipments.

We	have	over	600	paper	customers	including	paper	merchants,	commercial	and	financial	printers,	paper	converters	such	as	envelope	and	form	manufacturers, and	customers	who	use	our	pressure	sensitive	paper	for	specialty	applications	such	as	consumer	and	commercial	product	labels.	We	have	established	long-term relationships	with	many	of	our	customers.	OfficeMax	is	our	Paper	segment's	largest	customer.	In	November	2013,	OfficeMax	merged	with	its	competitor,	Office	Depot. We	have	an	agreement	with	OfficeMax	in	which	we	will	supply	at	least	80%	of	OfficeMax's	requirements	for	commodity	office	papers	through	December	2017; however,	there	are	circumstances	that	could	cause	the	agreement	to	terminate	before	2017.	If	this	were	to	occur,	OfficeMax's	purchase	obligations	under	the	agreement would	phase	out	over	two	years.	Our	agreement	with	OfficeMax	survived	the	merger	with	respect	to	the	office	paper	requirements	of	the	legacy	OfficeMax	business.	For the	period	of	October	25,	2013,	through	December	31,	2013,	our	sales	to	Office	Depot	(including	OfficeMax),	our	largest	paper	segment	customer,	represented	38%	of our	Paper	segment	sales	revenue.

The	markets	in	which	our	Paper	segment	competes	are	large	and	highly	competitive.	Commodity	grades	of	white	paper	are	globally	traded,	with	numerous worldwide	manufacturers,	and	as	a	result,	these	products	compete	primarily	on	the	basis	of	price.	All	of	our	paper	manufacturing	facilities	are	located	in	the	United States,	and	although	we	compete	primarily	in

the	domestic	market,	we	do	face	competition	from	foreign	producers.	The	level	of	this	competition	varies	depending	on	domestic	and	foreign	demand	and	foreign currency	exchange	rates.	In	general,	paper	production	does	not	rely	on	proprietary	processes	or	formulas,	except	in	highly	specialized	or	custom	grades.

Our	largest	competitors	include	Domtar	Corporation,	International	Paper	Company,	and	Georgia-Pacific	LLC.	Although	price	is	the	primary	basis	for competition	in	most	of	our	paper	grades,	quality	and	service	are	important	competitive	determinants.	Our	white	papers	compete	with	electronic	data	transmission,	e- readers,	electronic	document	storage	alternatives,	and	paper	grades	we	do	not	produce.	Increasing	shifts	to	these	alternatives	have	had,	and	are	likely	to	continue	to	have, an	adverse	effect	on	traditional	print	media	and	paper	usage.	In	response	to	lower	demand,	two	machines	were	shut	down	at	our	International	Falls,	Minnesota	mill	in October	2013.

# Corporate	and	Other

Our	Corporate	and	Other	segment	includes	corporate	support	services,	related	assets	and	liabilities,	and	foreign	exchange	gains	and	losses.	This	segment includes	Louisiana	Timber	Procurement	Company,	L.L.C.	(LTP)	a	variable-interest	entity	that	supplies	fiber	to	some	of	our	facilities	and	transportation	assets,	such	as rail	cars	and	trucks,	which	we	use	to	transport	our	products	from	our	manufacturing	sites.	Rail	cars	and	trucks	are	typically	leased.	For	segment	financial	information	see Note	19,	Segment	Information,	of	the	Notes	to	Consolidated	Financial	Statements	in	"Part	II,	Item	8.	Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K.

# Employees

As	of	December	31,	2013,	we	had	approximately	13,600	employees,	including	4,300	salaried	employees	and	9,300	hourly	employees.	Approximately	75%	of our	hourly	employees	are	represented	by	unions.	The	majority	of	our	unionized	employees	are	represented	by	the	United	Steel	Workers	(USW),	the	International Brotherhood	of	Teamsters	(IBT),	the	International	Association	of	Machinists	(IAM),	and	the	Association	of	Western	Pulp	and	Paper	Workers	(AWPPW).	We	are currently	in	negotiations	to	renew	or	extend	any	union	contracts	that	have	recently	expired	or	are	expiring	in	the	near	future,	including	the	agreements	at	our	Jackson, Alabama,	paper	mill,	which	expire	August	31,	2014.	During	2013,	we	experienced	no	work	stoppages	and	believe	we	have	satisfactory	labor	relations	with	our employees.

# Environmental	Matters

Our	discussion	of	the	financial	impact	of	our	compliance	with	environmental	laws	is	presented	under	the	caption	"Environmental	Matters"	in	Part	II,	Item	7. Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations.

# Executive	Officers	of	the	Registrant

Brief	statements	setting	forth	the	age	at	February	28,	2014,	the	principal	occupation,	employment	during	the	past	five	years,	the	year	in	which	such	person	first became	an	officer	of	PCA,	and	other	information	concerning	each	of	our	executive	officers	appears	below.

Mark	W.	Kowlzan,	58,	Chief	Executive	Officer	and	Director	-	Mr.	Kowlzan	has	served	as	Chief	Executive	Officer	and	a	director	of	PCA	since	July	2010. From	1998	through	June	2010,	Mr.	Kowlzan	led	the	company's	containerboard	mill	system,	first	as	Vice	President	and	General	Manager	and	then	as	Senior	Vice President	-	Containerboard.	From	1996	through	1998,	Mr.	Kowlzan	served	in	various	senior	mill-related	operating	positions	with	PCA	and	Tenneco	Packaging, including	as	manager	of	the	Counce	linerboard	mill.	Prior	to	joining	Tenneco	Packaging,	Mr.	Kowlzan	spent	15	years	at	International	Paper	Company,	where	he	held	a series	of	operational	and	managerial	positions	within	its	mill	organization.	Mr.	Kowlzan	is	a	member	of	the	board	of	American	Forest	and	Paper	Association.

Thomas	A.	Hassfurther,	58,	Executive	Vice	President	-	Corrugated	Products	-	Mr.	Hassfurther	has	served	as	Executive	Vice	President	-	Corrugated Products	of	PCA	since	September	2009.	From	February	2005	to	September	2009,	Mr.	Hassfurther	served	as	Senior	Vice	President	-	Sales	and	Marketing,	Corrugated Products.	Prior	to	this	he	held	various	senior-level	management	and	sales	positions	at	PCA	and	Tenneco	Packaging.	Mr.	Hassfurther	joined	the	company	in	1977.

Richard	B.	West,	61,	Senior	Vice	President	and	Chief	Financial	Officer	-	Mr.	West	has	served	as	Chief	Financial	Officer	of	PCA	since	March	1999	and	as Senior	Vice	President	since	March	2002.	From	April	1999	to	June	2007,	Mr.	West	also	served	as	Corporate	Secretary.	From	1995	through	April	1999,	Mr.	West	served in	various	senior	financial	positions	with	PCA

and	Tenneco	Packaging.	Prior	to	joining	Tenneco	Packaging,	Mr.	West	spent	20	years	with	International	Paper	Company	in	various	financial	positions.

Judith	M.	Lassa,	55,	Senior	Vice	President	-	Paper	-	Ms.	Lassa	joined	PCA	from	Boise	Inc.	as	Senior	Vice	President,	Paper	in	October	2013.	She	served Boise	as	Executive	Vice	President	and	Chief	Operating	Officer	from	January	2013	until	the	acquisition.	Ms.	Lassa	served	as	Senior	Vice	President	of	Boise's	paper	and specialty	products	operations	from	November	2010	to	December	2012.	From	February	2008	to	October	2010,	Ms.	Lassa	served	as	Vice	President	of	Boise's	Packaging segment.	From	October	2004	to	February	2008,	Ms.	Lassa	served	as	Vice	President,	Packaging,	of	Boise	Cascade,	L.L.C.	Prior	to	2004,	Ms.	Lassa	served	in	a	number of	capacities	with	Boise	Cascade	Corporation,	including	Vice	President,	Packaging,	and	packaging	business	leader.

Thomas	W.H.	Walton,	54,	Senior	Vice	President	-	Sales	and	Marketing,	Corrugated	Products	-	Mr.	Walton	has	served	as	Senior	Vice	President	-	Sales	and Marketing,	Corrugated	Products	since	October	2009.	Prior	to	this,	he	served	as	a	Vice	President	and	Area	General	Manager	within	the	Corrugated	Products	Group	since 1998.	Mr.	Walton	joined	the	company	in	1981	and	has	also	held	positions	in	production,	sales	and	general	management.

Kent	A.	Pflederer,	43,	Senior	Vice	President,	General	Counsel	and	Secretary	-	Mr.	Pflederer	has	served	as	Senior	Vice	President	since	January	2013	and Corporate	Secretary	since	June	2007.	He	served	as	Vice	President	and	General	Counsel	from	June	2007	to	January	2013.	Prior	to	joining	PCA,	Mr.	Pflederer	served	as Senior	Counsel,	Corporate	and	Securities,	at	Hospira,	Inc.	from	2004	to	2007	and	served	in	the	corporate	and	securities	practice	at	Mayer	Brown,	LLP	from	1996	to 2004.

Charles	J.	Carter,	54,	Senior	Vice	President	-	Containerboard	Mill	Operations	-	Mr.	Carter	has	served	as	Senior	Vice	President	-	Containerboard	Mill Operations	since	July	2013.	Prior	to	this,	he	served	as	Vice	President	–	Containerboard	Mill	Operations	since	January	2011.	From	March	2010	to	January	2011, Mr.	Carter	served	as	PCA's	Director	of	Papermaking	Technology.	Prior	to	joining	PCA	in	2010,	Mr.	Carter	spent	28	years	with	various	pulp	and	paper	companies	in managerial	and	technical	positions	of	increasing	responsibility,	most	recently	as	Vice	President	and	General	Manager	of	the	Calhoun,	Tennessee	mill	of	Abitibi	Bowater from	2007	to	2010	and	as	manager	of	SP	Newsprint's	Dublin,	Georgia	mill	from	1999	to	2007.

# Available	Information

PCA's	internet	website	address	is	www.packagingcorp.com.	Our	annual	reports	on	Form	10-K,	quarterly	reports	on	Form	10-Q,	current	reports	on	Form	8-K, and	amendments	to	those	reports	filed	or	furnished	pursuant	to	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934	are	available	free	of	charge	through	our website	as	soon	as	reasonably	practicable	after	they	are	electronically	filed	with,	or	furnished	to,	the	Securities	and	Exchange	Commission.	In	addition,	our	Code	of Ethics	may	be	accessed	in	the	Investor	Relations	section	of	PCA's	website.	PCA's	website	and	the	information	contained	or	incorporated	therein	are	not	intended	to	be incorporated	into	this	report.

# Item	1A. RISK	FACTORS

Some	of	the	statements	in	this	report	and,	in	particular,	statements	found	in	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of Operations,	that	are	not	historical	in	nature	are	forward-looking	statements	within	the	meaning	of	the	Private	Securities	Litigation	Reform	Act	of	1995.	Forward-looking statements	include	statements	about	our	expectations	regarding	our	future	liquidity,	earnings,	expenditures	and	financial	condition.	These	statements	are	often	identified by	the	words	"will,"	"should,"	"anticipate,"	"believe,"	"expect,"	"intend,"	"estimate,"	"hope,"	or	similar	expressions.	These	statements	reflect	management's	current views	with	respect	to	future	events	and	are	subject	to	risks	and	uncertainties.	There	are	important	factors	that	could	cause	actual	results	to	differ	materially	from	those	in forward-looking	statements,	many	of	which	are	beyond	our	control.	These	factors,	risks	and	uncertainties	include,	but	are	not	limited	to,	the	factors	described	below.

Our	actual	results,	performance	or	achievement	could	differ	materially	from	those	expressed	in,	or	implied	by,	these	forward-looking	statements,	and accordingly,	we	can	give	no	assurances	that	any	of	the	events	anticipated	by	the	forward-looking	statements	will	transpire	or	occur,	or	if	any	of	them	do	so,	what	impact they	will	have	on	our	results	of	operations	or	financial	condition.	In	view	of	these	uncertainties,	investors	are	cautioned	not	to	place	undue	reliance	on	these	forward- looking	statements.	We	expressly	disclaim	any	obligation	to	publicly	revise	any	forward-looking	statements	that	have	been	made	to	reflect	the	occurrence	of	events	after the	date	hereof.

In	addition	to	the	risks	and	uncertainties	we	discuss	elsewhere	in	this	Form	10-K	(particularly	in	"Part	II,	Item	7.	Management's	Discussion	and	Analysis	of Financial	Condition	and	Results	of	Operations")	or	in	our	other	filings	with	the

Securities	and	Exchange	Commission	(SEC),	the	following	are	important	factors	that	could	cause	our	actual	results	to	differ	materially	from	those	we	project	in	any forward-looking	statement.

# Industry	Risks

Industry	Cyclicality	-	Changes	in	the	prices	of	our	products	could	materially	affect	our	financial	condition,	results	of	operations,	and	liquidity.	Macroeconomic conditions	and	fluctuations	in	industry	capacity	create	changes	in	prices,	sales	volumes,	and	margins	for	most	of	our	products,	particularly	commodity	grades	of packaging	and	paper	products.

Prices	for	all	of	our	products	are	driven	by	many	factors,	including	general	economic	conditions,	demand	for	our	products,	and	competitive	conditions	in	our industry,	and	we	have	little	influence	over	the	timing	and	extent	of	price	changes,	which	are	often	volatile.	If	supply	exceeds	demand,	prices	for	our	products	could decline,	resulting	in	decreased	earnings	and	cash	generated	from	operations.	Additionally,	market	conditions	beyond	our	control	can	affect	the	prices	for	our	commodity products.	Our	ability	to	achieve	acceptable	operating	performance	and	margins	depends	primarily	upon	managing	our	cost	structure	and	general	operating	conditions.	If the	prices	for	our	products	decline	or	if	we	are	unable	to	control	our	costs,	it	could	have	a	material	adverse	effect	on	our	operating	cash	flows,	profitability,	and	liquidity.

Competition		-	The	intensity	of	competition	in	the	industries	in	which	we	operate	could	result	in	downward	pressure	on	pricing	and	volume,	which	could	lower earnings	and	cash	generated	from	operations.	Our	industries	are	highly	competitive,	with	no	single	containerboard,	corrugated	packaging	or	white	paper	producer having	a	dominant	position.	Containerboard	and	commodity	white	paper	products	cannot	generally	be	differentiated	by	producer,	which	tends	to	intensify	price competition.	The	corrugated	packaging	industry	is	also	sensitive	to	changes	in	economic	conditions,	as	well	as	other	factors	including	innovation,	design,	quality,	and service.	To	the	extent	that	one	or	more	competitors	are	more	successful	than	we	are	with	respect	to	any	key	competitive	factor,	our	business	could	be	adversely	affected. Our	packaging	products	also	compete,	to	some	extent,	with	various	other	packaging	materials,	including	products	made	of	paper,	plastics,	wood	and	various	types	of metal.	Our	white	paper	products	compete	with	electronic	data	transmission	and	document	storage	alternatives.	Increasing	shifts	to	these	alternatives	have	had	and	will continue	to	have	an	adverse	effect	on	usage	of	these	products.	The	intensity	of	competition	could	lead	to	a	reduction	in	our	market	share	as	well	as	lower	sales	prices	for our	products,	both	of	which	could	reduce	our	earnings	and	cash	flow.

Several	of	our	competitors	are	larger	than	we	are	and	may	have	greater	financial	and	other	resources,	greater	manufacturing	economies	of	scale,	greater	energy self	sufficiency,	or	lower	operating	costs,	compared	with	our	company.	We	may	be	unable	to	compete	with	these	companies	particularly	during	economic	downturns. Some	of	the	factors	that	may	adversely	affect	our	ability	to	compete	in	the	markets	in	which	we	participate	include	the	entry	of	new	competitors	(including	overseas producers)	into	the	markets	we	serve,	our	competitors'	pricing	strategies,	our	inability	to	anticipate	and	respond	to	changing	customer	preferences,	and	our	inability	to maintain	the	cost-efficiency	of	our	facilities.

# Company	Risks

Cost	of	Fiber	-	An	increase	in	the	cost	of	fiber	could	increase	our	manufacturing	costs	and	lower	our	earnings.	The	market	price	of	wood	fiber	varies	based	upon availability,	source,	and	the	costs	of	fuels	used	in	the	harvesting	and	transportation	of	wood	fiber.	The	cost	and	availability	of	wood	fiber	can	also	be	impacted	by weather,	general	logging	conditions,	and	geography.

The	availability	and	cost	of	recycled	fiber	depends	heavily	on	recycling	rates	and	the	domestic	and	global	demand	for	recycled	products.	We	purchase	recycled fiber	for	use	at	seven	of	our	eight	mills.	In	2013,	including	Boise's	operations	as	if	we	had	acquired	Boise	on	January	1,	2013,	we	would	have	purchased	approximately 480,000	tons	of	recycled	fiber,	net	of	the	recycled	fiber	generated	by	our	corrugated	box	plants.	The	amount	of	recycled	fiber	purchased	each	year	varies	based	upon production	and	the	prices	of	both	recycled	fiber	and	wood	fiber.

Periods	of	supply	and	demand	imbalance	have	tended	to	create	significant	price	volatility.	Periods	of	higher	recycled	fiber	costs	and	unusual	price	volatility have	occurred	in	the	past	and	may	occur	again	in	the	future,	which	could	result	in	lower	or	volatile	earnings.

Cost	of	Purchased	Energy	and	Chemicals	-	An	increase	in	the	cost	of	purchased	energy	and	chemicals	could	lead	to	higher	manufacturing	costs,	resulting	in reduced	earnings.	We	have	the	ability	to	use	various	types	of	purchased	fuels	in	our	manufacturing	operations,	including	coal,	bark,	natural	gas	and	oil.	Energy	prices, in	particular	prices	for	oil	and	natural	gas,	have	fluctuated	dramatically	in	the	past.	New	and	more	stringent	environmental	regulations	may	discourage,	or	make	more expensive,	the	use	of	certain	fuels.	In	addition,	costs	for	key	chemicals	used	in	our	manufacturing	also	fluctuate.	These

fluctuations	impact	our	manufacturing	costs	and	result	in	earnings	volatility.	If	energy	and	chemical	prices	rise,	our	production	costs	and	transportation	costs	will increase	and	cause	higher	manufacturing	costs	and	reduced	earnings.

Material	Disruption	of	Manufacturing	-	A	material	disruption	at	one	of	our	manufacturing	facilities	could	prevent	us	from	meeting	customer	demand,	reduce our	sales	and/or	negatively	affect	our	results	of	operations	and	financial	condition.	Our	business	depends	on	continuous	operation	of	our	facilities,	particularly	at	our mills.	Any	of	our	manufacturing	facilities,	or	any	of	our	machines	within	such	facilities,	could	cease	operations	unexpectedly	for	a	significant	period	of	time	due	to	a number	of	events,	including:

•Unscheduled	maintenance	outages.

•Prolonged	power

failures.

•Equipment	failure.

•Explosion	of	a	boiler.

•Disruption	in	the	supply	of	raw	materials,	such	as	wood	fiber,	energy,	or chemicals.

•A	chemical	spill	or

release.

•Closure	related	to	environmental

concerns.

•Labor	difficulties.

•Disruptions	in	the	transportation	infrastructure,	including	roads,	bridges,	railroad	tracks,	and tunnels.

•Fires,	floods,	earthquakes,	hurricanes,	or	other

catastrophes.

•Terrorism	or	threats	of	terrorism.

•Other	operational

problems.

These	events	could	harm	our	ability	to	serve	our	customers	and	lead	to	higher	costs	and	reduced	earnings.

Environmental	Matters	-	PCA	may	incur	significant	environmental	liabilities	with	respect	to	both	past	and	future	operations.	We	are	subject	to,	and	must comply	with,	a	variety	of	federal,	state	and	local	environmental	laws,	particularly	those	relating	to	air	and	water	quality,	waste	disposal	and	the	cleanup	of	contaminated soil	and	groundwater.	Because	environmental	regulations	are	constantly	evolving,	we	have	incurred,	and	will	continue	to	incur,	costs	to	maintain	compliance	with	those laws.	See	Item	7.	"Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations	-	Environmental	Matters"	for	estimates	of	expenditures	we expect	to	make	for	environmental	compliance	in	the	next	few	years.	New	and	more	stringent	environmental	regulations,	including	new	U.S.	Environmental	Protection Agency	rules	relating	to	industrial	boiler	emissions	known	as	the	Boiler	MACT	rules,	are	expected	to	require	us	to	incur	significant	additional	capital	expenditures	to modify	or	replace	certain	of	our	boilers.	In	addition,	environmental	regulations	may	increase	the	cost	of	our	raw	materials	and	purchased	energy.	Although	we	have established	reserves	to	provide	for	known	environmental	liabilities	as	of	the	date	of	this	filing,	these	reserves	may	change	over	time	due	to	the	enactment	of	new environmental	laws	or	regulations	or	changes	in	existing	laws	or	regulations,	which	might	require	additional	significant	environmental	expenditures.

Customer	Concentration	-	OfficeMax	represents	a	significant	portion	of	PCA's	paper	business.	We	have	a	supply	agreement	with	OfficeMax,	our	largest customer	in	the	paper	segment.	The	agreement	requires	OfficeMax	to	buy,	and	us	to	supply,	at	least	80%	of	OfficeMax's	requirements	for	office	papers	through December	2017;	however,	there	are	circumstances	that	could	cause	the	agreement	to	terminate	before	2017.	In	November	2013,	OfficeMax	merged	with	Office	Depot. Our	agreement	with	OfficeMax	provides	that	it	survives	the	merger	with	respect	to	the	office	paper	requirements	of	the	legacy	OfficeMax	business.	We	cannot	predict how	the	merger	will	affect	the	financial	condition	of	the	combined	company,	the	paper	requirements	of	the	legacy	OfficeMax	business,	or	the	effects	on	the	pricing	and competition	for	office	papers.	In	2013,	for	the	period	of	October	25,	2013,	to	December	31,	2013,	our	sales	revenue	to	Office	Depot	(including	OfficeMax)	accounted for	38%	of	Paper	segment	sales.	Significant	reductions	in	paper	purchases	from	the	post-merger	entity	would	cause	our	paper	business	to	attempt	to	expand	its	customer base	and	could	potentially	decrease	its	profitability	if	new	customer	sales	required	either	a	decrease	in	its	pricing	and/or	an	increase	in	its	cost	of	sales.	Any	significant deterioration	in	the	financial	condition	of	the	post-merger	entity	affecting	the	ability	to	pay	or	causing	a	significant	change	in	the	willingness	to	continue	to	purchase	our products	could	harm	our	business	and	results	of	operations.

Acquisition	Integration	-	The	acquired	businesses	of	Boise	may	underperform	relative	to	our	expectations,	and	we	may	not	be	able	to	successfully	integrate	the businesses.	The	acquired	businesses	of	Boise	may	underperform	relative	to	our	expectations,	which	may	cause	our	financial	results	to	differ	from	our	own	or	the investment	community's	expectations.	If	the	acquired	businesses	underperform	relative	to	our	expectations,	or	if	we	fail	to	successfully	integrate	the	businesses,	our business,	financial	condition	and	results	of	operations	may	be	materially	and	adversely	affected.

Cyber	Security	-	Risks	related	to	security	breaches	of	company,	customer,	employee,	and	vendor	information,	as	well	as	the	technology	that	manages	our operations	and	other	business	processes,	could	adversely	affect	our	business.	We	rely	on

various	information	technology	systems	to	capture,	process,	store,	and	report	data	and	interact	with	customers,	vendors,	and	employees.	Despite	careful	security	and controls	design,	implementation,	updating,	and	internal	and	independent	third-party	assessments,	our	information	technology	systems,	and	those	of	our	third	party providers,	could	become	subject	to	cyber	attacks	or	security	breaches.	Network,	system,	and	data	breaches	could	result	in	misappropriation	of	sensitive	data	or operational	disruptions	including	interruption	to	systems	availability	and	denial	of	access	to	and	misuse	of	applications	required	by	our	customers	to	conduct	business with	us.	Misuse	of	internal	applications;	theft	of	intellectual	property,	trade	secrets,	or	other	corporate	assets;	and	inappropriate	disclosure	of	confidential	information could	stem	from	such	incidents.	Delayed	sales,	slowed	production,	or	other	repercussions	resulting	from	these	disruptions	could	result	in	lost	sales,	business	delays,	and negative	publicity	and	could	have	a	material	adverse	effect	on	our	operations,	financial	condition,	or	cash	flows.

# Risks	Related	to	Economic,	Financial,	and	Investment	Risk

Increased	leverage	may	harm	our	financial	condition	and	results	of	operations.	We	increased	our	indebtedness	in	connection	with	our	acquisition	of	Boise	from $807.6	million	(including	capital	leases)	as	of	September	30,	2013,	to	approximately	$2,572.7	million	at	December	31,	2013.	We	and	our	subsidiaries	may	incur additional	indebtedness	in	the	future.	The	increase	in	indebtedness	from	the	acquisition	of	Boise,	plus	any	future	borrowings,	may	affect	our	future	operations,	including, without	limitation:

•Result	in	additional	cash	requirements	to	make	interest	and	maturity	payments	on	our	outstanding indebtedness;

•Increase	our	vulnerability	to	adverse	changes	in	our	business	or	industry conditions;

•Limit	our	ability	to	obtain	additional	financing	for	working	capital,	capital	expenditures,	general	corporate	and	other purposes;

•Limit	our	flexibility	in	planning	for,	or	reacting	to,	changes	in	our	business	and	our	industry;

•Limit	our	flexibility	to	make

acquisitions.

Further,	if	we	cannot	service	our	indebtedness,	we	may	have	to	take	actions	to	secure	additional	cash	by	selling	assets,	seeking	additional	equity	or	reducing investments.

# Market	Price	of	our	Common	Stock	-	The	market	price	of	our	common	stock	may	be	volatile,	which	could	cause	the	value	of	your	investment	to	decline.

Securities	markets	worldwide	periodically	experience	significant	price	declines	and	volume	fluctuations.	This	market	volatility,	as	well	as	general	economic,	market	or political	conditions,	could	reduce	the	market	price	of	our	common	stock	in	spite	of	our	operating	performance.	In	addition,	our	operating	results	could	be	below	the expectations	of	public	market	analysts	and	investors,	and	in	response,	the	market	price	of	our	common	stock	could	decrease	significantly.

General	Economic	Conditions	-	Adverse	business	and	global	economic	conditions	may	have	a	material	adverse	effect	on	our	business,	results	of	operations, liquidity,	and	financial	position.	General	global	economic	conditions	adversely	affect	the	demand	and	production	of	consumer	goods,	employment	levels,	the availability	and	cost	of	credit,	and	ultimately,	the	profitability	of	our	business.	High	unemployment	rates,	lower	family	income,	lower	corporate	earnings,	lower	business investment,	and	lower	consumer	spending	typically	result	in	decreased	demand	for	our	products.	These	conditions	are	beyond	our	control	and	may	have	a	significant impact	on	our	business,	results	of	operations,	liquidity,	and	financial	position.

# Item	1B. UNRESOLVED	STAFF

# COMMENTS

# None.

# Item	2. PROPERTIES

We	own	and	lease	properties	in	our	business.	All	of	our	leases	are	noncancelable	and,	are	primarily	accounted	for	as	operating	leases.	These	leases	are	not subject	to	early	termination	except	for	standard	nonperformance	clauses.

Information	concerning	capacity	and	utilization	of	our	principal	operating	facilities,	the	segments	that	use	those	facilities,	and	a	map	of	geographical	locations is	presented	in	"Part	I,	Item	1.	Business"	of	this	Form	10-K.	We	assess	the	condition	and	capacity	of	our	manufacturing,	distribution,	and	other	facilities	needed	to	meet our	operating	requirements.	Our	properties	have	been	generally	well	maintained	and	are	in	good	operating	condition.	In	general,	our	facilities	have	sufficient	capacity and	are	adequate	for	our	production	and	distribution	requirements.

We	currently	own	five	containerboard	mills	and	three	white	paper	mills.	Additionally,	we	have	98	corrugated	manufacturing	operations,	of	which	54	are	owned, including	46	combining	operations,	or	corrugated	plants,	one	corrugated	sheet-only	manufacturer,	and	seven	sheet	plants.	18	corrugated	plants	and	26	sheet	plants	are leased.	We	own	one	warehouse	and	miscellaneous	other	properties,	including	sales	offices	and	woodlands	management	offices.	We	lease	the	space	for	regional	design centers	and	numerous	other	distribution	centers,	warehouses,	and	facilities.	The	equipment	in	these	leased	facilities	is,	in	virtually	all	cases,	owned	by	us,	except	for forklifts	and	other	rolling	stock	which	are	generally	leased.

We	lease	the	cutting	rights	to	approximately	88,000	acres	of	timberland	located	near	our	Valdosta	mill	(77,000	acres)	and	our	Counce	mill	(11,000	acres).	On average,	these	cutting	rights	agreements	have	terms	with	approximately	10	years	remaining.	Additionally,	we	lease	approximately	9,000	acres	of	land	for	a	fiber	farm, located	near	our	Wallula	mill,	where	we	plant,	grow	and	harvest	fiber.

Our	corporate	headquarters	is	located	in	Lake	Forest,	Illinois.	The	headquarters	facility	is	leased	for	the	next	eight	years	with	provisions	for	two	additional	five year	lease	extensions.	We	also	lease	an	office	in	Boise,	Idaho,	which	is	leased	through	March	2018.

# Item	3. LEGAL

# PROCEEDINGS

Information	concerning	legal	proceedings	can	be	found	in	Note	20,	Commitments,	Guarantees,	Indemnifications,	and	Legal	Proceedings,	of	the	Notes	to Consolidated	Financial	Statements	in	"Part	II,	Item	8.	Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K.

# Item	4. MINE	SAFETY	DISCLOSURE

Not	applicable.

# PART	II

# Item	5. MARKET	FOR	REGISTRANT'S	COMMON	EQUITY,	RELATED	STOCKHOLDER	MATTERS,	AND	ISSUER	PURCHASES	OF	EQUITY SECURITIES

# Market	Information

PCA's	common	stock	is	listed	on	the	New	York	Stock	Exchange	(NYSE)	under	the	symbol	"PKG".	The	following	table	sets	forth	the	high	and	low	sales	prices as	reported	by	the	NYSE	and	the	cash	dividends	declared	per	common	share	during	the	last	two	years.

|  | 2013 | 2013 |  | 2012 | 2012 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Sales\tPrice |  |  | Sales\tPrice |  |  |
| Quarter\tEnded | High | Low | Dividends\tDeclared | High | Low | Dividends\tDeclared |
| March\t31 | $44.93 | $37.86 | $0.31 | $30.62 | $24.82 | $0.25 |
| June\t30 | 50.78 | 42.36 | 0.40 | 29.80 | 25.77 | 0.25 |
| September\t30 | 61.32 | 48.45 | 0.40 | 36.68 | 27.59 | 0.25 |
| December\t31 | 64.39 | 55.66 | 0.40 | 38.67 | 33.89 | 0.25 |

# Stockholders

On	January	31,	2014,	there	were	76	holders	of	record	of	our	common	stock.

# Dividend	Policy

PCA	expects	to	continue	to	pay	regular	cash	dividends,	although	there	is	no	assurance	as	to	the	timing	or	level	of	future	dividend	payments	because	these depend	on	future	earnings,	capital	requirements,	and	financial	condition.	The	timing	and	amount	of	future	dividends	are	subject	to	the	determination	of	PCA's	Board	of Directors.

On	January	14,	2013,	PCA	announced	an	increase	in	its	quarterly	cash	dividend	on	its	company	stock	from	an	annual	payout	of	$1.00	per	share	to	$1.25	per share.	The	first	quarterly	dividend	of	$0.3125	per	share	was	paid	to	stockholders	on	April	15,	2013.

On	May	15,	2013,	PCA	announced	another	increase	in	its	quarterly	cash	dividend	on	its	company	stock	from	an	annual	payout	of	$1.25	per	share	to	$1.60	per share.	The	first	quarterly	dividend	of	$0.40	per	share	was	paid	on	July	15,	2013.

# Purchases	of	Equity	Securities

# Stock	Repurchase	Program

On	December	14,	2011,	PCA	announced	that	its	Board	of	Directors	had	authorized	the	repurchase	of	an	additional	$150.0	million	of	its	common	stock.	In 2013,	the	Company	repurchased	171,263	shares	of	common	stock	for	$7.8	million,	or	an	average	price	of	$45.54	per	share.	All	shares	repurchased	under	this authorization	were	retired	prior	to	the	end	of	the	year.	As	of	December	31,	2013,	$98.1	million	of	the	$150.0	million	authorization	remained	available	for	repurchase	of the	Company's	common	stock.	PCA	did	not	repurchase	any	shares	of	its	common	stock	during	the	fourth	quarter	of	2013.

Beginning	in	2013,	the	Company	began	withholding	shares	from	vesting	equity	awards	to	cover	employee	tax	liabilities.	Total	shares	withheld	in	2013	were 223,995	at	an	average	price	of	$48.91,	or	$11.0	million.

The	following	table	presents	information	related	to	our	repurchases	of	common	stock	made	under	our	plan	announced	on	December	14,	2011,	and	shares withheld	to	cover	taxes	on	vesting	of	equity	awards,	during	the	three	months	ended	December	31,	2013:

| Period | Total<br>Number<br>of	Shares<br>Purchased	(a) | Average	Price	Paid	Per<br>Share |  | Total	Number<br>of	Shares<br>Purchased<br>as	Part	of	Publicly<br>Announced	Plans<br>or	Programs | Dollar	Value<br>of	Shares<br>That	May	Yet<br>Be	Purchased<br>Under	the	Plans<br>or	Programs |
| :--- | :--- | :--- | :--- | :--- | :--- |
| October\t1-31,\t2013 | — | $— |  | — | $98,086 |
| November\t1-30,\t2013 | — | — |  | — | 98,086 |
| December\t1-31,\t2013 | 1,297 | 62.61 |  | — | 98,086 |
| Total | 1,297 | $62.61 | (a) | — | $98,086 |

(a) 1,297	shares	were	withheld	from	employees	to	cover	income	and	payroll	taxes	on	equity	awards	that	vested	during	the	period.

# Performance	Graph

The	graph	below	compares	PCA's	cumulative	5-year	total	shareholder	return	on	common	stock	with	the	cumulative	total	returns	of	the	S&P	500	index;	the S&P	Midcap	400	index;	and	two	customized	peer	groups.	The	companies	included	in	our	Old	Peer	Group	are	International	Paper	Company	and	Rock-Tenn	Company. PCA	has	revised	its	Peer	Group	due	to	acquiring	Boise	Inc.	on	October	25,	2013.	The	companies	included	in	our	New	Peer	Group	are	International	Paper	Company, Kapstone	Paper	&	Packaging	Corp.,	and	Rock-Tenn	Company.	The	graph	tracks	the	performance	of	a	$100	investment	(including	the	reinvestment	of	all	dividends)	in our	common	stock,	in	each	index,	and	in	the	peer	groups'	common	stock	from	December	31,	2008	through	December	31,	2013.	The	stock	price	performance	included	in this	graph	is	not	necessarily	indicative	of	future	stock	price	performance.

|  | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Packaging\tCorporation\tof\tAmerica | $100.00 | $177.39 | $204.19 | $205.56 | $323.44 | $547.88 |
| S&amp;P\t500 | 100.00 | 126.46 | 145.51 | 148.59 | 172.37 | 228.19 |
| S&amp;P\tMidcap\t400 | 100.00 | 137.38 | 173.98 | 170.96 | 201.53 | 269.04 |
| Old\tPeer\tGroup | 100.00 | 218.00 | 227.06 | 253.93 | 343.57 | 453.68 |
| New\tPeer\tGroup | $100.00 | $220.05 | $232.81 | $259.36 | $353.05 | $484.88 |

The	information	in	the	graph	and	table	above	is	not	deemed	"filed"	with	the	Securities	and	Exchange	Commission	and	is	not	to	be	incorporated	by	reference	in any	of	PCA's	filings	under	the	Securities	Act	of	1933	or	the	Securities	Exchange	Act	of	1934,	whether	made	before	or	after	the	date	of	this	Annual	Report	on	Form	10- K,	except	to	the	extent	that	PCA	specifically	incorporates	such	information	by	reference.

# Item	6. SELECTED	FINANCIAL

The	following	table	sets	forth	selected	historical	financial	data	of	PCA	(dollars	in	thousands,	except	per	share	data).	The	information	contained	in	the	table should	be	read	in	conjunction	with	the	disclosures	in	"Part	II,	Item	7.	Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations"	and "Part	II,	Item	8.	Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K.

|  | 2013	(a) | 2012 | Year	Ended	December	31<br>2011 | 2010 | 2009 |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Statement\tof\tIncome\tData: |  |  |  |  |  |
| Net\tSales | $3,665,308 | $2,843,877 | $2,620,111 | $2,435,606 | $2,147,589 |
| Net\tIncome | 436,283 | 163,820 | 158,027 | 205,435 | 265,895 |
| Net\tincome\tper\tcommon\tshare: |  |  |  |  |  |
| —\tbasic | 4.52 | 1.70 | 1.59 | 2.02 | 2.62 |
| —\tdiluted | 4.47 | 1.68 | 1.57 | 2.00 | 2.60 |
| Weighted\taverage\tcommon\tshares\toutstanding: |  |  |  |  |  |
| —\tbasic | 96,579 | 96,384 | 99,281 | 101,678 | 101,577 |
| —\tdiluted | 97,547 | 97,497 | 100,376 | 102,608 | 102,358 |
| Earnings,\tbefore\tinterest,\ttaxes,\tdepreciation,\tand\namortization\t(EBITDA)\t(b) | $675,400 | $614,201 | $436,383 | $341,680 | $503,671 |
| Cash\tdividends\tdeclared\tper\tcommon\tshare | 1.51 | 1.00 | 0.80 | 0.60 | 0.60 |
| Balance\tSheet\tData: |  |  |  |  |  |
| Total\tassets | $5,199,974 | $2,453,768 | $2,412,499 | $2,225,910 | $2,152,840 |
| Total\tdebt\tobligations | 2,572,749 | 819,498 | 830,280 | 680,601 | 680,878 |
| Stockholders'\tequity | 1,313,015 | 969,461 | 928,910 | 1,009,001 | 898,845 |

(a) On	October	25,	2013,	we	acquired	Boise	Inc.	(Boise).	The	2013	consolidated	earnings	results	include	Boise	for	the	period	of	October	25	through	December	31,	2013.

(b) 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.	The	use	of	EBITDA	instead	of	net	income	has	limitations	as an	analytical	tool,	including	the	inability	to	determine	profitability;	the	exclusion	of	interest	expense,	interest	income,	and	associated	significant	cash	requirements;	and	the exclusion	of	depreciation,	amortization,	and	depletion,	which	represent	significant	and	unavoidable	operating	costs,	given	the	level	of	our	indebtedness	and	the	capital expenditures	needed	to	maintain	our	businesses.	Our	measures	of	EBITDA	are	not	necessarily	comparable	to	other	similarly	titled	captions	of	other	companies	due	to potential	inconsistencies	in	the	methods	of	calculation.	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	this	Item	7	for	a	reconciliation	of	non-GAAP	measures	to	the	most	comparable	GAAP	measure.

# Item	7. MANAGEMENT'S	DISCUSSION	AND	ANALYSIS	OF	FINANCIAL	CONDITION	AND	RESULTS	OF OPERATIONS

The	following	discussion	and	analysis	of	historical	results	of	operations	and	financial	condition	should	be	read	in	conjunction	with	the	audited	financial statements	and	the	notes	thereto	which	appear	elsewhere	in	this	Form	10-K.	This	discussion	includes	statements	regarding	our	expectations	with	respect	to	our	future performance,	liquidity,	and	capital	resources.	Such	statements,	along	with	any	other	nonhistorical	statements	in	the	discussion,	are	forward-looking.	These	forward- looking	statements	are	subject	to	numerous	risks	and	uncertainties,	including,	but	not	limited	to,	the	risks	and	uncertainties	described	in	"Part	I,	Item	1A.	Risk	Factors" of	this	Form	10-K,	as	well	as	those	factors	listed	in	other	documents	we	file	with	the	Securities	and	Exchange	Commission	(SEC).	We	do	not	assume	any	obligation	to update	any	forward-looking	statements.	Our	actual	results	may	differ	materially	from	those	contained	in	or	implied	by	any	of	the	forward-looking	statements	in	this Form	10-K.

# Acquisition	of	Boise	Inc.

On	October	25,	2013,	we	acquired	Boise	Inc.	("Acquisition,"	"Boise,"	or	"Boise	Acquisition"),	a	large	manufacturer	of	packaging	and	paper	products	for	$2.1 billion.	We	paid	$12.55	per	share	to	shareholders,	or	$1.2	billion,	net	of	$121.7	million	of	cash	acquired,	and	assumed	the	fair	value	of	Boise's	debt,	or	$829.8	million. PCA	entered	into	$2.35	billion	of	new	borrowings,	including	a	$1.65	billion	senior	unsecured	credit	agreement,	which	included	a	$350.0	million	undrawn	revolver,	and $700.0	million	of	4.5%	ten-year	notes,	which	in	connection	with	cash	on	hand,	was	used	to	finance	the	acquisition	of	Boise,	repay	certain	PCA	indebtedness,	and	for general	corporate	purposes.

The	acquisition	expands	our	corrugated	products	geographic	reach	and	offerings,	provides	additional	containerboard	capacity	for	continued	growth	in	the packaging	business,	and	provides	meaningful	opportunities	in	the	white	paper	business.	The	acquisition	of	Boise	increased	PCA's	containerboard	capacity,	at	year-end 2013,	to	approximately	3.4	million	tons	from	its	prior	level	of	2.6	million	tons.	The	results	of	Boise's	operations	are	included	in	PCA's	results	for	periods	on	and	after October	25,	2013.	Due	to	the	size	of	the	transaction,	a	significant	part	of	our	variances	to	2012	are	driven	by	the	acquisition.	We	discuss	this	acquisition	in	more	detail	in Note	3,	Acquisitions,	and	Note	8,	Debt,	of	the	Notes	to	Consolidated	Financial	Statements	in	"Part	II,	Item	8.	Financial	Statements	and	Supplementary	Data"	of	this Form	10-K.

Prior	to	the	acquisition	of	Boise	on	October	25,	2013,	we	manufactured	and	sold	packaging	products	and	reported	our	results	in	one	reportable	segment.	With the	acquisition,	we	report	our	financial	information	in	three	reportable	segments:	Packaging,	Paper,	and	Corporate	and	Other.	Our	Packaging	segment	produces	a	wide variety	of	corrugated	packaging	products.	The	Paper	segment	manufactures	and	sells	a	range	of	white	papers,	including	communication	papers,	pressure-sensitive	papers, and	market	pulp.	The	Corporate	and	other	segment	includes	support	staff	services	and	related	assets	and	liabilities,	transportation	assets,	and	activity	related	to	other ancillary	support	operations.	In	this	Item	7,	some	amounts	in	prior	periods'	consolidated	financial	statements	have	been	reclassified	to	conform	with	the	current	period segment	presentation.	For	more	information,	see	Note	19,	Segment	Information.	In	addition,	we	reclassified	amounts	previously	included	in	"Corporate	overhead"	in	the 2012	and	2011	Consolidated	Statements	of	Income	into	"Selling,	general,	and	administrative	expenses"	to	conform	with	the	current	period	presentation.	None	of	the reclassifications	affected	our	results	of	operations,	financial	position,	or	cash	flows.

# Overview

PCA,	with	the	acquisition	of	Boise	Inc.,	is	the	fourth	largest	producer	of	containerboard	in	the	United	States	and	the	third	largest	producer	of	white	papers	in North	America,	based	on	production	capacity.	We	operate	eight	mills	and	98	corrugated	products	manufacturing	plants.	Our	mills	are	comprised	of	five	containerboard mills	and	three	paper	mills.	Our	corrugated	products	manufacturing	plants	produce	a	wide	variety	of	corrugated	packaging	products,	including	conventional	shipping containers	used	to	protect	and	transport	manufactured	goods,	multi-color	boxes	and	displays	with	strong	visual	appeal	that	help	to	merchandise	the	packaged	product	in retail	locations,	and	honeycomb	protective	packaging.	In	addition,	we	are	a	large	producer	of	packaging	for	meat,	fresh	fruit	and	vegetables,	processed	food,	beverages, and	other	industrial	and	consumer	products.	We	operate	primarily	in	the	United	States	and	have	some	converting	operations	in	Europe,	Mexico,	and	Canada.

# Executive	Summary

In	2013,	sales	grew	28.9%	to	a	record	$3,665.3	million.	We	reported	$436.3	million	of	net	income,	or	$4.47	per	diluted	share	in	2013,	compared	with	$163.8 million,	or	$1.68	per	share	in	2012.	Excluding	special	items,	we	recorded	$320.2	million	of	net	income,	or	a	record	$3.28	per	diluted	share	in	2013,	compared	with $200.8	million	and	$2.06	per	diluted	share	in	2012.	In	2013,	income	included	$87.4	million	of	income	from	special	items	including	$166.0	million	from	the	reversal	of previously	established	tax	reserves,	partially	offset	by	$67.8	million	of	pretax	costs	primarily	related	to	the	acquisition	of	Boise	on	October	25,	2013,	and	$10.9	million of	pension	plan	curtailment	charges.	Excluding	these	special	items,	the	increase	in	earnings	was	driven	by	improvement	in	PCA's	earnings	and	two	months	and	five	days of	results	from	the	acquisition	of	Boise	operations.	PCA's	earnings	improvement	related	primarily	to	increased	pricing	and	higher	demand,	partially	offset	by	higher costs	for	labor	and	benefits,	energy,	fiber,	repairs,	freight,	and	interest	expense.

Earnings	per	diluted	share,	excluding	special	items,	in	2013	and	2012	were	as	follows:

|  | Years	Ended	December	31, |  |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Earnings\tper\tdiluted\tshare | $4.47 | \t $1.68 |
| Special\titems: |  |  |
| Alternative\tenergy\ttax\tcredits\t(a) | (1.70) | 0.24 |
| Acquisition-related\tcosts\t(b) | 0.11 | — |
| Acquisition-related\tfinancing\tcosts\t(b) | 0.08 | — |
| Acquisition\tinventory\tstep-up\t(c) | 0.14 | — |
| Integration-related\tand\tother\tcosts\t(d) | 0.11 | — |
| Pension\tcurtailment\tcharges\t(e) | 0.07 | — |
| Debt\trefinancing\tcharges\t(f) | — | 0.16 |
| State\tincome\ttax\tadjustments | — | (0.03) |
| Plant\tclosure\tcharges | — | 0.01 |
| Total\tspecial\titems | (1.19) | 0.38 |
| Earnings\tper\tdiluted\tshare,\texcluding\tspecial\titems | $3.28 | \t $2.06 |

(a) 2013	includes	$1.70	of	income	per	diluted	share	for	the	reversal	of	$166.0	million	of	tax	reserves	related	to	alternative	energy	tax	credits.	Approximately	$103.9	million	of the	reversal	is	due	to	the	completion	of	an	IRS	audit	of	PCA's	Filer	City	mill's	cellulosic	biofuel	tax	credits	and	$62.1	million	is	from	the	reversal	of	reserves	for	the taxability	of	the	alternative	fuel	mixture	credit	acquired	in	the	acquisition	of	Boise.

In	first	quarter	2012,	PCA	amended	its	2009	tax	return	to	reduce	the	gallons	claimed	as	cellulosic	biofuel	producer	credits	previously	recorded	as	a	tax	benefit,	and	increase the	gallons	claimed	for	alternative	fuel	mixture	credits	previously	recorded	as	income.	The	increase	in	gallons	claimed	as	alternative	fuel	mixture	credits	resulted	in	income of	$95.5	million,	and	the	decrease	in	gallons	claimed	as	cellulosic	biofuel	producer	credits	resulted	in	a	decrease	in	tax	benefits	of	$118.5	million,	or	a	net	charge	of	$23.0 million.

(b) Includes	$28.9	million	of	acquisition-related	costs,	primarily	for	professional	fees	related	to	transaction-advisory	services	and	expenses	related	to	financing	the	acquisition of	Boise	($18.3	million	after-tax	or	$0.19	per	diluted	share).

(c) Generally	accepted	accounting	principles	required	us	to	value	the	inventory	from	the	acquisition	of	Boise	at	fair	value,	which	increased	the	value	of	the	inventory	by	$21.5 million.	This	reduced	the	profit	on	the	sale	of	the	acquired	inventory	to	that	portion	attributable	to	the	selling	effort.	This	step-up	in	value	increased	expenses	by	$21.5 million	as	the	acquired	inventory	was	sold	and	charged	to	cost	of	sales	($13.6	million	after-tax	or	$0.14	per	diluted	share).

(d) Includes	$17.4	million	of	integration-related	and	other	costs,	primarily	for	professional	services,	employee,	and	other	costs	($11.0	million	after-tax	or	$0.11	per	diluted share).

(e) Includes	$10.9	million	of	non-cash	pension	curtailment	charges	related	to	pension	plan	changes	in	which	certain	hourly	corrugated	and	containerboard	mill	employees	will transition	from	a	defined	benefit	pension	plan	to	a	defined	contribution	401k	plan	($7.0	million	after-tax	or	$0.07	per	diluted	share).

(f) Includes	$24.8	million	of	debt	refinancing	charges	($16.0	million	after-tax	or	$0.16	per	diluted	share).

Management	excludes	special	items	and	uses	non-GAAP	measures	to	focus	on	PCA's	on-going	operations	and	assess	its	operating	performance	and	believes that	it	is	useful	to	investors	because	it	enables	them	to	perform	meaningful	comparisons	of	past	and	present	operating	results.	Reconciliation	of	diluted	EPS	to	diluted EPS	excluding	special	items	is	included	above	and	the	reconciliations	of	other	non-GAAP	measures	used	in	this	Management's	Discussion	and	Analysis	of	Financial Condition	and	Results	of	Operations,	to	the	most	comparable	measure	reported	in	accordance	with	GAAP,	are	included	later	in	Item	7	under	"Reconciliations	of	Non- GAAP	Financial	Measures	to	Reported	Amounts."	Any	analysis	of	non-GAAP	financial	measures	should	be	done	in	conjunction	with	results	presented	in	accordance with	GAAP.	The	non-GAAP	measures	are	not	intended	to	be	substitutes	for	GAAP	financial	measures	and	should	not	be	used	as	such.

# Markets

The	market	for	containerboard	and	corrugated	products	is	generally	subject	to	changes	in	the	U.S.	economy.	The	U.	S.	economy	continued	to	slowly	improve	in 2013,	with	an	annual	basis	real	GDP	increase	of	1.9%,	compared	with	a	2.8%	increase	in	2012	as	reported	by	the	U.S.	Department	of	Commerce.	Trade	publications reported	that	industry-wide	corrugated	products	shipments	were	unchanged	in	2013	compared	to	2012	and	containerboard	production	was	1.2%	higher	than	2012.	In 2013,	PCA's	corrugated	products	shipments	increased	5.7%,	excluding	Boise	shipments,	and	increased	10.7%	including	Boise	shipments	during	the	partial	fourth quarter.	PCA	containerboard	production	for	2013	was	2,607,000	tons,	excluding	Boise,	compared	to	2,600,000	tons	in	2012.	Including	PCA's	ownership	of	Boise	during the	partial	quarter,	PCA's	containerboard	production	was	2,749,000	tons	in	2013.

The	market	for	communication	papers	competes	heavily	with	electronic	data	transmission	and	document	storage	alternatives.	Increasing	shifts	to	these alternatives	have	had	an	adverse	effect	on	traditional	print	media	and	usage	of	communication	papers.	According	to	the	American	Forest	&	Paper	Association	(AF&PA), U.S.	industry	uncoated	freesheet	shipments	declined	1.9%	in	2013,	compared	to	2012.

# Outlook

In	the	first	quarter	of	2014,	we	expect	earnings	to	benefit,	compared	to	the	fourth	quarter	of	2013,	from	a	full	quarter	of	Boise's	results,	including	synergies,	and lower	amortization	of	annual	mill	outage	costs.	Our	largest	containerboard	mill	in	Counce,	Tennessee	will	be	down	in	March	for	its	annual	maintenance	outage	which will	reduce	production	and	increase	operating	costs.	We	also	expect	higher	energy	costs	across	the	company	with	colder	weather.	In	addition,	our	mills	were	impacted	by extreme	cold	and	significant	snowfalls	in	January	and	February	resulting	in	higher	than	normal	cost	increases	for	energy,	wood,	and	transportation.	Costs	at	our converting	plants	were	also	impacted	and	we	did	have	some	plant	closures	as	a	result	of	weather.	Labor	and	benefit	costs	are	expected	to	be	higher	in	the	first	quarter, with	annual	wage	increases	and	timing	related	benefit	payments,	and	we	expect	a	higher	tax	rate.	Considering	all	of	these	items,	we	expect	first	quarter	earnings, excluding	special	items,	to	be	comparable	to	our	fourth	quarter	2013	earnings,	excluding	special	items.

# Results	of	Operations

The	historical	results	of	operations	of	PCA	for	the	years	ended	December	31,	2013	and	2012	are	set	forth	below	(dollars	in	millions):

|  | Year	Ended	December	31 | Year	Ended	December	31 |  |
| :--- | :--- | :--- | :--- |
|  | 2013\t(a) | 2012 | Change |
| Packaging | $3,431.7 | $2,843.9 | $587.8 |
| Paper | 216.9 | — | 216.9 |
| Corporate\tand\tother\tand\teliminations | 16.7 | — | 16.7 |
| Net\tsales | $3,665.3 | $2,843.9 | $821.4 |
| Packaging | $545.9 | $389.7 | $156.2 |
| Paper | 13.5 | — | 13.5 |
| Corporate\tand\tother\tand\teliminations | (85.8) | 53.7 | (139.5) |
| Income\tfrom\toperations | $473.6 | $443.4 | $30.2 |
| Interest\texpense,\tnet | (58.3) | (62.9) | 4.6 |
| Income\tbefore\ttaxes | 415.3 | 380.5 | 34.8 |
| Income\ttax\t(expense)\tbenefit | 21.0 | (216.7) | 237.7 |
| Net\tincome | $436.3 | $163.8 | $272.5 |
| Net\tincome\texcluding\tspecial\titems\t(b) | $320.2 | $200.8 | $119.4 |
| Earnings,\tbefore\tinterest,\ttaxes,\tdepreciation,\tand\tamortization\t(EBITDA) | $675.4 | $614.2 | $61.2 |
| EBITDA\texcluding\tspecial\titems\t(b) | $742.4 | $520.7 | $221.7 |

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

# Net	Sales

Packaging.	Sales	increased	$587.8	million,	or	20.7%,	to	$3,431.7	million,	compared	with	$2,843.9	million	in	2012.	As	discussed	above,	higher	sales	price	and mix,	higher	sales	volumes,	and	two	months	and	five	days	of	Boise	operations	increased	sales	in	our	Packaging	segment.	Corrugated	products	shipments	per	workday increased	11.1%	in	2013,	compared	with	the	same	period	in	2012,	on	a	shipments-per-workday	basis.	Excluding	Boise's	shipments,	2013	shipments	increased	5.7%	in total,	and	were	up	6.1%	per	workday	compared	with	2012,	all	of	which	came	from	organic	growth.	Total	corrugated	products	volume	sold	in	2013,	including	Boise, increased	10.7%	over	the	same	period	last	year.	The	year	ended	December	31,	2013,	included	250	workdays,	those	days	not	falling	on	a	weekend	or	holiday,	compared to	251	workdays	in	2012.	Containerboard	volume	sold	to	outside	domestic	and	export	customers	was	essentially	unchanged	in	2013,	compared	with	2012,	as	the additional	Boise	outside	containerboard	sales	in	the	partial	fourth	quarter	were	offset	by	decreased	export	sales.	Containerboard	mill	production	in	2013	was	2,749,000 tons,	which	included	141,000	tons	from	the	acquired	Boise	mills,	compared	with	2,600,000	tons	in	2012.

Paper.	Our	paper	segment	sales	include	the	sales	for	the	white	paper	mills	we	acquired	from	Boise.	Sales	for	the	two	months	and	five	days	we	owned	Boise were	$216.9	million.	During	this	period,	sales	volumes	of	white	paper	were	210,000	tons.

# Gross	Profit

Gross	profit	increased	$218.6	million,	or	34.1%,	in	2013,	compared	with	2012	due	primarily	to	the	sales	price	and	volume	increases	described	above.	Gross profit	as	a	percentage	of	net	sales	increased	to	23.4%	of	net	sales	in	2013	compared	with	22.5%	in	the	same	period	in	2012.	Reported	2013	gross	profit	was	negatively affected	by	$21.5	million	of	expense	for	the	acquisition	inventory	step-up	related	to	the	acquisition	of	Boise,	of	which	$18.0	million	was	recorded	in	the	Packaging segment	and	$3.5	million	was	recorded	in	the	Paper	segment.	Excluding	the	step-up	expense,	gross	profit	was	24.0%	of	2013	net	sales.

# Selling,	General,	and	Administrative	Expenses

Selling,	general,	and	administrative	expenses	increased	$45.8	million,	or	16.3%,	in	2013	compared	to	2012.	Excluding	selling,	general,	and	administrative expenses	associated	with	the	acquired	Boise	businesses	of	approximately	$25.2	million,	selling,	general,	and	administrative	expenses	increased	$20.6	million,	primarily due	to	to	higher	costs	for	salaries	($6.9	million),	incentive	compensation	($4.8	million),	fringe	benefits	($1.8	million),	legal	expenses	($3.0	million),	travel	and	meeting costs	($1.7	million),	and	broker	commissions	($1.5	million).

# Other	Expense,	Net

Other	expense,	net,	in	2013	was	$59.0	million,	which	primarily	included	acquisition-related	costs	($17.2	million),	integration-related	and	other	costs	($17.4 million),	pension	plan	curtailment	charges	($10.9	million),	and	asset	disposals	and	write-offs	charges	($13.2	million).	In	2012,	"Other	expense,	net"	was	$11.8	million, which	related	primarily	to	asset	disposal	and	write-offs	charges	($10.8	million).

# Income	from	Operations

Income	from	operations	increased	$30.2	million,	or	6.8%,	for	the	year	ended	December	31,	2013,	compared	to	2012.	Our	2013	income	from	operations included	$67.1	million	of	expense	from	special	items,	consisting	of	$56.1	million	of	costs	primarily	related	to	the	acquisition	of	Boise	on	October	25,	2013,	and	$10.9 million	of	pension	plan	curtailment	charges.	Income	from	operations	in	2012	included	$95.5	million	of	income	related	to	alternative	energy	tax	credits,	offset	partially by	$2.0	million	of	plant	closure	charges.	Excluding	special	items,	income	from	operations	increased	$190.7	million	in	2013,	compared	with	2012.	The	increase	was primarily	due	to	increased	sales	price,	improved	mix,	higher	sales	volume,	and	a	partial	quarter	of	Boise	operations,	partially	offset	by	increased	costs.

Packaging.	Segment	income	from	operations	increased	$156.2	million,	or	40.0%,	to	$545.9	million,	compared	with	$389.7	million	in	2012.	Excluding	$30.3 million	of	special	items	related	to	acquisition	inventory	step-up,	integration-related	and	other	costs,	and	pension	curtailment	charges,	segment	income	increased	$184.5 million	to	$576.2	million,	compared	with	$391.7	million,	excluding	special	items	in	2012.	The	increase	primarily	related	to	increased	sales	price	and	improved	mix ($205.5	million),	higher	sales	volume	($25.2	million),	and	income	from	Boise's	operations	for	two	months	and	five	days	in	the	fourth	quarter	of	2013.	These improvements	were	partially	offset	by	increased	costs	for	labor	($16.8	million),	energy	($10.4	million),	transportation	($6.9	million),	incentive	compensation	($5.5 million),	wood	fiber	($5.8	million),	and	repairs	($4.1	million).

Paper.	Segment	income	from	operations	was	$13.5	million	in	2013,	which	included	$3.5	million	of	acquisition	inventory	step-up	included	in	cost	of	sales, partially	offset	by	$1.9	million	of	income	for	an	insurance	settlement	related	to	Boise's	St.	Helens,	Oregon,	mill,	net	of	other	expenses.	Excluding	these	special	items, segment	income	for	the	white	papers	business	was	$15.1	million.

# Interest	Expense,	Net,	and	Income	Taxes

Interest	expense,	net,	was	$58.3	million	in	2013,	compared	with	$62.9	million	in	2012.	Excluding	$10.5	million	of	expenses	related	to	financing	the	acquisition of	Boise	in	the	fourth	quarter	of	2013,	and	$1.1	million	of	expense	for	the	write-off	of	deferred	financing	costs	in	connection	with	repaying	the	term	loan	due	2016	and the	receivables	credit	facility	due	2014,	interest	expense	was	$46.7	million,	compared	with	$38.1	million	in	2012,	excluding	$24.8	million	of	debt	refinancing	charges. The	2013	increase	in	interest	expense,	excluding	special	items,	primarily	related	to	two	months	of	increased	interest	expense	on	the	higher	average	outstanding borrowings	used	to	fund	the	acquisition	of	Boise.

In	2013,	we	recorded	a	$21.0	million	income	tax	benefit,	which	included	$166.0	million	of	income	tax	benefits	from	the	reversal	of	the	reserve	for unrecognized	tax	benefits	from	alternative	energy	tax	credits.	The	IRS	completed	its	audit	of

PCA's	2008	and	2009	Federal	income	tax	returns	and	all	claimed	alternative	energy	tax	credits	were	allowed.	In	November	2013,	PCA	received	a	confirmation	letter from	the	Joint	Committee	on	Taxation	that	their	review	was	complete.	As	a	result,	a	$103.9	million	($102.0	million	of	tax	plus	$1.9	million	of	accrued	interest)	reserve for	unrecognized	tax	benefits	for	the	Filer	City	mill's	cellulosic	biofuel	tax	credit	was	fully	reversed	as	a	benefit	to	income	taxes	in	the	fourth	quarter.	Excluding	the alternative	energy	tax	credits,	the	2013	effective	tax	rate	was	34.9%,	compared	with	57.0%	in	2012,	as	reported,	or	34.5%,	excluding	the	impact	from	amending	our 2009	tax	return	in	2012	related	to	alternative	energy	tax	credits.	The	credits	are	described	in	Note	6,	Alternative	Energy	Tax	Credits,	of	the	Notes	to	Consolidated Financial	Statements	in	"Part	II,	Item	8.	Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K.	The	effective	tax	rate	varies	from	the	U.S.	federal	statutory tax	rate	of	35.0%	principally	due	to	the	impact	of	the	alternative	energy	tax	credits,	state	and	local	income	taxes	and	the	domestic	manufacturers'	deduction.

# 2013	Compared	to	2012	Balance	Sheet	Changes

The	changes	in	our	balance	sheet,	compared	with	December	31,	2012,	relate	primarily	to	the	Acquisition	and	liabilities	incurred	to	fund	the	Acquisition.	We increased	our	assets	approximately	$2.9	billion	and	our	liabilities	approximately	$1.6	billion	in	total	for	the	Acquisition	based	on	the	fair	values	on	the	acquisition	date. In	addition,	we	incurred	$2.0	billion	of	new	borrowings	which	was	used	to	finance	the	acquisition	of	Boise,	repay	$953.6	million	of	indebtedness,	which	included	$829.8 million	of	acquired	Boise	debt,	and	for	general	corporate	purposes.	For	more	information	about	the	acquisition	of	Boise,	see	Note	3,	Acquisitions,	and	Note	8,	Debt,	of the	Notes	to	Consolidated	Financial	Statements	in	"Part	II,	Item	8.	Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K.

|  | Year	Ended	December	31 | Year	Ended	December	31 |  |
| :--- | :--- | :--- | :--- |
|  | 2012 | 2011 | Change |
| Net\tsales | $2,843.9 | $2,620.1 | $223.8 |
| Income\tfrom\toperations | 443.4 | 272.7 | 170.7 |
| Interest\texpense,\tnet | (62.9) | (29.2) | (33.7) |
| Income\tbefore\ttaxes | 380.5 | 243.5 | 137.0 |
| Provision\tfor\tincome\ttaxes | (216.7) | (85.5) | (131.2) |
| Net\tincome | $163.8 | $158.0 | $5.8 |
| Net\tincome\texcluding\tspecial\titems\t(a) | $200.8 | $161.8 | $39.0 |
| EBITDA | $614.2 | $436.3 | $177.9 |
| EBITDA\texcluding\tspecial\titems\t(a) | $520.7 | $442.1 | $78.6 |

(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.

Net	sales	increased	$223.8	million,	or	8.5%,	for	the	year	ended	December	31,	2012,	from	the	year	ended	December	31,	2011.	Net	sales	increased	primarily	as	a result	of	increased	sales	volumes	($214.8	million)	and	higher	sales	prices	of	corrugated	products	and	containerboard	($9.0	million).

Total	corrugated	products	volume	sold	increased	6.6%	to	34.7	billion	square	feet	in	2012	compared	to	32.5	billion	square	feet	in	2011.	On	a	comparable shipment-per-workday	basis,	corrugated	products	sales	volume	also	increased	6.6%	in	2012	versus	2011.	Shipments-per-workday	is	calculated	by	dividing	our	total corrugated	products	volume	during	the	year	by	the	number	of	workdays	within	the	year.	Both	2012	and	2011	contained	251	workdays,	those	days	not	falling	on	a weekend	or	holiday.	Containerboard	sales	volume	to	external	domestic	and	export	customers	decreased	6.0%,	to	482,000	tons	for	the	year	ended	December	31,	2012, from	513,000	tons	in	2011.

Income	from	operations	increased	$170.7	million,	or	62.6%,	for	the	year	ended	December	31,	2012,	compared	to	2011.	As	noted	in	Note	6,	Alternative	Energy Tax	Credits,	of	the	Notes	to	Consolidated	Financial	Statements	in	"Part	II,	Item	8.	Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K,	PCA	amended	its 2009	federal	income	tax	return	to	reallocate	gallons	from	the	cellulosic	biofuel	producer	credits	to	the	alternative	fuel	mixture	credits.	As	a	result,	income	from operations	was	increased	by	$95.5	million	in	2012	with	an	offsetting	amount	recorded	in	tax	expense	of	$118.5	million.	Excluding	special	items	(as	detailed	below	under "Reconciliations	of	Non-GAAP	Financial	Measures	to	Reported	Amounts"),	income	from	operations	increased	$71.4	million	for	full	year	2012.	This	increase	was primarily	attributable	to	increased	sales	volumes	($50.7	million),	higher	sales	prices	($9.0	million)	and	lower	costs	for	energy	($26.5	million),	recycled	fiber	($18.6 million),	and	chemicals	($7.5	million).	These	improvements	were	partially	offset	by	increased	costs	for	fringe	benefits	($11.9	million),	depreciation	($11.5	million),	labor ($11.2	million),	and	transportation	($7.3	million).

Gross	profit	increased	$97.7	million,	or	18.0%,	for	the	year	ended	December	31,	2012,	from	the	year	ended	December	31,	2011.	Gross	profit	as	a	percentage	of net	sales	increased	from	20.7%	of	net	sales	in	the	year	ended	December	31,	2011,	to	22.5%	of	net	sales	in	the	year	ended	December	31,	2012,	primarily	due	to	increased volume	and	prices	and	reduced	costs	described	above.

Selling,	general,	and	administrative	expenses	increased	$22.3	million,	or	8.6%,	for	the	year	ended	December	31,	2012,	from	the	year	ended	December	31, 2011,	primarily	as	a	result	of	increased	costs	for	salaries	($11.4	million),	fringe	benefits	($3.8	million),	incentive	compensation	($3.4	million),	and	depreciation	($2.8 million).

Other	expense,	net,	increased	$1.1	million,	or	9.9%	for	the	year	ended	December	31,	2012,	compared	with	the	year	ended	December	31,	2011.	The	increase	was primarily	due	to	plant	closure	costs	($0.8	million).

Net	interest	expense	increased	$33.7	million,	or	115.4%,	for	the	year	ended	December	31,	2012,	compared	with	the	year	ended	December	31,	2011.	The	higher interest	expense	included	a	$21.3	million	premium	paid	as	part	of	the	July	2012	redemption	of	the	Company's	5.75%	notes	due	in	2013	and	a	$3.4	million	charge	from settling	the	Company's	2011	treasury	lock	prior	to	its	maturity.	The	remaining	$9.0	million	increase	in	interest	expense	was	primarily	a	result	of	lower	capitalized interest	($6.3	million)	related	primarily	to	the	Counce,	Tennessee	linerboard	mill	and	Valdosta,	Georgia	linerboard	mill	major	energy	projects	and	additional	interest expense	($2.1	million)	related	to	PCA's	term	loan	of	$150.0	million	borrowed	in	October	2011.

PCA's	effective	tax	rate	was	57.0%	for	the	year	ended	December	31,	2012,	which	included	a	22.5%	higher	rate	from	amending	our	2009	tax	return	in	2012 related	to	alternative	energy	tax	credits	as	described	in	Note	6,	Alternative	Energy	Tax	Credits,	of	the	Notes	to	Consolidated	Financial	Statements	in	"Part	II,	Item	8. Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K.	Excluding	the	amendment,	the	2012	effective	tax	rate	would	have	been	34.5%	for	the	year	ended December	31,	2012,	compared	to	35.1%	for	the	year	ended	December	31,	2011.	The	effective	tax	rate	varies	from	the	U.S.	federal	statutory	tax	rate	of	35.0% principally	due	to	the	impact	of	the	alternative	energy	tax	credits	in	2012,	state	and	local	income	taxes	and	the	domestic	manufacturers'	deduction.	PCA	had	no	material changes	to	its	reserve	for	unrecognized	tax	benefits	under	ASC	740,	"Income	Taxes,"	during	2012.

# Liquidity	and	Capital	Resources

# Sources	and	Uses	of	Cash

Our	primary	sources	of	liquidity	are	net	cash	provided	by	operating	activities	and	available	borrowing	capacity	under	our	revolving	credit	facility.	We	ended	the year	with	$191.0	million	of	cash	and	$331.0	million	of	unused	borrowing	capacity	under	the	revolving	credit	facility,	net	of	letters	of	credit.	Currently,	our	primary	uses of	cash	are	for	operations,	capital	expenditures,	debt	service	(including	voluntary	payments	of	debt),	and	declared	common	stock	dividends,	which	we	expect	to	be	able to	fund	from	these	sources.

We	believe	that	net	cash	generated	from	operating	activities,	cash	on	hand,	available	borrowings	under	our	revolving	credit	facility	and	available	capital through	access	to	capital	markets	will	be	adequate	to	meet	our	liquidity	and	capital	requirements,	including	payments	of	any	declared	common	stock	dividends	for	the foreseeable	future.	As	our	debt	or	credit

facilities	become	due,	we	will	need	to	repay,	extend	or	replace	such	facilities.	Our	ability	to	do	so	will	be	subject	to	future	economic	conditions	and	financial,	business, and	other	factors,	many	of	which	are	beyond	our	control.

Below	is	a	summary	table	of	our	cash	flows,	followed	by	a	discussion	of	our	sources	and	uses	of	cash	through	operating	activities,	investing	activities,	and financing	activities	(dollars	in	millions):

|  | 2013 | Year	Ended	December	31<br>2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Net\tcash\tprovided\tby\t(used\tfor): |  |  |  |
| Operating\tactivities | $608.2 | $404.2 | $345.5 |
| Investing\tactivities | (1,411.4) | (107.5) | (350.1) |
| Financing\tactivities | 786.8 | (245.6) | (35.6) |
| Net\tincrease\t(decrease)\tin\tcash\tand\tcash\tequivalents | $(16.4) | $51.1 | $(40.2) |

Our	foreign	operations	are	not	material	to	our	financial	position	or	results	of	operations.	At	December	31,	2013,	we	had	$7.1	million	of	cash	and	short-term investments	held	in	operations	outside	of	the	United	States.	We	indefinitely	reinvest	our	earnings	in	operations	outside	the	United	States;	however,	if	foreign	earnings were	repatriated	at	a	future	date,	we	would	need	to	accrue	and	pay	taxes.	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.

# Operating	Activities

In	2013,	net	cash	provided	by	operating	activities	was	$608.2	million,	compared	with	$404.2	million	in	2012,	an	increase	of	$204.0	million.	Approximately 61%,	or	$123.6	million	of	the	increase	in	cash	provided	by	operating	activities	before	changes	in	operating	assets	and	liabilities,	relate	to	the	increase	in	income	from	our operations	in	2013,	which	we	discuss	above	under	"Operating	Results,"	and	two	months	and	five	days	of	income	included	in	2013	from	the	newly	acquired	Boise operations.	In	addition,	we	used	an	additional	$7.2	million	of	alternative	energy	tax	credits	to	reduce	federal	income	tax	payments	during	2013,	compared	with	2012. Cash	used	for	operating	assets	and	liabilities,	excluding	acquisitions,	totaled	$0.4	million	in	2013,	compared	with	$80.8	million	in	2012.	The	lower	requirements	for operating	assets	and	liabilities,	excluding	acquisitions,	in	2013	were	driven	primarily	by	higher	accounts	payable	and	lower	inventory	levels,	partially	offset	by	lower accrued	liabilities	at	December	31,	2013,	compared	with	December	31,	2012.	Cash	requirements	for	operating	activities	are	subject	to	PCA's	operating	needs	and	the timing	of	collection	of	receivables	and	payments	of	payables	and	expenses.

Net	cash	provided	by	operating	activities	for	the	year	ended	December	31,	2012,	was	$404.2	million	compared	with	$345.5	million	for	the	year	ended December	31,	2011,	an	increase	of	$58.7	million,	or	17.0%.	Cash	provided	by	operating	activities	before	changes	in	operating	assets	and	liabilities	was	$485.0	million for	2012,	compared	with	$366.1	million	in	2011,	an	increase	of	$118.9	million	that	was	driven	by	the	higher	operating	income	in	2012	as	previously	discussed	above under	"Operating	Results"	and	an	additional	$29.5	million	of	alternative	energy	tax	credits	used	to	reduce	federal	income	tax	payments	during	2012,	compared	with 2011.	Cash	used	for	operating	assets	and	liabilities	totaled	$80.8	million	in	2012	compared	with	$20.5	million	in	2011,	an	increase	of	$60.3	million.	The	additional requirements	for	operating	assets	and	liabilities	in	2012	were	driven	by	reduced	accounts	payable	levels	in	2012	and	higher	levels	of	accounts	receivable	from	higher sales	volumes	in	2012.

# Investing	Activities

The	details	of	capital	expenditures	for	property	and	equipment,	excluding	acquisitions,	by	segment	for	the	year	ended	December	31,	2013,	are	included	in	the table	below	(dollars	in	millions).

|  | Year	Ended<br>December	31,	2013 |
| :--- | :--- |
| Packaging | \t $222.2 |
| Paper | 10.0 |
| Corporate\tand\tOther | 2.2 |

We	expect	capital	investments	in	2014	to	be	between	$380.0	million	and	$400.0	million,	including	capital	required	for	synergies,	Boiler	MACT	spending,	and the	DeRidder	conversion	project,	but	excluding	acquisitions,	if	any.	These	expenditures	could	increase	or	decrease	as	a	result	of	a	number	of	factors,	including	our financial	results,	future	economic	conditions,	and	our	regulatory	compliance	requirements.	We	currently	estimate	capital	expenditures	to	comply	with	Boiler	MACT regulations	(as	discussed	below	under	"Environmental	Matters")	in	2014	of	up	to	$31	million	and	we	expect	other	environmental	capital	expenditures	of	about	$4 million	in	2014.	Our	estimated	environmental	expenditures	could	vary	significantly	depending	upon	the	enactment	of	new	environmental	laws	and	regulations,	including those	related	to	greenhouse	gas	emissions	and	industrial	boilers.	For	additional	information,	see	"Environmental	Matters"	in	this	Management's	Discussion	and	Analysis of	Financial	Condition	and	Results	of	Operations.

At	December	31,	2013,	PCA	had	commitments	for	capital	expenditures	of	$151.4	million.	PCA	believes	that	cash-on-hand	combined	with	cash	flow	from operations	will	be	sufficient	to	fund	these	commitments.

Net	cash	used	for	investing	activities	for	the	year	ended	December	31,	2012,	decreased	$242.7	million,	or	69.3%,	to	$107.5	million,	compared	with	the	year ended	December	31,	2011.	The	decrease	was	related	to	lower	capital	investments	of	$151.7	million	as	our	major	energy	projects	were	completed	in	2011,	the	receipt	of $57.4	million	in	grant	proceeds	from	the	U.S.	Treasury	in	2012,	and	lower	cost	of	acquisitions	of	$21.9	million	and	lower	additions	to	long	term	assets	of	$12.0	million during	2012	compared	with	2011.

# Financing	Activities

In	2013,	financing	activities	provided	$786.8	million,	while	we	used	$245.6	million	for	financing	activities	in	2012.	The	change	was	due	primarily	to	activities related	to	financing	the	acquisition	of	Boise.	In	October	2013,	we	entered	into	$2.35	billion	of	new	borrowings,	including	a	$350.0	million	revolver	which	remains undrawn.	We	used	the	proceeds	from	these	borrowings	and	cash	on	hand	to	finance	the	acquisition	of	Boise,	repay	$953.6	million	of	indebtedness,	which	included $829.8	million	of	acquired	Boise	debt,	and	for	general	corporate	purposes.	In	addition	in	2013,	we	repaid	$12.2	million	of	outstanding	debt	prior	to	the	acquisition	of Boise	and	$109.0	million	that	was	outstanding	under	our	receivables	credit	facility	that	we	terminated	and	repaid	in	December	2013.	In	2013,	we	also	paid	$19.4 million	of	financing	costs.	We	also	paid	$109.1	million	of	dividends	and	we	repurchased	$7.8	million	of	common	stock	in	2013,	compared	with	$117.9	million	of dividends	paid	and	$45.2	million	of	common	stock	repurchases	in	2012.	The	higher	dividends	paid	in	2012	resulted	from	accelerating	the	dividends	that	would	have been	paid	in	January	2013	to	December	2012.	Beginning	in	2013,	we	began	withholding	shares	from	vesting	equity	awards	to	cover	employee	tax	liabilities,	which amounted	to	$11.0	million.	In	2012,	we	also	paid	$65.5	million	to	settle	treasury	locks.

For	more	information	about	our	debt,	commitments,	and	treasury	lock	derivative	instruments,	see	Note	8,	Debt,	Note	20,	Commitments,	Guarantees, Indemnifications,	and	Legal	Proceedings,	and	Note	11,	Derivative	Instruments	and	Hedging	Activities,	respectively,	of	the	Notes	to	Consolidated	Financial	Statements in	"Part	II,	Item	8.	Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K.

Net	cash	used	for	financing	activities	totaled	$245.6	million	in	2012,	compared	with	$35.6	million	in	2011,	an	increase	of	$210.0	million.	Payments	on	long- term	debt,	net	of	proceeds	received,	were	a	use	of	cash	of	$40.1	million	in	2012	compared	with	a	source	of	cash	of	$149.3	million	in	2011,	or	a	difference	of	$189.4 million.	Additionally,	PCA	paid	an	additional	$75.4	million	to	settle	treasury	locks	in	2012	compared	with	2011.	Also	in	2012,	the	Company	paid	higher	dividends	of $41.8	million,	including	the	$24.5	million	of	dividends	that	would	have	been	paid	in	January	of	2013	but	were	accelerated	to	December	of	2012.	This	was	partially offset	by	lower	repurchases	of	PCA	common	stock	of	$79.9	million	and	higher	proceeds	received	from	stock	option	exercises	of	$15.7	million	during	2012	compared with	2011.

On	June	26,	2012,	PCA	issued	$400.0	million	of	3.90%	senior	notes	due	June	15,	2022,	through	a	registered	public	offering.	PCA	used	the	proceeds	from	the offering,	together	with	cash	on	hand,	to	redeem	its	$400.0	million	of	5.75%	senior	notes	due	August	1,	2013,	on	July	26,	2012.	In	connection	with	the	redemption,	PCA paid	a	redemption	premium	of	$21.3	million	and	$11.2	million	of	accrued	and	unpaid	interest.

# Commitments

# Contractual	Obligations

The	table	below	sets	forth	our	enforceable	and	legally	binding	obligations	as	of	December	31,	2013,	for	the	categories	described	below.	Some	of	the	amounts included	in	the	table	are	based	on	management's	estimates	and	assumptions	about	these	obligations,	including	their	duration,	the	possibility	of	renewal,	anticipated actions	by	third	parties,	and	other	factors.	Because	these	estimates	and	assumptions	are	necessarily	subjective,	our	actual	payments	may	vary	from	those	reflected	in	the table.	Purchase	orders	made	in	the	ordinary	course	of	business	are	excluded	from	the	table	below.	Any	amounts	for	which	we	are	liable	under	purchase	orders	are reflected	on	the	Consolidated	Balance	Sheets	as	accounts	payable	and	accrued	liabilities	(dollars	in	millions):

|  |  | Less	Than |  |  | More	Than |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | Total | 1\tYear | 1-3\tYears | 3-5\tYears | 5\tYears |
| Five-Year\tTerm\tloan,\tdue\tOctober\t2018 | $650.0 | $32.5 | $130.0 | $487.5 | $— |
| Seven-Year\tTerm\tloan,\tdue\tOctober\t2020 | 650.0 | 6.5 | 13.0 | 13.0 | 617.5 |
| 4.50%\tSenior\tnotes,\tdue\tNovember\t2023 | 700.0 | — | — | — | 700.0 |
| 6.50%\tSenior\tNotes,\tdue\tMarch\t2018 | 150.0 | — | — | 150.0 | — |
| 3.90%\tSenior\tNotes,\tdue\tJune\t2022 | 400.0 | — | — | — | 400.0 |
| Total\tshort-term\tand\tlong-term\tdebt\t(a) | 2,550.0 | 39.0 | 143.0 | 650.5 | 1,717.5 |
| Interest\t(b) | 600.9 | 78.9 | 155.1 | 140.9 | 226.0 |
| Capital\tlease\tobligations | 39.1 | 2.6 | 5.3 | 5.3 | 25.9 |
| Operating\tleases\t(c) | 249.2 | 56.5 | 80.2 | 40.9 | 71.6 |
| Capital\tcommitments | 151.4 | 151.4 | — | — | — |
| Purchase\tobligations: |  |  |  |  |  |
| Raw\tmaterials\tand\tfinished\tgoods\tinventory\t(d) | 131.1 | 79.0 | 52.1 | — | — |
| Utilities\t(e) | 46.5 | 35.1 | 11.1 | 0.3 | — |
| Other\t(f) | 30.1 | 7.0 | 6.4 | 5.2 | 11.5 |
| Other\tlong-term\tliabilities\treflected\ton\tour\tConsolidated\tBalance\nSheet\t(g): |  |  |  |  |  |
| Compensation\tand\tbenefits\t(h) | 195.6 | 7.9 | 78.9 | 36.5 | 72.3 |
| Other\t(i)\t(j) | 60.3 | 4.7 | 8.8 | 5.6 | 41.2 |
|  | $4,054.2 | $462.1 | $540.9 | $885.2 | $2,166.0 |

(a) The	table	assumes	our	long-term	debt	is	held	to	maturity	and	includes	the	current	portion	of	long-term	debt.	See	Note	8,	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	$2.2	million	at	December	31,	2013.

(b) Amounts	represent	estimated	future	interest	payments	as	of	December	31,	2013,	assuming	our	long-term	debt	is	held	to	maturity	and	using	interest	rates	in	effect	at December	31,	2013.	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	$100.0	million	of	wood	fiber.	Purchase	prices	under	most	of	these agreements	are	set	quarterly	or	semiannually	based	on	regional	market	prices,	and	the	estimate	is	based	on	contract	terms	or	first	quarter	2014	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.	Under	most of	these	log	and	fiber	supply	agreements,	we	have	the	right	to	cancel	or	reduce	our	commitments	in	the	event	of	a	mill	curtailment	or	shutdown.	Our	log	and	fiber obligations	are	subject	to	change	based	on,	among	other	things,	the	effect	of	governmental	laws	and	regulations,	our	manufacturing	operations	not	operating	in	the	normal course	of	business,	log	and	fiber	availability,	and	the	status	of	environmental	appeals.

(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,	2013,	or	upon contract	language,	if	available.

(f) Consists	primarily	of	wood	chip	processing	service	agreements.

(g) Long-term	deferred	income	taxes	of	$434.8	million	and	unrecognized	tax	benefits	of	$5.7	million,	including	interest	and	penalties,	are	excluded	from	this	table,	because	the timing	of	their	future	cash	outflows	are	uncertain.

(h) Amounts	primarily	consist	of	pension	and	postretirement	obligations,	including	current	portion	of	$2.1	million	and	2014	required	minimum	contributions	of	approximately $5.0	million.	Actuarially	determined	liabilities	related	to	pension	benefits	are	recorded	based	on	estimates	and	assumptions.	Key	factors	used	in	developing	estimates	of these	liabilities	include	assumptions	related	to	discount	rates,	retirement	and	mortality	rates,	expected	contributions,	and	other	factors.	Changes	in	estimates	and	assumptions related	to	the	measurement	of	funded	status	could	have	a	material	impact	on	the	amount	reported.	In	the	table	above,	we	allocated	our	pension	obligations	by	year	based	on the	future	required	minimum	pension	contributions,	as	determined	by	our	actuaries.	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.

(i) Includes	current	liabilities	of	$3.6	million	related	primarily	to	the	current	portion	of	workers'	compensation	liability.

(j) We	have	excluded	$2.9	million	of	noncurrent	deferred	lease	costs	and	unfavorable	lease	liabilities	from	the	other	long-term	liabilities	in	the	table	above.	These	amounts have	been	excluded	because	deferred	lease	costs	relate	to	operating	leases	which	are	already	reflected	in	the	operating	lease	category	in	the	table,	and	unfavorable	lease liabilities	do	not	represent	a	contractual	obligation	which	will	be	settled	in	cash.

# Off-Balance-Sheet	Arrangements

The	Company	does	not	have	any	off-balance	sheet	arrangements	as	of	December	31,	2013.

Environmental	compliance	requirements	are	a	significant	factor	affecting	our	business.	We	employ	processes	in	the	manufacture	of	containerboard,	paper,	and pulp	which	result	in	various	discharges,	emissions	and	wastes.	These	processes	are	subject	to	numerous	federal,	state,	local	and	foreign	environmental	laws	and regulations.	We	operate	and	expect	to	continue	to	operate,	under	environmental	permits	and	similar	authorizations	from	various	governmental	authorities	that	regulate such	discharges,	emissions	and	wastes.	The	most	significant	of	these	laws	affecting	the	Company	are:

•Resource	Conservation	and	Recovery	Act

•Clean	Water	Act	(CWA);

•Clean	Air	Act

•The	Emergency	Planning	and	Community	Right-to-Know-Act	(EPCRA);

•Toxic	Substance	Control	Act

•Safe	Drinking	Water	Act	(SDWA).

We	believe	that	we	are	currently	in	material	compliance	with	these	and	all	applicable	environmental	rules	and	regulations.	Because	environmental	regulations are	constantly	evolving,	the	Company	has	incurred,	and	will	continue	to	incur,	costs	to	maintain	compliance	with	these	and	other	environmental	laws.	The	Company works	diligently	to	anticipate	and	budget	for	the	impact	of	applicable	environmental	regulations,	and	does	not	currently	expect	that	future	environmental	compliance obligations	will	materially	affect	its	business	or	financial	condition.	For	the	years	ended	December	31,	2013,	2012,	and	2011,	we	spent	$41.1	million,	$25.8	million	and $26.0	million,	respectively,	to	comply	with	the	requirements	of	these	and	other	environmental	laws.

As	is	the	case	with	any	industrial	operation,	PCA	has,	in	the	past,	incurred	costs	associated	with	the	remediation	of	soil	or	groundwater	contamination,	as required	by	the	federal	Comprehensive	Environmental	Response,	Compensation	and	Liability	Act,	commonly	known	as	the	federal	"Superfund"	law,	and	analogous	state laws.	Cleanup	requirements	arise	with	respect	to	properties	the	Company	currently	owns	or	operates,	former	facilities	and	off-site	facilities	where	the	Company	has disposed	of	hazardous	substances.	As	part	of	the	sale	to	PCA	of	the	containerboard	and	corrugated	products	business	of	Pactiv	Corporation	in	April	1999,	Pactiv	agreed to	retain	all	liability	for	all	former	facilities	and	all	sites	associated	with	pre-closing	off-site	waste	disposal.	Pactiv	also	retained	environmentally	impaired	real	property in	Filer	City,	Michigan	unrelated	to	current	mill	operations.	In	addition,	OfficeMax	(now	an	indirect,	wholly	owned	subsidiary	of	Office	Depot)	retains	responsibility	for certain	environmental	liabilities	related	to	some	of	the	businesses,	facilities,	and	assets	we	acquired	from	Boise.	Generally,	this	responsibility	relates	to	hazardous substance	releases	and	other	environmental	incidents	that	arose	before	2004.	Some	of	these

liabilities	could	be	significant;	however,	OfficeMax	may	not	have	sufficient	funds	to	satisfy	its	indemnification	obligations,	and	in	some	cases,	we	may	not	be	entitled	to such	indemnification.

In	January	2013,	the	U.S.	Environmental	Protection	Agency	(the	"EPA")	established	a	three	year	deadline	for	compliance	with	the	Boiler	MACT	regulations, establishing	air	emissions	standards	and	certain	other	requirements	for	industrial	boilers.	States	are	authorized	to	extend	the	deadline	an	additional	year	if	they	so	elect. PCA	is	currently	assessing	the	impact	of	these	regulations,	which	are	expected	to	require	modifications	to	or	replacement	of	certain	of	PCA's	boilers.	PCA	currently estimates	that	compliance	with	the	final	rule	will	require	capital	expenditures	between	$38	million	and	$42	million	over	the	next	three	years.	Due	to	the	complexity	of these	regulations,	and	the	potential	for	additional	future	regulatory	or	judicial	modification	to	these	regulations,	this	estimate	is	subject	to	further	revisions.	We	currently estimate	capital	expenditures	to	comply	with	Boiler	MACT	regulations	in	2014	of	up	to	$31	million	and	expect	other	environmental	capital	expenditures	of	about	$4 million	in	2014.	Total	capital	expenditures	for	environmental	matters	were	$9.9	million	for	2013	as	if	Boise	had	been	combined	with	us	on	January	1,	2013,	and $1.8	million	and	$2.8	million	for	2012	and	2011,	respectively.

Because	liability	for	remediation	costs	under	environmental	laws	is	strict,	meaning	that	liability	is	imposed	without	fault,	joint	and	several,	meaning	that liability	is	imposed	on	each	party	without	regard	to	contribution,	and	retroactive,	PCA	could	receive	notifications	of	cleanup	liability	in	the	future	and	this	liability	could be	material.	From	1994	through	2013,	remediation	costs	at	PCA's	mills	and	corrugated	plants	totaled	approximately	$3.2	million	and	the	acquired	Boise	locations	have not	incurred	any	significant	remediation	costs	since	their	inception	in	2008.	As	of	December	31,	2013,	we	maintained	an	environmental	reserve	of	$34.1	million	relating to	on-site	landfills	and	surface	impoundments	as	well	as	ongoing	and	anticipated	remedial	projects.	As	of	this	filing,	the	Company	believes	that	it	is	not	reasonably possible	that	future	environmental	expenses	above	the	$34.1	million	accrued	at	December	31,	2013,	will	have	a	material	impact	on	its	financial	condition,	results	of operations,	and	cash	flows.

While	legislation	regarding	the	regulation	of	greenhouse	gas	emissions	has	been	proposed	at	the	federal	level,	it	is	uncertain	whether	such	legislation	will	be passed	and,	if	so,	what	the	breadth	and	scope	of	such	legislation	will	be.	The	result	of	the	regulation	of	greenhouse	gas	emissions	could	be	an	increase	in	our	future environmental	compliance	costs,	through	caps,	taxes	or	additional	capital	expenditures	to	modify	facilities,	which	may	be	material.	However,	climate	change	legislation and	the	resulting	future	energy	policy	could	also	provide	us	with	opportunities	if	the	use	of	renewable	energy	is	encouraged.	We	currently	self-generate	a	significant portion	of	our	power	requirements	at	our	mills	using	bark,	black	liquor	and	biomass	as	fuel,	which	are	derived	from	renewable	resources.	While	we	believe	we	are	well- positioned	to	take	advantage	of	any	renewable	energy	incentives,	it	is	uncertain	what	the	ultimate	costs	and	opportunities	of	any	climate	change	legislation	will	be	and how	our	business	and	industry	will	be	affected.

# Critical	Accounting	Policies	and	Estimates

Management's	discussion	and	analysis	of	financial	condition	and	results	of	operations	are	based	upon	the	Company's	consolidated	financial	statements,	which have	been	prepared	in	accordance	with	accounting	principles	generally	accepted	in	the	United	States	of	America.	The	preparation	of	these	financial	statements	requires us	to	make	estimates	and	judgments	that	affect	the	reported	amounts	of	assets,	liabilities,	revenues	and	expenses,	and	related	disclosures	of	contingent	assets	and liabilities.	On	an	ongoing	basis,	PCA	evaluates	its	estimates,	including	those	related	to	business	combinations,	goodwill	and	intangible	assets,	pensions	and	other postretirement	benefits,	environmental	liabilities,	income	taxes,	and	long-lived	asset	impairment,	among	others.	PCA	bases	its	estimates	on	historical	experience	and	on various	other	assumptions	that	are	believed	to	be	reasonable	under	the	circumstances,	the	results	of	which	form	the	basis	for	making	judgments	about	the	carrying	values of	assets	and	liabilities	that	are	not	readily	apparent	from	other	sources.	Actual	results	may	differ	from	these	estimates	under	different	assumptions	or	conditions.

Critical	accounting	estimates	are	those	that	are	most	important	to	the	portrayal	of	our	financial	condition	and	results.	These	estimates	require	management's most	difficult,	subjective,	or	complex	judgments.	We	review	the	development,	selection,	and	disclosure	of	our	critical	accounting	estimates	with	the	Audit	Committee	of our	board	of	directors.	The	Company	believes	that	of	its	significant	accounting	policies,	the	following	involve	a	higher	degree	of	judgment	and/or	complexity:

# Business	Combinations

From	time	to	time,	we	may	enter	into	material	business	combinations.	We	allocate	the	total	purchase	price	of	a	business	combination	to	the	assets	acquired	and the	liabilities	assumed	based	on	their	estimated	fair	values	at	the	acquisition	date,	with	the	excess	purchase	price	recorded	as	goodwill.	The	acquisition	method	of accounting	requires	us	to	make	significant	estimates	and	assumptions	regarding	the	fair	values	of	the	elements	of	a	business	combination	as	of	the	date	of	acquisition,

including	the	fair	values	(fair	value	is	determined	using	the	income	approach,	cost	approach	and	or	market	approach)	of	inventory,	property,	plant,	and	equipment, identifiable	intangible	assets,	deferred	tax	asset	valuation	allowances,	and	liabilities	related	to	uncertain	tax	positions,	among	others.	This	method	also	requires	us	to refine	these	estimates	over	a	measurement	period	not	to	exceed	one	year	to	reflect	new	information	obtained	about	facts	and	circumstances	that	existed	as	of	the acquisition	date	that,	if	known,	would	have	affected	the	measurement	of	the	amounts	recognized	as	of	that	date.	If	we	are	required	to	retroactively	adjust	provisional amounts	that	we	have	recorded	for	the	fair	values	of	assets	and	liabilities	in	connection	with	acquisitions,	these	adjustments	could	have	a	material	impact	on	our financial	condition	and	results	of	operations.	Additionally,	we	expense	any	acquisition-related	costs	as	incurred	in	connection	with	each	business	combination.

Significant	estimates	and	assumptions	in	estimating	the	fair	value	of	customer	relationships	and	other	identifiable	intangible	assets	include	future	cash	flows that	we	expect	to	generate	from	the	acquired	assets.	If	the	subsequent	actual	results	and	updated	projections	of	the	underlying	business	activity	change	compared	with	the assumptions	and	projections	used	to	develop	these	values,	we	could	record	impairment	charges.	In	addition,	we	have	estimated	the	economic	lives	of	certain	acquired assets	and	these	lives	are	used	to	calculate	depreciation	and	amortization	expense.	If	our	estimates	of	the	economic	lives	change,	depreciation	or	amortization	expenses could	be	increased	or	decreased.

# Goodwill	and	Intangible	Asset	Impairment

Goodwill	represents	the	excess	of	the	cost	of	an	acquired	business	over	the	fair	value	of	the	identifiable	tangible	and	intangible	assets	acquired	and	liabilities assumed	in	a	business	combination.	At	December	31,	2013,	we	had	$526.8	million	of	goodwill,	of	which	we	recorded	$458.6	million	in	connection	with	the	acquisition of	Boise	in	fourth	quarter	2013.	At	December	31,	2013,	we	had	$472.9	million	and	$53.9	million	of	goodwill	recorded	in	our	Packaging	and	Paper	segments, respectively.	All	of	our	intangible	assets	are	amortized	over	their	estimated	useful	lives.

We	test	goodwill	for	impairment	annually	in	the	fourth	quarter	or	sooner	if	events	or	changes	in	circumstances	indicate	that	the	carrying	value	of	the	asset	may exceed	fair	value.	Recoverability	of	goodwill	is	determined	by	comparing	the	fair	value	of	the	reporting	unit	with	its	carrying	value,	including	goodwill.	If	the	carrying amount	of	the	reporting	unit	exceeds	the	fair	value,	the	implied	fair	value	of	the	reporting	unit's	goodwill	is	compared	to	the	carrying	amount	of	its	goodwill	to	determine if	a	write-down	to	fair	value	is	necessary.	Based	on	the	results	of	the	goodwill	impairment	test,	we	concluded	that	no	goodwill	impairment	existed.

If	management's	estimates	of	future	operating	results	materially	change	or	if	there	are	changes	to	other	assumptions,	the	estimated	fair	value	of	our	identifiable intangible	assets	and	goodwill	could	change	significantly.	Such	change	could	result	in	impairment	charges	in	future	periods,	which	could	have	a	significant	noncash impact	on	our	operating	results	and	financial	condition.	We	cannot	predict	the	occurrence	of	future	events	that	might	adversely	affect	the	reported	value	of	our	goodwill and	intangible	assets.	As	additional	information	becomes	known,	we	may	change	our	estimates.

# Pensions

The	Company	accounts	for	defined	benefit	pension	plans	in	accordance	with	Accounting	Standards	Codification	("ASC")	715,	"Compensation	-	Retirement Benefits."	The	calculation	of	pension	expense	and	pension	liabilities	requires	decisions	about	a	number	of	key	assumptions	that	can	significantly	affect	expense	and liability	amounts,	including	discount	rates,	expected	return	on	plan	assets,	expected	rate	of	compensation	increases,	retirement	rates,	mortality	rates,	expected contributions,	and	other	factors.	The	pension	assumptions	used	to	measure	pension	expense	and	liabilities	are	discussed	in	Note	10,	Employee	Benefit	Plans	and	Other Postretirement	Benefits.

We	recognize	the	funded	status	of	our	pension	plans	on	our	Consolidated	Balance	Sheet	and	recognize	the	actuarial	and	experience	gains	and	losses	and	the prior	service	costs	and	credits	as	a	component	of	"Accumulated	Other	Comprehensive	Loss"	in	our	Consolidated	Statement	of	Changes	in	Stockholders'	Equity.	Actual results	that	differ	from	assumptions	are	accumulated	and	amortized	over	future	periods	and,	therefore,	generally	affect	recognized	expense	in	future	periods.	At December	31,	2013,	we	had	approximately	$36.3	million	recorded	in	"Accumulated	other	comprehensive	loss,	net	of	tax"	on	our	Consolidated	Balance	Sheet. 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,	which	is	between	seven	to	ten	years,	to	the	extent	that	losses	are	not	offset	by	gains	in	subsequent	years. While	we	believe	that	the	assumptions	used	to	measure	our	pension	obligations	are	reasonable,	differences	in	actual	experience	or	changes	in	assumptions	may materially	affect	our	pension	obligations	and	future	expense.

We	believe	that	the	accounting	estimate	related	to	pensions	is	a	critical	accounting	estimate	because	it	is	highly	susceptible	to	change	from	period	to	period.	As discussed	above,	the	future	effects	of	pension	plans	on	our	financial	position	and	results	of	operations	will	depend	on	economic	conditions,	employee	demographics, mortality	rates,	retirement	rates,	investment	performance,	and	funding	decisions,	among	other	factors.	The	following	table	presents	selected	assumptions	used	and expected	to	be	used	in	the	measurement	of	pension	expense	in	the	following	periods	(dollars	in	millions):

|  | Year	Ending | Year	Ended	December	31 |  |
| :--- | :--- | :--- | :--- |
|  | December\t31,\t2014 | 2013 | 2012 |
| Pension\texpense | $25.4 | $46.4 | $36.0 |
| Assumptions |  |  |  |
| Discount\trate | 5.00% | 4.57% | 4.75% |
| Expected\trate\tof\treturn\ton\tplan\tassets | 6.69% | 6.53% | 6.15% |

A	change	of	0.25%	in	either	direction	to	the	discount	rate	or	the	expected	rate	of	return	on	plan	assets	would	have	had	the	following	effect	on	2013	and	2014 pension	expense	(dollars	in	millions):

|  |  | Increase	(Decrease)	in	Pension	Expense	(a) | Increase	(Decrease)	in	Pension	Expense	(a) |
| :--- | :--- | :--- | :--- |
|  | Base\tExpense | 0.25%\tIncrease | 0.25%\tDecrease |
| 2013\tExpense\t(b) |  |  |  |
| Discount\trate | $46.4 | $(2.2) | $2.3 |
| Expected\trate\tof\treturn\ton\tplan\tassets | 46.4 | (0.8) | 0.8 |
| 2014\tExpense |  |  |  |
| Discount\trate | $25.4 | $(0.6) | $1.7 |
| Expected\trate\tof\treturn\ton\tplan\tassets | 25.4 | (1.9) | 1.9 |

(a) The	sensitivities	shown	above	are	specific	to	2013	and	2014.	The	sensitivities	may	not	be	additive,	so	the	impact	of	changing	multiple	factors	simultaneously	cannot	be calculated	by	combining	the	individual	sensitivities	shown.

(b) 2013	expense	includes	$10.9	million	of	non-cash	pretax	pension	curtailment	charges	in	which	certain	hourly	corrugated	and	containerboard	mill	employees	will	transition from	an	hourly	defined	benefit	pension	plan	to	a	defined	contribution	401K	plan.

For	more	information	related	to	our	pensions	benefits,	including	the	general	nature	of	the	plans,	deferred	gains	and	losses,	funding	obligations,	and	cash	flows, 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.

# Income	Taxes

We	account	for	income	taxes	and	separately	recognize	deferred	tax	assets	and	deferred	tax	liabilities.	We	are	subject	to	income	taxes	in	both	the	U.S.	and foreign	jurisdictions.	Significant	judgments	and	estimates	are	required	in	determining	the	consolidated	income	tax	expense	and	our	tax	basis	in	assets	and	liabilities.

PCA's	annual	tax	rate	is	determined	based	on	income,	statutory	tax	rates	and	the	tax	impacts	of	items	treated	differently	for	tax	purposes	than	for	financial reporting	purposes.	Tax	law	requires	some	items	to	be	included	in	the	tax	return	at	different	times	than	the	items	reflected	in	the	financial	statements.	As	a	result,	the annual	tax	rate	in	the	financial	statements	is	different	than	the	rate	reported	on	PCA's	tax	return.	Some	of	these	differences	are	permanent,	such	as	expenses	that	are	not deductible	in	the	tax	return,	and	some	differences	are	temporary,	reversing	over	time,	such	as	depreciation	expense.	These	temporary	differences	create	deferred	tax assets	and	liabilities.	We	also	recognize	only	the	impact	of	tax	positions	that,	based	on	their	technical	merits,	are	more	likely	than	not	to	be	sustained	upon	an	audit	by the	taxing	authority.

Inherent	in	determining	the	annual	tax	rate	are	judgments	regarding	business	plans,	planning	opportunities	and	expectations	about	future	outcomes.	Significant management	judgments	are	required	for	the	following	items:

•Management	reviews	PCA's	deferred	tax	assets	for	realizability.	Valuation	allowances	are	established	when	management	believes	that	it	is	more	likely	than not	that	some	portion	of	the	deferred	tax	assets	will	not	be	realized.	Changes	in	valuation	allowances	from	period	to	period	are	included	in	the	tax	provision.

•PCA	establishes	accruals	for	unrecognized	tax	benefits	when,	despite	the	belief	that	PCA's	tax	return	positions	are	fully	supported,	PCA	believes	that	an uncertain	tax	position	does	not	meet	the	recognition	threshold	of	ASC	740,	"Income	Taxes."	The	tax	contingency	accruals	are	adjusted	in	light	of	changing facts	and	circumstances,	such	as	the	progress	of	tax	audits,	the	expiration	of	the	statute	of	limitations	for	the	relevant	taxing	authority	to	examine	a	tax return,	case	law	and	emerging	legislation.	While	it	is	difficult	to	predict	the	final	outcome	or	timing	of	resolution	for	any	particular	tax	matter,	PCA	believes that	the	accruals	for	unrecognized	tax	benefits	at	December	31,	2013,	reflect	the	likely	outcome	of	known	tax	contingencies	as	of	such	date	in	accordance with	accounting	for	uncertainty	in	income	taxes	under	ASC	740.

The	calculation	of	our	tax	liabilities	involves	dealing	with	uncertainties	in	the	application	of	complex	U.S.	and	foreign	tax	regulations,	exposures	from	not filing	in	some	jurisdictions,	and	transfer	pricing	exposures	from	allocation	of	income	between	jurisdictions.	It	is	inherently	difficult	and	subjective	to	estimate	uncertain tax	positions,	because	we	have	to	determine	the	probability	of	various	possible	outcomes.	We	evaluate	these	uncertain	tax	positions	on	a	quarterly	basis.	This	evaluation is	based	on	factors	including,	but	not	limited	to,	changes	in	facts	or	circumstances,	changes	in	tax	law,	effectively	settled	issues	under	audit,	and	new	audit	activity.	Such a	change	in	recognition	or	measurement	would	result	in	the	recognition	of	a	tax	benefit	or	an	additional	charge	to	the	tax	provision.

# Long-Lived	Asset	Impairment

An	impairment	of	a	long-lived	asset	exists	when	the	carrying	value	of	an	asset	is	not	recoverable	through	future	undiscounted	cash	flows	from	operations	and when	the	carrying	value	of	the	asset	exceeds	its	fair	value.	Long-lived	asset	impairment	is	a	critical	accounting	estimate,	as	it	is	susceptible	to	change	from	period	to period.

We	review	the	carrying	value	of	long-lived	assets	for	impairment	when	events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of	assets	may	not be	recoverable.	For	purposes	of	testing	for	impairment,	we	group	our	long-lived	assets	at	the	lowest	level	for	which	identifiable	cash	flows	are	largely	independent	of	the cash	flows	from	other	assets	and	liabilities.	Our	asset	groupings	vary	based	on	the	related	business	in	which	the	long-lived	asset	is	employed	and	the	interrelationship between	those	long-lived	assets	in	producing	net	cash	flows.	Asset	groupings	could	change	in	the	future	if	changes	in	the	operations	of	the	business	or	business environment	affect	the	way	particular	long-lived	assets	are	employed	or	the	interrelationships	between	assets.	To	estimate	whether	the	carrying	value	of	an	asset	or	asset group	is	impaired,	we	estimate	the	undiscounted	cash	flows	that	could	be	generated	under	a	range	of	possible	outcomes.	To	measure	future	cash	flows,	we	are	required to	make	assumptions	about	future	production	volumes,	future	product	pricing,	and	future	expenses	to	be	incurred.	In	addition,	estimates	of	future	cash	flows	may	change based	on	the	availability	of	fiber,	environmental	requirements,	capital	spending,	and	other	strategic	management	decisions.	We	estimate	the	fair	value	of	an	asset	or	asset group	based	on	quoted	market	prices	for	similar	assets	and	liabilities	or	inputs	that	are	observable	either	directly	(Level	1	measurement)	or	indirectly	(the	amount	for which	the	asset(s)	could	be	bought	or	sold	in	a	current	transaction	with	a	third	party)	when	available	(Level	2	measurement).	When	quoted	market	prices	are	not available,	we	use	a	discounted	cash	flow	model	to	estimate	fair	value	(Level	3	measurement).

We	periodically	assess	the	estimated	useful	lives	of	our	assets.	Changes	in	circumstances,	such	as	changes	to	our	operational	or	capital	strategy,	changes	in regulation,	or	technological	advances,	may	result	in	the	actual	useful	lives	differing	from	our	estimates.	Revisions	to	the	estimated	useful	lives	of	assets	requires judgment	and	constitutes	a	change	in	accounting	estimate,	which	is	accounted	for	prospectively	by	adjusting	or	accelerating	depreciation	and	amortization	rates.

# New	and	Recently	Adopted	Accounting	Standards

For	a	listing	of	our	new	and	recently	adopted	accounting	standards,	see	Note	2,	Summary	of	Significant	Accounting	Policies,	of	the	Notes	to	Consolidated Financial	Statements	in	"Part	II,	Item	8.	Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K.

# Reconciliations	of	Non-GAAP	Financial	Measures	to	Reported	Amounts

Income	from	operations	and	net	income	excluding	special	items	are	non-GAAP	financial	measures.	Management	excludes	special	items	and	uses	non-GAAP measures	to	focus	on	PCA's	on-going	operations	and	assess	its	operating	performance	and	believes	that	it	is	useful	to	investors	because	it	enables	them	to	perform meaningful	comparisons	of	past	and	present	operating	results.	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.	Reconciliations	of	the non-GAAP	measures	to	the	most	comparable	measure	reported	in	accordance	with	GAAP	for	the	years	ended	December	31,	2013,	2012,	and	2011,	follow	(in	millions, except	per	share	amounts):

|  | Income<br>from<br>Operations | Net<br>Income | Income<br>from<br>Operations | Net<br>Income | Income<br>from<br>Operations | Net<br>	Income |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| As\treported\tin\taccordance\twith\tGAAP | $473.6 | $436.3 | $443.4 | $163.8 | $272.7 | $158.0 |
| Special\titems: |  |  |  |  |  |  |
| Alternative\tenergy\ttax\tcredits\t(b) | — | (166.0) | (95.5) | 23.0 | — | — |
| Acquisition-related\tcosts\t(c) | 17.2 | 10.9 | — | — | — | — |
| Acquisition-related\tfinancing\tcosts\t(c) | — | 7.4 | — | — | — | — |
| Integration-related\tand\tother\tcosts\t(d) | 17.4 | 11.0 | — | — | — | — |
| Acquisition\tinventory\tstep-up\t(e) | 21.5 | 13.6 | — | — | — | — |
| Pension\tcurtailment\tcharges\t(f) | 10.9 | 7.0 | — | — | — | — |
| Debt\trefinancing\tcharges\t(g) | — | — | — | 16.0 | — | — |
| State\tincome\ttax\tadjustments | — | — | — | (3.4) | — | — |
| Plant\tclosure\tcharges\t(h) | — | — | 2.0 | 1.4 | 7.4 | 4.8 |
| Medical\tbenefits\treserve\tadjustment | — | — | — | — | (1.6) | (1.0) |
| Total\tspecial\titems | 67.1 | (116.1) | (93.5) | 37.0 | 5.8 | 3.8 |
| Excluding\tspecial\titems | $540.6 | $320.2 | $349.9 | $200.8 | $278.6 | $161.8 |

(b) 2013	includes	the	reversal	of	$166.0	million	of	tax	reserves	related	to	alternative	energy	tax	credits.	Approximately	$103.9	million	of	the	reversal	is	due	to	the	completion of	the	IRS	audit	of	PCA's	Filer	City	mill's	cellulosic	biofuel	tax	credits	and	$62.1	million	is	from	the	reversal	of	a	reserve	for	the	taxability	of	the	alternative	fuel mixture	credit	acquired	in	the	acquisition	of	Boise.

(c) Includes	acquisition-related	costs,	primarily	for	professional	fees	related	to	transaction-advisory	services	and	expenses	related	to	financing	the	acquisition	of	Boise.

(d) Includes	integration-related	and	other	costs,	primarily	for	professional	services,	employee,	and	other	costs.

(e) Generally	accepted	accounting	principles	required	us	to	value	the	inventory	from	the	acquisition	of	Boise	at	fair	value.	This	reduced	the	profit	on	the	sale	of	the	acquired inventory	to	that	portion	attributable	to	the	selling	effort.	This	step-up	in	value	increased	expense	as	the	acquired	inventory	was	sold	and	charged	to	cost	of	sales.

(f) Includes	non-cash	pension	curtailment	charges	related	to	pension	plan	changes	in	which	certain	hourly	corrugated	and	containerboard	mill	employees	will	transition	from	a defined	benefit	pension	plan	to	a	defined	contribution	401k	plan.

(g) Consists	of	charges	related	to	the	Company's	refinancing	of	debt	completed	in	2012,	including	the	redemption	premium,	the	charge	to	settle	the	treasury	lock	prior	to	its maturity,	and	other	items.

(h) Consists	of	plant	closure	charges	in	2012	and	energy	project	related	disposals	in	2011.

The	following	table	reconciles	net	income	(loss)	to	EBITDA	for	the	periods	indicated	(dollars	in	millions):

|  |  |  | Year	Ended	December	31 |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 | 2010 | 2009 |
| Net\tincome\t(loss) | $436.3 | $163.8 | $158.0 | $205.4 | $265.9 |
| Interest\texpense,\tnet | 58.3 | 62.9 | 29.2 | 32.3 | 35.5 |
| Income\ttax\tprovision | (21.0) | 216.7 | 85.5 | (52.3) | 51.1 |
| Depreciation,\tamortization,\tand\tdepletion | 201.8 | 170.8 | 163.6 | 156.3 | 151.2 |
| EBITDA\t(a) | $675.4 | $614.2 | $436.3 | $341.7 | $503.7 |
| Special\titems: |  |  |  |  |  |
| Acquisition-related\tcosts | $17.2 | $— | $— | $— | $— |
| Acquisition\tinventory\tstep-up | 21.5 | — | — | — | — |
| Integration-related\tand\tother\tcosts | 17.4 | — | — | — | — |
| Pension\tcurtailment\tcharges | 10.9 | — | — | — | — |
| Plant\tclosure\tcharges | — | 2.0 | 7.4 | 13.2 | 2.0 |
| Alternative\tenergy\ttax\tcredits | — | (95.5) | — | 86.8 | (168.4) |
| Medical\tbenefits\treserve\tadjustment | — | — | (1.6) | — | — |
| EBITDA\texcluding\tspecial\titems\t(a) | $742.4 | $520.7 | $442.1 | $441.7 | $337.2 |

(a) EBITDA	and	EBITDA,	excluding	special	items,	are	non-GAAP	financial	measures.	We	present	these	measures	because	they	provide	a	means	to	evaluate	the	performance of	our	segments	and	our	company	on	an	ongoing	basis	using	the	same	measures	that	are	used	by	our	management	and	because	these	measures	are	frequently	used	by investors	and	other	interested	parties	in	the	evaluation	of	companies	and	the	performance	of	their	segments.	For	each	non-GAAP	financial	measure,	we	provide	a reconciliation	to	the	most	directly	comparable	financial	measure	presented	in	accordance	with	GAAP.	These	measures	may	differ	from	similarly	captioned	measures	of other	companies.	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.

# Item	7A. QUANTITATIVE	AND	QUALITATIVE	DISCLOSURES	ABOUT	MARKET

PCA	is	exposed	to	the	impact	of	interest	rate	changes	and	changes	in	the	market	value	of	its	financial	instruments.	PCA	periodically	enters	into	derivatives	in order	to	minimize	these	risks,	but	not	for	trading	purposes.	For	a	discussion	of	derivatives	and	hedging	activities,	see	Note	11,	Derivative	Instruments	and	Hedging Activities,	of	the	Notes	to	Consolidated	Financial	Statements	in	"Part	II,	Item	8.	Financial	Statements	and	Supplementary	Data"	of	this	Form	10-K.

The	interest	rates	on	approximately	49%	of	PCA's	debt	are	fixed.	A	one	percent	increase	in	interest	rates	related	to	variable	rate	debt	would	have	resulted	in	an increase	in	interest	expense	and	a	corresponding	decrease	in	income	before	taxes	of	$13.0	million	annually.

# Item	8. FINANCIAL	STATEMENTS	AND	SUPPLEMENTARY

# INDEX	TO	FINANCIAL	STATEMENTS

# Packaging	Corporation	of	America	Consolidated	Financial	Statements

| Packaging	Corporation	of	America	Consolidated	Financial	Statements |  |
| :--- | :--- |
| Report\tof\tindependent\tregistered\tpublic\taccounting\tfirm | 36 |
| Consolidated\tstatements\tof\tincome\tand\tcomprehensive\tincome\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 38 |
| Consolidated\tbalance\tsheets\tas\tof\tDecember\t31,\t2013\tand\t2012 | 39 |
| Consolidated\tstatements\tof\tcash\tflows\tfor\tthe\tyear\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 40 |
| Consolidated\tstatement\tof\tchanges\tin\tstockholders'\tequity\tfor\tthe\tyears\tended\tDecember\t31,\t2013,\t2012\tand\t2011 | 41 |
| Notes\tto\tConsolidated\tFinancial\tStatements | 42 |

# REPORT	OF	INDEPENDENT	REGISTERED	PUBLIC	ACCOUNTING	FIRM

# Packaging	Corporation	of	America

# Board	of	Directors	and	Stockholders

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Packaging	Corporation	of	America	(the	"Company")	as	of	December	31,	2013	and	2012,	and	the related	consolidated	statements	of	income	and	comprehensive	income,	changes	in	stockholders'	equity,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended December	31,	2013.	Our	audits	also	 included	 the	financial	statement	schedule	 listed	 in	 the	 index	at	Item	15(a).	These	financial	statements	and	schedule	are	 the responsibility	of	the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	these	financial	statements	and	schedule	based	on	our	audits.	We	did	not audit	the	consolidated	financial	statements	of	Boise	Inc.,	a	wholly-owned	subsidiary,	which	statements	reflect	total	assets	constituting	52%	in	2013	and	total	revenues and	net	income	constituting	12%	and	14%,	respectively	in	2013	of	the	related	consolidated	totals.	Those	statements	were	audited	by	other	auditors	whose	report	has been	furnished	to	us,	and	our	opinion,	insofar	as	it	relates	to	the	amounts	included	for	Boise	Inc.,	is	based	solely	on	the	report	of	the	other	auditors.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a	test	basis, evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant	estimates made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	and	the	report	of	other	auditors	provide	a	reasonable basis	for	our	opinion.

In	our	opinion,	based	on	our	audits	and	the	report	of	other	auditors,	the	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	consolidated financial	position	of	Packaging	Corporation	of	America	at	December	31,	2013	and	2012,	and	the	consolidated	results	of	its	operations	and	its	cash	flows	for	the	years then	ended	in	conformity	with	U.S.	generally	accepted	accounting	principles.	Also,	in	our	opinion,	the	related	financial	statement	schedule,	when	considered	in	relation to	the	basic	financial	statements	taken	as	a	whole,	presents	fairly,	in	all	material	respects,	the	information	set	forth	therein.

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	Packaging	Corporation	of	America's internal	control	over	financial	reporting	as	of	December	31,	2013,	based	on	criteria	established	in	Internal	Control-Integrated	Framework	issued	by	the	Committee	of Sponsoring	Organizations	of	the	Treadway	Commission	(1992	framework),	and	our	report	dated	February	28,	2014	expressed	an	unqualified	opinion	thereon.

# /s/	Ernst	&	Young	LLP

Chicago,	Illinois

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

# REPORTING

We	have	audited	Packaging	Corporation	of	America's	internal	control	over	financial	reporting	as	of	December	31,	2013,	based	on	criteria	established	in	Internal Control-Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(1992	framework)	(the	COSO	criteria).	Packaging Corporation	of	America's	management	is	responsible	for	maintaining	effective	internal	control	over	financial	reporting,	and	for	its	assessment	of	the	effectiveness	of internal	control	over	financial	reporting	included	in	Management's	Report	on	Internal	Control	Over	Financial	Reporting.	Our	responsibility	is	to	express	an	opinion	on the	Company's	internal	control	over	financial	reporting	based	on	our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we	plan	and perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our	audit included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	testing	and	evaluating	the	design	and operating	effectiveness	of	internal	control	based	on	the	assessed	risk,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We	believe that	our	audit	provides	a	reasonable	basis	for	our	opinion.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	 and	 directors	 of	 the	 company;	 and	 (3)	 provide	 reasonable	 assurance	 regarding	 prevention	 or	 timely	 detection	 of	 unauthorized	 acquisition,	 use,	 or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of	effectiveness to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the	policies	or procedures	may	deteriorate.

As	indicated	in	the	accompanying	Management's	Report	on	Internal	Control	over	Financial	Reporting,	management's	assessment	of	and	conclusion	on	the	effectiveness of	internal	control	over	financial	reporting	did	not	include	the	internal	controls	of	Boise	Inc.,	a	wholly-owned	subsidiary,	which	is	included	in	the	2013	consolidated financial	statements	of	Packaging	Corporation	of	America	and	constituted	52%	of	total	assets	as	of	December	31,	2013	and	12%	and	14%	of	revenues	and	net	income, respectively	for	the	year	then	ended.	Our	audit	of	internal	control	over	financial	reporting	also	did	not	include	an	evaluation	of	the	internal	control	over	financial reporting	of	Boise	Inc.

In	our	opinion,	Packaging	Corporation	of	America	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	December	31,	2013,	based on	the	COSO	criteria.

We	also	have	audited,	 in	accordance	with	 the	standards	of	 the	Public	Company	Accounting	Oversight	Board	(United	States),	 the	consolidated	balance	sheets	of Packaging	Corporation	of	America	as	of	December	31,	2013	and	2012,	and	the	related	consolidated	statements	of	income	and	comprehensive	income,	changes	in stockholders'	equity,	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	December	31,	2013,	and	our	report	dated	February	28,	2014	expressed	an	unqualified opinion	thereon.

# Consolidated	Statements	of	Income	and	Comprehensive	Income

(dollars	in	thousands,	except	per-share	data)

|  | 2013 | Year	Ended	December	31<br>2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Statements\tof\tIncome: |  |  |  |
| Net\tsales | $3,665,308 | $2,843,877 | $2,620,111 |
| Cost\tof\tsales | (2,806,121) | (2,203,286) | (2,078,088) |
| Gross\tprofit | 859,187 | 640,591 | 542,023 |
| Selling,\tgeneral,\tand\tadministrative\texpenses | (326,602) | (280,843) | (258,551) |
| Alternative\tenergy\ttax\tcredits | — | 95,500 | — |
| Other\texpense,\tnet | (58,978) | (11,789) | (10,723) |
| Income\tfrom\toperations | 473,607 | 443,459 | 272,749 |
| Interest\texpense,\tnet | (58,275) | (62,900) | (29,245) |
| Income\tbefore\ttaxes | 415,332 | 380,559 | 243,504 |
| (Provision)\tbenefit\tfor\tincome\ttaxes | 20,951 | (216,739) | (85,477) |
| Net\tincome | $436,283 | $163,820 | $158,027 |
| Weighted\taverage\tcommon\tshares\toutstanding |  |  |  |
| Basic | 96,579 | 96,384 | 99,281 |
| Diluted | 97,547 | 97,497 | 100,376 |
| Net\tincome\tper\tcommon\tshare |  |  |  |
| Basic | $4.52 | $1.70 | $1.59 |
| Diluted | $4.47 | $1.68 | $1.57 |
| Dividends\tdeclared\tper\tcommon\tshare | $1.51 | $1.00 | $0.80 |
| Statements\tof\tComprehensive\tIncome: |  |  |  |
| Net\tIncome | $436,283 | $163,820 | $158,027 |
| Other\tcomprehensive\tincome\t(loss),\tnet\tof\ttax: |  |  |  |
| Foreign\tcurrency\ttranslation\tadjustment | (136) | — | — |
| for\t2013,\t2012,\tand\t2011,\trespectively | — | (10,183) | (24,134) |
|  | 3,481 | 1,842 | (1,125) |
| Amortization\tof\tpension\tand\tpostretirement\tplans\tactuarial\tloss\tand\tprior\tservice\tcost,\tnet\tof\ttax\tof |  |  |  |
|  | 13,409 | 6,689 | 3,806 |
| $20.3\tmillion\tfor\t2013,\t2012,\tand\t2011,\trespectively | 32,264 | (14,612) | (31,944) |
| Other\tcomprehensive\tincome\t(loss) | 49,018 | (16,264) | (53,397) |
| Comprehensive\tincome | $485,301 | $147,556 | $104,630 |

# Consolidated	Balance	Sheets

(dollars	and	shares	in	thousands,	except	per-share	data)

| ASSETS | 2013 | 2012 |
| :--- | :--- | :--- |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $190,960 | $207,393 |
| Accounts\treceivable,\tnet\tof\tallowance\tfor\tdoubtful\taccounts\tand\tcustomer\tdeductions\tof\t$10,567\tand\t$5,353\tas\tof\tDecember\t31,\t2013\nand\t2012,\trespectively | 643,083 | 352,142 |
| Inventories | 522,523 | 268,767 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 32,101 | 20,915 |
| Federal\tand\tstate\tincome\ttaxes\treceivable | 22,958 | 65,488 |
| Deferred\tincome\ttaxes | 75,579 | 22,328 |
| Total\tcurrent\tassets | 1,487,204 | 937,033 |
| Property,\tplant,\tand\tequipment,\tnet | 2,805,704 | 1,366,069 |
| Goodwill | 526,789 | 67,160 |
| Intangible\tassets,\tnet | 310,539 | 38,283 |
| Other\tlong-term\tassets | 69,738 | 45,223 |
| Total\tassets | $5,199,974 | $2,453,768 |
| LIABILITIES\tAND\tSTOCKHOLDERS'\tEQUITY |  |  |
| Current\tliabilities: |  |  |
| Current\tmaturities\tof\tlong-term\tdebt | $39,000 | $15,000 |
| Capital\tlease\tobligations | 1,030 | 964 |
| Accounts\tpayable | 357,432 | 117,510 |
| Dividends\tpayable | 39,297 | — |
| Accrued\tliabilities | 214,058 | 122,696 |
| Accrued\tinterest | 9,722 | 3,676 |
| Total\tcurrent\tliabilities | 660,539 | 259,846 |
| Long-term\tliabilities: |  |  |
| Long-term\tdebt | 2,508,845 | 778,630 |
| Capital\tlease\tobligations | 23,874 | 24,904 |
| Deferred\tincome\ttaxes | 434,835 | 125,109 |
| Compensation\tand\tbenefits | 193,548 | 164,538 |
| Alternative\tenergy\ttax\tcredits\treserve | — | 102,051 |
| Other\tlong-term\tliabilities | 65,318 | 29,229 |
| Total\tlong-term\tliabilities | 3,226,420 | 1,224,461 |
| Commitments\tand\tcontingent\tliabilities |  |  |
| Stockholders'\tequity: |  |  |
| 2012,\trespectively | 982 | 981 |
| Additional\tpaid\tin\tcapital | 401,761 | 378,794 |
| Retained\tearnings | 975,296 | 703,728 |
| Accumulated\tother\tcomprehensive\tloss | (65,024) | (114,042) |
| Total\tstockholders'\tequity | 1,313,015 | 969,461 |
| Total\tliabilities\tand\tstockholders'\tequity | $5,199,974 | $2,453,768 |

See	notes	to	consolidated	financial	statements.

# Consolidated	Statements	of	Cash	Flows

# (dollars	in	thousands)

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Cash\tFlows\tfrom\tOperating\tActivities: |  |  |  |
| Net\tincome | $436,283 | $163,820 | $158,027 |
| Adjustments\tto\treconcile\tnet\tincome\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation,\tdepletion,\tand\tamortization | 217,918 | 175,384 | 162,839 |
| Share-based\tcompensation\texpense | 14,761 | 11,687 | 9,736 |
| Deferred\tincome\ttax\tprovision\t(benefit) | (163,550) | 183,202 | 27,347 |
| Alternative\tenergy\ttax\tcredits | 76,281 | (76,281) | — |
| Loss\ton\tdisposals\tof\tproperty,\tplant,\tand\tequipment | 9,377 | 7,298 | 7,137 |
| Loss\ton\tearly\textinguishment\tof\tdebt | — | 21,296 | — |
| Pension\tand\tpost\tretirement\tbenefits\texpense,\tnet\tof\tcontributions | 18,525 | 1,687 | 5,726 |
| Other,\tnet | (1,008) | (3,090) | (4,761) |
| Changes\tin\toperating\tassets\tand\tliabilities,\tnet\tof\tacquisitions: |  |  |  |
| Decrease\t(increase)\tin\tassets\t— |  |  |  |
| Accounts\treceivable | (31,191) | (24,995) | (16,946) |
| Inventories | 33,304 | (12,212) | (8,333) |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | (1,914) | (835) | (616) |
| Increase\t(decrease)\tin\tliabilities\t— |  |  |  |
| Accounts\tpayable | 54,222 | (40,448) | (694) |
| Accrued\tliabilities | (54,807) | (2,308) | 6,052 |
| Net\tcash\tprovided\tby\toperating\tactivities | 608,201 | 404,205 | 345,514 |
| Cash\tFlows\tfrom\tInvesting\tActivities: |  |  |  |
| Additions\tto\tproperty,\tplant,\tand\tequipment | (234,422) | (128,524) | (280,213) |
| Acquisitions\tof\tbusinesses,\tnet\tof\tcash\tacquired | (1,174,506) | (35,393) | (57,340) |
| Treasury\tgrant\tproceeds | — | 57,399 | — |
| Additions\tto\tother\tlong\tterm\tassets | (3,134) | (1,070) | (13,055) |
| Other | 654 | 78 | 443 |
| Net\tcash\tused\tfor\tinvesting\tactivities | (1,411,408) | (107,510) | (350,165) |
| Cash\tFlows\tfrom\tFinancing\tActivities: |  |  |  |
| Proceeds\tfrom\tissuance\tof\tdebt | 1,998,145 | 397,044 | 150,000 |
| Repayments\tof\tdebt | (1,074,774) | (437,184) | (670) |
| Financing\tcosts\tpaid | (19,419) | (876) | (2,041) |
| Settlement\tof\ttreasury\tlock | — | (65,500) | 9,910 |
| Common\tstock\tdividends\tpaid | (109,145) | (117,851) | (76,012) |
| Repurchases\tof\tcommon\tstock | (7,799) | (45,162) | (125,027) |
| Proceeds\tfrom\texercise\tof\tstock\toptions | 2,848 | 19,898 | 7,016 |
| Excess\ttax\tbenefits\tfrom\tstock-based\tawards | 7,802 | 4,016 | 1,232 |
| Shares\twithheld\tto\tcover\temployee\trestricted\tstock\ttaxes | (10,955) | — | — |
| Other | 71 | — | — |
| Net\tcash\tprovided\tby\t(used\tfor)\tfinancing\tactivities | 786,774 | (245,615) | (35,592) |
| Net\t(decrease)\tincrease\tin\tcash\tand\tcash\tequivalents | (16,433) | 51,080 | (40,243) |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tyear | 207,393 | 156,313 | 196,556 |
| Cash\tand\tcash\tequivalents,\tend\tof\tyear | $190,960 | $207,393 | $156,313 |

# Consolidated	Statements	of	Changes	in	Stockholders'	Equity

(dollars	and	shares	in	thousands)

|  | Common	Stock<br>Shares | Amount | Treasury	Stock<br>Shares | Amount | Additional<br>Paid	in<br>Capital | Retained<br>Earnings | Accumulated	Other<br>Comprehensive	Loss | Total<br>Stockholders'<br>Equity |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tJanuary\t1,\t2011 | 102,308 | $1,023 | — | $— | $362,248 | $690,111 | $(44,381) | $1,009,001 |
| Common\tstock\trepurchases\tand\nretirements | (4,897) | (49) | (2) | (59) | (29,098) | (93,871) | — | (123,077) |
| Common\tstock\tdividends\tdeclared | — | — | — | — | — | (80,307) | — | (80,307) |
| Restricted\tstock\tgrants\tand\ncancellations | 570 | 6 | — | — | 506 | — | — | 512 |
| Exercise\tof\tstock\toptions | 344 | 3 | — | — | 7,733 | — | — | 7,736 |
| Share-based\tcompensation\texpense | — | — | — | — | 9,736 | — | — | 9,736 |
| Other | — | — | — | — | 679 | — | — | 679 |
| Comprehensive\tincome | — | — | — | — | — | 158,027 | (53,397) | 104,630 |
| Balance\tat\tDecember\t31,\t2011 | 98,325 | $983 | (2) | $(59) | $351,804 | $673,960 | $(97,778) | $928,910 |
| Common\tstock\trepurchases\tand\nretirements | (1,510) | (15) | 2 | 59 | (9,282) | (35,924) | — | (45,162) |
| Common\tstock\tdividends\tdeclared | — | — | — | — | — | (98,128) | — | (98,128) |
| Restricted\tstock\tgrants\tand\ncancellations | 383 | 4 | — | — | 1,611 | — | — | 1,615 |
| Exercise\tof\tstock\toptions | 945 | 9 | — | — | 22,288 | — | — | 22,297 |
| Share-based\tcompensation\texpense | — | — | — | — | 11,687 | — | — | 11,687 |
| Other | — | — | — | — | 686 | — | — | 686 |
| Comprehensive\tincome | — | — | — | — | — | 163,820 | (16,264) | 147,556 |
| Balance\tat\tDecember\t31,\t2012 | 98,143 | $981 | — | $— | $378,794 | $703,728 | $(114,042) | $969,461 |
| Common\tstock\trepurchases\tand\nretirements | (171) | (1) | — | — | (1,078) | (6,720) | — | (7,799) |
| Common\tstock\twithheld\tand\tretired\tto\ncover\ttaxes\ton\tvested\tstock\tawards | (224) | (2) | — | — | (1,362) | (9,591) | — | (10,955) |
| Common\tstock\tdividends\tdeclared | — | — | — | — | — | (148,404) | — | (148,404) |
| Restricted\tstock\tgrants\tand\ncancellations | 297 | 3 | — | — | 6,923 | — | — | 6,926 |
| Exercise\tof\tstock\toptions | 127 | 1 | — | — | 3,723 | — | — | 3,724 |
| Share-based\tcompensation\texpense | — | — | — | — | 14,761 | — | — | 14,761 |
| Comprehensive\tincome | — | — | — | — | — | 436,283 | 49,018 | 485,301 |
| Balance\tat\tDecember\t31,\t2013 | 98,172 | $982 | — | $— | $401,761 | $975,296 | $(65,024) | $1,313,015 |

# Notes	to	Consolidated	Financial	Statements

# 1.					Nature	of	Operations	and	Basis	of	Presentation

Packaging	Corporation	of	America	("we",	"us",	"our",	PCA"	or	the	"Company")	was	incorporated	on	January	25,	1999.	In	April	1999,	PCA	acquired	the containerboard	and	corrugated	packaging	products	business	of	Pactiv	Corporation	("Pactiv"),	formerly	known	as	Tenneco	Packaging,	Inc.,	a	wholly	owned	subsidiary	of Tenneco	Inc.	On	October	25,	2013,	PCA	acquired	Boise	Inc.	("Boise").	For	more	information,	see	Note	3,	Acquisitions.	After	the	acquisition	of	Boise,	we	became	a large	diverse	manufacturer	of	both	packaging	and	paper	products.	We	are	headquartered	in	Lake	Forest,	Illinois,	and	we	operate	largely	in	the	United	States	but	also	have operations	in	Europe,	Mexico,	and	Canada.	We	have	approximately	13,600	employees.

After	the	acquisition	of	Boise,	we	began	reporting	our	business	in	three	reportable	segments:	Packaging,	Paper,	and	Corporate	and	Other.	Our	Packaging segment	produces	a	wide	variety	of	corrugated	packaging	products.	The	Paper	segment	manufactures	and	sells	a	range	of	papers,	including	communication-based	papers, and	pressure	sensitive	papers	(collectively,	white	papers),	and	market	pulp.	Corporate	and	other	includes	support	staff	services	and	related	assets	and	liabilities, transportation	assets,	and	activity	related	to	other	ancillary	support	operations.	For	more	information	about	our	segments,	see	Note	19,	Segment	Information.

In	these	consolidated	financial	statements,	certain	amounts	in	prior	periods'	consolidated	financial	statements	have	been	reclassified	to	conform	with	the	current period	presentation.	In	accordance	with	Accounting	Standards	Codification	("ASC")	280,	"Segment	Reporting,"	we	recast	2012	and	2011	segment	information	to conform	with	the	current	year	presentation.	For	more	information	see	Note	19,	Segment	Information.	In	addition,	we	reclassified	amounts	previously	disclosed	in "Corporate	overhead"	in	the	2012	and	2011	Consolidated	Statements	of	Income	into	"Selling,	general,	and	administrative	expenses"	given	that	Corporate	and	Other	is now	disclosed	separately	in	our	segment	information	as	discussed	above.	None	of	the	reclassifications	affected	our	results	of	operations,	financial	position,	or	cash flows.

The	consolidated	financial	statements	include	the	accounts	of	PCA	and	its	majority-owned	subsidiaries	after	elimination	of	intercompany	balances	and transactions.	Boise's	results	are	included	in	our	results	for	the	period	of	October	25,	2013,	through	December	31,	2013.

# 2.					Summary	of	Significant	Accounting	Policies

# Use	of	Estimates

The	preparation	of	financial	statements	in	conformity	with	accounting	principles	generally	accepted	in	the	United	States	of	America	requires	management	to make	estimates	and	assumptions	about	future	events.	These	estimates	and	the	underlying	assumptions	affect	the	amounts	of	assets	and	liabilities	reported,	disclosures about	contingent	assets	and	liabilities,	and	reported	amounts	of	revenues	and	expenses.	These	estimates	and	assumptions	are	based	on	management's	best	estimates	and judgment.	Management	evaluates	its	estimates	and	assumptions	on	an	ongoing	basis	using	historical	experience	and	other	factors,	including	the	current	economic environment.	We	adjust	such	estimates	and	assumptions	when	facts	and	circumstances	dictate.	As	future	events	and	their	effects	cannot	be	determined	with	precision, actual	results	could	differ	significantly	from	these	estimates.	Changes	in	these	estimates	will	be	reflected	in	the	consolidated	financial	statements	in	future	periods.

# Revenue	Recognition

We	recognize	revenue	when	the	following	criteria	are	met:	persuasive	evidence	of	an	agreement	exists,	delivery	has	occurred	or	services	have	been	rendered, our	price	to	the	buyer	is	fixed	or	determinable,	and	collectability	is	reasonably	assured.	Shipping	and	handling	billings	to	a	customer	are	included	in	net	sales.	Shipping and	handling	costs	are	included	in	cost	of	sales.	We	present	taxes	collected	from	customers	and	remitted	to	governmental	authorities	on	a	net	basis	in	our	Consolidated Statements	of	Income.

# Planned	Major	Maintenance	Costs

The	Company	accounts	for	its	planned	major	maintenance	activities	in	accordance	with	ASC	360,	"Property,	Plant,	and	Equipment,"	using	the	deferral	method. All	maintenance	costs	incurred	during	the	year	are	expensed	in	the	year	in	which	the	maintenance	activity	occurs.

# Share-Based	Compensation

We	recognize	compensation	expense	for	awards	granted	under	the	PCA	long-term	equity	incentive	plans	based	on	the	fair	value	on	the	grant	date.	We recognize	the	cost	of	the	equity	awards	over	the	period	the	awards	vest.	See	Note	9,	Share-Based	Compensation,	for	more	information.

# Research	and	Development

Research	and	development	costs	are	expensed	as	incurred.	The	amount	charged	to	expense	was	$11.5	million,	$11.3	million,	and	$12.5	million	for	the	years ended	December	31,	2013,	2012,	and	2011,	respectively.

# Foreign	Currency

Local	currencies	are	the	functional	currencies	for	our	operations	outside	the	United	States.	Assets	and	liabilities	are	remeasured	into	U.S.	dollars	using	the exchange	rates	as	of	the	Consolidated	Balance	Sheet	date.	Revenue	and	expense	items	are	remeasured	into	U.S.	dollars	using	an	average	exchange	rate	prevailing	during the	period.	Any	resulting	translation	adjustments	are	recorded	in	the	Consolidated	Statements	of	Comprehensive	Income.	The	foreign	exchange	gain	(loss)	resulting from	remeasuring	transactions	into	the	functional	currencies	is	reported	in	the	Consolidated	Statements	of	Income.

# Cash	and	Cash	Equivalents

Cash	and	cash	equivalents	include	all	cash	balances	and	highly	liquid	investments	with	a	maturity,	when	acquired,	of	three	months	or	less.	Cash	equivalents	are stated	at	cost,	which	approximates	market.	Cash	and	cash	equivalents	totaled	$191.0	million	and	$207.4	million	at	December	31,	2013	and	2012,	respectively,	which included	cash	equivalents	of	$156.6	million	and	$203.5	million,	respectively.	Also	included	in	cash	and	cash	equivalents	on	December	31,	2013,	was	$7.1	million	of cash	at	our	operations	outside	the	United	States.

# Trade	Accounts	Receivable,	Allowance	for	Doubtful	Accounts,	and	Customer	Deductions

Trade	accounts	receivable	are	stated	at	the	amount	we	expect	to	collect.	The	collectability	of	our	accounts	receivable	is	based	upon	a	combination	of	factors.	In circumstances	where	a	specific	customer	is	unable	to	meet	its	financial	obligations	to	PCA	(e.g.,	bankruptcy	filings,	substantial	downgrading	of	credit	sources),	a specific	reserve	for	bad	debts	is	recorded	against	amounts	due	to	the	Company	to	reduce	the	net	recorded	receivable	to	the	amount	the	Company	reasonably	believes	will be	collected.	For	all	other	customers,	reserves	for	bad	debts	are	recognized	based	on	historical	collection	experience.	If	collection	experience	deteriorates	(i.e.,	higher than	expected	defaults	or	an	unexpected	material	adverse	change	in	a	major	customer's	ability	to	meet	its	financial	obligations	to	the	Company),	the	estimate	of	the recoverability	of	amounts	due	could	be	reduced	by	a	material	amount.	We	periodically	review	our	allowance	for	doubtful	accounts	and	adjustments	to	the	valuation allowance	are	charged	to	income.	Trade	accounts	receivable	balances	that	remain	outstanding	after	we	have	used	reasonable	collection	efforts	are	written	off	through	a charge	to	the	valuation	allowance	and	a	credit	to	accounts	receivable.	At	December	31,	2013	and	2012,	the	allowance	for	doubtful	accounts	was	$3.9	million	and	$1.9 million,	respectively.

The	customer	deductions	reserve	represents	the	estimated	amount	required	for	customer	returns,	allowances	and	earned	discounts.	Based	on	the	Company's experience,	customer	returns,	allowances	and	earned	discounts	have	averaged	approximately	1%	of	gross	selling	price.	Accordingly,	PCA	reserves	1%	of	its	open customer	accounts	receivable	balance	for	these	items.	The	reserve	for	customer	deductions	of	$6.7	million	and	$3.4	million	at	December	31,	2013	and	2012, respectively,	are	also	included	as	a	reduction	of	the	accounts	receivable	balance.

# Derivative	Instruments	and	Hedging	Activities

The	Company	records	its	derivatives,	if	any,	in	accordance	with	ASC	815,	"Derivatives	and	Hedging."	The	guidance	requires	the	Company	to	recognize derivative	instruments	as	either	assets	or	liabilities	on	the	balance	sheet	at	fair	value.	The	accounting	for	changes	in	the	fair	value	of	a	derivative	depends	on	the	intended use	and	designation	of	the	derivative	instrument.	For	a	derivative	designated	as	a	fair	value	hedge,	the	gain	or	loss	on	the	derivative	is	recognized	in	earnings	in	the period	of	change	in	fair	value	together	with	the	offsetting	gain	or	loss	on	the	hedged	item.	For	a	derivative	instrument	designated	as	a	cash	flow	hedge,	the	effective portion	of	the	derivative's	gain	or	loss	is	initially	reported	as	a	component	of	accumulated	other	comprehensive	income	(loss)	("AOCI")	and	is	subsequently	recognized in	earnings	when	the	hedged	exposure	affects	earnings.	The	ineffective	portion	of	the	gain	or	loss	is	recognized	in	earnings.	We	were	not	party	to	any	derivative-based arrangements	at	December	31,	2013	and	2012.

# Fair	Value	Measurements

PCA	measures	the	fair	value	of	its	financial	instruments	in	accordance	with	ASC	820,	"Fair	Value	Measurements	and	Disclosures."	The	guidance	defines	fair value	as	the	price	that	would	be	received	to	sell	an	asset	or	paid	to	transfer	a	liability	in	an	orderly	transaction	between	market	participants.	It	is	determined	based	on assumptions	that	market	participants	would	use	in	pricing	an	asset	or	liability.	As	a	basis	for	considering	such	assumptions,	ASC	820	establishes	the	following	hierarchy that	prioritizes	the	inputs	to	valuation	methodologies	used	to	measure	fair	value:

Level	1	—	Valuations	based	on	quoted	prices	for	identical	assets	and	liabilities	in	active	markets.

Level	2	—	Valuations	based	on	observable	inputs	other	than	quoted	prices	included	in	Level	1,	such	as	quoted	prices	for	similar	assets	and	liabilities	in	active markets,	quoted	prices	for	identical	or	similar	assets	and	liabilities	in	markets	that	are	not	active,	or	other	inputs	that	are	observable	or	can	be	corroborated	by observable	market	data.

Level	3	—	Valuations	based	on	unobservable	inputs	in	which	there	is	little	or	no	market	data,	which	require	the	reporting	entity	to	develop	its	own assumptions.

Financial	instruments	measured	at	fair	value	on	a	recurring	basis	include	the	fair	value	of	our	pension	and	postretirement	benefit	assets	and	liabilities.	See	Note 10,	Employee	Benefit	Plans	and	Other	Postretirement	Benefits	for	more	information.	Other	assets	and	liabilities	measured	and	recognized	at	fair	value	on	a	nonrecurring basis	include	assets	acquired	and	liabilities	assumed	in	acquisitions	and	our	asset	retirement	obligations.	Given	the	nature	of	these	assets	and	liabilities,	evaluating	their fair	value	from	the	perspective	of	a	market	participant	is	inherently	complex.	Assumptions	and	estimates	about	future	values	can	be	affected	by	a	variety	of	internal	and external	factors.	Changes	in	these	factors	may	require	us	to	revise	our	estimates	and	could	require	us	to	retroactively	adjust	provisional	amounts	that	we	recorded	for	the fair	values	of	assets	acquired	and	liabilities	assumed	in	connection	with	business	combinations.	These	adjustments	could	have	a	material	effect	on	our	financial	condition and	results	of	operations.	See	Note	3,	Acquisitions,	and	Note	14,	Asset	Retirement	Obligations,	for	more	information.

# Inventory	Valuation

With	the	exception	of	inventories	at	corrugated	products	and	paper	plants	acquired	since	2004,	raw	materials,	work	in	process	and	finished	goods	are	valued using	the	last-in,	first-out	("LIFO")	cost	method.	Inventories	at	the	acquired	locations	are	valued	at	the	first-in,	first-out	("FIFO")	or	average	cost	methods.	Supplies	and materials	are	valued	using	average	cost.	All	inventories	are	stated	at	the	lower	of	cost	or	market	and	include	all	costs	directly	associated	with	manufacturing	products: materials,	labor,	and	manufacturing	overhead.	Inventories	valued	using	the	LIFO	method	totaled	$200.8	million	and	$194.0	million,	respectively,	as	of	December	31, 2013	and	2012,	compared	to	total	inventory	values	(before	the	LIFO	inventory	reserve)	of	$594.3	million	and	$332.3	million	for	the	same	respective	periods.

The	components	of	inventories	are	as	follows	(dollars	in	thousands):

|  | December	31 | December	31 |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Raw\tmaterials | $212,027 | $125,909 |
| Work\tin\tprocess | 13,898 | 8,287 |
| Finished\tgoods | 209,972 | 78,788 |
| Supplies\tand\tmaterials | 158,394 | 119,284 |
| Inventories\tat\tFIFO\tor\taverage\tcost | 594,291 | 332,268 |
| Excess\tof\tFIFO\tor\taverage\tcost\tover\tLIFO\tcost | (71,768) | (63,501) |
| Inventories | $522,523 | $268,767 |

# Property,	Plant,	and	Equipment

Property,	plant,	and	equipment	are	recorded	at	cost.	Cost	includes	expenditures	for	major	improvements	and	replacements	and	the	amount	of	interest	cost associated	with	significant	capital	additions.	Repairs	and	maintenance	costs	are	expensed	as	incurred.	When	property	and	equipment	are	retired,	sold,	or	otherwise disposed	of,	the	asset's	carrying	amount	and	related	accumulated	depreciation	are	removed	from	the	accounts	and	any	gain	or	loss	is	included	in	"Net	income"	in	our Consolidated	Statements	of	Income.

Property,	plant,	and	equipment	consist	of	the	following	(dollars	in	thousands):

|  | December	31 | December	31 |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Land\tand\tland\timprovements | $140,592 | $107,250 |
| Buildings | 628,948 | 390,363 |
| Machinery\tand\tequipment | 4,263,505 | 3,048,932 |
| Construction\tin\tprogress | 168,808 | 67,051 |
| Other | 30,847 | 27,196 |
| Property,\tplant\tand\tequipment,\tat\tcost | 5,232,700 | 3,640,792 |
| Less\taccumulated\tdepreciation | (2,426,996) | (2,274,723) |
| Property,\tplant,\tand\tequipment,\tnet | $2,805,704 | $1,366,069 |

The	amount	of	interest	capitalized	from	construction	in	progress	was	$1.7	million,	$0.8	million	and	$7.1	million	for	the	years	ended	December	31,	2013,	2012, and	2011,	respectively.

Depreciation	is	computed	on	the	straight-line	basis	over	the	estimated	useful	lives	of	the	related	assets.	Assets	under	capital	leases	are	depreciated	on	the straight-line	method	over	the	term	of	the	lease	or	the	useful	life,	if	shorter.	The	following	lives	are	used	for	the	various	categories	of	assets:

Pursuant	to	the	terms	of	an	industrial	revenue	bond,	title	to	certain	property,	plant,	and	equipment	was	transferred	to	a	municipal	development	authority	in	2009 in	order	to	receive	a	property	tax	abatement.	The	title	of	these	assets	will	revert	back	to	PCA	upon	retirement	or	cancellation	of	the	bond.	The	assets	are	included	in	the consolidated	balance	sheet	under	the	caption	"Property,	plant	and	equipment,	net"	as	all	risks	and	rewards	remain	with	the	Company.

# Leases

We	assess	lease	classification	as	either	capital	or	operating	at	lease	inception	or	upon	modification.	We	lease	some	of	our	locations,	as	well	as	other	property and	equipment,	under	operating	leases.	For	purposes	of	determining	straight-line	rent	expense,	the	lease	term	is	calculated	from	the	date	of	possession	of	the	facility, including	any	periods	of	free	rent	and	any	renewal	option	periods	that	are	reasonably	assured	of	being	exercised.

Long-lived	assets	other	than	goodwill	and	other	intangibles	are	reviewed	for	impairment	in	accordance	with	provisions	of	ASC	360,	"Property,	Plant	and Equipment."	In	the	event	that	facts	and	circumstances	indicate	that	the	carrying	amount	of	any	long-lived	assets	may	be	impaired,	an	evaluation	of	recoverability	is performed.	If	an	evaluation	is	required,	the	estimated	future	undiscounted	cash	flows	associated	with	the	asset	(or	group	of	assets)	is	compared	to	the	asset's	(or	group	of assets')	carrying	amount	to	determine	if	a	write-down	to	fair	value	is	required.

# Goodwill	and	Intangible	Assets

The	Company	has	capitalized	certain	intangible	assets,	primarily	goodwill,	customer	relationships,	and	trademarks	and	trade	names,	based	on	their	estimated fair	value	at	the	date	of	acquisition.	Amortization	is	provided	for	customer	relationships	on	a	straight-line	basis	over	periods	ranging	from	six	to	40	years,	and trademarks	and	trade	names	over	periods	ranging	from	three	to	20	years.

Goodwill,	which	amounted	to	$526.8	million	and	$67.2	million	for	the	years	ended	December	31,	2013	and	2012,	respectively,	is	not	amortized	but	is	subject	to an	annual	impairment	test	in	accordance	with	ASC	350,	"Intangibles	-	Goodwill	and	Other."	We	test	goodwill	for	impairment	annually	in	the	fourth	quarter	or	sooner	if events	or	changes	in	circumstances	indicate	that	the	carrying	value	of	the	asset	may	exceed	fair	value.	Additionally,	we	evaluate	the	remaining	useful	lives	of	our	finite- lived	purchased	intangible	assets	to	determine	whether	any	adjustments	to	the	useful	lives	are	necessary.	The	Company	concluded	that	none	of	the	goodwill	or	intangible assets	were	impaired	in	the	2013,	2012,	and	2011	annual	impairment	tests.	See	Note	7,	Goodwill	and	Intangible	Assets	for	additional	information.

# Pension	and	Postretirement	Benefits

Several	estimates	and	assumptions	are	required	to	record	pension	costs	and	liabilities,	including	discount	rate,	return	on	assets,	and	longevity	and	service	lives of	employees.	We	review	and	update	these	assumptions	annually	unless	a	plan	curtailment	or	other	event	occurs,	requiring	we	update	the	estimates	on	an	interim	basis. While	we	believe	the	assumptions	used	to	measure	our	pension	and	postretirement	benefit	obligations	are	reasonable,	differences	in	actual	experience	or	changes	in assumptions	may	materially	affect	our	pension	and	postretirement	benefit	obligations	and	future	expense.	See	Note	10,	Employee	Benefit	Plans	and	Other	Postretirement Benefits,	for	additional	information.

For	postretirement	health	care	plan	accounting,	the	Company	reviews	external	data	and	its	own	historical	trends	for	health	care	costs	to	determine	the	health care	cost	trend	rate	assumption.

Environmental	expenditures	that	extend	the	life	of	the	related	property	or	mitigate	or	prevent	future	environmental	contamination	are	capitalized.	Liabilities	are recorded	for	environmental	contingencies	when	such	costs	are	probable	and	reasonably	estimable.	These	liabilities	are	adjusted	as	further	information	develops	or circumstances	change.	Environmental	expenditures	related	to	existing	conditions	resulting	from	past	or	current	operations	from	which	no	current	or	future	benefit	is discernible	are	expensed	as	incurred.

# Asset	Retirement	Obligations

The	Company	accounts	for	its	retirement	obligations	related	predominantly	to	landfill	closure,	wastewater	treatment	pond	dredging,	closed-site	monitoring costs,	and	certain	leasehold	improvements	under	ASC	410,	"Asset	Retirement	and	Environmental	Obligations,"	which	requires	recognition	of	legal	obligations associated	with	the	retirement	of	long-lived	assets	whether	these	assets	are	owned	or	leased.	These	legal	obligations	are	to	be	recognized	at	fair	value	at	the	time	that	the obligations	are	incurred.	When	we	record	the	liability,	we	capitalize	the	cost	by	increasing	the	carrying	amount	of	the	related	long-lived	asset	which	is	amortized	to expense	over	the	useful	life	of	the	asset.	See	Note	14,	Asset	Retirement	Obligations,	for	additional	information.

# Deferred	Financing	Costs

PCA	has	capitalized	certain	costs	related	to	obtaining	its	financing.	These	costs	are	amortized	to	interest	expense	using	the	effective	interest	rate	method	over the	terms	of	the	related	financing,	which	range	from	five	to	ten	years.	Unamortized	deferred	financing	costs	of	$14.1	million	and	$5.0	million	as	of	December	31,	2013 and	2012,	respectively,	were	recorded	in	"Other	long-term	assets"	on	our	Consolidated	Balance	Sheets.

# Cutting	Rights	and	Fiber	Farms

We	lease	the	cutting	rights	to	approximately	88,000	acres	of	timberland	and	we	lease	9,000	acres	of	land	where	we	operate	fiber	farms	as	a	source	of	future fiber	supply.	For	our	cutting	rights,	we	capitalize	the	annual	lease	payments	and	reforestation	costs	associated	with	these	leases.	For	fiber	farms,	costs	for	activities related	to	the	establishment	of	a	new	crop	of	trees,	including	planting,	thinning,	fertilization,	pest	control,	herbicide	application,	irrigation,	and	land	lease	costs,	are

capitalized.	Costs	are	recorded	as	depletion	when	the	timber	or	fiber	is	harvested	and	used	in	operations	or	sold	to	customers.	Capitalized	long-term	lease	costs	for	our cutting	rights	recorded	in	"Other	long-term	assets"	on	our	Consolidated	Balance	Sheet	were	$27.6	million	and	$27.4	million	as	of	December	31,	2013,	and	2012, respectively.	Capitalized	fiber	farm	costs	recorded	in	"Other	long-term	assets"	on	our	Consolidated	Balance	Sheet	were	$9.4	million	as	of	December	31,	2013.	The amount	of	depletion	expense	was	$2.5	million,	$0.7	million	and	$0.04	million	for	the	years	ended	December	31,	2013,	2012,	and	2011,	respectively.

# Deferred	Software	Costs

PCA	capitalizes	costs	related	to	the	purchase	and	development	of	software	which	is	used	in	its	business	operations.	The	costs	attributable	to	these	software systems	are	amortized	over	their	estimated	useful	lives	based	on	various	factors	such	as	the	effects	of	obsolescence,	technology	and	other	economic	factors.	Net capitalized	software	costs	recorded	in	"Other	long-term	assets"	on	our	Consolidated	Balance	Sheets	were	$5.7	million	and	$1.1	million	for	the	years	ended	December	31, 2013,	and	2012,	respectively.	Software	amortization	expense	was	$1.1	million,	$0.9	million,	and	$0.6	million	for	the	years	ended	December	31,	2013,	2012,	and	2011, respectively.

PCA	utilizes	the	liability	method	of	accounting	for	income	taxes	whereby	it	recognizes	deferred	tax	assets	and	liabilities	for	the	future	tax	consequences	of temporary	differences	between	the	tax	basis	of	assets	and	liabilities	and	their	reported	amounts	in	the	financial	statements.	Deferred	tax	assets	will	be	reduced	by	a valuation	allowance	if,	based	upon	management's	estimates,	it	is	more	likely	than	not	that	a	portion	of	the	deferred	tax	assets	will	not	be	realized	in	a	future	period.	The estimates	utilized	in	the	recognition	of	deferred	tax	assets	are	subject	to	revision	in	future	periods	based	on	new	facts	or	circumstances.	PCA's	practice	is	to	recognize interest	and	penalties	related	to	unrecognized	tax	benefits	in	income	tax	expense.

# Trade	Agreements

PCA	regularly	trades	containerboard	with	other	manufacturers	primarily	to	reduce	shipping	costs.	These	agreements	are	entered	into	with	other	producers	on	an annual	basis,	pursuant	to	which	both	parties	agree	to	ship	an	identical	number	of	tons	of	containerboard	to	each	other	within	the	agreement	period.	These	agreements lower	transportation	costs	by	allowing	each	party's	containerboard	mills	to	ship	containerboard	to	the	other	party's	closest	corrugated	products	plant.	PCA	tracks	each shipment	to	ensure	that	the	other	party's	shipments	to	PCA	match	PCA's	shipments	to	the	other	party	during	the	agreement	period.	Such	transfers	are	possible	because containerboard	is	a	commodity	product	with	no	distinguishing	product	characteristics.	These	transactions	are	accounted	for	at	carrying	value,	and	revenue	is	not recorded	as	the	transactions	do	not	represent	the	culmination	of	an	earnings	process.	The	transactions	are	recorded	into	inventory	accounts,	and	no	income	is	recorded until	such	inventory	is	converted	to	a	finished	product	and	sold	to	an	end-use	customer.

In	July	2013,	the	Financial	Accounting	Standards	Board	("FASB")	issued	Accounting	Standards	Update	("ASU")	2013-11,	Income	Taxes	(Topic	740): Presentation	of	an	Unrecognized	Tax	Benefit	When	a	Net	Operating	Loss	Carryforward,	a	Similar	Tax	Loss,	or	a	Tax	Credit	Carryforward	Exists.	This	ASU	requires that	liabilities	related	to	unrecognized	tax	benefits	offset	deferred	tax	assets	for	net	operating	loss	carryforwards,	a	similar	tax	loss,	or	a	tax	credit	carryforward	if	such settlement	is	required	or	expected	in	the	event	the	uncertain	tax	position	is	disallowed.	In	situations	in	which	carryforwards	cannot	be	used	or	the	deferred	tax	asset	is	not intended	to	be	used	for	such	purpose,	the	unrecognized	tax	benefit	should	be	recorded	as	a	liability	and	should	not	offset	deferred	tax	assets.	We	adopted	the	provisions of	this	guidance	on	December	31,	2013,	and	it	did	not	have	a	significant	effect	on	our	financial	position	or	results	of	operations.	See	Note	5,	Income	Taxes,	for additional	information.

In	February	2013,	the	FASB	issued	ASU	2013-02,	Comprehensive	Income	(Topic	220):	Reporting	of	Amounts	Reclassified	Out	of	Accumulated	Other Comprehensive	Income.	This	ASU	requires	entities	to	disclose	additional	information	about	changes	in	and	significant	items	reclassified	out	of	AOCI.	In	addition,	an entity	is	required	to	present,	either	on	the	face	of	the	statement	where	net	income	is	presented	or	in	the	notes,	significant	amounts	reclassified	out	of	AOCI	by	the respective	line	items	of	net	income	but	only	if	the	amount	reclassified	is	required	under	U.S.	generally	accepted	accounting	principles	("GAAP")	to	be	reclassified	to	net income	in	its	entirety	in	the	same	reporting	period.	For	other	amounts	not	required	under	U.S.	GAAP	to	be	reclassified	in	their	entirety	to	net	income,	an	entity	is required	to	cross-reference	to	other	disclosures	that	provide	additional	detail	about	those	amounts.	We	adopted	the	provisions	of	this	guidance	on	January	1,	2013,	and	it had	no	effect	on	our	financial	position	and	results	of	operations.	See	Note	12,	Stockholders'	Equity,	for	additional	information.

In	February	2013,	the	FASB	issued	ASU	2013-04,	"Liabilities	(Topic	405):	Obligations	Resulting	from	Joint	and	Several	Liability	Arrangements	for	Which	the Total	Amount	of	the	Obligation	is	Fixed	at	the	Reporting	Date."	This	ASU	requires	an	entity	to	measure	obligations	resulting	from	joint	and	several	liability arrangements	for	which	the	total	amount	of	the	obligation	within	the	scope	of	this	guidance	is	fixed	at	the	reporting	date,	as	the	sum	of	(a)	the	amount	the	reporting	entity agreed	to	pay	on	the	basis	of	its	arrangement	among	its	co-obligors	and	(b)	any	additional	amount	the	reporting	entity	expects	to	pay	on	behalf	of	its	co-obligors.	This ASU	also	requires	an	entity	to	disclose	the	nature	and	amount	of	the	obligation	as	well	as	other	information	about	those	obligations.	The	amendments	in	this	ASU	are effective	for	fiscal	years,	and	interim	periods	within	those	years,	beginning	after	December	15,	2013,	and	should	be	applied	retrospectively	to	all	prior	periods	presented. To	the	extent	the	Company	has	any	joint	and	several	liability	arrangements,	we	do	not	believe	this	ASU	will	have	a	material	effect	on	our	financial	position	and	results of	operations.

In	July	2012,	the	FASB	issued	ASU	2012-02,	Intangibles	—	Goodwill	and	Other	(Topic	350):	Testing	Indefinite-Lived	Intangible	Assets	for	Impairment.	This ASU	gives	entities	testing	indefinite-lived	intangible	assets	for	impairment	the	option	first	to	assess	qualitative	factors	to	determine	whether	the	existence	of	events	and circumstances	indicates	that	it	is	more	likely	than	not	that	the	indefinite-lived	intangible	asset	is	impaired.	If,	after	assessing	the	totality	of	events	and	circumstances,	an entity	concludes	that	it	is	not	more	likely	than	not	that	the	indefinite-lived	intangible	asset	is	impaired,	the	entity	is	not	required	to	take	further	action.	However,	if	an entity	concludes	otherwise,	a	quantitative	impairment	test	is	required.	We	adopted	the	guidance	January	1,	2013,	and	it	did	not	have	a	material	effect	on	our	financial position	and	results	of	operations.

There	were	no	other	accounting	standards	recently	issued	that	had	or	are	expected	to	have	a	material	impact	on	our	financial	position	or	results	of	operations.

# Boise	Acquisition

On	October	25,	2013,	we	acquired	100%	of	the	outstanding	stock	and	voting	equity	interests	of	Boise,	a	large	manufacturer	of	packaging	and	white	paper products	for	$2.1	billion	including	the	assumption	of	debt.	We	paid	$12.55	per	share	to	shareholders,	or	$1.2	billion,	net	of	$121.7	million	of	cash	acquired,	and	assumed the	fair	value	of	Boise's	debt,	of	$829.8	million.	The	acquisition	expands	our	corrugated	products	geographic	reach	and	offerings,	provides	low-cost,	lightweight containerboard	capacity	for	continued	growth	in	the	packaging	business,	and	provides	meaningful	opportunities	in	the	white	paper	business.	We	incurred	$17.2	million of	acquisition-related	costs	recorded	in	"Other	expense,	net"	and	$11.6	million	of	acquisition-related	debt	financing	costs	recorded	in	"Interest	expense".	Our consolidated	income	statement	for	the	year	ended	December	31,	2013,	included	Boise	net	sales	revenue	of	$448.0	million	and	Boise	income	from	operations	of	$3.5 million.	Boise's	income	from	operations	included	$21.5	million	of	expense	related	to	the	step-up	in	inventory	value	at	the	acquisition	date,	$14.6	million	of	integration- related	and	other	costs,	and	$0.4	million	of	acquisition-related	costs.	Boise's	financial	results	are	included	in	our	Packaging,	Paper,	and	Corporate	and	Other	segments from	the	date	of	acquisition.	For	more	information,	see	Note	19,	Segment	Information.

The	purchase	price	allocation	is	preliminary.	Our	estimates	and	assumptions	are	subject	to	change	as	more	information	becomes	available.	The	primary	areas	of the	purchase	price	allocation	that	are	not	yet	finalized	relate	to	the	valuation	of	fixed	assets,	income	taxes,	and	residual	goodwill.	The	following	table	summarizes	the allocation	of	the	purchase	price	to	the	assets	acquired	and	liabilities	assumed,	based	on	our	current	estimates	of	the	fair	value	at	the	date	of	the	acquisition	(dollars	in thousands):

| thousands): |  |
| :--- | :--- |
| Current\tassets: |  |
| Cash\tand\tcash\tequivalents | $121,658 |
| Accounts\treceivable | 270,364 |
| Inventories | 286,277 |
| Deferred\tincome\ttaxes | 9,144 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 8,624 |
| Total\tcurrent\tassets | 696,067 |
| Property,\tplant,\tand\tequipment\t(a) | 1,401,183 |
| Intangible\tassets\t(b): |  |
| Customer\trelationships | 256,400 |
| Trademarks\tand\ttrade\tnames | 20,600 |
| Goodwill\t(c) | 458,579 |
| Other\tlong-term\tassets | 21,786 |
| Assets\tacquired | 2,854,615 |
| Current\tliabilities | 322,230 |
| Long-term\tdebt | 829,750 |
| Deferred\ttax\tliabilities | 281,463 |
| Other\tlong-term\tliabilities | 131,276 |
| Liabilities\tassumed | 1,564,719 |
| Net\tassets\tacquired | $1,289,896 |

(a) Property	and	equipment	acquired	are	being	depreciated	on	a	straight-line	basis	over	their	estimated	remaining	lives,	which	range	from	one	to	30	years.

(b) We	are	amortizing	the	intangible	assets	on	a	straight-line	basis	over	the	following	(in	years):

(c) Goodwill	is	the	excess	of	purchase	price	over	the	fair	value	of	tangible	and	identifiable	intangible	assets	acquired	and	liabilities	assumed.	Goodwill	generated	from	the acquisition	is	primarily	attributable	to	expected	synergies	and	the	assembled	workforce.	Goodwill	recognized	in	the	transaction	is	not	deductible	for	income	tax	purposes; however,	we	assumed	$1.9	million	of	goodwill	that	Boise	had	been	amortizing	in	connection	with	previous	acquisitions,	which	we	will	continue	to	amortize	and	deduct	for income	tax	purposes.

# Pro	Forma	Financial	Information	(Unaudited)

The	following	pro	forma	financial	information	presents	the	combined	results	of	operations	as	if	Boise	had	been	combined	with	us	on	January	1,	2012.	The	pro forma	results	are	intended	for	information	purposes	only	and	do	not	purport	to	represent	what	the	combined	companies'	results	of	operations	would	actually	have	been had	the	transactions	in	fact	occurred	on	January	1,	2012.	They	also	do	not	reflect	any	cost	savings,	operating	synergies,	or	revenue	enhancements	that	we	may	achieve	or the	costs	necessary	to	achieve	those	cost	savings,	operating	synergies,	revenue	enhancements,	or	integration	efforts	(dollars	in	millions,	except	per-share	amounts).

|  | Year	Ended	December	31 | Year	Ended	December	31 |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Sales | $5,696.2 | $5,355.9 |
| Net\tincome\t(a) | $492.4 | $226.0 |
| Net\tincome\tper\tshare—diluted | $5.05 | $2.32 |

(a) The	2013	and	2012	unaudited	pro	forma	financial	information	presented	in	the	table	above	has	been	adjusted	to	give	effect	to	adjustments	that	are	directly	related	to	the acquisition,	factually	supportable,	and	expected	to	have	a	continuing	impact.	These	adjustments	include,	but	are	not	limited	to,	the	application	of	our	accounting	policies; elimination	of	related	party	transactions;	depreciation	and	amortization	related	to	fair	value	adjustments	to	property,	plant	and	equipment	and	intangible	assets;	and	interest expense	on	acquisition-related	debt.

The	2013	unaudited	pro	forma	net	income	was	also	adjusted	to	exclude	$21.5	million	of	acquisition	inventory	step-up	expense,	$17.2	million	of	acquisition-related	costs, which	primarily	consist	of	advisory,	legal,	accounting,	valuation	and	other	professional	or	consulting	fees,	and	$11.6	million	of	acquisition-related	debt	financing	costs. Included	in	2013	pro	forma	net	income	is	$166.0	million	of	income	from	the	reversal	of	tax	reserves	related	to	alternative	fuel	mixture	credits,	$17.4	million	of	integration- related	and	other	costs,	which	primarily	consist	of	severance	and	other	employee	costs	and	professional	services.

# Other	Acquisitions

In	November	2013,	we	acquired	Damage	Prevention	Company	for	$6.3	million	and	recorded	$1.1	million	of	goodwill	in	the	Packaging	segment.	During	the first	quarter	of	2012,	PCA	acquired	a	corrugated	products	manufacturer	located	in	Pennsylvania	for	$35.4	million.	Sales	and	total	assets	of	both	acquisitions	were	not material	to	the	Company's	overall	sales	and	total	assets.	The	operating	results	of	both	acquisitions	subsequent	to	the	purchase	dates	are	included	in	the	Packaging segment.	The	Company	allocated	the	purchase	price	to	the	assets	acquired	and	liabilities	assumed.

The	following	table	sets	forth	the	computation	of	basic	and	diluted	income	per	common	share	for	the	periods	presented	(dollars	in	thousands,	except	per	share

|  | 2013 | Year	Ended	December	31<br>2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Numerator: |  |  |  |
| Net\tincome | $436,283 | $163,820 | $158,027 |
| Denominator: |  |  |  |
| Weighted\taverage\tbasic\tcommon\tshares\toutstanding | 96,579 | 96,384 | 99,281 |
| Effect\tof\tdilutive\tsecurities: |  |  |  |
| Stock\toptions,\tunvested\trestricted\tstock,\tand\tperformance\tunits | 968 | 1,113 | 1,095 |
| Diluted\tcommon\tshares\toutstanding | 97,547 | 97,497 | 100,376 |
| Basic\tincome\tper\tcommon\tshare | $4.52 | $1.70 | $1.59 |
| Diluted\tincome\tper\tcommon\tshare | $4.47 | $1.68 | $1.57 |

All	outstanding	options	to	purchase	shares	at	December	31,	2013,	2012,	and	2011,	were	included	in	the	computation	of	diluted	common	shares	outstanding.

The	following	is	an	analysis	of	the	components	of	the	consolidated	income	tax	provision	(dollars	in	thousands):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Current\tincome\ttax\tprovision\t(benefit)\t- |  |  |  |
| U.S.\tFederal | $129,633 | $27,100 | $41,452 |
| State\tand\tlocal | 12,649 | 6,437 | 16,678 |
| Foreign | 317 | — | — |
| Total\tcurrent\tprovision\tfor\ttaxes | 142,599 | 33,537 | 58,130 |
| Deferred\t- |  |  |  |
| U.S.\tFederal | (163,187) | 180,997 | 29,895 |
| State\tand\tlocal | (251) | 2,205 | (2,548) |
| Foreign | (112) | — | — |
| Total\tdeferred\tprovision\tfor\ttaxes | (163,550) | 183,202 | 27,347 |
| Total\tprovision\t(benefit)\tfor\ttaxes | $(20,951) | $216,739 | $85,477 |

The	effective	tax	rate	varies	from	the	U.S.	Federal	statutory	tax	rate	principally	due	to	the	following	(dollars	in	thousands):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Provision\tcomputed\tat\tU.S.\tFederal\tstatutory\trate\tof\t35% | $145,366 | $133,196 | $85,226 |
| Alternative\tfuel\tmixture\tand\tcellulosic\tbiofuel\tproducer\tcredits | (166,006) | 81,695 | — |
| State\tand\tlocal\ttaxes,\tnet\tof\tfederal\tbenefit | 13,237 | 9,135 | 7,504 |
| Domestic\tmanufacturers\tdeduction | (11,712) | (7,155) | (7,670) |
| Other | (1,836) | (132) | 417 |
| Total | $(20,951) | $216,739 | $85,477 |

Tax	benefits	in	2013	included	$166.0	million	for	the	release	of	ASC	740	uncertain	tax	positions	related	to	the	taxability	of	the	alternative	fuel	mixture	tax credits	acquired	in	the	acquisition	of	Boise	and	the	completion	of	the	IRS	audit	of	PCA's	2008	and	2009	Federal	income	tax	returns	including	the	Filer	City	mill's cellulosic	biofuel	tax	credits.	Tax	expense	in	2012	included	$81.7	million	for	the	reallocation	of	gallons	from	the	cellulosic	biofuel	producer	credit	to	the	alternative	fuel mixture

credit	claimed	in	the	2009	amended	federal	and	state	income	tax	returns	filed	in	2012.	For	further	discussion	regarding	these	credits,	see	Note	6.

The	following	details	the	scheduled	expiration	dates	of	our	tax	effected	net	operating	loss	(NOL)	and	other	tax	carryforwards	at	December	31,	2013	(dollars	in thousands):

|  | 2014	Through	2023 | 2024	Through	2033 | Indefinite | Total |
| :--- | :--- | :--- | :--- | :--- |
| U.S.\tfederal\tand\tnon-U.S.\tNOLs | $1,633 | $110,086 | $— | $111,719 |
| State\ttaxing\tjurisdiction\tNOLs | 1,199 | 13,878 | — | 15,077 |
| U.S.\tfederal,\tnon-U.S.,\tand\tstate\ttax\tcredit\tcarryforwards | 203 | 748 | 613 | 1,564 |
| U.S.\tfederal\tcapital\tloss\tcarryforwards | 1,088 | — | — | 1,088 |
| Total | $4,123 | $124,712 | $613 | $129,448 |

Deferred	income	taxes	reflect	the	net	tax	effects	of	temporary	differences	between	the	carrying	amounts	of	assets	and	liabilities	for	financial	reporting	purposes and	the	amounts	for	income	tax	purposes.	Deferred	income	tax	assets	and	liabilities	at	December	31	are	summarized	as	follows	(dollars	in	thousands):

|  | December	31<br>2013 | 2012 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets: |  |  |
| Accrued\tliabilities | $19,521 | $7,332 |
| Employee\tbenefits\tand\tcompensation | 27,252 | 16,002 |
| Net\toperating\tloss\tcarryforwards | 126,796 | — |
| Stock\toptions\tand\trestricted\tstock | 8,875 | 8,389 |
| Pension\tand\tpostretirement\tbenefits | 75,518 | 65,520 |
| Derivatives | 18,221 | 20,381 |
| Capital\tloss,\tgeneral\tbusiness,\tforeign,\tand\tAMT\tcredit\tcarryforwards | 2,652 | — |
| Gross\tdeferred\ttax\tassets | $278,835 | $117,624 |
| Valuation\tallowance\t(a) | (2,715) | — |
| Net\tdeferred\ttax\tassets | $276,120 | $117,624 |
| Deferred\ttax\tliabilities: |  |  |
| Property,\tplant,\tand\tequipment | $(519,718) | $(210,486) |
| Goodwill\tand\tintangible\tassets | (111,865) | (7,267) |
| Inventories | (559) | (1,533) |
| Investment\tin\tjoint\tventure | (1,026) | (1,119) |
| Other | (2,208) | — |
| Total\tdeferred\ttax\tliabilities | $(635,376) | $(220,405) |
| Net\tdeferred\ttax\tassets\t(liabilities)\t(b) | $(359,256) | $(102,781) |
| ___________ |  |  |
| (a)\nDeferred\ttax\tassets\tare\treduced\tby\ta\tvaluation\tallowance\twhen\tit\tis\tmore\tlikely\tthan\tnot\tthat\tsome\tportion\tof\tthe\tdeferred\ttax\tassets\twill\tnot\tbe\trealized.\tOf\tthe | (a)\nDeferred\ttax\tassets\tare\treduced\tby\ta\tvaluation\tallowance\twhen\tit\tis\tmore\tlikely\tthan\tnot\tthat\tsome\tportion\tof\tthe\tdeferred\ttax\tassets\twill\tnot\tbe\trealized.\tOf\tthe | $2.7\tmillion |

(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.	Of	the $2.7	million valuation	allowance,	$1.6	million	relates	to	foreign	net	operating	loss	carryforwards	and	credits	and	$1.1	million	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	of	or	all	of	the	valuation	allowance	would	be	recognized as	a	benefit	to	income	tax	expense.

(b) As	of	December	31,	2013,	we	did	not	recognize	U.S.	deferred	income	taxes	on	our	cumulative	total	of	undistributed	foreign	earnings	for	our	non-U.S.	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.

The	following	table	summarizes	the	changes	related	to	PCA's	gross	unrecognized	tax	benefits	excluding	interest	and	penalties	(dollars	in	thousands):

|  | 2013 | 2012 |
| :--- | :--- | :--- |
| Balance\tas\tof\tJanuary\t1 | $(111,303) | $(111,013) |
| Increase\trelated\tto\tacquisition\tof\tBoise\tInc.\t(a) | (65,158) | — |
| Increases\trelated\tto\tprior\tyears'\ttax\tpositions | (49) | (128) |
| Increases\trelated\tto\tcurrent\tyear\ttax\tpositions | (1,538) | (1,267) |
| Decreases\trelated\tto\tprior\tyears'\ttax\tpositions\t(b) | 64,774 | — |
| Settlements\twith\ttaxing\tauthorities\t(c) | 106,187 | — |
| Expiration\tof\tthe\tstatute\tof\tlimitations\t(d) | 1,667 | 1,105 |
| Balance\tat\tDecember\t31 | $(5,420) | $(111,303) |

(a) PCA	acquired	$65.2	million	of	gross	unrecognized	tax	benefits	from	Boise	Inc.	that	relate	primarily	to	the	taxability	of	the	alternative	fuel	mixture	credits.

(b) Includes	a	$64.3	million	gross	decrease	related	to	the	taxability	of	the	alternative	fuel	mixture	tax	credits	claimed	in	2009	excise	tax	returns	by	Boise	Inc.	For	further discussion	regarding	these	credits,	see	Note	6,	Alternative	Energy	Tax	Credits.

(c) Includes	a	$104.7	million	gross	decrease	related	to	the	conclusion	of	the	Internal	Revenue	Service	audit	of	PCA's	alternative	energy	tax	credits.	For	further	discussion regarding	these	credits,	see	Note	6,	Alternative	Energy	Tax	Credits.

(d) In	the	third	and	fourth	quarters	of	2013,	various	state	statutes	of	limitations	expired.	As	a	result,	the	reserve	for	unrecognized	tax	benefits	decreased	by	$1.7	million	gross.

At	December	31,	2013,	PCA	had	recorded	a	$5.4	million	gross	reserve	for	unrecognized	tax	benefits,	excluding	interest	and	penalties.	Of	the	total,	$4.0	million (net	of	the	federal	benefit	for	state	taxes)	would	impact	the	effective	tax	rate	if	recognized.

PCA	recognizes	interest	accrued	related	to	unrecognized	tax	benefits	and	penalties	as	income	tax	expense.	Related	to	the	unrecognized	tax	benefits	noted	above, PCA	accrued	interest	of	$3.3	million	gross	and	accrued	penalties	of	less	than	$0.1	million	gross	during	2013	and	in	total,	as	of	December	31,	2013,	and	after	the decreases	and	settlements	noted	in	the	table	above,	has	recognized	a	liability	for	interest	of	$0.4	million	gross	and	penalties	of	less	than	$0.1	million	gross.	During	2012, PCA	accrued	interest	of	$0.3	million	gross	and	penalties	of	less	than	$0.1	million	gross	and	in	total,	as	of	December	31,	2012,	had	recognized	a	liability	for	interest	of $2.5	million	gross	and	penalties	of	less	than	$0.1	million	gross.	PCA	does	not	expect	the	unrecognized	tax	benefits	to	change	significantly	over	the	next	12	months.

PCA	is	subject	to	taxation	in	the	United	States	and	various	state	and	foreign	jurisdicitions.	A	federal	examination	of	the	tax	years	2008	and	2009	was	concluded in	November	2013.	The	tax	years	2010	-	2013	remain	open	to	federal	examination.	The	tax	years	2009	-	2013	remain	open	to	state	examinations.	Some	foreign	tax jurisdictions	are	open	to	examination	for	the	2008	tax	year	forward.	Through	the	Boise	acquisition,	PCA	recorded	net	operating	losses	and	credit	carryforwards	from 2008	through	2011	and	2013	that	are	subject	to	examinations	and	adjustments	for	at	least	three	years	following	the	year	in	which	utilized.

# 6.					Alternative	Energy	Tax	Credits

The	Company	generates	black	liquor	as	a	by-product	of	its	pulp	manufacturing	process,	which	entitled	it	to	certain	federal	income	tax	credits.	When	black liquor	is	mixed	with	diesel,	it	is	considered	an	alternative	fuel	that	was	eligible	for	a	$0.50	per	gallon	refundable	alternative	fuel	mixture	credit	for	gallons	produced before	December	31,	2009.	Black	liquor	is	also	eligible	for	a	$1.01	per	gallon	taxable	cellulosic	biofuel	producer	credit	for	gallons	of	black	liquor	produced	and	used	in 2009.	The	Company	first	recorded	income	relating	to	these	credits	in	its	income	statement	for	the	year	ended	December	31,	2009.

During	2010,	the	Internal	Revenue	Service	(IRS)	released	guidance	related	to	the	alternative	energy	credits	which	resulted	in:	(1)	the	Company	releasing	a reserve	that	was	established	in	2009	for	ambiguity	in	the	calculation	of	the	alternative	fuel	mixture	credit;	(2)	reallocation	of	gallons	of	black	liquor	from	the	alternative fuel	mixture	credit	to	the	cellulosic	biofuel	credit;	and	(3)	the	determination	that	the	Company's	proprietary	biofuel	process	at	its	Filer	City,	Michigan	mill	would	likely qualify	for	the	cellulosic	biofuel	producer	credit.	The	Company	amended	its	2009	federal	income	tax	return	in	December	2010	to	claim	the	additional	Filer	City	gallons. As	a	result	of	these	changes,	the	Company	recorded	a	charge	of	$(86.3)	million	in	"Alternative	fuel	mixture	credits"	and	a	$135.5	million	benefit	in	the	"(Provision) benefit	for	income	taxes."	Additional	expenses	of	$1.6	million	related	to	the	alternative	energy	tax	credits	were	also	recorded,	resulting	in	total	income	of	$47.7	million recorded	in	2010.	In	addition,	the	Company	recorded	in	2010	a	reserve	for	unrecognized	tax	benefits	under	ASC	740,	"Income	Taxes,"	of	$102.0	million	(net	of	the federal	benefit	for	state	taxes)	because	the	IRS	guidelines	do	not	specifically	address	the	unique	and	proprietary	nature	of	the	Filer	City	mill	process	and	uncertainty exists.

On	February	3,	2012,	PCA	again	amended	its	2009	federal	tax	return	to	reallocate	claimed	gallons	from	cellulosic	biofuel	producer	credits	to	alternative	fuel mixture	credits.	As	a	result	of	this	change,	the	Company	recorded	a	charge	of	$(118.5)	million	in	"(Provision)	benefit	for	income	taxes"	and	income	of	$95.5	million	in "Alternative	fuel	mixture	credits,"	together	resulting	in	a	first	quarter	2012	non-cash,	after-tax	charge	of	$23.0	million.	In	the	fourth	quarter	of	2012,	PCA	recorded	after- tax	income	of	$3.4	million	for	the	amendment	of	the	2009	state	income	tax	returns	related	to	the	federal	amendment	filed	in	February	2012.	The	net	impact	of	these changes	resulted	in	a	non-cash,	after-tax	charge	of	$19.6	million	for	the	year	ended	December	31,	2012.

The	IRS	completed	its	audit	of	PCA's	2008	and	2009	Federal	income	tax	returns	and	all	claimed	alternative	energy	tax	credits	were	allowed.	In	November 2013,	PCA	received	a	confirmation	letter	from	the	Joint	Committee	on	Taxation	that	their	review	was	also	complete.	As	a	result,	a	$103.9	million	($102.0	million	of	tax plus	$1.9	million	of	accrued	interest)	reserve	for	unrecognized	tax	benefits	for	the	Filer	City	mill's	cellulosic	biofuel	tax	credit	was	fully	reversed	as	a	benefit	to	income taxes	in	the	fourth	quarter.

In	November	2013,	an	IRS	Chief	Counsel	Memorandum	was	published	that	provided	guidance	concerning	the	taxability	of	the	alternative	fuel	mixture	credits. Based	on	this	new	fact,	PCA	reversed	a	$62.1	million	(net	of	the	federal	benefit	for	state	taxes)	reserve	for	unrecognized	tax	benefits	acquired	from	Boise	for	the taxability	of	the	2009	alternative	fuel	mixture	credits	that	Boise	had	claimed	through	excise	tax	refunds	as	a	benefit	to	income	taxes	in	the	fourth	quarter.	This	resulted	in a	reduction	in	"Other	long-term	liabilities"	of	$13.1	million	and	the	recording	of	a	deferred	tax	asset	to	increase	the	net	operating	loss	carryforwards	recorded	in	deferred taxes	by	$49.0	million.

# Goodwill

Goodwill	represents	the	excess	of	the	cost	of	an	acquired	business	over	the	fair	value	of	the	identifiable	tangible	and	intangible	assets	acquired	and	liabilities assumed	in	a	business	combination.	At	December	31,	2013,	we	had	$472.9	million	of	goodwill	recorded	in	our	Packaging	segment	and	$53.9	million	in	our	Paper segment	on	our	Consolidated	Balance	Sheet.

         Changes	in	the	carrying	amount	of	our	goodwill	are	as	follows	(dollars	in	thousands):

| Changes	in	the	carrying	amount	of	our	goodwill	are	as	follows	(dollars	in	thousands): |  |
| :--- | :--- |
|  | Goodwill |
| Balance\tat\tJanuary\t1,\t2012 | $58,214 |
| Acquisitions | 14,098 |
| Adjustments\trelated\tto\tpurchase\taccounting | (5,152) |
| Balance\tat\tDecember\t31,\t2012 | 67,160 |
| Acquisitions\t(a) | 459,629 |
| Balance\tat\tDecember\t31,\t2013 | $526,789 |

(a) In	2013,	in	addition	to	acquiring	Boise	and	recording	$458.6	million	of	goodwill,	we	acquired	Damage	Prevention	Company	for	$6.3	million	and	recorded	$1.1	million	of goodwill	in	the	Packaging	segment.

# Intangible	Assets

Intangible	assets	are	comprised	of	customer	relationships	and	trademarks	and	trade	names.

The	weighted	average	useful	life,	gross	carrying	amount,	and	accumulated	amortization	of	our	intangible	assets	were	as	follows	(dollars	in	thousands):

|  |  | As	of	December	31,	2013 |  |  | As	of	December	31,	2012 |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Weighted\nAverage\nRemaining\tUseful\nLife\t(in\tYears) | Gross\nCarrying\nAmount | Accumulated\nAmortization | Weighted\nAverage\nRemaining\tUseful\nLife\t(in\tYears) | Gross\nCarrying\nAmount | Accumulated\nAmortization |
| Customer\trelationships | 15.4 | $306,361 | $16,509 | 16.7 | $48,261 | $10,663 |
| Trademarks\tand\ttrade\tnames | 14.7 | 21,370 | 794 | 2.6 | 770 | 248 |
| Other | 3.0 | 220 | 109 | 3.7 | 220 | 57 |
| Total\tintangible\tassets\t(excluding\tgoodwill) | 15.4 | $327,951 | $17,412 | 16.5 | $49,251 | $10,968 |

# Impairment	Testing

We	test	goodwill	for	impairment	annually	in	the	fourth	quarter	or	sooner	if	events	or	changes	in	circumstances	indicate	that	the	carrying	value	of	the	asset	may exceed	fair	value.	Additionally,	when	we	experience	changes	to	our	business	or	operating	environment,	we	evaluate	the	remaining	useful	lives	of	our	finite-lived purchased	intangible	assets	to	determine	whether	any	adjustments	to	the	useful	lives	are	necessary.	We	completed	our	test	in	fourth	quarter,	and	there	is	no	indication	of goodwill	or	intangible	asset	impairment.

At	December	31,	2013	and	2012,	our	long-term	debt	and	interest	rates	on	that	debt	were	as	follows	(dollars	in	thousands):

|  | December	31,	2013 |  | December	31,	2012 |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Amount | Interest\tRate | Amount | Interest\tRate |
| Revolving\tCredit\tFacility,\tdue\tOctober\t2018 | $— | —% | $— | —% |
| Five-Year\tTerm\tLoan,\tdue\tOctober\t2018 | 650,000 | 1.54 | — | — |
| Seven-Year\tTerm\tLoan,\tdue\tOctober\t2020 | 650,000 | 1.79 | — | — |
| November\t2023 | 698,173 | 4.50 | — | — |
| and\t2012,\trespectively,\tdue\tMarch\t2018 | 149,974 | 6.50 | 149,968 | 6.50 |
| 2013\tand\t2012,\trespectively,\tdue\tJune\t2022 | 399,698 | 3.90 | 399,662 | 3.90 |
| Receivables\tCredit\tFacility,\tdue\tOctober\t2014 | — | — | 109,000 | 1.06 |
| Senior\tCredit\tFacility,\tTerm\tLoan,\tdue\tOctober\t2016 | — | — | 135,000 | 1.71 |
| Total | 2,547,845 | 3.08 | 793,630 | 3.63 |
| Less\tcurrent\tportion | 39,000 | 1.59 | 15,000 | 1.71 |
| Total\tlong-term\tdebt | $2,508,845 | 3.10% | $778,630 | 3.67% |

In	October	2013,	we	entered	into	$2.35	billion	of	new	borrowings	and	credit	facility,	including	a	$1.65	billion	senior	unsecured	credit	agreement,	which includes	a	$350.0	million	undrawn	revolver,	and	$700.0	million	of	4.50%	ten-year	notes,	which	in	connection	with	cash	on	hand,	was	used	to	finance	the	acquisition	of Boise,	repay	$953.6	million	of	indebtedness,	which	included	$829.8	million	of	acquired	Boise	debt,	and	for	general	corporate	purposes.	The	details	of	the	new borrowings	are	as	follows:

•Senior	Unsecured	Credit	Agreement.	On	October,	18,	2013,	we	replaced	our	senior	credit	facility	that	was	scheduled	to	terminate	in	October	2016,	with	a	new $1.65	billion	senior	unsecured	credit	facility.	Loans	bear	interest	at	LIBOR	plus	a	margin	that	is	determined	based	upon	our	credit	ratings.	The	financing consisted	of:

◦Revolving	Credit	Facility:	A	$350.0	million	unsecured	revolving	credit	facility	with	variable	interest	(LIBOR	plus	a	margin)	due	October	2018.	During 2013,	we	did	not	borrow	under	the	Revolving	Credit	Facility.	At	December	31,	2013,	we	had	$19.0	million	of	outstanding	letters	of	credit	that	were considered	a	draw	on	the	revolving	credit	facility,	resulting	in	$331.0	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	$650.0	million	unsecured	term	loan	with	variable	interest	(LIBOR	plus	1.375%),	payable	quarterly,	due	October 2018.

◦Seven-Year	Term	Loan:	A	$650.0	million	unsecured	term	loan	with	variable	interest	(LIBOR	plus	1.625%),	payable	quarterly,	due	October 2020.

On	December	23,	2013,	we	repaid	in	full	the	$109.0	million	that	was	outstanding	under,	and	terminated,	the	receivables	credit	facility	that	was	scheduled	to terminate	on	October	11,	2014.

On	June	26,	2012,	we	issued	$400.0	million	of	3.90%	senior	notes	due	June	15,	2022,	through	a	registered	public	offering	and	notified	the	holders	of	our $400.0	million	of	5.75%	senior	notes	due	August	1,	2013,	that	we	would	redeem	those	notes	on	July	26,	2012.	On	July	26,	2012,	we	completed	the	redemption	of	the	old 5.75%	notes	for	$432.5	million,	which	included	a	redemption	premium	of	$21.3	million	and	$11.2	million	of	accrued	and	unpaid	interest.	We	used	the	proceeds	of	the offering	of	the	new	3.90%	notes	and	cash	on	hand	to	fund	the	redemption.

The	instruments	governing	our	indebtedness	contain	financial	and	other	covenants	that	limit	the	ability	of	PCA	and	its	subsidiaries	to	enter	into	sale	and leaseback	transactions,	incur	liens,	incur	indebtedness	at	the	subsidiary	level,	enter	into	certain	transactions	with	affiliates,	merge	or	consolidate	with	any	other	person	or sell	or	otherwise	dispose	of	all	or	substantially	all	of	our	assets.	Our	credit	facility	also	requires	us	to	comply	with	certain	financial	covenants,	including	maintaining	a minimum	interest	coverage	ratio	and	a	maximum	leverage	ratio.	A	failure	to	comply	with	these	restrictions	could	lead	to	an	event	of	default,	which	could	result	in	an acceleration	of	any	outstanding	indebtedness	and/or	prohibit	us	from	drawing	on	the	revolving	credit	facility.	Such	an	acceleration	may	also	constitute	an	event	of default	under	the	senior	notes	indenture.	At	December	31,	2013,	we	were	in	compliance	with	these	covenants.

Additional	information	regarding	our	variable	rate	debt	is	shown	below:

|  | Reference	Interest	Rate |  | Applicable	Margin |  |
| :--- | :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2013 | 2012 |
| Five-Year\tTerm\tLoan,\tdue\tOctober\t2018 | 0.17% | n/a | 1.375% | n/a |
| Seven-Year\tTerm\tLoan,\tdue\tOctober\t2020 | 0.17% | n/a | 1.625% | n/a |
| Receivables\tCredit\tFacility | n/a | 0.21% | n/a | 0.85% |
| Senior\tCredit\tFacility,\tTerm\tLoan,\tdue\tOctober\t2016 | n/a | 0.21% | n/a | 1.50% |

Interest	payments	and	redemption	premium	payments	paid	in	connection	with	the	Company's	debt	obligations	for	the	years	ended	December	31,	2013,	2012, and	2011,	were	$105.7	million	(including	a	$54.8	million	redemption	premium	related	to	the	acquired	Boise	Inc.	debt),	$66.3	million	(including	a	$21.3	million redemption	premium),	and	$35.2	million,	respectively.

Included	in	interest	expense,	net,	are	amortization	of	financing	costs	and	amortization	of	treasury	lock	settlements.	For	the	years	ended	December	31,	2013, 2012,	and	2011,	amortization	of	treasury	lock	settlements	was	a	$5.7	million	net	loss,	a	$3.0	million	net	loss,	and	a	$1.8	million	net	gain,	respectively.	Amortization	of financing	costs	for	the	years	ended	December	31,	2013,	2012,	and	2011,	was	$10.3	million	(including	$8.2	million	for	acquisition-related	financing	fees),	$1.1	million, and	$0.7	million,	respectively.

With	the	exception	of	the	senior	notes,	our	debt	is	variable-rate	debt.	At	December	31,	2013,	the	book	value	of	our	fixed-rate	debt	was	$1,247.8	million,	and	the fair	value	was	estimated	to	be	$1,258.3	million.	The	difference	between	the	book	value	and	fair	value	is	due	to	the	difference	between	the	period-end	market	interest	rate and	the	stated	rate	of	our	fixed-rate	debt.	We	estimated	the	fair	value	of	our	fixed-rate	debt	using	quoted	market	prices	(Level	1	inputs),	discussed	further	in	Note	2, Summary	of	Significant	Accounting	Policies.

The	Company	has	a	long-term	equity	incentive	plan,	which	allows	for	grants	of	stock	options,	stock	appreciation	rights,	restricted	stock,	and	performance awards	to	directors,	officers	and	employees,	as	well	as	others	who	engage	in	services	for	PCA.	The	plan,	as	amended,	terminates	May	1,	2023,	and	authorizes	10.6 million	shares	of	common	stock	for	grant	over	the	life	of	the	plan.	As	of	December	31,	2013,	2.1	million	shares	remained	available	for	future	issuance	under	the	plan. Forfeitures	are	added	back	to	the	pool	of	shares	of	common	stock	available	to	be	granted	at	a	future	date.

# Restricted	Stock

Restricted	stock	awards	granted	to	officers	and	employees	generally	vest	at	the	end	of	a	four-year	period,	and	restricted	stock	awards	granted	to	directors	vest immediately.	The	fair	value	of	restricted	stock	is	determined	based	on	the	closing	price	of	the	Company's	stock	on	the	grant	date.	A	summary	of	the	Company's restricted	stock	activity	follows:

|  | Shares | Weighted	Average<br>Grant-	Date	Fair<br>Value | Shares | Weighted	Average<br>Grant-	Date	Fair<br>Value | Shares | Weighted	Average<br>Grant-	Date	Fair<br>Value |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Restricted\tstock\tat\tJanuary\t1 | 1,771,664 | $23.44 | 1,817,745 | $22.37 | 1,478,000 | $20.70 |
| Granted | 331,053 | 51.99 | 394,928 | 27.46 | 575,694 | 27.80 |
| Vested\t(a) | (605,458) | 19.54 | (429,034) | 22.66 | (229,979) | 25.29 |
| Forfeitures | (33,565) | 24.76 | (11,975) | 21.46 | (5,970) | 22.45 |
| Restricted\tstock\tat\tDecember\t31 | 1,463,694 | $31.48 | 1,771,664 | $23.44 | 1,817,745 | $22.37 |

# Performance	Units

The	Company	granted	70,600	performance	award	units	to	certain	key	employees	on	June	24,	2013,	with	a	weighted-average	grant-date	fair	value	of	$47.83	per unit.	The	number	of	units	that	vest	at	the	end	of	a	four-year	period	are	based	on	the	Company's	performance	compared	to	a	peer	group.	The	performance	units	are	paid out	entirely	in	shares	of	the	Company's	common	stock.	The	award	is	valued	at	the	closing	price	of	the	Company's	stock	on	the	grant	date	and	is	expensed	over	the requisite	service	period	based	on	the	most	probable	number	of	awards	expected	to	vest.

# Compensation	Expense

Our	share-based	compensation	expense	is	recorded	in	"Selling,	general,	and	administrative	expenses."	Compensation	expense	for	share-based	awards recognized	in	the	Consolidated	Statements	of	Income,	net	of	forfeitures	was	as	follows	(dollars	in	thousands):

|  |  | Year	Ended	December	31 |  |
| :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 |
| Restricted\tstock | $14,238 | $11,687 | $9,736 |
| Performance\tunits | 523 | — | — |
| Impact\ton\tincome\tbefore\tincome\ttaxes | 14,761 | 11,687 | 9,736 |
| Income\ttax\tbenefit | (5,728) | (4,543) | (3,784) |
| Impact\ton\tnet\tincome | $9,033 | $7,144 | $5,952 |

The	fair	value	of	restricted	stock	and	performance	units	is	determined	based	on	the	closing	price	of	the	Company's	common	stock	on	the	grant	date.	As	PCA's Board	of	Directors	has	the	ability	to	accelerate	vesting	of	share-based	awards	upon	an	employee's	retirement,	the	Company	accelerates	the	recognition	of	compensation expense	for	certain	employees	approaching	normal	retirement	age.

The	unrecognized	compensation	expense	for	all	share-based	awards	follows	(dollars	in	thousands):

|  | Unrecognized<br>Compensation	Expense | Average	Recognition<br>Period	(in	years) |
| :--- | :--- | :--- |
| Restricted\tstock | $24,500 | 2.7 |
| Performance\tunits | 2,941 | 3.5 |
| Total\tunrecognized\tshare-based\tcompensation\texpense | $27,441 | 2.8 |

We	evaluate	share-based	compensation	expense	on	a	quarterly	basis	based	on	our	estimate	of	expected	forfeitures,	review	of	recent	forfeiture	activity,	and expected	future	turnover.	We	recognize	the	effect	of	adjusting	the	forfeiture	rate	for	all	expense	amortization	in	the	period	that	we	change	the	forfeiture	estimate.	The effect	of	forfeiture	adjustments	was	insignificant	in	all	periods	presented.

# 10.					Employee	Benefit	Plans	and	Other	Postretirement	Benefits

Including	plans	acquired	in	the	acquisition	of	Boise	Inc.,	PCA	has	defined	pension	benefit	plans	for	both	salaried	and	hourly	employees.	The	plans	covering salaried	employees	are	closed	to	new	entrants	with	only	certain	current	active	participants	still	accruing	benefits.	The	plans	covering	certain	hourly	employees	are	closed to	new	participants.	We	also	have	a	Supplemental	Executive	Retirement	Plan	(SERP)	and	other	nonqualified	defined	benefit	pension	plans	that	provide	unfunded supplemental	retirement	benefits	to	certain	of	our	executives	and	former	executives.	The	SERP	provides	for	incremental	pension	benefits	in	excess	of	those	offered	in our	principal	pension	plans.

In	connection	with	the	acquisition	of	Boise	Inc.,	we	recorded	a	$67.8	million	liability	equal	to	the	net	underfunded	status	of	the	acquired	defined	benefit	plans. The	majority	of	the	Boise	pension	benefit	plans	acquired	are	frozen;	with	only	about	300	hourly	employees	continuing	to	accrue	benefits.	When	frozen,	the	pension benefit	for	salaried	employees	was	based	primarily	on	the	employees'	years	of	service	and	highest	five-year	average	compensation.	The	benefit	for	hourly	employees	is generally	based	on	a	fixed	amount	per	year	of	service.

# Other	Postretirement	Benefits

PCA	provides	postretirement	medical	benefits	for	salaried	employees	and	postretirement	medical	and	life	insurance	benefits	for	certain	hourly	employees.	For salaried	employees,	the	plan	covers	employees	retiring	from	PCA	on	or	after	attaining	age	58	who	have	had	at	least	10	years	of	full-time	service	with	PCA	after attaining	age	48.	For	hourly	employees,	the	postretirement	medical	and	life	insurance	coverage,	where	applicable,	is	available	according	to	the	eligibility	provisions contained	in	the	applicable	collective	bargaining	agreement	in	effect	at	the	employee's	work	location.

# Obligations	and	Funded	Status	of	Defined	Benefit	Pension	and	Other	Postretirement	Benefits	Plans

The	funded	status	of	PCA's	plans	change	from	year	to	year	based	on	the	plan	asset	investment	return,	contributions,	benefit	payments,	and	the	discount	rate used	to	measure	the	liability.	The	following	table,	which	includes	only	company-sponsored	defined	benefit	and	other	postretirement	benefit	plans,	reconciles	the beginning	and	ending	balances	of	the	projected	benefit	obligation	and	the	fair	value	of	plan	assets.	We	recognize	the	unfunded	status	of	these	plans	on	the	Consolidated Balance	Sheets,	and	we	recognize	changes	in	funded	status	in	the	year	changes	occur	through	the	Consolidated	Statements	of	Comprehensive	Income	(dollars	in thousands):

|  | Pension	Plans | Pension	Plans | Postretirement	Plans |  |
| :--- | :--- | :--- | :--- | :--- |
|  | Year\tEnded\tDecember\t31\n2013 | 2012 | Year\tEnded\tDecember\t31\n2013 | 2012 |
| Change\tin\tBenefit\tObligation |  |  |  |  |
| Benefit\tobligation\tat\tbeginning\tof\tperiod | $378,714 | $314,155 | $31,806 | $25,937 |
| Service\tcost | 24,460 | 22,424 | 2,061 | 1,856 |
| Interest\tcost | 21,488 | 14,800 | 1,248 | 1,241 |
| Plan\tamendments\t(a) | 13,785 | 2,271 | — | 2,266 |
| Actuarial\t(gain)\tloss\t(b) | (53,451) | 29,338 | (7,797) | 1,698 |
| Acquisitions | 553,969 | — | 226 | — |
| Participant\tcontributions | — | — | 1,239 | 1,055 |
| Benefits\tpaid | (9,149) | (4,274) | (2,528) | (2,247) |
| Benefit\tobligation\tat\tplan\tyear\tend | $929,816 | $378,714 | $26,255 | $31,806 |
| Accumulated\tbenefit\tobligation\tportion\tof\tabove | $884,016 | $341,729 |  |  |
| Change\tin\tFair\tValue\tof\tPlan\tAssets |  |  |  |  |
| Plan\tassets\tat\tfair\tvalue\tat\tbeginning\tof\tperiod | $238,359 | $185,122 | $— | $— |
| Acquisitions | 486,171 | — | — | — |
| Actual\treturn\ton\tplan\tassets | 26,555 | 21,527 | — | — |
| Company\tcontributions | 30,146 | 35,984 | 1,289 | 1,192 |
| Participant\tcontributions | — | — | 1,239 | 1,055 |
| Benefits\tpaid | (9,149) | (4,274) | (2,528) | (2,247) |
| Fair\tvalue\tof\tplan\tassets\tat\tplan\tyear\tend | $772,082 | $238,359 | $— | $— |
| Underfunded\tstatus | $(157,734) | $(140,355) | $(26,255) | $(31,806) |
| Amounts\tRecognized\tin\tStatement\tof\tFinancial\tPosition |  |  |  |  |
| Current\tliabilities | $(832) | $(6,290) | $(1,231) | $(1,333) |
| Noncurrent\tliabilities | (156,902) | (134,065) | (25,024) | (30,473) |
| Accrued\tbenefit\trecognized\tat\tDecember\t31 | $(157,734) | $(140,355) | $(26,255) | $(31,806) |
| Amounts\tRecognized\tin\tAccumulated\tOther\tComprehensive\t(Income)\nLoss\t(Pre-Tax) |  |  |  |  |
| Prior\tservice\tcost | $31,577 | $34,921 | $72 | $(353) |
| Actuarial\tloss | 26,742 | 90,057 | 1,472 | 9,759 |
| Total | $58,319 | $124,978 | $1,544 | $9,406 |

(a) In	2013,	the	United	Steel	Workers	(USW)	ratified	a	master	labor	agreement	with	PCA	under	which	certain	USW-represented	employees	will	have	their	pension	accruals frozen	under	PCA's	hourly	pension	plan,	resulting	in	most	of	the	$13.8	million	increase	in	benefit	obligations.

(b) The	actuarial	gain	in	2013	is	due	primarily	to	an	increase	in	the	weighted	average	discount	rate,	while	the	discount	rate	decreased	in	2012.

# Components	of	Net	Periodic	Benefit	Cost	and	Other	Comprehensive	(Income)	Loss

The	components	of	net	periodic	benefit	cost	and	other	comprehensive	(income)	loss	(pretax)	are	as	follows	(dollars	in	thousands):

|  | Pension	Plans | Pension	Plans | Pension	Plans | Postretirement	Plans | Postretirement	Plans | Postretirement	Plans |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | Year\tEnded\tDecember\t31 |  | Year\tEnded\tDecember\t31 | Year\tEnded\tDecember\t31 |  |
|  | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 |
| Service\tcost | $24,460 | $22,424 | $19,808 | $2,061 | $1,856 | $1,599 |
| Interest\tcost | 21,488 | 14,800 | 13,473 | 1,248 | 1,241 | 1,189 |
| Expected\treturn\ton\tplan\tassets | (21,345) | (12,108) | (13,544) | — | — | — |
| Net\tamortization\tof\tunrecognized\tamounts |  |  |  |  |  |  |
| Prior\tservice\tcost | 6,222 | 5,993 | 5,782 | (426) | (419) | (416) |
| Actuarial\tloss | 4,662 | 4,916 | 411 | 490 | 452 | 449 |
| Curtailment\tloss\t(a) | 10,908 | — | — | — | — | — |
| Net\tperiodic\tbenefit\tcost | $46,395 | $36,025 | $25,930 | $3,373 | $3,130 | $2,821 |
| Changes\tin\tplan\tassets\tand\tbenefit\tobligations\trecognized\tin\tother\ncomprehensive\t(income)\tloss |  |  |  |  |  |  |
| Actuarial\tnet\t(gain)\tloss | $(58,652) | $19,919 | $49,675 | $(7,798) | $1,698 | $754 |
| Prior\tservice\tcredit | 13,785 | 2,270 | 1,827 | — | 17 | — |
| Amortization\tof\tactuarial\tloss | (4,662) | (4,916) | (411) | (490) | (452) | (449) |
| Amortization\tof\tprior\tservice\tcost | (17,130) | (5,993) | (5,782) | 426 | 419 | 416 |
| Total\trecognized\tin\tother\tcomprehensive\t(income)\tloss\t(b) | (66,659) | 11,280 | 45,309 | (7,862) | 1,682 | 721 |
| Total\trecognized\tin\tnet\tperiodic\tbenefit\tcost\tand\tother\tcomprehensive\n(income)\tloss | $(20,264) | $47,305 | $71,239 | $(4,489) | $4,812 | $3,542 |

(a) PCA	recognized	curtailment	losses	in	"Other	expense,	net"	in	the	Consolidated	Statements	of	Income	for	recent	USW	negotiations,	resulting	in	the	bifurcation	of	the	active USW	population	between	those	grandfathered	in	the	current	formula	(with	continued	accruals)	and	non-grandfathered	in	the	current	formula	(frozen	benefits	at	the	contract date).

(b) Accumulated	losses	in	excess	of	10%	of	the	greater	of	the	projected	benefit	obligation	or	the	market-related	value	of	assets	will	be	recognized	on	a	straight-line	basis	over the	average	remaining	service	period	of	active	employees,	which	is	between	seven	to	ten	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	income	(loss)"	into	pension	expense	in	2014	is	$7.1	million.

Some	of	our	defined	benefit	plans	have	accumulated	benefit	obligations	which	are	less	than	the	fair	value	of	plan	assets.	The	accumulated	benefit	obligations for	the	plans	with	obligations	in	excess	of	plan	assets,	is	$798	million.

# Assumptions

The	following	table	presents	the	assumptions	used	in	the	measurement	of	our	benefits	obligations:

|  | Pension	Plans | Pension	Plans | Pension	Plans | Postretirement	Plans | Postretirement	Plans | Postretirement	Plans |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | 2013 | December\t31\n2012 | 2011 | 2013 | December\t31\n2012 | 2011 |
| Weighted-Average\tAssumptions\tUsed\tto\tDetermine\tBenefit\nObligations\tat\tDecember\t31 |  |  |  |  |  |  |
| Discount\trate | 5.00% | 4.25% | 4.75% | 4.85% | 4.00% | 4.50% |
| Rate\tof\tcompensation\tincrease | 4.00% | 4.00% | 4.00% | N/A | N/A | N/A |
| Weighted-Average\tAssumptions\tUsed\tto\tDetermine\tNet\tPeriodic\nBenefit\tCost\tfor\tthe\tYears\tEnded\tDecember\t31 |  |  |  |  |  |  |
| Discount\trate | 4.57% | 4.75% | 5.50% | 4.00% | 4.50% | 5.25% |
| Expected\treturn\ton\tplan\tassets | 6.53% | 6.15% | 7.75% | N/A | N/A | N/A |
| Rate\tof\tcompensation\tincrease | 4.00% | 4.00% | 4.00% | N/A | N/A | N/A |

Discount	Rate	Assumption.	The	discount	rate	reflects	the	current	rate	at	which	the	pension	obligations	could	be	settled	on	the	measurement	date:	December	31. The	discount	rate	assumption	used	to	calculate	the	present	value	of	pension	and	postretirement	benefit	obligations	reflects	the	rates	available	on	high-quality,	fixed- income	debt	instruments	on	December	31.	In	all	periods,	the	bonds	included	in	the	models	reflect	anticipated	investments	that	would	be	made	to	match	the	expected monthly	benefit	payments	over	time.	The	plans'	projected	cash	flows	were	duration-matched	to	these	models	to	develop	an	appropriate	discount	rate.	The	discount	rate PCA	will	use	in	2014	to	calculate	the	net	periodic	pension	benefit	and	postretirement	benefit	cost	is	5.00%	and	4.85%,	respectively.

Asset	Return	Assumption.	The	expected	return	on	plan	assets	reflects	the	expected	long-term	rates	of	return	for	the	categories	of	investments	currently	held	in the	plan	as	well	as	anticipated	returns	for	additional	contributions	made	in	the	future.	The	expected	long-term	rate	of	return	is	adjusted	when	there	are	fundamental changes	in	expected	returns	on	the	plan	investments.	The	weighted-average	expected	return	on	plan	assets	we	will	use	in	our	calculation	of	2014	net	periodic	pension benefit	cost	is	6.69%.

Rate	of	Compensation	Increase.	The	rate	of	compensation	increase	is	determined	by	PCA	based	upon	annual	reviews.	The	compensation	increase	assumption	is not	applicable	for	all	plans	as	many	of	our	pension	plans	are	frozen	and	not	accruing	benefits.

Health	Care	Cost	Trend	Rate	Assumptions.	PCA	assumed	health	care	cost	trend	rates	for	its	postretirement	benefits	plans	were	as	follows:

Postretirement	Health	Care	Plan	Assumptions.	For	postretirement	health	care	plan	accounting,	PCA	reviews	external	data	and	its	own	historical	trends	for health	care	costs	to	determine	the	health	care	cost	trend	rate	assumption.

A	one-percentage	point	change	in	assumed	health	care	cost	trend	rates	would	have	the	following	effects	on	the	2013	postretirement	benefit	obligation	and	the 2013	net	post	retirement	benefit	cost	(in	thousands):

# Investment	Policies	and	Strategies

PCA	has	retained	the	services	of	professional	advisors	to	oversee	pension	investments	and	provide	recommendations	regarding	investment	strategy.	PCA's overall	strategy	and	related	apportionments	between	equity	and	debt	securities	may	change	from	time	to	time	based	on	market	conditions,	external	economic	factors,	and the	funded	status	of	the	plans.	The	general	investment	objective	for	all	of	our	plan	assets	is	to	optimize	growth	of	the	pension	plan	trust	assets,	while	minimizing	the	risk of	significant	losses	to	enable	the	plans	to	satisfy	their	benefit	payment	obligations	over	time.	The	objectives	take	into	account	the	long-term	nature	of	the	benefit obligations,	the	liquidity	needs	of	the	plans,	and	the	expected	risk/return	trade-offs	of	the	asset	classes	in	which	the	plans	may	choose	to	invest.	Pension	plans'	assets were	invested	in	the	following	classes	of	securities	at	December	31,	2013	and	2012:

|  | Percentage<br>of	Fair	Value |  |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Debt\tsecurities | 52% | 61% |
| International\tequity\tsecurities | 25 | 20 |
| U.S.\tequity\tsecurities | 21 | 16 |
| Real\testate\tsecurities | 1 | 3 |
| Other | 1% | —% |

At	December	31,	2013,	the	targeted	investment	allocations	differed	between	the	acquired	Boise	plans	and	PCA's	historical	plans	based	on	funded	status.	At December	31,	2013,	PCA's	historical	plans,	which	comprised	$283.1	million	of	the	fair	value	of	plan	assets,	targeted	34%	invested	in	equities,	62%	invested	in	bonds, and	4%	in	other,	whereas	the	Boise	plans,	which	comprised	$489.0	million	of	the	total	fair	value	of	plan	assets,	targeted	50%	in	equities	and	50%	in	bonds.	The	pension assets	we	acquired	with	the	acquisition	of	Boise	are	invested	more	heavily	in	equities	than	our	plans	have	historically	been	invested,	which	increased	the	percentage	of fair	value	invested	in	equities	in	2013,	compared	with	2012.

Investment	securities,	in	general,	are	exposed	to	various	risks,	such	as	interest	rate,	credit,	and	overall	market	volatility	risk,	all	of	which	are	subject	to	change. Due	to	the	level	of	risk	associated	with	some	investment	securities,	it	is	reasonably	possible	that	changes	in	the	values	of	investment	securities	will	occur	in	the	near term,	and	such	changes	could	materially	affect	the	reported	amounts.

# Fair	Value	Measurements	of	Plan	Assets

The	following	tables	set	forth,	by	level	within	the	fair	value	hierarchy,	discussed	in	Note	2,	Summary	of	Significant	Accounting	Policies,	the	pension	plan assets,	by	major	asset	category,	at	fair	value	at	December	31,	2013	and	2012	(dollars	in	thousands):

|  |  | Fair	Value	Measurements	at	December	31,	2013 |  |  |
| :--- | :--- | :--- | :--- | :--- |
| Asset\tCategory | Quoted\tPrices\tin\tActive\nMarkets\tfor\tIdentical\nAssets\t(Level\t1) | Significant\tOther\nObservable\nInputs\t(Level\t2) | Significant\nUnobservable\nInputs\t(Level\t3) | Total |
| Short-term\tinvestments\t(a) | $— | $1,858 | $— | $1,858 |
| Mutual\tfunds\t(b): |  |  |  |  |
| U.S.\tlarge\tvalue | 19,453 | — | — | 19,453 |
| U.S.\tlarge\tgrowth | 17,217 | — | — | 17,217 |
| U.S.\tmid-cap\tvalue | 3,135 | — | — | 3,135 |
| U.S.\tmid-cap\tgrowth | 6,781 | — | — | 6,781 |
| Foreign\tlarge\tblend | 45,159 | — | — | 45,159 |
| Diversified\temerging\tmarkets | 8,005 | — | — | 8,005 |
| Real\testate | 7,469 | — | — | 7,469 |
| Fixed\tincome | 54,366 | — | — | 54,366 |
| Common/collective\ttrust\tfunds\t(a): |  |  |  |  |
| U.S.\tlarge-cap\tequity\tblend | — | 87,862 | — | 87,862 |
| U.S.\tsmall\tand\tmid-cap\tequity\tblend | — | 19,577 | — | 19,577 |
| Foreign\tlarge\tblend | — | 126,653 | — | 126,653 |
| Diversified\temerging\tmarkets | — | 9,211 | — | 9,211 |
| Government\tbonds | — | 35,603 | — | 35,603 |
| Corporate\tbonds | — | 77,256 | — | 77,256 |
| U.S.\tsmall\tblend | — | 6,777 | — | 6,777 |
| Fixed\tincome | — | 234,445 | — | 234,445 |
| Private\tequity\tsecurities\t(c) | — | — | 9,904 | 9,904 |
| Total\tsecurities\tat\tfair\tvalue | $161,585 | $599,242 | $9,904 | $770,731 |
| Receivables\tand\taccrued\texpenses |  |  |  | 1,351 |
| Total\tfair\tvalue\tof\tplan\tassets |  |  |  | $772,082 |

# Fair	Value	Measurements	at	December	31,	2012

|  |  | Fair	Value	Measurements	at	December	31,	2012 |  |  |
| :--- | :--- | :--- | :--- | :--- |
| Asset\tCategory | Quoted\tPrices\tin\tActive\nMarkets\tfor\tIdentical\nAssets\t(Level\t1) | Significant\tOther\nObservable\nInputs\t(Level\t2) | Significant\nUnobservable\nInputs\t(Level\t3) | Total |
| Short-term\tinvestments\t(a) | $— | $394 | $— | $394 |
| Mutual\tfunds\t(b): |  |  |  |  |
| U.S.\tlarge\tvalue | 15,021 | — | — | 15,021 |
| U.S.\tlarge\tgrowth | 12,029 | — | — | 12,029 |
| U.S.\tmid-cap\tvalue | 2,481 | — | — | 2,481 |
| U.S.\tmid-cap\tgrowth | 4,734 | — | — | 4,734 |
| Foreign\tlarge\tblend | 39,204 | — | — | 39,204 |
| Diversified\temerging\tmarkets | 7,722 | — | — | 7,722 |
| Real\testate | 6,881 | — | — | 6,881 |
| Fixed\tincome | 48,699 | — | — | 48,699 |
| Common/collective\ttrust\tfunds\t(a): |  |  |  |  |
| Government\tbonds | — | 29,644 | — | 29,644 |
| Corporate\tbonds | — | 66,517 | — | 66,517 |
| U.S.\tsmall\tblend | — | 5,033 | — | 5,033 |
| Total\tfair\tvalue\tof\tplan\tassets | $136,771 | $101,588 | $— | $238,359 |

(a) Investments	in	common/collective	trust	funds	valued	using	NAV	provided	by	the	administrator	of	the	funds.	We	use	NAV	as	a	practical	expedient	to	fair	value.	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	$6.2	million	of	the	commitment	unfunded	at	December	31,	2013.

The	following	table	sets	forth	a	summary	of	changes	in	the	fair	value	of	the	pension	plans'	Level	3	assets	for	the	year	ended	December	31,	2013	(dollars	in

thousands):

# Funding	and	Cash	Flows

PCA	makes	pension	plan	contributions	that	are	sufficient	to	fund	its	actuarially	determined	costs,	generally	equal	to	the	minimum	amounts	required	by	the Employee	Retirement	Income	Security	Act	(ERISA).	From	time	to	time,	PCA	may	make	discretionary	contributions	based	on	the	funded	status	of	the	plans,	tax deductibility,	income	from	operations,	and	other	factors.	In	2013,	we	contributed	$30.1	million	to	our	plans,	which	exceeded	our	2013	minimum	pension	contribution requirements.	We	expect	to	contribute	at	least	the	required	minimum	currently	estimated	to	be	approximately	$5.0	million	in	2014.

The	following	are	estimated	benefit	payments	to	be	paid	to	current	plan	participants	by	year	(dollars	in	thousands).	Qualified	pension	benefit	payments	are	paid from	plan	assets,	while	nonqualified	pension	benefit	payments	are	paid	by	the	Company.

|  | Pension	Plans | Postretirement<br>Plans |
| :--- | :--- | :--- |
| 2014 | $30,551 | \t $1,231 |
| 2015 | 34,304 | 1,287 |
| 2016 | 38,027 | 1,369 |
| 2017 | 42,020 | 1,523 |
| 2018 | 45,759 | 1,665 |
| 2019\t-\t2023 | 281,889 | 10,150 |

# Defined	Contribution	Plans

Some	of	our	employees	participate	in	contributory	defined	contribution	savings	plans,	available	to	most	of	our	salaried	and	hourly	employees.	The	defined contribution	plans	permit	participants	to	make	contributions	by	salary	reduction	pursuant	to	Section	401(k)	of	the	Code.	PCA	made	employer-matching	contributions	of $15.0	million,	$10.8	million,	and	$10.4	million	in	2013,	2012,	and	2011.	The	increase	in	contributions	in	2013,	compared	with	the	prior	periods,	relates	primarily	to	the additional	participants	added	in	the	Boise	acquisition.	Company	matching	contributions	to	full-time	salaried	employees	are	made	in	company	stock,	through	our Employee	Stock	Ownership	Plan	(ESOP).	All	other	matching	contributions	are	in	cash.	We	expense	employer	matching	contributions	and	charge	dividends	on	shares held	by	the	ESOP	to	retained	earnings.	Shares	of	company	stock	held	by	the	ESOP	are	included	in	basic	shares	for	earnings-per-share	computations.	At	both December	31,	2013	and	2012,	the	ESOP	held	2.1	million	shares	of	company	stock.

Salaried	and	certain	hourly	employees	that	are	not	participating	in	a	PCA	sponsored	defined	benefit	pension	plan	receive	a	service-related	company	retirement contribution	to	their	defined	contribution	plan	account	in	addition	to	any	employer	matching	contribution.	This	contribution	increases	with	years	of	service	and	ranges from	3%	to	5%	of	base	pay.	We	expensed	$5.3	million,	$4.3	million,	and	$3.9	million	for	this	retirement	contribution	during	the	years	ended	December	31,	2013,	2012, and	2011,	respectively.

# Deferred	Compensation	Plans

Key	managers	can	elect	to	participate	in	a	deferred	compensation	plan.	The	deferred	compensation	plan	is	unfunded;	therefore,	benefits	are	paid	from	our general	assets.	At	December	31,	2013	and	2012,	we	had	$12.0	million	and	$3.4	million,	respectively,	of	liabilities	attributable	to	participation	in	our	deferred compensation	plan	on	our	Consolidated	Balance	Sheets.	The	$8.6	million	increase	in	liabilities	relates	primarily	to	the	$7.9	million	of	deferred	compensation	liabilities assumed	in	the	Boise	Acquisition.

# Hedging	Strategy

PCA	is	exposed	to	certain	risks	relating	to	its	ongoing	operations.	When	appropriate,	the	Company	uses	derivatives	as	a	risk	management	tool	to	mitigate	the potential	impact	of	certain	market	risks.	The	primary	risks	managed	by	using	derivative	financial	instruments	are	interest	rate	and	foreign	currency	exchange	rate	risks. PCA	does	not	enter	into	derivative	financial	instruments	for	trading	or	speculative	purposes.

# Interest	Rate	Risk

The	Company	has	used	treasury	lock	derivative	instruments	to	manage	interest	costs	and	the	risk	associated	with	changing	interest	rates.	In	connection	with contemplated	issuances	of	ten-year	debt	securities,	PCA	entered	into	interest	rate	protection	agreements	with	counterparties	in	2003,	2008,	2010,	and	2011	to	protect against	increases	in	the	ten-year	U.S.	Treasury	Note	rate.	These	treasury	rates	served	as	references	in	determining	the	interest	rates	applicable	to	the	debt	securities	the Company	issued	in	July	2003,	March	2008,	February	2011,	and	June	2012.	As	a	result	of	changes	in	the	interest	rates	on	those	treasury	securities	between	the	time	PCA entered	into	the	derivative	agreements	and	the	time	PCA	priced	and	issued	the	debt	securities,	the	Company:	(1)	received	a	payment	of	$22.8	million	from	the counterparty	upon	settlement	of	the	2003	interest	rate	protection	agreement	on	July	21,	2003;	(2)	made	a	payment	of	$4.4	million	to	the	counterparty	upon	settlement	of the	2008	interest	rate	protection	agreement	on	March	25,	2008;	(3)	received	a	payment	of	$9.9	million	from	the	counterparties	upon	settlement	of	the	2010	interest	rate protection	agreements	on	February	4,	2011;	and	(4)	made	a	payment	of	$65.5	million	to	the	counterparty	upon	settlement	of	the	2011	interest	rate	protection	agreement on	June	26,	2012.	The	Company	recorded	the	effective	portion	of	the	settlements	in	AOCI,	and	these	amounts	are	being	amortized	over	the	terms	of	the	respective	notes.

During	the	second	quarter	of	2012,	the	Company	recorded	a	charge	of	$3.4	million	in	interest	expense	as	hedge	ineffectiveness	due	to	settling	the	2011	interest rate	protection	agreement	prior	to	its	maturity	of	December	31,	2012.	The	Company	calculated	the	ineffective	portion	of	the	hedge	utilizing	the	hypothetical	derivative method.	Additionally,	during	the	third	quarter	of	2012,	the	Company	recorded	a	$2.2	million	settlement	gain	in	interest	expense	from	the	2003	interest	rate	protection agreement	that	was	written	off	due	to	the	redemption	of	the	5.75%	notes	on	July	26,	2012.

# Foreign	Currency	Exchange	Rate	Risk

In	connection	with	the	energy	optimization	projects	at	its	Valdosta,	Georgia	mill	and	Counce,	Tennessee	mill,	the	Company	entered	into	foreign	currency forward	contracts	in	2009	and	2010	to	hedge	its	exposure	to	forecasted	purchases	of	machinery	and	equipment	denominated	in	foreign	currencies.	The	foreign	currency forward	contracts	were	properly	documented	and	designated	as	cash	flow	hedges	at	inception.	By	the	end	of	2011,	all	contracts	had	been	settled	for	a	loss	of	$0.7 million.	The	loss	was	recorded	in	accumulated	OCI	and	is	being	amortized	into	cost	of	sales	over	the	lives	of	the	respective	machinery	and	equipment.

# Derivative	Instruments

The	impact	of	derivative	instruments	on	the	consolidated	statements	of	income	and	accumulated	OCI	is	as	follows	(dollars	in	thousands):

|  | Net	Gain<br>(Loss)	Recognized	in<br>Accumulated	OCI<br>(Effective	Portion)<br>December	31 | Net	Gain<br>(Loss)	Recognized	in<br>Accumulated	OCI<br>(Effective	Portion)<br>December	31 |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Treasury\tlocks,\tnet\tof\ttax | $(28,191) | $(31,651) |
| Foreign\tcurrency\texchange\tcontracts,\tnet\tof\ttax | (371) | (392) |
| Total | $(28,562) | $(32,043) |

|  |  | Gain	(Loss)	Reclassified<br>from	Accumulated	OCI	into<br>Income<br>(Effective	Portion)<br>Year	Ended	December	31 |  |
| :--- | :--- | :--- | :--- |
| Location | 2013 | 2012 | 2011 |
| Amortization\tof\ttreasury\tlocks\t(included\tin\tinterest\texpense,\tnet) | $(5,655) | $435 | $1,846 |
| Amortization\tof\tforeign\tcurrency\tforward\tcontracts\t(included\tin\tcost\tof\tsales) | (34) | (34) | (7) |

The	net	amount	of	settlement	gains	or	losses	on	derivative	instruments	included	in	accumulated	OCI	to	be	amortized	over	the	next	12	months	is	a	net	loss	of $5.7	million	($3.5	million	after	tax).

# Share	Repurchase	Program

In	2013,	2012,	and	2011,	we	repurchased	the	following	shares	of	common	stock.	In	all	years,	all	of	the	shares	purchased	were	retired.	At	December	31,	2013, $98.1	million	of	the	$150.0	million	authorization	by	the	Board	of	Directors,	remained	available	for	repurchase	of	the	Company's	common	stock	(in	thousands,	except share	and	per	share	amounts).

|  | Shares | Weighted	Average<br>Price	Per	Share | Total |
| :--- | :--- | :--- | :--- |
| 2011 | 4,824,021 | $25.51 | $123,077 |
| 2012 | 1,507,659 | 29.96 | 45,162 |
| 2013 | 171,263 | 45.54 | 7,799 |

# Accumulated	Other	Comprehensive	Income	(Loss)

Changes	in	AOCI	by	component	follows	(dollars	in	thousands).	Amounts	in	parentheses	indicate	losses.

|  | Foreign	Currency<br>Translation<br>Adjustments | Unrealized	Loss<br>On	Treasury<br>Locks,	Net | Unrealized	Loss<br>on	Foreign<br>Exchange<br>Contracts | Unfunded<br>Employee	Benefit<br>Obligations | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Balance\tat\tDecember\t31,\t2012 | $— | $(31,651) | $(392) | $(81,999) | $(114,042) |
| Other\tcomprehensive\tincome\tbefore\treclassifications,\tnet\tof\ttax | (136) | — | — | 32,264 | 32,128 |
| Amounts\treclassified\tfrom\tAOCI,\tnet\tof\ttax | — | 3,460 | 21 | 13,409 | 16,890 |
| Net\tcurrent-period\tother\tcomprehensive\tincome | (136) | 3,460 | 21 | 45,673 | 49,018 |
| Balance\tat\tDecember\t31,\t2013 | $(136) | $(28,191) | $(371) | $(36,326) | $(65,024) |

The	following	table	presents	information	about	reclassifications	out	of	AOCI	(dollars	in	thousands).	Amounts	in	parentheses	indicate	expenses	in	the Consolidated	Statement	of	Income.

| Details	about	AOCI	Components | 2013 | 2012 | Income	is	Presented |
| :--- | :--- | :--- | :--- |
| Unrealized\tloss\ton\ttreasury\tlocks,\tnet | $(5,655) | $(2,988) | See\t(a)\tbelow |
|  | 2,195 | 1,167 | Tax\tbenefit |
|  | $(3,460) | $(1,821) | Net\tof\ttax |
| Unrealized\tloss\ton\tforeign\texchange\tcontracts | $(34) | $(34) | See\t(b)\tbelow |
|  | 13 | 13 | Tax\tbenefit |
|  | $(21) | $(21) | Net\tof\ttax |
| Unfunded\temployee\tbenefit\tobligations |  |  |  |
| Amortization\tof\tprior\tservice\tcosts | $(16,704) | $(5,575) | See\t(c)\tbelow |
| Amortization\tof\tactuarial\tgains\t/\t(losses) | (5,197) | (5,368) | See\t(c)\tbelow |
|  | (21,901) | (10,943) | Total\tbefore\ttax |
|  | 8,492 | 4,254 | Tax\tbenefit |
|  | $(13,409) | $(6,689) | Net\tof\ttax |

(a) This	AOCI	component	is	included	in	interest	expense,	net.	See	Note	11,	Derivative	Instruments	and	Hedging	Activities,	for	additional	information.

(b)					This	AOCI	component	is	included	as	depreciation	in	cost	of	sales.

(c) 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.

# 13.					Concentrations	of	Risk

Our	Paper	segment	has	had	a	long-standing	commercial	and	contractual	relationship	with	OfficeMax	Incorporated	(OfficeMax),	and	OfficeMax	is	our	largest customer	in	the	paper	business.	Following	a	merger	in	late	2013,	OfficeMax	is	now	a	wholly-owned	subsidiary	of	Office	Depot.	Although	we	expect	our	long-term business	and	contractual	relationship	with	OfficeMax	to	continue	post-merger,	the	relationship	exposes	us	to	a	significant	concentration	of	business	and	financial	risk. For	the	period	of	October	25,	2013,	through	December	31,	2013,	our	sales	to	Office	Depot	(including	OfficeMax)	represented	2%	of	our	total	company	sales	revenue	and 38%	of	our	Paper	segment	sales	revenue.	At	December	31,	2013,	we	had	$39.2	million	of	accounts	receivable	due	from	Office	Depot	(including	OfficeMax),	which represents	6%	of	our	total	company	receivables.

We	cannot	predict	how	the	merger	between	OfficeMax	and	Office	Depot	will	affect	our	business.	Significant	increases	in	paper	purchases	would	intensify	the concentration	of	risk.	Significant	reductions	in	paper	purchases	would	cause	our	paper	business	to	expand	its	customer	base	and	could	potentially	decrease	its profitability	if	new	customer	sales	required	either	a	decrease	in	pricing	and/or	an	increase	in	cost	of	sales.	Any	significant	deterioration	in	the	financial	condition	of	the post-merger	entity	affecting	the	ability	to	pay	or	causing	a	significant	change	in	the	willingness	to	continue	to	purchase	our	products	could	harm	our	business	and	results of	operations.

# Labor

At	December	31,	2013,	we	had	approximately	13,600	employees	and	approximately	50%	of	these	employees	worked	pursuant	to	collective	bargaining agreements.	Approximately	75%	of	our	hourly	employees	are	represented	by	unions.	The	majority	of	our	unionized	employees	are	represented	by	the	United	Steel Workers	(USW),	the	International	Brotherhood	of	Teamsters	(IBT),	the	International	Association	of	Machinists	(IAM),	and	the	Association	of	Western	Pulp	and	Paper Workers	(AWPPW).	We	are	currently	in	negotiations	to	renew	or	extend	any	union	contracts	that	have	recently	expired	or	are	expiring	in	the	near	future,	including	the agreements	at	our	Jackson,	Alabama,	paper	mill,	which	expire	August	31,	2014.	During	2013,	we	experienced	no	work	stoppages	and	believe	we	have	satisfactory	labor relations	with	our	employees.	Approximately	20%	of	our	employees	work	pursuant	to	collective	bargaining	agreements	that	will	expire	within	the	next	twelve	months.

Our	asset	retirement	obligations	relate	predominantly	to	landfill	closure,	wastewater	treatment	pond	dredging,	closed-site	monitoring	costs,	and	certain leasehold	improvements.	In	accordance	with	ASC	410,	"Asset	Retirement	and	Environmental	Obligations,"	we	recognize	the	fair	value	of	these	liabilities	as	an	asset retirement	obligation	and	capitalize	that	cost	as	part	of	the	cost	basis	of	the	related	asset	in	the	period	in	which	they	are	incurred	if	sufficient	information	is	available	to reasonably	estimate	the	fair	value	of	the	obligation.	Fair	value	estimates	are	determined	using	Level	3	inputs	in	the	fair	value	hierarchy.	The	fair	value	of	our	asset retirement	obligations	is	measured	using	expected	future	cash	outflows	discounted	using	the	company's	credit-adjusted	risk-free	interest	rate.	When	we	record	the liability,	we	capitalize	the	cost	by	increasing	the	carrying	amount	of	the	related	long-lived	asset.	Over	time,	the	liability	is	accreted	to	its	settlement	value,	and	the capitalized	cost	is	depreciated	over	the	useful	life	of	the	related	asset.	These	liabilities	are	based	on	the	best	estimate	of	costs	and	are	updated	periodically	to	reflect current	technology,	laws	and	regulations,	inflation,	and	other	economic	factors.	Occasionally,	we	become	aware	of	events	or	circumstances	that	require	us	to	revise	our future	estimated	cash	flows.	When	revisions	become	necessary,	we	recalculate	our	obligation	and	adjust	our	asset	and	liability	accounts	utilizing	appropriate	discount rates.	No	assets	are	legally	restricted	for	purposes	of	settling	asset	retirement	obligations.	Upon	settlement	of	the	liability,	we	will	recognize	a	gain	or	loss	for	any difference	between	the	settlement	amount	and	the	liability	recorded.

The	following	table	describes	changes	to	the	asset	retirement	obligation	liability	(dollars	in	thousands):

|  | Year	Ended	December	31 |  |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Asset\tretirement\tobligation\tat\tbeginning\tof\tperiod | $5,145 | $5,095 |
| Acquisition | 23,841 | — |
| Liabilities\tincurred | 3,164 | — |
| Accretion\texpense | 275 | 50 |
| Revisions\tin\testimated\tcash\tflows | (378) | — |
| Asset\tretirement\tobligation\tat\tend\tof\tperiod | $32,047 | $5,145 |

We	have	additional	asset	retirement	obligations	with	indeterminate	settlement	dates.	The	fair	value	of	these	asset	retirement	obligations	cannot	be	estimated	due to	the	lack	of	sufficient	information	to	estimate	the	settlement	dates	of	the	obligations.	These	asset	retirement	obligations	include,	for	example,	(i)	removal	and	disposal of	potentially	hazardous	materials	related	to	equipment	and/or	an	operating	facility	if	the	equipment	and/or	facilities	were	to	undergo	major	maintenance,	renovation,	or demolition	and	(ii)	storage	sites	or	owned	facilities	for	which	removal	and/or	disposal	of	chemicals	and	other	related	materials	are	required	if	the	operating	facility	is closed.	We	will	recognize	a	liability	in	the	period	in	which	sufficient	information	becomes	available	to	reasonably	estimate	the	fair	value	of	these	obligations.

# 15.					Transactions	With	Related	Parties

Louisiana	Timber	Procurement	Company,	L.L.C.	(LTP)	is	a	variable-interest	entity	that	is	50%	owned	by	PCA,	after	the	acquisition	of	Boise,	and	50%	owned by	Boise	Cascade	Company	(Boise	Cascade).	LTP	procures	sawtimber,	pulpwood,	residual	chips,	and	other	residual	wood	fiber	to	meet	the	wood	and	fiber	requirements of	PCA	and	Boise	Cascade	in	Louisiana.	PCA	is	the	primary	beneficiary	of	LTP,	and	has	the	power	to	direct	the	activities	that	most	significantly	affect	the	economic performance	of	LTP.	Therefore,	we	consolidate	100%	of	LTP	in	our	financial	statements	in	our	Corporate	and	Other	segment.	The	carrying	amounts	of	LTP's	assets	and liabilities	(which	relate	primarily	to	noninventory	working	capital	items)	on	our	Consolidated	Balance	Sheet	were	both	$5.0	million	at	December	31,	2013.	During	the period	of	October	25,	2013,	to	December	31,	2013,	we	recorded	$10.3	million	of	LTP	sales	to	Boise	Cascade	in	"Net	Sales"	in	the	Consolidated	Statements	of	Income and	approximately	the	same	amount	of	expenses	in	"Cost	of	Sales."	The	sales	were	at	prices	designed	to	approximate	market	prices.

During	the	period	of	October	25,	2013,	to	December	31,	2013,	fiber	purchases	from	related	parties	was	$3.7	million.	Most	of	these	purchases	related	to	chip	and log	purchases	by	LTP	from	Boise	Cascade's	wood	products	business.	These	purchases	are	recorded	in	"Cost	of	Sales"	in	the	Consolidated	Statements	of	Income.

# 16.					Accrued	Liabilities

The	components	of	accrued	liabilities	are	as	follows	(in	thousands):

|  | December	31, |  |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Compensation\tand\tbenefits | $130,455 | $71,246 |
| Medical\tinsurance\tand\tworkers'\tcompensation | 26,399 | 18,448 |
| Customer\tvolume\tdiscounts\tand\trebates | 11,436 | 13,365 |
| Franchise,\tproperty,\tsales\tand\tuse\ttaxes | 20,232 | 9,337 |
| Asset\tretirement\tobligations | 4,002 | — |
| Severance | 8,172 | — |
| Other | 13,362 | 10,300 |
| Total | $214,058 | $122,696 |

The	components	of	other	(income)	expense	are	as	follows	(in	thousands):

|  |  | Year	Ended	December	31 |  |
| :--- | :--- | :--- | :--- |
|  | 2013 | 2012 | 2011 |
| Integration-related\tand\tother\tcosts | $17,430 | $— | $— |
| Acquisition-related\tcosts | 17,240 | — | — |
| Pension\tcurtailment\tcharges | 10,908 | — | — |
| Asset\tdisposals\tand\twrite-offs | 13,192 | 10,821 | 12,726 |
| Other | 208 | 968 | (2,003) |
| Total | $58,978 | $11,789 | $10,723 |

On	April	5,	2012,	PCA's	application	for	a	U.S.	Treasury	Section	1603	Grant	for	Specified	Energy	property	was	approved	for	the	Valdosta	energy	project.	The Company	received	the	grant	proceeds	of	$57.4	million	on	April	11,	2012	and	recorded	the	proceeds	as	a	reduction	to	the	cost	of	the	related	property,	plant,	and equipment.	These	proceeds	will	be	amortized	ratably	over	the	estimated	useful	lives	of	the	related	equipment,	which	amounts	to	$3.2	million	each	year.

# 19.					Segment	Information

Prior	to	the	acquisition	of	Boise	on	October	25,	2013,	we	manufactured	and	sold	packaging	products	and	reported	our	results	in	one	reportable	segment.	In connection	with	the	acquisition,	we	expanded	our	packaging	business	and	entered	the	paper	business	as	the	third	largest	producer	of	white	papers	in	North	America	in terms	of	production	capacity.	As	a	result,	we	began	managing	our	business	in	three	reportable	segments:	Packaging,	Paper,	and	Corporate	and	Other.	These	segments represent	distinct	businesses	that	are	managed	separately	because	of	differing	products	and	services.	Each	of	these	businesses	requires	distinct	operating	and	marketing strategies.	The	segments	follow	the	accounting	principles	described	in	Note	2,	Summary	of	Significant	Accounting	Policies.

Packaging.	We	manufacture	and	sell	a	wide	variety	of	corrugated	packaging	products,	including	conventional	shipping	containers	used	to	protect	and	transport manufactured	goods,	multi-color	boxes	and	displays	with	strong	visual	appeal	that	help	to	merchandise	the	packaged	product	in	retail	locations.	In	addition,	we	are	a large	producer	of	packaging	for	meat,	fresh	fruit	and	vegetables,	processed	food,	beverages,	and	other	industrial	and	consumer	products.	We	are	also	a	low-volume producer	of	newsprint.

Paper.	We	manufacture	and	sell	a	range	of	white	papers,	including	communication	papers,	and	pressure	sensitive	papers,	and	market	pulp.	Our	white	papers	can be	manufactured	as	either	commodity	papers	or	specialty	papers	with	specialized	or	custom	features,	such	as	colors,	coatings,	high	brightness,	or	recycled	content.	We ship	to	customers	both	directly	from	our	mills	and	through	distribution	centers.	For	the	period	of	October	25	through	December	31,	2013,	our	sales	to	Office	Depot (including	OfficeMax),	our	largest	paper	segment	customer,	represented	38%	of	our	Paper	segment	sales	revenue.

Corporate	and	Other.	Our	Corporate	and	Other	segment	includes	corporate	support	services,	related	assets	and	liabilities,	and	foreign	exchange	gains	and losses.	This	segment	also	includes	transportation	assets,	such	as	rail	cars	and	trucks,	which	we	use	to	transport	our	products	from	our	manufacturing	sites	and	assets related	to	a	50%	owned	variable	interest	entity,	Louisiana	Timber	Procurement	Company,	L.L.C.	(LTP),	that	we	acquired	in	the	Boise	Acquisition.	See	Note	15, Transactions	With	Related	Parties,	for	more	information	related	to	LTP.	Sales	in	this	segment	relate	primarily	to	LTP	and	our	rail	and	truck	business.	We	provide transportation	services	not	only	to	our	own	facilities	but	also,	on	a	limited	basis,	to	third	parties	when	geographic	proximity	and	logistics	are	favorable.	Rail	cars	and trucks	are	generally	leased.

Each	segments'	profits	and	losses	are	measured	on	operating	profits	before	interest	expense	and	interest	income.	After	the	acquisition	of	Boise,	expenses	that were	historically	included	in	"Corporate	overhead"	on	our	Consolidated	Statements	of	Income,	were	reclassified	to	"Selling,	general,	and	administrative	expenses"	to conform	with	the	current	year	presentation.	In	addition,	after	increasing	our	product	offerings	to	include	both	packaging	and	paper	products	after	the	Boise	Acquisition, we	began	allocating	the	amounts	associated	with	running	those	businesses,	previously	included	in	"Corporate	overhead",	to	our	segments.	For	many	of	these	allocated expenses,	the	related	assets	and	liabilities	remain	in	the	Corporate	and	Other	segment.

Segment	sales	to	external	customers	by	product	line	are	as	follows	(dollars	in	millions):

|  | 2013 | 2012 | 2011 |
| :--- | :--- | :--- | :--- |
| Packaging\tsales | $3,431.7 | $2,843.9 | $2,620.1 |
| Paper\tsales |  |  |  |
| White\tpapers | 207.0 | — | — |
| Market\tpulp | 9.9 | — | — |
|  | 216.9 | — | — |
| Corporate\tand\tOther | 16.7 | — | — |
|  | $3,665.3 | $2,843.9 | $2,620.1 |

Sales	to	foreign	unaffiliated	customers,	which	are	primarily	recorded	in	our	Packaging	segment,	during	the	year	ended	December	31,	2013,	were	$162.4 million.	At	December	31,	2013,	the	net	carrying	value	of	long-lived	assets	held	by	foreign	operations,	all	of	which	were	in	our	Packaging	segment,	was	$14.0	million.

An	analysis	of	operations	by	reportable	segment	is	as	follows	(dollars	in	millions):

| Year	Ended	December	31,<br>2011 | Trade | Sales,	net<br>Inter-<br>segment |  | Total | Operating	Income<br>(Loss) |  | Depreciation,<br>Amortization,	and<br>Depletion | Capital<br>Expenditures	(k) | Assets |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Packaging | $2,620.1 |  | — | $2,620.1 | 309.9 | (i) | $162.9 | $280.2 | $2,165.7 |
| Paper | — |  | — | — | — |  | — | — | — |
| Corporate\tand\tOther | — |  | — | — | (37.2) | (j) | 0.7 | — | 246.8 |
| Intersegment\teliminations | — |  | — | — | — |  | — | — | — |
|  | $2,620.1 |  | — | $2,620.1 | 272.7 |  | $163.6 | $280.2 | $2,412.5 |

(b) Includes	$18.0	million	of	expense	for	the	acquisition	inventory	step-up	and	$1.4	million	of	integration-related	and	other	costs	incurred	in	connection	with	the	acquisition	of Boise	in	fourth	quarter	2013.

(c) Includes	$3.5	million	of	expense	for	acquisition	inventory	step-up	and	$1.9	million	of	income	for	integration-related	and	other	costs.

(d) Includes	$17.2	million	of	acquisition-related	costs	and	$17.9	million	of	integration-related	and	other	costs.

(e) Includes	$10.5	million	of	expenses	for	financing	the	acquisition	and	$1.1	million	of	expense	for	the	write-off	of	deferred	financing	costs.

(f) Includes	$2.0	million	of	plant	closure	charges.

(g) Includes	$95.5	million	of	income	related	to	the	increase	in	gallons	claimed	as	alternative	fuel	mixture	credits	on	the	Company's	amended	2009	tax	return.	See	Note	6, Alternative	Energy	Tax	Credits,	for	more	information.

(h) Includes	$24.8	million	of	debt	refinancing	charges,	including	the	$21.3	million	redemption	premium,	the	$3.4	million	charge	to	settle	the	treasury	lock	prior	to	its	maturity, and	$0.1	million	of	other	items.

(i) Includes	$7.4	million	of	charges	related	to	energy	project	disposals.

(j) Includes	$1.6	million	of	income	from	an	adjustment	to	our	medical	benefits	reserve.

(k) Includes	"Expenditures	for	property	and	equipment"	and	excludes	cash	used	for	"Acquisition	of	businesses	and	facilities,	net	of	cash	acquired"	as	reported	on	our Consolidated	Statements	of	Cash	Flows.

# 20.					Commitments,	Guarantees,	Indemnifications,	and	Legal	Proceedings

We	have	financial	commitments	and	obligations	that	arise	in	the	ordinary	course	of	our	business.	These	include	long-term	debt	(discussed	in	Note	8,	Debt), capital	commitments,	lease	obligations,	purchase	commitments	for	goods	and	services,	and	legal	proceedings	(discussed	below).

# Capital	Commitments

The	Company	had	capital	commitments	of	approximately	$151.4	million	and	$27.0	million	as	of	December	31,	2013	and	2012,	respectively,	in	connection	with the	expansion	and	replacement	of	existing	facilities	and	equipment.

# Lease	Obligations

PCA	leases	space	for	certain	of	its	facilities,	cutting	rights	to	approximately	88,000	acres	of	timberland,	land	for	a	fiber	farm,	and	equipment,	primarily	vehicles and	rolling	stock.	Lease	terms	range	from	one	to	15	years	and	may	contain	renewal	options	or	escalation	clauses.	Substantially	all	lease	agreements	have	fixed	payment terms	based	on	the	passage	of	time.	Some	lease	agreements	provide	us	with	the	option	to	purchase	the	leased	property.	Additionally,	some	agreements	contain	renewal options	averaging	approximately	five	years.	Some	leases	may	require	the	Company	to	pay	executory	costs,	which	may	include	property	taxes,	maintenance	and insurance.	The	minimum	lease	payments	under	non-cancelable	operating	leases	with	lease	terms	in	excess	of	one	year	are	as	follows	(dollars	in	thousands):

| 2014 | $56,492 |
| :--- | :--- |
| 2015 | 45,818 |
| 2016 | 34,392 |
| 2017 | 23,872 |
| 2018 | 17,034 |
| Thereafter | 73,647 |
| Total | $251,255 |

Total	lease	expense,	including	base	rent	on	all	leases	and	executory	costs,	such	as	insurance,	taxes,	and	maintenance,	for	the	years	ended	December	31,	2013, 2012,	and	2011,	was	$56.0	million,	$49.4	million	and	$46.1	million,	respectively.	These	costs	are	included	in	"Cost	of	sales"	and	"Selling,	general,	and	administrative expenses"	in	our	Consolidated	Statements	of	Income.	We	had	an	insignificant	amount	of	sublease	rental	income	in	the	periods	presented.

PCA	was	obligated	under	capital	leases	covering	buildings	and	machinery	and	equipment	in	the	amount	of	$24.9	million	and	$25.9	million	at	December	31, 2013	and	2012,	respectively.	Assets	held	under	capital	lease	obligations	are	included	in	property,	plant	and	equipment	as	follows	(dollars	in	thousands):

|  | Year	Ended	December	31 | Year	Ended	December	31 |
| :--- | :--- | :--- |
|  | 2013 | 2012 |
| Buildings | $250 | $250 |
| Machinery\tand\tequipment | 28,526 | 28,526 |
| Total | 28,776 | 28,776 |
| Less\taccumulated\tamortization | (8,676) | (6,845) |
| Total | $20,100 | $21,931 |

Amortization	of	assets	under	capital	lease	obligations	is	included	in	depreciation	expense.

         The	future	minimum	payments	under	capitalized	leases	at	December	31,	2013	are	as	follows	(dollars	in	thousands):

| The	future	minimum	payments	under	capitalized	leases	at	December	31,	2013	are	as	follows	(dollars	in	thousands): |  |
| :--- | :--- |
| 2014 | $2,654 |
| 2015 | 2,654 |
| 2016 | 2,654 |
| 2017 | 2,654 |
| 2018 | 2,654 |
| Thereafter | 25,874 |
| Total\tminimum\tcapital\tlease\tpayments | 39,144 |
| Less\tamounts\trepresenting\tinterest | (14,240) |
| Present\tvalue\tof\tnet\tminimum\tcapital\tlease\tpayments | 24,904 |
| Less\tcurrent\tmaturities\tof\tcapital\tlease\tobligations | (1,030) |
| Total\tlong-term\tcapital\tlease\tobligations | $23,874 |

Interest	expense	related	to	capital	lease	obligations	was	$1.7	million	during	both	the	years	ended	December	31,	2013	and	2012,	and	$1.5	million	during	the	year ended	December	31,	2011.

# Purchase	Commitments

In	the	table	below,	we	set	forth	our	enforceable	and	legally	binding	purchase	obligations	as	of	December	31,	2013.	Some	of	the	amounts	included	in	the	table are	based	on	management's	estimates	and	assumptions	about	these	obligations,	including	their	duration,	the	possibility	of	renewal,	anticipated	actions	by	third	parties, and	other	factors.	Because	these	estimates	and	assumptions	are	necessarily	subjective,	our	actual	payments	may	vary	from	those	reflected	in	the	table.	Purchase	orders made	in	the	ordinary	course	of	business	are	excluded	from	the	table	below.	Any	amounts	for	which	we	are	liable	under	purchase	orders	are	reflected	on	the	Consolidated Balance	Sheets	as	accounts	payable	and	accrued	liabilities.	These	obligations	relate	to	various	purchase	agreements	for	items	such	as	minimum	amounts	of	fiber	and energy	purchases	over	periods	ranging	from	one	to	15	years.	Total	purchase	commitments	are	as	follows	(dollars	in	thousands):

The	Company	purchased	a	total	of	$61.7	million,	$27.7	million,	and	$28.5	million	during	the	years	ended	December	31,	2013,	2012,	and	2011,	respectively, under	these	purchase	agreements.	The	increase	in	purchase	commitments	in	2014,	compared	with	2013,	relates	to	the	acquisition	of	Boise	in	fourth	quarter	2013.

# Environmental	Liabilities

The	potential	costs	for	various	environmental	matters	are	uncertain	due	to	such	factors	as	the	unknown	magnitude	of	possible	cleanup	costs,	the	complexity	and evolving	nature	of	governmental	laws	and	regulations	and	their	interpretations,	and	the	timing,	varying	costs	and	effectiveness	of	alternative	cleanup	technologies.	From 1994	through	2013,	remediation	costs	at	the	Company's	mills	and	corrugated	plants	totaled	approximately	$3.2	million.	At	December	31,	2013,	the	Company	had	$34.1 million	of	environmental-related	reserves	recorded	on	its	Consolidated	Balance	Sheet.	Of	the	$34.1	million,	approximately	$26.5	million	related	to	environmental- related	asset	retirement	obligations	discussed	in	Note	14,	Asset	Retirement	Obligations,	and	$7.6	million	related	to	our	estimate	of	other	environmental	contingencies. The	Company	recorded	$7.8	million	in	"Accrued	liabilities"	and	$26.3	million	in	"Other	long-term	liabilities"	on	the	Consolidated	Balance	Sheet.	Liabilities	recorded for	environmental	contingencies	are	estimates	of	the	probable	costs	based	upon	available	information	and	assumptions.	Because	of	these	uncertainties,	PCA's	estimates may	change.	As	of	the	date	of	this	filing,	the	Company	believes	that	it	is	not	reasonably

possible	that	future	environmental	expenditures	for	remediation	costs	and	asset	retirement	obligations	above	the	$34.1	million	accrued	as	of	December	31,	2013,	will have	a	material	impact	on	its	financial	condition,	results	of	operations,	or	cash	flows.

# Guarantees	and	Indemnifications

We	provide	guarantees,	indemnifications,	and	other	assurances	to	third	parties	in	the	normal	course	of	our	business.	These	include	tort	indemnifications, environmental	assurances,	and	representations	and	warranties	in	commercial	agreements.	At	December	31,	2013,	we	are	not	aware	of	any	material	liabilities	arising from	any	guarantee,	indemnification,	or	financial	assurance	we	have	provided.	If	we	determined	such	a	liability	was	probable	and	subject	to	reasonable	determination, we	would	accrue	for	it	at	that	time.

# Legal	proceedings

During	2010,	PCA	and	eight	other	U.S.	and	Canadian	containerboard	producers	were	named	as	defendants	in	five	purported	class	action	lawsuits	filed	in	the United	States	District	Court	for	the	Northern	District	of	Illinois,	alleging	violations	of	the	Sherman	Act.	The	lawsuits	have	been	consolidated	in	a	single	complaint	under the	caption	Kleen	Products	LLC	v	Packaging	Corp.	of	America	et	al.	The	consolidated	complaint	alleges	that	the	defendants	conspired	to	limit	the	supply	of containerboard,	and	that	the	purpose	and	effect	of	the	alleged	conspiracy	was	to	artificially	increase	prices	of	containerboard	products	during	the	period	of	August	2005 to	October	2010	(the	time	of	filing	of	the	complaint).	The	complaint	was	filed	as	a	class	action	suit	on	behalf	of	all	purchasers	of	containerboard	products	during	such period.	The	complaint	seeks	treble	damages	and	costs,	including	attorney's	fees.	The	defendants'	motions	to	dismiss	the	complaint	were	denied	by	the	court	in	April 2011.	PCA	believes	the	allegations	are	without	merit	and	is	defending	the	lawsuit	vigorously.	Due	to	discovery	not	being	completed	in	the	case	and	the	final	outcome being	dependent	on	many	complex	variables,	the	amount	of	reasonably	possible	losses,	if	any,	cannot	be	estimated	at	this	time.

We	are	also	a	party	to	several	other	legal	actions	arising	in	the	ordinary	course	of	our	business.	These	legal	actions	include	commercial	liability	claims, premises	liability	claims,	and	employment-related	claims,	among	others.	As	of	the	date	of	this	filing,	we	believe	it	is	not	reasonably	possible	that	any	of	the	legal	actions against	us	will,	either	individually	or	in	the	aggregate,	have	a	material	adverse	effect	on	our	financial	condition,	results	of	operations,	or	cash	flows.

# 21. Quarterly	Results	of	Operations	(unaudited,	dollars	in	thousands,	except	per-share	and	stock	price information)

| 2013: | First | Second	(a) | Third	(b) | Fourth	(c) | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tsales | $755,207 | $800,230 | $845,440 | $1,264,431 | $3,665,308 |
| Gross\tprofit | 182,492 | 192,323 | 226,777 | 257,595 | 859,187 |
| Income\tfrom\toperations | 103,246 | 107,270 | 141,960 | 121,131 | 473,607 |
| Net\tincome | 60,613 | 64,465 | 84,180 | 227,025 | 436,283 |
| Basic\tearnings\tper\tshare | 0.63 | 0.67 | 0.87 | 2.35 | 4.52 |
| Diluted\tearnings\tper\tshare | 0.62 | 0.66 | 0.86 | 2.33 | 4.47 |
| Stock\tprice\t-\thigh | 44.93 | 50.78 | 61.32 | 64.39 | 64.39 |
| Stock\tprice\t-\tlow | 37.86 | 42.36 | 48.45 | 55.66 | 37.86 |

| 2012: | First	(d) | Second	(e) | Third	(e) | Fourth	(f) | Total |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Net\tsales | $671,357 | $712,468 | $723,473 | $736,579 | $2,843,877 |
| Gross\tprofit | 145,135 | 158,015 | 163,102 | 174,339 | 640,591 |
| Income\tfrom\toperations | 169,110 | 83,858 | 92,072 | 98,419 | 443,459 |
| Net\tincome | 17,844 | 45,154 | 39,791 | 61,031 | 163,820 |
| Basic\tearnings\tper\tshare | 0.18 | 0.47 | 0.41 | 0.63 | 1.70 |
| Diluted\tearnings\tper\tshare | 0.18 | 0.46 | 0.41 | 0.63 | 1.68 |
| Stock\tprice\t-\thigh | 30.62 | 29.80 | 36.68 | 38.67 | 38.67 |
| Stock\tprice\t-\tlow | 24.82 | 25.77 | 27.59 | 33.89 | 24.82 |

Note:	The	sum	of	the	quarters	may	not	equal	the	total	of	the	respective	year's	earnings	per	share	on	either	a	basic	or	diluted	basis	due	to	changes	in	the	weighted	average	shares outstanding	throughout	the	year.

(a) Includes	a	$7.8	million	non-cash	pension	curtailment	charge	($5.0	million	after	tax	or	$0.05	per	diluted	share).

(b) Includes	a	$3.1	million	non-cash	pension	curtailment	charge	($2.0	million	after	tax	or	$0.02	per	diluted	share),	$1.5	million	of	acquisition-related	costs	($1.0	million	after tax	or	$0.01	per	diluted	share),	and	$2.7	million	of	acquisition-related	financing	costs	($1.8	million	after	tax	or	$0.02	per	diluted	share).

(c) Includes	Boise's	results	for	the	period	of	October	25,	2013,	through	December	31,	2013.	The	quarter	also	includes	$166.0	million	of	income	tax	benefits	from	the	reversal	of the	reserves	for	unrecognized	tax	benefits	from	alternative	energy	tax	credits	($1.70	per	diluted	share),	partially	offset	by	$21.5	million	of	expense	for	the	acquisition inventory	step-up	($13.6	million	after	tax	or	$0.14	per	diluted	share),	$15.8	million	of	acquisition-related	costs	($10.0	million	after	tax	or	$0.10	per	diluted	share),	$8.9 million	of	acquisition-related	financing	costs	($5.6	million	after	tax	or	$0.06	per	diluted	share),	and	$17.4	million	of	integration-related	and	other	costs	($11.0	million	after tax	or	$0.11	per	diluted	share).

(d) During	the	first	quarter	of	2012,	PCA	amended	its	2009	federal	income	tax	return	to	reduce	the	gallons	claimed	as	cellulosic	biofuel	producer	credits	previously	recorded	as a	tax	benefit	and	to	increase	those	gallons	claimed	as	alternative	fuel	mixture	credits	previously	recorded	as	income.	The	increase	in	gallons	claimed	as	alternative	fuel mixture	credits	resulted	in	income	of	$95.5	million.	The	decrease	in	gallons	claimed	as	cellulosic	biofuel	producer	credits	resulted	in	a	decrease	in	tax	benefits	of	$118.5 million,	for	a	total	decrease	in	net	income	of	$23.0	million	($0.24	per	diluted	share).

(e) The	second	and	third	quarters	of	2012	include	debt	refinancing	charges	of	$3.7	million	($2.5	million	after	tax	or	$0.03	per	diluted	share)	and	$21.1	million	($13.5	million after	tax	or	$0.14	per	diluted	share),	respectively.

(f) Includes	$3.4	million	of	income	from	state	income	tax	adjustments	($0.03	per	diluted	share),	partially	offset	by	$2.0	million	of	plant	closure	charges	($1.4	million	after	tax or	$0.01	per	diluted	share).

# Item	9. CHANGES	IN	AND	DISAGREEMENTS	WITH	ACCOUNTANTS	ON	ACCOUNTING	AND	FINANCIAL

# DISCLOSURE

# Item	9A. CONTROLS	AND

# PROCEDURES

# Controls	and	Procedures

PCA	maintains	disclosure	controls	and	procedures	(as	defined	in	Rule	13a-15(e)	of	the	Securities	Exchange	Act	of	1934)	that	are	designed	to	provide	reasonable assurance	that	information	required	to	be	disclosed	in	PCA's	filings	under	the	Securities	Exchange	Act	is	recorded,	processed,	summarized	and	reported	within	the periods	specified	in	the	rules	and	forms	of	the	SEC	and	that	such	information	is	accumulated	and	communicated	to	PCA's	management,	including	its	Chief	Executive Officer	and	Chief	Financial	Officer,	as	appropriate,	to	allow	timely	decisions	regarding	required	disclosure.

On	October	25,	2013,	PCA	acquired	Boise	Inc.	("Boise").	PCA	is	in	the	process	of	integrating	Boise	into	its	operations.	PCA	is	analyzing,	evaluating,	and where	necessary,	will	implement	changes	in	controls	and	procedures	relating	to	the	Boise	business	as	such	integration	proceeds.	As	a	result,	this	process	may	result	in additions	or	changes	to	PCA's	internal	control	over	financial	reporting.	Except	as	it	relates	to	the	acquisition	of	Boise,	there	was	no	change	in	PCA's	internal	control	over financial	reporting	during	the	most	recent	fiscal	quarter	that	has	materially	affected,	or	is	reasonably	likely	to	materially	affect	PCA's	internal	control	over	financial reporting.

Prior	to	filing	this	report,	PCA	completed	an	evaluation	under	the	supervision	and	with	the	participation	of	PCA's	management,	including	PCA's	Chief Executive	Officer	and	Chief	Financial	Officer,	of	the	effectiveness	of	the	design	and	operation	of	PCA's	disclosure	controls	and	procedures	as	of	December	31,	2013. The	evaluation	of	PCA's	disclosure	controls	and	procedures	included	a	review	of	the	controls'	objectives	and	design,	PCA's	implementation	of	the	controls	and	the effect	of	the	controls	on	the	information	generated	for	use	in	this	report,	but	excluded	the	operations	acquired	from	Boise.	Based	on	this	evaluation,	PCA's	Chief Executive	Officer	and	Chief	Financial	Officer	concluded	that	PCA's	disclosure	controls	and	procedures	were	effective	at	the	reasonable	assurance	level	as	of December	31,	2013.

# Management's	Report	on	Internal	Control	Over	Financial	Reporting

PCA's	management	is	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting,	as	such	term	is	defined	in	Exchange	Act Rule	13a-15(f).	Internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	Internal	control	over	financial	reporting	includes those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and	dispositions	of	the Company's	assets;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in	accordance	with generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	are	being	made	only	with	proper	authorizations;	and	(3)	provide	reasonable	assurance regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or	disposition	of	the	Company's	assets	that	could	have	a	material	effect	on	the	financial statements.

Because	of	its	inherent	limitations,	PCA's	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	A	control	system,	no	matter	how well	conceived	and	operated,	can	provide	only	reasonable,	not	absolute,	assurance	that	objectives	of	the	control	system	are	met.	Because	of	the	inherent	limitations	in	all control	systems,	no	evaluation	of	controls	can	provide	absolute	assurance	that	all	control	issues	and	instances	of	fraud,	if	any,	have	been	detected.	Also,	projections	of any	evaluation	of	effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of compliance	with	the	policies	and	procedures	may	deteriorate.

PCA's	management,	under	the	supervision	of	and	with	the	participation	of	the	Chief	Executive	Officer	and	Chief	Financial	Officer,	assessed	the	Company's internal	control	over	financial	reporting	as	of	December	31,	2013,	based	on	criteria	established	in	Internal	Control	-	Integrated	Framework	(1992)	issued	by	the Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(COSO).	Based	on	this	assessment	and	excluding	the	operations	acquired	from	Boise,	PCA's management	concluded	that	its	internal	control	over	financial	reporting	was	effective	as	of	December	31,	2013,	based	on	the	specified	criteria.

Ernst	&	Young	LLP,	the	independent	registered	public	accounting	firm	that	audited	PCA's	financial	statements	included	in	this	Form	10-K,	has	also	audited the	effectiveness	of	the	Company's	internal	control	over	financial	reporting.	Their	attestation	report	precedes	PCA's	audited	financial	statements	included	elsewhere	in this	report.

# Changes	in	Internal	Control	Over	Financial	Reporting

Except	as	it	relates	to	the	acquisition	of	Boise	on	October	25,	2013,	there	have	been	no	changes	in	our	internal	control	over	financial	reporting	during	the quarter	ended	December	31,	2013,	that	have	materially	affected,	or	are	reasonably	likely	to	materially	affect,	our	internal	control	over	financial	reporting.	Due	to	the timing	of	the	acquisition,	we	excluded	Boise	from	our	evaluation	of	the	effectiveness	of	internal	control	over	financial	reporting.	Boise's	net	sales,	net	income,	and	total assets	represented	approximately	12%	of	PCA's	2013	consolidated	net	sales,	14%	of	2013	consolidated	net	income,	and	52%	of	total	consolidated	assets	at	December 31,	2013,	respectively.

# Item	9B. OTHER	INFORMATION

# PART	III

# Item	10. DIRECTORS,	EXECUTIVE	OFFICERS,	AND	CORPORATE

# GOVERNANCE

Information	regarding	PCA's	executive	officers	required	by	this	Item	10	is	set	forth	in	Item	1	of	Part	I	of	this	report	under	the	caption	"Executive	Officers	of the	Registrant."

The	following	information	required	by	this	Item	10	will	be	included	in	PCA's	Proxy	Statement	for	the	2013	Annual	Meeting	of	Stockholders	and	is incorporated	by	reference	herein:

•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	2014	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

Information	with	respect	to	executive	compensation	required	by	this	Item	11	will	be	included	in	PCA's	Proxy	Statement	under	the	captions	"Compensation Discussion	and	Analysis,"	"Executive	Officer	and	Director	Compensation"	(including	all	subcaptions	and	tables	thereunder)	and	"Board	Committees	-	Compensation Committee"	and	is	incorporated	herein	by	reference.

# Item	12. SECURITY	OWNERSHIP	OF	CERTAIN	BENEFICIAL	OWNERS	AND	MANAGEMENT	AND	RELATED	STOCKHOLDER MATTERS

Information	with	respect	to	security	ownership	of	certain	beneficial	owners	and	management	required	by	this	Item	12	will	be	included	in	PCA's	Proxy Statement	under	the	caption	"Ownership	of	Our	Stock"	and	is	incorporated	herein	by	reference.

Authorization	of	Securities	under	Equity	Compensation	Plans	—	Securities	authorized	for	issuance	under	our	equity	compensation	plans	at	December	31,	2013	are as	follows:

| Plan	Category | Number	of	Securities	to<br>Be	Issued	Upon	Exercise	of<br>Outstanding	Options,	Warrants,<br>and	Rights	(a) | Weighted	Average	Exercise	Price	of<br>Outstanding	Options,	Warrants,	and<br>Rights | Issuance	Under<br>Equity	Compensation	Plans<br>(Excluding	Securities	Reflected	in<br>Column	A) |
| :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\nsecurityholders | 151,945 | $24.61 | 2,140,954 |
| Equity\tcompensation\tplans\tnot\tapproved\tby\nsecurityholders | N/A | N/A | N/A |
| Total | 151,945 | $24.61 | 2,140,954 |

(a) Does	not	include	1,534,294	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

Information	with	respect	to	certain	relationships	and	related	transactions	and	director	independence	required	by	this	Item	13	will	be	included	in	PCA's	Proxy Statement	under	the	captions	"Transactions	with	Related	Persons"	and	"Election	of	Directors	-	Determination	of	Director	Independence,"	respectively,	and	is incorporated	herein	by	reference.

# Item	14. PRINCIPAL	ACCOUNTING	FEES	AND

# SERVICES

Information	with	respect	to	fees	and	services	of	the	principal	accountant	required	by	this	Item	14	will	be	included	in	PCA's	Proxy	Statement	under	the	caption "Ratification	of	Appointment	of	the	Independent	Registered	Public	Accounting	Firm"	under	the	subcaptions	"-	Fees	to	the	Independent	Registered	Public	Accounting Firm"	and	"-	Audit	Committee	Preapproval	Policy	for	Audit	and	Non-Audit	Fees"	and	are	incorporated	herein	by	reference.

# Item	15. EXHIBITS,	FINANCIAL	STATEMENT

# SCHEDULES

(a)		The	following	documents	are	filed	as	a	part	of	this	report:

(1)		The	financial	statements	listed	in	the	"Index	to	Financial	Statements."

(2)		Financial	Statement	Schedule.

The	following	consolidated	financial	statement	schedule	of	PCA	for	the	years	ended	December	31,	2013,	2012,	and	2011	is	included	in	this	report.

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

| Description | Balance<br>Beginning	of<br>Year | Acquired	Reserves | Charged<br>to<br>Expenses | Deductions |  | Balance<br>End	of<br>Year |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Year\tended\tDecember\t31,\t2013: |  |  |  |  |  |  |
| Deducted\tfrom\tassets\taccounts: |  |  |  |  |  |  |
| Allowance\tfor\tdoubtful\taccounts | $1,909 | $— | $2,812 | $(821) | (a) | $3,900 |
| Reserve\tfor\tcustomer\tdeductions | 3,444 | 3,369 | 39,510 | (39,656) | (b) | 6,667 |
| Deferred\ttax\tasset\tvaluation\tallowance | — | 2,715 | — | — |  | 2,715 |
| Total | $5,353 | $6,084 | $42,322 | $(40,477) |  | $13,282 |
| Year\tended\tDecember\t31,\t2012: |  |  |  |  |  |  |
| Deducted\tfrom\tassets\taccounts: |  |  |  |  |  |  |
| Allowance\tfor\tdoubtful\taccounts | $1,906 | $— | $1,043 | $(1,040) | (a) | $1,909 |
| Reserve\tfor\tcustomer\tdeductions | 3,128 | — | 31,045 | (30,729) | (b) | 3,444 |
| Total | $5,034 | $— | $32,088 | $(31,769) |  | $5,353 |
| Year\tended\tDecember\t31,\t2011: |  |  |  |  |  |  |
| Deducted\tfrom\tassets\taccounts: |  |  |  |  |  |  |
| Allowance\tfor\tdoubtful\taccounts | $2,493 | $— | $143 | $(730) | (a) | $1,906 |
| Reserve\tfor\tcustomer\tdeductions | 2,920 | — | 30,009 | (29,801) | (b) | 3,128 |
| Total | $5,413 | $— | $30,152 | $(30,531) |  | $5,034 |

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

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

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

31.2 Certification	of	Chief	Financial	Officer,	As	Adopted	Pursuant	to	Section	302	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,	2013, formatted	in	XBRL	(eXtensible	Business	Reporting	Language):	(i)	Consolidated	Balance	Sheets	at	December	31,	2013	and	2012,	(ii)	Consolidated Statements	of	Income	for	the	years	ended	December	31,	2013,	2012	and	2011,	(iii)	Consolidated	Statements	of	Changes	in	Stockholders'	Equity	for	the years	ended	December	31,	2013,	2012	and	2011,	(iv)	Consolidated	Statements	of	Cash	Flows	for	the	years	ended	December	31,	2013,	2012	and	2011, (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.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrants	have	duly	caused	this	report	to	be	signed	on	their behalf	by	the	undersigned,	thereunto	duly	authorized	on	February	28,	2014.

Mark	K.	Kowlzan Chief	Executive	Officer

Richard	B.	West

Senior	Vice	President	and	Chief	Financial	Officer

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	on	February	28,	2014,	by	the	following	persons	on behalf	of	the	registrants	and	in	the	capacities	indicated.

Chairman	of	the	Board



Question: as of december 2013 what was the value of the equity compensation plans approved by security holders to be issued upon exercise of outstanding options warrants and rights
Calculation:   shares_issued = 151945
 price = 24.61
 value = shares_issued * price
 answer = value
Answer: 3739366.45