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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2010	Feb. 18, 2011	Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	PACKAGING CORP OF AMERICA
Entity Central Index Key	0000075677
Document Type	10-K
Document Period End Date	Dec. 31, 2010
Amendment Flag	false
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	FY
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			$ 2,249,160,212
Entity Common Stock, Shares Outstanding		102,355,005

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2010	Dec. 31, 2009
Current assets:
Cash and cash equivalents	$ 196,556	$ 260,727
Accounts receivable, net of allowance for doubtful accounts and customer deductions of $5,413 and $6,348 as of December 31, 2010 and 2009, respectively	293,159	243,403
Inventories	241,142	213,396
Alternative fuel mixture tax credits receivable	0	127,811
Federal and state income taxes receivable	0	4,707
Prepaid expenses and other current assets	16,952	13,045
Deferred income taxes	50,232	22,125
Total current assets	798,041	885,214
Property, plant and equipment, net	1,337,986	1,182,504
Goodwill	38,854	38,854
Other intangible assets, net	10,975	11,790
Other long-term assets	38,418	34,478
Total assets	2,224,274	2,152,840
Current liabilities:
Short-term debt and current maturities of long-term debt	109,000	109,000
Capital lease obligations	670	626
Accounts payable	154,130	126,813
Dividends payable	15,351	15,451
Accrued interest	12,598	12,644
Federal and state income taxes payable	2,601	0
Accrued liabilities	111,208	106,423
Total current liabilities	405,558	370,957
Long-term liabilities:
Long-term debt	549,099	548,749
Capital lease obligations	21,832	22,503
Deferred income taxes	9,190	205,227
Pension and postretirement benefit plans	97,914	78,859
Cellulosic Biofuel Tax Reserve	102,051	0
Other long-term liabilities	29,629	27,700
Total long-term liabilities	809,715	883,038
Stockholders' equity:
Common stock (par value $0.01 per share, 300,000,000 shares authorized, 102,308,231 and 103,018,358 shares issued as of December 31, 2010 and 2009, respectively)	1,023	1,030
Additional paid in capital	362,248	387,496
Retained earnings	690,111	546,355
Accumulated other comprehensive income (loss), net of tax:
Unrealized gain (loss) on treasury locks, net	2,164	4,512
Unrealized loss on foreign exchange contracts	(607)	0
Unfunded employee benefit obligations	(45,938)	(40,548)
Total accumulated other comprehensive loss	(44,381)	(36,036)
Total stockholders' equity	1,009,001	898,845
Total liabilities and stockholders' equity	$ 2,224,274	$ 2,152,840

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Consolidated Statements of Income [Abstract]
Net sales	$ 2,435,606	$ 2,147,589	$ 2,360,493
Cost of sales	(1,903,406)	(1,721,012)	(1,869,135)
Gross profit	532,200	426,577	491,358
Selling and administrative expenses	(182,489)	(173,445)	(173,257)
Corporate overhead	(58,100)	(54,580)	(61,030)
Alternative fuel mixture tax credits	(86,265)	168,437
Other expense, net	(19,964)	(14,535)	(15,259)
Income from operations	185,382	352,454	241,812
Interest expense, net	(32,278)	(35,483)	(31,669)
Income before taxes	153,104	316,971	210,143
Benefit (provision) for income taxes	52,331	(51,076)	(74,534)
Net income	$ 205,435	$ 265,895	$ 135,609
Weighted average common shares outstanding
Basic	101,678	101,577	102,753
Diluted	102,608	102,358	103,593
Net income per common share
Basic	$ 2.02	$ 2.62	$ 1.32
Diluted	2.00	2.60	1.31
Dividends declared per common share	$ 0.60	$ 0.60	$ 1.20

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Statement [Line Items]
Beginning Balance	$ 898,845	$ 683,949	$ 760,861
Common stock repurchases and retirements	(38,901)		(65,666)
Common stock dividends declared	(61,679)	(61,612)	(124,219)
Restricted stock grants and cancellations	513	(218)	(80)
Exercise of stock options	8,037	2,245	3,213
Share-based compensation expense	7,006	6,371	8,695
Other	(1,910)
Effects of changing the pension and postretirement benefit plans measurement date pursuant to ASC 715-20-65:
Service cost, interest cost and expected return on plan assets for October 1 - December 31, 2007, net of tax of $1.8 million			(2,884)
Comprehensive income (loss):
Net income	205,435	265,895	135,609
Amortization of treasury locks, net of tax of $0.5 million for 2010	(1,309)	(1,846)	(2,407)
Settlement of treasury lock			(4,386)
Unrealized losses on treasury locks, net of tax of $1.9 million for 2010	(1,039)
Foreign currency translation adjustment			3
Unrealized losses on foreign currency exchange contracts, net of tax of $0.4 million for 2010	(607)
Amortization of unfunded employee benefit obligations, net of tax of $2.3 million, $2.2 million and $1.3 million for 2010, 2009 and 2008, respectively	3,583	3,304	1,975
Unfunded employee benefit obligations, net of tax of $5.7 million, $0.5 million and $17.0 million for 2010, 2009 and 2008, respectively	(8,973)	757	(26,765)
Total comprehensive income (1)	197,090	268,110	104,029
Ending Balance	1,009,001	898,845	683,949
Common Stock
Statement [Line Items]
Beginning Balance	$ 1,030	$ 1,024	$ 1,050
Beginning Balance, Shares	103,018,358	102,397,952	105,018,679
Common stock repurchases and retirements	$ (17)		$ (31)
Common stock repurchases and retirements, Shares	(1,665,392)		(3,142,600)
Restricted stock grants and cancellations	$ 6	$ 4	$ 4
Restricted stock grants and cancellations, Shares	560,845	434,605	369,560
Exercise of stock options	$ 4	$ 2	$ 1
Exercise of stock options, Shares	394,420	185,801	152,313
Comprehensive income (loss):
Ending Balance	$ 1,023	$ 1,030	$ 1,024
Ending Balance, Shares	102,308,231	103,018,358	102,397,952
Additional Paid in Capital
Statement [Line Items]
Beginning Balance	$ 387,496	$ 379,104	$ 432,916
Common stock repurchases and retirements	(38,884)		(65,635)
Restricted stock grants and cancellations	507	(222)	(84)
Exercise of stock options	8,033	2,243	3,212
Share-based compensation expense	7,006	6,371	8,695
Other	(1,910)
Comprehensive income (loss):
Ending Balance	362,248	387,496	379,104
Retained Earnings
Statement [Line Items]
Beginning Balance	546,355	342,072	334,060
Common stock dividends declared	(61,679)	(61,612)	(124,219)
Effects of changing the pension and postretirement benefit plans measurement date pursuant to ASC 715-20-65:
Service cost, interest cost and expected return on plan assets for October 1 - December 31, 2007, net of tax of $1.8 million			(2,884)
Amortization of prior service cost and net loss for October 1 - December 31, 2007, net of tax of $0.3 million			(494)
Comprehensive income (loss):
Net income	205,435	265,895	135,609
Ending Balance	690,111	546,355	342,072
Accumulated Other Comprehensive Income (Loss)
Statement [Line Items]
Beginning Balance	(36,036)	(38,251)	(7,165)
Effects of changing the pension and postretirement benefit plans measurement date pursuant to ASC 715-20-65:
Amortization of prior service cost and net loss for October 1 - December 31, 2007, net of tax of $0.3 million			494
Comprehensive income (loss):
Amortization of treasury locks, net of tax of $0.5 million for 2010	(1,309)	(1,846)	(2,407)
Settlement of treasury lock			(4,386)
Unrealized losses on treasury locks, net of tax of $1.9 million for 2010	(1,039)
Foreign currency translation adjustment			3
Unrealized losses on foreign currency exchange contracts, net of tax of $0.4 million for 2010	(607)
Amortization of unfunded employee benefit obligations, net of tax of $2.3 million, $2.2 million and $1.3 million for 2010, 2009 and 2008, respectively	3,583	3,304	1,975
Unfunded employee benefit obligations, net of tax of $5.7 million, $0.5 million and $17.0 million for 2010, 2009 and 2008, respectively	(8,973)	757	(26,765)
Ending Balance	$ (44,381)	$ (36,036)	$ (38,251)

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Statement [Line Items]
Service cost, interest cost and expected return on plan assets, tax effect			$ 1.8
Amortization of unfunded employee benefit obligations, tax effect	$ 2.3	$ 2.2	1.3
Unfunded employee benefit obligations, tax effect	5.7	0.5	17.0
Amortization of treasury lock, tax effect	0.5
Unrealized losses on treasury locks, tax effect	1.9
Unrealized losses on foreign currency exchange contracts, tax effect	0.4
Retained Earnings
Statement [Line Items]
Service cost, interest cost and expected return on plan assets, tax effect			1.8
Amortization of prior service cost and net loss, tax effect			0.3
Accumulated Other Comprehensive Income (Loss)
Statement [Line Items]
Amortization of prior service cost and net loss, tax effect			0.3
Amortization of unfunded employee benefit obligations, tax effect	2.3	2.2	1.3
Unfunded employee benefit obligations, tax effect	5.7	$ 0.5	$ 17.0
Amortization of treasury lock, tax effect	0.5
Unrealized losses on treasury locks, tax effect	1.9
Unrealized losses on foreign currency exchange contracts, tax effect	$ 0.4

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Cash Flows from Operating Activities:
Net income	$ 205,435	$ 265,895	$ 135,609
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	156,298	151,217	147,769
Amortization of financing costs	648	772	685
Amortization of net gain on treasury lock	(1,846)	(1,846)	(2,407)
Share-based compensation expense	7,006	7,261	8,695
Deferred income tax provision	(120,579)	(13,819)	(10,814)
Loss on disposals of property, plant and equipment	8,865	6,605	5,825
Alternative fuel mixture tax credits receivables	127,811	(127,811)
(Increase) decrease in assets -
Accounts receivable	(50,256)	13,602	21,023
Inventories	(28,352)	(5,498)	(2,598)
Prepaid expenses and other current assets	(3,956)	(9,458)	(8)
Increase (decrease) in liabilities -
Accounts payable	25,367	22,475	(31,133)
Accrued liabilities	11,254	4,764	(9,855)
Other, net	12,225	(8,028)	6,531
Net cash provided by operating activities	349,920	306,131	269,322
Cash Flows from Investing Activities:
Additions to property, plant and equipment	(320,200)	(114,197)	(132,972)
Additions to other long term assets	(2,627)	(2,105)	(3,267)
Acquisition of business, net of cash acquired		(3,136)
Proceeds from disposals of property, plant and equipment	1,513	114	1,703
Net cash used for investing activities	(321,314)	(119,324)	(134,536)
Cash Flows from Financing Activities:
Proceeds from long-term debt			149,939
Payments on long-term debt	(626)	(606)	(170,320)
Financing costs paid			(1,176)
Settlement of treasury lock			(4,386)
Common stock dividends paid	(61,798)	(76,898)	(125,057)
Repurchases of common stock	(38,901)		(65,666)
Proceeds from exercise of stock options	7,496	1,615	2,410
Excess tax benefits from share-based awards	1,052	412	724
Net cash used for financing activities	(92,777)	(75,477)	(213,532)
Net increase (decrease) in cash and cash equivalents	(64,171)	111,330	(78,746)
Cash and cash equivalents, beginning of year	260,727	149,397	228,143
Cash and cash equivalents, end of year	$ 196,556	$ 260,727	$ 149,397

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2010

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The accompanying 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.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with a maturity, when acquired, of three months or less. Cash equivalents are stated at cost, which approximates market.

Accounts Receivable

The collectibility of PCA’s accounts receivable is based upon a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to PCA (e.g., bankruptcy filings, substantial downgrading of credit sources), a specific reserve for bad debts is recorded against amounts due to the Company to reduce the net recorded receivable to the amount the Company reasonably believes will be collected. For all other customers, reserves for bad debts are recognized based on historical collection experience. If collection experience deteriorates (i.e., higher than expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations to the Company), the estimate of the recoverability of amounts due could be reduced by a material amount.

The customer deductions reserve represents the estimated amount required for customer returns, allowances and earned discounts. Based on the Company’s experience, customer returns, allowances and earned discounts have averaged 1.0% of gross selling price. Accordingly, PCA reserves 1.0% of its open customer accounts receivable balance for these items.

At December 31, 2010 and 2009, the allowance for doubtful accounts was $2.5 million and $3.9 million, respectively. The reserve for customer deductions of $2.9 million and $2.4 million at December 31, 2010 and 2009, respectively, are also included as a reduction of the accounts receivable balance.

Inventories

With the exception of inventories at PCA’s Chicago corrugated products plants, which were acquired in 2004 and 2009, raw materials, work in process and finished goods are valued using the last-in, first-out (“LIFO”) cost method. Inventories at the Chicago plants are valued at the first-in, first-out (“FIFO”) cost method. Supplies and materials are valued using a moving average cost. All inventories are stated at the lower of cost or market and include all costs directly associated with manufacturing products: materials, labor and manufacturing overhead. Inventories valued using the LIFO method totaled $199.5 million and $169.2 million, respectively, as of December 31, 2010 and 2009, compared to total inventory values (before the LIFO inventory reserve) of $309.2 million and $275.9 million for the same respective periods.

The components of inventories are as follows:


	December 31,
	2010			2009
	(In thousands)

Raw materials	$	126,401		$	101,429
Work in process		6,395			6,600
Finished goods		73,710			66,994
Supplies and materials		102,720			100,919

Inventories at FIFO or average cost		309,226			275,942
Excess of FIFO or average cost over LIFO cost		(68,084	)		(62,546	)

Inventories, net	$	241,142		$	213,396

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, and consist of the following:


	December 31,
	2010			2009
	(In thousands)

Land and land improvements	$	98,197		$	98,066
Buildings		350,301			341,344
Machinery and equipment		2,753,258			2,665,876
Construction in progress		212,931			53,006
Other		24,834			25,322

Property, plant and equipment, at cost		3,439,521			3,183,614
Less accumulated depreciation		(2,101,535	)		(2,001,110	)

Property, plant and equipment, net	$	1,337,986		$	1,182,504

The amount of interest capitalized related to construction in progress was $4.8 million, $0.9 million and $1.3 million for the years ended December 31, 2010, 2009 and 2008, respectively.

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


Buildings and land improvements			5 to 40 years
Machinery and equipment			3 to 25 years
Trucks and automobiles			3 to 10 years
Furniture and fixtures			3 to 20 years
Computers and hardware			3 to 7 years
			Period of the lease or
Leasehold improvements			useful life, if shorter

The amount of depreciation expense was $154.0 million, $148.2 million and $143.3 million for the years ended December 31, 2010, 2009 and 2008, respectively. Expenditures for repairs and maintenance are expensed as incurred.

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

Goodwill and Intangible Assets

The Company has capitalized certain intangible assets, primarily customer lists and relationships, covenants not to compete and goodwill, based on their estimated fair value at the date of acquisition. Amortization is provided for customer lists and relationships on a straight-line basis over periods ranging from six to 40 years. Covenants not to compete are amortized on a straight-line basis over the terms of the respective agreements.

Goodwill, which amounted to $38.9 million as of both December 31, 2010 and 2009, is not being amortized but is subject to an annual impairment test in accordance with Accounting Standards Codification (“ASC”) 350, “Intangibles — Goodwill and Other.” The Company performs the impairment test in the fourth quarter or sooner if events or changes in circumstances indicate that the carrying amount may exceed fair value. Recoverability of goodwill is determined by comparing the fair value of the reporting unit with its carrying value, including goodwill. If the carrying amount of the reporting unit exceeds the fair value, the implied fair value of the reporting unit’s goodwill is compared to the carrying amount of its goodwill to determine if a write-down to fair value is necessary. The Company concluded that no impairment of goodwill existed at the time of the annual impairment tests in 2010, 2009 and 2008.

Other Long-Term Assets

PCA has capitalized certain costs related to obtaining its financing. These costs are amortized to interest expense using the effective interest rate method over the terms of the senior credit facilities and senior notes, which range from five to ten years. Unamortized deferred financing costs were $1.3 million and $1.8 million as of December 31, 2010 and 2009, respectively.

PCA leases the cutting rights to approximately 88,000 acres of timberland and capitalizes the annual lease payments and reforestation costs associated with these leases. These costs are recorded as depletion when timber is harvested and used in PCA’s business operations or sold to customers. Capitalized long-term lease costs were $24.5 million and $22.9 million as of December 31, 2010 and 2009, respectively. The amount of depletion expense was $0.5 million, $1.2 million and $1.4 million for the years ended December 31, 2010, 2009 and 2008, respectively.

PCA capitalizes certain costs related to the purchase and development of software which is used in its business operations. The costs attributable to these software systems are amortized over their estimated useful lives based on various factors such as the effects of obsolescence, technology and other economic factors. Net capitalized software costs were $1.5 million as of both December 31, 2010 and 2009, respectively. Software amortization expense was $0.6 million, $0.5 million and $0.3 million for the years ended December 31, 2010, 2009 and 2008, respectively.

Impairment of Long-Lived Assets

Long-lived assets other than goodwill are reviewed for impairment in accordance with provisions of ASC 360, “Property, Plant and Equipment.” In the event that facts and circumstances indicate that the carrying amount of any long-lived assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset (or group of assets) would be compared to the asset’s (or group of assets’) carrying amount to determine if a write-down to fair value is required. The Company concluded that no impairment of long-lived assets existed in 2010, 2009 and 2008.

Pension and Postretirement Benefits

One of the principal assumptions used to calculate net periodic pension cost is the expected long-term rate of return on plan assets. The expected long-term rate of return on plan assets may result in recognized returns that are greater or less than the actual returns on those plan assets in any given year. Over time, however, the expected long-term rate of return on plan assets is designed to approximate the actual long term returns.

The discount rate assumptions used to calculate net periodic pension and postretirement cost reflect the rates available on high-quality, fixed-income debt instruments on December 31st of each year. The rate of compensation increase is another significant assumption used to calculate net periodic pension cost and is determined by the Company based upon annual reviews.

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

Environmental Matters

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

Asset Retirement Obligations

The Company accounts for its retirement obligations related to its landfills under ASC 410, “Asset Retirement and Environmental Obligations,” which requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Upon initial recognition of a liability, that cost is capitalized as part of the related long-lived asset and amortized to expense over the useful life of the asset.

Income Taxes

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

PCA’s practice is to recognize interest and penalties related to uncertain tax positions in income tax expense.

Fair Value of Financial Instruments

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

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

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

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

The Company measures the fair value of money market funds based on quoted prices in active markets for identical assets or liabilities. See Note 6 for information about PCA’s pension plans’ assets measured at fair value and Note 11 for information about PCA’s assets and liabilities measured at fair value.

Planned Major Maintenance Activities

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

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.

Research and Development

Research and development costs are expensed as incurred. The amount charged to expense was $10.9 million, $9.4 million and $8.3 million for the years ended December 31, 2010, 2009 and 2008, respectively.

Interest Expense, Net

Interest expense, net, includes interest income of $0.04 million, $0.1 million and $5.2 million for the years ended December 31, 2010, 2009 and 2008, respectively, and amortization of the net gain on treasury lock settlements in July 2003 and March 2008 of $1.8 million for both 2010 and 2009 and $2.4 million in 2008.

Industry Agreements

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

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.

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.

Recent Accounting Pronouncements

In December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-28, “Intangibles — Goodwill and Other (Topic 350) — When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.” This ASU modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For such reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. ASU 2010-28 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The Company does not expect the adoption of this guidance to have any impact on its financial position, results of operations or cash flows.

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820) — Improving Disclosures about Fair Value Measurements.” This ASU requires some new disclosures and clarifies some 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 11 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. Early application is not permitted. The Company adopted this guidance on January 1, 2010. See Note 8 for additional information.

Stock-Based Compensation

12 Months Ended

Dec. 31, 2010

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION


4.	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 December 31, 2010, options and restricted stock for 7,089,531 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, which were fully vested at June 30, 2010, and restricted stock recognized in the consolidated statements of income for the years ended December 31, 2010, 2009 and 2008 was as follows:


	Year Ended December 31,
	2010			2009			2008
	(In thousands)

Stock options	$	226		$	720		$	1,457
Restricted stock		6,780			6,541			7,238

Impact on income before income taxes		7,006			7,261			8,695
Income tax benefit		(2,721	)		(2,827	)		(3,382	)

Impact on net income	$	4,285		$	4,434		$	5,313

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 in 2010, 2009 or 2008.

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


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

Outstanding at December 31, 2007		2,396,096		$	19.62
Exercised		(152,313	)		16.00
Forfeited		(16,751	)		22.38

Outstanding at December 31, 2008		2,227,032			19.85
Exercised		(185,801	)		8.69
Forfeited		(67,930	)		19.11

Outstanding at December 31, 2009		1,973,301			20.92
Exercised		(394,420	)		19.01
Forfeited		(10,497	)		24.62

Outstanding and exercisable at December 31, 2010		1,568,384		$	21.38		2.4	$	6,992

The total intrinsic value of options exercised during the years ended December 31, 2010, 2009, and 2008 was $2.4 million, $1.7 million, and $1.4 million, respectively. As of December 31, 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						2008
				Fair Market						Fair Market						Fair Market
				Value at						Value at						Value at
				Date of						Date of						Date of
	Shares			Grant			Shares			Grant			Shares			Grant
	(Dollars in thousands)

Restricted stock at January 1		1,235,505		$	24,718			1,038,270		$	23,023			764,705		$	17,490
Granted		573,440			12,693			444,985			6,995			374,455			7,947
Vested		(318,350	)		(6,563	)		(237,370	)		(5,079	)		(95,995	)		(2,304	)
Cancellations		(12,595	)		(248	)		(10,380	)		(221	)		(4,895	)		(110	)

Restricted stock at December 31		1,478,000		$	30,600			1,235,505		$	24,718			1,038,270		$	23,023

As of December 31, 2010, there was $15.3 million of total unrecognized compensation costs related to the restricted stock awards. The Company expects to recognize the cost of these stock awards over a weighted-average period of 2.8 years.

Employee Benefit Plans and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2010

Employee Benefit Plans and Other Postretirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS AND OTHER POSTRETIREMENT BENEFITS


6.	EMPLOYEE BENEFIT PLANS AND OTHER POSTRETIREMENT BENEFITS

In connection with the acquisition from Pactiv, PCA and Pactiv entered into a human resources agreement which, among other items, granted PCA employees continued participation in the Pactiv pension plan for a period of up to five years following the closing of the acquisition for an agreed upon fee.

Effective January 1, 2003, PCA adopted a mirror-image pension plan for eligible hourly employees to succeed the Pactiv pension plan in which PCA hourly employees had participated though December 31, 2002. The PCA pension plan for hourly employees recognizes service earned under both the PCA plan and the prior Pactiv plan. Benefits earned under the PCA plan are reduced by retirement benefits earned under the Pactiv plan through December 31, 2002. All assets and liabilities associated with benefits earned through December 31, 2002 for hourly employees and retirees of PCA were retained by the Pactiv plan.

Effective May 1, 2004, PCA adopted a grandfathered pension plan for eligible salaried employees who had previously participated in the Pactiv pension plan. The benefit formula for the new PCA pension plan for salaried employees is comparable to that of the Pactiv plan except that the PCA plan uses career average base pay in the benefit formula in lieu of final average base pay. The PCA pension plan for salaried employees recognizes service earned under both the PCA plan and the prior Pactiv plan. Benefits earned under the PCA plan are reduced by retirement benefits earned under the Pactiv plan through April 30, 2004. All assets and liabilities associated with benefits earned through April 30, 2004 for salaried employees and retirees of PCA were retained by the Pactiv plan.

PCA maintains a supplemental executive retirement plan (“SERP”), which augments pension benefits for eligible executives earned under the PCA pension plan for salaried employees. Benefits are determined using the same formula as the PCA pension plan but in addition to counting career average base pay, the SERP also recognizes bonuses and any pay earned in excess of IRS qualified plan compensation limits. Benefits earned under the SERP are reduced by benefits paid from the PCA salaried pension plan and any prior qualified pension and SERP benefits earned under the Pactiv plan.

PCA previously maintained a separate SERP for its former CEO and current Executive Chairman which was paid out and terminated on March 15, 2009. The terminated plan was replaced by a lower cost deferred compensation benefit plan.

PCA provides certain medical benefits for retired salaried employees and certain medical and life insurance benefits for certain hourly employees. For salaried employees, the plan covers employees retiring from PCA on or after attaining age 58 who have had at least 10 years of full-time service with PCA after attaining age 48. For hourly employees, the postretirement medical coverage, where applicable, is available according to the eligibility provisions in effect at the employee’s work location. Per the human resources agreement referred to above, Pactiv retained the liability relating to retiree medical and life benefits for PCA employees who had retired on or before April 12, 1999 or who were eligible to retire within two years of that date. On January 1, 2003, the Company adopted a new plan design for salaried employees incorporating annual dollar caps in determining the maximum amount of employer contributions made towards the total cost of postretirement medical coverage.

The following tables provide information related to the Company’s pension and postretirement benefit plans.


	Pension Plans									Postretirement Plans
	2010			2009			2008			2010			2009			2008
	(In thousands)

Change in Benefit Obligation
Benefit obligation at beginning of period	$	203,292		$	178,455		$	129,913		$	20,080		$	17,300		$	13,342
Service cost(1)		18,315			17,955			22,224			1,399			1,341			1,334
Interest cost(1)		12,091			10,208			9,785			1,130			1,022			985
Plan amendments		837			7,168			14,570			—			—			616
Actuarial loss (gain)		15,153			701			3,442			1,931			987			1,877
Participant contributions		—			—			—			838			656			575
Benefits paid		(2,703	)		(11,195	)		(1,479	)		(2,163	)		(1,226	)		(1,429	)

Benefit obligation at plan year end	$	246,985		$	203,292		$	178,455		$	23,215		$	20,080		$	17,300

Accumulated benefit obligation portion of above	$	214,676		$	171,384		$	143,773

Change in Fair Value of Plan Assets
Plan assets at fair value at beginning of period	$	140,065		$	97,248		$	87,321		$	—		$	—		$	—
Actual return on plan assets		14,457			18,590			(16,116	)		—			—			—
Company contributions		15,214			35,422			27,522			1,325			570			854
Participant contributions		—			—			—			838			656			575
Benefits paid		(2,703	)		(11,195	)		(1,479	)		(2,163	)		(1,226	)		(1,429	)

Fair value of plan assets at plan year end	$	167,033		$	140,065		$	97,248		$	—		$	—		$	—


(1)		Service cost and interest cost for 2008 include amounts for the period October 1 — December 31, 2007.


	Pension Plans						Postretirement Plans
	December 31,			December 31,			December 31,			December 31,
	2010			2009			2010			2009
	(In thousands)

Development of Net Amount Recognized
Benefit obligation in excess of plan assets at December 31	$	(79,952	)	$	(63,227	)	$	(23,215	)	$	(20,080	)

Amounts Recognized in Statement of Financial Position
Current liabilities	$	(4,107	)	$	(3,586	)	$	(1,146	)	$	(862	)
Noncurrent liabilities		(75,845	)		(59,641	)		(22,069	)		(19,218	)

Accrued benefit recognized at December 31	$	(79,952	)	$	(63,227	)	$	(23,215	)	$	(20,080	)

Amounts Recognized in Accumulated Other Comprehensive Income (Loss), Net of Tax
Prior service cost	$	25,957		$	28,897		$	(734	)	$	(988	)
Actuarial loss		15,714			8,608			5,001			4,031

Total	$	41,671		$	37,505		$	4,267		$	3,043

The 2009 and 2008 prior year presentation of total comprehensive income incorrectly omitted the change in unfunded employee benefit obligations of $0.8 million and $26.8 million, respectively. The Company restated the previously reported total comprehensive income herein to correct for this error. The correction has no impact on the consolidated balance sheets, statements of income or total stockholders’ equity previously reported.


	Pension Plans									Postretirement Plans
	2010			2009			2008			2010			2009			2008
	(In thousands)

Components of Net Periodic Benefit Cost
Service cost for benefits earned during the year	$	18,315		$	17,955		$	17,779		$	1,399		$	1,341		$	1,067
Interest cost on accumulated benefit obligation		12,091			10,208			7,828			1,130			1,022			788
Expected return on plan assets		(11,207	)		(8,573	)		(8,578	)		—			—			—
Net amortization of unrecognized amounts
Prior service cost		5,685			4,903			3,326			(416	)		(416	)		(472	)
Actuarial loss		247			803			3,676			342			328			233
Other		—			(126	)		—			—			—			—

Net periodic benefit cost	$	25,131		$	25,170		$	24,031		$	2,455		$	2,275		$	1,616

For the year ended December 31, 2011, the Company expects to recognize in net periodic benefit cost $5.8 million ($3.5 million net of tax) and $(0.4) million ($0.3 million net of tax) of prior service cost for pension and postretirement plans, respectively, and $0.4 million ($0.3 million net of tax) of actuarial loss for both the pension and postretirement plans, which is included in accumulated other comprehensive income (loss) at December 31, 2010.


	Pension Plans									Postretirement Plans
	2010			2009			2008			2010			2009			2008

Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31
Discount rate		5.50	%		6.00	%		6.00	%		5.25	%		5.75	%		6.00	%
Rate of compensation increase		4.00	%		4.00	%		4.00	%		N/A			N/A			N/A
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for the Years Ended December 31
Discount rate		6.00	%		6.00	%		6.00	%		5.75	%		6.00	%		6.00	%
Expected return on plan assets		7.75	%		8.25	%		8.25	%		N/A			N/A			N/A
Rate of compensation increase		4.00	%		4.00	%		4.00	%		N/A			N/A			N/A

The expected return on pension plan assets reflects the expected long-term rates of return for the categories of investments currently held in the plan as well as anticipated returns for additional contributions made in the future. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the plan investments.

The discount rate assumptions used to calculate the present value of pension and postretirement benefit obligations reflect the rates available on high-quality, fixed-income debt instruments on December 31st beginning in 2008. Prior to 2008, the discount rate assumptions were based on rates as of September 30th of each year. The rate of compensation increase is another significant assumption used for pension accounting and is determined by the Company based upon annual reviews.

In determining net pension and postretirement benefit costs, the Company elected to amortize prior service cost on a straight-line basis over the average remaining service period of employees expected to receive benefits under the plans. A 10% corridor is used to determine the amount of the unrecognized net gain or loss to be amortized. The excess, if any, of the unrecognized net gain or loss over 10% of the greater of the projected benefit obligation or the market-related value of plan assets is amortized over the average remaining service period until retirement for active participants and included in the net periodic benefit cost.

The Company assumed health care cost trend rates for its postretirement benefits plans were as follows:


	2010			2009			2008

Health care cost trend rate assumed for next year		7.50	%		7.50	%		7.50	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		5.00	%		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate		2016			2015			2014

A one-percentage point change in assumed health care cost trend rates would have the following effects on the 2010 postretirement benefit obligation and the 2010 net post retirement benefit cost:


	1-Percentage		1-Percentage
	Point Increase		Point Decrease
	(In thousands)

Effect on postretirement benefit obligation	$	681	$	(606	)
Effect on net postretirement benefit cost		69		(60	)

PCA has retained the services of a professional advisor to oversee pension investments and provide recommendations regarding investment strategy. PCA’s overall strategy and related apportionments between equity and debt securities may change from time to time based on market conditions, external economic factors, and the funding status of the plans. Pension plans’ assets were invested in the following classes of securities at December 31, 2010 and 2009:


	Percentage
	of Fair Value
	2010			2009

Equity securities		39	%		39	%
Debt securities		60	%		60	%
Other		1	%		1	%

The fair values of PCA’s pension plans’ assets at December 31, 2010 and 2009, measured on a recurring basis, by asset category are as follows:


	Fair Value Measurements at December 31, 2010
			Quoted Prices in Active		Significant Other		Significant
			Markets for identical		Observable		Unobservable
Asset Category	Total		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
	(In thousands)

Short-term investments	$	1,320	$	—	$	1,320	$	—
Equity securities:
U.S. large value		10,594		10,594
U.S. large growth		8,519		8,519
U.S. mid-cap value		1,871		1,871
U.S. mid-cap growth		3,486		3,486
U.S. small blend		3,394				3,394
Foreign large blend		26,616		26,616
Diversified emerging markets		5,219		5,219
Real estate		5,095		5,095
Debt securities:
Government bonds		21,088				21,088
Corporate bonds		79,831		33,240		46,591

Total	$	167,033	$	94,640	$	72,393	$	—


	Fair Value Measurements at December 31, 2009
			Quoted Prices in Active		Significant Other		Significant
			Markets for identical		Observable		Unobservable
Asset Category	Total		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
	(In thousands)

Short-term investments	$	1,212	$	—	$	1,212	$	—
Equity securities:
U.S. large value		8,573		8,573
U.S. large growth		7,287		7,287
U.S. mid-cap value		2,948		2,948
U.S. mid-cap growth		2,994		2,994
U.S. small blend		1,519				1,519
Foreign large blend		21,310		21,310
Diversified emerging markets		5,854		5,854
Real estate		4,416		4,416
Debt securities:
Government bonds		12,761				12,761
Corporate bonds		71,191		41,161		30,030

Total	$	140,065	$	94,543	$	45,522	$	—

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. PCA currently expects to make pension contributions of $22.1 million and record pension plan expense of $25.9 million in 2011.

The following are estimated benefit payments to be paid to current plan participants by year:


	Pension Plans		Postretirement Plans
	(In thousands)

2011	$	4,107	$	1,146
2012		5,406		1,113
2013		6,787		1,232
2014		8,236		1,378
2015		9,801		1,535
2016 — 2020		75,123		9,804

The Company has two defined contribution 401(k) benefit plans that cover all full-time salaried employees and certain hourly employees at several of the Company’s facilities. Employees can make voluntary contributions in accordance with the provisions of their respective plan. The Company made employer-matching contributions of $9.6 million, $9.4 million and $9.4 million during the years ended December 31, 2010, 2009 and 2008, respectively.

Salaried employees who are not participants in the grandfathered pension plan (generally those hired on or after April 12, 1999) receive a service-related Company retirement contribution to their 401(k) account in addition to any employer matching contribution. This contribution increases with years of service and ranges from 3% to 5% of base pay. The Company expensed $3.1 million, $2.8 million and $2.5 million for this retirement contribution during the years ended December 31, 2010, 2009 and 2008, respectively.

Debt

12 Months Ended

Dec. 31, 2010

Debt [Abstract]

DEBT


8.	DEBT

A summary of debt is set forth in the following table:


	December 31,
	2010		2009
	(In thousands)

Receivables credit facility, effective interest rate of 1.56% and 1.97% as of December 31, 2010 and 2009, respectively, due March 1, 2011	$	109,000	$	109,000
Senior notes, net of discount of $857 and $1,200 as of December 31, 2010 and 2009, respectively, interest at 5.75% payable semi-annually, due August 1, 2013		399,143		398,800
Senior notes, net of discount of $44 and $51 as of December 31, 2010 and 2009, respectively, interest at 6.50% payable semi-annually, due March 15, 2018		149,956		149,949

Total		658,099		657,749
Less current portion		109,000		109,000

Total long-term debt	$	549,099	$	548,749

On July 21, 2003, PCA closed its offering and private placement of $150.0 million of 4.375% senior notes which were due 2008 and $400.0 million of 5.75% senior notes due 2013. On March 25, 2008, PCA issued $150.0 million of 6.50% senior notes due March 15, 2018 through a registered public offering. PCA used the proceeds of this offering, together with cash on hand, to repay all of the $150.0 million of outstanding 4.375% senior notes on August 1, 2008.

On April 15, 2008, PCA replaced its existing senior credit facility that was scheduled to expire later in 2008, with a new five-year $150.0 million senior revolving credit facility. The Company had $18.8 million of outstanding letters of credit under this facility, resulting in $131.2 million in unused borrowing capacity as of December 31, 2010.

On April 14, 2010, the Company extended its receivables-backed credit facility through March 1, 2011. The Company had $41.0 million in additional borrowing capacity available under this facility as of December 31, 2010.

The instruments governing PCA’s indebtedness contain financial and other covenants that limit the ability of PCA and its subsidiaries to enter into sale and leaseback transactions, incur liens, incur indebtedness at the subsidiary level, enter into certain transactions with affiliates, merge or consolidate with any other person or sell or otherwise dispose of all or substantially all of its assets. The senior credit facility also requires PCA to comply with certain financial covenants, including maintaining minimum net worth and maximum debt to total capitalization and minimum interest coverage ratios. A failure to comply with these restrictions could lead to an event of default, which could result in an acceleration of any outstanding indebtedness and/or prohibit the Company from drawing on the senior credit facility. Such an acceleration may also constitute an event of default under the senior notes indenture and the receivables credit facility. At December 31, 2010, the Company was in compliance with these covenants.

Additional information regarding PCA’s variable rate debt is shown below:


	Weighted-Average
	Reference Interest Rate						Applicable Margin
	December 31,						December 31,
	2010			2009			2010			2009

Receivables credit facility		0.26	%		0.27	%		1.30	%		1.70	%

As of December 31, 2010, annual principal maturities for debt, excluding unamortized debt discount, are: $109.0 million (2011), $400.0 million (2013) and $150.0 million (2018).

Interest payments in connection with the Company’s debt obligations for the years ended December 31, 2010, 2009 and 2008, amounted to $35.3 million, $35.7 million, and $38.9 million, respectively.

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 December 31, 2010, $109.0 million was outstanding and included in “Short — term debt and current maturities of long — term debt” on the consolidated balance sheet. Substantially all accounts receivable at December 31, 2010 have been sold to PRC and are included in “Accounts receivable, net of allowance for doubtful accounts and customer deductions” on the consolidated balance sheet. The highest outstanding principal balance under the receivables credit facility during 2010 was $109.0 million.

A summary of the Company’s drawings under credit facilities, including the impact of $18.8 million of outstanding letters of credit, as of December 31, 2010 follows:


	Commitments		Utilized		Available
	(In thousands)

Receivables credit facility	$	150,000	$	109,000	$	41,000
Senior revolving credit facility		150,000		18,832		131,168

	$	300,000	$	127,832	$	172,168

PCA is required to pay commitment fees on the unused portions of the credit facilities. The Company’s outstanding letters of credit of $18.8 million at December 31, 2010 are for workers’ compensation.

Derivative Instruments and Hedging Activities

12 Months Ended

Dec. 31, 2010

Derivative Instruments and Hedging Activities [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES


9.	DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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), which are amortized over the terms of the respective notes.

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 December 31, 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 project at its Valdosta, Georgia mill and Counce, Tennessee mill, the Company entered into foreign currency forward contracts on July 27, 2010 and September 30, 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 December 31, 2010, the Company had a notional value of $4.5 million in foreign currency exchange contracts outstanding that are expected to settle by the end of the third quarter 2011.

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 at December 31, 2010 was $0.8 million, which is included in “Other long-term assets” on the Company’s consolidated balance sheet at December 31, 2010. The fair value of the foreign currency forward contracts was nominal at December 31, 2010.

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


	Amount of Net Gain (Loss) Recognized in OCI (Effective Portion) December 31,
	2010			2009
	(In thousands)

Treasury locks, net of tax	$	2,164		$	4,512
Foreign currency exchange contracts, net of tax		(607	)		—

Total	$	1,557		$	4,512


	Amount of Gain (Loss) Reclassified
	from Accumulated OCI into Income
	(Effective Portion)
	Year Ended December 31,
Location	2010		2009		2008

Interest expense, net	$	1,846	$	1,846	$	2,407

The amount of gain recognized from accumulated OCI into income is associated with settlements of treasury locks in 2003 and 2008. 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 December 31, 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.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2010

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES


13.	COMMITMENTS AND CONTINGENCIES

Capital Commitments

The Company had authorized capital commitments of approximately $143.3 million and $198.0 million as of December 31, 2010 and 2009, respectively, in connection with the expansion and replacement of existing facilities and equipment. Included in authorized capital commitments are $109.2 million and $156.3 million at December 31, 2010 and 2009, respectively, for the major energy optimization projects at its Counce and Valdosta mills.

Lease Obligations

PCA leases space for certain of its facilities and cutting rights to approximately 88,000 acres of timberland under long-term leases. The Company also leases equipment, primarily vehicles and rolling stock, and other assets under long-term leases with a duration of two to seven years. The minimum lease payments under non-cancelable operating leases with lease terms in excess of one year are as follows:


	(In thousands)

2011	$	28,613
2012		24,592
2013		17,703
2014		10,702
2015		5,824
Thereafter		30,181

Total	$	117,615

Total lease expense, including base rent on all leases and executory costs, such as insurance, taxes, and maintenance, for the years ended December 31, 2010, 2009 and 2008 was $42.0 million, $41.3 million and $41.6 million, respectively. These costs are included in cost of goods sold and selling and administrative expenses.

PCA was obligated under capital leases covering buildings and machinery and equipment in the amount of $22.5 million and $23.1 million at December 31, 2010 and 2009, respectively. During the fourth quarter of 2008, the Company entered into a capital lease relating to buildings and machinery, totaling $23.9 million, payable over 20 years. This capital lease amount is a non-cash transaction and, accordingly, has been excluded from the consolidated statements of cash flows. Assets held under capital lease obligations are included in property, plant and equipment as follows:


	December 31,
	2010			2009
	(In thousands)

Buildings	$	250		$	250
Machinery and equipment		23,602			23,602

Total		23,852			23,852
Less accumulated amortization		(3,481	)		(1,934	)

Total	$	20,371		$	21,918

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

The future minimum payments under capitalized leases at December 31, 2010 are as follows:


	(In thousands)

2011	$	2,202
2012		2,202
2013		2,202
2014		2,202
2015		2,202
Thereafter		28,075

Total minimum capital lease payments		39,085
Less amounts representing interest		16,583

Present value of net minimum capital lease payments		22,502
Less current maturities of capital lease obligations		670

Total long-term capital lease obligations	$	21,832

Interest paid as part of the capital lease obligations was $1.6 million, $1.6 million, and $0.4 million during the years ended December 31, 2010, 2009 and 2008, respectively.

Purchase Commitments

The Company has entered into various purchase agreements for minimum amounts of pulpwood processing and energy over periods ranging from one to twenty years at fixed prices. Total purchase commitments are as follows:


	(In thousands)

2011	$	7,387
2012		3,451
2013		1,486
2014		1,486
2015		1,486
Thereafter		23,013

Total	$	38,309

These purchase agreements are not marked to market. The Company purchased $32.8 million, $37.3 million, and $29.4 million during the years ended December 31, 2010, 2009 and 2008, respectively, under these purchase agreements.

Litigation

During September and October 2010, PCA and eight other U.S. and Canadian containerboard producers were named as defendants in five purported class action lawsuits filed in the United States District Court for the Northern District of Illinois, alleging violations of the Sherman Act. The lawsuits have been consolidated in a single complaint under the caption Kleen Products LLC v Packaging Corp. of America et al.. The consolidated complaint alleges that the defendants conspired to limit the supply of containerboard, and that the purpose and effect of the alleged conspiracy was to artificially increase prices of containerboard products during the period from August 2005 to the time of filing of the complaints. The complaint was filed as a purported class action suit on behalf of all purchasers of containerboard products during such period. The complaint seeks treble damages and costs, including attorney’s fees. PCA believes the allegations are without merit and will defend this lawsuit vigorously. However, as the lawsuit is in preliminary stages, PCA is unable to predict the ultimate outcome or estimate a range of reasonably possible losses.

PCA is a party to various other legal actions arising in the ordinary course of business. These legal actions cover a broad variety of claims spanning our entire business. As of the date of this filing, the Company believes it is not reasonably possible that the resolution of these legal actions will, individually or in the aggregate, have a material adverse effect on its financial position, results of operations, or cash flows.

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 2010, remediation costs at the Company’s mills and corrugated plants totaled approximately $3.2 million. As of December 31, 2010, the Company maintained an environmental reserve of $9.7 million relating to on-site landfills (see Note 14) 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 $9.7 million accrued as of December 31, 2010, will have a material impact on its financial condition, results of operations, or cash flows.

In connection with the sale to PCA of its containerboard and corrugated products business, Pactiv agreed to retain all liability for all former facilities and all sites associated with pre-closing off-site waste disposal and all environmental liabilities related to a closed landfill located near the Company’s Filer City mill.

Income Taxes

12 Months Ended

Dec. 31, 2010

Income Tax [Abstract]

INCOME TAXES


15.	INCOME TAXES

Following is an analysis of the components of the consolidated income tax provision:


	2010			2009			2008
	(In thousands)

Current —
U.S.	$	44,595		$	52,704		$	74,399
State and local		23,653			12,191			10,949

Total current provision for taxes		68,248			64,895			85,348

Deferred —
U.S.		(117,945	)		(11,745	)		(10,098	)
State and local		(2,634	)		(2,074	)		(716	)

Total deferred provision for taxes		(120,579	)		(13,819	)		(10,814	)

Total provision (benefit) for taxes	$	(52,331	)	$	51,076		$	74,534

The effective tax rate varies from the U.S. Federal statutory tax rate principally due to the following:


	2010			2009			2008
				(In thousands)

Provision computed at U.S. Federal statutory rate of 35%	$	53,586		$	110,939		$	73,550
Alternative fuel mixture and cellulosic biofuel producer credits		(104,785	)		(61,673	)		—
State and local taxes, net of federal benefit		7,694			4,566			6,212
Domestic manufacturers deduction		(7,540	)		(2,956	)		(4,413	)
Other		(1,286	)		200			(815	)

Total	$	(52,331	)	$	51,076		$	74,534

The $104.8 million benefit in 2010 includes the reallocation of gallons from the alternative fuel mixture credit to the cellulosic biofuel producer credit claimed in the 2009 federal tax return, and includes a reserve for uncertain tax positions of $102.0 million. For further discussion regarding the alternative fuel mixture and cellulosic biofuel producer credits recorded during 2010 and 2009, see Note 16.

Deferred income tax assets and liabilities at December 31 are summarized as follows:


	December 31,
	2010			2009
	(In thousands)

Deferred tax assets:
Accrued liabilities	$	2,063		$	2,720
Employee benefits and compensation		8,729			7,502
Inventories		6,114			13,665
Stock options and restricted stock		7,485			7,795
Pension and postretirement benefits		42,465			35,305
Cellulosic biofuel tax credit carryforward		200,334			—

Total deferred tax assets	$	267,190		$	66,987

Deferred tax liabilities:
Property, plant and equipment	$	(197,367	)	$	(221,559	)
Investment in joint venture		(27,827	)		(28,530	)
Derivatives		(954	)		—

Total deferred tax liabilities	$	(226,148	)	$	(250,089	)

Net deferred tax assets (liabilities)	$	41,042		$	(183,102	)

The net deferred tax assets (liabilities) at December 31 are classified in the balance sheet as follows:


	December 31,
	2010			2009
	(In thousands)

Current deferred tax assets	$	50,232		$	22,125
Non-current deferred tax liabilities		(9,190	)		(205,227	)

Net deferred tax assets (liabilities)	$	41,042		$	(183,102	)

Cash payments for income taxes were $19.1 million, $22.3 million and $89.4 million for the years ended December 31, 2010, 2009 and 2008, respectively. In 2010 and 2009, cash payments for income taxes were lower due to the alternative fuel mixture and cellulosic biofuel producer credits offsetting federal income taxes payable.

As of December 31, 2010, the Company had federal income tax credit carryforwards included in deferred taxes of $200.3 million which can be used to offset federal taxes payable through December 31, 2015. The $200.3 million recognizes the full benefit of federal tax credit carryforwards as claimed on PCA’s amended federal tax return for the cellulosic biofuel credits before an adjustment of $102.0 million for uncertain tax positions under ASC 740. The deferred tax asset from the cellulosic biofuel producer credit carryforwards of $200.3 million is described in more detail in Note 16.

The following table summarizes the changes related to PCA’s gross uncertain tax positions excluding interest:


	2010			2009
	(In thousands)

Balance as of January 1	$	(9,041	)	$	(10,426	)
Increases related to prior years’ tax positions		(104,721	)		(949	)
Increases related to current year tax positions		(692	)		(619	)
Settlements with taxing authorities		424			248
Expiration of the statute of limitations		1,719			2,705

Balance at December 31	$	(112,311	)	$	(9,041	)

During the third quarter of 2010, the statue of limitations for the federal tax year of 2006 expired. During the third and fourth quarters of 2010, various state statutes of limitations expired. As a result of these events, the reserve for uncertain tax positions was decreased by $1.7 million gross or $1.3 million net of the federal benefit for state taxes during the third and fourth quarters of 2010. At December 31, 2010, PCA had recorded a $112.3 million reserve for uncertain tax positions excluding interest. Of the total, $107.6 million (net of the federal benefit for state taxes) would impact the effective tax rate if recognized. The increase in reserve in 2010 is attributable to alternative energy tax credits as described in Note 16.

During the years ended December 31, 2010 and 2009, PCA recorded $0.2 million gross ($0.09 million net) and $0.1 million gross ($0.06 million net), respectively, in its statement of income, increasing the accrual for interest to $2.0 million gross ($1.2 million net) and $1.8 million gross ($1.1 million, net) at December 31, 2010 and 2009, respectively. No accrual for penalties was made.

PCA and its subsidiaries are subject to U.S. federal income taxes, as well as income taxes of multiple state and city jurisdictions. A federal examination of the tax years 2002 and 2004 has been concluded. The tax years 2007 — 2010 remain open to federal examination. The tax years 2002 — 2010 remain open to state examinations. PCA expects the Internal Revenue Service (IRS) to review the cellulosic biofuel producer tax credits claimed in the 2009 federal income tax return. Pending the timing and outcome of the IRS review, which is not determinable at this time, PCA expects the reserve for uncertain tax positions to change significantly. PCA estimates the change in uncertain tax positions to be between $0 and $104.7 million due to potential changes upon IRS examination.

Alternative Energy Tax Credits

12 Months Ended

Dec. 31, 2010

Alternative Energy Tax Credits [Abstract]

ALTERNATIVE ENERGY TAX CREDITS


16.	ALTERNATIVE ENERGY TAX CREDITS

The Company generated black liquor as a by-product of its pulp manufacturing process and used it in a mixture with diesel fuel during 2009 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 used alternative fuels in their trade or business. 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. 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. This reserve release resulted in additional income of $9.2 million, which was recorded in Alternative Fuel Mixture Tax Credits on the income statement in the first quarter of 2010.

The total alternative fuel mixture credits earned by PCA in 2008 and 2009 were $185.4 million, which was recorded as income with a corresponding receivable on its balance sheet during 2009 when the Company received their registration as a producer of alternative fuels. As federal cash taxes became due, PCA applied these credits against the taxes due. The laws governing the taxability of the alternative fuel mixture credit are not completely defined. The IRS has not issued definitive guidance regarding such taxability. PCA believes that the manner in which the credit was claimed will not subject the Company to federal or state income taxes on such benefits. If it is determined that any of the credits are subject to taxation, PCA will be required to pay those taxes and take a corresponding charge to its income.

In a Chief Counsel’s Office of the Internal Revenue Service Memorandum AM2010-002 dated June 28, 2010, the IRS concluded that black liquor also qualifies for the taxable cellulosic biofuel producer credit of $1.01 per gallon of biofuel produced in 2009. PCA received the required cellulosic biofuel producer registration code on September 13, 2010. In a Chief Counsel’s Office of the Internal Revenue Service Memorandum AM2010-004 dated October 5, 2010, the IRS concluded that a black liquor producer may claim the alternative fuel mixture credit and the cellulosic biofuel producer credit in the same taxable year for different volumes of black liquor (the same gallon of fuel cannot receive both credits but can be claimed as either alternative fuel mixture credit or the cellulosic biofuel producer credit).

Based upon both the IRS memoranda and guidance regarding the cellulosic biofuel producer credit, during the quarter ended September 30, 2010 and upon receipt of the cellulosic biofuel registration, the Company analyzed the additional potential benefits from claiming the cellulosic biofuel producer credit for 2009 instead of the alternative fuel mixture credit, or claiming a combination of the two credits for 2009. For the gallons of alternative fuels produced in 2009 at three of our four mills, PCA claimed about two-thirds of the gallons as cellulosic biofuel producer credits and about one-third of the gallons as alternative fuel mixture credits. As a result, during the quarter ended September 30, 2010, the Company recorded a charge of $(111.9) million in Other Expense, Net due to the reversal of a portion of the income previously recorded from alternative fuel mixture credits and a $145.8 million benefit in the Benefit (Provision) for Income Taxes to reflect the reallocation of gallons to the cellulosic biofuel producer credit. The net impact of the reallocation of the gallons between the two credits resulted in additional net income impact of $33.4 million in the third quarter of 2010. Additional expenses of $0.8 million ($0.5 million after tax) related to the cellulosic biofuel producer credit were also recorded.

During the quarter ended December 31, 2010, the Company determined that its proprietary biofuel process at the Filer City, Michigan mill would likely qualify for the 2009 cellulosic biofuel producer credit. The Company amended the 2009 federal return in December 2010 to claim these gallons, resulting in $107.0 million of cellulosic biofuel producer credits. Due to the unique and proprietary nature of the Filer City mill process, IRS guidelines do not specifically address the process and uncertainty exists. As a result, the Company increased the reserve for uncertain tax positions under ASC 740 by $102.0 million, which resulted in a fourth quarter net benefit of $5.0 million. The Company expects the IRS to review the cellulosic biofuel producer tax credits claimed in the 2009 federal income tax return. Similar to the quarter ended September 30, 2010, the Company analyzed the appropriate combination of the cellulosic biofuel producer credit and the alternative fuel mixture credit. As a result, the Company recorded income of $16.4 million in Other Expense, Net, representing gallons reallocated to the alternative fuel credits per the amended 2009 federal return.

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. As of December 31, 2010, including $102.0 million recorded as a reserve for uncertain tax positions under ASC 740, PCA has as much as $206.1 million of tax credits (of which $200.3 million is related to cellulosic biofuel tax credits and recorded in deferred tax assets and $5.8 million related to alternative fuel mixture credits and recorded as an offset to accrued federal and state income tax liabilities) to be used to offset future cash tax payments. The cellulosic biofuel producer credit carryforward must be utilized to offset federal taxes owed by December 31, 2015, at which time the credit carryforward expires. A valuation allowance was not recorded against the deferred tax asset for this credit carryforward since the Company believes the credit can be fully utilized before expiration. If it is determined that any of the credit carryforward will become subject to expiration, PCA will reduce the deferred tax asset and record a corresponding charge to income.

Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2010	Dec. 31, 2009
Current assets:
Allowance for doubtful accounts receivable and reserve for customer deductions, current	$ 5,413,000	$ 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	102,308,231	103,018,358