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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of ~~October~~July 29, ~~2021~~2022 the Registrant had outstanding ~~94,990,766~~93,739,929 shares of common stock, par value $0.01 per share.

All reports we file with the Securities and Exchange Commission (SEC) are available free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC website at www.sec.gov. We also provide copies of our SEC filings at no charge upon request and make electronic copies of our reports available through our website at www.packagingcorp.com as soon as reasonably practicable after filing such material with the SEC.


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Statements of Income:
Net sales	$	2,000.1		$	1,693.7		$	5,687.1		$	4,944.0		$	2,237.3		$	1,879.9		$	4,373.7		$	3,687.0
Cost of sales		(1,489.4	)		(1,348.3	)		(4,324.0	)		(3,907.9	)		(1,648.5	)		(1,431.1	)		(3,251.7	)		(2,834.5	)
Gross profit		510.7			345.4			1,363.1			1,036.1			588.8			448.8			1,122.0			852.5
Selling, general and administrative expenses		(144.5	)		(127.1	)		(435.7	)		(409.3	)		(156.7	)		(146.3	)		(317.7	)		(291.3	)
Goodwill impairment		0			0			0			(55.2	)
Other expense, net		(13.4	)		(8.8	)		(41.7	)		(36.9	)		(16.3	)		(7.9	)		(31.9	)		(28.3	)
Income from operations		352.8			209.5			885.7			534.7			415.8			294.6			772.4			532.9
Non-operating pension income		5.0			0.6			14.8			1.7			3.6			5.0			7.3			9.8
Interest expense, net		(23.9	)		(24.4	)		(72.2	)		(69.1	)		(18.8	)		(24.9	)		(38.7	)		(48.4	)
Income before taxes		333.9			185.7			828.3			467.3			400.6			274.7			741.0			494.3
Provision for income taxes		(83.2	)		(46.6	)		(203.7	)		(129.9	)		(99.1	)		(67.4	)		(185.3	)		(120.5	)
Net income	$	250.7		$	139.1		$	624.6		$	337.4		$	301.5		$	207.3		$	555.7		$	373.8
Net income per common share:
Basic	$	2.64		$	1.47		$	6.58		$	3.56		$	3.22		$	2.18		$	5.93		$	3.94
Diluted	$	2.63		$	1.46		$	6.55		$	3.54		$	3.20		$	2.17		$	5.91		$	3.92
Dividends declared per common share	$	1.00		$	0.79		$	3.00		$	2.37		$	1.25		$	1.00		$	2.25		$	2.00
Statements of Comprehensive Income:
Net income	$	250.7		$	139.1		$	624.6		$	337.4		$	301.5		$	207.3		$	555.7		$	373.8
Other comprehensive income, net of tax:
Foreign currency translation adjustment		0.4			0			0.4			0
Changes in unrealized gains (losses) on marketable debt securities, net of tax of $0.0 million, $0.1 million, $0.1 million, and $0.2 million		0			(0.2	)		(0.2	)		0.5
Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of $0.8 million, $0.9 million, $2.5 million, and $2.7 million		2.5			2.7			7.5			8.1
Changes in unrealized losses on marketable debt securities, net of tax of $0.1 million, $0.0 million, $0.5 million, and $0.1 million														(0.3	)		(0.1	)		(1.5	)		(0.2	)
Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of ($0.4) million, ($0.8) million, ($0.7) million, and ($1.7) million														1.1			2.5			2.3			5.0
Other comprehensive income		2.9			2.5			7.7			8.6			0.8			2.4			0.8			4.8
Comprehensive income	$	253.6		$	141.6		$	632.3		$	346.0		$	302.3		$	209.7		$	556.5		$	378.6

See accompanying condensed notes to unaudited quarterly consolidated financial statements.


	September 30,			December 31,			June 30,			December 31,
	2021			2020			2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,702.9		$	974.6		$	667.3		$	618.7
Short-term marketable debt securities		88.3			105.6			82.3			86.1
Accounts receivable, net of allowance for credit losses and customer deductions of $15.1 million and $10.6 million as of September 30, 2021 and December 31, 2020, respectively		1,066.7			832.4
Accounts receivable, net of allowance for credit losses and customer deductions of $21.3 million and $14.3 million as of June 30, 2022 and December 31, 2021, respectively								1,212.0			1,071.0
Inventories		880.1			787.9			954.2			902.5
Prepaid expenses and other current assets		55.4			44.7			74.6			47.0
Federal and state income taxes receivable		11.4			5.1			—			7.4
Total current assets		3,804.8			2,750.3			2,990.4			2,732.7
Property, plant, and equipment, net		3,360.8			3,193.4			3,762.9			3,529.0
Goodwill		863.5			863.5			922.5			923.5
Other intangible assets, net		267.7			295.9			287.3			308.4
Operating lease right-of-use assets		230.4			234.2			273.8			238.3
Long-term marketable debt securities		57.8			42.7			61.2			60.0
Other long-term assets		45.8			53.2			42.5			44.9
Total assets	$	8,630.8		$	7,433.2		$	8,340.6		$	7,836.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	698.1		$	0
Operating lease obligations		67.2			68.9		$	69.3		$	67.1
Finance lease obligations		1.7			1.6			1.8			1.7
Accounts payable		499.1			387.0			528.2			452.4
Dividends payable		97.3			97.0			120.2			96.3
Accrued liabilities		252.5			216.2			236.7			255.0
Accrued interest		28.5			11.9			11.7			12.3
Federal and state income taxes payable								5.0			—
Total current liabilities		1,644.4			782.6			972.9			884.8
Long-term liabilities:
Long-term debt		2,471.1			2,479.4			2,472.6			2,471.5
Operating lease obligations		171.5			173.6			210.9			179.3
Finance lease obligations		13.1			14.4			11.7			12.7
Deferred income taxes		423.9			379.4			495.1			465.9
Compensation and benefits		241.1			298.3			153.2			157.4
Other long-term liabilities		57.4			59.2			59.7			58.0
Total long-term liabilities		3,378.1			3,404.3			3,403.2			3,344.8
Commitments and contingent liabilities
Commitments and contingent liabilities (Note 20)
Stockholders' equity:
Common stock, par value $0.01 per share, 300.0 million shares authorized, 95.0 million and 94.8 million shares issued as of September 30, 2021 and December 31, 2020, respectively		1.0			0.9
Common stock, par value $0.01 per share, 300.0 million shares authorized, 93.7 million and 93.5 million shares issued as of June 30, 2022 and December 31, 2021, respectively								0.9			0.9
Additional paid in capital		581.3			554.4			601.0			579.4
Retained earnings		3,162.8			2,835.5			3,437.0			3,102.1
Accumulated other comprehensive loss		(136.8	)		(144.5	)		(74.4	)		(75.2	)
Total stockholders' equity		3,608.3			3,246.3			3,964.5			3,607.2
Total liabilities and stockholders' equity	$	8,630.8		$	7,433.2		$	8,340.6		$	7,836.8

See accompanying condensed notes to unaudited quarterly consolidated financial statements.


	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2021			2020			2022			2021
Cash Flows from Operating Activities:
Net income	$	624.6		$	337.4		$	555.7		$	373.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization of intangibles		311.1			309.0			224.0			205.5
Amortization of deferred financing costs		2.0			1.9			1.0			1.3
Share-based compensation expense		26.9			23.8			21.6			20.1
Deferred income tax provision		41.7			21.1			28.8			14.3
Loss on asset disposals		7.3			4.1			12.1			5.4
Goodwill impairment		0			55.2
Pension and post-retirement benefits expense, net of contributions		(50.4	)		(68.1	)		1.7			(0.3	)
Other, net		8.9			18.8			0.2			4.2
Changes in operating assets and liabilities:
(Increase) decrease in assets —
Increase in assets —
Accounts receivable		(234.3	)		(19.0	)		(140.9	)		(149.0	)
Inventories		(92.3	)		16.5			(51.7	)		(39.4	)
Prepaid expenses and other current assets		(11.8	)		(5.6	)		(27.3	)		(34.7	)
Increase (decrease) in liabilities —
Accounts payable		22.3			(6.2	)		25.1			(2.7	)
Accrued liabilities		53.5			29.0			(18.3	)		15.4
Federal and state income taxes payable / receivable		(6.1	)		43.8			12.3			5.9
Net cash provided by operating activities		703.4			761.7			644.3			419.8
Cash Flows from Investing Activities:
Additions to property, plant, and equipment		(366.2	)		(253.5	)		(397.5	)		(216.5	)
Additions to other long term assets		(1.8	)		(6.2	)
Additions to other long-term assets								(2.6	)		(1.6	)
Proceeds from asset disposals		2.6			4.4			0.4			2.4
Purchases of marketable debt securities		(100.3	)		(71.5	)		(64.2	)		(65.7	)
Proceeds from sales of marketable debt securities		17.7			17.2			19.9			12.9
Proceeds from maturities of marketable debt securities		83.0			53.7			44.0			48.3
Other, net								1.9			0
Net cash used for investing activities		(365.0	)		(255.9	)		(398.1	)		(220.2	)
Cash Flows from Financing Activities:
Repayments of debt and finance lease obligations		(1.2	)		(1.1	)		(0.9	)		(0.8	)
Proceeds from issuance of debt		696.3			0
Financing costs paid		(8.5	)		0			0			(0.9	)
Common stock dividends paid		(284.8	)		(224.6	)		(187.2	)		(189.8	)
Shares withheld to cover employee restricted stock taxes		(11.9	)		(10.5	)		(9.5	)		(10.5	)
Net cash provided by (used for) financing activities		389.9			(236.2	)
Net increase in cash and cash equivalents		728.3			269.6
Net cash used for financing activities								(197.6	)		(202.0	)
Net increase (decrease) in cash and cash equivalents								48.6			(2.4	)
Cash and cash equivalents, beginning of period		974.6			679.5			618.7			974.6
Cash and cash equivalents, end of period	$	1,702.9		$	949.1		$	667.3		$	972.2

See accompanying condensed notes to unaudited quarterly consolidated financial statements.


	Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'			Common Stock						Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount		Capital			Earnings			Loss			Equity			Shares			Amount			Capital			Earnings			Loss			Equity
Balance at July 1, 2021		94,979		$	1.0	$	574.5		$	3,008.5		$	(139.7	)	$	3,444.3
Balance at April 1, 2022																			93,704		$	0.9		$	591.7		$	3,261.9		$	(75.2	)	$	3,779.3
Common stock withheld and retired to cover taxes on vested stock awards		(10	)		0		(0.1	)		(1.3	)		0			(1.4	)		(66	)		0			(0.5	)		(8.7	)		0			(9.2	)
Common stock dividends declared		—			0		0			(95.3	)		0			(95.3	)		—			0			0			(117.7	)		0			(117.7	)
Share-based compensation and other		22			0		6.9			0.2			0			7.1			48			0			9.8			0			0			9.8
Comprehensive income		—			0		0			250.7			2.9			253.6			—			0			0			301.5			0.8			302.3
Balance at September 30, 2021		94,991		$	1.0	$	581.3		$	3,162.8		$	(136.8	)	$	3,608.3
Balance at June 30, 2022																			93,686		$	0.9		$	601.0		$	3,437.0		$	(74.4	)	$	3,964.5


	Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'			Common Stock						Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount		Capital			Earnings			Loss			Equity			Shares			Amount			Capital			Earnings			Loss			Equity
Balance at July 1, 2020		94,835		$	0.9	$	542.7		$	2,742.9		$	(153.4	)	$	3,133.1
Balance at April 1, 2021																			94,994		$	1.0		$	566.0		$	2,906.3		$	(142.1	)	$	3,331.2
Common stock withheld and retired to cover taxes on vested stock awards		(1	)		0		0			(0.1	)		0			(0.1	)		(76	)		(0.1	)		(0.6	)		(9.7	)		—			(10.4	)
Common stock dividends declared		—			0		0			(75.2	)		0			(75.2	)		—			—			—			(95.4	)		—			(95.4	)
Share-based compensation and other		(3	)		0		6.0			0			0			6.0			61			0.1			9.1			—			—			9.2
Comprehensive income		—			0		0			139.1			2.5			141.6			—			—			—			207.3			2.4			209.7
Balance at September 30, 2020		94,831		$	0.9	$	548.7		$	2,806.7		$	(150.9	)	$	3,205.4
Balance at June 30, 2021																			94,979		$	1.0		$	574.5		$	3,008.5		$	(139.7	)	$	3,444.3

See accompanying condensed notes to unaudited quarterly 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)~~("Pactiv"), formerly known as Tenneco Packaging, Inc. We are a large diverse manufacturer of both packaging and paper products. We are headquartered in Lake Forest, Illinois and we operate primarily in the United States.

We report our business in 3 reportable segments: Packaging, Paper, and Corporate and Other. Our Packaging segment produces a wide variety of containerboard and corrugated packaging products. The Paper segment manufactures and sells a range of communication-based papers. Corporate and Other includes support staff services and related assets and liabilities, transportation assets, and activity related to other ancillary support operations. For more information about our segments, see Note ~~18,~~19, Segment Information.

Our Jackson, Alabama mill had historically operated as an uncoated freesheet ("UFS") paper mill, with its results of operations reported in our Paper segment. During the fourth quarter of 2020, in order to meet strong packaging demand and maintain appropriate inventory levels, we temporarily began producing linerboard on the No. 3 machine at our Jackson, Alabama mill. In the first quarter of 2021, we announced the discontinuation of production of ~~uncoated freesheet~~UFS paper grades on the machine and the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities. ~~Before October 2020, operating results for~~In the third quarter of 2021, we began producing corrugating medium on the No. 1 machine at the Jackson mill ~~were included~~(which had produced UFS paper in the ~~Paper segment. Beginning~~past) to help satisfy our demand for containerboard, build necessary inventories, and evaluate the capability of the machine to produce containerboard on a cost-effective basis. For the periods presented in ~~October 2020,~~this Form 10-Q, operating results for the Jackson mill are included in both the Packaging and Paper ~~segments.~~segments, as appropriate.

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

The consolidated financial statements of PCA as of ~~September~~June 30, ~~2021~~2022 and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 are unaudited but include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. The preparation of the consolidated financial statements involves the use of estimates and accruals. Actual results may vary from those estimates. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete audited financial statements. Operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022. These consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

The consolidated financial statements include the accounts of PCA and its majority-owned subsidiaries after elimination of intercompany balances and transactions.

2. New Accounting Standards

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Under current business combination guidance in ASC 805, Business Combinations, such assets and liabilities are recognized by the acquirer at fair value on the acquisition date, whereas the new guidance requires the acquirer to recognize such assets and liabilities as if it had originated the contracts. The ASU is effective for annual periods beginning after December 15, 2022, and interim periods within those annual periods, with early adoption permitted. The amended guidance should be applied on a prospective basis to any business combinations that occur on or after the adoption date. The Company is currently evaluating the impact of this guidance but does not expect the guidance to have a significant impact on the Company's financial position, results of operations, or cash flow.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. The amendments in this Update are elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, which extends some of the optional expedients under Topic 848 to include derivative contracts impacted by discounting transition. Companies can apply the ASU immediately. The ASU can be adopted on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to any new modification from any date within an interim period that includes or is subsequent to the date of the issuance of a final Update, up to the date that financial statements are available to be issued. The optional guidance will only be available until December 31, 2022. While the Company’s fixed-rate outstanding debt will not be impacted by the reference rate reform, the Company is still evaluating the impact of this guidance on its revolving credit facility, as the interest rate associated with any future borrowings against the revolving credit facility is based on LIBOR. Overall, the Company does not expect the guidance to have a significant impact on its financial position or related disclosures.

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.

3. Revenue

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration expected to be received in exchange for those goods or services. Sales, value added, and other taxes collected concurrently with revenue-producing activities are excluded from revenue.

The following table presents our revenues disaggregated by product line (dollars in millions):

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Packaging

$
1,829.4

$
1,501.1

$
5,171.4

$
4,378.5

Paper

150.3

178.1

457.1

518.7

Corporate and Other

20.4

14.5

58.6

46.8

Total revenue

$
2,000.1

$
1,693.7

$
5,687.1

$
4,944.0


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Packaging	$	2,066.9	$	1,718.5	$	4,031.3	$	3,342.1
Paper		149.8		142.3		303.3		306.8
Corporate and Other		20.6		19.1		39.1		38.1
Total revenue	$	2,237.3	$	1,879.9	$	4,373.7	$	3,687.0

Packaging Revenue

Our containerboard mills produce linerboard and corrugating medium which are papers primarily used in the production of corrugated products. The majority of our containerboard production is used internally by our corrugated products manufacturing facilities. The remaining containerboard is sold to outside domestic and export customers. Our corrugated products manufacturing plants produce a wide variety of corrugated packaging products and retail merchandise displays. We sell corrugated products to national, regional and local accounts, which are broadly diversified across industries and geographic locations.

The Company recognizes revenue for its packaging products when performance obligations under the terms of a contract with a customer are satisfied. This occurs with the transfer of control of our products at a specific point in time. Based on our express terms and conditions of the sale of products to our customers, as well as terms included in contractual arrangements with our customers, we do not have an enforceable right of payment that includes a reasonable profit throughout the duration of the contract for products that do not have an alternative use. Revenue is recognized when the product is shipped from the mill or from our manufacturing facility to our customer. Certain customers may receive volume-based incentives, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized.

Certain customers receive a portion of their packaging products as consigned inventory with billing triggered once the customer uses or consumes the designated product. Prior to invoicing, these amounts are handled as unbilled receivables. Total unbilled receivables, which are immaterial in amount, are included in the accounts receivable financial statement caption.

Paper Revenue

We manufacture and sell a range of communication-based papers. Communication papers consist of cut-size office papers, and printing and converting papers.

The Company recognizes revenue for its paper products when performance obligations under the terms of a contract with a customer are satisfied. This occurs with the transfer of control of our products at a specific point in time. Revenue is recognized when the product is shipped from the mill or from our manufacturing facility or distribution center to our customer. Certain customers may receive volume-based incentives, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized.

Corporate and Other Revenue

Revenue in this segment primarily relates to Louisiana Timber Procurement Company, L.L.C. ~~(LTP)~~("LTP"), a variable-interest entity that is 50% owned by PCA and 50% owned by Boise Cascade Company ~~(Boise Cascade)~~("Boise Cascade"). PCA is the primary beneficiary of LTP and has the power to direct the activities that most significantly affect the economic performance of LTP. Therefore, we consolidate 100% of LTP in our financial statements. See Note ~~17,~~18, Transactions With Related Parties, for more information related to LTP.

The Company recognizes revenue within this segment when performance obligations under the terms of a contract with a customer are satisfied. This occurs with the transfer of control of our products at a specific point in time.

Practical Expedients and Exemption

Shipping and handling fees billed to a customer are recorded on a gross basis in "Net sales" with the corresponding shipping and handling costs included in "Cost of sales" in the concurrent period as the revenue is recorded. We expense sales commissions when incurred because the amortization period is one year or less. Sales commissions are recorded in "Selling, general, and administrative expenses".

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.

5. Earnings Per Share

The following table sets forth the computation of basic and diluted income per common share for the periods presented (dollars and shares in millions, except per share data):


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
Numerator:	2021			2020			2021			2020			2022			2021			2022			2021
Net income	$	250.7		$	139.1		$	624.6		$	337.4		$	301.5		$	207.3		$	555.7		$	373.8
Less: Distributed and undistributed earnings allocated to participating securities		(1.7	)		(1.0	)		(4.9	)		(2.7	)		(2.6	)		(1.8	)		(4.6	)		(3.1	)
Net income attributable to common shareholders	$	249.0		$	138.1		$	619.7		$	334.7		$	298.9		$	205.5		$	551.1		$	370.7
Denominator:
Weighted average basic common shares outstanding		94.3			94.2			94.2			94.0			92.9			94.2			92.9			94.2
Effect of dilutive securities		0.4			0.3			0.4			0.4			0.5			0.4			0.4			0.4
Weighted average diluted common shares outstanding		94.7			94.5			94.6			94.4			93.4			94.6			93.3			94.6
Basic income per common share	$	2.64		$	1.47		$	6.58		$	3.56		$	3.22		$	2.18		$	5.93		$	3.94
Diluted income per common share	$	2.63		$	1.46		$	6.55		$	3.54		$	3.20		$	2.17		$	5.91		$	3.92

5.6. Other Expense, Net

The components of other income (expense), net, were as follows (dollars in millions):


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Asset disposals and write-offs	$	(6.4	)	$	(5.5	)	$	(27.3	)	$	(16.5	)	$	(13.8	)	$	(9.0	)	$	(26.4	)	$	(19.9	)
Jackson mill conversion-related activities (a)		(3.2	)		0			(6.1	)		0			(1.7	)		(2.4	)		(2.1	)		(2.9	)
Facilities closure and other income (costs) (b)		(0.7	)		(2.9	)		2.7			(16.6	)
Acquisition-related, facilities closure and other income (b)														0.5			5.5			0.1			3.4
Other		(3.1	)		(0.4	)		(11.0	)		(3.8	)		(1.3	)		(2.0	)		(3.5	)		(8.9	)
Total	$	(13.4	)	$	(8.8	)	$	(41.7	)	$	(36.9	)	$	(16.3	)	$	(7.9	)	$	(31.9	)	$	(28.3	)

(a)

Includes charges related to the announced discontinuation of production of uncoated freesheet paper grades on the No. 3 machine at the Jackson, Alabama mill in the first quarter of 2021 associated with the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities.

(b)

For ~~the three months ended September 30, 2021,~~2022, includes ~~charges~~income primarily consisting of insurance proceeds received for a natural disaster at one of the corrugated products facilities, partially offset by closure costs related to corrugated products ~~facilities.~~facilities and acquisition and integration costs related to the December 2021 Advance Packaging Corporation acquisition. For ~~the nine months ended September 30,~~ 2021, ~~these costs are partially offset by~~includes income primarily consisting of an adjustment of the required asset retirement obligation related to the 2020 closure of the San Lorenzo, California facility, a gain on sale of transportation assets, and insurance proceeds received for a natural disaster at one of the corrugated products facilities, partially offset by closure costs related to corrugated products facilities. For 2020, includes costs primarily related to the closure of the San Lorenzo, California facility during the second quarter of 2020, partially offset by income related to the sale of a corrugated products facility during the second quarter of 2020.

6.7. Income Taxes

For the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, we recorded $~~83.2~~99.1 million and $~~46.6~~67.4 million of income tax expense and had an effective tax rate of ~~24.9~~24.7% and 2~~5.0~~24.5%, respectively. The ~~decrease~~increase in our effective tax rate for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in ~~2020~~2021 was primarily due to ~~the favorable state rate impact of a subsidiary merger during the three months ended September 30, 2021 compared~~higher nondeductible employee remuneration paid to ~~September 30, 2020.~~covered employees.

For the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, we recorded $~~203.7~~185.3 ~~million~~ and $~~129.9~~120.5 million of income tax expense and had an effective tax rate of 2~~4.6~~25.0% and ~~27.8~~24.4%, respectively. The ~~decrease~~increase in our effective tax rate for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in ~~2020~~2021 was primarily due to ~~the~~higher nondeductible ~~goodwill impairment charge associated with our Paper reporting unit recognized during the nine months ended September 30, 2020 with~~ 0 ~~corresponding charge during the nine months ended September 30, 2021.~~employee remuneration paid to covered employees and lower net favorable state tax law changes.

Our current effective tax rate may differ from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income taxes. During the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, cash paid for taxes, net of refunds received, was $~~168.1~~144.2 million and $~~65.0~~100.4 million, respectively. The increase in cash tax payments between the periods is primarily due to higher ~~2021~~2022 forecasted taxable income.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, there were no significant changes to our uncertain tax positions. For more information, see Note 7,8, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our ~~2020~~2021 Annual Report on Form 10-K.

7.8. Inventories

We value our raw materials, work in process, and finished goods inventories using lower of cost, as determined by the average cost method, or net realizable value. Supplies and materials are valued at the first-in, first-out (FIFO) or average cost methods.

The components of inventories were as follows (dollars in millions):


	September 30,		December 31,		June 30,		December 31,
	2021		2020		2022		2021
Raw materials	$	323.3	$	263.5	$	340.1	$	324.2
Work in process		16.1		11.6		19.0		16.2
Finished goods		190.6		183.6		211.1		201.0
Supplies and materials		350.1		329.2		384.0		361.1
Inventories	$	880.1	$	787.9	$	954.2	$	902.5

8.9. Property, Plant, and Equipment

The components of property, plant, and equipment were as follows (dollars in millions):


	September 30,			December 31,			June 30,			December 31,
	2021			2020			2022			2021
Land and land improvements	$	186.2		$	179.6		$	192.5		$	189.8
Buildings		895.5			858.5			973.6			938.7
Machinery and equipment		6,055.2			5,826.6			6,359.6			6,159.1
Construction in progress		417.5			360.0			607.0			481.0
Other		97.4			88.8			122.2			102.9
Property, plant and equipment, at cost		7,651.8			7,313.5			8,254.9			7,871.5
Less accumulated depreciation		(4,291.0	)		(4,120.1	)		(4,492.0	)		(4,342.5	)
Property, plant, and equipment, net	$	3,360.8		$	3,193.4		$	3,762.9		$	3,529.0

During the second quarter of 2020, with the exacerbated deterioration in uncoated freesheet market conditions arising from the COVID-19 pandemic and the estimated impact on our Paper segment and its projected future results of operations, we identified a triggering event indicating possible impairment of our long lived assets within our Paper segment, including property, plant, and equipment, and performed a recoverability test on the Paper reporting unit long lived assets as of May 31, 2020. The recoverability test was based on forecasts of undiscounted cash flows. The results of the recoverability test indicated that the long lived assets within our Paper segment, inclusive of property, plant, and equipment, were ~~100% recoverable.~~

Depreciation expense for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 was $~~95.5~~103.5 million and $~~89.6~~94.5 million, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, depreciation expense was $~~279.9~~202.1 million and $~~272.7~~184.5 million, respectively. We recognized $~~3.6~~1.7 million of incremental depreciation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 as a result of ~~corrugated products facilities closures and the~~ Jackson ~~Alabama~~ mill ~~conversion.~~conversion-related activities. We recognized $~~2.9~~2.1 million of incremental depreciation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 as a result of ~~the~~ closure ~~of the San Lorenzo, California~~costs related to corrugated products ~~facility.~~facilities and Jackson mill conversion-related activities.

At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, purchases of property, plant, and equipment included in accounts payable were $~~112.1~~118.3 million and $~~22.2~~73.6 million, respectively.

9.10. Goodwill and Intangible Assets

Goodwill

Due to the triggering event identified above an interim quantitative impairment analysis was performed as of May 31, 2020 for the Paper reporting unit, which is the same as our Paper reportable segment. We estimated the fair value of the Paper reporting unit using a combination of the income approach and the market approach, as further described below. Based on the evaluation performed, we determined that the carrying value of the Paper reporting unit exceeded its fair value, which resulted in a goodwill impairment charge totaling $~~55.2~~ ~~million in the second quarter of 2020.~~

For purposes of our goodwill impairment analysis, we estimated the fair value of the Paper reporting unit using a combination of the income approach and the market approach applying an equal weighting. The income approach incorporated the estimated future cash flows and a terminal value discounted to their present value using an appropriate risk-adjusted discount rate. The estimated future cash flows and terminal value were based on internal forecasts and industry trends, including the long-term outlook for the paper industry. Our expected cash flows include assumptions about industry pricing, expected paper demand, and anticipated input and conversion costs. The ~~discount~~ ~~rate~~ ~~utilized~~ ~~in the income approach was~~ 9%, which was derived using a capital asset pricing model based on relevant industry data to estimate the cost of equity financing. The discount rate is commensurate with the risks and uncertainties inherent in the business and the cash flow forecasts, updated for recent events. The market approach estimated the fair value of the Paper reporting unit by using valuation metrics of publicly traded companies or historically completed transactions of comparable businesses.

The valuation of our Paper reporting unit requires significant judgment in evaluating recent indicators of market activity and estimated future cash flows, discount rates, and other factors. Our impairment analysis contains inherent uncertainties due to uncontrollable events that could positively or negatively impact anticipated future economic and operating conditions. In making these estimates, the weighted-average cost of capital is utilized to calculate the present value of future cash flows and terminal value. Many variables go into estimating future cash flows, including estimates of our future revenue growth and operating results. When estimating our projected revenue growth and future operating results, we considered industry trends, economic data, and our competitive situation.

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 ~~both September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021 we had $~~863.5~~922.5 millionand $923.5 million, respectively, of goodwill recorded in our Packaging segment, which represents the entire goodwill balance reported on our Consolidated Balance Sheets.

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


	Goodwill
Balance at January 1, 2022	$	923.5
Acquisitions (a)		(1.0	)
Balance at June 30, 2022	$	922.5

(a)

During the six months ended June 30, 2022, the Company recorded a $1.0 million adjustment to decrease the goodwill balance for the Company's December 2021 acquisition of Advance Packaging.

Intangible Assets

Intangible assets are primarily comprised of customer relationships and trademarks and trade names. As a result of the triggering event described above, we also performed a recoverability test on our long-lived assets within the Paper segment, including long lived intangible assets, as of May 31, 2020. The recoverability test was based on forecasts of undiscounted cash flows. The results of the recoverability test indicated that the long lived assets within our Paper segment, inclusive of the long lived intangible assets, were ~~100% recoverable.~~

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


	September 30, 2021						December 31, 2020						June 30, 2022						December 31, 2021
	Weighted Average Remaining Useful Life (in Years)		Gross Carrying Amount		Accumulated Amortization		Weighted Average Remaining Useful Life (in Years)		Gross Carrying Amount		Accumulated Amortization		Weighted Average Remaining Useful Life (in Years)		Gross Carrying Amount		Accumulated Amortization		Weighted Average Remaining Useful Life (in Years)		Gross Carrying Amount		Accumulated Amortization
Customer relationships(b)		8.4	$	503.8	$	246.2		9.1	$	503.8	$	220.2		8.6	$	546.0	$	273.0		8.5	$	551.1	$	254.9
Trademarks and trade names(b)		9.3		34.8		24.8		9.3		34.8		23.0		7.4		41.3		27.2		8.4		37.6		25.5
Other(b)		0.9		4.3		4.2		1.2		4.3		3.8		3.6		4.5		4.3		2.2		4.4		4.3
Total intangible assets (excluding goodwill)		8.5	$	542.9	$	275.2		9.1	$	542.9	$	247.0		8.6	$	591.8	$	304.5		8.5	$	593.1	$	284.7

(b)

In connection with the December 2021 acquisition of Advance Packaging, the Company recorded intangible assets of $47.3 million for customer relationships, $2.8 million for trade names, and $0.1 million for other intangibles. During the three months ended June 30, 2022, the Company made a $1.4 million net adjustment based on the valuation received for the intangible assets. This adjustment resulted in a revision to the original allocations for customer relationships and trade names. As of June 30, 2022, the revised allocations for customer relationships and trade names are $42.2 million and $6.5 million, respectively.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, amortization expense was $~~28.2~~19.8 million and $~~33.4~~18.9 million, respectively. ~~For the nine months ended September 30, 2020, amortization expense includes a $4.5~~ ~~million adjustment to decrease the remaining book value of the customer relationship intangible asset as a result of the closure of the San Lorenzo, California corrugated products facility.~~

~~10.~~11. Accrued Liabilities

The components of accrued liabilities were as follows (dollars in millions):


	September 30,		December 31,		June 30,		December 31,
	2021		2020		2022		2021
Compensation and benefits	$	144.5	$	126.5	$	127.3	$	157.1
Customer rebates and other credits		36.3		27.1		36.3		36.9
Franchise, property, sales and use taxes						27.2		17.6
Medical insurance and workers’ compensation		26.5		25.5		25.9		26.9
Property, franchise, sales and use taxes		26.3		16.5
Environmental liabilities and asset retirement obligations		3.8		4.6		4.3		4.0
Severance, retention, and relocation		2.1		4.1		2.9		2.7
Other		13.0		11.9		12.8		9.8
Total	$	252.5	$	216.2	$	236.7	$	255.0

~~12.~~13. Cash, Cash Equivalents, and Marketable Debt Securities

The following table shows the Company’s cash and available-for-sale ~~(AFS)~~("AFS") debt securities by major asset category at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in millions):


	September 30, 2021														June 30, 2022
	Adjusted Cost Basis		Unrealized Gain		Unrealized Loss		Fair Value		Cash and Cash Equivalents		Short-Term Marketable Debt Securities		Long-Term Marketable Debt Securities		Adjusted Cost Basis		Unrealized Gain		Unrealized Loss			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Debt Securities		Long-Term Marketable Debt Securities
Cash and cash equivalents	$	1,695.4	$	0	$	0	$	1,695.4	$	1,695.4	$	0	$	0	$	659.9	$	0	$	0		$	659.9	$	659.9	$	0	$	0
Level 1 (a):
U.S. Treasury securities																23.0		0		(0.4	)		22.6		0.6		12.4		9.6
Money market funds		7.0		0		0		7.0		7.0		0		0		4.3		0		0			4.3		4.3		0		0
U.S. Treasury securities		27.6		0		0		27.6		0		19.3		8.3
Subtotal		34.6		0		0		34.6		7.0		19.3		8.3		27.3		0		(0.4	)		26.9		4.9		12.4		9.6
Level 2 (b):
Corporate debt securities																120.9		0		(1.9	)		119.0		2.0		66.2		50.8
U.S. government agency securities																4.0		0		0			4.0		0		3.2		0.8
Certificates of deposit		3.9		0		0		3.9		0		3.9		0		1.0		0		0			1.0		0.5		0.5		0
U.S. government agency securities		5.3		0		0		5.3		0		4.0		1.3
Corporate debt securities		109.7		0.1		0		109.8		0.5		61.1		48.2
Subtotal		118.9		0.1		0		119.0		0.5		69.0		49.5		125.9		0		(1.9	)		124.0		2.5		69.9		51.6
Total	$	1,848.9	$	0.1	$	0	$	1,849.0	$	1,702.9	$	88.3	$	57.8	$	813.1	$	0	$	(2.3	)	$	810.8	$	667.3	$	82.3	$	61.2

1110


	December 31, 2020														December 31, 2021
	Adjusted Cost Basis		Unrealized Gain		Unrealized Loss		Fair Value		Cash and Cash Equivalents		Short-Term Marketable Debt Securities		Long-Term Marketable Debt Securities		Adjusted Cost Basis		Unrealized Gain		Unrealized Loss			Fair Value		Cash and Cash Equivalents		Short-Term Marketable Debt Securities		Long-Term Marketable Debt Securities
Cash and cash equivalents	$	970.5	$	0	$	0	$	970.5	$	970.5	$	0	$	0	$	612.3	$	0	$	0		$	612.3	$	612.3	$	0	$	0
Level 1 (a):
U.S. Treasury securities																26.4		0		(0.1	)		26.3		2.0		14.7		9.6
Money market funds		0.6		0		0		0.6		0.6		0		0		0.9		0		0			0.9		0.9		0		0
U.S. Treasury securities		28.1		0.2		0		28.3		0		18.9		9.4
Subtotal		28.7		0.2		0		28.9		0.6		18.9		9.4		27.3		0		(0.1	)		27.2		2.9		14.7		9.6
Level 2 (b):
Corporate debt securities																118.9		0		(0.3	)		118.6		3.5		66.0		49.1
U.S. government agency securities																4.8		0		0			4.8		0		3.5		1.3
Certificates of deposit		5.9		0		0		5.9		1.1		4.8		0		1.9		0		0			1.9		0		1.9		0
Commercial paper		3.2		0		0		3.2		1.0		2.2		0
U.S. government agency securities		6.6		0		0		6.6		0		2.6		4.0
Corporate debt securities		107.5		0.3		0		107.8		1.4		77.1		29.3
Subtotal		123.2		0.3		0		123.5		3.5		86.7		33.3		125.6		0		(0.3	)		125.3		3.5		71.4		50.4
Total	$	1,122.4	$	0.5	$	0	$	1,122.9	$	974.6	$	105.6	$	42.7	$	765.2	$	0	$	(0.4	)	$	764.8	$	618.7	$	86.1	$	60.0

(a)

Valuations based on quoted prices for identical assets or liabilities in active markets.

(b)

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

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, net realized gains and losses on the sales and maturities of certain marketable debt securities were insignificant.

The Company invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy requires securities to be investment grade and limits the amount of credit exposure to any one issuer. The maturities of the Company’s long-term marketable debt securities generally range from one to two years.

Fair values were determined for each individual marketable debt security in the investment portfolio. When evaluating a marketable debt security for impairment, PCA reviews factors such as the duration and extent to which the fair value of the marketable debt security is less than its cost, the financial condition of the issuer and any changes thereto, the general market condition in which the issuer operates, and PCA’s intent to sell, or whether it will be more likely than not be required to sell, the marketable debt security before recovery of its amortized cost basis.

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we do 0t consider any of the impairments related to our marketable debt securities to be the result of credit losses. Therefore, we have 0t recorded an allowance for credit losses related to our marketable debt securities. All unrealized gains and losses were recorded in other comprehensive income (OCI).

The following table provides information about the Company’s marketable debt securities that have been in a continuous loss position as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in millions, except number of marketable debt securities in a loss position):


	September 30, 2021						December 31, 2020							June 30, 2022
	Fair Value of Marketable Debt Securities		Number of Marketable Debt Securities in a Loss Position		Unrealized Losses (c)		Fair Value of Marketable Debt Securities			Number of Marketable Debt Securities in a Loss Position		Unrealized Losses (c)		Fair Value of Marketable Debt Securities in a Loss Position < 12 Months		Number of Marketable Debt Securities in a Loss Position < 12 Months		Unrealized Losses < 12 Months		Fair Value of Marketable Debt Securities in a Loss Position ≥ 12 Months		Number of Marketable Debt Securities in a Loss Position ≥ 12 Months		Unrealized Losses ≥ 12 Months (c)
Corporate debt securities	$	50.0		63	$	0	$	42.9			56	$	0	$	112.7		176	$	1.9	$	0.3		1	$	0
U.S. Treasury securities		8.1		10		0		1.7	��		3		0		20.8		23		0.4		1.0		1		0
U.S. government agency securities		0.8		2		0		0			0		0		4.0		6		0		0		0		0
Certificates of deposit		0.5		1		0		1.3			2		0		0.5		1		0		0		0		0
Commercial paper		0		0		0		2.2			1		0
	$	59.4		76	$	0	$	48.1			62	$	0	$	138.0		206	$	2.3	$	1.3		2	$	0

(c)

Unrealized losses were insignificant for debt securities in a continuous loss position greater than or equal to 12 months for the ~~periods~~period ended ~~September~~June 30, ~~2021 and~~2022.


	December 31, 2021
	Fair Value of Marketable Debt Securities		Number of Marketable Debt Securities in a Loss Position		Unrealized Losses (d)
Corporate debt securities	$	106.9		153	$	0.3
U.S. Treasury securities		22.4		27		0.1
U.S. government agency securities		4.8		6		0
Certificates of deposit		0.5		1		0
	$	134.6		187	$	0.4

(d)

For the period ended December 31, ~~2020.~~ 2021, there were no debt securities in a continuous loss position greater than or equal to 12 months.

~~13.~~14. Employee Benefit Plans and Other Postretirement Benefits

The components of net periodic benefit cost for our pension plans were as follows (dollars in millions):


	Pension Plans												Pension Plans
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Service cost	$	5.4		$	5.4		$	16.0		$	17.3		$	4.9		$	5.4		$	9.9		$	10.7
Interest cost		7.4			9.9			22.2			29.8			8.7			7.4			17.4			14.9
Expected return on plan assets		(15.8	)		(14.2	)		(47.3	)		(42.6	)		(13.9	)		(15.8	)		(27.9	)		(31.6	)
Net amortization of unrecognized amounts
Prior service cost		1.0			1.1			2.9			3.3			0.9			1.0			1.8			1.9
Actuarial loss		2.6			2.7			7.8			8.1			0.8			2.5			1.7			5.0
Net periodic benefit cost	$	0.6		$	4.9		$	1.6		$	15.9		$	1.4		$	0.5		$	2.9		$	0.9

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 additional discretionary contributions based on the funded status of the plans, tax deductibility, income from operations, and other factors. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, payments to our nonqualified pension plans were insignificant.During ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, we ~~made~~did 0t make any contributions ~~of $50.0~~ ~~million to our qualified pension plans, and for the three and nine months ended September 30, 2020, we made contributions of $71.4~~ ~~million and $82.5~~ ~~million, respectively,~~ to our qualified pension plans. We do not have a required minimum contribution amount ~~established~~ for ~~2021,~~2022, but we expect to make discretionary contributions to our plans.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the net periodic benefit cost for our postretirement plans was insignificant.

~~14.~~15. Share-Based Compensation

The Company has a long-term equity incentive plan, which allows for grants of restricted stock, performance awards, stock appreciation rights, and stock options to directors, officers, and employees, as well as others who engage in services for PCA. On February 25, 2020, our board of directors approved and, on May 5, 2020, our stockholders approved, the amendment and restatement of the plan. The amendment extended the plan’s term to May 5, 2030 and increased the number of shares of common stock available for issuance under the plan by 1.4 million shares. The total number of shares authorized for past and future awards is 12.0 million shares.

As of ~~September~~June 30, ~~2021,~~2022, assuming performance units are paid out at the target level of performance, ~~1.2~~1.0 million shares were available for future grants under the current plan. Forfeitures are added back to the pool of shares of common stock available to be granted at a future date.

The following table presents restricted stock and performance unit award activity for the ~~nine~~six months ended ~~September~~June 30, ~~2021:~~2022:

Restricted Stock

Performance Units

Shares

Weighted
Average Grant-
Date Fair Value

Shares

Weighted
Average Grant-
Date Fair Value

Outstanding at January 1, 2021

669,102

$
102.55

357,417

$
103.63

Granted

173,970

134.10

95,236

140.47

Vested (a)

(164,483
)

108.73

(74,894
)

134.53

Forfeitures

(6,692
)

110.47

(19,667
)

132.58

Outstanding at September 30, 2021

671,897

$
109.13

358,092

$
105.38


	Restricted Stock					Performance Units
	Shares			Weighted Average Grant- Date Fair Value		Shares			Weighted Average Grant- Date Fair Value
Outstanding at January 1, 2022		651,448		$	109.16		358,092		$	105.38
Granted		175,047			145.63		96,309			154.21
Vested (a)		(146,093	)		115.78		(42,024	)		141.62
Forfeitures		(6,651	)		111.31		(256	)		145.26
Outstanding at June 30, 2022		673,751		$	117.18		412,121		$	113.07

(a)

Upon vesting of the performance unit awards, PCA issued ~~81,577~~46,281 shares, which ~~includes~~included ~~6,683~~4,257 shares for dividends accrued during the vesting period.

Compensation Expense

Our share-based compensation expense is primarily 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 millions):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Restricted stock	$	3.9		$	3.2		$	18.4		$	16.8		$	5.4		$	5.9		$	14.7		$	14.5
Performance units		2.9			2.8			8.5			7.0			3.8			2.5			6.9			5.6
Total share-based compensation expense		6.8			6.0			26.9			23.8			9.2			8.4			21.6			20.1
Income tax benefit		(1.7	)		(1.5	)		(6.8	)		(6.0	)		(2.3	)		(2.1	)		(5.5	)		(5.1	)
Share-based compensation expense, net of tax benefit	$	5.1		$	4.5		$	20.1		$	17.8		$	6.9		$	6.3		$	16.1		$	15.0

The fair value of restricted stock is determined based on the closing price of the Company’s stock on the grant date. Compensation expense, net of estimated forfeitures, is recorded over the requisite service period. As PCA’s Board of Directors has the ability to accelerate the vesting of these awards upon an employee’s retirement, the Company accelerates the recognition of compensation expense for certain employees approaching normal retirement age.

Performance unit awards granted to certain key employees are earned based on the achievement of defined performance rankings of Return on Invested Capital (ROIC) or Total Shareholder Return (TSR) compared to ROIC and TSR for peer companies. For performance unit awards made in ~~2021~~2022 and ~~2020,~~2021, in terms of grant date value, 50% used TSR as the performance measure and 50% used ROIC as the performance measure. The ROIC component of performance unit awards is valued based on the closing price of the stock on the grant date. As the ROIC component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest. The TSR component of performance unit awards is valued using a Monte Carlo simulation as the TSR component contains a market condition. The Monte Carlo simulation estimates the fair value of the TSR component based on the expected term of the award, a risk-free interest rate, expected dividends, and expected volatility of the Company’s common stock and the common stock of the peer companies. Compensation expense is recorded ratably over the expected term of the award.

The unrecognized compensation expense for all share-based awards at ~~September~~June 30, ~~2021~~2022 was as follows (dollars in millions):


	September 30, 2021				June 30, 2022
	Unrecognized Compensation Expense		Remaining Weighted Average Recognition Period (in years)		Unrecognized Compensation Expense		Remaining Weighted Average Recognition Period (in years)
Restricted stock	$	30.6		2.6	$	36.4		2.8
Performance units		21.6		2.3		25.9		2.5
Total unrecognized share-based compensation expense	$	52.2		2.5	$	62.3		2.7

~~15.~~16. Stockholders' Equity

Dividends

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we paid $~~284.8~~187.2 million of dividends to shareholders. ~~On August 25, 2021,~~ During the second quarter of 2022, PCA announced an increase of its quarterly cash dividend on its common stock from an annual rate of $4.00 per share to $5.00 per share.PCA’s Board of Directors declared athe first regular quarterly cash dividend of $~~1.00~~1.25 per share of common stock on May 17, 2022, which was paid on ~~October~~July 15, ~~2021~~2022 to shareholders of record as of ~~September~~June 15, ~~2021.~~2022. The dividend payment was $~~95.0~~117.1 million.

Repurchases of Common Stock

On ~~February 25, 2016,~~January 26, 2022, PCA announced that its Board of Directors authorized the repurchase of an additional $~~200.0~~1 ~~million~~billion of the Company’s outstanding common stock. Repurchases may be made from time to time in open market or privately negotiated transactions in accordance with applicable securities regulations. The timing and amount of repurchases will be determined by the Company in its discretion based on factors such as PCA’s stock price and market and business conditions.

The Company did 0t repurchase any shares of its common stock under this authority during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. At ~~September~~June 30, ~~2021,~~2022, $~~193.0~~1 ~~million~~billion of the authorized amount remained available for repurchase of the Company’s common stock.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) (AOCI) by component were as follows (dollars in millions). Amounts in parentheses indicate losses:

Foreign
Currency
Translation
Adjustments

Unrealized Loss
on Foreign
Exchange
Contracts

Unrealized Loss
on Marketable
Debt Securities

Unfunded
Employee
Benefit
Obligations

Total

Balance at January 1, 2021

$
(0.4
)

$
(0.2
)

$
0.3

$
(144.2
)

$
(144.5
)
Other comprehensive income before reclassifications,
net of tax

0

0

(0.2
)

0

(0.2
)
Amounts reclassified from AOCI, net of tax

0.4

0

0

7.5

7.9

Balance at September 30, 2021

$
0

$
(0.2
)

$
0.1

$
(136.7
)

$
(136.8
)


	Unrealized Loss On Foreign Exchange Contracts			Unrealized Loss on Marketable Debt Securities			Unfunded Employee Benefit Obligations			Total
Balance at January 1, 2022	$	(0.2	)	$	(0.2	)	$	(74.8	)	$	(75.2	)
Other comprehensive income before reclassifications, net of tax		0			(1.5	)		0			(1.5	)
Amounts reclassified from AOCI, net of tax		0			0			2.3			2.3
Balance at June 30, 2022	$	(0.2	)	$	(1.7	)	$	(72.5	)	$	(74.4	)

Reclassifications out of AOCI were as follows (dollars in millions). Amounts in parentheses indicate expenses in the Consolidated Statements of Income:


	Amounts Reclassified from AOCI													Amounts Reclassified from AOCI
	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
Details about AOCI Components	2021			2020			2021			2020				2022			2021			2022			2021
Unfunded employee benefit obligations (a)
Amortization of prior service costs	$	(0.8	)	$	(1.0	)	$	(2.5	)	$	(3.0	)	See (a) below	$	(0.8	)	$	(0.8	)	$	(1.6	)	$	(1.7	)	See (a) below
Amortization of actuarial losses		(2.5	)		(2.6	)		(7.5	)		(7.8	)	See (a) below		(0.7	)		(2.5	)		(1.4	)		(5.0	)	See (a) below
		(3.3	)		(3.6	)		(10.0	)		(10.8	)	Total before tax		(1.5	)		(3.3	)		(3.0	)		(6.7	)	Total before tax
		0.8			0.9			2.5			2.7		Tax benefit		0.4			0.8			0.7			1.7		Tax benefit
	$	(2.5	)	$	(2.7	)	$	(7.5	)	$	(8.1	)	Net of tax	$	(1.1	)	$	(2.5	)	$	(2.3	)	$	(5.0	)	Net of tax

(a)

These AOCI components are included in the computation of net pension and postretirement benefit costs. See Note ~~13,~~14, Employee Benefit Plans and Other Postretirement Benefits, for additional information.

~~16.~~17. Concentrations of Risk

Our Paper segment has a long-standing commercial and contractual relationship with Office Depot, our largest customer in the paper business. This relationship exposes us to a significant concentration of business and financial risk. Our sales to Office Depot represent approximately 4% ~~and~~ 5% of our total Company sales revenue for both the ~~nine~~six month periods ended ~~September~~June 30, ~~2021~~2022 and ~~2020, respectively,~~2021 and approximately 4858% and 4347% of our Paper segment sales revenue for both of those periods, respectively. For the full year ~~2020,~~2021, sales to Office Depot represented 4551% of our Paper segment sales. At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had$~~47.7~~41.2 million and $~~39.6~~49.8 million of accounts receivable due from Office Depot, respectively, which represents approximately 43% and 54% of our total Company accounts receivable, respectively.

~~17.~~18. Transactions With Related Parties

Louisiana Timber Procurement Company, L.L.C. ~~(LTP)~~("LTP") is a variable-interest entity that is 50% owned by PCA and 50% owned by Boise Cascade Company ~~(Boise Cascade)~~("Boise Cascade"). LTP procures sawtimber, pulpwood, residual chips, and other residual wood fiber to meet the wood and fiber requirements of PCA and Boise Cascade in Louisiana. PCA is the primary beneficiary of LTP and has the power to direct the activities that most significantly affect the economic performance of LTP. Therefore, we consolidate 100% of LTP in our financial statements in our Corporate and Other segment. The carrying amounts of LTP's assets and liabilities (which relate primarily to non-inventory working capital items) on our Consolidated Balance Sheets were $~~2.5~~3.1 million at ~~both September~~June 30, ~~2021~~2022 and $3.5 million at December 31, ~~2020.~~2021. During the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, we recorded $~~22.3~~23.5 million and $~~15.6~~20.7 million, respectively, and during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, we recorded $~~63.3~~44.3 million and $~~52.0~~41.0 million, respectively, of LTP sales to Boise Cascade in "Net Sales" in the Consolidated Statements of Income and approximately the same amount of expenses in "Cost of Sales".

During the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, fiber purchases from related parties were $3.6 million and $~~2.8~~3.4 million, ~~respectively. Fiber~~respectively, and during the six months ended June 30, 2022 and 2021, fiber purchases from related parties were $~~10.3~~7.4 million and $~~9.5~~6.7 million, ~~for the nine months ended September 30, 2021 and 2020.~~respectively. 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.

~~18.~~19. Segment Information

We report our business in 3 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.

Our Jackson, Alabama mill had historically operated as a UFS mill, with its results of operations reported in our Paper segment. During the fourth quarter of 2020, in order to meet strong packaging demand and maintain appropriate inventory levels, we temporarily began producing linerboard on the No. 3 machine at our Jackson, Alabama mill. In the first quarter of 2021, we announced the discontinuation of production of ~~uncoated freesheet~~UFS paper grades on the machine and the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities. ~~Before October 2020, operating results for~~In the third quarter of 2021, we began producing corrugating medium on the No. 1 machine at the Jackson mill ~~were included~~(which had produced UFS paper in the ~~Paper segment. Beginning in October 2020,~~past) to help satisfy our demand for containerboard, build necessary inventories, and evaluate the capability of the machine to produce containerboard on a cost-effective basis. For the periods presented, operating results for the Jackson mill are included in both the Packaging and Paper ~~segments.~~segments, as appropriate.

Each segment’s profits and losses are measured on operating profits before interest expense, net, non-operating pension income, and income taxes. For certain allocated expenses, the related assets and liabilities remain in the Corporate and Other segment.

Selected financial information by reportable segment was as follows (dollars in millions):


	Sales, net												Sales, net
Three Months Ended September 30, 2021	Trade		Intersegment			Total			Operating Income (Loss)
Three Months Ended June 30, 2022													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,825.0	$	4.4		$	1,829.4		$	365.2		(a)	$	2,061.7	$	5.2		$	2,066.9		$	419.8		(a)
Paper		150.3		0			150.3			11.0		(a)		149.8		—			149.8			22.7		(a)
Corporate and Other		24.8		36.5			61.3			(23.4	)	(a)		25.8		37.4			63.2			(26.7	)
Intersegment eliminations		0		(40.9	)		(40.9	)		0				—		(42.6	)		(42.6	)		—
	$	2,000.1	$	—		$	2,000.1			352.8			$	2,237.3	$	—		$	2,237.3			415.8
Non-operating pension income										5.0												3.6
Interest expense, net										(23.9	)	(a)										(18.8	)
Income before taxes									$	333.9											$	400.6


	Sales, net												Sales, net
Three Months Ended September 30, 2020	Trade		Intersegment			Total			Operating Income (Loss)
Three Months Ended June 30, 2021													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,497.6	$	3.5		$	1,501.1		$	222.4		(b)	$	1,714.5	$	4.0		$	1,718.5		$	317.2		(b)
Paper		178.1		0			178.1			7.3				142.3		—			142.3			2.6		(b)
Corporate and Other		18.0		30.8			48.8			(20.2	)			23.1		32.0			55.1			(25.2	)	(b)
Intersegment eliminations		0		(34.3	)		(34.3	)		0				—		(36.0	)		(36.0	)		—
	$	1,693.7	$	—		$	1,693.7			209.5			$	1,879.9	$	—		$	1,879.9			294.6
Non-operating pension income										0.6												5.0
Interest expense, net										(24.4	)											(24.9	)
Income before taxes									$	185.7											$	274.7


	Sales, net												Sales, net
Nine Months Ended September 30, 2021	Trade		Intersegment			Total			Operating Income (Loss)
Six Months Ended June 30, 2022													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	5,159.3	$	12.1		$	5,171.4		$	940.3		(a)	$	4,021.6	$	9.7		$	4,031.3		$	782.1		(a)
Paper		457.0		0.1			457.1			22.3		(a)		303.3		—			303.3			45.1		(a)
Corporate and Other		70.8		101.0			171.8			(76.9	)	(a)		48.8		72.7			121.5			(54.8	)
Intersegment eliminations		0		(113.2	)		(113.2	)		0				—		(82.4	)		(82.4	)		—
	$	5,687.1	$	—		$	5,687.1			885.7			$	4,373.7	$	—		$	4,373.7			772.4
Non-operating pension income										14.8												7.3
Interest expense, net										(72.2	)	(a)										(38.7	)
Income before taxes									$	828.3											$	741.0


	Sales, net												Sales, net
Nine Months Ended September 30, 2020	Trade		Intersegment			Total			Operating Income (Loss)
Six Months Ended June 30, 2021													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	4,364.8	$	13.7		$	4,378.5		$	619.9		(b)(c)	$	3,334.3	$	7.8		$	3,342.1		$	575.1		(b)
Paper		518.7		0			518.7			(21.7	)	(c)(d)		306.7		0.1			306.8			11.3		(b)
Corporate and Other		60.5		99.2			159.7			(63.5	)			46.0		64.5			110.5			(53.5	)	(b)
Intersegment eliminations		0		(112.9	)		(112.9	)		0				—		(72.4	)		(72.4	)		—
	$	4,944.0	$	—		$	4,944.0			534.7			$	3,687.0	$	—		$	3,687.0			532.9
Non-operating pension income										1.7												9.8
Interest expense, net										(69.1	)											(48.4	)
Income before taxes									$	467.3											$	494.3

1615


(a)	The three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 include the following:
	1.	$~~4.5~~3.9 million and $~~9.4~~5.4 million, respectively, of charges related to the announced discontinuation of production of ~~uncoated freesheet~~UFS paper grades on the No. 3 machine at the Jackson, Alabama mill ~~in the first quarter of 2021~~ associated with the permanent conversion of the machine to produce linerboard and other ~~paper-to-containerboard~~paper-to containerboard conversion related activities.
	2.	$~~2.7~~0.9 million and $~~0.1~~0.3 million, respectively, of ~~charges~~income primarily consisting of insurance proceeds received for a natural disaster at one of the corrugated products facilities and a favorable lease buyout for a closed corrugated products facility, partially offset by closure costs related to corrugated products ~~facilities. For~~facilities and acquisition and integration costs related to the ~~nine~~December 2021 Advance Packaging Corporation acquisition.

(b)	The three and six months ended ~~September~~June 30, 2021 ~~these costs are partially offset by~~include the following:
	1.	$4.7 million and $2.6 million, respectively, of income primarily consisting of an adjustment of the required asset retirement obligation related to the 2020 closure of the San Lorenzo, California facility, a gain on sale of transportation assets, and insurance proceeds received for a natural disaster at one of the corrugated products ~~facilities.~~
	3.	$~~0.5~~ ~~million of costs related to the Company's September 2021 debt refinancing, which included the issuance of the new~~ ~~3.05% Senior Notes due 2051.~~

~~(b)~~	~~The three and nine months ended September 30, 2020 include the following:~~
	1.	$~~3.3~~ ~~million and $24.1~~ ~~million of charges, respectively, consisting of~~facilities, partially offset by closure costs related to corrugated products facilities, substantially all of which relates to the closure of the San Lorenzo, California facility during the second quarter of 2020, partially offset by income related to the sale of a corrugated products facility during the second quarter of 2020.facilities.
	2.	$~~10.0~~3.8 million and $4.9 million, respectively, of charges related to the ~~impact~~announced discontinuation of ~~Hurricane Laura~~production of UFS paper grades on the No. 3 machine at ~~our DeRidder, Louisiana~~the Jackson, Alabama mill ~~including unabsorbed costs related~~associated with the permanent conversion of the machine to ~~lost production, excess purchased containerboard and freight costs, repair expenses, rental and supplies costs,~~produce linerboard and other ~~recovery expenses.~~

~~(c)~~	~~The nine months ended September 20, 2020 include $6.9~~ ~~million of incremental, out-of-pocket costs~~paper-to-containerboard conversion related ~~to COVID-19, including supplies, cleaning and sick pay. Beginning in July 2020, all corresponding COVID-19 related expenses were included in normalized costs.~~

~~(d)~~	During the second quarter of 2020, with the exacerbated deterioration in uncoated freesheet market conditions and the estimated impact on our Paper reporting unit arising from the COVID-19 pandemic, as well as projected future results of operations, we identified a triggering event indicating possible impairment of goodwill within our Paper reporting unit. The Company performed an interim quantitative impairment analysis as of May 31, 2020, and, based on the evaluation performed, we determined that goodwill was fully impaired for the Paper reporting unit and recognized a non-cash impairment charge of $~~55.2~~ ~~million. See Note 9, Goodwill and Intangible Assets, for additional information.~~activities.

~~19.~~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, capital commitments, lease obligations, and purchase commitments for goods and services, and legal proceedings, all of which are discussed in Note ~~10,~~11, Debt, and Note ~~20,~~21, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of our ~~2020~~2021 Annual Report on Form 10-K.

Guarantees and Indemnifications

We provide guarantees, indemnifications, and other assurances to third parties in the normal course of our business. These include tort indemnifications, product guarantees, environmental assurances, and representations and warranties in commercial agreements. At ~~September~~June 30, ~~2021,~~2022, 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.

DeRidder Mill Incident

On February 8, 2017, a tank located in the pulp mill at the Company's DeRidder, Louisiana facility exploded, resulting in three contractor fatalities and other injuries. The Company has been served with multiple lawsuits involving the decedents and other allegedly injured parties, alleging negligence on the part of the Company and claiming compensatory and punitive damages. The Company is vigorously defending these lawsuits. The Company believes that these suits are covered by its liability insurance policies, subject to an aggregate $1.0 million deductible, which has been satisfied in full as a result of settlement of various lawsuits and fees and expenses incurred by the Company. Cases involving nine plaintiffs are pending in the U.S. District Court for the Middle District of Louisiana and one case remains pending in state court in Alabama. One case previously dismissed by the federal district court for the Western District of Louisiana has been appealed by the plaintiff to the United States Court of Appeals for the Fifth Circuit. The Fifth Circuit Court of Appeals affirmed such dismissal. The remaining lawsuits pending in federal district court and state court are in the early stages. Accordingly, the Company is unable to estimate a range of reasonable possible losses at this time.

The Company has cooperated with investigations from the U.S. Occupational Health and Safety Administration ~~(OSHA)~~("OSHA"), the U.S. Chemical Safety Board ~~(CSB)~~("CSB") and the U.S. Environmental Protection Agency ~~(EPA)~~("EPA"). The U.S. Chemical Safety Board completed its investigation and issued its report during the second quarter of 2018. The Company settled with OSHA during the second quarter of 2018 and paid approximately $40,000 in penalties for citations.

The EPA investigation is ongoing. In May 2017, the EPA conducted an on-site inspection of the facility to assess compliance with the Clean Air Act, Risk Management Program ~~(RMP)~~("RMP"). The Company provided additional information to the EPA promptly after the inspection to address certain areas of concern ~~(AOCs)~~("AOCs") observed during the inspection. In January 2021, the EPA and U.S. Department of Justice ~~(DOJ)~~("DOJ") initiated civil judicial enforcement discussions with PCA. These discussions are ongoing. As of the date of filing of this report, no complaint has been filed. PCA continues to cooperate with the agencies. Since the inspection in 2017, PCA performed several voluntary activities to address the AOCs presented in the EPA’s inspection report and has removed the RMP covered process from the facility.

~~Environmental Matters~~

On August 8, 2019, the EPA issued a notice of violation (NOV) alleging violations of the Clean Air Act, resulting from an inspection of our Wallula, Washington mill in September 2018. PCA denies the violations set forth in the NOV and has requested that the EPA’s Office of Air Quality Planning and Standards provide an applicability determination to clarify that the relevant operations of PCA have not violated the regulations at issue in the NOV. The EPA denied our request in 2020. We intend to vigorously defend any enforcement action and, on July 27, 2020, filed a petition with the EPA to reconsider its denial of our applicability determination and filed petitions in U.S. federal court to review the agency’s denial of our applicability determination as well as the rule at issue. While we cannot predict with certainty the ultimate resolution of this matter, we believe that we have a meritorious position that our operations have not violated the Clean Air Act, that we have taken appropriate action to address the matters raised by the EPA in the NOV, and that this matter will not result in a material adverse effect on our financial condition, results of operations, or cash flows.

Legal Proceedings

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

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management’s discussion and analysis includes statements regarding our expectations with respect to our future performance, expected business conditions, liquidity, and capital resources. Such statements, along with any other statements that are not historical in nature, 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 our ~~2020~~2021 Annual Report on Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission ~~(SEC)~~("SEC"). We do not assume any obligation to update any forward-looking statement. Our actual results may differ materially from those contained in or implied by any of the forward-looking statements in this Form 10-Q. Please see “Forward Looking Statements” elsewhere in this Item 2.

PCA is the third largest producer of containerboard products and a leading producer of ~~uncoated freesheet~~UFS paper in North America. We operate eight mills and 8990 corrugated products manufacturing plants. Our containerboard mills produce linerboard and corrugating medium, which are papers primarily used in the production of corrugated 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, 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 also manufacture and sell ~~uncoated freesheet~~UFS papers, including both commodity and specialty papers, which may have custom or specialized features such as colors, coatings, high brightness, and recycled content. We are headquartered in Lake Forest, Illinois and operate primarily in the United States.

This Item 2 is intended to supplement, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our ~~2020~~2021 Annual Report on Form 10-K.

~~Third~~Second quarter net sales were ~~$2.00~~$2.24 billion in ~~2021~~2022 and ~~$1.69~~$1.88 billion in ~~2020.~~2021. We reported ~~$251~~$302 million of net income, or ~~$2.63~~$3.20 per diluted share, during the ~~third~~second quarter of ~~2021,~~2022, compared to ~~$139~~$207 million, or ~~$1.46~~$2.17 per diluted share, during the same period in ~~2020.~~2021. Net income included $6$2 million of expense for special items in the ~~third~~second quarter of ~~2021,~~2022, compared to ~~$10~~less than $1 million of ~~expense~~income for special items in ~~2020~~2021 (discussed below). Excluding special items, net income was ~~$257~~$304 million, or ~~$2.69~~$3.23 per diluted share, during the ~~third~~second quarter of ~~2021,~~2022, compared to ~~$149~~$207 million, or ~~$1.57~~$2.17 per diluted share, in the ~~third~~second quarter of ~~2020.~~2021. The increase in net income was driven primarily by higher prices and mix and volume in ~~our~~the Packaging segment, higher ~~production volume and~~ prices and mix in ~~our~~the Paper segment, lower ~~non-operating pension~~scheduled outage expenses, lower interest expense, and ~~lower interest expense.~~other items. These items were partially offset by higher operating costs, ~~higher~~ freight and logistics expenses, ~~higher~~ converting costs, ~~higher scheduled outage expenses,~~ and depreciation expense, lower ~~sales~~ volume in ~~our~~the Paper ~~segment.~~segment, and a higher tax rate. For additional detail on special items included in reported GAAP results, as well as segment income (loss) excluding special items, earnings before non-operating pension income (expense), interest, income taxes, and depreciation, amortization, and depletion ~~(EBITDA)~~("EBITDA"), and EBITDA excluding special items, see “Item 2. Reconciliations of Non-GAAP Financial Measures to Reported Amounts.”

Packaging segment income from operations was ~~$365~~$420 million in the ~~third~~second quarter of ~~2021,~~2022, compared to ~~$222~~$317 million in the ~~third~~second quarter of ~~2020.~~2021. Packaging segment EBITDA excluding special items was ~~$467~~$525 million in the ~~third~~second quarter of ~~2021~~2022 compared to ~~$324~~$409 million in the ~~third~~second quarter of ~~2020.~~2021. The increase ~~in EBITDA excluding special items~~ was due primarily to higher prices and mix and higher sales and production volumes, and lower scheduled outage expenses, partially offset by higher operating and converting costs, ~~higher annual outage expense,~~ and higher freight and logistic expenses. We continued to experience strong demand during the quarter, driving record volumes in terms of box shipments and record containerboard production. We also continued to experience cost inflation across our business, includingDemand in the areas of labor and benefits, recycled fiber, energy, repairs, materials, and supplies, as well as higher transportation costs, driven by higher fuel costs, tight supply, driver shortages, and higher spot prices. Our sales prices were higher as we implemented price increases on containerboardPackaging segment remained strong and corrugated products that we previously communicated to our customers. We continue to deploy capital to improve productivity and efficiencies at our facilities and believe that our success in doing so is helping us to manage cost inflation and better serve our customers.product shipments were flat with the prior year second quarter.

Paper segment income from operations was ~~$11~~$23 million in the ~~third~~second quarter of ~~2021,~~2022, compared to $7$3 million in the ~~third~~second quarter of ~~2020.~~2021. Paper segment EBITDA excluding special items was ~~$18~~$32 million in the ~~third~~second quarter of ~~2021,~~2022, compared to ~~$17~~$12 million in the ~~third~~second quarter of ~~2020.~~2021. The increase ~~in EBITDA excluding special items~~ was due to ~~higher production volumes,~~ higher prices and mix and lower ~~annual outage~~operating costs, partially offset by ~~higher operating costs,~~lower sales and production volumes, and higher freight and logistic ~~expenses, and lower sales volume.~~expenses.

Sales and production volumes in the Paper segment significantly declined after the first quarter of 2020 as the COVID-19 pandemic caused lower demand for our paper products. During the second and third quarters of 2020, in response to such lower demand, we temporary idled both machines at our Jackson Alabama mill. During the fourth quarter of 2020, in order to meet strong packaging demand and maintain appropriate inventory levels in the packaging segment, we temporarily began producing linerboard on the ~~number~~No. 3 machine at the Jackson mill, and we have produced linerboard on the machine since that time. In the first quarter of 2021, we announced the discontinuation of production of ~~uncoated freesheet~~UFS paper grades on the machine and ~~our plans to permanently convert~~the permanent conversion of the machine to produce linerboard ~~in a phased approach over the next three years. Demand for paper products has improved since the beginning of the pandemic, but our sales~~and other paper-to-containerboard conversion related activities. Sales and production in the ~~paper~~Paper segment will remain below pre-pandemic levels as we will no longer be producing paper products on the Jackson No. 3 machine. In the third quarter of 2021, we began ~~to produce~~producing corrugating medium on the ~~number~~No. 1 machine at the Jackson mill (which had produced ~~uncoated freesheet~~UFS paper in the past) ~~in order~~ to help satisfy our demand for containerboard, build necessary inventories, and evaluate the capability of the machine to produce containerboard on a cost-effective basis. We expect to continue ~~to produce~~producing corrugating medium on the machine ~~during the fourth quarter. Before October 2020, operating results~~ for the ~~Jackson mill were included in~~foreseeable future. For the ~~Paper segment. Beginning in October 2020,~~periods presented, operating results for the Jackson mill are included in both the Packaging and Paper ~~segments.~~segments, as appropriate.

Packaging segment income from operations was ~~$940~~$782 million in the first ~~nine~~six months of ~~2021,~~2022, compared to ~~$620~~$575 million in the same period in ~~2020.~~2021. Packaging segment EBITDA excluding special items was ~~$1,228~~$989 million in the first ~~nine~~six months of ~~2021~~2022 compared to ~~$926~~$761 million in the first ~~nine~~six months of ~~2020.~~2021. The increase in EBITDA excluding special items was due primarily to higher prices and mix and higher sales and production volumes and lower scheduled outage expenses, partially offset by higher operating and converting costs, and higher freight and logistic ~~expenses, and higher annual outage expense.~~expenses.

Paper segment income from operations was ~~$22~~$45 million in the first ~~nine~~six months of ~~2021,~~2022, compared to ~~a loss of $22~~$11 million in the first ~~nine~~six months of ~~2020.~~2021. Paper segment EBITDA excluding special items was ~~$46~~$60 million in the first ~~nine~~six months of ~~2021,~~2022, compared to ~~$64~~$27 million in the same period in ~~2020.~~2021. The ~~decrease~~increase in EBITDA excluding special items was due to higher prices and mix and lower operating costs, partially offset by lower sales and production volumes and higher freight and logistic ~~expenses, partially offset by lower operating costs and lower annual outage expense, while prices and mix were flat.~~expenses.

A reconciliation of reported earnings per diluted share to earnings per diluted share, excluding special items, for the three ~~and nine~~ months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 are as follows:

Included in this Item 2 are various non-GAAP financial measures, including diluted EPS excluding special items, segment income excluding special items and EBITDA excluding special items. Management excludes special items as it believes these items are not necessarily reflective of the ongoing results of operations of our business. 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, because these measures assist in providing a meaningful comparison between periods presented and because these measures are frequently used by investors and other interested parties in the evaluation of companies and the performance of their segments. A 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 in Item 2 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.

Trade publications reported North American industry-wide corrugated products shipments in total and per work day were ~~up 0.1%~~down 2.3% during the ~~third~~second quarter of ~~2021~~2022 compared to the same quarter of ~~2020.~~2021. Reported industry containerboard production increased ~~3.9%~~2.2% compared to the ~~third~~second quarter of ~~2020.~~2021. Reported industry containerboard inventories at the end of the ~~third~~second quarter of ~~2021~~2022 were approximately ~~2.7~~2.86 million tons, up ~~16.6%~~16.1% compared to the same period in ~~2020.~~2021. Reported containerboard export shipments were up ~~9.7%~~18.7% compared to the ~~third~~second quarter of ~~2020.~~2021. Prices reported by trade publications increased by ~~$20~~$60 per ton for linerboard and ~~$30~~$70 per ton for corrugating medium in March ~~2021, $40 per ton for linerboard and corrugating medium~~2022. There were no additional price increases in ~~April 2021, and a further $50 per ton for linerboard and $60 per ton for corrugating medium in August 2021.~~the second quarter of 2022.

Trade publications reported North American ~~uncoated freesheet~~UFS paper shipments were essentially flat, up ~~3.0%~~0.4% in the ~~third~~second quarter of ~~2021,~~2022, compared to the same quarter of ~~2020.~~2021. Average prices reported by a trade publication for cut size office papers were higher by ~~$50~~$100 per ton, or ~~4.4%~~7.7%, in the ~~third~~second quarter of ~~2021,~~2022, compared to the first quarter of 2022, and higher by $270 per ton, or 23.9%, compared to the second quarter of ~~2021, and higher by $120 per ton, or 11.3%, compared to~~2021.

During the third quarter, we expect higher prices in our Packaging segment as we implement the remaining portion of ~~2020. Average~~previously announced price increases. In our Paper segment, we expect higher prices ~~reported by a trade publication for cut size office papers increased $20 per ton in March, $40 per ton in April, $30 per ton in June, and $30 per ton in July 2021.~~

~~Looking ahead to the fourth quarter,~~as we will continue to implement our previously announced price increases. We notified customers of an additional $60 per ton price increase on all paper grades, effective with shipments beginning September 6, 2022. With economic conditions continuing to be negatively impacted by broad-based inflation and aggressive interest rate increases, ~~for domestic containerboard,~~we see corrugated ~~packaging, and paper, and, based upon conditions~~products growth as softening in the ~~export~~quarter but demand still firm as certain end markets ~~into which we sell, we also~~work through their current supply of inventory. We expect an increase in average export containerboard prices compared to the third quarter. Packaging segment volume will be lower due to three less shipping days as well as a scheduled maintenance outage that we are taking at our DeRidder mill, and Paper segment volume will be lower as we do not expect to produce any uncoated grades at the Jackson mill. With higher natural gas prices and anticipated colder weather, we expect energy costs to increase. Wood costs, especially in our southern mills, are expected to be higher due to the previous wet weather, low inventory, and high demand for wood fiber. We also expectcontinued inflation ~~to continue with most~~ of our ~~other~~ operating and converting costs, including higher costs for natural gas, purchased electricity, and chemicals, along with ~~continued~~ higher ~~freight and logistics expenses.~~labor costs. We also expect ~~scheduled~~higher freight expenses, driven by continued rail service challenges and rail fuel surcharges. Maintenance outage costs towill be higher ~~than~~because we postponed our scheduled International Falls mill outage from the second to the third quarter. Considering these items, and excluding the effect of any special items, we expect ~~fourth~~third quarter earnings to be lower than ~~third quarter earnings.~~our earnings for the second quarter.

Three Months Ended ~~September~~June 30, ~~2021,~~2022, compared to Three Months Ended ~~September~~June 30, ~~2020~~2021

The historical results of operations of PCA for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 are set forth below (dollars in millions):


	Three Months Ended									Three Months Ended
	September 30,									June 30,
	2021			2020			Change			2022			2021			Change
Packaging	$	1,829.4		$	1,501.1		$	328.3		$	2,066.9		$	1,718.5		$	348.4
Paper		150.3			178.1			(27.8	)		149.8			142.3			7.5
Corporate and Other		61.3			48.8			12.5			63.2			55.1			8.1
Intersegment eliminations		(40.9	)		(34.3	)		(6.6	)		(42.6	)		(36.0	)		(6.6	)
Net sales	$	2,000.1		$	1,693.7		$	306.4		$	2,237.3		$	1,879.9		$	357.4

Packaging	$	365.2		$	222.4		$	142.8		$	419.8		$	317.2		$	102.6
Paper		11.0			7.3			3.7			22.7			2.6			20.1
Corporate and Other		(23.4	)		(20.2	)		(3.2	)		(26.7	)		(25.2	)		(1.5	)
Income from operations	$	352.8		$	209.5		$	143.3		$	415.8		$	294.6		$	121.2
Non-operating pension income		5.0			0.6			4.4			3.6			5.0			(1.4	)
Interest expense, net		(23.9	)		(24.4	)		0.5			(18.8	)		(24.9	)		6.1
Income before taxes		333.9			185.7			148.2			400.6			274.7			125.9
Income tax provision		(83.2	)		(46.6	)		(36.6	)		(99.1	)		(67.4	)		(31.7	)
Net income	$	250.7		$	139.1		$	111.6		$	301.5		$	207.3		$	94.2
Non-GAAP Measures (a)
Net income excluding special items	$	256.5		$	149.2		$	107.3		$	303.7		$	206.6		$	97.1
Consolidated EBITDA		458.4			309.9			148.5			530.1			399.3			130.8
Consolidated EBITDA excluding special items		464.0			322.8			141.2			532.6			396.8			135.8
Packaging EBITDA		461.4			311.0			150.4			525.8			412.1			113.7
Packaging EBITDA excluding special items		466.9			323.9			143.0			525.3			408.8			116.5
Paper EBITDA		18.1			16.9			1.2			28.5			10.1			18.4
Paper EBITDA excluding special items		18.1			16.9			1.2			31.5			11.6			19.9

Net sales increased ~~$306~~$357 million, or ~~18.1%~~19.0%, to ~~$2,000~~$2,237 million during the three months ended ~~September~~June 30, ~~2021,~~2022, compared to ~~$1,694~~$1,880 million during the same period in ~~2020.~~2021.

Packaging. Net sales increased ~~$328~~$348 million, or ~~21.9%~~20.3%, to ~~$1,829~~$2,067 million, compared to ~~$1,501~~$1,719 million in the ~~third~~second quarter of ~~2020~~2021 due to higher prices and mix ($~~241~~286 million) and higher containerboard and corrugated products volume ($8862 million). In the ~~third~~second quarter of ~~2021,~~2022, our domestic containerboard prices were ~~24.4%~~15.3% higher, while export prices were ~~46.1%~~27.7% higher, than the same period in ~~2020.~~2021. In the ~~third~~second quarter of ~~2021,~~2022, export and domestic containerboard outside shipments increased ~~51.6%~~23.0% compared to the ~~third~~second quarter of ~~2020.~~2021. Our total ~~and per day~~ corrugated products shipments were ~~up 2.3%~~flat in total and per workday, compared to the same period in ~~2020, driven by strong demand.~~2021.

Paper.Net sales ~~decreased $28~~increased $8 million, or ~~15.6%~~5.3%, to $150 million, compared to ~~$178~~$142 million in the ~~third~~second quarter of ~~2020,~~2021, due to ~~lower volume~~higher prices and mix ($3423 million), partially offset by ~~higher prices and mix~~lower volume ($615 million). ~~In the fourth quarter of 2020, the Jackson mill No. 3 machine began producing linerboard. The Jackson mill was idled for two months during the second quarter of 2020.~~

Gross profit increased ~~$165~~$140 million during the three months ended ~~September~~June 30, ~~2021,~~2022, compared to the same period in ~~2020.~~2021. The increase was driven primarily by higher prices and mix and volume in ~~our~~the Packaging segment, ~~and~~ higher ~~production volume and~~ prices and mix in ~~our~~the Paper ~~segment. These items were~~segment, and lower scheduled outage expenses, partially offset by higher operating costs, higher freight and logistics expenses, higher converting costs, ~~higher annual outage expenses,~~ and lower ~~sales~~ volume in ~~our~~the Paper segment. In both the three ~~months~~month periods ended ~~September~~June 30, 2022, and 2021, gross profit included $3$2 million of special items. For 2022, these special items included charges primarily related to Jackson mill conversion-related activities and acquisition and integration costs related to Advance Packaging, partially offset by income related to a favorable lease buyout for a closed corrugated facility. For 2021, these special items included charges related to ~~the~~ Jackson mill ~~conversion~~conversion-related activities and ~~other paper-to-containerboard conversion related activities and~~corrugated facility closure costs. ~~In the three months ended September 30, 2020, gross profit included $10 million of special items for charges related to the impact of Hurricane Laura at our DeRidder mill.~~

Selling, general, and administrative expenses (“SG&A”) increased ~~$17~~$10 million during the three months ended ~~September~~June 30, ~~2021,~~2022, compared to the same period in ~~2020.~~2021. The increase was primarily due to higher information technology expenses and employee ~~salaries and fringes and incentives.~~related expenses.

Other income (expense), net, for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 are set forth below (dollars in millions):

We discuss these items in more detail in Note 5,6, Other Expense, Net, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this Form 10-Q.

Income from operations increased ~~$143~~$121 million, or ~~68.4%~~41.1%, during the three months ended ~~September~~June 30, ~~2021,~~2022, compared to the same period in ~~2020.~~2021. The ~~third~~second quarter of ~~2021~~2022 included $7$3 million of special items expense primarily related to ~~corrugated facility closures and costs from~~ the Jackson mill ~~conversion from uncoated freesheet paper~~conversion-related activities, corrugated facility closure costs, and acquisition and integration costs related to ~~linerboard~~Advance Packaging, partially offset by income related to storm damage proceeds and ~~other paper-to-containerboard conversion related activities,~~a favorable lease buyout for a closed corrugated facility, compared to ~~$13~~$1 million of special items ~~expense~~income related to ~~the impact~~corrugated facility closures, net of ~~Hurricane Laura at our DeRidder~~costs for Jackson mill ~~and corrugated facilities closure costs~~conversion-related activities in the ~~third~~second quarter of ~~2020.~~2021.

Packaging. Packaging segment income from operations increased ~~$143~~$103 million to ~~$365~~$420 million, compared to ~~$222~~$317 million during the three months ended ~~September~~June 30, ~~2020.~~2021. The increase related primarily to higher containerboard and corrugated products prices and mix ($~~203~~255 million), higher sales and production volumes ($7916 million), lower annual outage expenses ($10 million), and other costs ($2 million), partially offset by higher operating and converting costs ($~~112~~136 million), higher freight expenses ($2331 million), ~~higher annual outage expenses ($7 million),~~and higher depreciation expense ($811 million)~~, and other costs.~~. Special items during the ~~third~~second quarter of ~~2021~~2022 included $6$1 million of ~~expense~~income primarily related to storm damage insurance proceeds and a favorable lease buyout for ~~the~~a closed corrugated facility, net of costs for Jackson mill conversion-related activities, ~~and~~ corrugated facility closures, and Advanced Packaging acquisition and integration costs, compared to ~~$10 million of special items expense related to the impact of Hurricane Laura at our DeRidder mill and~~ $3 million of income for special items primarily related to corrugated facility ~~closure costs.~~closures in the second quarter of 2021.

Paper. Paper segment income from operations increased $4$20 million to ~~$11~~$23 million, compared to $7$3 million during the three months ended ~~September~~June 30, ~~2020.~~2021. The increase primarily related to higher prices and mix ($~~6 million), higher sales and production volumes ($5~~23 million), lower ~~depreciation expense~~operating costs ($47 million), and lower ~~annual outage~~depreciation expenses ($1 million), partially offset by lower sales and production volumes ($8 million), higher freight expenses ($61 million), and ~~higher operating~~other costs ($41 million). Special items during both the ~~third~~second quarter of 2022 and the second quarter of 2021 each included $1$4 million of expense for ~~the~~ Jackson mill conversion-related activities. ~~There were no material special items during the third quarter of 2020.~~

Non-operating pension income ~~increased $4~~decreased $1 million during the three months ended ~~September~~June 30, ~~2021,~~2022, compared to the same period in ~~2020.~~2021. The ~~increase~~decrease in non-operating pension income was primarily related to ~~the~~assumption changes, partially offset by favorable ~~2020~~2021 asset performance.

Interest expense, net for the three months ended ~~September~~June 30, ~~2021 was relatively flat~~2022decreased $6 million when compared to the same period in ~~2020.~~2021. The ~~slight~~ decrease in interest expense, net was primarily ~~related~~due to lower ~~earnings~~interest rates on ~~deferred compensation balances~~the Company's fixed-rate debt as a result of the Company's debt refinancing completed in ~~the third quarter of~~October 2021, ~~partially offset by lower~~higher interest income due to ~~lower~~higher rates on invested cash balances, ~~lower~~and higher capitalized interest ~~in the third quarter of 2021, and higher interest expense~~ related to the ~~Company's September 2021 debt refinancing.~~increase in capital investments in the second quarter of 2022, compared to the same period in 2021.

During the three months ended ~~September~~June 30, ~~2021,~~2022, we recorded ~~$83~~$99 million of income tax expense, compared to ~~$47~~$67 million of expense during the three months ended ~~September~~June 30, ~~2020.~~2021. The effective tax rate for the three months ended ~~September~~June 30, 2022 and 2021 was 24.7% and ~~2020 was 24.9% and 25.0%~~24.5%, respectively. The ~~decrease~~increase in our effective tax rate for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in ~~2020~~2021 was primarily due to ~~the favorable state rate impact of a subsidiary merger during the three months ended September~~higher nondeductible employee remuneration paid to covered employees.

~~Nine~~Six Months Ended ~~September~~June 30, 2021 ~~compared to Nine Months Ended September 30, 2020~~

The historical results of operations of PCA for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 are set forth below (dollars in millions):


	Nine Months Ended									Six Months Ended
	September 30,									June 30,
	2021			2020			Change			2022			2021			Change
Packaging	$	5,171.4		$	4,378.5		$	792.9		$	4,031.3		$	3,342.1		$	689.2
Paper		457.1			518.7			(61.6	)		303.3			306.8			(3.5	)
Corporate and Other		171.8			159.7			12.1			121.5			110.5			11.0
Intersegment eliminations		(113.2	)		(112.9	)		(0.3	)		(82.4	)		(72.4	)		(10.0	)
Net sales	$	5,687.1		$	4,944.0		$	743.1		$	4,373.7		$	3,687.0		$	686.7

Packaging	$	940.3		$	619.9		$	320.4		$	782.1		$	575.1		$	207.0
Paper		22.3			(21.7	)		44.0			45.1			11.3			33.8
Corporate and Other		(76.9	)		(63.5	)		(13.4	)		(54.8	)		(53.5	)		(1.3	)
Income from operations	$	885.7		$	534.7		$	351.0		$	772.4		$	532.9		$	239.5
Non-operating pension income		14.8			1.7			13.1			7.3			9.8			(2.5	)
Interest expense, net		(72.2	)		(69.1	)		(3.1	)		(38.7	)		(48.4	)		9.7
Income before taxes		828.3			467.3			361.0			741.0			494.3			246.7
Income tax provision		(203.7	)		(129.9	)		(73.8	)		(185.3	)		(120.5	)		(64.8	)
Net income	$	624.6		$	337.4		$	287.2		$	555.7		$	373.8		$	181.9
Non-GAAP Measures (a)
Net income excluding special items	$	632.1		$	423.5		$	208.6		$	559.5		$	375.5		$	184.0
Consolidated EBITDA		1,196.7			843.7			353.0			996.4			738.4			258.0
Consolidated EBITDA excluding special items		1,202.6			932.3			270.3			999.8			738.6			261.2
Packaging EBITDA		1,223.4			893.5			329.9			989.0			762.1			226.9
Packaging EBITDA excluding special items		1,227.8			926.3			301.5			989.2			760.9			228.3
Paper EBITDA		43.4			7.8			35.6			57.2			25.3			31.9
Paper EBITDA excluding special items		45.5			63.6			(18.1	)		60.4			27.4			33.0

Net sales increased ~~$743~~$687 million, or ~~15.0%~~18.6%, to ~~$5,687~~$4,374 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to ~~$4,944~~$3,687 million during the same period in ~~2020.~~2021.

Packaging. Net sales increased ~~$793~~$689 million, or ~~18.1%~~20.6%, to ~~$5,171~~$4,031 million, compared to ~~$4,378~~$3,342 million in the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, due to higher containerboard and corrugated products prices and mix ($~~441~~554 million) and higher containerboard and corrugated products volume ($~~352~~135 million). In the first ~~nine~~six months of ~~2021,~~2022, our domestic containerboard prices were ~~14.5%~~17.8% higher, while export prices were ~~31.5%~~34.9% higher, than the same period in ~~2020.~~2021. In the first ~~nine~~six months of ~~2021,~~2022, export and domestic containerboard outside shipments increased ~~70.6%~~24.5% compared to the first ~~nine~~six months of ~~2020.~~2021. Total corrugated products shipments were up ~~6.1%~~1.4% with one ~~less~~additional workday, and up ~~6.7%~~0.6% per day compared to the same period in ~~2020.~~2021, driven by continued strong demand.

Paper. Net sales during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 decreased ~~$62~~$4 million, or ~~11.9%~~1.1%, to ~~$457~~$303 million, compared to ~~$519~~$307 million in the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, due to decreased volume ($6146 million) ~~and lower~~, partially offset by higher prices and mix ($142 million)~~, primarily related to the Jackson mill conversion from uncoated freesheet paper to linerboard and other paper-to-containerboard conversion related activities.~~.

Gross profit increased ~~$327~~$270 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to the same period in ~~2020.~~2021. The increase was driven primarily by higher prices and mix and ~~higher volumes~~volume in ~~our~~the Packaging segment, higher prices and mix in the Paper segment, and lower scheduled outage expenses, partially offset by ~~lower volume in our Paper segment,~~ higher operating ~~and converting~~ costs, higher freight and ~~logistic~~logistics expenses, higher converting costs, and ~~higher annual outage expense.~~lower volume in the Paper segment. In both the ~~nine months~~six month periods ended ~~September~~June 30, 2022 and 2021, gross profit included $6$3 million of special items. For 2022, these special items ~~expense for the~~included charges primarily related to Jackson mill ~~conversion and other paper-to-containerboard conversion related~~conversion-related activities and facility closure costs. In the nine months ended September 30, 2020, gross profit included $10 million of special items expense related to the impact of Hurricane Laura at our DeRidder mill, $7 million for incremental out-of-pocketacquisition and integration costs related to ~~the COVID-19 pandemic, including supplies, cleaning~~Advance Packaging, partially offset by income related to a favorable lease buyout for a closed corrugated facility. For 2021, these special items included charges related to Jackson mill conversion-related activities and ~~sick pay, and $3 million of accelerated depreciation associated with the~~corrugated facility closure ~~of our San Lorenzo, California facility.~~costs.

Selling, general, and administrative expenses (“SG&A”) increased $26 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to the same period in ~~2020.~~2021. The increase was primarily due to ~~higher employee compensation~~employee-related expenses, information technology expenses, and ~~fringes.~~

During the nine months ended September 30, 2020, with the exacerbated deterioration in uncoated freesheet market conditions and the estimated impact on our Paper reporting unit arising from the COVID-19 pandemic, as well as projected future results of operations, we identified a triggering event indicating possible impairment of goodwill within our Paper reporting unit. The Company performed an interim quantitative impairment analysis as of May 31, 2020, and, based on the evaluation performed, we determined that goodwill was fully impaired for the Paper reporting unit and recognized a non-cash impairment charge of $55 million in the second quarter of 2020.outside services.

Other income (expense), net, for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 are set forth below (dollars in millions):

Income from operations increased ~~$351~~$240 million, or ~~65.6%~~44.9%, during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to the same period in ~~2020.~~2021. The first ~~nine~~six months of ~~2021~~2022 included ~~$10~~$5 million of special items expense primarily related to Jackson mill conversion-related costs, corrugated facility closure costs, and acquisition and integration costs related to Advance Packaging, partially offset by income related to storm damage proceeds and a favorable lease buyout for a closed corrugated facility, compared to $5 million of special items expense related to Jackson mill ~~conversion costs and other paper-to-containerboard conversion related~~conversion-related activities, and facility closure costs, compared to $96 million of special items expense for the Paper reporting unit goodwill impairment; Hurricane Laura impact at our DeRidder mill; incremental, out-of-pocket costspartially offset by income related to ~~COVID-19; and~~ facility ~~closure costs~~closures in the same period ~~in 2020.~~

Packaging. Packaging segment income from operations increased ~~$320~~$207 million to ~~$940~~$782 million during the first ~~nine~~six months of ~~2021,~~2022, compared to the same period last year. The increase related primarily to higher containerboard and corrugated products prices and mix ($~~373~~488 million), higher sales and production volumes ($~~233~~46 million), and lower annual outage expenses ($4 million), partially offset by higher operating and converting costs ($~~234~~250 million), higher freight expenses ($~~49 million), higher annual outage expenses ($23~~59 million), and higher depreciation expense ($1720 million). ~~Special~~There was no impact from special items during the first ~~nine~~six months of ~~2021 included $4~~2022, compared to $2 million of ~~costs for the Jackson mill conversion-related activities~~income related to facility closures and $1 million of facility closure costs, compared to $24 million of expense related to facility closure costs; $10 million of expense related to the Hurricane Laura impact at our DeRidder mill, and $6 million of incremental, out-of-pocket costs related to ~~COVID-19~~Jackson mill conversation-related activities in the first ~~nine~~six months of ~~2020.~~

Paper. Paper segment income from operations increased ~~$44~~$34 million to ~~$22~~$45 million, compared to the ~~nine~~six months ended ~~September~~June 30, 2020. Special items during the first nine months of 2021 included $5 million of expense for Jackson mill conversion-related activities, compared to $55 million of goodwill impairment and $1 million of incremental, out-of-pocket costs2021. The increase primarily related to ~~COVID-19 in the first nine months of 2020. The decrease, excluding special items, primarily related to~~higher prices and mix ($42 million), lower operating costs ($16 million), and lower depreciation expense ($2 million), partially offset by lower sales and production volumes ($2717 million), and higher freight and other expenses ($239 million)~~, partially offset by lower operating costs ($24 million), lower annual outage expenses ($8 million), and lower depreciation~~. Special items during the first six months of 2022 included $5 million of expense ~~($11 million).~~related to Jackson mill conversion-related activities, compared to $4 million of expense related to Jackson mill conversation-related activities in the first six months of 2021.

Non-operating pension income ~~increased $13~~decreased $3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to the same period in ~~2020.~~2021. The ~~increase~~decrease in non-operating pension income was primarily related to ~~the~~assumption changes, partially offset by favorable ~~2020~~2021 asset performance.

Interest expense, net ~~increased $3~~decreased $10 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to the same period in ~~2020.~~2021. The ~~increase~~decrease in interest expense, net was primarily ~~related~~due to lower interest rates on the Company's fixed-rate debt as a result of the Company's debt refinancing completed in October 2021, higher interest income due to ~~lower~~higher rates on invested cash balances, ~~in 2021~~ and higher capitalized interest ~~expense~~ related to the ~~Company's September 2021 debt refinancing, partially offset by lower earnings on deferred compensation balances~~increase in capital investments in the first half of 2022, compared to the same period in 2021.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we recorded ~~$204~~$185 million of income tax expense, compared to ~~$130~~$121 million of expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The effective tax rate for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021 was 25.0% and ~~2020 was 24.6% and 27.8%~~24.4%, respectively.The ~~decrease~~increase in our effective tax rate for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period in ~~2020~~2021 was primarily due to ~~the~~higher nondeductible goodwill impairment charge associated with our Paper reporting unit recognized during the nine months ended September 30, 2020 with no corresponding charge during the nine months ended September 30, 2021.employee remuneration paid to covered employees and lower net favorable state tax law changes.

Our primary sources of liquidity are net cash provided by operating activities ~~cash on hand,~~ and available borrowing capacity under our revolving credit facility. At ~~September~~June 30, ~~2021,~~2022, we had ~~$1.7 billion~~ $667 million of cash and cash equivalents, ~~$146~~$144 million of marketable debt securities, and ~~$326~~$321 million of unused borrowing capacity under the revolving credit facility, net of letters of credit. On October 8, 2021, we redeemed our $700 million of outstanding 4.50% notes due November 1, 2023, using the proceeds of new notes we issued in September 2021 and cash-on-hand. See Note 11, Debt, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Part I, Item 1. Financial Statements" of this Form 10-Q as well as the information provided below under "—Financing Activities" for further information.

Currently, our primary uses of cash are for operations, capital expenditures, acquisitions, debt service, common stock dividends, ~~debt service, acquisitions,~~ and repurchases of common stock. 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, ~~refinance,~~ extend, or replace such ~~debt or credit~~ 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):

Our operating cash flow is primarily driven by our earnings and changes in operating assets and liabilities, such as accounts receivable, inventories, accounts payable and other accrued liabilities, as well as factors described below. 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.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, net cash provided by operating activities was $~~703~~644 million, compared to ~~$762~~$420 million in the same period in ~~2020, a decrease~~2021, an increase of ~~$58~~$224 million. Cash from operations excluding changes in cash used for operating assets and liabilitiesincreased ~~$269~~$221 million primarily due to higher income from operations in ~~2021~~2022 as discussed above. Cash ~~decreased~~from operations increased by ~~$327~~$4 million due to changes in operating assets and liabilities, primarily due to ~~the following:~~

We used ~~$365~~$398 million for investing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to ~~$256~~$220 million during the same period in ~~2020.~~2021. We spent $~~366~~398 millionfor internal capital investments during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to ~~$254~~$217 million during the same period in ~~2020.~~2021.

We expect capital investments in ~~2021~~2022 to be approximately ~~$550~~$800 million, including capital spending related to the conversion of the No. 3 paper machine to containerboard at our Jackson mill. These expenditures could increase or decrease as a result of a number of factors, including our financial results, strategic opportunities, future economic conditions, and our regulatory compliance requirements. We currently estimate capital expenditures to comply with environmental regulations will be about ~~$20~~$17 million in ~~2021.~~2022. 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.~~regulations. For additional information, see “Environmental Matters” in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our ~~2020~~2021 Annual Report on Form 10-K.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021, net cash provided by financing activities was $390 million, compared to~~2022, net cash used for financing activities was $198 million, compared to $202 million of ~~$236 million~~net cash used for financing activities during the same period in ~~2020. During~~2021. We paid $187 million of dividends during the ~~nine~~first six months of 2022, compared to $190 million of dividends paid during the comparable period in 2021. In addition, for the six months ended ~~September~~June 30, 2021, we ~~issued $700~~paid $1 million of 3.05% Senior Notes due 2051 (the "New Notes") through a registered public offering and notified the holders of our $700 million of 4.50% Senior Notes due November 1, 2023 (the "Old Notes") that we would redeem those notes in October 2021. On October 8, 2021, we completed the redemption of the Old Notes for $770 million, which included a redemption premium of $56 million and $14 million of accrued and unpaid interest. We used the proceeds of the offering of the New Notes and cash on hand to fund the redemption and the $8 million of debt ~~issuance costs associated with the New Notes.~~

~~In addition to the $8 million of issuance costs associated with the debt refinancing paid in the first nine months of 2021, we paid an additional $1 million of~~ issuance costs related to the New Revolving Credit Agreement that was entered into on June 8, 2021. ~~In the first nine months of 2021, we paid $285 million of dividends compared to $225 million of dividends paid during the first nine months of 2020.~~

In addition to the items discussed in Note ~~11,~~12, Debt, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Part I, Item 1. Financial Statements" of this Form 10-Q, ~~for more information about our debt,~~ see Note ~~10,~~11, Debt, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our ~~2020~~2021 Annual Report on Form ~~10-K.~~10-K for more information.

There have been no material changes to the contractual obligations ~~table~~ disclosed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our ~~2020~~2021 Annual Report on Form 10-K.

Income from operations excluding special items, net income excluding special items, EBITDA, and EBITDA excluding special items are non-GAAP financial measures. Management excludes special items, as it believes that these items are not necessarily reflective of the ongoing operations of our business. These measures are presented 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, because these measures assist in providing a meaningful comparison between periods and because these measures are frequently used by investors and other interested parties in the evaluation of companies and the performance of their segments. 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 three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 follow (dollars in millions):

The following table reconciles net income to EBITDA and EBITDA excluding special items for the periods indicated (dollars in millions):


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Net income	$	250.7		$	139.1		$	624.6		$	337.4		$	301.5		$	207.3		$	555.7		$	373.8
Non-operating pension income		(5.0	)		(0.6	)		(14.8	)		(1.7	)		(3.6	)		(5.0	)		(7.3	)		(9.8	)
Interest expense, net		23.9			24.4			72.2			69.1			18.8			24.9			38.7			48.4
Income tax provision		83.2			46.6			203.7			129.9			99.1			67.4			185.3			120.5
Depreciation, amortization, and depletion		105.6			100.4			311.0			309.0			114.3			104.7			224.0			205.5
EBITDA	$	458.4		$	309.9		$	1,196.7		$	843.7		$	530.1		$	399.3		$	996.4		$	738.4

Special items:
Facilities closure and other costs (income)		2.3			2.9			(0.5	)		16.5
Jackson mill conversion-related activities		3.3			—			6.4			—			3.4			2.5			3.7			3.1
Hurricane Laura impact		—			10.0			—			10.0
Goodwill impairment		—			—			—			55.2
Incremental costs for COVID-19		—			—			—			6.9
Acquisition-related, facilities closure and other income														(0.9	)		(5.0	)		(0.3	)		(2.9	)
Total special items		5.6			12.9			5.9			88.6			2.5			(2.5	)		3.4			0.2
EBITDA excluding special items	$	464.0		$	322.8		$	1,202.6		$	932.3		$	532.6		$	396.8		$	999.8		$	738.6

The following table reconciles segment income (loss) to EBITDA and EBITDA excluding special items for the periods indicated (dollars in millions):


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Packaging
Segment income	$	365.2		$	222.4		$	940.3		$	619.9		$	419.8		$	317.2		$	782.1		$	575.1
Depreciation, amortization, and depletion		96.2			88.6			283.1			273.6			106.0			94.9			206.9			187.0
EBITDA		461.4			311.0			1,223.4			893.5			525.8			412.1			989.0			762.1
Facilities closure and other costs		2.3			2.9			0.3			16.5
Acquisition-related, facilities closure and other income														(0.9	)		(4.2	)		(0.3	)		(2.1	)
Jackson mill conversion-related activities		3.2			—			4.1			—			0.4			0.9			0.5			0.9
Hurricane Laura impact		—			10.0			—			10.0
Incremental costs for COVID-19		—			—			—			6.3
EBITDA excluding special items	$	466.9		$	323.9		$	1,227.8		$	926.3		$	525.3		$	408.8		$	989.2		$	760.9

Paper
Segment income (loss)	$	11.0		$	7.3		$	22.3		$	(21.7	)
Segment income													$	22.7		$	2.6		$	45.1		$	11.3
Depreciation, amortization, and depletion		7.1			9.6			21.1			29.5			5.8			7.5			12.1			14.0
EBITDA		18.1			16.9			43.4			7.8			28.5			10.1			57.2			25.3
Jackson mill conversion-related activities		—			—			2.1			—			3.0			1.5			3.2			2.1
Goodwill impairment		—			—			—			55.2
Incremental costs for COVID-19		—			—			—			0.6
EBITDA excluding special items	$	18.1		$	16.9		$	45.5		$	63.6		$	31.5		$	11.6		$	60.4		$	27.4

Corporate and Other
Segment loss	$	(23.4	)	$	(20.2	)	$	(76.9	)	$	(63.5	)	$	(26.7	)	$	(25.2	)	$	(54.8	)	$	(53.5	)
Depreciation, amortization, and depletion		2.3			2.2			6.8			5.9			2.5			2.3			5.0			4.5
EBITDA		(21.1	)		(18.0	)		(70.1	)		(57.6	)		(24.2	)		(22.9	)		(49.8	)		(49.0	)
Acquisition-related, facilities closure and other income														—			(0.8	)		—			(0.8	)
Jackson mill conversion-related activities		0.1			—			0.2			—			—			0.1			—			0.1
Facilities closure and other costs		—			—			(0.8	)		—
EBITDA excluding special items	$	(21.0	)	$	(18.0	)	$	(70.7	)	$	(57.6	)	$	(24.2	)	$	(23.6	)	$	(49.8	)	$	(49.7	)

EBITDA	$	458.4		$	309.9		$	1,196.7		$	843.7		$	530.1		$	399.3		$	996.4		$	738.4

EBITDA excluding special items	$	464.0		$	322.8		$	1,202.6		$	932.3		$	532.6		$	396.8		$	999.8		$	738.6

PCA is exposed to the impact of interest rate changes and changes in the market value of its financial instruments. We periodically enter into derivatives to minimize these risks, but not for trading purposes. We were not a party to any derivatives-based arrangements at ~~September~~June 30, ~~2021.~~2022. For a discussion of derivatives and hedging activities, see Note ~~15,~~16, Derivative Instruments and Hedging Activities, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our ~~2020~~2021 Annual Report on Form 10-K.

At ~~September~~June 30, ~~2021,~~2022, interest rates on 100% of PCA’s outstanding debt are fixed.

The Company does not have any off-balance sheet arrangements as of ~~September~~June 30, ~~2021.~~2022.

There have been no material changes to the disclosure set forth in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Environmental Matters” filed with our ~~2020~~2021 Annual Report on Form 10-K.

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, pensions and other postretirement benefits, goodwill and intangible assets, long-lived asset impairment, environmental liabilities, and income taxes, 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.

PCA has included in its ~~2020~~2021 Annual Report on Form 10-K a discussion of its critical accounting policies and estimates which require management’s most difficult, subjective, or complex judgments used in the preparation of its consolidated financial statements. PCA has not had any changes to these critical accounting estimates during the first ~~nine~~six months of ~~2021.~~2022.

For a listing of our new and recently adopted accounting standards, see Note 2, New and Recently Adopted Accounting Standards, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this Form 10-Q.

Some of the statements in this Quarterly Report on Form 10-Q, and in particular, statements found in this 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 the following:

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 occur, what impact they will have on our results of operations or financial condition. Given 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. For a discussion of other factors, risks and uncertainties that may affect our business, see Item 1A. Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

For a discussion of market risks related to PCA, see Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk and Risk Management Policies” in this Quarterly Report on Form 10-Q.

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.

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 ~~September~~June 30, ~~2021.~~2022. 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. 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 ~~September~~June 30, ~~2021.~~2022.

~~There have been~~On December 11, 2021, PCA acquired Advance Packaging Corporation ("Advance Packaging"). We are currently in the process of evaluating and integrating Advance Packaging's controls over financial reporting which may result in changes or additions to PCA's internal control over financial reporting. Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company. We excluded Advance Packaging from the assessment of internal control over financial reporting at June 30, 2022. Except as may relate to the integration of the Advance Packaging acquisition, there were no other changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the most recent fiscal quarter ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As of the quarter ended June 30, 2022, Advance Packaging accounted for approximately 2% of the Company's consolidated total assets. For both the three and six months ended June 30, 2022, Advance Packaging accounted for approximately 1% of the Company's consolidated net sales.

The disclosure set forth under the caption "Legal Proceedings" in Note ~~19,~~20, Commitments, Guarantees, Indemnifications and Legal Proceedings, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Part I, Item 1. Financial Statements" of this Form 10-Q is incorporated herein by reference.

There have been no material changes to the risk factors disclosed in “Part I, Item IA. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

The following table presents information related to our repurchases of common stock made under repurchase plans authorized by PCA's Board of Directors, and shares withheld to cover taxes on vesting of equity awards, during the three months ended ~~September~~June 30, ~~2021:~~2022:

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Delaware		36-4277050
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1 North Field Court, Lake Forest, Illinois		60045
(Address of Principal Executive Offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	PKG	New York Stock Exchange


	PART I

Item 1.	Financial Statements	1

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1917

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3127

Item 4.	Controls and Procedures	3127

	PART II

Item 1.	Legal Proceedings	3228

Item 1A.	Risk Factors	3228

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3228

Item 3.	Defaults Upon Senior Securities	3228

Item 4.	Mine Safety Disclosures	3228

Item 5.	Other Information	3228

Item 6.	Exhibits	3329


	September 30,		December 31,
	2021		2020
Revolving Credit Facility, due August 2021, terminated June 2021	$	0	$	0
Revolving Credit Facility, due June 2026		0		0
4.50% Senior Notes, net of discount of $0.5 million and $0.6 million as of September 30, 2021 and December 31, 2020, respectively, due November 2023		699.5		699.4
3.65% Senior Notes, net of discount of $0.4 million and $0.5 million as of September 30, 2021 and December 31, 2020, respectively, due September 2024		399.6		399.5
3.40% Senior Notes, net of discount of $1.1 million and $1.2 million as of September 30, 2021 and December 31, 2020, respectively, due December 2027		498.9		498.8
3.00% Senior Notes, net of discount of $0.5 million and $0.6 million as of September 30, 2021 and December 31, 2020, respectively, due December 2029		499.5		499.4
4.05% Senior Notes, net of discount of $3.4 million as of both September 30, 2021 and December 31, 2020, due December 2049		396.6		396.6
3.05% Senior Notes, net of discount of $3.7 million as of September 30, 2021, due October 2051		696.3		0
Total		3,190.4		2,493.7
Less current portion (a)		698.1		0
Less unamortized debt issuance costs		21.2		14.3
Total long-term debt	$	2,471.1	$	2,479.4


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐

Non-accelerated filer	☐	Smaller reporting company	☐


	12/31/2021 Allocation		Adjustments			Revised Allocation
Goodwill	$	60.0	$	(1.0	)	$	59.0
Other intangible assets		50.2		(1.4	)		48.8
Property, plant and equipment		66.7		0.5			67.2
Other net assets		18.0		0			18.0
Net assets acquired	$	194.9	$	(1.9	)	$	193.0


	Foreign Currency Translation Adjustments			Unrealized Loss on Foreign Exchange Contracts			Unrealized Loss on Marketable Debt Securities			Unfunded Employee Benefit Obligations			Total
Balance at January 1, 2021	$	(0.4	)	$	(0.2	)	$	0.3		$	(144.2	)	$	(144.5	)
Other comprehensive income before reclassifications, net of tax		0			0			(0.2	)		0			(0.2	)
Amounts reclassified from AOCI, net of tax		0.4			0			0			7.5			7.9
Balance at September 30, 2021	$	0		$	(0.2	)	$	0.1		$	(136.7	)	$	(136.8	)


Issuer Purchases of Equity Securities	Issuer Purchases of Equity Securities									Issuer Purchases of Equity Securities
Period		Total Number of Shares Purchased (a)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in millions)			Total Number of Shares Purchased (a)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in millions)
July 1-31, 2021			10,435	$	132.75		—	$	193.0
August 1-31, 2021			344		139.43		—		193.0
September 1-30, 2021			—		—		—		193.0
April 1-30, 2022												154	$	155.76		—	$	1,000.0
May 1-31, 2022												230		156.23		—		1,000.0
June 1-30, 2022												65,429		141.69		—		1,000.0
Total			10,779	$	132.97		—	$	193.0			65,813	$	141.77		—	$	1,000.0


Exhibit Number		Description

~~4.1~~		Officers' Certificate, dated September 21, 2021, pursuant to Section 301 of the Indenture, dated as of July 21, 2003, between Packaging Corporation of America and U.S. Bank National Association (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by the registrant on September 21, 2021).

~~4.2~~		~~Form of 3.050% Senior Notes due 2051 (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by the registrant on September 21, 2021).~~

31.1		Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †

31.2		Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †

32		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. †

101.SCH		Inline XBRL Taxonomy Extension Schema Document. †

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document. †

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document. †

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document. †

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document. †

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). †


		Packaging Corporation of America

		/s/ PAMELA A. BARNES
		Pamela A. Barnes Senior Vice President, Finance and Controller