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 ~~November 2, 2018~~July 26, 2019 the Registrant had outstanding ~~94,497,298~~94,662,821 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,
	2018			2017			2018			2017			2019			2018			2019			2018
Statements of Income:
Net sales	$	1,809.9		$	1,640.1		$	5,268.1		$	4,760.6		$	1,759.9		$	1,767.5		$	3,493.6		$	3,458.1
Cost of sales		(1,366.7	)		(1,243.1	)		(4,048.2	)		(3,661.2	)		(1,332.0	)		(1,346.9	)		(2,644.3	)		(2,681.4	)
Gross profit		443.2			397.0			1,219.9			1,099.4			427.9			420.6			849.3			776.7
Selling, general and administrative expenses		(134.2	)		(129.6	)		(406.7	)		(386.9	)		(143.7	)		(137.7	)		(283.7	)		(272.6	)
Other expense, net		(10.5	)		(24.8	)		(32.2	)		(32.4	)		(3.8	)		(13.3	)		(9.8	)		(21.6	)
Income from operations		298.5			242.6			781.0			680.1			280.4			269.6			555.8			482.5
Interest expense, net and other		(24.4	)		(25.7	)		(75.0	)		(75.5	)
Non-operating pension expense														(2.0	)		(0.5	)		(4.1	)		(1.1	)
Interest expense, net														(22.4	)		(23.8	)		(46.4	)		(49.6	)
Income before taxes		274.1			216.9			706.0			604.6			256.0			245.3			505.3			431.8
Provision for income taxes		(67.4	)		(77.8	)		(172.6	)		(204.9	)		(62.4	)		(58.7	)		(124.9	)		(105.1	)
Net income	$	206.7		$	139.1		$	533.4		$	399.7		$	193.6		$	186.6		$	380.4		$	326.7

Net income per common share:
Basic	$	2.19		$	1.47		$	5.65		$	4.24		$	2.05		$	1.98		$	4.03		$	3.46
Diluted	$	2.18		$	1.47		$	5.64		$	4.23		$	2.04		$	1.97		$	4.02		$	3.46
Dividends declared per common share	$	0.79		$	0.63		$	2.21		$	1.89		$	0.79		$	0.79		$	1.58		$	1.42

Statements of Comprehensive Income:
Net income	$	206.7		$	139.1		$	533.4		$	399.7		$	193.6		$	186.6		$	380.4		$	326.7
Other comprehensive income, net of tax:
Foreign currency translation adjustment		—			0.1			(0.1	)		(0.2	)		—			—			—			(0.1	)
Reclassification adjustments to cash flow hedges included in net income, net of tax of $0.3 million, $0.5 million, $1.0 million, and $1.6 million		1.0			0.9			3.0			2.6
Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of $1.0 million, $1.2 million, $3.0 million, and $3.7 million		3.0			1.9			8.9			6.2
Reclassification adjustments to cash flow hedges included in net income, net of tax of $0.3 million, $0.3 million, $0.7 million, and $0.7 million														1.0			1.0			1.9			2.0
Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of $0.8 million, $1.0 million, $1.6 million, and $1.9 million														2.3			3.0			4.7			6.0
Other comprehensive income		4.0			2.9			11.8			8.6			3.3			4.0			6.6			7.9
Comprehensive income	$	210.7		$	142.0		$	545.2		$	408.3		$	196.9		$	190.6		$	387.0		$	334.6

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

	September 30,			December 31,			June 30,			December 31,
	2018			2017			2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	293.8		$	216.9		$	569.4		$	361.5
Accounts receivable, net of allowance for doubtful accounts and customer deductions of $14.0 million and $12.6 million as of September 30, 2018, and December 31, 2017, respectively		986.2			830.7
Accounts receivable, net of allowance for doubtful accounts and customer deductions of $12.8 million and $13.6 million as of June 30, 2019, and December 31, 2018, respectively								947.0			901.9
Inventories		780.6			762.5			815.7			795.6
Prepaid expenses and other current assets		49.0			35.5			59.2			39.4
Federal and state income taxes receivable		5.1			69.5			11.4			16.7
Total current assets		2,114.7			1,915.1			2,402.7			2,115.1
Property, plant, and equipment, net		3,065.1			2,924.9			3,107.2			3,108.6
Operating lease right-of-use assets								238.0			—
Goodwill		888.7			883.2			918.7			917.3
Other intangible assets, net		373.9			410.0			358.2			378.2
Other long-term assets		57.6			64.3			49.6			50.5
Total assets	$	6,500.0		$	6,197.5		$	7,074.4		$	6,569.7
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	—		$	150.0
Capital lease obligations		1.4			1.3
Finance lease obligations							$	1.5		$	1.4
Operating lease obligations								59.9			—
Accounts payable		438.9			402.9			382.8			382.2
Dividends payable		75.8			60.5			75.9			76.1
Accrued liabilities		223.4			203.2			197.9			222.4
Accrued interest		27.0			14.8			11.6			11.5
Total current liabilities		766.5			832.7			729.6			693.6
Long-term liabilities:
Long-term debt		2,482.9			2,480.4			2,485.4			2,483.7
Capital lease obligations		17.9			19.0
Finance lease obligations								16.8			17.6
Operating lease obligations								183.4			—
Deferred income taxes		279.3			239.5			314.8			285.2
Compensation and benefits		360.2			372.5			364.9			357.5
Other long-term liabilities		63.0			70.8			58.3			59.7
Total long-term liabilities		3,203.3			3,182.2			3,423.6			3,203.7
Commitments and contingent liabilities
Stockholders' equity:
Common stock, par value $0.01 per share, 300.0 million shares authorized, 94.5 million and 94.3 million shares issued as of September 30, 2018, and December 31, 2017, respectively		0.9			0.9
Common stock, par value $0.01 per share, 300.0 million shares authorized, 94.7 and 94.5 million shares issued as of June 30, 2019, and December 31, 2018, respectively								0.9			0.9
Additional paid in capital		488.9			471.2			513.3			494.5
Retained earnings		2,185.5			1,867.4			2,539.2			2,315.8
Accumulated other comprehensive loss		(145.1	)		(156.9	)		(132.2	)		(138.8	)
Total stockholders' equity		2,530.2			2,182.6			2,921.2			2,672.4
Total liabilities and stockholders' equity	$	6,500.0		$	6,197.5		$	7,074.4		$	6,569.7

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2018			2017			2019			2018
Cash Flows from Operating Activities:
Net income	$	533.4		$	399.7		$	380.4		$	326.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization of intangibles		313.6			283.7			190.7			212.2
Amortization of deferred financing costs		6.5			6.0			4.3			4.4
Share-based compensation expense		17.4			15.4			18.6			10.7
Deferred income tax provision		34.9			1.6			26.9			30.1
Net loss on impairment of assets		—			13.5
Loss on asset disposals								1.9			3.3
Pension and post-retirement benefits expense, net of contributions		(2.7	)		(25.3	)		11.3			9.0
Other, net		8.2			12.0			8.7			0.5
Changes in operating assets and liabilities:
Increase in assets —
Accounts receivable		(148.9	)		(142.2	)		(44.9	)		(82.7	)
Inventories		(22.6	)		(13.0	)		(20.1	)		(5.7	)
Prepaid expenses and other current assets		(13.2	)		(10.3	)		(21.2	)		(19.2	)
Increase (decrease) in liabilities —
Accounts payable		19.6			37.7			(1.8	)		11.0
Accrued liabilities		23.7			9.6			(22.3	)		(19.7	)
Federal and state income taxes payable / receivable		64.6			(5.1	)		5.9			52.9
Net cash provided by operating activities		834.5			583.3			538.4			533.5
Cash Flows from Investing Activities:
Additions to property, plant, and equipment		(404.3	)		(226.2	)		(170.9	)		(273.9	)
Additions to other long term assets		(4.1	)		(6.9	)		(1.8	)		(2.7	)
Proceeds from disposals		0.5			4.4			1.2			0.5
Other, net		2.6			1.1			(1.3	)		2.6
Net cash used for investing activities		(405.3	)		(227.6	)		(172.8	)		(273.5	)
Cash Flows from Financing Activities:
Repayments of debt and capital lease obligations		(151.0	)		(35.6	)
Repayments of debt and finance lease obligations								(0.7	)		(150.7	)
Common stock dividends paid		(193.4	)		(178.2	)		(149.3	)		(118.9	)
Shares withheld to cover employee restricted stock taxes		(7.9	)		(10.7	)		(7.7	)		(7.7	)
Net cash used for financing activities		(352.3	)		(224.5	)		(157.7	)		(277.3	)
Net increase in cash and cash equivalents		76.9			131.2
Net increase (decrease) in cash and cash equivalents								207.9			(17.3	)
Cash and cash equivalents, beginning of period		216.9			239.3			361.5			216.9
Cash and cash equivalents, end of period	$	293.8		$	370.5		$	569.4		$	199.6

See accompanying condensed notes to unaudited quarterly consolidated financial ~~statements~~.

	Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount		Capital			Earnings			Loss			Equity
Balance at April 1, 2019		94,494		$	0.9	$	501.4		$	2,427.8		$	(135.5	)	$	2,794.6
Common stock withheld and retired to cover taxes on vested stock awards		(83	)		—		(0.6	)		(7.1	)		—			(7.7	)
Common stock dividends declared		—			—		—			(74.9	)		—			(74.9	)
Share-based compensation		255			—		12.5			—			—			12.5
Other		—			—		—			(0.2	)		—			(0.2	)
Comprehensive income		—			—		—			193.6			3.3			196.9
Balance at June 30, 2019		94,666		$	0.9	$	513.3		$	2,539.2		$	(132.2	)	$	2,921.2


	Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount		Capital			Earnings			Loss			Equity
Balance at April 1, 2018		94,348		$	0.9	$	476.3		$	1,949.6		$	(153.0	)	$	2,273.8
Common stock withheld and retired to cover taxes on vested stock awards		(67	)		—		(0.4	)		(7.2	)		—			(7.6	)
Common stock dividends declared		—			—		—			(74.8	)		—			(74.8	)
Share-based compensation		219			—		6.0			—			—			6.0
Other		—			—		0.2			(0.2	)		—			—
Comprehensive income		—			—		—			186.6			4.0			190.6
Balance at June 30, 2018		94,500		$	0.9	$	482.1		$	2,054.0		$	(149.0	)	$	2,388.0

	Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
��	Shares			Amount		Capital			Earnings			Loss			Equity
Balance at January 1, 2019		94,497		$	0.9	$	494.5		$	2,315.8		$	(138.8	)	$	2,672.4
Common stock withheld and retired to cover taxes on vested stock awards		(83	)		—		(0.6	)		(7.1	)		—			(7.7	)
Common stock dividends declared		—			—		—			(149.7	)		—			(149.7	)
Share-based compensation		252			—		19.4			—			—			19.4
Other		—			—		—			(0.2	)		—			(0.2	)
Comprehensive income		—			—		—			380.4			6.6			387.0
Balance at June 30, 2019		94,666		$	0.9	$	513.3		$	2,539.2		$	(132.2	)	$	2,921.2


	Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount		Capital			Earnings			Loss			Equity
Balance at January 1, 2018		94,350		$	0.9	$	471.2		$	1,867.4		$	(156.9	)	$	2,182.6
Common stock withheld and retired to cover taxes on vested stock awards		(67	)		—		(0.4	)		(7.3	)		—			(7.7	)
Common stock dividends declared		—			—		—			(134.2	)		—			(134.2	)
Adoption of ASC 606		—			—		—			1.6			—			1.6
Share-based compensation		217			—		11.1			—			—			11.1
Other		—			—		0.2			(0.2	)		—			—
Comprehensive income		—			—		—			326.7			7.9			334.6
Balance at June 30, 2018		94,500		$	0.9	$	482.1		$	2,054.0		$	(149.0	)	$	2,388.0

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

Packaging Corporation of America ("we," "us," "our," PCA," or the "Company") was incorporated on January 25, 1999. In April 1999, PCA acquired the containerboard and corrugated packaging products business of Pactiv Corporation (Pactiv), formerly known as Tenneco Packaging, Inc., a wholly owned subsidiary of Tenneco Inc. We are a large diverse manufacturer of both packaging and paper products. We are headquartered in Lake Forest, Illinois and we operate primarily in the United States.

We report our business in three reportable segments: Packaging, Paper, and Corporate and Other. Our Packaging segment produces a wide variety of containerboard and corrugated packaging products. The Paper segment manufactures and sells a range of communication-based papers. During the second quarter of 2018, the Company discontinued the production of uncoated free sheet and coated one-side grades at the Wallula, Washington mill and converted the No. 3 machine to a virgin kraft linerboard machine. Subsequent to the date of conversion in May 2018, operating results for the Wallula mill are primarily included in the Packaging segment. Corporate and ~~other~~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 1819, Segment Information.

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

The consolidated financial statements of PCA as ~~of September~~June 30, ~~2018~~2019 and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 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 ~~footnotes~~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, ~~2018~~2019 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2018.~~2019. These consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

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

Effective January 1, ~~2018,~~2019, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) ~~2014-09~~2016-02 (Topic ~~606)~~842): ~~Revenue from Contracts with Customers. This ASU supersedes~~Leases, which requires the ~~revenue~~ recognition ~~requirements in Topic 605~~ ~~Revenue Recognition~~ ~~(Topic 605)~~of lease assets and requires entities to recognize revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchangelease liabilities by lessees for those ~~goods or services.~~leases classified as operating leases under previous guidance. The ASU requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and estimates, and changes in those estimates. The Company adopted the standard utilizing theoriginal guidance required application on a modified retrospective ~~method,~~basis with the earliest period presented. In July 2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842, which included an option to not restate comparative periods in ~~which case~~transition and elect to use the ~~cumulative effect was recognized at~~effective date of ASC 842, Leases, as the date of initial application of transition, which we elected. As a result of the adoption of ASC 842 on January 1, ~~2018.~~2019, we recorded operating lease liabilities of $228 million, with corresponding right of use (“ROU”) assets of the same amount. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward the historical lease classification and not to reassess whether existing or expired contracts contain a lease. We also elected the short-term lease recognition exemption, which permits us to exclude short-term leases (i.e. leases with terms of 12 months or less) from the recognition requirements of this standard, and we elected to account for lease and non-lease components as a single lease component for all classes of underlying assets except for embedded leases. The adoption of ~~the standard did not have a material effect~~ASC 842 had an immaterial impact on ~~the Company’s financial position or results of operations; however, the following adjustment~~our consolidated net earnings, liquidity and ~~reclassification of certain costs were made~~debt covenants under our current agreements for the ~~three~~three- and ~~nine months~~six-month periods ended ~~September~~June 30, ~~2018:~~

a. The Company ships a portion of its products to customers under consignment agreements. These products do not have an alternative use, and, under the new standard, revenue associated with these products is required to be recognized earlier than under prior revenue recognition standards. Utilizing the modified retrospective method, the cumulative impact of adopting the new standard resulted in an increase of approximately $1.6 million, net of tax, to opening retained earnings as of January 1, 2018.

b. The new revenue standard also provides additional clarity concerning contract fulfillment costs, which resulted in certain costs being classified as cost of sales rather than selling, general and administrative expenses beginning January 1, 2018. For the three and nine months ended September 30, 2018, this amount totaled $6.9 million and $20.0 million, respectively.

Effective January 1, ~~2018, the Company~~2019, we adopted ASU ~~2017-07,~~ ~~Compensation: Improving~~2018-02 (Topic 220): Income Statement—Reporting Comprehensive Income – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows for optional reclassification from Accumulated Other Comprehensive Income (“AOCI”) to retained earnings for the ~~Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.~~ ~~The guidance in this update requires that an employer disaggregate the service cost component~~stranded tax effects resulting from the Tax Cuts and Jobs Act in December 2017 (“Tax Act”). Stranded tax effects are the difference in deferred taxes between the amount initially recorded to other ~~components of net benefit cost. Non-service cost components of net periodic benefit cost~~ ~~are~~comprehensive income (“OCI”) at historical corporate income tax rates and the amount recorded using the newly-enacted corporate income tax rate. The cumulative tax rate adjustment to deferred taxes was required to be ~~presented~~recorded through income tax expense from continuing operations in the ~~income statement separately from~~period of enactment as opposed to OCI, resulting in the ~~service cost component and outside~~stranded tax effects in AOCI. The Company elected to not reclassify the subtotal of operating income. The update also allows only the service cost component to be eligible for capitalization for internally developed capital projects. The amendments in this update are applied retrospectively for the income statement presentations and prospectively for the capitalization of service costs.

~~The adoption of this ASU retrospectively resulted in a $0.3 million and $0.9 million~~ reclassification between cost of sales and selling, general and administrative expenses (both components of income from operations) and interest expense, net and other (a component outside of income from operations) for the three and nine months ended September 30, 2017, respectively.

~~Effective January 1, 2018, the Company adopted ASU 2017-09,~~ ~~Compensation - Stock Compensation~~ ~~(Topic 718):~~ ~~Scope of Modification Accounting, which clarifies what changes~~stranded tax effects related to the ~~terms or conditions of~~Tax Act. As a ~~share-based payment award require an entity to apply modification accounting in Topic 718. This ASU will be applied prospectively when changes to~~result, the ~~terms or conditions of a share-based payment award occur.~~

~~Effective January 1, 2018, the Company adopted~~ ~~ASU 2017-01 (Topic 805):~~ ~~Clarifying the Definition of a Business~~, which amends the guidance in ASC 805, “Business Combinations”. The ASU changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Under the new guidance, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If it is not met, the entity then evaluates whether the set meets the requirements that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The ASU defines an output as “the result of inputs and processes applied to those inputs that provide goods or services to customers, investment income (such as dividends or interest), or other revenues.” The ASU will be applied prospectively to any transactions subsequent to adoption.

~~Effective January 1, 2018, the Company adopted~~ ~~ASU 2016-15 (Topic 230),~~ ~~Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. This ASU adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The~~ adoption ~~of this guidance~~ did not have ~~a material~~an impact on the Company's financial ~~condition,~~position, results of operations, or cash ~~flows.~~flow.

In August 2018, the ~~Financial~~FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40): Customer’s Accounting ~~Standards Board (“FASB”)~~ for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which includes amendments to align the accounting for costs incurred to implement a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. The accounting for the service component of a hosting arrangement that is a service contract is not affected by the amendments in this update. The ASU is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance.

In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and adds additional disclosures. The ASU is effective for annual periods beginning after December 31, 2020, with early adoption permitted. The amendments in ASU 2018-14 would need to be applied on a retrospective basis. The Company is currently evaluating the impact this guidance will have on its related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes or modifies certain disclosure requirements and adds additional requirements to improve the usefulness of the fair value measurement disclosure for financial statement users. The ASU is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. Certain amendments of ASU 2018-13 are required to be applied prospectively for the first interim period of the initial year of adoption. All other amendments need to be applied retrospectively. The Company is currently evaluating the impact of the new guidance.

~~In February 2018, the FASB issued ASU 2018-02 (Topic 220):~~ ~~Income Statement – Reporting Comprehensive Income~~ – ~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~, which allows for optional reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from the enactment of H.R.1 (P.L. 115-97), originally known as the “Tax Cuts and Jobs Act,” in December 2017. An entity that elects to reclassify these amounts must reclassify stranded tax effects related to the change in federal tax rate for all items accounted for in other comprehensive income (e.g., pension and postretirement benefits and cash flow hedges). Entities may also elect to reclassify other stranded tax effects that relate to the Act but do not directly relate to the change in the federal tax rate (e.g., state taxes). Upon adoption of ASU 2018-02, entities are required to disclose their policy for releasing the income tax effects from accumulated other comprehensive income. ASU 2018-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect this ASU to have a material impact on the Company’s financial position, results of operations, or cash flow.

~~In February 2016, the FASB issued ASU 2016-02 (Topic 842):~~ ~~Leases~~. This ASU amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. Additionally, the guidance requires qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-10: ~~Codification Improvements to Topic 842, Leases~~ ~~and ASU 2018-11:~~ ~~Leases (Topic 842): Targeted Improvements~~. These ASUs provide clarification to the lease standard and allow entities an optional transition method for implementing ASU 2016-02 and a lessor practical expedient for separating lease and non-lease components. The optional transition method allows companies the option to use the effective date as the date of initial application on transition. The Company plans to elect this transition method, and as a result, we will not adjust our comparative period financial information or make the new required lease disclosures for periods before the effective date.

ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. We are in the process of implementing changes to our systems and processes in conjunction with our review of existing lease agreements, which primarily consist of equipment and real estate leases. In addition, we are currently working with a vendor to implement a technology tool to assist with the accounting and reporting requirements of the new standard. We will adopt Topic 842 effective January 1, 2019 and expect to elect certain available transitional practical expedients. We are still in the process of determining the effects on our financial statements but do expect to recognize a liability and corresponding asset associated with in-scope operating leases.

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.

We group our leases into two primary lease types, real estate and equipment, and into various asset classes within each type. Real estate leases primarily include manufacturing locations, office space, warehouses, and design centers, while equipment leases primarily include manufacturing equipment.

Leases with an initial term of 12 months or less and certain month-to-month leases are not recorded on the balance sheet. The lease expense for these types of leases is recognized on a straight-line basis over the lease term.

To determine the lease term, we include the non-cancellable period of the lease together with the following: all periods covered by an option to extend the lease if we are reasonably certain to exercise that option; any periods covered by an option to terminate the lease if we are reasonably certain not to exercise that option; and any periods covered by an option to extend or not to terminate the lease that are controlled by the lessor. The exercising of lease renewal options is based on whether future economic benefit is expected to be derived from the renewal. Most of our real estate leases contain at least one renewal option. Renewal options generally range from 1 to 5 years. Although equipment leases may also contain renewal options, we typically do not expect to extend and/or exercise these renewal options unless a compelling business reason is provided to management.

Our leases may contain fixed and variable costs. Fixed costs determine the right-of-use asset. Variable costs are those costs which will vary month to month and are excluded from the calculation of the right-of-use asset. Variable lease costs are recorded to lease expense in the period in which they are incurred.

Our leases do not provide an implicit borrowing rate of return. Therefore, we use our incremental borrowing rate to calculate the present value of lease payments at inception of the lease or when a lease is modified.

Supplemental balance sheet information related to our leases was as follows (dollars in millions):

Supplemental cash flow information related to leases was as follows (dollars in millions):

The maturities of lease liabilities for operating and finance leases at June 30, 2019 were as follows (dollars in millions):

The maturities of lease liabilities at December 31, 2018 under ASC 840 were as follows (dollars in millions):

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 ~~entitled~~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):

Our containerboard mills produce linerboard and semi-chemical 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,~~customers, 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.

We manufacture and sell a range of communication-based papers. Communication papers consist of cut-size office papers, and printing and converting papers. ~~Pressure sensitive papers, including release liners, are used for specialty applications such as consumer and commercial product labels.~~

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.

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

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.

On October ~~2, 2017,~~9, 2018, PCA acquired ~~substantially all of~~ the assets of ~~Sacramento Container Corporation,~~Englander dZignPak (“Englander”), a corrugated products manufacturer, for $56.3 million. The assets include two sheet plants located in Waco, Texas and ~~100%~~Carrollton, Texas. Sales and total assets of the ~~membership interests~~acquired company are not material to our overall sales and total assets. Operating results of ~~Northern Sheets, LLC and Central California Sheets, LLC (collectively referred~~the acquired assets subsequent to as “Sacramento Container”) for a purchase price of $274 million, including working capital adjustments. Funding for the $274 million purchase price came from available cash on hand. Assets acquired include full-line corrugated products and sheet feeder operations in both McClellan, California and Kingsburg, California. Sacramento Container provides packaging solutions to customers serving portions of California’s strong agricultural market. Sacramento Container’s financial resultsOctober 9, 2018 are included in ~~the~~our Packaging ~~segment from the date of acquisition.~~

~~The Company accounted for the Sacramento Container acquisition using the acquisition method of accounting in accordance with ASC 805,~~ ~~Business Combinations~~.segment’s 2018 operating results. The total purchase price has been allocated to ~~tangible and intangible~~the assets acquired and liabilities assumed based on ~~respective~~ fair values ~~as follows (dollars~~at the date of acquisition, of which $28.6 million was allocated to goodwill (which is deductible for tax purposes) and $14.1 million to intangible assets (to be amortized over a weighted average life of approximately 9.7 years), primarily customer relationships, in ~~millions):~~

During the second quarter ~~ended June 30, 2018,~~of 2019, we ~~made~~paid $1.4 million to the seller related to a ~~$5.5 million net adjustment based on the~~ final ~~valuation of the intangible assets.~~working capital adjustment. We recorded the adjustment as ~~a decrease~~an increase to ~~other intangible assets with an offset to goodwill.~~

~~Goodwill is calculated as the excess of~~goodwill, which increased the purchase price ~~over the fair value of the net assets acquired. Among the factors that contributed~~ to the recognition of goodwill were Sacramento Container’s commitment to continuous improvement and regional synergies, as well as the expected increases in PCA’s containerboard integration levels. Goodwill is deductible for tax purposes.$57.7 million.

~~Other intangible assets, primarily customer relationships, were assigned an estimated weighted average useful life of 9.6 years.~~9

~~Property, plant, and equipment were assigned estimated useful lives ranging from one to 13 years.~~

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:	2018			2017			2018			2017			2019			2018			2019			2018
Net income	$	206.7		$	139.1		$	533.4		$	399.7		$	193.6		$	186.6		$	380.4		$	326.7
Less: distributed and undistributed earnings allocated to participating securities		(1.6	)		(1.1	)		(4.1	)		(3.4	)		(1.5	)		(1.4	)		(2.9	)		(2.5	)
Net income attributable to common shareholders	$	205.1		$	138.0		$	529.3		$	396.3		$	192.1		$	185.2		$	377.5		$	324.2
Denominator:
Weighted average basic common shares outstanding		93.7			93.6			93.7			93.5			93.8			93.6			93.8			93.6
Effect of dilutive securities		0.3			0.2			0.2			0.2			0.2			0.2			0.2			0.2
Weighted average diluted common shares outstanding		94.0			93.8			93.9			93.7			94.0			93.8			94.0			93.8
Basic income per common share	$	2.19		$	1.47		$	5.65		$	4.24		$	2.05		$	1.98		$	4.03		$	3.46
Diluted income per common share	$	2.18		$	1.47		$	5.64		$	4.23		$	2.04		$	1.97		$	4.02		$	3.46

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,
	2018			2017			2018			2017			2019			2018			2019			2018
Asset disposals and write-offs	$	(5.1	)	$	(3.9	)	$	(14.4	)	$	(8.6	)	$	(4.5	)	$	(4.1	)	$	(8.8	)	$	(9.2	)
Wallula mill restructuring (a)		(3.7	)		(22.7	)		(11.6	)		(22.7	)		—			(7.2	)		(0.4	)		(7.9	)
Facilities closure and other costs (b)		(1.5	)		(0.9	)		(1.6	)		(1.9	)		—			—			—			(0.1	)
Acquisition and integration related costs (c)		(0.1	)		(0.5	)		(0.1	)		(0.8	)
Insurance deductible for property damage (d)		(0.5	)		—			(0.5	)		—
DeRidder mill incident (e)		—			2.6			—			0.1
Hexacomb working capital adjustment (f)		—			—			—			2.3
Other		0.4			0.6			(4.0	)		(0.8	)		0.7			(2.0	)		(0.6	)		(4.4	)
Total	$	(10.5	)	$	(24.8	)	$	(32.2	)	$	(32.4	)	$	(3.8	)	$	(13.3	)	$	(9.8	)	$	(21.6	)

On December 22, 2017, the President signed into law H.R.1 (P.L. 115-97), originally known as the “Tax Cuts and Jobs Act” (the “Tax Act”). The Tax Act significantly revises the U.S. tax code by, among other items, reducing the federal corporate tax rate from 35% to 21%, providing for the full expensing of certain depreciable property, eliminating the corporate alternative minimum tax, limiting the deductibility of interest expense, further limiting the deductibility of certain executive compensation, limiting the use of net operating loss carryforwards created in tax years beginning after December 31, 2017, and implementing a territorial tax system imposing a deemed repatriation transition tax (“Transition Tax”) on earnings of foreign subsidiaries.

~~The SEC staff issued Staff Accounting Bulletin (“SAB”) 118,~~ ~~Income Tax Accounting Implications of the Tax Cuts and Jobs Act,~~ which provides guidance on accounting for the effects and includes a measurement period that ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting of the Tax Act, which cannot extend beyond one year. In accordance with SAB 118, the Company recorded provisional estimates of the income tax effects of the Tax Act in the 2017 Form 10-K.

During the three and nine months ended September 30, 2018, we have recorded an immaterial favorable adjustment for the Transition Tax originally recorded with the measurement period provisional estimates at December 31, 2017. We expect to record our final adjustment for the income tax effects of the Tax Act after the completion and filing of our 2017 federal and state income tax returns during the fourth quarter and before the SAB 118 measurement period ends. We estimate this final adjustment, primarily from favorable timing item differences, to also be immaterial.

For the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, we recorded ~~$67.4~~$62.4 million and ~~$77.8 million of income tax expense and had an effective tax rate of 24.6% and 35.9%, respectively. For the nine months ended September 30, 2018 and 2017, we recorded $172.6 million and $204.9~~$58.7 million of income tax expense and had an effective tax rate of 24.4% and ~~33.9%~~23.9%, respectively. For the six months ended June 30, 2019 and 2018, we recorded $124.9 million and $105.1 million of income tax expense and had an effective tax rate of 24.7% and 24.3%, respectively. The ~~decrease~~increase in our effective tax rate for both the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 compared with the same ~~periods~~period in ~~2017~~2018 was ~~primarily~~ due to ~~the Tax Act (P.L. 115-97), which included a reduction in the federal tax rate~~higher state and local income taxes net of ~~14.0% offset by the loss of the Domestic Production Activities Deduction benefit of about 3.2% and a reduction in~~ the federal benefit ~~of state tax deductions of about 0.8%, as well as an internal legal entity consolidation that took place in the third quarter of 2017, partially offset by~~and higher employee compensation related impacts from restricted stock vests with a lower excess tax ~~benefits~~benefit (ASU 2016-09) and from ~~employee share-based payment awards under ASU 2016-09~~the elimination of the performance based exclusion in ~~2018 compared to the same periods in 2017.~~tax reform.

Our 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, ~~2018~~2019 and ~~2017,~~2018, cash paid for taxes, net of refunds received, was ~~$73.2~~$92.1 million and ~~$208.3~~$22.2 million,

respectively. The ~~decrease~~increase in cash tax payments between the periods is primarily due to the ~~lower statutory tax rate and~~2018 use of a federal overpayment carryforward from the 2017 tax year ~~into the 2018~~resulting from tax ~~year as a result of Tax Act~~reform related changes.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, there were no significant changes to our uncertain tax positions. For more information, see Note 6,7, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our ~~2017~~2018 Annual Report on Form 10-K.

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

	September 30,		December 31,		June 30,		December 31,
	2018		2017		2019		2018
Raw materials	$	317.9	$	279.8	$	303.5	$	307.8
Work in process		14.9		12.6		14.3		13.9
Finished goods		180.4		217.0		213.9		199.0
Supplies and materials		267.4		253.1		284.0		274.9
Inventories	$	780.6	$	762.5	$	815.7	$	795.6

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

	September 30,			December 31,			June 30,			December 31,
	2018			2017			2019			2018
Land and land improvements	$	162.0		$	156.0		$	167.7		$	161.9
Buildings		756.2			729.8			812.0			795.5
Machinery and equipment		5,356.7			5,162.5			5,603.6			5,481.6
Construction in progress		240.6			194.5			172.2			176.7
Other		72.8			68.4			78.1			75.4
Property, plant and equipment, at cost		6,588.3			6,311.2			6,833.6			6,691.1
Less accumulated depreciation		(3,523.2	)		(3,386.3	)		(3,726.4	)		(3,582.5	)
Property, plant, and equipment, net	$	3,065.1		$	2,924.9		$	3,107.2		$	3,108.6

Depreciation expense for the three months ended ~~September~~June 30, 2019 and 2018 ~~and 2017~~ was ~~$89.0~~$85.8 million and ~~$87.0~~$91.6 million, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, depreciation expense was ~~$275.3~~$171.0 million and ~~$253.0~~$186.2 million, respectively. We recognized ~~$14.0~~$0.2 million and $13.5 millionof incremental depreciation expense during the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018, respectively, as a result of shortening the useful lives of certain assets primarily related to the Wallula mill ~~restructuring and a corporate administration facility.~~restructuring.

At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, purchases of property, plant, and equipment included in accounts payable were ~~$46.2~~$27.0 million and ~~$29.8~~$24.7 million, respectively.

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 ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018, we had ~~$833.5~~$863.5 millionand ~~$828.0~~$862.1 million of goodwill recorded in our Packaging segment, respectively. At both ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had $55.2 million of goodwill recorded in our Paper segment.

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

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

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

	September 30, 2018					December 31, 2017					June 30, 2019						December 31, 2018
	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 ~~(a)~~(b)	11.2	$	491.4	$	135.5	11.8	$	497.8	$	109.8		10.4	$	503.8	$	162.4		10.9	$	504.6	$	144.5
Trademarks and trade names ~~(a)~~	10.4		33.9		17.6	9.8		32.9		13.2		9.7		34.8		19.3		10.1		34.8		18.3
Other ~~(a)~~	3.1		4.3		2.6	3.6		4.3		2.0		2.5		4.3		3.0		3.0		4.3		2.7
Total intangible assets (excluding goodwill)	11.1	$	529.6	$	155.7	11.7	$	535.0	$	125.0		10.3	$	542.9	$	184.7		10.8	$	543.7	$	165.5

During the ~~three~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, amortization expense was ~~$10.2~~$19.2 million and ~~$8.4 million, respectively. During the nine months ended September 30, 2018 and 2017, amortization expense was $30.7 million and $25.3~~$20.5 million, respectively.

	September 30,		December 31,		June 30,		December 31,
	2018		2017		2019		2018
Compensation and benefits	$	131.1	$	127.5	$	106.1	$	136.7
Medical insurance and workers’ compensation		27.0		23.9		27.5		27.5
Customer volume discounts and rebates		21.5		23.4		22.1		25.2
Franchise, property, sales and use taxes		21.3		16.0		21.1		13.4
Environmental liabilities and asset retirement obligations		4.7		4.0		5.0		5.0
Severance, retention, and relocation		3.3		3.1		4.0		2.2
Other		14.5		5.3		12.1		12.4
Total	$	223.4	$	203.2	$	197.9	$	222.4

~~At September 30, 2018 and December 31, 2017, our long-term debt and interest rates on that debt were as follows (dollars in millions):~~

September 30, 2018

December 31, 2017

Amount

Interest Rate

Amount

Interest Rate

6.50% Senior Notes due March 2018

$
—

—
%

$
150.0

6.50
%
2.45% Senior Notes, net of discount of $0.4 million and
   $0.5 million as of September 30, 2018 and
   December 31, 2017, respectively, due December 2020

499.6

2.45
%

499.5

2.45
%
3.90% Senior Notes, net of discount of $0.1 million and
   $0.2 million as of September 30, 2018 and
   December 31, 2017, respectively, due June 2022

399.9

3.90
%

399.8

3.90
%
4.50% Senior Notes, net of discount of $1.1 million and
   $1.2 million as of September 30, 2018 and
   December 31, 2017, respectively, due November 2023

698.9

4.50
%

698.8

4.50
%
3.65% Senior Notes, net of discount of $0.7 million and
   $0.8 million as of September 30, 2018 and
   December 31, 2017, respectively, due September 2024

399.3

3.65
%

399.2

3.65
%
3.40% Senior Notes, net of discount of $1.5 million and
   $1.6 million as of September 30, 2018 and
   December 31, 2017, respectively, due December 2027

498.5

3.40
%

498.4

3.40
%
Total

2,496.2

3.64
%

2,645.7

3.80
%
Less current portion

—

—
%

150.0

6.50
%
Less unamortized debt issuance costs

13.3

15.3

Total long-term debt

$
2,482.9

3.64
%

$
2,480.4

3.64
%

~~During~~For the ~~nine~~six months ended ~~September~~June 30, ~~2018, we used cash on hand to repay debt outstanding of $150.0 million under the 6.50% Senior Notes due March 2018. For the nine months ended September 30, 2018~~2019 and ~~2017,~~2018, cash payments for interest were ~~$58.6~~$45.8 millionand ~~$67.2~~$51.1 million, respectively.

Included in interest expense, net ~~and other,~~ are amortization of treasury lock settlements and amortization of financing costs. For both the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, amortization of treasury lock settlements was $1.3 million, and ~~$1.4 million, respectively, and~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, amortization of treasury locks was ~~$4.0~~$2.6 millionand ~~$4.2~~$2.7 million, respectively. For both the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, amortization of financing costs was $0.7 million, and ~~$0.5 million, respectively, and~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, amortization of financing costs was ~~$2.0~~$1.4 millionand ~~$1.5~~$1.3 million, respectively.

At ~~September~~June 30, ~~2018,~~2019, we had ~~$2,496.2~~$2,496.7 million of fixed-rate senior notes outstanding. The fair value of our fixed-rate debt was estimated to be ~~$2,478.0~~$2,582.2 million. The difference between the book value and fair value is due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. We estimated the fair value of our fixed-rate debt using quoted market prices (Level 2 inputs) within the fair value hierarchy, which is further defined in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of our ~~2017~~2018 Annual Report on Form 10-K.

For more information on our long-term debt and interest rates on that debt, see Note 9,10, Debt, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of our ~~2017~~2018 Annual Report on Form 10-K.

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,
	2018			2017			2018			2017			2019			2018			2019			2018
Service cost	$	6.3		$	5.8		$	18.8		$	18.0		$	6.2		$	6.2		$	12.3		$	12.4
Interest cost		10.6			10.4			31.8			31.1			11.7			10.6			23.5			21.3
Expected return on plan assets		(14.2	)		(13.5	)		(42.5	)		(40.5	)		(13.0	)		(14.2	)		(26.0	)		(28.3	)
Net amortization of unrecognized amounts
Prior service cost		1.8			1.4			5.2			4.4			1.6			1.8			3.1			3.4
Actuarial loss		2.3			1.9			7.0			5.7			1.7			2.3			3.5			4.6
Net periodic benefit cost	$	6.8		$	6.0		$	20.3		$	18.7		$	8.2		$	6.7		$	16.4		$	13.4

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, ~~2018~~2019 and ~~2017,~~2018, payments to our nonqualified pension plans were insignificant. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we made contributions of ~~$18.0~~$3.9 million and ~~$21.2~~$4.6 million, respectively, to our qualified pension ~~plans, which exceeded our 2018 minimum pension contributions of $4.6 million.~~plans. We made contributions of ~~$36.2~~$1.0 million and ~~$42.1~~$3.2 millionto our qualified plans during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, respectively. We expect to contribute at least the estimated required minimum contributions to our qualified pension plans of approximately $15.8 million in 2019.

~~The components of~~For the three and six months ended June 30, 2019 and 2018, the net periodic benefit cost for our postretirement plans ~~were as follows (dollars in millions):~~was insignificant.

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. The plan, as amended, terminates May 1, 2023 and authorizes 10.6 millionshares of common stock for grant over the life of the plan. As of ~~September~~June 30, ~~2018, 0.7~~2019, 0.4 million shares were available for future grants under the 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, ~~2018:~~2019:

	Restricted Stock					Performance Units					Restricted Stock					Performance Units
	Shares			Weighted Average Grant- Date Fair Value		Shares			Weighted Average Grant- Date Fair Value		Shares			Weighted Average Grant- Date Fair Value		Shares			Weighted Average Grant- Date Fair Value
Outstanding at January 1, 2018		739,732		$	77.23		226,558		$	77.07
Outstanding at January 1, 2019												743,591		$	86.90		266,704		$	90.01
Granted		173,144			114.63		87,022			115.33		199,185			95.45		115,608			96.98
Vested		(163,436	)		67.28		(46,876	)		74.46		(198,292	)		67.62		(59,165	)		67.84
Forfeitures		(3,738	)		81.04		—			—		(6,530	)		102.74		—			—
Outstanding at September 30, 2018		745,702		$	88.07		266,704		$	90.01
Outstanding at June 30, 2019												737,954		$	94.25		323,147		$	96.56

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Restricted stock	$	4.9		$	3.8		$	13.9		$	11.3		$	10.8		$	5.0		$	15.7		$	8.9
Performance units		1.7			1.4			3.5			4.1			0.9			0.6			2.9			1.8
Total share-based compensation expense		6.6			5.2			17.4			15.4			11.7			5.6			18.6			10.7
Income tax benefit		(1.6	)		(2.0	)		(4.4	)		(5.9	)		(3.0	)		(1.4	)		(4.7	)		(2.7	)
Share-based compensation expense, net of tax benefit	$	5.0		$	3.2		$	13.0		$	9.5		$	8.7		$	4.2		$	13.9		$	8.0

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 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 2019 and 2018, in terms of grant date value, 50% used TSR as the

performance measure and 50% ~~used ROIC as the performance measure. All units awarded before 2018~~ used ROIC as the performance measure. The ROIC component of performance unit awards ~~are~~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, ~~2018~~2019 was as follows (dollars in millions):

	September 30, 2018				June 30, 2019
	Unrecognized Compensation Expense		Remaining Weighted Average Recognition Period (in years)		Unrecognized Compensation Expense		Remaining Weighted Average Recognition Period (in years)
Restricted stock	$	36.5	2.5		$	34.7	2.9
Performance units		15.7		3.1		21.6		2.8
Total unrecognized share-based compensation expense	$	52.2		2.7	$	56.3		2.9

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we paid ~~$193.4~~$149.3 million of dividends to shareholders. On May ~~15, 2018, PCA announced an increase of its quarterly cash dividend on its common stock from an annual payout of $2.52 per share to $3.16 per share. On August 30, 2018,~~7, 2019, PCA’s Board of Directors declared a regular quarterly cash dividend of $0.79 per share of common stock, which was paid on ~~October~~July 15, ~~2018~~2019 to shareholders of record as of ~~September~~June 14, ~~2018.~~2019. The dividend payment was ~~$74.7~~$74.7 million.

On February 25, 2016, PCA announced that its Board of Directors authorized the repurchase of $200.0 million 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 not repurchase any shares of its common stock under this authority during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. At ~~September~~June 30, ~~2018,~~2019, $193.0 million of the authorized amount remained available for repurchase of the Company’s common stock.

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 Treasury Locks, Net

Unrealized Loss on Foreign Exchange Contracts

Unfunded Employee Benefit Obligations

Total

Balance at January 1, 2018

$
(0.3
)

$
(14.2
)

$
(0.3
)

$
(142.1
)

$
(156.9
)
Amounts reclassified from AOCI, net of tax

(0.1
)

3.0

—

8.9

11.8

Balance at September 30, 2018

$
(0.4
)

$
(11.2
)

$
(0.3
)

$
(133.2
)

$
(145.1
)

	Foreign Currency Translation Adjustments			Unrealized Loss On Treasury Locks, Net			Unrealized Loss on Foreign Exchange Contracts			Unfunded Employee Benefit Obligations			Total
Balance at January 1, 2019	$	(0.4	)	$	(10.2	)	$	(0.3	)	$	(127.9	)	$	(138.8	)
Amounts reclassified from AOCI, net of tax		—			1.9			—			4.7			6.6
Balance at June 30, 2019	$	(0.4	)	$	(8.3	)	$	(0.3	)	$	(123.2	)	$	(132.2	)

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	2018			2017			2018			2017				2019			2018			2019			2018
Unrealized loss on treasury locks, net (a)	$	(1.3	)	$	(1.4	)	$	(4.0	)	$	(4.2	)	See (a) below	$	(1.3	)	$	(1.3	)	$	(2.6	)	$	(2.7	)	See (a) below
		0.3			0.5			1.0			1.6		Tax benefit		0.3			0.3			0.7			0.7		Tax benefit
	$	(1.0	)	$	(0.9	)	$	(3.0	)	$	(2.6	)	Net of tax	$	(1.0	)	$	(1.0	)	$	(1.9	)	$	(2.0	)	Net of tax

Unfunded employee benefit obligations (b)
Amortization of prior service costs	$	(1.7	)	$	(1.3	)	$	(5.0	)	$	(4.3	)	See (b) below	$	(1.5	)	$	(1.7	)	$	(3.0	)	$	(3.3	)	See (b) below
Amortization of actuarial gains / (losses)		(2.3	)		(1.8	)		(6.9	)		(5.6	)	See (b) below		(1.6	)		(2.3	)		(3.3	)		(4.6	)	See (b) below
		(4.0	)		(3.1	)		(11.9	)		(9.9	)	Total before tax		(3.1	)		(4.0	)		(6.3	)		(7.9	)	Total before tax
		1.0			1.2			3.0			3.7		Tax benefit		0.8			1.0			1.6			1.9		Tax benefit
	$	(3.0	)	$	(1.9	)	$	(8.9	)	$	(6.2	)	Net of tax	$	(2.3	)	$	(3.0	)	$	(4.7	)	$	(6.0	)	Net of tax

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 7% of our total Company sales revenue for both the ~~nine~~six month periods ended ~~September~~June 30, 2019 and 2018 and ~~2017~~approximately51% and ~~approximately 46% and 42%~~45% of our Paper segment sales revenue for both of those periods, respectively. For full year 2018, sales to Office Depot represented 47% of our Paper segment sales. At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we had ~~$73.5~~$83.7 million and ~~$33.3~~$66.7 million of accounts receivable due from Office Depot, respectively, which represents 7%9% and 4%7% of our total Company accounts receivable, ~~for both of those periods,~~ respectively. ~~The increase in accounts receivable corresponds to a negotiated extension of credit terms effective during the first quarter of 2018.~~

For full year 2017, sales to Office Depot represented 43% of our Paper segment sales. If these sales are reduced, we would need to find new customers. We may not be able to fully replace any lost sales, and any new sales may be at lower prices or higher costs. Any significant deterioration in the financial condition of Office Depot affecting its ability to pay or any other change that affects its willingness to purchase our products will harm our business and results of operations.

Louisiana Timber Procurement Company, L.L.C. (LTP) is a variable-interest entity that is 50% owned by PCA and 50% owned by Boise Cascade Company (Boise Cascade). LTP procures sawtimber, pulpwood, residual chips, and other residual wood fiber to meet the wood and fiber requirements of PCA and Boise Cascade in Louisiana. PCA is the primary beneficiary of LTP and has the power to direct the activities that most significantly affect the economic performance of LTP. Therefore, we consolidate 100% of LTP in our financial statements in our Corporate and Other segment. The carrying amounts of LTP's assets and liabilities (which relate primarily to non-inventory working capital items) on our Consolidated Balance Sheets were ~~$3.5~~$3.4 millionat ~~September~~June 30, ~~2018~~2019 and ~~$3.0~~$2.7 million at December 31, ~~2017.~~2018. During the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, we recorded ~~$22.4~~$21.4 million and ~~$20.8~~$22.6 million, respectively, and during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018, we recorded ~~$65.5~~$41.4 million and ~~$66.0~~$43.0 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, ~~2018~~2019 and ~~2017,~~2018, fiber purchases from related parties were ~~$4.1~~$4.4 million and ~~$4.0~~$4.7 million, respectively. Fiber purchases from related parties were ~~$12.8~~$8.8 million and ~~$13.6~~$8.7 million, respectively, during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017.~~2018. 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.

We report our business in three reportable segments: Packaging, Paper, and Corporate and Other. These segments represent distinct businesses that are managed separately because of differing products and services. Each of these businesses requires distinct operating and marketing strategies.

During the second quarter of 2018, the Company discontinued the production of uncoated free sheet and coated one-side grades at the Wallula, Washington mill and converted the No. 3 machine to a virgin kraft linerboard machine. Subsequent to the date of conversion in May 2018, operating results for the Wallula mill are primarily included in the Packaging segment.

Each segment’s profits and losses are measured on operating profits before interest expense, net, non-operating pension expense, 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, 2018	Trade		Intersegment			Total			Operating Income (Loss) (a)
Three Months Ended June 30, 2019													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,528.3	$	6.8		$	1,535.1		$	284.4		(b)	$	1,497.8	$	6.8		$	1,504.6		$	263.9
Paper		254.3		—			254.3			32.3		(b)		237.8		—			237.8			38.8
Corporate and other		27.3		32.3			59.6			(18.2	)	(b)		24.3		31.5			55.8			(22.3	)
Intersegment eliminations		—		(39.1	)		(39.1	)		—				—		(38.3	)		(38.3	)		—
	$	1,809.9	$	—		$	1,809.9			298.5			$	1,759.9	$	—		$	1,759.9			280.4
Interest expense, net and other										(24.4	)
Non-operating pension expense																						(2.0	)
Interest expense, net																						(22.4	)
Income before taxes									$	274.1											$	256.0

	Sales, net												Sales, net
Three Months Ended September 30, 2017	Trade		Intersegment			Total			Operating Income (Loss) (a)
Three Months Ended June 30, 2018													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,340.6	$	6.0		$	1,346.6		$	263.2		(c)	$	1,489.6	$	6.6		$	1,496.2		$	273.2		(b)
Paper		271.4		—			271.4			(2.6	)	(c)		250.8		—			250.8			16.2		(b)
Corporate and Other		28.1		33.0			61.1			(18.0	)			27.1		33.5			60.6			(19.8	)	(b)
Intersegment eliminations		—		(39.0	)		(39.0	)		—				—		(40.1	)		(40.1	)		—
	$	1,640.1	$	—		$	1,640.1			242.6			$	1,767.5	$	—		$	1,767.5			269.6
Interest expense, net and other										(25.7	)
Non-operating pension expense																						(0.5	)
Interest expense, net																						(23.8	)
Income before taxes									$	216.9											$	245.3

	Sales, net												Sales, net
Nine Months Ended September 30, 2018	Trade		Intersegment			Total			Operating Income (Loss) (a)
Six Months Ended June 30, 2019													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	4,414.7	$	19.5		$	4,434.2		$	782.3		(b)	$	2,968.6	$	13.6		$	2,982.2		$	513.4		(a)
Paper		774.5		—			774.5			55.7		(b)		477.5		—			477.5			84.4		(a)
Corporate and Other		78.9		94.9			173.8			(57.0	)	(b)		47.5		65.0			112.5			(42.0	)
Intersegment eliminations		—		(114.4	)		(114.4	)		—				—		(78.6	)		(78.6	)		—
	$	5,268.1	$	—		$	5,268.1			781.0			$	3,493.6	$	—		$	3,493.6			555.8
Interest expense, net and other										(75.0	)
Non-operating pension expense																						(4.1	)
Interest expense, net																						(46.4	)
Income before taxes									$	706.0											$	505.3

	Sales, net												Sales, net
Nine Months Ended September 30, 2017	Trade		Intersegment			Total			Operating Income (Loss) (a)
Six Months Ended June 30, 2018													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	3,897.4	$	17.6		$	3,915.0		$	681.7		(c)(d)	$	2,886.3	$	12.8		$	2,899.1		$	497.9		(b)
Paper		784.3		—			784.3			52.5		(c)		520.2		—			520.2			23.5		(b)
Corporate and Other		78.9		92.3			171.2			(54.1	)	(c)(d)		51.6		62.6			114.2			(38.9	)	(b)
Intersegment eliminations		—		(109.9	)		(109.9	)		—				—		(75.4	)		(75.4	)		—
	$	4,760.6	$	—		$	4,760.6			680.1			$	3,458.1	$	—		$	3,458.1			482.5
Interest expense, net and other										(75.5	)
Non-operating pension expense																						(1.1	)
Interest expense, net																						(49.6	)
Income before taxes									$	604.6											$	431.8

The components of our financial statements affected by the change in presentation of operating and non-operating pension expense as originally reported in 2017 and as adjusted for the requirements per the new standard are as follows (dollars in millions):

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 9,10, Debt, and Note ~~18,~~19, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of our ~~2017~~2018 Annual Report on Form 10-K.

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, ~~2018,~~2019, 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.

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. The incident remains under investigation and all lawsuits are in the early stages. Accordingly, the Company is unable to estimate a range of reasonable possible losses at this time.

The Company has also incurred property damage and business interruption losses and has claimed these losses, subject to a $5.0 million deductible, under its property damage and business interruption insurance policy. As of December 31, 2017, the Company finalized the claim with the insurance carrier and received $17.0 million in insurance proceeds during the first quarter of 2018. The insurance proceeds are included in net cash provided by operating activities ($14.5 million) and in net cash used for investing activities ($2.5 million) based on the nature of the reimbursement.

The Company has cooperated with investigations from the U.S. Occupational Health and Safety Administration (OSHA), the U.S. Chemical Safety Board (CSB) and the U.S. Environmental Protection Agency (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.

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.

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 ~~2017~~2018 Annual Report on Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission (SEC). We do not assume any obligation to update any forward-looking 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 the third largest producer of uncoated freesheet paper in North America. We operate six containerboard mills, two paper mills, and 9594 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 white 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 ~~2017~~2018 Annual Report on Form 10-K.

~~Third~~Second quarter net sales were ~~$1.81~~$1.76 billion in ~~2018~~2019 and ~~$1.64~~$1.77 billion in ~~2017.~~2018. We reported ~~$207~~$194 million of net income, or ~~$2.18~~$2.04 per diluted share, during the ~~third~~second quarter of ~~2018,~~2019, compared to ~~$139~~$187 million, or ~~$1.47~~$1.97 per diluted share, during the same period in ~~2017.~~2018. Net income included ~~$4 million of~~no income or expense for special items ~~(discussed below)~~ in the ~~third~~second quarter of ~~2018,~~2019, compared to ~~$20~~$10 million of expense in ~~2017.~~2018 (discussed below). Excluding special items, net income was ~~$211~~$197 million, or ~~$2.23~~$2.08 per diluted share, during the ~~third~~second quarter of ~~2018, compared to $159 million, or $1.68 per diluted share, in the third quarter of 2017.~~2018. The ~~increase~~decrease was driven primarily by higher ~~prices and mix and volumes in our Packaging segment,~~operating costs, higher ~~prices and mix in our~~converting costs, lower Paper segment ~~lower wood and recycled fiber costs,~~volume, higher annual outage expenses, and a ~~favorable~~higher tax ~~rate resulting primarily from changes resulting from the Tax Act.~~rate. These items were partially offset by ~~lower volumes in our~~higher Packaging segment volume and prices and mix, higher Paper segment ~~higher operating~~prices and ~~converting costs, higher freight and logistics expenses, higher annual outage~~mix, lower Wallula No. 3 paper machine conversion-related costs, and ~~higher depreciation and other~~lower freight costs. 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 expense, interest, income taxes, and depreciation, amortization, and depletion (EBITDA), and EBITDA excluding special items, see “Item 2. Reconciliations of Non-GAAP Financial Measures to Reported Amounts.”

Packaging segment income from operations was ~~$284~~$264 million in the ~~third~~second quarter of ~~2018,~~2019, compared to ~~$263~~$273 million in the ~~third~~second quarter of ~~2017.~~2018. Packaging segment ~~earnings before interest, taxes, depreciation, amortization, and depletion (EBITDA)~~EBITDA was $349 million in the second quarter of 2019 compared to $363 million, excluding special items, ~~was $378 million~~ in the ~~third~~second quarter of ~~2018 compared to $343 million in the third quarter of 2017.~~2018. The ~~increase~~decrease in EBITDA excluding special items was due primarily to lower export containerboard prices, higher operating and converting costs, and other fixed costs, partially offset by higher domestic containerboard and corrugated products prices and mix and sales and production volumes, ~~driven by strong demand, and~~ lower ~~wood and recycled fiber costs, partially offset by higher operating and converting costs, higher freight and logistics expenses, higher~~ annual outage expenses, lower Wallula No. 3 paper machine conversion-related costs, and ~~other fixed~~lower freight costs.

Paper segment income from operations was ~~$32~~$39 million in the ~~third~~second quarter of ~~2018,~~2019, compared to ~~a loss of $3~~$16 million in the ~~third~~second quarter of ~~2017.~~2018. Paper segment EBITDA ~~excluding special items~~ was ~~$44~~$48 million in the ~~third~~second quarter of ~~2018,~~2019, compared to $38 million, excluding special items, in the ~~third~~second quarter of ~~2017.~~2018. The increase in EBITDA excluding special items was due to higher prices and mix, lower operating costs, and lower ~~operating~~freight costs, partially offset by lower ~~volume~~sales and production volumes primarily related to the exit from the paper business at the Wallula Mill, and higher ~~freight and logistics~~annual outage expenses.

During the first ~~nine~~six months of ~~2018~~2019, we reported ~~$533~~$380 million of net income, or ~~$5.64~~$4.02 per diluted share, compared to ~~$400~~$327 million of net income, or ~~$4.23~~$3.46 per diluted share, during the same period in ~~2017.~~2018. Net income included ~~$22~~$0.5 million of expense for special items (discussed below), compared to $17 million of expense for special items during the same period in ~~2018 and 2017.~~2018. Excluding special items, we recorded $381 million of net income, ~~was $555 million,~~ or ~~$5.87~~$4.02 per diluted share, during the first ~~nine~~six months of ~~2018,~~2019, compared to ~~$422~~$344 million of net income, or ~~$4.47~~$3.64 per diluted share, in the first ~~nine~~six months of ~~2017.~~2018. The increase was driven primarily by higher containerboard and corrugated products prices and mix and higher sales and production volumes, higher Paper segment prices and mix, lower wood and recycled fiber costs, and lower taxes, partially offset by higher operating and converting costs, higher freight and logistics expense, higher annual outage expense, and higher depreciation and other costs.

Packaging segment income from operations was $782 million in the first nine months of 2018, compared to $682 million in the same period in 2017. Packaging segment EBITDA excluding special items was $1.05 billion in the first nine months of 2018, compared to $922 million in the first nine months of 2017. The increase in EBITDA excluding special items was driven primarily by higherdomestic containerboard and corrugated products prices and mix and sales and production volumes, higher Paper segment prices and mix, lower ~~wood and~~ recycled fiber costs, lower Wallula No. 3 paper machine conversion-related costs, and lower freight expense, partially offset by lower containerboard export prices, lower volumes in our Paper segment, primarily related to the exit from the paper business at the Wallula Mill, higher ~~operating~~indirect and converting costs, higher ~~freight and logistics expense,~~direct material costs, higher fixed expenses, and higher annual ~~outages,~~outage expenses.

Packaging segment income from operations was $513 million in the first six months of 2019, compared to $498 million in the same period in 2018. Packaging segment EBITDA excluding special items was $682 million in the first six months of 2019, compared to $671 million in the first six months of 2018. The increase was driven primarily by higher domestic containerboard and corrugated products prices and mix and sales and production volumes, lower recycled fiber costs, lower Wallula No. 3 paper machine conversion-related costs, and lower annual outage expenses, partially offset by lower containerboard export prices, higher costs for wood, labor, and other operating costs.

Paper segment income from operations was ~~$56~~$84 million in the first ~~nine~~six months of ~~2018,~~2019, compared to ~~$53~~$24 million in the first ~~nine~~six months of ~~2017.~~2018. Paper segment EBITDA excluding special items was ~~$113~~$103 million in the first ~~nine~~six months of ~~2018,~~2019, compared to ~~$121~~$69 million in the same period in ~~2017.~~2018. The ~~decrease in EBITDA excluding special items~~increase was due primarily to higher prices and mix and lower ~~volumes, higher freight and logistics expense, and higher wood and recycled fiber~~operating costs, partially offset by ~~higher prices~~lower sales and ~~mix, lower input~~production volumes, primarily related to the exit from the paper business at the Wallula Mill, and ~~operating costs, and lower~~higher annual outage ~~expense.~~costs.

During the second quarter of 2018, the Company ~~ceased~~discontinued production of ~~white papers on~~uncoated freesheet and coated one-side grades at its Wallula, Washington mill and converted the No. 3 paper machine ~~at the Wallula Mill and began producing~~to a 400,000 ton-per-year virgin kraft linerboard ~~on the~~ machine. The Company ~~will take~~took an extended outage on the machine to complete the conversion in the fourth quarter of 2018. The Company incurred charges in both the Packaging and Paper segments during the first quarter of 2019 and ~~Packaging segments~~the first and second quarters of 2018 relating to these activities ~~during the third quarter of 2018~~ as described below under “Special Items and Earnings per Diluted Share, Excluding Special ~~Items,~~Items.” ~~and will~~The Company does not expect to incur ~~future charges.~~further related charges going forward.

A reconciliation of reported earnings per diluted share to earnings per diluted share, excluding special items, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 are as follows:

	Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
	September 30,				September 30,					June 30,				June 30,
	2018		2017		2018		2017			2019		2018		2019		2018
Earnings per diluted share, as reported	$	2.18	$	1.47	$	5.64	$	4.23		$	2.04	$	1.97	$	4.02	$	3.46
Special items:
Wallula mill restructuring (a)		0.04		0.16		0.22		0.16			—		0.11		—		0.18
Facilities closure and other costs (b)(c)		0.01		0.01		0.01		0.01
Internal legal entity consolidation (d)		—		0.04		—		0.04
DeRidder mill incident (e)		—		—		—		0.03
Acquisition and integration related costs (f)(g)		—		—		—		0.01
Hexacomb working capital adjustment (h)		—		—		—		(0.01	)
Total special items		0.05		0.21		0.23		0.24			—		0.11		—		0.18
Earnings per diluted share, excluding special items	$	2.23	$	1.68	$	5.87	$	4.47		$	2.04	$	2.08	$	4.02	$	3.64

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 ~~with one additional working day increased 1.4%, and shipments~~ per work day were flat during the ~~third~~second quarter of ~~2018~~2019 compared to the same quarter of ~~2017.~~2018. Reported industry containerboard production ~~increased 3.7%~~decreased 5.8% compared to the ~~third~~second quarter of ~~2017.~~2018. Reported industry containerboard inventories at the end of the ~~third~~second quarter of ~~2018~~2019 were approximately ~~2.6~~2.5 million tons, up ~~8.7%~~4.4% compared to the same period in ~~2017 and weeks of supply was 3.9.~~2018. Reported containerboard export shipments were ~~up 11.6%~~down 16.4% compared to the ~~third~~second quarter of ~~2017.~~2018. Trade publications reported ~~no price change on~~prices were lower than prices reported during the first quarter of 2019 with decreases of $10 per ton for both domestic linerboard and corrugating medium ~~during the third quarter~~in both May and June of ~~2018.~~2019.

The market for communication papers competes heavily with electronic data transmission and document storage alternatives. Increasing shifts to these alternatives have reduced usage of traditional print media and communication papers. Trade publications reported North American uncoated freesheet paper shipments were down ~~8.2%~~12.3% in the ~~third~~second quarter of ~~2018,~~2019, compared to the same quarter of ~~2017.~~2018. Average prices reported by a trade publication for cut size office papers were higher by ~~$107~~$120 per ton, or ~~11.2%~~11.7%, in the ~~third~~second quarter of ~~2018,~~2019, compared to the ~~third~~second quarter of ~~2017.~~2018.

Looking ahead to the ~~fourth~~third quarter of ~~2018,~~2019, in our Packaging segment, we expect ~~Packaging segment demand to remain strong although there will be two less shipping days,~~seasonally higher containerboard and ~~we expect a seasonally less rich mix in~~ corrugated products ~~compared to~~shipments, with lower prices as a result of the ~~third quarter.~~published domestic containerboard price decreases, and lower export prices. In ~~our~~the Paper segment, ~~we will continue implementing price increases that we recently communicated to customers, but expect a seasonally less rich mix. Although paper volumes will~~volume should be seasonally ~~lower, we expect demand to remain strong as we manage our already tight inventory levels. With seasonally colder weather, fuel costs~~stronger, but prices and mix are expected to move lower. Converting and other costs should be slightly higher, ~~across the company,~~but operating costs and ~~we expect continued inflation in most of our operating and converting~~scheduled maintenance outage costs including incremental wage pressure with a tighter labor market. We will also have an extended outage at our Wallula Mill to complete the remaining work related to the conversion of the No. 3 machine from paper to linerboard.should be lower. Considering these items, we expect ~~fourth~~third quarter earnings ~~excluding special items~~ to be lower than ~~third quarter 2018.~~the second quarter.

Three Months Ended ~~September~~June 30, ~~2018,~~2019, compared to Three Months Ended ~~September~~June 30, ~~2017~~2018

The historical results of operations of PCA for the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 are set forth below (dollars in millions):

	Three Months Ended										Three Months Ended
	September 30,										June 30,
	2018			2017				Change			2019			2018			Change
Packaging	$	1,535.1		$	1,346.6			$	188.5		$	1,504.6		$	1,496.2		$	8.4
Paper		254.3			271.4				(17.1	)		237.8			250.8			(13.0	)
Corporate and Other		59.6			61.1				(1.5	)		55.8			60.5			(4.7	)
Intersegment eliminations		(39.1	)		(39.0	)			(0.1	)		(38.3	)		(40.0	)		1.7
Net sales	$	1,809.9		$	1,640.1			$	169.8		$	1,759.9		$	1,767.5		$	(7.6	)

Packaging	$	284.4		$	263.2		(b)	$	21.2		$	263.9		$	273.2		$	(9.3	)
Paper		32.3			(2.6	)	(b)		34.9			38.8			16.2			22.6
Corporate and Other		(18.2	)		(18.0	)	(b)		(0.2	)		(22.3	)		(19.8	)		(2.5	)
Income from operations	$	298.5		$	242.6			$	55.9		$	280.4		$	269.6		$	10.8
Interest expense, net and other		(24.4	)		(25.7	)	(b)		1.3
Non-operating pension expense												(2.0	)		(0.5	)		(1.5	)
Interest expense, net												(22.4	)		(23.8	)		1.4
Income before taxes		274.1			216.9				57.2			256.0			245.3			10.7
Income tax provision		(67.4	)		(77.8	)			10.4			(62.4	)		(58.7	)		(3.7	)
Net income	$	206.7		$	139.1			$	67.6		$	193.6		$	186.6		$	7.0
Non-GAAP Measures (a)
Net income excluding special items	$	211.1		$	158.8			$	52.3		$	193.6		$	197.0		$	(3.4	)
Consolidated EBITDA		400.0			340.1		(b)		59.9			376.2			373.7			2.5
Consolidated EBITDA excluding special items		405.8			364.2		(b)		41.6			376.2			382.3			(6.1	)
Packaging EBITDA		373.0			341.9		(b)		31.1			348.6			357.7			(9.1	)
Packaging EBITDA excluding special items		378.2			343.0		(b)		35.2			348.6			362.8			(14.2	)
Paper EBITDA		43.5			14.5		(b)		29.0			48.2			34.2			14.0
Paper EBITDA excluding special items		44.1			37.5		(b)		6.6			48.2			37.7			10.5

Net sales ~~increased $170~~decreased $8 million, or ~~10.4%~~0.4%, to ~~$1,810~~$1,760 million during the three months ended ~~September~~June 30, ~~2018,~~2019, compared to ~~$1,640~~$1,768 million during the same period in ~~2017.~~2018.

Packaging. Net sales increased ~~$188~~$8 million, or ~~14.0%~~0.6%, to ~~$1,535~~$1,504 million, compared to ~~$1,347~~$1,496 million in the ~~third~~second quarter of ~~2017~~2018 due to ~~increased~~higher corrugated products prices and mix ($27 million), partially offset by lower domestic and export containerboard price and mix ($11 million) and decreased containerboard and corrugated products volume ($~~129 million) and higher domestic and export containerboard and corrugated products prices and mix ($59~~8 million). In the ~~third~~second quarter of ~~2018,~~2019, our domestic containerboard prices ~~increased 6.1%~~decreased 3.4%, ~~and~~while export prices ~~increased 15.3%~~decreased 19.0%, compared to the same period in ~~2017.~~2018. In the ~~third~~second quarter of ~~2018,~~2019, export and domestic containerboard outside shipments ~~increased 11.4%~~decreased 10.1%, ~~and~~compared to the second quarter of 2018. Total corrugated products shipments were down 1.3%, as there was one less work day in the second quarter of 2019, compared to the same period in 2018. However, total corrugated products shipments were up ~~8.2%,~~0.3% per work day in 2019 compared to the ~~third~~second quarter of ~~2017.~~2018.

Paper. Net sales during the three months ended ~~September~~June 30, ~~2018~~2019 decreased ~~$17~~$13 million, or ~~6.3%~~5.2%, to ~~$254~~$238 million, compared to ~~$271~~$251 million in the ~~third~~second quarter of ~~2017,~~2018, due to decreased volume ($3633 million), primarily due to the exit from the paper business at Wallula, partially offset by favorable changes in prices and mix ($1920 million).

Gross profit increased ~~$46~~$7 million during the three months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017.~~2018. The increase was driven primarily by higher ~~containerboard and~~ corrugated products prices and mix and sales and production volumes, higher prices and ~~lower wood and recycled fiber costs,~~mix in our Paper segment, partially offset by lower containerboard prices and mix, lower volumes in our Paper segment and higher operating and converting costs. In the three months ended ~~September~~June 30, ~~2018 and 2017,~~2019, gross profit ~~included~~did not include any special items, ~~of $0.3~~compared to $6 million ~~and $3 million, respectively,~~ of Wallula Mill restructuring ~~charges.~~charges in the same period last year.

Selling, general, and administrative expenses (“SG&A”) increased $5$6 million during the three months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017.~~2018. The increase was primarily due to higher employee salaries and fringes ($5 million), the Sacramento Container acquisition ($3 million), and various other administrative expenses individually insignificant ($3 million). These increases were partially offset by certain expenses

that were previously recorded in SG&A for the third quarter of 2017 which are now recorded in cost of sales for the third quarter 2018 ($6 million). Effective January 1, 2018, the Company adopted ASU 2014-09 (Topic 606): ~~Revenue from Contracts with Customers~~ using the modified retrospective method. The new standard provides additional clarity concerning contract fulfillment costs, which resulted in certain costs being classified as cost of sales rather than SG&A for 2018.fringes.

Other income (expense), net, for the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 are set forth below (dollars in millions):

	Three Months Ended						Three Months Ended
	September 30,						June 30,
	2018			2017			2019			2018
Asset disposals and write-offs	$	(5.1	)	$	(3.9	)	$	(4.5	)	$	(4.1	)
Wallula mill restructuring		(3.7	)		(22.7	)		—			(7.2	)
Facilities closure and other costs		(1.5	)		(0.9	)
Acquisition and integration related costs		(0.1	)		(0.5	)
Insurance deductible for property damage		(0.5	)		—
DeRidder mill incident		—			2.6
Other		0.4			0.6			0.7			(2.0	)
Total	$	(10.5	)	$	(24.8	)	$	(3.8	)	$	(13.3	)

We discuss these items in more detail in Note 6,7, Other Income (Expense), Net of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item1. Financial Statements” of this Form 10-Q.

Income from operations increased ~~$56~~$11 million, or ~~23.0%~~4.0%, during the three months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017.~~2018. The ~~third~~second quarter of ~~2018~~2019 included $6no special items, compared to $14 million of ~~expense for~~ special ~~items primarily related to Wallula Mill restructuring. Third quarter 2017 included~~item expense, ~~from special items of $25 million of charges~~ related to the Wallula Mill restructuring, ~~and $2 million~~in the second quarter of ~~closure costs related to corrugated products facilities and a paper administration facility and integration costs related to the TimBar Corporation and Columbus Container, Inc. acquisitions.~~2018.

Packaging. Packaging segment income from operations ~~increased $21~~decreased $9 million to ~~$284~~$264 million, compared to ~~$263~~$273 million during the three months ended ~~September~~June 30, ~~2017.~~2018. The ~~increase~~decrease related primarily to lower export containerboard prices ($10 million), higher ~~containerboard~~operating and ~~corrugated products prices~~converting costs ($37 million) and ~~mix~~other fixed costs ($566 million), partially offset by higher containerboard and corrugated products sales and production volumes ($5111 million), higher domestic containerboard and corrugated products prices and mix ($20 million), lower Wallula No. 3 paper machine conversion-related costs ($6 million), lower annual outage expenses ($1 million), and lower ~~wood and recycled fiber costs ($7 million), partially offset by higher operating and converting costs ($60 million), higher~~ freight expense ($7 million), higher annual outage expense ($7 million), higher depreciation expense ($6 million), a partial insurance recovery related to the DeRidder Mill incident in 2017 ($3 million), fixed asset disposals ($2 million) and other expenses ($21 million). ~~Special~~There were no special items during the ~~third~~second quarter of 2019. Special items for the second quarter of 2018 included $6$5 million of Wallula Mill restructuring ~~and corrugated facility closure~~ charges. Special items for the third quarter 2017 included expense of $1 million related to closure costs for corrugated products facilities and integration costs related to the TimBar Corporation and Columbus Container, Inc. acquisitions.

Paper. Paper segment income from operations increased ~~$35~~$23 million to ~~$32~~$39 million, compared to ~~a loss of $3~~$16 million during the three months ended ~~September~~June 30, ~~2017.~~2018. The increase primarily related to higher prices and mix ($1920 million) ~~and~~, lower operating costs ($135 million), lower freight expenses ($2 million), and other costs ($2 million), partially offset by higher annual outage expenses ($9 million) and lower sales and production volumes ($~~21 million) and higher freight expense ($4~~6 million). ~~Special~~There were no special items ~~during~~in the ~~third~~Paper segment in the second quarter of ~~2018 included $1 million of Wallula Mill restructuring charges.~~2019. Special items for the ~~third~~second quarter ~~2017~~2018 included ~~$26~~expense of $8 million ofrelated to the Wallula Mill ~~restructuring charges and facilities closures.~~ restructuring.

Non-operating pension expense increased $1.5 million during the three months ended June 30, 2019, compared to the same period in 2018. The increase in non-operating pension expense was primarily related to the 2018 asset performance (i.e. lower asset balances resulted in lower than expected return) and the amortization of the 2018 losses.

Interest expense, net ~~and other~~ decreased $1 million during the three months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017.~~2018. The decrease in interest expense, net was primarily due to ~~no term loan~~higher interest income as ~~these were repaid~~a result of higher cash balances in ~~December 2017 and no interest on the Company’s 6.50% Senior Notes as these were repaid in March 2018, partially offset by the interest on the new notes related to the December 2017 refinancing.~~ 2019.

During the three months ended ~~September~~June 30, ~~2018,~~2019, we recorded ~~$67~~$62 million of income tax expense, compared to ~~$78~~$59 million of expense during the three months ended ~~September~~June 30, ~~2017.~~2018. The effective tax rate for the three months ended ~~September~~June 30, 2019 and 2018 was 24.4% and ~~2017 was 24.6% and 35.9%~~23.9%, respectively. The ~~decrease~~increase in our effective tax rate was ~~primarily~~ due to ~~federal tax reform as a result~~higher state and local income taxes net of the ~~Tax Act, which~~federal benefit and higher employee compensation related impacts from restricted stock vests with a lower excess tax benefit (ASU 2016-09) and from the ~~President signed into law on December 22, 2017, as well as an internal legal entity consolidation that took place during~~elimination of the ~~three months ended September 30, 2017.~~performance based exclusion in tax reform.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2018,~~2019, compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018

The historical results of operations of PCA for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 are set forth below (dollars in millions):

	Nine Months Ended										Six Months Ended
	September 30,										June 30,
	2018			2017				Change			2019			2018			Change
Packaging	$	4,434.2		$	3,915.0			$	519.2		$	2,982.2		$	2,899.1		$	83.1
Paper		774.5			784.3				(9.8	)		477.5			520.2			(42.7	)
Corporate and Other		173.8			171.2				2.6			112.5			114.2			(1.7	)
Intersegment eliminations		(114.4	)		(109.9	)			(4.5	)		(78.6	)		(75.4	)		(3.2	)
Net sales	$	5,268.1		$	4,760.6			$	507.5		$	3,493.6		$	3,458.1		$	35.5

Packaging	$	782.3		$	681.7		(b)	$	100.6		$	513.4		$	497.9		$	15.5
Paper		55.7			52.5		(b)		3.2			84.4			23.5			60.9
Corporate and Other		(57.0	)		(54.1	)	(b)		(2.9	)		(42.0	)		(38.9	)		(3.1	)
Income from operations	$	781.0		$	680.1			$	100.9		$	555.8		$	482.5		$	73.3
Interest expense, net and other		(75.0	)		(75.5	)	(b)		0.5
Non-operating pension expense												(4.1	)		(1.1	)		(3.0	)
Interest expense, net												(46.4	)		(49.6	)		3.2
Income before taxes		706.0			604.6				101.4			505.3			431.8			73.5
Income tax provision		(172.6	)		(204.9	)			32.3			(124.9	)		(105.1	)		(19.8	)
Net income	$	533.4		$	399.7			$	133.7		$	380.4		$	326.7		$	53.7
Non-GAAP Measures (a)
Net income excluding special items	$	555.0		$	422.0			$	133.0		$	380.9		$	343.9		$	37.0
Consolidated EBITDA		1,094.7			963.8		(b)		130.9			746.4			694.7			51.7
Consolidated EBITDA excluding special items		1,109.9			991.9		(b)		118.0			746.8			704.1			42.7
Packaging EBITDA		1,038.6			915.9		(b)		122.7			682.2			665.6			16.6
Packaging EBITDA excluding special items		1,049.0			921.7		(b)		127.3			682.4			670.8			11.6
Paper EBITDA		108.2			97.6		(b)		10.6			102.9			64.8			38.1
Paper EBITDA excluding special items		113.0			120.6		(b)		(7.6	)		103.1			69.0			34.1

Net sales increased ~~$507~~$36 million, or ~~10.7%~~1.0%, to ~~$5,268~~$3,494 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to ~~$4,761~~$3,458 million during the same period in ~~2017.~~2018.

Packaging. Net sales increased ~~$519~~$83 million, or ~~13.3%~~2.9%, to ~~$4,434~~$2,982 million, compared to ~~$3,915~~$2,899 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, due to ~~increased containerboard and corrugated products volume ($324 million) and~~ higher ~~domestic and export containerboard and~~ corrugated products prices and mix ($~~195~~92 million) and increased corrugated products volume ($12 million), partially offset by lower domestic and export containerboard price and mix ($12 million) and lower containerboard volume ($9 million). Our domestic containerboard prices in the first ~~nine~~six months of ~~2018 increased 6.7%,~~2019 were flat, and export prices ~~increased 20.8%~~decreased 11.7%, compared to the same period in ~~2017.~~2018. In the first ~~nine~~six months of ~~2018,~~2019, containerboard outside shipments ~~increased 13.7%, and total corrugated products shipments were up 7.5%,~~decreased 14.8% compared to the same period in ~~2017.~~2018. Total corrugated products shipments were down 0.3%, as there was one less work day in the first six months of 2019, compared to the first six months of 2018. However, corrugated products shipments in total per work day were up 0.5% during the six months ended June 30, 2019, compared to the same period in 2018. Prices reported by trade publications ~~increased~~decreased by ~~$50~~$10 per ton for linerboard in March, May, and June, and corrugating medium ~~during March 2018.~~decreased $20 in January and $10 in May and June 2019.

Paper. Net sales during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 decreased $9$43 million, or ~~1.2%~~8.2%, to ~~$775~~$477 million, compared to ~~$784~~$520 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, due to ~~decreased~~lower volume ($3088 million), partially offset by higher prices and mix ($2145 million).

Gross profit increased ~~$121~~$73 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017.~~2018. The increase was driven primarily by higher ~~containerboard and~~ corrugated products prices and mix and sales and production volumes, higher Paper segment prices and mix, ~~and lower costs for wood and recycled fiber,~~ partially offset by lower containerboard export prices, higher operating costs, and higher annual outage expense. In the ~~nine~~six months ended ~~September~~June 30, ~~2018 and 2017,~~2019, gross profit included no significant special items, ~~of $14~~compared to $15 million ~~and $3 million, respectively, related to~~of Wallula Mill ~~restructuring.~~restructuring charges in the same period last year.

Selling, general, and administrative expenses (“SG&A”) increased ~~$20~~$11 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017.~~2018. The increase was primarily due to higher employee salaries and fringes ($15 million), the Sacramento Container acquisition ($8 million), outside professional services ($6 million), and various other administrative expenses individually insignificant ($9 million). These increases were partially offset by certain expenses that were previously recorded in SG&A in 2017 which are now recorded in cost of sales for 2018 ($18 million). Effective January 1, 2018, the Company adopted ASU 2014-09 (Topic 606): ~~Revenue from Contracts with Customers~~ using the modified retrospective method. The new standard provides additional clarity concerning contract fulfillment costs, which resulted in certain costs being classified as cost of sales rather than SG&A for 2018.fringes.

Other income (expense), net, for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017~~2018 are set forth below (dollars in millions):

	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2018			2017			2019			2018
Asset disposals and write-offs	$	(14.4	)	$	(8.6	)	$	(8.8	)	$	(9.2	)
Wallula mill restructuring		(11.6	)		(22.7	)		(0.4	)		(7.9	)
Facilities closure and other costs		(1.6	)		(1.9	)		—			(0.1	)
Acquisition and integration related costs		(0.1	)		(0.8	)
Insurance deductible for property damage		(0.5	)		—
Hexacomb working capital adjustment		—			2.3
DeRidder mill incident		—			0.1
Other		(4.0	)		(0.8	)		(0.6	)		(4.4	)
Total	$	(32.2	)	$	(32.4	)	$	(9.8	)	$	(21.6	)

Income from operations increased ~~$101~~$73 million, or ~~14.8%~~15.2%, during the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to the same period in ~~2017.~~2018. The first ~~nine~~six months of ~~2018~~2019 included ~~$29~~less than $1 million of expense for special items, primarily related to ~~the~~ Wallula Mill restructuring. The ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 included ~~$25~~$23 million of ~~charges~~expense for special items, primarily related to ~~the~~ Wallula Mill restructuring; $5 million for the property damage and business interruption insurance deductible related to the DeRidder Mill incident; $3 million of charges consisting of closure costs related to corrugated products facilities and a paper administration facility, integration costs related to the TimBar Corporation and Columbus Container Inc. acquisitions, and costs related to a lump sum settlement payment for a multiemployer pension plan withdrawal liability; and $2 million of income related to a working capital adjustment from the April 2015 sale of our Hexacomb corrugated manufacturing operations in Europe and Mexico. restructuring.

Packaging. Packaging segment income from operations increased ~~$101~~$16 million to ~~$782~~$513 million during the first ~~nine~~six months of ~~2018~~2019 compared to the same period last year. The increase related primarily to higher domestic containerboard and corrugated products prices and mix ($~~176~~68 million), higher containerboard and corrugated products sales and production volumes ($~~116~~45 million), ~~and~~ lower ~~wood and~~ recycled fiber costs ($2814 million), ~~partially offset by higher operating and converting costs ($119 million), higher annual outage expense ($31 million), higher freight expense ($22 million), higher depreciation expense ($12 million),~~lower Wallula No. 3 paper machine conversion-related costs ($56 million), ~~an insurance recovery received in 2017 related to the DeRidder incident~~and lower annual outage expense ($34 million), partially offset by lower containerboard export prices ($12 million), higher operating and converting costs ($74 million), higher wood costs ($23 million), higher depreciation ($4 million), and other expenses ~~primarily related to the disposal and transfer~~($14 million). There were an insignificant amount of ~~fixed assets ($8 million). Special~~special items in the Packaging segment in the first ~~nine~~six months of 2019. The first six months of 2018 included $9$5 million of Wallula Mill restructuring charges and $2 million of closure costs related to corrugated products facilities and other costs. The nine months of 2017 included $5 million for the property damage and business interruption insurance deductible related to the DeRidder Mill incident; $3 million of charges consisting of closure costs related to corrugated products facilities, integration costs related to the TimBar Corporation and Columbus Container Inc. acquisitions, and costs related to a lump sum settlement payment for a multiemployer pension plan withdrawal liability; and $2 million of income related to a working capital adjustment from the April 2015 sale of our Hexacomb corrugated manufacturing operations in Europe and Mexico.charges.

Paper. Paper segment income from operations increased $3$61 million to ~~$56~~$84 million, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018. The increase primarily related to higher prices and mix ($2146 million), lower input and operating costs ($716 million), lower freight expenses ($3 million), and lower ~~annual outage~~depreciation and other expenses ($610 million), partially offset by lower sales and production ~~volumes~~volume ($1822 million), and higher ~~freight~~annual outage expense ($~~11 million), and higher wood and recycled fiber costs ($10~~9 million). ~~Special~~There were an insignificant amount of special items in the Paper segment in the first ~~nine~~six months of 2019. The first six months of 2018 included ~~$18~~$17 million of Wallula Mill restructuring charges. ~~Special items for~~

Non-operating pension expense increased $3 million during the six months ended June 30, 2019, compared to the same period in ~~2017 included $25 million~~2018. The increase in non-operating pension expense was primarily related to the 2018 asset performance (i.e. lower asset balances resulted in lower than expected return) and the amortization of ~~Wallula Mill restructuring charges.~~ the 2018 losses.

Interest expense, net, ~~and other~~ was ~~$75~~$46 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to ~~$76~~$50 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018. The decrease in interest expense was primarily due to ~~no term loan~~higher interest income as ~~these were repaid~~a result of higher cash balances in ~~December~~

~~2017~~2019 and lower interest, onas the ~~Company’s 6.50% Senior Notes as these were~~Company repaid $150 million of notes in March ~~2018, partially offset by interest on the new notes related to the December 2017 refinancing.~~2018.

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we recorded ~~$173~~$125 million of income tax expense, compared to ~~$205~~$105 million of expense during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2018. The effective tax rate for the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018 was 24.7% and ~~2017 was 24.4% and 33.9%~~24.3%, respectively. The ~~decrease~~increase in our effective tax rate was ~~primarily~~ due to higher state and local income taxes net of the ~~Tax Act as well as an internal legal entity consolidation that took place during the nine months ended September 30, 2017, partially offset by~~federal benefit and higher employee compensation related impacts from restricted stock vests with a lower excess tax ~~benefits~~benefit (ASU 2016-09) and from ~~employee share-based payment awards under ASU 2016-09~~the elimination of the performance based exclusion in ~~2018 compared with the same period in 2017.~~tax reform.

Our primary sources of liquidity are net cash provided by operating activities and available borrowing capacity under our revolving credit facility. At ~~September~~June 30, ~~2018,~~2019, we had ~~$294~~$569 million of cash and ~~$327~~ $328millionof unused borrowing capacity under the revolving credit facility, net of letters of credit. Currently, our primary uses of cash are for operations, capital expenditures, acquisitions, debt service, common stock dividends, and repurchases of common ~~stock, and declared common stock dividends.~~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):

	Nine Months Ended									Six Months Ended
	September 30,									June 30,
	2018			2017			Change			2019			2018			Change
Net cash provided by (used for):
Operating activities	$	834.5		$	583.3		$	251.2		$	538.4		$	533.5		$	4.9
Investing activities		(405.3	)		(227.6	)		(177.7	)		(172.8	)		(273.5	)		100.7
Financing activities		(352.3	)		(224.5	)		(127.8	)		(157.7	)		(277.3	)		119.6
Net increase in cash and cash equivalents	$	76.9		$	131.2		$	(54.3	)
Net increase (decrease) in cash and cash equivalents										$	207.9		$	(17.3	)	$	225.2

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, ~~2018,~~2019, net cash provided by operating activities was ~~$835~~$538 million, compared to ~~$583~~$533 million in the same period in ~~2017,~~2018, an increase of ~~$252~~$5 million. Cash from operations excluding changes in cash used for operating assets and liabilities increased ~~$205~~$46 million, primarily due to higher income from operations as discussed ~~above and lower pension contributions.~~above. Cash ~~increased~~decreased by ~~$47~~$41 million due to changes in operating assets and liabilities. The ~~increase~~decrease was primarily due to the following: (a) ~~a reduction in~~lower taxes paid in 2018 ascompared to 2019 due to the 2018 use of a ~~result of~~federal overpayment carryforward from the 2017 tax year resulting from Federal Tax Reform, (b) ana smaller increase in ~~accrued liabilities due~~inventory for 2018 compared to 2019 primarily related to higher sales in the Paper segment during the first six months in 2018 compared to 2019 resulting in favorable changes in finished goods, and (c) a decrease in accounts payable levels related to the timing of ~~interest~~ payments ~~associated with the new notes issued in December 2017, and (c) the receipt of the DeRidder insurance proceeds~~ in the ~~first quarter of 2018.~~second quarter. These changes were partially offset by ana smaller increase in ~~inventories~~accounts receivable in 2019 compared to 2018 related to timing of collections in the Packaging ~~segment in anticipation of the Wallula Mill extended outage in the fourth quarter of 2018 as well as additional inventory build due to the Sacramento Container acquisition.~~segment.

We used ~~$405~~$173 million for investing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 compared to ~~$228~~$274 million during the same period in ~~2017.~~2018. We spent ~~$404~~$171 million for internal capital investments ~~including the Wallula No. 3 paper machine conversion to kraft linerboard,~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, compared to ~~$226~~$274 million during the same period in ~~2017.~~2018.

We expect capital investments in ~~2018~~2019 to be between ~~$530~~$390 million and ~~$550~~$410 million, not including acquisitions. 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 $8$10 million in ~~2018.~~2019. Our estimated environmental expenditures could vary significantly depending upon the enactment of new environmental laws and regulations, including those related to greenhouse gas emissions and industrial boilers. For additional information, see “Environmental Matters” in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our ~~2017~~2018 Annual Report on Form 10-K.

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, net cash used for financing activities was ~~$352~~$158 million, compared to ~~$225~~$277 million during the same period in ~~2017.~~2018. The ~~increase~~decrease primarily relates to the $150 million repayment from cash on hand at maturity of our 6.5% senior notes that were due March 2018. ~~During~~In the ~~comparable period in 2017,~~first six months of 2019, we ~~made $36~~paid $149 million of ~~principal payments~~dividends compared with $119 million of dividends paid during the first six months of 2018. On May 15, 2018, PCA's Board of Directors announced an increase in the regular quarterly cash dividend to $0.79 per share from the previous $0.63 per share dividend, beginning with the dividend paid on ~~long-term variable rate debt and capital leases.~~July 13, 2018.

For more information about our debt, see Note 9,10, Debt, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our ~~2017~~2018 Annual Report on Form 10-K.

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 ~~2017~~2018 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, ~~2018~~2019 and ~~2017~~2018 follow (dollars in millions):

Three Months Ended September 30,

2018

2017

Income
before
Taxes

Income
Taxes

Net
Income

Income
before
Taxes

Income
Taxes

Net
Income

As reported in accordance with GAAP

$
274.1

$
(67.4
)

$
206.7

$
216.9

$
(77.8
)

$
139.1

Special items:

Wallula mill restructuring (a)(b)

4.0

(1.1
)

2.9

25.3

(9.8
)

15.5

Facilities closure and other costs (a)(b)

1.3

(0.3
)

1.0

0.9

(0.3
)

0.6

Acquisition and integration related costs (a)(b)

0.1

—

0.1

0.5

(0.2
)

0.3

Insurance deductible for property damage (a)

0.5

(0.1
)

0.4

—

—

—

Internal legal entity consolidation (b)

—

—

—

—

3.3

3.3

Total special items

5.9

(1.5
)

4.4

26.7

(7.0
)

19.7

Excluding special items

$
280.0

$
(68.9
)

$
211.1

$
243.6

$
(84.8
)

$
158.8

Nine Months Ended September 30,

2018

2017

Income
before
Taxes

Income
Taxes

Net
Income

Income
before
Taxes

Income
Taxes

Net
Income

As reported in accordance with GAAP

$
706.0

$
(172.6
)

$
533.4

$
604.6

$
(204.9
)

$
399.7

Special items:

Wallula mill restructuring (a)(b)

26.4

(6.6
)

19.8

25.3

(9.7
)

15.6

Facilities closure and other costs (a)(b)

1.8

(0.5
)

1.3

1.9

(0.7
)

1.2

Acquisition and integration related costs (a)(b)

0.1

—

0.1

0.8

(0.3
)

0.5

Insurance deductible for property damage (a)

0.5

(0.1
)

0.4

—

—

—

DeRidder mill incident (c)

—

—

—

5.0

(1.9
)

3.1

Hexacomb working capital adjustment (c)

—

—

—

(2.3
)

0.9

(1.4
)
Internal legal entity consolidation (b)

—

—

—

—

3.3

3.3

Total special items

28.8

(7.2
)

21.6

30.7

(8.4
)

22.3

Excluding special items

$
734.8

$
(179.8
)

$
555.0

$
635.3

$
(213.3
)

$
422.0

	Three Months Ended June 30,
	2019							2018
	Income before Taxes		Income Taxes			Net Income		Income before Taxes		Income Taxes			Net Income
As reported in accordance with GAAP	$	256.0	$	(62.4	)	$	193.6	$	245.3	$	(58.7	)	$	186.6
Special items:
Wallula mill restructuring (b)		—		—			—		13.6		(3.4	)		10.2
Facilities closure and other costs (b)		—		—			—		0.2		—			0.2
Total special items		—		—			—		13.8		(3.4	)		10.4
Excluding special items	$	256.0	$	(62.4	)	$	193.6	$	259.1	$	(62.1	)	$	197.0

~~$0.5 million of costs for the property damage insurance deductible for a weather-related incident at one of the corrugated products facilities.~~

	Six Months Ended June 30,
	2019							2018
	Income before Taxes		Income Taxes			Net Income		Income before Taxes		Income Taxes			Net Income
As reported in accordance with GAAP	$	505.3	$	(124.9	)	$	380.4	$	431.8	$	(105.1	)	$	326.7
Special items:
Wallula mill restructuring (a)(b)		0.6		(0.1	)		0.5		22.4		(5.6	)		16.8
Facilities closure and other costs (b)		—		—			—		0.5		(0.1	)		0.4
Total special items		0.6		(0.1	)		0.5		22.9		(5.7	)		17.2
Excluding special items	$	505.9	$	(125.0	)	$	380.9	$	454.7	$	(110.8	)	$	343.9

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,
	2018		2017		2018		2017			2019		2018		2019		2018
Net income	$	206.7	$	139.1	$	533.4	$	399.7		$	193.6	$	186.6	$	380.4	$	326.7
Interest expense, net and other		24.4		25.7		75.0		75.5
Non-operating pension expense											2.0		0.5		4.1		1.1
Interest expense, net											22.4		23.8		46.4		49.6
Income tax provision		67.4		77.8		172.6		204.9			62.4		58.7		124.9		105.1
Depreciation, amortization, and depletion		101.5		97.5		313.7		283.7			95.8		104.1		190.6		212.2
EBITDA	$	400.0	$	340.1	$	1,094.7	$	963.8		$	376.2	$	373.7	$	746.4	$	694.7

Special items:
Wallula mill restructuring		3.7		22.7		13.0		22.7			—		8.6		0.4		9.3
Facilities closure and other costs		1.5		0.9		1.6		1.9			—		—		—		0.1
Acquisition and integration related costs		0.1		0.5		0.1		0.8
Insurance deductible for property damage		0.5		—		0.5		—
DeRidder mill incident		—		—		—		5.0
Hexacomb working capital adjustment		—		—		—		(2.3	)
Total special items		5.8		24.1		15.2		28.1			—		8.6		0.4		9.4
EBITDA excluding special items	$	405.8	$	364.2	$	1,109.9	$	991.9		$	376.2	$	382.3	$	746.8	$	704.1

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,
	2018			2017			2018			2017			2019			2018			2019			2018
Packaging
Segment income	$	284.4		$	263.2		$	782.3		$	681.7		$	263.9		$	273.2		$	513.4		$	497.9
Depreciation, amortization, and depletion		88.6			78.7			256.3			234.2			84.7			84.5			168.8			167.7
EBITDA		373.0			341.9			1,038.6			915.9			348.6			357.7			682.2			665.6
Wallula mill restructuring														—			5.1			0.2			5.1
Facilities closure and other costs		1.5			0.6			1.6			1.6			—			—			—			0.1
Acquisition and integration related costs		0.1			0.5			0.1			0.8
Wallula mill restructuring		3.1			—			8.2			—
Property damage insurance deductible		0.5			—			0.5			—
DeRidder mill incident		—			—			—			5.0
Hexacomb working capital adjustment		—			—			—			(1.6	)
EBITDA excluding special items	$	378.2		$	343.0		$	1,049.0		$	921.7		$	348.6		$	362.8		$	682.4		$	670.8

Paper
Segment income	$	32.3		$	(2.6	)	$	55.7		$	52.5		$	38.8		$	16.2		$	84.4		$	23.5
Depreciation, amortization, and depletion		11.2			17.1			52.5			45.1			9.4			18.0			18.5			41.3
EBITDA		43.5			14.5			108.2			97.6			48.2			34.2			102.9			64.8
Wallula mill restructuring		0.6			22.7			4.8			22.7			—			3.5			0.2			4.2
Facilities closure and other costs		—			0.3			—			0.3
EBITDA excluding special items	$	44.1		$	37.5		$	113.0		$	120.6		$	48.2		$	37.7		$	103.1		$	69.0

Corporate and Other
Segment loss	$	(18.2	)	$	(18.0	)	$	(57.0	)	$	(54.1	)	$	(22.3	)	$	(19.8	)	$	(42.0	)	$	(38.9	)
Depreciation, amortization, and depletion		1.7			1.7			4.9			4.4			1.7			1.6			3.3			3.2
EBITDA		(16.5	)		(16.3	)		(52.1	)		(49.7	)		(20.6	)		(18.2	)		(38.7	)		(35.7	)
Hexacomb working capital adjustment		—			—			—			(0.7	)
EBITDA excluding special items	$	(16.5	)	$	(16.3	)	$	(52.1	)	$	(50.4	)	$	(20.6	)	$	(18.2	)	$	(38.7	)	$	(35.7	)

EBITDA	$	400.0		$	340.1		$	1,094.7		$	963.8		$	376.2		$	373.7		$	746.4		$	694.7

EBITDA excluding special items	$	405.8		$	364.2		$	1,109.9		$	991.9		$	376.2		$	382.3		$	746.8		$	704.1

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, ~~2018.~~2019. For a discussion of derivatives and hedging activities, see Note ~~13,~~14, Derivative Instruments and Hedging Activities, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our ~~2017~~2018 Annual Report on Form 10-K.

At ~~September~~June 30, ~~2018~~2019, 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, ~~2018.~~2019.

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 ~~2017~~2018 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 ~~2017~~2018 Annual Report on Form 10-Ka 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 ~~2018.~~2019.

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, ~~2017.~~2018.

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, ~~2018.~~2019. 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, ~~2018.~~2019.

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 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

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, ~~2018:~~2019:

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, 2018			1,101	$	112.37		—	$	193.0
August 1-31, 2018			400		110.56		—		193.0
September 1-30, 2018			—		—		—		193.0
April 1-30, 2019												—	$	—		—	$	193.0
May 1-31, 2019												1,216		95.42		—		193.0
June 1-30, 2019												81,455		92.89		—		193.0
Total			1,501	$	111.89		—	$	193.0			82,671	$	92.92		—	$	193.0

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 ~~Prinicpal~~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	1718

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

	PART II

Item 1.	Legal Proceedings	3029

Item 1A.	Risk Factors	3029

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3029

Item 3.	Defaults Upon Senior Securities	3029

Item 4.	Mine Safety Disclosures	3029

Item 5.	Other Information	3029

Item 6.	Exhibits	3130

	June 30, 2019
Operating leases:
Operating lease right-of-use assets	$	238.0

Current portion of operating lease obligations	$	59.9
Long-term portion of operating lease obligations		183.4
Total operating lease obligations	$	243.3

Finance leases:
Buildings	$	0.3
Machinery and equipment		28.5
Total		28.8
Less accumulated amortization		(17.4	)
Total	$	11.4

Current portion of finance lease obligations	$	1.5
Long-term portion of finance lease obligations		16.8
Total finance lease obligations	$	18.3

Weighted-average remaining lease term (years):
Operating leases		5.9
Finance leases		9.3
Weighted-average discount rate:
Operating leases	4.38%
Finance leases	6.66%

	Six Months Ended
	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	(29.5	)
Operating cash flows for finance leases		(0.7	)
Financing cash flows for finance leases		(0.6	)
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	(16.1	)
Finance leases		—

Supplemental non-cash information on changes in lease liabilities	$	28.8
Supplemental non-cash information on changes in right-of-use assets	$	6.1

Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐

Non-accelerated filer	☐	Smaller reporting company	☐
~~Emerging growth company~~	☐

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Finance lease cost:
Amortization of finance lease assets	$	0.4	$	0.7
Interest on lease liabilities		0.3		0.6
Total finance lease cost		0.7		1.3
Operating lease cost		17.3		34.7
Short-term lease cost		6.4		10.7
Variable lease cost		3.9		9.8
Total lease cost	$	28.3	$	56.5

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Packaging	$	1,504.6	$	1,496.2	$	2,982.2	$	2,899.1
Paper		237.8		250.8		477.5		520.2
Corporate and Other		17.5		20.5		33.9		38.8
Total revenue	$	1,759.9	$	1,767.5	$	3,493.6	$	3,458.1

	12/31/2017 Allocation		Adjustments			Revised Allocation
Goodwill	$	151.1	$	5.5		$	156.6
Other intangible assets		72.6		(5.5	)		67.1
Property, plant and equipment		26.7		—			26.7
Other net assets		23.4		—			23.4
Net assets acquired	$	273.8	$	—		$	273.8

	~~Goodwill~~
~~Balance at January 1, 2018~~	$	~~883.2~~
~~Acquisitions (a)~~		~~5.5~~
~~Balance at September 30, 2018~~	$	~~888.7~~

	Postretirement Plans
	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Service cost	$	0.1		$	0.1		$	0.2		$	0.2
Interest cost		0.1			0.2			0.4			0.5
Net amortization of unrecognized amounts
Prior service cost		(0.1	)		(0.1	)		(0.2	)		(0.1	)
Actuarial income		—			(0.1	)		(0.1	)		(0.1	)
Net periodic benefit cost	$	0.1		$	0.1		$	0.3		$	0.5

	Foreign Currency Translation Adjustments			Unrealized Loss On Treasury Locks, Net			Unrealized Loss on Foreign Exchange Contracts			Unfunded Employee Benefit Obligations			Total
Balance at January 1, 2018	$	(0.3	)	$	(14.2	)	$	(0.3	)	$	(142.1	)	$	(156.9	)
Amounts reclassified from AOCI, net of tax		(0.1	)		3.0			—			8.9			11.8
Balance at September 30, 2018	$	(0.4	)	$	(11.2	)	$	(0.3	)	$	(133.2	)	$	(145.1	)

Segment income (loss)	Three Months Ended September 30, 2017 As Reported			Non-Operating Pension Adjustment			Three Months Ended September 30, 2017 Adjusted
Packaging	$	261.5		$	1.7		$	263.2
Paper		(0.7	)		(1.9	)		(2.6	)
Corporate		(18.5	)		0.5			(18.0	)
Income from operations		242.3			0.3			242.6
Interest expense, net and other		(25.4	)		(0.3	)		(25.7	)
Income before taxes	$	216.9		$	—		$	216.9

Segment income (loss)	Nine Months Ended September 30, 2017 As Reported			Non-Operating Pension Adjustment			Nine Months Ended September 30, 2017 Adjusted
Packaging	$	676.8		$	4.9		$	681.7
Paper		58.1			(5.6	)		52.5
Corporate		(55.7	)		1.6			(54.1	)
Income from operations		679.2			0.9			680.1
Interest expense, net and other		(74.6	)		(0.9	)		(75.5	)
Income before taxes	$	604.6		$	—		$	604.6

Exhibit Number		Description

10.1		Form of 2019 Executive Officer Restricted Stock Award. †

10.2		Form of 2019 Executive Officer Performance Unit Award – ROIC. †

10.3		Form of 2019 Executive Officer Performance Unit Award – TSR. †

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~~101.INS		~~The following financial information from Packaging Corporation of America’s Quarterly Report on Form 10-Q for~~XBRL Instance Document – the ~~quarter ended September 30, 2018, formatted~~instance document does not appear in the Interactive Data File because its XBRL ~~(eXtensible Business Reporting Language): (i) Consolidated Statements of Income and Comprehensive Income for~~tags are embedded within the three and nine months ended September 30, 2018 and 2017, (ii) Consolidated Balance Sheets at September 30, 2018 and December 31, 2017, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017, and (iv) the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements.Inline XBRL document.†

101.SCH		XBRL Taxonomy Extension Schema Document. †

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document. †

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document. †

101.LAB		XBRL Taxonomy Extension Label Linkbase Document. †

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document. †

		Packaging Corporation of America

		/s/ M~~ARK~~ ~~W. KOWLZAN~~PAMELA A. BARNES
		~~Mark W. Kowlzan~~Pamela A. Barnes
		~~Chairman~~Senior Vice President, Finance and ~~Chief Executive Officer~~Controller

		~~/s/ ROBERT~~ ~~P. MUNDY~~
		~~Robert P. Mundy~~
		~~Senior Vice President and Chief Financial Officer~~