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Document and Entity Information - USD ($)	6 Months Ended
Document and Entity Information - USD ($)	Jun. 30, 2010	Aug. 02, 2010	Jun. 30, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	PACKAGING CORP OF AMERICA
Entity Central Index Key	0000075677
Document Type	10-Q
Document Period End Date	Jun. 30, 2010
Amendment Flag	false
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1,645,908,385
Entity Common Stock, Shares Outstanding		103,623,814

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2010	Dec. 31, 2009
Current assets:
Cash and cash equivalents	$ 181,511	$ 260,727
Accounts receivable, net of allowance for doubtful accounts and customer deductions of $5,272 and $6,348 as of June 30, 2010 and December 31, 2009, respectively	308,665	243,403
Inventories	207,867	213,396
Alternative fuel mixture tax credits receivable	96,039	127,811
Federal and state income taxes receivable	22,810	4,707
Prepaid expenses and other current assets	29,960	13,045
Deferred income taxes	13,944	22,125
Total current assets	860,796	885,214
Property, plant and equipment, net	1,256,927	1,182,504
Goodwill	38,854	38,854
Other intangible assets, net	11,382	11,790
Other long-term assets	35,560	34,478
Total assets	2,203,519	2,152,840
Current liabilities:
Short-term debt and current maturities of long-term debt	109,000	109,000
Capital lease obligations	648	626
Accounts payable	165,835	126,813
Dividends payable	15,455	15,451
Accrued interest	12,601	12,644
Accrued liabilities	93,488	106,423
Total current liabilities	397,027	370,957
Long-term liabilities:
Long-term debt	548,924	548,749
Capital lease obligations	22,173	22,503
Deferred income taxes	190,756	205,227
Pension and postretirement benefit plans	84,154	78,859
Other long-term liabilities	39,332	27,700
Total long-term liabilities	885,339	883,038
Stockholders' equity:
Common stock, par value $0.01 per share, 300,000,000 shares authorized, 103,470,588 shares and 103,018,358 shares issued as of June 30, 2010 and December 31, 2009, respectively	1,035	1,030
Additional paid in capital	391,634	387,496
Retained earnings	572,672	546,355
Accumulated other comprehensive income (loss), net of tax:
Unrealized gain (loss) on treasury locks, net	(4,504)	4,512
Unrealized loss on foreign currency exchange contracts	(925)	0
Unfunded employee benefit obligations	(38,759)	(40,548)
Total accumulated other comprehensive loss	(44,188)	(36,036)
Total stockholders' equity	921,153	898,845
Total liabilities and stockholders' equity	$ 2,203,519	$ 2,152,840

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2010	Dec. 31, 2009
Current assets:
Allowance for doubtful accounts receivable and reserve for customer deductions, current	$ 5,272,000	$ 6,348,000
Stockholders' equity:
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	103,470,588	103,018,358

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2010	Jun. 30, 2009	Jun. 30, 2010	Jun. 30, 2009
Condensed Consolidated Statements of Income [Abstract]
Net sales	$ 615,459	$ 549,381	$ 1,166,191	$ 1,061,759
Cost of sales	(483,794)	(430,882)	(947,727)	(833,252)
Gross profit	131,665	118,499	218,464	228,507
Selling and administrative expenses	(44,653)	(42,759)	(88,930)	(86,067)
Corporate overhead	(15,386)	(15,453)	(28,016)	(28,888)
Alternative fuel mixture tax credits income		79,695	9,235	79,695
Other expense, net	(3,880)	(4,265)	(9,391)	(7,923)
Income from operations	67,746	135,717	101,362	185,324
Interest expense, net	(8,093)	(8,830)	(16,816)	(17,568)
Income (Loss) from Continuing Operations Before Income Taxes	59,653	126,887	84,546	167,756
Provision for income taxes	(21,623)	(18,006)	(27,322)	(33,199)
Net income	$ 38,030	$ 108,881	$ 57,224	$ 134,557
Weighted average common shares outstanding:
Basic	102,035	101,469	101,982	101,416
Diluted	102,886	102,164	102,885	102,143
Net income per common share:
Basic	$ 0.37	$ 1.07	$ 0.56	$ 1.33
Diluted	0.37	1.07	0.56	1.32
Dividends declared per common share	$ 0.15	$ 0.15	$ 0.3	$ 0.3

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2010	Jun. 30, 2009
Cash Flows from Operating Activities:
Net income	$ 57,224	$ 134,557
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	77,728	74,279
Amortization of financing costs	344	389
Amortization of net gain on treasury lock	(923)	(923)
Share-based compensation expense	3,788	4,511
Deferred income tax provision	(3,639)	6,453
Loss on disposals of property, plant and equipment	3,837	4,357
Alternative Fuel Mixture Tax Credits Receivable	31,770	(62,455)
(Increase) decrease in assets-
Accounts receivable	(65,760)	(8,550)
Inventories	5,529	68
Prepaid expenses and other current assets	(35,067)	(23,686)
Increase (decrease) in liabilities -
Accounts payable	39,022	20,383
Accrued liabilities	(14,203)	(5,998)
Other, net	8,934	(2,137)
Net cash provided by operating activities	108,584	141,248
Cash Flows from Investing Activities:
Additions to property, plant and equipment	(155,349)	(50,294)
Additions to other long term assets	(1,711)	(1,800)
Proceeds from disposals of property, plant and equipment	93	28
Net cash used for investing activities	(156,967)	(52,066)
Cash Flows from Financing Activities:
Payments on long-term debt	(307)	(309)
Common stock dividends paid	(30,911)	(46,079)
Repurchases of common stock	(3,111)
Proceeds from exercise of stock options	2,761	593
Excess tax benefits from share-based awards	735	160
Net cash used for financing activities	(30,833)	(45,635)
Net increase (decrease) in cash and cash equivalents	(79,216)	43,547
Cash and cash equivalents, beginning of period	260,727	149,397
Cash and cash equivalents, end of period	$ 181,511	$ 192,944

Basis of Presentation

6 Months Ended

Jun. 30, 2010

Basis of Presentation [Abstract]

Basis of Presentation


1.	Basis of Presentation

The condensed consolidated financial statements as of June 30, 2010 and 2009 of Packaging Corporation of America (“PCA” or the “Company”) and for the three- and six-month periods then ended are unaudited but include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. 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 SEC Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete audited financial statements. Operating results for the period ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. These condensed consolidated financial statements should be read in conjunction with PCA’s Annual Report on Form 10-K for the year ended December 31, 2010.

Summary of Accounting Policies

6 Months Ended

Jun. 30, 2010

Summary of Accounting Policies [Abstract]

Summary of Accounting Policies


2.	Summary of Accounting Policies

Basis of Consolidation

The accompanying condensed consolidated financial statements of PCA include all majority-owned subsidiaries. All intercompany transactions have been eliminated. The Company has one joint venture that is accounted for under the equity method.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts in the financial statements and the accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue as title to the products is transferred to customers. Shipping and handling billings to a customer are included in net sales. Shipping and handling costs are included in cost of sales. In addition, the Company offers volume rebates to certain of its customers. The total cost of these programs is estimated and accrued as a reduction to net sales at the time of the respective sale.

Segment Information

PCA is engaged in one line of business: the integrated manufacture and sale of packaging materials, boxes and containers for industrial and consumer markets. No single customer accounts for more than 10% of total net sales.

Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-06, “Fair Value Measurements and Disclosures (Topic 820) — Improving Disclosures about Fair Value Measurements.” This ASU requires new disclosures and clarifies existing disclosure requirements about fair value measurement as set forth in Accounting Standards Codification (“ASC”) 820. ASU 2010-06 amends ASC 820 to now require: (1) a reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers; and (2) in the reconciliation for fair value measurements using significant unobservable inputs, a reporting entity should present separately information about purchases, sales, issuances, and settlements. In addition, ASU 2010-06 clarifies the requirements of existing disclosures. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company adopted this guidance on January 1, 2010. See Note 12 for additional information.

In December 2009, the FASB issued ASU 2009-16, “Transfers and Servicing (Topic 860) — Accounting for Transfers of Financial Assets,” which formally codifies FASB Statement No. 166, “Accounting for Transfers of Financial Assets,” into the FASB Accounting Standards Codification. ASU 2009-16 revises the provisions of former FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. ASU 2009-16 is effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009. The Company adopted this guidance on January 1, 2010. See Note 9 for additional information.

Earnings Per Share

6 Months Ended

Jun. 30, 2010

Earnings Per Share [Abstract]

Earnings Per Share


3.	Earnings Per Share

The following table sets forth the computation of basic and diluted income per common share for the periods presented.


	Three Months Ended
	June 30,
	2010		2009
(In thousands, except per share data)

Numerator:
Net income	$	38,030	$	108,881
Denominator:
Basic common shares outstanding		102,035		101,469
Effect of dilutive securities:
Stock options		233		46
Unvested restricted stock		618		649

Dilutive common shares outstanding		102,886		102,164

Basic income per common share	$	0.37	$	1.07
Diluted income per common share	$	0.37	$	1.07


	Six Months Ended
	June 30,
	2010		2009
(In thousands, except per share data)

Numerator:
Net income	$	57,224	$	134,557
Denominator:
Basic common shares outstanding		101,982		101,416
Effect of dilutive securities:
Stock options		248		43
Unvested restricted stock		655		684

Dilutive common shares outstanding		102,885		102,143

Basic income per common share	$	0.56	$	1.33
Diluted income per common share	$	0.56	$	1.32

Options to purchase 0.6 million shares and 2.0 million shares for both the three- and six-month periods ended June 30, 2010 and 2009, respectively, were not included in the computation of diluted common shares outstanding as their exercise price exceeded the average market price of the Company’s common stock for each respective reporting period.

Comprehensive Income

6 Months Ended

Jun. 30, 2010

Comprehensive Income [Abstract]

Comprehensive Income


4.	Comprehensive Income

Comprehensive income is as follows:


	Three Months Ended June 30,
	2010			2009
(In thousands)

Net income	$	38,030		$	108,881
Other comprehensive income, net of tax:
Amortization of unfunded employee benefit obligations		894			860
Amortization of net gain on treasury locks		(281	)		(461	)
Unrealized losses on treasury locks		(8,273	)		—
Unrealized losses on foreign currency exchange contracts		(114	)		—

Comprehensive income	$	30,256		$	109,280


	Six Months Ended June 30,
	2010			2009
(In thousands)

Net income	$	57,224		$	134,557
Other comprehensive income, net of tax:
Amortization of unfunded employee benefit obligations		1,789			1,718
Amortization of net gain on treasury locks		(743	)		(923	)
Unrealized losses on treasury locks		(8,273	)		—
Unrealized losses on foreign currency exchange contracts		(925	)		—
Other		—			(125	)

Comprehensive income	$	49,072		$	135,227

Stock-Based Compensation

6 Months Ended

Jun. 30, 2010

Stock-Based Compensation [Abstract]

Stock-Based Compensation


5.	Stock-Based Compensation

In October 1999, the Company adopted a long-term equity incentive plan, which provides for grants of stock options, stock appreciation rights, restricted stock and performance awards to directors, officers and employees of PCA, as well as others who engage in services for PCA. Option awards granted to directors, officers and employees have contractual lives of seven or ten years. Options granted to officers and employees vest ratably over a three-year period, and options granted to directors vest immediately. Restricted stock awards granted to employees vest at the end of a four-year period, and restricted stock awards granted to directors vest at the end of a six-month period. The plan, which will terminate on October 19, 2014, provides for the issuance of up to 8,550,000 shares of common stock over the life of the plan. As of June 30, 2010, options and restricted stock of 6,975,001 shares have been granted, net of forfeitures. Forfeitures are added back to the pool of shares of common stock available to be granted at a future date.

Compensation expense for both stock options and restricted stock recognized in the condensed consolidated statements of income for the three- and six-month periods ended June 30, 2010 and 2009 was as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
(In thousands)

Stock options	$	64		$	181		$	221		$	366
Restricted stock		2,488			3,090			3,567			4,145

Impact on income before income taxes		2,552			3,271			3,788			4,511
Income tax benefit		(994	)		(1,270	)		(1,475	)		(1,752	)

Impact on net income	$	1,558		$	2,001		$	2,313		$	2,759

The Company uses the Black-Scholes-Merton option-pricing model to estimate the fair value of each option grant as of the date of grant. Expected volatilities are based on historical volatility of the Company’s common stock. The expected life of the option is estimated using historical data pertaining to option exercises and employee terminations. Separate groups of employees that have similar historical exercise behavior are considered separately for estimating the expected life. The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant. The fair value of restricted stock is determined based on the closing price of the Company’s common stock on the grant date. There were no option grants during the first or second quarters of 2010.

A summary of the Company’s stock option activity and related information follows:


						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Options			Price		Term (years)		Value
								(In thousands)

Outstanding at December 31, 2009		1,973,301		$	20.92
Exercised		(163,230	)		16.92
Forfeited		(3,182	)		25.56

Outstanding and exercisable at June 30, 2010		1,806,889		$	21.28		2.9	$	2,918

The total intrinsic value of options exercised during the three months ended June 30, 2010 and 2009 was $0.5 million and $1.2 million, respectively, and during the six months ended June 30, 2010 and 2009 was $1.3 million and $1.2 million respectively. As of June 30, 2010, there is no unrecognized compensation cost related to stock option awards granted under the Company’s equity incentive plan as all outstanding awards have vested.

A summary of the Company’s restricted stock activity follows:


	2010						2009
				Fair Market						Fair Market
				Value at						Value at
				Date of						Date of
(Dollars in thousands)	Shares			Grant			Shares			Grant

Restricted stock at January 1		1,235,505		$	24,718			1,038,270		$	23,023
Granted		448,440			9,933			424,985			6,587
Vested		(315,640	)		(6,509	)		(219,760	)		(4,683	)
Cancellations		(9,440	)		(182	)		(6,050	)		(135	)

Restricted stock at June 30		1,358,865		$	27,960			1,237,445		$	24,792

The Company generally recognizes compensation expense associated with restricted stock awards ratably over their vesting periods. As PCA’s Board of Directors has the ability to accelerate vesting of restricted stock upon an employee’s retirement, the Company accelerates the recognition of compensation expense for certain employees approaching normal retirement age. As of June 30, 2010, there was $15.8 million of total unrecognized compensation costs related to the above restricted stock awards. The Company expects to recognize the cost of these stock awards over a weighted-average period of 3.2 years.

Inventories

6 Months Ended

Jun. 30, 2010

Inventories [Abstract]

Inventories


6.	Inventories

The components of inventories are as follows:


	June 30,			December 31,
	2010			2009
(In thousands)				(Audited)

Raw materials	$	104,378		$	101,429
Work in process		7,603			6,600
Finished goods		69,729			66,994
Supplies and materials		96,532			100,919

Inventories at FIFO or average cost		278,242			275,942
Excess of FIFO or average cost over LIFO cost		(70,375	)		(62,546	)

Inventories, net	$	207,867		$	213,396

An actual valuation of inventory under the LIFO method is made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of expected year-end inventory levels and costs. Because these are subject to many factors beyond management’s control, interim results are subject to the final year-end LIFO inventory valuation.

Other Intangible Assets

6 Months Ended

Jun. 30, 2010

Other Intangible Assets [Abstract]

Other Intangible Assets


7.	Other Intangible Assets

The components of other intangible assets are as follows:

As of June 30, 2010

As of December 31, 2009

Weighted

Gross

Average

Carrying

Accumulated

Carrying

Accumulated

Remaining Life

Amount

Amortization

Amount

Amortization

(In thousands)

(Audited)

Customer lists and relations

31.5 years

17,441

6,059

17,441

5,651

Employee Benefit Plans and Other Postretirement Benefits

6 Months Ended

Jun. 30, 2010

Employee Benefit Plans and Other Postretirement Benefits [Abstract]

Employee Benefit Plans and Other Postretirement Benefits


8.	Employee Benefit Plans and Other Postretirement Benefits

For the three- and six-months ended June 30, 2010 and 2009, net pension costs were comprised of the following:


	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
	2010			2009			2010			2009
(In thousands)

Components of Net Pension Costs
Service cost for benefits earned during the year	$	4,579		$	4,489		$	9,158		$	8,977
Interest cost on accumulated benefit obligation		3,023			2,524			6,045			5,161
Expected return on assets		(2,802	)		(2,143	)		(5,604	)		(4,286	)
Net amortization of unrecognized amounts		1,483			1,426			2,966			2,853
Other		—			—			—			(126	)

Net pension costs	$	6,283		$	6,296		$	12,565		$	12,579

The Company 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). However, from time to time the Company may make discretionary contributions in excess of the required minimum amounts. The Company expects to contribute $14.0 million to the pension plans in 2010, of which $4.5 million has been contributed through June 30, 2010.

For the three- and six-months ended June 30, 2010 and 2009, net postretirement costs were comprised of the following:


	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
	2010			2009			2010			2009
(In thousands)

Components of Net Postretirement Costs
Service cost for benefits earned during the year	$	350		$	335		$	700		$	670
Interest cost on accumulated benefit obligation		283			256			565			512
Net amortization of unrecognized amounts		(19	)		(22	)		(37	)		(44	)

Net postretirement costs	$	614		$	569		$	1,228		$	1,138

Transfers of Financial Assets

6 Months Ended

Jun. 30, 2010

Transfers of Financial Assets [Abstract]

Transfers of Financial Assets


9.	Transfers of Financial Assets

PCA has an on-balance sheet securitization program for its trade accounts receivable that is accounted for as a secured borrowing under ASC 860, “Transfers and Servicing.” To effectuate this program, the Company formed a wholly owned, limited-purpose subsidiary, Packaging Credit Company, LLC (“PCC”), which in turn formed a wholly owned, bankruptcy-remote, special-purpose subsidiary, Packaging Receivables Company, LLC (“PRC”), for the purpose of acquiring receivables from PCC. Both of these entities are included in the consolidated financial statements of the Company. Under this program, PCC purchases on an ongoing basis substantially all of the receivables of the Company and sells such receivables to PRC. PRC and lenders established a $150.0 million receivables-backed revolving credit facility (“Receivables Credit Facility”) through which PRC obtains funds to purchase receivables from PCC. The receivables purchased by PRC are solely the property of PRC. In the event of liquidation of PRC, the creditors of PRC would be entitled to satisfy their claims from PRC’s assets prior to any distribution to PCC or the Company. Credit available under the receivables credit facility is on a borrowing-base formula. As a result, the full amount of the facility may not be available at all times. At June 30, 2010, $109.0 million was outstanding and included in “Short-term debt and current maturities of long-term debt” on the condensed consolidated balance sheet. Approximately $280.2 million of accounts receivable at June 30, 2010 have been sold to PRC and are included in “Accounts receivable, net of allowance for doubtful accounts and customer deductions” on the condensed consolidated balance sheet.

Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2010

Derivative Instruments and Hedging Activities [Abstract]

Derivative Instruments and Hedging Activities


10.	Derivative Instruments and Hedging Activities

The Company records its derivatives in accordance with ASC 815, “Derivatives and Hedging.” The guidance requires the Company to recognize derivative instruments as either assets or liabilities in the balance sheet at fair value. The accounting for changes in the fair value of a derivative depends on the intended use and designation of the derivative instrument. For a derivative designated as a fair value hedge, the gain or loss on the derivative is recognized in earnings in the period of change in fair value together with the offsetting gain or loss on the hedged item. For a derivative instrument designated as a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income (loss) (“OCI”) and is subsequently recognized in earnings when the hedged exposure affects earnings. The ineffective portion of the gain or loss is recognized in earnings.

Hedging Strategy

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

Interest Rate Risk

The Company has historically used treasury lock derivative instruments to manage interest costs and the risk associated with changing interest rates. On June 12, 2003 and January 17, 2008, in connection with contemplated issuances of ten-year debt securities, PCA entered into interest rate protection agreements with counterparties to protect against increases in the ten-year U.S. Treasury Note rate. These treasury rates served as references in determining the interest rates applicable to the debt securities the Company issued in July 2003 and March 2008, respectively. As a result of changes in the interest rates on those treasury securities between the time PCA entered into the agreements and the time PCA priced and issued the debt securities, the Company: (1) received a payment of $22.8 million from the counterparty upon settlement of the 2003 interest rate protection agreement on July 21, 2003; and (2) made a payment of $4.4 million to the counterparty upon settlement of the 2008 interest rate protection agreement on March 25, 2008. The Company recorded the settlements in accumulated other comprehensive income (loss).

On May 25, 2010, in connection with a contemplated issuance of ten-year debt securities to eventually refinance PCA’s currently outstanding $400.0 million of senior notes that mature in 2013, PCA entered into interest rate protection agreements with counterparties to protect against increases in the ten-year U.S. Treasury Note rate. The treasury rate will serve as a reference in determining the interest rate applicable to the new debt securities the Company expects to issue in the future. The interest rate protection agreements were properly documented and designated as cash flow hedges at inception. At June 30, 2010, the Company had a notional value of $400.0 million in interest rate protection agreements outstanding that are expected to settle by the end of 2012.

Foreign Currency Exchange Rate Risk

In connection with the energy optimization projects at its Valdosta, Georgia mill and Counce, Tennessee mill, the Company entered into foreign currency forward contracts on December 18, 2009 and May 6, 2010 to hedge its exposure to forecasted purchases of machinery and equipment denominated in foreign currencies. The foreign currency forward contracts were properly documented and designated as cash flow hedges at inception. At June 30, 2010, the Company had a notional value of $8.0 million in foreign currency exchange contracts outstanding that are expected to settle by the end of 2010.

Counterparty Credit Risk

The Company is exposed to credit risk in the event of non-performance by counterparties to these derivative financial instruments. The amount of counterparty credit exposure is the unrealized gains, if any, on such derivative contracts. To minimize credit risk, the Company only enters into these types of transactions with investment grade counterparties. On a quarterly basis, the Company evaluates each hedge’s net position relative to the counterparty’s ability to cover its position. Although no assurances can be given, the Company does not expect any of the counterparties to these derivative financial instruments to fail to meet its obligations.

Derivative Instruments

The fair value of the Company’s treasury locks and foreign currency forward contracts at June 30, 2010 was $11.0 million and $0.9 million, respectively. The interest rate contracts are included in “Other long-term liabilities,” and the foreign currency forward contracts are included in “Accrued liabilities” on the Company’s condensed consolidated balance sheet at June 30, 2010.

The impact of derivative instruments on the condensed consolidated statements of income and OCI is as follows:


	Amount of
	Net Gain (Loss)			Amount of Gain (Loss) Reclassified
	Recognized			from Accumulated OCI into Income
	in OCI			(Effective Portion)
	(Effective Portion)				Three Months		Six Months
	June 30,				Ended		Ended
	2010			Location	June 30, 2010		June 30, 2010
(In thousands)

Treasury locks, net of tax	$	(4,504	)	Interest expense, net	$	461	$	923
Foreign currency exchange contracts, net of tax		(925	)	Cost of sales		—		—

Total	$	(5,429	)	Total	$	461	$	923

The net amount of settlement gains or losses on derivative instruments included in accumulated OCI to be realized during the next 12 months is a net gain of $1.8 million ($1.1 million after tax) at June 30, 2010. Mark to market gains and losses on derivative instruments included in accumulated OCI will be reclassified into earnings in the same periods during which the hedged transactions affect earnings. There were no ineffective portions of these contracts during the period.

Financial Instruments

6 Months Ended

Jun. 30, 2010

Financial Instruments [Abstract]

Financial Instruments


11.	Financial Instruments

The carrying and estimated fair values of PCA’s financial instruments at June 30, 2010 and December 31, 2009 were as follows:


	June 30, 2010						December 31, 2009
	Carrying						Carrying
	Amount			Fair Value			Amount			Fair Value
(In thousands)							(Audited)

Cash and cash equivalents	$	181,511		$	181,511		$	260,727		$	260,727
Long-term debt —
5.75% senior notes		(398,972	)		(431,000	)		(398,800	)		(427,000	)
6.50% senior notes		(149,952	)		(162,000	)		(149,949	)		(163,500	)
Receivables credit facility		(109,000	)		(109,000	)		(109,000	)		(109,000	)
Capital lease obligations		(22,821	)		(22,821	)		(23,129	)		(23,129	)

The fair value of cash and cash equivalents approximates its carrying amounts due to the short-term nature of these financial instruments.

The fair value of the receivables credit facility approximates its carrying amount due to the variable interest-rate feature of the instrument. The fair values of the senior notes are based on quoted market prices. The fair value of the capital lease obligations was estimated to not be materially different from the carrying amount.

Fair Value Measurements

6 Months Ended

Jun. 30, 2010

Fair Value Measurements [Abstract]

Fair Value Measurements


12.	Fair Value Measurements

The following presents information about PCA’s assets and liabilities measured at fair value and the valuation techniques used to determine those fair values. The inputs used in the determination of fair values are categorized according to the fair value hierarchy as follows:

Level 1 — observable inputs such as quoted prices in active markets

Level 2 — inputs, other than quoted prices in active markets, that are observable either directly or indirectly

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

The valuation techniques are as follows:

(a) Market approach — prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities

(b) Cost approach — amount that would be required to replace the service capacity of an asset (replacement cost)

(c) Income approach — techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models)

Assets and liabilities measured at fair value on a recurring basis are as follows:


	As of June 30, 2010
					Measurement Approach					As of December 31, 2009
	Carrying		Fair				Valuation			Carrying		Fair
	Value		Value		Level		Technique			Value		Value
(In thousands)										(Audited)

Current Assets
Money market funds	$	181,013	$	181,013		1		(a	)	$	260,230	$	260,230
Current Liabilities
Foreign currency exchange contracts		915		915		2		(a	)		—		—
Long-Term Liabilities
Treasury locks		10,967		10,967		2		(a	)		—		—

The money market funds PCA invests in include funds comprised of U.S. Treasury obligations or backed by U.S. Treasury obligations. The Company measures the fair value of money market funds based on quoted prices in active markets for identical assets.

The Company calculates the fair value of its Treasury locks and foreign currency forward contracts using quoted treasury rates and currency spot rates, respectively, plus or minus forward points to calculate forward rates.

There were no changes in the Company’s valuation techniques used to measure fair values on a recurring basis as a result of adopting ASC 820. PCA had no assets or liabilities that were measured on a nonrecurring basis.

Environmental Liabilities

6 Months Ended

Jun. 30, 2010

Environmental Liabilities [Abstract]

Environmental Liabilities


13.	Environmental Liabilities

The potential costs for various environmental matters are uncertain due to such factors as the unknown magnitude of possible cleanup costs, the complexity and evolving nature of governmental laws and regulations and their interpretations, and the timing, varying costs and effectiveness of alternative cleanup technologies. From 1994 through June 30, 2010, remediation costs at PCA’s mills and corrugated plants totaled approximately $3.2 million. As of June 30, 2010, the Company maintained an environmental reserve of $9.1 million relating to on-site landfills and surface impoundments as well as ongoing and anticipated remedial projects. Liabilities recorded for environmental contingencies are estimates of the probable costs based upon available information and assumptions. Because of these uncertainties, PCA’s estimates may change. As of the date of this filing, the Company believes that it is not reasonably possible that future environmental expenditures and asset retirement obligations above the $9.1 million accrued as of June 30, 2010, will have a material impact on our financial condition, results of operations, or cash flows.

Stock Repurchase Program

6 Months Ended

Jun. 30, 2010

Stock Repurchase Program [Abstract]

Stock Repurchase Program


14.	Stock Repurchase Program

On October 17, 2007, PCA announced that its Board of Directors authorized a $150.0 million common stock repurchase program. There is no expiration date for the common stock repurchase program. Through June 30, 2010, the Company repurchased 3,968,729 shares of common stock, with 150,000 shares repurchased for $3.1 million during the second quarter of 2010. All repurchased shares were retired prior to June 30, 2010. As of June 30, 2010, $61.9 million of the $150.0 million authorization remained available for repurchase of the Company’s common stock.

Alternative Fuel Mixture Tax Credits

6 Months Ended

Jun. 30, 2010

Alternative Fuel Mixture Tax Credits [Abstract]

Alternative Fuel Mixture Tax Credits


15.	Alternative Fuel Mixture Tax Credits

The Company generates “black liquor” as a by-product of its pulp manufacturing process and uses it in a mixture with diesel fuel to produce energy at its Counce, Tennessee, Valdosta, Georgia, and Tomahawk, Wisconsin mills. Through December 31, 2009, the U.S. Internal Revenue Code provided a $0.50 per gallon refundable tax credit for taxpayers who use alternative fuels in their trade or business. The Company filed applications with the Internal Revenue Service (the “IRS”) in December 2008 to be registered as an alternative fuel mixer and received approval in April 2009. As a registered alternative fuel mixer, the Company believes the use of black liquor as an alternative fuel through December 31, 2009 qualified for this tax credit. The laws governing this credit, as well as the taxability of benefits received from this credit, are complex and not completely defined. After December 31, 2009, the alternative fuel mixture credit for a mixture of black liquor and diesel fuel used is no longer available. During the first quarter of 2010, the Chief Counsel’s Office of the Internal Revenue Service released Memorandum AM2010-001, which provided clarification about the calculation of the alternative fuel mixture credit for black liquor. As a result, during the first quarter of 2010 the Company released the reserve of $9.2 million that was established in 2009 due to the ambiguity in the calculation of the credit. The total alternative fuel mixture credits earned by PCA in 2008 and 2009 were $185.4 million. The Company applied $41.0 million of these credits against its second quarter 2010 federal cash tax payments. Through June 30, 2010, the total credits applied against federal cash tax payments were $89.4 million, resulting in a receivable of $96.0 million for the remaining balance of the alternative fuel mixture tax credits earned through December 31, 2009 that is included on the Company’s balance sheet at June 30, 2010.

In a memorandum dated June 28, 2010, the IRS concluded that “black liquor” qualifies for the taxable cellulosic bio-fuel credit of $1.01 per gallon of bio-fuel produced in 2009. PCA filed an application in July 2010 to receive the required registration code to become a registered cellulosic bio-fuel producer and expects to receive this registration code sometime during the third quarter of 2010. Based upon both the memorandum and IRS guidance regarding the cellulosic bio-fuel credit, the Company is analyzing the additional potential benefits from claiming the cellulosic bio-fuel producer credit for 2009 instead of the alternative fuel mixture credit, or claiming a combination of the two credits for 2009. The amount of credits that the Company can apply against future federal taxes owed will be dependent upon the timing and amount of PCA’s future taxable income.

Subsequent Events

6 Months Ended

Jun. 30, 2010

Subsequent Events [Abstract]

Subsequent Events


16.	Subsequent Events

The Company has evaluated subsequent events through the filing date of this Form 10-Q and determined there were no events to disclose.