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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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

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

As of ~~October 25, 2019~~July 31, 2020 the Registrant had outstanding ~~94,657,919~~94,835,022 shares of common stock, par value $0.01 per share.

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Statements of Income:
Net sales	$	1,750.7		$	1,809.9		$	5,244.3		$	5,268.1		$	1,541.6		$	1,759.9		$	3,250.3		$	3,493.6
Cost of sales		(1,339.3	)		(1,366.7	)		(3,983.6	)		(4,048.2	)		(1,215.8	)		(1,332.0	)		(2,559.6	)		(2,644.3	)
Gross profit		411.4			443.2			1,260.7			1,219.9			325.8			427.9			690.7			849.3
Selling, general and administrative expenses		(136.9	)		(134.2	)		(420.6	)		(406.7	)		(136.3	)		(143.7	)		(282.2	)		(283.7	)
Goodwill impairment														(55.2	)		—			(55.2	)		—
Other expense, net		(11.7	)		(10.5	)		(21.5	)		(32.2	)		(18.2	)		(3.8	)		(28.1	)		(9.8	)
Income from operations		262.8			298.5			818.6			781.0			116.1			280.4			325.2			555.8
Non-operating pension expense		(1.9	)		(0.5	)		(6.0	)		(1.6	)
Non-operating pension income (expense)														0.6			(2.0	)		1.1			(4.1	)
Interest expense, net		(21.6	)		(23.9	)		(68.0	)		(73.4	)		(25.1	)		(22.4	)		(44.6	)		(46.4	)
Income before taxes		239.3			274.1			744.6			706.0			91.6			256.0			281.7			505.3
Provision for income taxes		(59.5	)		(67.4	)		(184.4	)		(172.6	)		(34.9	)		(62.4	)		(83.4	)		(124.9	)
Net income	$	179.8		$	206.7		$	560.2		$	533.4		$	56.7		$	193.6		$	198.3		$	380.4
Net income per common share:
Basic	$	1.90		$	2.19		$	5.93		$	5.65		$	0.60		$	2.05		$	2.09		$	4.03
Diluted	$	1.89		$	2.18		$	5.91		$	5.64		$	0.59		$	2.04		$	2.08		$	4.02
Dividends declared per common share	$	0.79		$	0.79		$	2.37		$	2.21		$	0.79		$	0.79		$	1.58		$	1.58
Statements of Comprehensive Income:
Net income	$	179.8		$	206.7		$	560.2		$	533.4		$	56.7		$	193.6		$	198.3		$	380.4
Other comprehensive income, net of tax:
Foreign currency translation adjustment		—			—			—			(0.1	)
Reclassification adjustments to cash flow hedges included in net income, net of tax of $0.3 million, $0.3 million, $1.0 million, and $1.0 million		1.0			1.0			2.9			3.0
Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of $0.8 million, $1.0 million, $2.4 million, and $3.0 million		2.4			3.0			7.1			8.9
Reclassification adjustments to cash flow hedges included in net income, net of tax of $0.0 million, $0.3 million, $0.0 million, and $0.7 million														—			1.0			—			1.9
Changes in unrealized gains on marketable debt securities, net of tax of $0.3 million, $0.0 million, $0.2 million, and $0.0 million														0.9			—			0.7			—
Amortization of pension and postretirement plans actuarial loss and prior service cost, net of tax of $0.9 million, $0.8 million, $1.8 million, and $1.6 million														2.7			2.3			5.4			4.7
Other comprehensive income		3.4			4.0			10.0			11.8			3.6			3.3			6.1			6.6
Comprehensive income	$	183.2		$	210.7		$	570.2		$	545.2		$	60.3		$	196.9		$	204.4		$	387.0

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

	September 30,			December 31,			June 30,			December 31,
	2019			2018			2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	738.3		$	361.5		$	853.3		$	679.5
Accounts receivable, net of allowance for doubtful accounts and customer deductions of $13.9 million and $13.6 million as of September 30, 2019, and December 31, 2018, respectively		932.3			901.9
Short-term marketable debt securities								86.9			87.9
Accounts receivable, net of allowance for credit losses and customer deductions of $12.6 million as of both June 30, 2020, and December 31, 2019								817.3			845.6
Inventories		806.3			795.6			834.5			794.1
Prepaid expenses and other current assets		44.9			39.4			60.9			44.8
Federal and state income taxes receivable		9.5			16.7			6.1			26.5
Total current assets		2,531.3			2,115.1			2,659.0			2,478.4
Property, plant, and equipment, net		3,110.4			3,108.6			3,114.7			3,151.7
Operating lease right-of-use assets		232.3			—
Goodwill		918.7			917.3			863.5			918.7
Other intangible assets, net		348.5			378.2			314.9			338.8
Operating lease right-of-use assets								229.7			234.3
Long-term marketable debt securities								36.3			58.1
Other long-term assets		49.9			50.5			53.9			55.8
Total assets	$	7,191.1		$	6,569.7		$	7,272.0		$	7,235.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Operating lease obligations							$	67.1		$	62.6
Finance lease obligations	$	1.5		$	1.4			1.6			1.5
Operating lease obligations		60.4			—
Accounts payable		385.5			382.2			315.2			351.9
Dividends payable		76.3			76.1			76.5			76.6
Accrued liabilities		220.1			222.4			211.3			217.5
Accrued interest		26.9			11.5			11.9			13.7
Total current liabilities		770.7			693.6			683.6			723.8
Long-term liabilities:
Long-term debt		2,486.3			2,483.7			2,478.0			2,476.8
Operating lease obligations								171.5			177.6
Finance lease obligations		16.4			17.6			15.2			16.0
Operating lease obligations		177.3			—
Deferred income taxes		327.6			285.2			361.1			340.1
Compensation and benefits		320.3			357.5			369.5			375.5
Other long-term liabilities		57.8			59.7			60.0			55.0
Total long-term liabilities		3,385.7			3,203.7			3,455.3			3,441.0
Commitments and contingent liabilities
Stockholders' equity:
Common stock, par value $0.01 per share, 300.0 million shares authorized, 94.7 million and 94.5 million shares issued as of September 30, 2019, and December 31, 2018, respectively		0.9			0.9
Common stock, par value $0.01 per share, 300.0 million shares authorized, 94.8 million and 94.7 million shares issued as of June 30, 2020 and December 31, 2019, respectively								0.9			0.9
Additional paid in capital		518.9			494.5			542.7			524.8
Retained earnings		2,643.7			2,315.8			2,742.9			2,704.8
Accumulated other comprehensive loss		(128.8	)		(138.8	)		(153.4	)		(159.5	)
Total stockholders' equity		3,034.7			2,672.4			3,133.1			3,071.0
Total liabilities and stockholders' equity	$	7,191.1		$	6,569.7		$	7,272.0		$	7,235.8

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2019			2018			2020			2019
Cash Flows from Operating Activities:
Net income	$	560.2		$	533.4		$	198.3		$	380.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization of intangibles		288.6			313.6			208.5			190.7
Amortization of deferred financing costs		6.5			6.5			1.3			4.3
Share-based compensation expense		24.5			17.4			17.8			18.6
Deferred income tax provision		38.3			34.9			19.2			26.9
Loss on asset disposals		6.7			4.9			2.3			1.9
Goodwill impairment								55.2			—
Pension and post-retirement benefits expense, net of contributions		(30.4	)		(2.7	)		(1.1	)		11.3
Other, net		9.6			3.3			14.1			8.7
Changes in operating assets and liabilities:
Increase in assets —
(Increase) decrease in assets —
Accounts receivable		(30.3	)		(148.9	)		28.3			(44.9	)
Inventories		(10.8	)		(22.6	)		(40.4	)		(20.1	)
Prepaid expenses and other current assets		(5.6	)		(13.2	)		(14.9	)		(21.2	)
Increase (decrease) in liabilities —
Accounts payable		(2.3	)		19.6			(37.8	)		(1.8	)
Accrued liabilities		15.4			23.7			(7.7	)		(22.3	)
Federal and state income taxes payable / receivable		7.8			64.6			20.4			5.9
Net cash provided by operating activities		878.2			834.5			463.5			538.4
Cash Flows from Investing Activities:
Additions to property, plant, and equipment		(263.8	)		(404.3	)		(151.2	)		(170.9	)
Additions to other long term assets		(4.5	)		(4.1	)		(5.1	)		(1.8	)
Redemptions of marketable debt securities, net of purchases								23.2			—
Proceeds from disposals		1.4			0.5			4.3			1.2
Other, net		(1.4	)		2.6			—			(1.3	)
Net cash used for investing activities		(268.3	)		(405.3	)		(128.8	)		(172.8	)
Cash Flows from Financing Activities:
Repayments of debt and finance lease obligations		(1.1	)		(151.0	)		(0.8	)		(0.7	)
Common stock dividends paid		(223.9	)		(193.4	)		(149.7	)		(149.3	)
Shares withheld to cover employee restricted stock taxes		(8.1	)		(7.9	)		(10.4	)		(7.7	)
Net cash used for financing activities		(233.1	)		(352.3	)		(160.9	)		(157.7	)
Net increase in cash and cash equivalents		376.8			76.9			173.8			207.9
Cash and cash equivalents, beginning of period		361.5			216.9			679.5			361.5
Cash and cash equivalents, end of period	$	738.3		$	293.8		$	853.3		$	569.4

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

	Common Stock					Additional Paid in		Retained			Accumulated Other Comprehensive			Total Stockholders'			Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount		Capital		Earnings			Loss			Equity			Shares			Amount		Capital			Earnings			Loss			Equity
Balance at July 1, 2019		94,666		$	0.9	$	513.3	$	2,539.2		$	(132.2	)	$	2,921.2
Balance at April 1, 2020																		94,848		$	0.9	$	534.9		$	2,771.1		$	(157.0	)	$	3,149.9
Common stock withheld and retired to cover taxes on vested stock awards																		(106	)		—		(0.8	)		(9.6	)		—			(10.4	)
Common stock dividends declared																		—			—		—			(75.3	)		—			(75.3	)
Share-based compensation																		93			—		8.6			—			—			8.6
Comprehensive income																		—			—		—			56.7			3.6			60.3
Balance at June 30, 2020																		94,835		$	0.9	$	542.7		$	2,742.9		$	(153.4	)	$	3,133.1


																	Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
																	Shares			Amount		Capital			Earnings			Loss			Equity
Balance at April 1, 2019																		94,494		$	0.9	$	501.4		$	2,427.8		$	(135.5	)	$	2,794.6
Common stock withheld and retired to cover taxes on vested stock awards		(4	)		—		—		(0.3	)		—			(0.3	)		(83	)		—		(0.6	)		(7.1	)		—			(7.7	)
Common stock dividends declared		—			—		—		(75.0	)		—			(75.0	)		—			—		—			(74.9	)		—			(74.9	)
Share-based compensation		(2	)		—		5.6		—			—			5.6			255			—		12.5			—			—			12.5
Other		—			—		—		—			—			—			—			—		—			(0.2	)		—			(0.2	)
Comprehensive income		—			—		—		179.8			3.4			183.2			—			—		—			193.6			3.3			196.9
Balance at September 30, 2019		94,660		$	0.9	$	518.9	$	2,643.7		$	(128.8	)	$	3,034.7


	Common Stock					Additional Paid in		Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount		Capital		Earnings			Loss			Equity
Balance at July 1, 2018		94,500		$	0.9	$	482.1	$	2,054.0		$	(149.0	)	$	2,388.0
Common stock withheld and retired to cover taxes on vested stock awards		(2	)		—		—		(0.3	)		—			(0.3	)
Common stock dividends declared		—			—		—		(74.9	)		—			(74.9	)
Share-based compensation		(1	)		—		6.7		—			—			6.7
Other		—			—		0.1		—			(0.1	)		—
Comprehensive income		—			—		—		206.7			4.0			210.7
Balance at September 30, 2018		94,497		$	0.9	$	488.9	$	2,185.5		$	(145.1	)	$	2,530.2
Balance at June 30, 2019																		94,666		$	0.9	$	513.3		$	2,539.2		$	(132.2	)	$	2,921.2

																		Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
																		Shares			Amount		Capital			Earnings			Loss			Equity
Balance at January 1, 2020																			94,655		$	0.9	$	524.8		$	2,704.8		$	(159.5	)	$	3,071.0
Common stock withheld and retired to cover taxes on vested stock awards																			(107	)		—		(0.8	)		(9.6	)		—			(10.4	)
Common stock dividends declared																			—			—		—			(150.5	)		—			(150.5	)
Share-based compensation																			287			—		18.7			—			—			18.7
Other																			—			—		—			(0.1	)		—			(0.1	)
Comprehensive income																			—			—		—			198.3			6.1			204.4
Balance at June 30, 2020																			94,835		$	0.9	$	542.7		$	2,742.9		$	(153.4	)	$	3,133.1


	Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'			Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount		Capital			Earnings			Loss			Equity			Shares			Amount		Capital			Earnings			Loss			Equity
Balance at January 1, 2019		94,497		$	0.9	$	494.5		$	2,315.8		$	(138.8	)	$	2,672.4			94,497		$	0.9	$	494.5		$	2,315.8		$	(138.8	)	$	2,672.4
Common stock withheld and retired to cover taxes on vested stock awards		(87	)		—		(0.7	)		(7.4	)		—			(8.1	)		(83	)		—		(0.6	)		(7.1	)		—			(7.7	)
Common stock dividends declared		—			—		—			(224.7	)		—			(224.7	)		—			—		—			(149.7	)		—			(149.7	)
Share-based compensation		250			—		25.1			—			—			25.1			252			—		19.4			—			—			19.4
Other		—			—		—			(0.2	)		—			(0.2	)		—			—		—			(0.2	)		—			(0.2	)
Comprehensive income		—			—		—			560.2			10.0			570.2			—			—		—			380.4			6.6			387.0
Balance at September 30, 2019		94,660		$	0.9	$	518.9		$	2,643.7		$	(128.8	)	$	3,034.7


	Common Stock					Additional Paid in			Retained			Accumulated Other Comprehensive			Total Stockholders'
	Shares			Amount		Capital			Earnings			Loss			Equity
Balance at January 1, 2018		94,350		$	0.9	$	471.2		$	1,867.4		$	(156.9	)	$	2,182.6
Common stock withheld and retired to cover taxes on vested stock awards		(69	)		—		(0.5	)		(7.4	)		—			(7.9	)
Common stock dividends declared		—			—		—			(209.3	)		—			(209.3	)
Adoption of ASC 606		—			—		—			1.6			—			1.6
Share-based compensation		216			—		17.8			—			—			17.8
Other		—			—		0.4			(0.2	)		—			0.2
Comprehensive income		—			—		—			533.4			11.8			545.2
Balance at September 30, 2018		94,497		$	0.9	$	488.9		$	2,185.5		$	(145.1	)	$	2,530.2
Balance at June 30, 2019																			94,666		$	0.9	$	513.3		$	2,539.2		$	(132.2	)	$	2,921.2

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

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

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

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

The consolidated financial statements of PCA as ~~September~~of June 30, ~~2019~~2020 and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are unaudited but include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. The preparation of the consolidated financial statements involves the use of estimates and accruals. Actual results may vary from those estimates. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete audited financial statements. Operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2019.~~2020. These consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

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

Effective January 1, ~~2019, the Company~~2020, we adopted ~~the Financial Accounting Standards Board (“FASB”)~~ Accounting Standards Update (“ASU”) 2016-13, ~~2016-02 (Topic 842)~~Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.~~Leases, which requires~~ ASU 2016-13 introduces the ~~recognition of lease assets and lease liabilities by lessees~~Current Expected Credit Losses (“CECL”) framework for ~~those leases classified as operating leases under previous guidance. The original guidance required application~~evaluating credit losses on afinancial instruments measured at amortized cost. ASU 2016-13 was applied using the modified retrospective ~~basis with the earliest period presented. In July 2018, the FASB issued ASU 2018-11,~~ ~~Targeted Improvements to ASC 842, which included an option to not restate comparative periods in transition~~method, and ~~elect to use the effective date of ASC 842,~~ ~~Leases~~, as ~~the date of initial application of transition, which we elected. As~~ a result, amounts recorded prior to January 1, 2020 have not been retrospectively restated. This new framework requires entities to incorporate forward-looking information into their estimate of current expected credit loss as of each reporting date. Although available-for-sale (“AFS”) debt securities are not within the scope of the new CECL framework, the ASU includes an amended impairment model for evaluating losses related to AFS debt securities. The guidance in this update also includes enhanced requirements for disclosures related to credit loss estimates.

Prior to adoption of the new standard, the Company already incorporated forward-looking information into its estimate of credit losses for trade receivables. Due to the short duration of the Company’s trade receivables, the adoption of ~~ASC 842~~ASU 2016-13 did not have a material impact on January 1, 2019, we recorded operating lease liabilities of $228 million, with corresponding right of use (“ROU”) assets of the same amount. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward the historical lease classification and not to reassess whether existing or expired contracts contain a lease. We also elected the short-term lease recognition exemption, which permits us to exclude short-term leases (i.e. leases with terms of 12 months or less) from the recognition requirements of this standard, and we elected to account for lease and non-lease components as a single lease component for all classes of underlying assets except for embedded leases.trade receivables. The adoption of ASC 842 had an immaterial impact on our consolidated net earnings, liquidity and debt covenants under our current agreements for the three- and nine-month periods ended September 30, 2019. See Note 3, Leases, for more information.

~~Effective January 1, 2019, we adopted~~ ASU ~~2018-02 (Topic 220): Income Statement—Reporting Comprehensive Income – Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~, which allows for optional reclassification from Accumulated Other Comprehensive Income (“AOCI”) to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act in December 2017 (“Tax Act”). Stranded tax effects are the difference in deferred taxes between the amount initially recorded to other comprehensive income (“OCI”) at historical corporate income tax rates and the amount recorded using the newly-enacted corporate income tax rate. The cumulative tax rate adjustment to deferred taxes was required to be recorded through income tax expense from continuing operations in the period of enactment as opposed to OCI, resulting in the stranded tax effects in AOCI. The Company elected to not reclassify the stranded tax effects related to the Tax Act. As a result, the adoption2016-13 also did not have ana material impact on the ~~Company's~~Company’s AFS marketable debt securities, as the Company only invests in highly-rated AFS marketable debt securities. Overall, the adoption of ASU 2016-13 did not have a material impact on the Company’s financial ~~position,~~condition, results of operations or cash flow.

Effective January 1, 2020, the Company adopted ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes or modifies certain disclosure requirements and adds additional requirements to improve the usefulness of the fair value measurement disclosure for financial statement users. Certain new requirements of ASU 2018-13 are required to be applied prospectively for the first interim period of the initial year of adoption. However, the modifications and removal of certain information needs to be applied retrospectively. The adoption of this Update did not have a significant impact on the Company’s related disclosures as reflected in this Quarterly Report on Form 10-Q.

In ~~August 2018,~~March 2020, the FASB issued ASU ~~2018-15,~~2020-04, ~~Intangibles – Goodwill and Other – Internal Use Software~~Reference Rate Reform (~~Subtopic 350-40)~~Topic 848):~~Customer’s Accounting~~ Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional guidance for ~~Implementation Costs Incurred~~a limited period of time to ease the potential burden in ~~a Cloud Computing Arrangement That Is a Service Contract, which includes amendments to align the~~ accounting for, ~~costs incurred to implement a cloud computing arrangement that is a service contract with~~or recognizing the ~~guidance~~effects of, reference rate reform on ~~capitalizing costs associated with developing or obtaining internal-use software.~~financial reporting. The ~~accounting for the service component of a hosting arrangement that is a service contract is not affected by the~~ amendments in this ~~update. The~~Update are elective and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Companies can apply the ASU ~~is effective for annual and interim periods beginning after~~immediately, but the guidance will only be available until December ~~15, 2019. Early adoption is permitted.~~31, 2022. The Company is currently evaluating the impact of this guidance, but does not expect the ~~new guidance.~~guidance to have a significant impact on its related disclosures.

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

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

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments – Credit Losses~~ ~~(Topic 326): Measurement of Credit Losses on Financial Instruments.~~ ASU 2016-13 introduces the Current Expected Credit Losses (“CECL”) framework for evaluating credit losses on financial instruments measured at amortized cost. This new framework requires entities to incorporate forward-looking information into their estimate of current expected credit loss as of each reporting date. Although available-for-sale (“AFS”) debt securities are not within the scope of the new CECL framework, the ASU includes an amended impairment model for evaluating losses related to AFS debt securities. The guidance in this update also includes enhanced requirements for disclosures related to credit loss estimates. The ASU is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The amendments in ASU 2016-13 would need to be applied using the modified retrospective method. The Company is currently evaluating the impact of the new guidance, but does not expect ~~this ASU to~~the guidance will have a ~~material~~significant impact on ~~the Company’s financial position, results of operation, or cash flow.~~its related disclosures.

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

We group our leases into 2 primary lease types, real estate and equipment, and into various asset classes within each type. Real estate leases primarily include manufacturing locations, office space, warehouses, and design centers, while equipment leases primarily include manufacturing equipment.

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

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

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

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

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

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

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

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

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

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

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Packaging	$	1,489.9	$	1,535.1	$	4,472.1	$	4,434.2	$	1,409.9	$	1,504.6	$	2,877.4	$	2,982.2
Paper		242.8		254.3		720.3		774.5		123.3		237.8		340.7		477.5
Corporate and Other		18.0		20.5		51.9		59.4		8.4		17.5		32.2		33.9
Total revenue	$	1,750.7	$	1,809.9	$	5,244.3	$	5,268.1	$	1,541.6	$	1,759.9	$	3,250.3	$	3,493.6

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

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

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

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

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

Revenue in this segment primarily relates to Louisiana Timber Procurement Company, L.L.C. (LTP), a variable-interest entity that is 50% owned by PCA and 50% owned by Boise Cascade Company (Boise Cascade). PCA is the primary beneficiary of LTP and has the power to direct the

activities that most significantly affect the economic performance of LTP. Therefore, we consolidate 100% of LTP in our financial statements. See Note ~~18,~~17, Transactions With Related Parties, for more information related to LTP.

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

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

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

On October 9, 2018, PCA acquired the assets of Englander dZignPak (“Englander”), a corrugated products manufacturer, for $56.3 million. The assets include two sheet plants located in Waco, Texas and Carrollton, Texas. Sales and total assets of the acquired company are not material to our overall sales and total assets. Operating results of the acquired assets subsequent to October 9, 2018 are included in our Packaging segment’s 2018 operating results. The total purchase price has been allocated to the assets acquired and liabilities assumed based on fair values at the date of acquisition, of which $28.6 million was allocated to goodwill (which is deductible for tax purposes) and $14.1 million to intangible assets (to be amortized over a weighted average life of approximately 9.7 years), primarily customer relationships, in the Packaging segment.

During the second quarter of 2019, we paid $1.4 million to the seller related to a final working capital adjustment. We recorded the adjustment as an increase to goodwill, which increased the purchase price to $57.7 million.

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
Numerator:	2019			2018			2019			2018			2020			2019			2020			2019
Net income	$	179.8		$	206.7		$	560.2		$	533.4		$	56.7		$	193.6		$	198.3		$	380.4
Less: Distributed and undistributed earnings allocated to participating securities		(1.3	)		(1.6	)		(4.2	)		(4.1	)		(0.5	)		(1.5	)		(1.8	)		(2.9	)
Net income attributable to common shareholders	$	178.5		$	205.1		$	556.0		$	529.3		$	56.2		$	192.1		$	196.5		$	377.5
Denominator:
Weighted average basic common shares outstanding		93.9			93.7			93.8			93.7			94.0			93.8			94.0			93.8
Effect of dilutive securities		0.4			0.3			0.3			0.2			0.4			0.2			0.4			0.2
Weighted average diluted common shares outstanding		94.3			94.0			94.1			93.9			94.4			94.0			94.4			94.0
Basic income per common share	$	1.90		$	2.19		$	5.93		$	5.65		$	0.60		$	2.05		$	2.09		$	4.03
Diluted income per common share	$	1.89		$	2.18		$	5.91		$	5.64		$	0.59		$	2.04		$	2.08		$	4.02

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Asset disposals and write-offs ~~(a)~~	$	(9.5	)	$	(5.1	)	$	(18.3	)	$	(14.4	)	$	(5.0	)	$	(4.5	)	$	(11.0	)	$	(8.8	)
Facilities closure and other costs (a)														(13.3	)		—			(13.7	)		—
Wallula mill restructuring (b)		—			(3.7	)		(0.4	)		(11.6	)		—			—			—			(0.4	)
Facilities closure and other costs (c)		—			(1.5	)		—			(1.6	)
Insurance deductible for property damage (d)		—			(0.5	)		—			(0.5	)
Acquisition and integration related costs (e)		—			(0.1	)		—			(0.1	)
Other		(2.2	)		0.4			(2.8	)		(4.0	)		0.1			0.7			(3.4	)		(0.6	)
Total	$	(11.7	)	$	(10.5	)	$	(21.5	)	$	(32.2	)	$	(18.2	)	$	(3.8	)	$	(28.1	)	$	(9.8	)

For the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, we recorded ~~$59.5~~$34.9 million and ~~$67.4~~$62.4 million of income tax expense and had an effective tax rate of ~~24.9%~~38.2% and ~~24.6%~~24.4%, respectively. ~~The increase in our effective tax rate for~~For the ~~three~~six months ended ~~September~~June 30, ~~2019 compared with the same period in 2018 was due to higher state~~2020 and ~~local income taxes net of the federal benefit and higher employee compensation related impacts from the elimination of the performance based compensation exclusion in tax reform.~~

~~For the nine months ended September 30,~~ 2019, ~~and 2018,~~ we recorded ~~$184.4~~$83.4 millionand ~~$172.6~~$124.9 million of income tax expense and had an effective tax rate of ~~24.8%~~ 29.6%and ~~24.4%~~24.7%, respectively. The increase in our effective tax rate for both the ~~nine~~three and six months ended ~~September~~June 30, ~~2019~~2020 compared with the same period in ~~2018~~2019 was primarily due to ~~higher state and local income taxes net~~the nondeductible goodwill impairment charge associated with our Paper reporting unit slightly offset by the favorable impact of ~~the federal benefit, higher~~ employee ~~compensation related impacts from~~ restricted stock and performance unit vests with ~~a lower~~higher excess tax ~~benefit~~benefits (ASU 2016-09), during the three and ~~the elimination of the performance based compensation exclusion in tax reform~~.six months ended June 30, 2020 compared to June 30, 2019.

Our effective tax rate may differ from the federal statutory income tax rate of 21.0% due primarily to the effect of state and local income ~~taxes.~~taxes and the nondeductible goodwill impairment recorded in the second quarter of 2020. During the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, cash paid for taxes, net of refunds received, was ~~$138.2~~$43.7 million and ~~$73.2~~$92.1 million, respectively. The ~~increase~~decrease in cash tax payments between the periods is primarily due to ~~the 2018 use of a federal overpayment carryforward from the 2017 tax year resulting from tax reform related changes.~~lower taxable income.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, there were no significant changes to our uncertain tax positions. For more information, see Note 7,8, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our ~~2018~~2019 Annual Report on Form 10-K.

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

	September 30,		December 31,		June 30,		December 31,
	2019		2018		2020		2019
Raw materials	$	280.2	$	307.8	$	272.1	$	271.5
Work in process		15.8		13.9		13.1		11.0
Finished goods		215.8		199.0		231.7		207.7
Supplies and materials		294.5		274.9		317.6		303.9
Inventories	$	806.3	$	795.6	$	834.5	$	794.1

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

	September 30,			December 31,			June 30,			December 31,
	2019			2018			2020			2019
Land and land improvements	$	167.5		$	161.9		$	177.5		$	177.5
Buildings		815.4			795.5			845.1			837.4
Machinery and equipment		5,672.3			5,481.6			5,793.7			5,727.4
Construction in progress		173.3			176.7			214.5			174.0
Other		77.1			75.4			86.2			81.5
Property, plant and equipment, at cost		6,905.6			6,691.1			7,117.0			6,997.8
Less accumulated depreciation		(3,795.2	)		(3,582.5	)		(4,002.3	)		(3,846.1	)
Property, plant, and equipment, net	$	3,110.4		$	3,108.6		$	3,114.7		$	3,151.7

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

Depreciation expense for the three months ended ~~September~~June 30, 2020 and 2019 ~~and 2018~~ was ~~$87.6~~$93.3 million and ~~$89.0~~$85.8 million, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, depreciation expense was ~~$258.6~~$183.1 million and ~~$275.3~~$171.0 million, respectively. We recognized ~~$0.2~~$2.6 million ~~and $14.0~~of incremental depreciation expense during the six months ended June 30, 2020 as a result of the closure of the San Lorenzo, California corrugated products facility. We recognized $0.2 million of incremental depreciation expense during the ~~nine~~six months ended ~~September~~June 30, 2019 ~~and 2018, respectively,~~ as a result of shortening the useful lives of certain assets primarily related to the Wallula mill restructuring.

At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, purchases of property, plant, and equipment included in accounts payable were ~~$30.3~~$27.9 million and ~~$24.7~~$26.8 million, respectively.

Due to the triggering event identified above an interim quantitative impairment analysis was performed as of May 31, 2020 for the Paper reporting unit, which is the same as our Paper reportable segment. We estimated the fair value of the Paper reporting unit using a combination of the income approach and the market approach, as further described below. Based on the evaluation performed, we determined that the carrying value of the Paper reporting unit exceeded its fair value, which resulted in a goodwill impairment charge totaling $55.2 million. The impairment charge is included in “Goodwill impairment” on our unaudited Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2020 and is not tax deductible.

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

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

Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. At ~~September~~both June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had $863.5 ~~millionand $862.1~~ million of goodwill recorded in our Packaging ~~segment, respectively.~~segment. At ~~both September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had $0 million and $55.2 million of goodwill recorded in our Paper ~~segment.~~

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

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

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

	September 30, 2019						December 31, 2018						June 30, 2020						December 31, 2019
	Weighted Average Remaining Useful Life (in Years)		Gross Carrying Amount		Accumulated Amortization		Weighted Average Remaining Useful Life (in Years)		Gross Carrying Amount		Accumulated Amortization		Weighted Average Remaining Useful Life (in Years)		Gross Carrying Amount		Accumulated Amortization		Weighted Average Remaining Useful Life (in Years)		Gross Carrying Amount		Accumulated Amortization
Customer relationships ~~(b)~~(a)		10.2	$	503.8	$	171.3		10.9	$	504.6	$	144.5		9.4	$	503.8	$	202.7		10.0	$	503.8	$	180.2
Trademarks and trade names		9.6		34.8		19.9		10.1		34.8		18.3		9.3		34.8		21.8		9.5		34.8		20.6
Other		2.3		4.3		3.2		3.0		4.3		2.7		1.6		4.3		3.5		2.1		4.3		3.3
Total intangible assets (excluding goodwill)		10.1	$	542.9	$	194.4		10.8	$	543.7	$	165.5		9.4	$	542.9	$	228.0		9.9	$	542.9	$	204.1

During the ~~three~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, amortization expense was ~~$9.7~~$23.9 million and ~~$10.2 million, respectively. During the nine months ended September 30, 2019 and 2018, amortization expense was $28.9 millionand $30.7~~$19.2 million, respectively.

	September 30,		December 31,		June 30,		December 31,
	2019		2018		2020		2019
Compensation and benefits	$	121.7	$	136.7	$	108.5	$	124.5
Customer volume discounts and rebates		27.4		25.2		25.7		27.9
Medical insurance and workers’ compensation		26.9		27.5		25.0		26.3
Franchise, property, sales and use taxes		25.2		13.4		22.9		15.3
Severance, retention, and relocation						9.7		3.5
Environmental liabilities and asset retirement obligations		5.3		5.0		4.8		5.6
Severance, retention, and relocation		3.5		2.2
Other		10.1		12.4		14.7		14.4
Total	$	220.1	$	222.4	$	211.3	$	217.5

For the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, cash payments for interest were ~~$53.4~~$49.4 million and ~~$58.6~~$45.8 million, respectively.

Included in interest expense, net ~~are~~is the amortization of financing costs, and, for 2019 only, the amortization of treasury lock settlements. The remaining balances of the treasury lock settlements ~~and amortization of financing costs.~~were written off in connection with the debt refinancing completed in December 2019. For ~~both~~ the three months ended ~~September~~June 30, 2020 and 2019, amortization of financing costs was $0.5 millionand ~~2018,~~$0.7 million, respectively, and during the six months ended June 30, 2020 and 2019, amortization of financing costs was $1.0 millionand $1.4 million, respectively. For the three and six months ended June 30, 2019, amortization of treasury lock settlements was $1.3 million and ~~for the nine months ended September 30, 2019 and 2018, amortization of treasury locks was $3.9 million~~and $4.0 million, respectively. For both the three months ended September 30, 2019 and 2018, amortization of financing costs was $0.7 million, and during the nine months ended September 30, 2019 and 2018, amortization of financing costs was $2.1 million~~and $2.0~~$2.6 million, respectively.

At ~~September~~June 30, ~~2019,~~2020, we had ~~$2,496.8~~$2,493.4 million of fixed-rate senior notes outstanding. The fair value of our fixed-rate debt was estimated to be ~~$2,607.0~~$2,782.7 million. The difference between the book value and fair value is due to the difference between the period-end market interest rate and the stated rate of our fixed-rate debt. We estimated the fair value of our fixed-rate debt using quoted market prices (Level 2 inputs) within the fair value hierarchy, which is further defined in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of our ~~2018~~2019 Annual Report on Form 10-K.

For more information on our long-term debt and interest rates on that debt, see Note ~~10,~~11, Debt, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of our ~~2018~~2019 Annual Report on Form 10-K.

12The following table shows the Company’s cash and available-for-sale (AFS) debt securities by major asset category at June 30, 2020 and December 31, 2019 (in millions):

	June 30, 2020
	Adjusted Cost Basis		Unrealized Gain		Unrealized Loss		Fair Value		Cash and Cash Equivalents		Short-Term Marketable Debt Securities		Long-Term Marketable Debt Securities
Cash and cash equivalents	$	824.3	$	—	$	—	$	824.3	$	824.3	$	—	$	—
Level 1 ^(a):
Money market funds		29.0		—		—		29.0		29.0		—		—
U.S. Treasury securities		27.8		0.3		—		28.1		—		17.3		10.8
Subtotal		56.8		0.3		—		57.1		29.0		17.3		10.8
Level 2 ^(b):
Certificates of deposit		0.7		—		—		0.7		—		0.7		—
U.S. government agency securities		5.6		—		—		5.6		—		3.0		2.6
Corporate debt securities		88.1		0.7		—		88.8		—		65.9		22.9
Subtotal		94.4		0.7		—		95.1		—		69.6		25.5
Total	$	975.5	$	1.0	$	—	$	976.5	$	853.3	$	86.9	$	36.3

	December 31, 2019
	Adjusted Cost Basis		Unrealized Gain		Unrealized Loss		Fair Value (c)		Cash and Cash Equivalents		Short-Term Marketable Debt Securities		Long-Term Marketable Debt Securities
Cash and cash equivalents	$	675.6					$	675.6	$	675.6	$	—	$	—
Level 1 ^(a):
Money market funds		0.1		—		—		0.1		0.1		—		—
U.S. Treasury securities		27.1		—		—		27.1		3.1		11.5		12.5
Subtotal		27.2						27.2		3.2		11.5		12.5
Level 2 ^(b):
Certificates of deposit		3.9		—		—		3.9		—		3.9		—
Commercial paper		5.6		—		—		5.6		0.7		4.9		—
U.S. government agency securities		7.0		—		—		7.0		—		3.0		4.0
Corporate debt securities		106.2		—		—		106.2		—		64.6		41.6
Subtotal		122.7						122.7		0.7		76.4		45.6
Total	$	825.5	$	—	$	—	$	825.5	$	679.5	$	87.9	$	58.1

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

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

Fair values were determined for each individual marketable debt security in the investment portfolio. The Company evaluates each individual security to determine whether the security is impaired. An impairment exists when a security’s fair value is below its amortized cost basis. The Company reviews each impaired investment to determine if the decline in fair value below the amortized cost basis resulted from a credit loss or other factors. If the impairment of a marketable debt security (or a portion of the impairment) is due to credit factors of the issuer, the Company records an allowance for credit losses. Non-credit related impairments are recorded in Other Comprehensive Income (OCI). PCA reviews factors such as the duration and extent to which the fair value of the marketable debt security is less than its cost, the financial condition of the issuer and any changes thereto, the general market condition in which the issuer operates, and ability of the issuer to make all required payments of the marketable debt security. PCA utilizes various credit rating services to provide information on the impaired investment of a particular issuer.

As of June 30, 2020 and December 31, 2019, we do not consider any of our marketable debt securities to be other-than-temporarily impaired. Any impairment existing at June 30, 2020 or December 31, 2019 is not related to credit losses. Therefore, we have not recorded an allowance for credit losses related to our marketable debt securities. All unrealized gains and losses were recorded in OCI.

The following table provides information about the Company’s marketable debt securities that have been in a continuous loss position as of June 30, 2020 and December 31, 2019 (in millions, except number of marketable debt securities in a loss position):

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

	Pension Plans												Pension Plans
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Service cost	$	6.1		$	6.3		$	18.4		$	18.8		$	5.9		$	6.2		$	11.9		$	12.3
Interest cost		11.7			10.6			35.2			31.8			10.0			11.7			19.9			23.5
Expected return on plan assets		(13.0	)		(14.2	)		(39.1	)		(42.5	)		(14.2	)		(13.0	)		(28.4	)		(26.0	)
Net amortization of unrecognized amounts
Prior service cost		1.6			1.8			4.7			5.2			1.1			1.6			2.2			3.1
Actuarial loss		1.7			2.3			5.3			7.0			2.7			1.7			5.3			3.5
Net periodic benefit cost	$	8.1		$	6.8		$	24.5		$	20.3		$	5.5		$	8.2		$	10.9		$	16.4

PCA makes pension plan contributions that are sufficient to fund its actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act (ERISA). From time to time, PCA may make additional discretionary contributions based on the funded status of the plans, tax deductibility, income from operations, and other factors. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, payments to our nonqualified pension plans were insignificant. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we made contributions of ~~$49.4~~$7.2 million and ~~$54.0~~$11.1 million, respectively, to our qualified pension plans. We made contributions of ~~$18.0~~$3.9 million and ~~$21.2~~$4.6 millionto our qualified plans during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively. We expect to contribute at least the estimated required minimum contributions to our qualified plans of approximately $19.8 million in 2020.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, the net periodic benefit cost for our postretirement plans was insignificant.

The Company has a long-term equity incentive plan, which allows for grants of restricted stock, performance awards, stock appreciation rights, and stock options to directors, officers, and employees, as well as others who engage in services for PCA. On February 25, 2020, our board of directors approved and, on May 5, 2020, our stockholders approved, the amendment and restatement of the plan. The ~~plan, as amended, terminates~~amendment extended the plan’s term to May ~~1, 2023~~5, 2030 and ~~authorizes 10.6 million~~increased the number of shares of common stock available for ~~grant over~~issuance under the ~~life~~plan by 1,400,000 shares. The total number of ~~the plan.~~ shares authorized for past and future awards is 11,950,000 shares.

As of ~~September~~June 30, ~~2019, 0.4~~2020, assuming performance units are measured at the target level of performance, 1.5 million shares were available for future grants under the current plan. Forfeitures are added back to the pool of shares of common stock available to be granted at a future date.

The following table presents restricted stock and performance unit award activity for the ~~nine~~six months ended ~~September~~June 30, ~~2019:~~2020:

	Restricted Stock					Performance Units					Restricted Stock					Performance Units
	Shares			Weighted Average Grant- Date Fair Value		Shares			Weighted Average Grant- Date Fair Value		Shares			Weighted Average Grant- Date Fair Value		Shares			Weighted Average Grant- Date Fair Value
Outstanding at January 1, 2019		743,591		$	86.90		266,704		$	90.01
Outstanding at January 1, 2020												716,952		$	94.50		323,147		$	96.56
Granted		199,185			95.45		115,608			96.98		204,960			94.25		120,285			99.16
Vested		(209,687	)		68.21		(59,165	)		67.84		(241,714	)		71.82		(86,015	)		70.81
Forfeitures		(8,836	)		100.69		—			—		(3,666	)		96.60		—			—
Outstanding at September 30, 2019		724,253		$	94.50		323,147		$	96.56
Outstanding at June 30, 2020												676,532		$	102.52		357,417		$	103.63

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Restricted stock	$	3.5		$	4.9		$	19.1		$	13.9		$	5.6		$	10.8		$	13.6		$	15.7
Performance units		2.4			1.7			5.4			3.5			2.1			0.9			4.2			2.9
Total share-based compensation expense		5.9			6.6			24.5			17.4			7.7			11.7			17.8			18.6
Income tax benefit		(1.5	)		(1.6	)		(6.2	)		(4.4	)		(1.9	)		(3.0	)		(4.5	)		(4.7	)
Share-based compensation expense, net of tax benefit	$	4.4		$	5.0		$	18.3		$	13.0		$	5.8		$	8.7		$	13.3		$	13.9

The fair value of restricted stock is determined based on the closing price of the Company’s stock on the grant date. Compensation expense, net of estimated forfeitures, is recorded over the requisite service period. As PCA’s Board of Directors has the ability to accelerate the vesting of these

awards upon an employee’s retirement, the Company accelerates the recognition of compensation expense for certain employees approaching normal retirement age.

Performance unit awards are earned based on the achievement of defined performance rankings of Return on Invested Capital (ROIC) or Total Shareholder Return (TSR) compared to ROIC and TSR for peer companies. For performance unit awards made in ~~2019~~2020 and ~~2018,~~2019, in terms of grant date value, 50% used TSR as the performance measure and 50% used ROIC as the performance measure. The ROIC component of performance unit awards is valued based on the closing price of the stock on the grant date. As the ROIC component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest. The TSR component of performance unit awards is valued using a Monte Carlo simulation as the TSR component contains a market condition. The Monte Carlo simulation estimates the fair value of the TSR component based on the expected term of the award, a risk-free interest rate, expected dividends, and expected volatility of the Company’s common stock and the common stock of the peer companies. Compensation expense is recorded ratably over the expected term of the award.

The unrecognized compensation expense for all share-based awards at ~~September~~June 30, ~~2019~~2020 was as follows (dollars in millions):

	September 30, 2019				June 30, 2020
	Unrecognized Compensation Expense		Remaining Weighted Average Recognition Period (in years)		Unrecognized Compensation Expense		Remaining Weighted Average Recognition Period (in years)
Restricted stock	$	31.0		3.0	$	32.6		3.1
Performance units		19.4		2.6		22.9		2.6
Total unrecognized share-based compensation expense	$	50.4		2.9	$	55.5		2.9

During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we paid ~~$223.9~~$149.7 million of dividends to shareholders. On ~~August 20, 2019,~~May 5, 2020, PCA’s Board of Directors declared a regular quarterly cash dividend of $0.79 per share of common stock, which was paid on ~~October~~July 15, ~~2019~~2020 to shareholders of record as of ~~September 13, 2019.~~June 15, 2020. The dividend payment was $~~74.8~~74.9 million.

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

The Company did 0t repurchase any shares of its common stock under this authority during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. At ~~September~~June 30, ~~2019,~~2020, $193.0 million of the authorized amount remained available for repurchase of the Company’s common stock.

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

Foreign
Currency
Translation
Adjustments

Unrealized
Loss On
Treasury
Locks, Net

Unrealized
Loss on
Foreign
Exchange
Contracts

Unfunded
Employee
Benefit
Obligations

Total

Balance at January 1, 2019

$
(0.4
)

$
(10.2
)

$
(0.3
)

$
(127.9
)

$
(138.8
)
Amounts reclassified from AOCI, net of tax

—

2.9

—

7.1

10.0

Balance at September 30, 2019

$
(0.4
)

$
(7.3
)

$
(0.3
)

$
(120.8
)

$
(128.8
)

	Foreign Currency Translation Adjustments			Unrealized Loss on Foreign Exchange Contracts			Unrealized Loss on Marketable Debt Securities		Unfunded Employee Benefit Obligations			Total
Balance at January 1, 2020	$	(0.4	)	$	(0.2	)	$	—	$	(158.9	)	$	(159.5	)
Other comprehensive income before reclassifications, net of tax					—			0.7		—			0.7
Amounts reclassified from AOCI, net of tax		—			—			—		5.4			5.4
Balance at June 30, 2020	$	(0.4	)	$	(0.2	)	$	0.7	$	(153.5	)	$	(153.4	)

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

	Amounts Reclassified from AOCI													Amounts Reclassified from AOCI
	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
Details about AOCI Components	2019			2018			2019			2018				2020			2019			2020			2019
Unrealized loss on treasury locks, net (a)	$	(1.3	)	$	(1.3	)	$	(3.9	)	$	(4.0	)	See (a) below	$	—		$	(1.3	)	$	—		$	(2.6	)	See (a) below
		0.3			0.3			1.0			1.0		Tax benefit		—			0.3			—			0.7		Tax benefit
	$	(1.0	)	$	(1.0	)	$	(2.9	)	$	(3.0	)	Net of tax	$	—		$	(1.0	)	$	—		$	(1.9	)	Net of tax

Unfunded employee benefit obligations (b)
Amortization of prior service costs	$	(1.5	)	$	(1.7	)	$	(4.5	)	$	(5.0	)	See (b) below	$	(1.0	)	$	(1.5	)	$	(2.0	)	$	(3.0	)	See (b) below
Amortization of actuarial gains / (losses)		(1.7	)		(2.3	)		(5.0	)		(6.9	)	See (b) below
Amortization of actuarial losses															(2.6	)		(1.6	)		(5.2	)		(3.3	)	See (b) below
		(3.2	)		(4.0	)		(9.5	)		(11.9	)	Total before tax		(3.6	)		(3.1	)		(7.2	)		(6.3	)	Total before tax
		0.8			1.0			2.4			3.0		Tax benefit		0.9			0.8			1.8			1.6		Tax benefit
	$	(2.4	)	$	(3.0	)	$	(7.1	)	$	(8.9	)	Net of tax	$	(2.7	)	$	(2.3	)	$	(5.4	)	$	(4.7	)	Net of tax

Our Paper segment has a long-standing commercial and contractual relationship with Office Depot, our largest customer in the paper business. This relationship exposes us to a significant concentration of business and financial risk. Our sales to Office Depot represent approximately 5% and 7% of our total Company sales revenue for both the ~~nine~~six month periods ended ~~September~~June 30, 2020 and 2019, ~~and 2018~~respectively, and approximately ~~50%~~44% and ~~46%~~51% of our Paper segment sales revenue for both of those periods, respectively. For full year ~~2018,~~2019, sales to Office Depot represented ~~47%~~50% of our Paper segment sales. At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had ~~$78.5~~$34.0 million and ~~$66.7~~$76.2 million of accounts receivable due from Office Depot, respectively, which represents 8%4% and 7%9% of our total Company accounts receivable, respectively.

Louisiana Timber Procurement Company, L.L.C. (LTP) is a variable-interest entity that is 50% owned by PCA and 50% owned by Boise Cascade Company (Boise Cascade). LTP procures sawtimber, pulpwood, residual chips, and other residual wood fiber to meet the wood and fiber requirements of PCA and Boise Cascade in Louisiana. PCA is the primary beneficiary of LTP and has the power to direct the activities that most significantly affect the economic performance of LTP. Therefore, we consolidate 100% of LTP in our financial statements in our Corporate and Other segment. The carrying amounts of LTP's assets and liabilities (which relate primarily to non-inventory working capital items) on our Consolidated Balance Sheets were ~~$5.1~~$5.0 millionat ~~September~~June 30, ~~2019~~2020 and ~~$2.7~~$3.9 million at December 31, ~~2018.~~2019. During the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, we recorded ~~$21.4~~$13.8 million and ~~$22.4~~$21.4 million, respectively, and during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, we recorded ~~$62.7~~$36.4 million and ~~$65.5~~$41.4 million, respectively, of LTP sales to Boise Cascade in "Net Sales" in the Consolidated Statements of Income and approximately the same amount of expenses in "Cost of Sales".

During the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, fiber purchases from related parties were ~~$4.4~~$2.5 million and ~~$4.1~~$4.4 million, respectively. Fiber purchases from related parties were ~~$13.2~~$6.7 million and ~~$12.8~~$8.8 million, respectively, during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018.~~2019. Most of these purchases related to chip and log purchases by LTP from Boise Cascade's wood products business. These purchases are recorded in "Cost of Sales" in the Consolidated Statements of Income.

We report our business in 3 reportable segments: Packaging, Paper, and Corporate and Other. These segments represent distinct businesses that are managed separately because of differing products and services. Each of these businesses requires distinct operating and marketing strategies.

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

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

	Sales, net												Sales, net
Three Months Ended September 30, 2019	Trade		Intersegment			Total			Operating Income (Loss)
Three Months Ended June 30, 2020													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,482.9	$	7.0		$	1,489.9		$	235.1		(a)	$	1,401.8	$	8.1		$	1,409.9		$	197.6		(a)
Paper		242.8		—			242.8			48.1				123.3		—			123.3			(61.4	)	(a)(b)
Corporate and Other		25.0		34.0			59.0			(20.4	)			16.5		34.0			50.5			(20.1	)
Intersegment eliminations		—		(41.0	)		(41.0	)		—				—		(42.1	)		(42.1	)		—
	$	1,750.7	$	—		$	1,750.7			262.8			$	1,541.6	$	—		$	1,541.6			116.1
Non-operating pension expense										(1.9	)
Non-operating pension income																						0.6
Interest expense, net										(21.6	)											(25.1	)
Income before taxes									$	239.3											$	91.6

	Sales, net												Sales, net
Three Months Ended September 30, 2018	Trade		Intersegment			Total			Operating Income (Loss)
Three Months Ended June 30, 2019													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,528.3	$	6.8		$	1,535.1		$	284.4		(c)	$	1,497.8	$	6.8		$	1,504.6		$	263.9
Paper		254.3		—			254.3			32.3		(c)		237.8		—			237.8			38.8
Corporate and Other		27.3		32.3			59.6			(18.2	)	(c)		24.3		31.5			55.8			(22.3	)
Intersegment eliminations		—		(39.1	)		(39.1	)		—				—		(38.3	)		(38.3	)		—
	$	1,809.9	$	—		$	1,809.9			298.5			$	1,759.9	$	—		$	1,759.9			280.4
Non-operating pension expense										(0.5	)											(2.0	)
Interest expense, net										(23.9	)											(22.4	)
Income before taxes									$	274.1											$	256.0

	Sales, net												Sales, net
Nine Months Ended September 30, 2019	Trade		Intersegment			Total			Operating Income (Loss)
Six Months Ended June 30, 2020													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	4,451.5	$	20.6		$	4,472.1		$	748.6		(a)(b)	$	2,867.2	$	10.2		$	2,877.4		$	397.5		(a)
Paper		720.3		—			720.3			132.5				340.7		—			340.7			(29.0	)	(a)(b)
Corporate and Other		72.5		98.9			171.4			(62.5	)			42.4		68.3			110.7			(43.3	)
Intersegment eliminations		—		(119.5	)		(119.5	)		—				—		(78.5	)		(78.5	)		—
	$	5,244.3	$	—		$	5,244.3			818.6			$	3,250.3	$	—		$	3,250.3			325.2
Non-operating pension expense										(6.0	)
Non-operating pension income																						1.1
Interest expense, net										(68.0	)											(44.6	)
Income before taxes									$	744.6											$	281.7

	Sales, net												Sales, net
Nine Months Ended September 30, 2018	Trade		Intersegment			Total			Operating Income (Loss)
Six Months Ended June 30, 2019													Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	4,414.7	$	19.5		$	4,434.2		$	782.3		(c)	$	2,968.6	$	13.6		$	2,982.2		$	513.4		(c)
Paper		774.5		—			774.5			55.7		(c)		477.5		—			477.5			84.4		(c)
Corporate and Other		78.9		94.9			173.8			(57.0	)	(c)		47.5		65.0			112.5			(42.0	)
Intersegment eliminations		—		(114.4	)		(114.4	)		—				—		(78.6	)		(78.6	)		—
	$	5,268.1	$	—		$	5,268.1			781.0			$	3,493.6	$	—		$	3,493.6			555.8
Non-operating pension expense										(1.6	)											(4.1	)
Interest expense, net										(73.4	)											(46.4	)
Income before taxes									$	706.0											$	505.3

We have financial commitments and obligations that arise in the ordinary course of our business. These include long-term debt, capital commitments, lease obligations, and purchase commitments for goods and services, and legal proceedings, all of which are discussed in Note ~~10,~~11, Debt, and Note ~~19,~~21, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of our ~~2018~~2019 Annual Report on Form 10-K.

We provide guarantees, indemnifications, and other assurances to third parties in the normal course of our business. These include tort indemnifications, product guarantees, environmental assurances, and representations and warranties in commercial agreements. At ~~September~~June 30, ~~2019,~~2020, we are not aware of any material liabilities arising from any guarantee, indemnification, or financial assurance we have provided. If we determined such a liability was probable and subject to reasonable determination, we would accrue for it at that time.

On February 8, 2017, a tank located in the pulp mill at the Company's DeRidder, Louisiana facility exploded, resulting in three contractor fatalities and other injuries. The Company has been served with multiple lawsuits involving the decedents and other allegedly injured parties, alleging negligence on the part of the Company and claiming compensatory and punitive damages. The Company is vigorously defending these lawsuits. The Company believes that these suits are covered by its liability insurance policies, subject to an aggregate $1.0 million ~~deductible. The incident remains under investigation~~deductible, which has been satisfied in full as a result of settlement of various lawsuits and ~~all~~fees and expenses incurred by the Company. All pending lawsuits are in the early stages. Accordingly, the Company is unable to estimate a range of reasonable possible losses at this time.

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

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

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

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

This management’s discussion and analysis includes statements regarding our expectations with respect to our future performance, expected business conditions, liquidity, and capital resources. Such statements, along with any other statements that are not historical in nature, are forward-looking. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in our ~~2018~~2019 Annual Report on Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission (SEC). We do not assume any obligation to update any forward-looking statement. Our actual results may differ materially from those contained in or implied by any of the forward-looking statements in this Form 10-Q. Please see “Forward Looking Statements” elsewhere in this Item 2.

PCA is the third largest producer of containerboard products and the third largest producer of uncoated freesheet paper in North America. We operate six containerboard mills, two paper mills, and 9493 corrugated products manufacturing plants. Our containerboard mills produce linerboard and corrugating medium, which are papers primarily used in the production of corrugated products. Our corrugated products manufacturing plants produce a wide variety of corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays with strong visual appeal that help to merchandise the packaged product in retail locations, and honeycomb protective packaging. In addition, we are a large producer of packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products. We also manufacture and sell ~~white~~uncoated freesheet papers, including both commodity and specialty papers, which may have custom or specialized features such as colors, coatings, high brightness, and recycled content. We are headquartered in Lake Forest, Illinois and operate primarily in the United States.

This Item 2 is intended to supplement, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our ~~2018~~2019 Annual Report on Form 10-K.

~~Third~~Second quarter net sales were ~~$1.75~~$1.54 billion in ~~2019~~2020 and ~~$1.81~~$1.76 billion in ~~2018.~~2019. We reported ~~$180~~$57 million of net income, or ~~$1.89~~$0.59 per diluted share, during the ~~third~~second quarter of ~~2019,~~2020, compared to ~~$207~~$194 million, or ~~$2.18~~$2.04 per diluted share, during the same period in ~~2018.~~2019. Net income included $2$75 million of expense for special items in the ~~third~~second quarter of ~~2019,~~2020, compared to ~~$4 million of~~no income or expense for special items in ~~2018~~2019 (discussed below). Special items primarily included the non-cash goodwill impairment charge as described in Note 9, Goodwill and Intangible Assets, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this Form 10-Q, charges related to the closure of the San Lorenzo, California corrugated products facility, and incremental costs to address the COVID-19 pandemic. Excluding special items, net income was ~~$182~~$132 million, or ~~$1.92~~$1.38 per diluted share, during the ~~third~~second quarter of ~~2019, compared to $211 million, or $2.23 per diluted share, in the third quarter of 2018.~~2020. The decrease was driven primarily by lower prices and mix ~~and lower volume~~ in our Packaging ~~segment,~~and Paper segments, lower ~~volume~~volumes in our Paper segment, and higher ~~operating and converting costs, and other costs.~~depreciation expense. These items were partially offset by ~~higher prices and mix in our Paper segment,~~lower operating costs, lower annual outage expenses, ~~and~~lower converting costs, lower freight expense, and ~~logistics expenses.~~other costs. PCA’s facilities have been permitted to continue to operate as “essential operations” during the COVID-19 pandemic. PCA did not experience significant disruptions in its operations as a result of the pandemic and has maintained adequate availability of its workforce and supply of raw materials and services. For additional detail on special items included in reported GAAP results, as well as segment income (loss) excluding special items, earnings before non-operating pension expense, interest, income taxes, and depreciation, amortization, and depletion (EBITDA), and EBITDA excluding special items, see “Item 2. Reconciliations of Non-GAAP Financial Measures to Reported Amounts.”

Packaging segment income from operations was ~~$235~~$198 million in the ~~third~~second quarter of ~~2019,~~2020, compared to ~~$284~~$264 million in the ~~third~~second quarter of ~~2018.~~2019. Packaging segment EBITDA excluding special items was ~~$325~~$313 million in the ~~third~~second quarter of ~~2019~~2020 compared to ~~$378~~$349 million in the ~~third~~second quarter of ~~2018.~~2019. The decrease in EBITDA excluding special items was due primarily to lower prices and mix, partially offset by lower ~~sales and production volumes and higher~~ operating and converting costs, ~~partially offset by~~ lower annual outage expenses, and lower freight and logistic expenses.Demand for our Packaging products remained strong in the second quarter. We cannot predict the future impact of the pandemic on our packaging operations, economic and operating conditions affecting our packaging business or demand for our packaging products.

Paper segment ~~income~~loss from operations was ~~$48~~$61 million in the ~~third~~second quarter of ~~2019,~~2020, compared to ~~$32~~income of $39 million in the ~~third~~second quarter of ~~2018.~~2019. Paper segment EBITDA excluding special items was ~~$58~~$5 million in the ~~third~~second quarter of ~~2019,~~2020, compared to ~~$44~~$48 million in the ~~third~~second quarter of ~~2018.~~2019. The ~~increase~~decrease in EBITDA excluding special items was due to ~~higher~~lower sales and production volumes and lower prices and mix, ~~lower annual outage expenses, and lower freight costs,~~ partially offset by lower ~~sales and production volumes.~~

During the first nine months of 2019, we reported $560 million of net income, or $5.91 per diluted share, compared to $533 million of net income, or $5.64 per diluted share, during the same period in 2018. Net income included $3 million of expense for special items, compared to $22 million of expense for special items during the same period in 2018 (discussed below). Excluding special items, we recorded $563 million of net income, or $5.94 per diluted share, during the first nine months of 2019, compared to $555 million of net income, or $5.87 per diluted share, in the first nine months of 2018. The increase was driven primarily by higher corrugated products prices and mix, higher containerboard and corrugated products sales and production volumes, higher Paper segment prices and mix,operating costs and lower annual outage ~~expenses, and lower depreciation expense, partially offset by lower containerboard domestic and export prices and mix, lower volumes~~expenses.Reported results in our Paper segment ~~primarily related~~included the goodwill impairment charge described above. Sales were 48% lower than last year, as demand for our paper products has been affected by nationwide responses to address the ~~exit from~~COVID-19 pandemic, including school and office closures. Operations at our Jackson, Alabama paper mill were temporarily idled in late April and are expected to remain idled at least through the ~~paper business at the Wallula Mill, higher operating and converting costs, and higher fixed expenses.~~end of August.

Packaging segment income from operations was ~~$749~~$398 million in the first ~~nine~~six months of ~~2019,~~2020, compared to ~~$782~~$513 million in the same period in ~~2018.~~2019. Packaging segment EBITDA excluding special items was ~~$1.01 billion~~$602 million in the first ~~nine~~six months of ~~2019,~~2020 compared to ~~$1.05 billion~~$682 million in the first ~~nine~~six months of ~~2018.~~2019. The decrease ~~related~~in EBITDA excluding special items was due primarily to lower prices and mix, partially offset by higher sales and production volumes, lower operating and converting costs, lower domestic and export containerboard prices and mix, and other expenses, partially offset by higher corrugated products prices and mix, higher containerboard and corrugated products sales and production volumes,annual outage expense, and lower ~~annual outage expense.~~freight and logistic expenses.

Paper segment ~~income~~loss from operations was ~~$133~~$29 million in the first ~~nine~~six months of ~~2019,~~2020, compared to ~~$56~~income of $84 million in the first ~~nine~~six months of ~~2018.~~2019. Paper segment EBITDA excluding special items was ~~$161~~$47 million in the first ~~nine~~six months of ~~2019,~~2020, compared to ~~$113~~$103 million in the same

period in ~~2018.~~2019. The ~~increase~~decrease in EBITDA excluding special items was due ~~primarily~~ to ~~higher prices and mix and lower operating costs, partially offset by~~ lower sales and production volumes ~~primarily related to the exit from the paper business at the Wallula Mill,~~ and ~~higher~~lower prices and mix, partially offset by lower operating costs and lower annual outage ~~costs.~~expenses.

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

A reconciliation of reported earnings per diluted share to earnings per diluted share, excluding special items, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are as follows:

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Earnings per diluted share, as reported	$	1.89	$	2.18	$	5.91	$	5.64	$	0.59	$	2.04	$	2.08	$	4.02
Special items:
DeRidder mill fixed asset disposals (a)		0.02		—		0.02		—
Wallula mill restructuring (b)		—		0.04		0.01		0.22
Facilities closure and other costs (c)		—		0.01		—		0.01
Goodwill impairment (a)										0.58		—		0.58		—
Facilities closure and other costs (b)										0.16		—		0.17		—
Incremental costs for COVID-19 (c)										0.05		—		0.05		—
Total special items		0.02		0.05		0.03		0.23		0.79		—		0.80		—
Earnings per diluted share, excluding special items	$ 1.92 ^(d)		$	2.23	$	5.94	$	5.87	$	1.38	$	2.04	$	2.88	$	4.02

Included in this Item 2 are various non-GAAP financial measures, including diluted EPS excluding special items, segment income excluding special items and EBITDA excluding special items. Management excludes special items as it believes these items are not necessarily reflective of the ongoing results of operations of our business. We present these measures because they provide a means to evaluate the performance of our segments and our Company on an ongoing basis using the same measures that are used by our management, because these measures assist in providing a meaningful comparison between periods presented and because these measures are frequently used by investors and other interested parties in the evaluation of companies and the performance of their segments. A reconciliation of diluted EPS to diluted EPS excluding special items is included above and the reconciliations of other non-GAAP measures used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, to the most comparable measure reported in accordance with GAAP, are included in Item 2 under “Reconciliations of Non-GAAP Financial Measures to Reported Amounts.” Any analysis of non-GAAP financial measures should be done in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such.

Trade publications reported North American industry-wide corrugated products shipments per work day were ~~up 1.5%~~down 1.4% during the ~~third~~second quarter of ~~2019~~2020 compared to the same quarter of ~~2018.~~2019. Reported industry containerboard production ~~decreased 4.9%~~increased 3.0% compared to the ~~third~~second quarter of ~~2018.~~2019. Reported industry containerboard inventories at the end of the ~~third~~second quarter of ~~2019~~2020 were approximately 2.5 million tons, ~~down 3.4%~~flat compared to the same period in ~~2018.~~2019. Reported containerboard export shipments were ~~down 16.9%~~up 25.0% compared to the ~~third~~second quarter of ~~2018.~~2019. Prices reported by trade publications decreased by $10 per ton for linerboard ~~in March, May,~~ and ~~June 2019, and~~$15 per ton for corrugating medium ~~decreased $20 per ton~~ in January ~~and $10 per ton~~2020; there were no additional price changes reported in ~~May and June 2019.~~the second quarter of 2020.

Trade publications reported North American uncoated freesheet paper shipments were down ~~9.8%~~32.3% in the ~~third~~second quarter of ~~2019,~~2020, compared to the same quarter of ~~2018.~~2019. Average prices reported by a trade publication for cut size office papers ~~increased $35 per ton in both the second and third quarters of 2019. Average prices~~ were ~~higher~~lower by ~~$46~~$17 per ton, or ~~4.3%~~1.5%, in the ~~third~~second quarter of ~~2019,~~2020 compared to the ~~third~~first quarter of ~~2018.~~

Looking ahead to the fourth quarter of 2019, in our Packaging segment we expect slightly lower prices as the remaining impact of the published domestic containerboard price decreases from earlier this year work through our system,2020, and lower export prices. We also expect a seasonally less rich mix in corrugated products and slightly lower shipments with one less shipping day than the third quarter of 2019. Containerboard sales volume is expected to be lower. We expect to match production to our demand as well as increase our containerboard inventory levels to prepare for first quarter 2020 scheduled maintenance outages at our three largest containerboard mills. In our Paper segment, volumes are expected to be seasonally lower along with lower average prices whenby $65 per ton, or 5.7%, compared to the third quarter of 2019. With anticipated colder weather, energy costs are expected to be higher, and we expect certain other operating and converting costs to be higher as well, which includes the costs associated with the start-up of our new Richland, Washington box plant during the quarter. Scheduled maintenance outage costs are also expected to be higher than the third quarter of 2019. ~~Considering these items, we expect fourth quarter earnings to be lower than the third~~second quarter of 2019.

Three Months Ended ~~September~~June 30, ~~2019,~~2020, compared to Three Months Ended ~~September~~June 30, ~~2018~~2019

The historical results of operations of PCA for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are set forth below (dollars in millions):

	Three Months Ended									Three Months Ended
	September 30,									June 30,
	2019			2018			Change			2020			2019			Change
Packaging	$	1,489.9		$	1,535.1		$	(45.2	)	$	1,409.9		$	1,504.6		$	(94.7	)
Paper		242.8			254.3			(11.5	)		123.3			237.8			(114.5	)
Corporate and Other		59.0			59.6			(0.6	)		50.5			55.8			(5.3	)
Intersegment eliminations		(41.0	)		(39.1	)		(1.9	)		(42.1	)		(38.3	)		(3.8	)
Net sales	$	1,750.7		$	1,809.9		$	(59.2	)	$	1,541.6		$	1,759.9		$	(218.3	)

Packaging	$	235.1		$	284.4		$	(49.3	)	$	197.6		$	263.9		$	(66.3	)
Paper		48.1			32.3			15.8			(61.4	)		38.8			(100.2	)
Corporate and Other		(20.4	)		(18.2	)		(2.2	)		(20.1	)		(22.3	)		2.2
Income from operations	$	262.8		$	298.5		$	(35.7	)	$	116.1		$	280.4		$	(164.3	)
Non-operating pension expense		(1.9	)		(0.5	)		(1.4	)
Non-operating pension income (expense)											0.6			(2.0	)		2.6
Interest expense, net		(21.6	)		(23.9	)		2.3			(25.1	)		(22.4	)		(2.7	)
Income before taxes		239.3			274.1			(34.8	)		91.6			256.0			(164.4	)
Income tax provision		(59.5	)		(67.4	)		7.9			(34.9	)		(62.4	)		27.5
Net income	$	179.8		$	206.7		$	(26.9	)	$	56.7		$	193.6		$	(136.9	)
Non-GAAP Measures (a)
Net income excluding special items	$	182.1		$	211.1		$	(29.0	)	$	131.8		$	193.6		$	(61.8	)
Consolidated EBITDA		360.7			400.0			(39.3	)		224.4			376.2			(151.8	)
Consolidated EBITDA excluding special items		363.7			405.8			(42.1	)		299.0			376.2			(77.2	)
Packaging EBITDA		321.6			373.0			(51.4	)		293.6			348.6			(55.0	)
Packaging EBITDA excluding special items		324.6			378.2			(53.6	)		312.5			348.6			(36.1	)
Paper EBITDA		57.7			43.5			14.2			(51.0	)		48.2			(99.2	)
Paper EBITDA excluding special items		57.7			44.1			13.6			4.7			48.2			(43.5	)

Net sales decreased ~~$59~~$218 million, or ~~3.3%~~12.4%, to ~~$1,751~~$1,542 million during the three months ended ~~September~~June 30, ~~2019,~~2020, compared to ~~$1,810~~$1,760 million during the same period in ~~2018.~~2019.

Packaging. Net sales decreased ~~$45~~$95 million, or ~~2.9%~~6.3%, to ~~$1,490~~$1,410 million, compared to ~~$1,535~~$1,505 million in the ~~third~~second quarter of ~~2018~~2019 due to lower containerboard and corrugated products prices and mix ($6297 million), partially offset by ~~increased~~higher containerboard and corrugated products volume ($162 million). In the ~~third~~second quarter of ~~2019,~~2020, our domestic containerboard prices ~~decreased 6.6%,~~were 7.7% lower, while export prices ~~decreased 27.6%, compared to~~were 15.4% lower, than the same period in ~~2018.~~2019. In the ~~third~~second quarter of ~~2019,~~2020, export and domestic containerboard outside shipments decreased ~~13.4%,~~7.1% compared to the ~~third~~second quarter of ~~2018.~~2019. Total corrugated products shipments were up ~~1.9%,~~ 1.2% with the same number of workdayscompared to the same period in ~~2018 with the same number of workdays.~~2019.

Paper. Net sales during the three months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$11~~$115 million, or ~~4.5%~~48.1%, to ~~$243~~$123 million, compared to ~~$254~~$238 million in the ~~third~~second quarter of ~~2018,~~2019, due to decreased volume ($22109 million)~~, primarily due to the exit from the paper business at Wallula, partially offset by favorable changes in~~ and lower prices and mix ($116 million)., primarily related to the COVID-19 pandemic.

Gross profit decreased ~~$32~~$102 million during the three months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018.~~2019. The decrease was driven primarily by lower ~~containerboard and corrugated products~~ prices and mix ~~lower containerboard sales~~in our Packaging and ~~production volumes,~~Paper segments, and lower volumes in our Paper ~~segment, and higher operating and converting costs,~~segment. These items were partially offset by ~~higher prices and mix in our Paper segment and~~lower operating costs, lower annual outage expenses, lower converting costs, lower freight expense, and other costs. In the three months ended ~~September~~June 30, ~~2019,~~2020, gross profit included $6 million of special items for incremental out-of-pocket costs related to the COVID-19 pandemic, including supplies, cleaning and sick pay, and $3 million of accelerated depreciation associated with the closure of our San Lorenzo, California facility. There were no significant special items ~~compared to $0.3 million of Wallula Mill restructuring charges~~ in the ~~same period last year.~~three months ended June 30, 2019.

Selling, general, and administrative expenses (“SG&A”) ~~increased $3~~decreased $7 million during the three months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018.~~2019. The ~~increase~~decrease was primarily due to ~~higher~~lower travel and entertainment expenses and employee ~~salaries~~compensation and fringes.

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

Other ~~income (expense),~~expense, net, for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are set forth below (dollars in millions):

	Three Months Ended						Three Months Ended
	September 30,						June 30,
	2019			2018			2020			2019
Asset disposals and write-offs	$	(9.5	)	$	(5.1	)	$	(5.0	)	$	(4.5	)
Facilities closure and other costs								(13.3	)		—
Wallula mill restructuring		—			(3.7	)		—			—
Facilities closure and other costs		—			(1.5	)
Insurance deductible for property damage		—			(0.5	)
Acquisition and integration related costs		—			(0.1	)
Other		(2.2	)		0.4			0.1			0.7
Total	$	(11.7	)	$	(10.5	)	$	(18.2	)	$	(3.8	)

We discuss these items in more detail in Note 7,5, Other ~~Income (Expense),~~Expense, Net, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, ~~Item1.~~Item 1. Financial Statements” of this Form 10-Q.

Income from operations decreased ~~$36~~$164 million, or ~~12.0%~~58.6%, during the three months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018.~~2019. The ~~third~~second quarter of ~~2019~~2020 included $3$82 million of special ~~item~~items expense for Paper reporting unit goodwill impairment, facility closures, and incremental, out-of-pocket costs related to ~~DeRidder fixed asset disposals,~~COVID-19, compared to ~~$6 million of expense primarily related to the Wallula Mill restructuring~~no special items in the ~~third~~second quarter of ~~2018.~~2019.

Packaging. Packaging segment income from operations decreased ~~$49~~$66 million to ~~$235~~$198 million, compared to ~~$284~~$264 million during the three months ended ~~September~~June 30, ~~2018.~~2019. The decrease related primarily to lower ~~domestic~~containerboard and ~~export containerboard prices ($25 million), lower~~ corrugated products prices and mix ($2083 million)~~, lower containerboard sales~~ and ~~production volumes~~higher depreciation expense ($~~7 million), higher operating and converting costs ($6 million), and other fixed costs ($2~~4 million), partially offset by lower operating and converting costs ($35 million), lower annual outage ~~expenses~~expense ($86 million), and lower freight expenses ($15 million). Special items during the ~~third~~second quarter of ~~2019~~2020 included $3$20 million of ~~DeRidder fixed asset disposals,~~facility closure costs and $6 million of incremental, out-of-pocket costs related to COVID-19, compared to ~~$6 million for~~no special items in the ~~third~~Packaging segment in the second quarter of ~~2018 primarily related to Wallula Mill restructuring and corrugated facility closure charges.~~2019.

Paper. Paper segment income from operations ~~increased $16~~decreased $100 million to ~~$48~~a loss of $61 million, compared to ~~$32~~income of $39 million during the three months ended ~~September~~June 30, ~~2018.~~2019. The ~~increase~~decrease primarily related to ~~higher~~lower sales and production volumes ($50 million), lower prices and mix ($116 million), partially offset by lower operating costs ($7 million), lower annual outage expenses ($~~4 million), and lower freight expenses ($2 million), partially offset by lower sales and production volumes ($3~~7 million). ~~There were~~Special items during the second quarter of 2020 included $55 million of goodwill impairment and $1 million of incremental, out-of-pocket costs related to COVID-19, compared to no ~~material~~ special items in the ~~Paper~~Packaging segment in the ~~third~~second quarter of 2019. ~~Special items for the third quarter 2018 included expense of $1 million of Wallula Mill restructuring charges.~~

Non-operating pension expense ~~increased $1~~decreased $3 million during the three months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018.~~2019. The ~~increase~~decrease in non-operating pension expense was primarily related to the ~~2018~~favorable 2019 asset performance, ~~(i.e. lower asset balances resulted in lower than expected return) and the amortization of the 2018 losses.~~partially offset by assumption changes.

Interest expense, net ~~decreased $2~~increased $3 million during the three months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018.~~2019. The ~~decrease~~increase in interest expense, net was primarily related to higher earnings on deferred compensation balances in the second quarter of 2020, lower interest income due to ~~higher interest income as a result of higher~~lower rates on invested cash balances in the second quarter of 2020, partially offset by no treasury lock amortization due to the write-off of the remaining balances of treasury locks in connection with the Company’s debt refinancing completed in December 2019.

During the three months ended ~~September~~June 30, ~~2019,~~2020, we recorded ~~$59~~$35 million of income tax expense, compared to ~~$67~~$62 million of expense during the three months ended ~~September~~June 30, ~~2018.~~2019. The effective tax rate for the three months ended ~~September~~June 30, 2020 and 2019 was 38.2% and ~~2018 was 24.9% and 24.6%~~24.4%, respectively. The increase in our effective tax rate was primarily due to the nondeductible goodwill impairment charge associated with our Paper reporting unit slightly offset by the favorable impact of employee restricted stock and performance unit vests with higher ~~state and local income taxes net of~~excess tax benefits (ASU 2016-09) during the ~~federal benefit and higher employee compensation related impacts from the elimination of the performance based exclusion in tax reform.~~three months ended June 30, 2020 compared to June 30, 2019.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2019,~~2020, compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019

The historical results of operations of PCA for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are set forth below (dollars in millions):

	Nine Months Ended									Six Months Ended
	September 30,									June 30,
	2019			2018			Change			2020			2019			Change
Packaging	$	4,472.1		$	4,434.2		$	37.9		$	2,877.4		$	2,982.2		$	(104.8	)
Paper		720.3			774.5			(54.2	)		340.7			477.5			(136.8	)
Corporate and Other		171.5			173.8			(2.3	)		110.7			112.5			(1.8	)
Intersegment eliminations		(119.6	)		(114.4	)		(5.2	)		(78.5	)		(78.6	)		0.1
Net sales	$	5,244.3		$	5,268.1		$	(23.8	)	$	3,250.3		$	3,493.6		$	(243.3	)

Packaging	$	748.6		$	782.3		$	(33.7	)	$	397.5		$	513.4		$	(115.9	)
Paper		132.5			55.7			76.8			(29.0	)		84.4			(113.4	)
Corporate and Other		(62.5	)		(57.0	)		(5.5	)		(43.3	)		(42.0	)		(1.3	)
Income from operations	$	818.6		$	781.0		$	37.6		$	325.2		$	555.8		$	(230.6	)
Non-operating pension expense		(6.0	)		(1.5	)		(4.5	)
Non-operating pension income (expense)											1.1			(4.1	)		5.2
Interest expense, net		(68.0	)		(73.5	)		5.5			(44.6	)		(46.4	)		1.8
Income before taxes		744.6			706.0			38.6			281.7			505.3			(223.6	)
Income tax provision		(184.4	)		(172.6	)		(11.8	)		(83.4	)		(124.9	)		41.5
Net income	$	560.2		$	533.4		$	26.8		$	198.3		$	380.4		$	(182.1	)
Non-GAAP Measures (a)
Net income excluding special items	$	563.0		$	555.0		$	8.0		$	274.3		$	380.9		$	(106.6	)
Consolidated EBITDA		1,107.1			1,094.7			12.4			533.7			746.4			(212.7	)
Consolidated EBITDA excluding special items		1,110.5			1,109.9			0.6			609.5			746.8			(137.3	)
Packaging EBITDA		1,003.8			1,038.6			(34.8	)		582.3			682.2			(99.9	)
Packaging EBITDA excluding special items		1,007.0			1,049.0			(42.0	)		602.3			682.4			(80.1	)
Paper EBITDA		160.6			108.2			52.4			(9.1	)		102.9			(112.0	)
Paper EBITDA excluding special items		160.8			113.0			47.8			46.7			103.1			(56.4	)

Net sales decreased ~~$24~~$243 million, or ~~0.5%~~7.0%, to ~~$5,244~~$3,250 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to ~~$5,268~~$3,494 million during the same period in ~~2018.~~2019.

~~Packaging~~Packaging.. Net sales ~~increased $38~~decreased $105 million, or ~~0.9%~~3.5%, to ~~$4,472~~$2,877 million, compared to ~~$4,434~~$2,982 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, due to ~~higher~~lower containerboard and corrugated products prices and mix ($~~56 million) and increased corrugated products volume ($31~~191 million), partially offset by ~~lower domestic~~higher containerboard and ~~export containerboard price and mix ($37 million) and lower containerboard~~corrugated products volume ($1286 million). ~~Our~~In the first six months of 2020, our domestic containerboard prices were 7.8% lower, while export prices were 20.5% lower, than the same period in 2019. In the first ~~nine~~six months of ~~2019 decreased 2.4%,~~2020, export and ~~export prices decreased 17.5%,~~domestic containerboard outside shipments increased 2.7% compared to the first six months of 2019. Total corrugated products shipments were up 3.4% with one additional workday, and up 2.6% per day compared to the same period in ~~2018. In~~2019.

Paper. Net sales during the ~~first nine~~six months ofended June 30, 2020 decreased $137 million, or 28.6%, to $341 million, compared to $478 million in the six months ended June 30, 2019, ~~containerboard outside shipments~~due to decreased ~~14.3%~~volume ($126 million) and lower prices and mix ($12 million), primarily related to the COVID-19 pandemic.

Gross profit decreased $159 million during the six months ended June 30, 2020, compared to the same period in ~~2018. Total corrugated products shipments were up 0.4%, with one less work day~~2019. The decrease was driven primarily by lower prices and mix in ~~the first nine months of 2019, compared to the first nine months of 2018~~our Packaging and up 1.0% per workday. Prices reported by trade publications decreased by $10 per ton for linerboard in March, May, and June, and corrugating medium decreased $20 per ton in January and $10 per ton in May and June 2019.

Paper~~. Net sales during the nine months ended September 30, 2019 decreased $54 million, or 7.0%, to $720 million, compared to $775 million in the nine months ended September 30, 2018, due to~~ segments, lower volume ~~($110 million),~~in our Paper segment, partially offset by higher ~~prices and mix ($56 million).~~

Gross profit increased $41 million during the nine months ended September 30, 2019, compared to the same period in 2018. The increase was driven primarily by higher corrugated products prices and mix, higher containerboard and corrugated products sales and production volumes, higher Paper segment prices and mix, and lower annual outage expenses, partially offset by lower containerboard domestic and export prices and mix, lower volumes in our ~~Paper~~Packaging segment, ~~primarily related to the exit from the paper business at the Wallula Mill, higher~~lower operating and converting costs, lower annual outage expense, and ~~higher fixed~~lower freight and logistic expenses.In the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, gross profit included $7 million of special items for incremental out-of-pocket costs related to the COVID-19 pandemic, including supplies, cleaning and sick pay, and $3 million of accelerated depreciation associated with the closure of our San Lorenzo, California facility. There were no significant special items ~~compared to $14 million of Wallula Mill restructuring charges~~ in the ~~same period last year.~~six months ended June 30, 2019.

Selling, general, and administrative expenses (“SG&A”) ~~increased $14~~decreased $2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018.~~2019. The ~~increase~~decrease was primarily due to ~~higher~~lower employee ~~salaries~~compensation and ~~fringes.~~fringes and travel and entertainment expenses.

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

Other ~~income (expense),~~expense, net, for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are set forth below (dollars in millions):

	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2019			2018			2020			2019
Asset disposals and write-offs	$	(18.3	)	$	(14.4	)	$	(11.0	)	$	(8.8	)
Facilities closure and other costs								(13.7	)		—
Wallula mill restructuring		(0.4	)		(11.6	)		—			(0.4	)
Facilities closure and other costs		—			(1.6	)
Insurance deductible for property damage		—			(0.5	)
Acquisition and integration related costs		—			(0.1	)
Other		(2.8	)		(4.0	)		(3.4	)		(0.6	)
Total	$	(21.5	)	$	(32.2	)	$	(28.1	)	$	(9.8	)

Income from operations ~~increased $38~~decreased $231 million, or ~~4.8%~~41.5%, during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018.~~2019. The first ~~nine~~six months of ~~2019~~2020 included $4$83 million of special items expense for Paper reporting unit goodwill impairment; incremental, out-of-pocket costs related to COVID-19; and facility closure costs, compared to less than $1 million of expense for special items ~~primarily~~ related to ~~the disposal of fixed assets at the DeRidder Mill. The nine months ended September 30, 2018 included $29 million of expense for special items, primarily related to the~~ Wallula Mill ~~restructuring.~~restructuring in the same period in 2019.

Packaging. Packaging segment income from operations decreased ~~$34~~$116 million to ~~$749~~$398 million during the first ~~nine~~six months of ~~2019~~2020, compared to the same period last year. The decrease related primarily to ~~higher operating~~lower containerboard and ~~converting costs ($89 million), lower domestic and export containerboard prices and mix ($37 million), and other fixed expenses ($17 million), partially offset by higher~~ corrugated products prices and mix ($48164 million) and higher depreciation expense ($9 million), ~~higher containerboard~~partially offset by lower operating and ~~corrugated products~~converting costs ($51 million), higher sales and production volumes ($4018 million), lower annual outage expenses ($7 million), and lower ~~annual outage expense~~freight expenses ($127 million). ~~The~~Special items during the first ~~nine~~six months of ~~2019~~2020 included $3$21 million of ~~special item expense related to the disposal of fixed assets at the DeRidder Mill, compared to $9~~facility closure costs and $6 million of ~~Wallula Mill restructuring charges and $2 million of closure~~incremental, out-of-pocket costs related to ~~corrugated products facilities and other costs during~~COVID-19, compared to an insignificant amount of special items in the ~~same period~~Packaging segment in the first six months of ~~2018.~~2019.

Paper. Paper segment income from operations ~~increased $77~~decreased $113 million to ~~$133~~a loss of $29 million, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The ~~increase~~decrease primarily related to ~~higher~~lower sales and production volumes ($54 million), lower prices and mix ($~~57 million), lower operating costs ($16 million), lower freight expenses ($5~~12 million), and ~~lower depreciation~~higher freight and other expenses ($115 million), partially offset by lower ~~sales and production volume~~operating costs ($2510 million) and ~~higher~~lower annual outage ~~expense~~expenses ($52 million). Special items during the first six months of 2020 included $55 million of goodwill impairment and $1 million of incremental, out-of-pocket costs related to COVID-19. There were an insignificant amount of special items in the Paper segment in the first ~~nine~~six months of 2019. ~~The first nine months of 2018 included $18 million of Wallula Mill restructuring charges.~~

Non-operating pension expense ~~increased $4~~decreased $5 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018.~~2019. The ~~increase~~decrease in non-operating pension expense was primarily related to the ~~2018~~favorable 2019 asset performance, ~~(i.e. lower asset balances resulted in lower than expected return) and the amortization of the 2018 losses.~~partially offset by assumption changes.

Interest expense, net decreased $5$2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in ~~2018.~~2019. The decrease in interest expense, net was primarily related to no treasury lock amortization due to ~~higher interest income as a result~~the write-off of ~~higher cash~~the remaining balances of treasury locks in connection with the Company’s debt refinancing completed in December 2019 and lower earnings on deferred compensation balances in 2020, partially offset by higher interest asrates on the ~~Company repaid $150 million~~notes issued in November 2019, net of interest on the notes redeemed in ~~March 2018.~~December 2019.

During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we recorded ~~$184~~$83 million of income tax expense, compared to ~~$173~~$125 million of expense during the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The effective tax rate for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019 was 29.6% and ~~2018 was 24.8% and 24.4%~~24.7%, respectively. The increase in our effective tax rate was primarily due to ~~higher state and local income taxes net~~the nondeductible goodwill impairment charge associated with our Paper reporting unit slightly offset by the favorable impact of ~~the federal benefit, higher~~ employee ~~compensation related impacts from~~ restricted stock and performance unit vests with ~~a lower~~higher excess tax ~~benefit~~benefits (ASU 2016-09)~~, and~~ during the ~~elimination of the performance based exclusion in tax reform.~~six months ended June 30, 2020 compared to June 30, 2019.

Our primary sources of liquidity are net cash provided by operating activities and available borrowing capacity under our revolving credit facility. At ~~September~~June 30, ~~2019,~~2020, we had ~~$738~~$853 million of cash and ~~$329~~cash equivalents, $123 million of marketable debt securities, and $326 million of unused borrowing capacity under the revolving credit facility, net of letters of credit. Currently, our primary uses of cash are for operations, capital expenditures, acquisitions, debt service, common stock dividends, and repurchases of common stock. We believe that net cash generated from operating activities, cash on hand, available borrowings under our revolving credit facility, and available capital through access to capital markets will be adequate to meet our liquidity and capital requirements, including payments of any declared common stock dividends, for the foreseeable future. As our debt or credit facilities become due, we will need to repay, refinance, extend, or replace such debt or credit facilities. Our ability to do so will be subject to future economic conditions and financial, business, and other factors, many of which are beyond our control.

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

	Nine Months Ended								Six Months Ended
	September 30,								June 30,
	2019			2018			Change		2020			2019			Change
Net cash provided by (used for):
Operating activities	$	878.2		$	834.5		$	43.7	$	463.5		$	538.4		$	(74.9	)
Investing activities		(268.3	)		(405.3	)		137.0		(128.8	)		(172.8	)		44.0
Financing activities		(233.1	)		(352.3	)		119.2		(160.9	)		(157.7	)		(3.2	)
Net increase in cash and cash equivalents	$	376.8		$	76.9		$	299.9	$	173.8		$	207.9		$	(34.1	)

Our operating cash flow is primarily driven by our earnings and changes in operating assets and liabilities, such as accounts receivable, inventories, accounts payable and other accrued liabilities, as well as factors described below. Cash requirements for operating activities are subject to PCA’s operating needs and the timing of collection of receivables and payments of payables and expenses.

During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, net cash provided by operating activities was ~~$878~~$463 million, compared to ~~$834~~$538 million in the same period in ~~2018, an increase~~2019, a decrease of ~~$44~~$75 million. Cash from operations excluding changes in cash used for operating assets and liabilities decreased $127 million, primarily due to lower income from operations as discussed above. Cash increased by ~~$51~~$52 million due to changes in operating assets and liabilities, primarily due to the following: a smaller increase in accounts receivable in 2019 compared to 2018 related to the timing of collections in the Packaging segment, partially offset by: (a) lower taxes paid in 2018 compared to 2019 due to the 2018 use of a federal overpayment carryforward from the 2017 tax year resulting from Federal Tax Reform, and (b) a decrease in accounts payable levels related to the timing of payments in 2019. Cash from operations excluding

These favorable changes ~~in cash used for operating assets and liabilities decreased $7 million, primarily due to higher pension contributions made in 2019 compared to 2018 of $33 million,~~were partially offset by ~~higher income from operations as discussed above.~~the following:

We used ~~$268~~$129 million for investing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$405~~$173 million during the same period in ~~2018.~~2019. We spent ~~$264~~$151 million for internal capital investments during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to ~~$404~~$171 million during the same period in ~~2018.~~2019. We also received $23 million from redemptions of marketable debt securities, net of purchases during the six months ended June 30, 2020.

We expect capital investments in ~~2019~~2020 to be between ~~$385~~$400 million and ~~$395~~$425 million, not including acquisitions. These expenditures could increase or decrease as a result of a number of factors, including our financial results, strategic opportunities, future economic conditions, and our regulatory compliance requirements. We currently estimate capital expenditures to comply with environmental regulations will be about $10 million in ~~2019.~~2020. Our estimated environmental expenditures could vary significantly depending upon the enactment of new environmental laws and

regulations, including those related to greenhouse gas emissions and industrial boilers. For additional information, see “Environmental Matters” in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our ~~2018~~2019 Annual Report on Form 10-K.

During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, net cash used for financing activities was ~~$233~~$161 million, compared to ~~$352~~$158 million during the same period in ~~2018. The decrease primarily relates to the $150 million repayment from cash on hand at maturity of our 6.5% senior notes that were due March 2018.~~2019. In the first ~~nine~~six months of ~~2019,~~2020 we paid ~~$224~~$150 million of dividends compared with ~~$193~~$149 million of dividends paid during the first ~~nine~~six months of 2018. On May 15, 2018, PCA's Board of Directors announced an increase in the regular quarterly cash dividend to $0.79 per share from the previous $0.63 per share dividend, beginning with the dividend paid on July 13, 2018.2019.

For more information about our debt, see Note ~~10,~~11, Debt, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our ~~2018~~2019 Annual Report on Form 10-K.

There have been no material changes to the contractual obligations table disclosed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our ~~2018~~2019 Annual Report on Form 10-K.

Income from operations excluding special items, net income excluding special items, EBITDA, and EBITDA excluding special items are non-GAAP financial measures. Management excludes special items, as it believes that these items are not necessarily reflective of the ongoing operations of our business. These measures are presented because they provide a means to evaluate the performance of our segments and our Company on an ongoing basis using the same measures that are used by our management, because these measures assist in providing a meaningful comparison between periods and because these measures are frequently used by investors and other interested parties in the evaluation of companies and the performance of their segments. Any analysis of non-GAAP financial measures should be done in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such. Reconciliations of the non-GAAP measures to the most comparable measure reported in accordance with GAAP for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 follow (dollars in millions):

Three Months Ended September 30,

2019

2018

Income
before
Taxes

Income
Taxes

Net
Income

Income
before
Taxes

Income
Taxes

Net
Income

As reported in accordance with GAAP

$
239.3

$
(59.5
)

$
179.8

$
274.1

$
(67.4
)

$
206.7

Special items:

DeRidder mill fixed asset disposals (a)

3.0

(0.7
)

2.3

—

—

—

Wallula mill restructuring (c)

—

—

—

4.0

(1.1
)

2.9

Facilities closure and other costs (c)

—

—

—

1.3

(0.3
)

1.0

Insurance deductible for property damage (c)

—

—

—

0.5

(0.1
)

0.4

Acquisition and integration related costs (c)

—

—

—

0.1

—

0.1

Total special items

3.0

(0.7
)

2.3

5.9

(1.5
)

4.4

Excluding special items

$
242.3

$
(60.2
)

$
182.1

$
280.0

$
(68.9
)

$
211.1

	Three Months Ended June 30,
	2020							2019
	Income before Taxes		Income Taxes			Net Income		Income before Taxes		Income Taxes			Net Income
As reported in accordance with GAAP	$	91.6	$	(34.9	)	$	56.7	$	256.0	$	(62.4	)	$	193.6
Special items:
Goodwill impairment (a)		55.2		—			55.2		—		—			—
Facilities closure and other costs (b)		20.4		(5.1	)		15.3		—		—			—
Incremental costs for COVID-19 (b)		6.1		(1.5	)		4.6		—		—			—
Total special items		81.7		(6.6	)		75.1		—		—			—
Excluding special items	$	173.3	$	(41.5	)	$	131.8	$	256.0	$	(62.4	)	$	193.6

Nine Months Ended September 30,

2019

2018

Income
before
Taxes

Income
Taxes

Net
Income

Income
before
Taxes

Income
Taxes

Net
Income

As reported in accordance with GAAP

$
744.6

$
(184.4
)

$
560.2

$
706.0

$
(172.6
)

$
533.4

Special items:

DeRidder mill fixed asset disposals (a)

3.0

(0.7
)

2.3

—

—

—

Wallula mill restructuring (b)(c)

0.6

(0.1
)

0.5

26.4

(6.6
)

19.8

Facilities closure and other costs (c)

—

—

—

1.8

(0.5
)

1.3

Insurance deductible for property damage (c)

—

—

—

0.5

(0.1
)

0.4

Acquisition and integration related costs (c)

—

—

—

0.1

—

0.1

Total special items

3.6

(0.8
)

2.8

28.8

(7.2
)

21.6

Excluding special items

$
748.2

$
(185.2
)

$
563.0

$
734.8

$
(179.8
)

$
555.0

	Six Months Ended June 30,
	2020							2019
	Income before Taxes		Income Taxes			Net Income		Income before Taxes		Income Taxes			Net Income
As reported in accordance with GAAP	$	281.7	$	(83.4	)	$	198.3	$	505.3	$	(124.9	)	$	380.4
Special items:
Goodwill impairment (a)		55.2		—			55.2		—		—			—
Facilities closure and other costs (b)		20.8		(5.2	)		15.6		—		—			—
Incremental costs for COVID-19 (b)		6.9		(1.7	)		5.2		—		—			—
Wallula mill restructuring (c)		—		—			—		0.6		(0.1	)		0.5
Total special items		82.9		(6.9	)		76.0		0.6		(0.1	)		0.5
Excluding special items	$	364.6	$	(90.3	)	$	274.3	$	505.9	$	(125.0	)	$	380.9

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

	Three Months Ended				Nine Months Ended				Three Months Ended					Six Months Ended
	September 30,				September 30,				June 30,					June 30,
	2019		2018		2019		2018		2020			2019		2020			2019
Net income	$	179.8	$	206.7	$	560.2	$	533.4	$	56.7		$	193.6	$	198.3		$	380.4
Non-operating pension expense		1.9		0.5		6.0		1.6
Non-operating pension (income) expense										(0.6	)		2.0		(1.1	)		4.1
Interest expense, net		21.6		23.9		68.0		73.4		25.1			22.4		44.6			46.4
Income tax provision		59.5		67.4		184.4		172.6		34.9			62.4		83.4			124.9
Depreciation, amortization, and depletion		97.9		101.5		288.5		313.7		108.3			95.8		208.5			190.6
EBITDA	$	360.7	$	400.0	$	1,107.1	$	1,094.7	$	224.4		$	376.2	$	533.7		$	746.4

Special items:
DeRidder mill fixed asset disposals		3.0		—		3.0		—
Goodwill impairment										55.2			—		55.2			—
Facilities closure and other costs										13.3			—		13.7			—
Incremental costs for COVID-19										6.1			—		6.9			—
Wallula mill restructuring		—		3.7		0.4		13.0		—			—		—			0.4
Facilities closure and other costs		—		1.5		—		1.6
Insurance deductible for property damage		—		0.5		—		0.5
Acquisition and integration related costs		—		0.1		—		0.1
Total special items		3.0		5.8		3.4		15.2		74.6			—		75.8			0.4
EBITDA excluding special items	$	363.7	$	405.8	$	1,110.5	$	1,109.9	$	299.0		$	376.2	$	609.5		$	746.8

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Packaging
Segment income	$	235.1		$	284.4		$	748.6		$	782.3		$	197.6		$	263.9		$	397.5		$	513.4
Depreciation, amortization, and depletion		86.5			88.6			255.2			256.3			96.0			84.7			184.8			168.8
EBITDA		321.6			373.0			1,003.8			1,038.6			293.6			348.6			582.3			682.2
DeRidder mill fixed asset disposals		3.0			—			3.0			—
Facilities closure and other costs														13.3			—			13.7			—
Incremental costs for COVID-19														5.6			—			6.3			—
Wallula mill restructuring		—			3.1			0.2			8.2			—			—			—			0.2
Facilities closure and other costs		—			1.5			—			1.6
Property damage insurance deductible		—			0.5			—			0.5
Acquisition and integration related costs		—			0.1			—			0.1
EBITDA excluding special items	$	324.6		$	378.2		$	1,007.0		$	1,049.0		$	312.5		$	348.6		$	602.3		$	682.4

Paper
Segment income	$	48.1		$	32.3		$	132.5		$	55.7		$	(61.4	)	$	38.8		$	(29.0	)	$	84.4
Depreciation, amortization, and depletion		9.6			11.2			28.1			52.5			10.4			9.4			19.9			18.5
EBITDA		57.7			43.5			160.6			108.2			(51.0	)		48.2			(9.1	)		102.9
Goodwill impairment														55.2			—			55.2			—
Incremental costs for COVID-19														0.5			—			0.6			—
Wallula mill restructuring		—			0.6			0.2			4.8			—			—			—			0.2
EBITDA excluding special items	$	57.7		$	44.1		$	160.8		$	113.0		$	4.7		$	48.2		$	46.7		$	103.1

Corporate and Other
Segment loss	$	(20.4	)	$	(18.2	)	$	(62.5	)	$	(57.0	)	$	(20.1	)	$	(22.3	)	$	(43.3	)	$	(42.0	)
Depreciation, amortization, and depletion		1.8			1.7			5.2			4.9			1.9			1.7			3.8			3.3
EBITDA		(18.6	)		(16.5	)		(57.3	)		(52.1	)		(18.2	)		(20.6	)		(39.5	)		(38.7	)
EBITDA excluding special items	$	(18.6	)	$	(16.5	)	$	(57.3	)	$	(52.1	)	$	(18.2	)	$	(20.6	)	$	(39.5	)	$	(38.7	)

EBITDA	$	360.7		$	400.0		$	1,107.1		$	1,094.7		$	224.4		$	376.2		$	533.7		$	746.4

EBITDA excluding special items	$	363.7		$	405.8		$	1,110.5		$	1,109.9		$	299.0		$	376.2		$	609.5		$	746.8

PCA is exposed to the impact of interest rate changes and changes in the market value of its financial instruments. We periodically enter into derivatives to minimize these risks, but not for trading purposes. We were not a party to any derivatives-based arrangements at ~~September~~June 30, ~~2019.~~2020. For a discussion of derivatives and hedging activities, see Note ~~14,~~16, Derivative Instruments and Hedging Activities, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our ~~2018~~2019 Annual Report on Form 10-K.

At ~~September~~June 30, ~~2019,~~2020, interest rates on 100% of PCA’s outstanding debt are fixed.

The Company does not have any off-balance sheet arrangements as of ~~September~~June 30, ~~2019.~~2020.

There have been no material changes to the disclosure set forth in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Environmental Matters” filed with our ~~2018~~2019 Annual Report on Form 10-K.

Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, PCA evaluates its estimates, including those related to business combinations, pensions and other postretirement benefits, goodwill and intangible assets, long-lived asset impairment, environmental liabilities, and income taxes, among others. PCA bases its estimates on historical experience and on various other assumptions that are believed to be

reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

PCA has included in its ~~2018~~2019 Annual Report on Form 10-K a discussion of its critical accounting policies and estimates which require management’s most difficult, subjective, or complex judgments used in the preparation of its consolidated financial statements. PCA has not had any changes to these critical accounting estimates during the first ~~nine~~six months of ~~2019.~~2020.

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

Some of the statements in this Quarterly Report on Form 10-Q, and in particular, statements found in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our expectations regarding our future liquidity, earnings, expenditures, and financial condition. These statements are often identified by the words “will,” “should,” “anticipate,” “believe,” “expect,” “intend,” “estimate,” “hope,” or similar expressions. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties. There are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control. These factors, risks and uncertainties include the following:

Our actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, we can give no assurances that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do occur, what impact they will have on our results of operations or financial condition. Given these uncertainties, investors are cautioned not to place undue reliance on these forward-looking statements. We expressly disclaim any obligation to publicly revise any forward-looking statements that have been made to reflect the occurrence of events after the date hereof. For a discussion of other factors, risks and uncertainties that may affect our business, see Item 1A. Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019, as supplemented by Part II, Item 1A. Risk Factors included in our Quarterly Report on Form 10-Q for the first quarter of 2020.

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

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

Prior to filing this report, PCA completed an evaluation under the supervision and with the participation of PCA’s management, including PCA’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of PCA’s disclosure controls and procedures as of ~~September~~June 30, ~~2019.~~2020. The evaluation of PCA’s disclosure controls and procedures included a review of the controls’ objectives and design, PCA’s implementation of the controls, and the effect of the controls on the information generated for use in this report. Based on this evaluation, PCA’s Chief Executive Officer and Chief Financial Officer concluded that PCA’s disclosure controls and procedures were effective at the reasonable assurance level as of ~~September~~June 30, ~~2019.~~2020.

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the most recent fiscal quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

~~There~~Except as disclosed in “Part II, Item IA. Risk Factors” of our Quarterly Report on Form 10-Q for the first quarter of 2020, which disclosure is incorporated by reference herein, there have been no material changes to the risk factors disclosed in ~~"Part~~“Part I, Item ~~1A.~~IA. Risk ~~Factors"~~Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The following table presents information related to our repurchases of common stock made under repurchase plans authorized by PCA's Board of Directors, and shares withheld to cover taxes on vesting of equity awards, during the three months ended ~~September~~June 30, ~~2019:~~2020:

Issuer Purchases of Equity Securities	Issuer Purchases of Equity Securities									Issuer Purchases of Equity Securities
Period		Total Number of Shares Purchased (a)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in millions)			Total Number of Shares Purchased (a)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in millions)
July 1-31, 2019			3,127	$	97.43		—	$	193.0
August 1-31, 2019			442		100.08		—		193.0
September 1-30, 2019			615		105.87		—		193.0
April 1-30, 2020												4,936	$	82.20		—	$	193.0
May 1-31, 2020												656		93.33		—		193.0
June 1-30, 2020												100,510		98.60		—		193.0
Total			4,184	$	98.95		—	$	193.0			106,102	$	97.80		—	$	193.0

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

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

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

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

	September 30, 2019
Operating leases:
Operating lease right-of-use assets	$	232.3

Current portion of operating lease obligations	$	60.4
Long-term portion of operating lease obligations		177.3
Total operating lease obligations	$	237.7

Finance leases:
Buildings	$	0.3
Machinery and equipment		28.5
Total		28.8
Less accumulated amortization		(17.8	)
Total	$	11.0

Current portion of finance lease obligations	$	1.5
Long-term portion of finance lease obligations		16.4
Total finance lease obligations	$	17.9

Weighted-average remaining lease term (years):
Operating leases		5.8
Finance leases		9.0
Weighted-average discount rate:
Operating leases	4.33%
Finance leases	6.66%

	Nine Months Ended
	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	(44.6	)
Operating cash flows for finance leases		(1.1	)
Financing cash flows for finance leases		(0.9	)
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	(20.5	)
Finance leases		—

Supplemental non-cash information on changes in lease liabilities	$	33.8
Supplemental non-cash information on changes in right-of-use assets	$	16.2

	Operating Leases			Finance Leases
2019	$	18.1		$	0.7
2020		66.9			2.7
2021		56.6			2.7
2022		39.2			2.7
2023		25.4			2.7
Thereafter		63.8			12.4
Total lease payments		270.0			23.9
Less imputed interest (a)		(32.3	)		(6.0	)
Present value of lease liabilities	$	237.7		$	17.9

Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐

Non-accelerated filer	☐	Smaller reporting company	☐

	PART I

Item 1.	Financial Statements	1

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

	PART II

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults Upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost:
Amortization of finance lease assets	$	0.4	$	1.1
Interest on lease liabilities		0.3		0.9
Total finance lease cost		0.7		2.0
Operating lease cost		17.6		52.3
Short-term lease cost		4.4		15.1
Variable lease cost		3.2		13.0
Total lease cost	$	25.9	$	82.4

	June 30, 2020						December 31, 2019
	Fair Value of Marketable Debt Securities		Number of Marketable Debt Securities in a Loss Position		Unrealized Losses (d)		Fair Value of Marketable Debt Securities		Number of Marketable Debt Securities in a Loss Position	Unrealized Losses (d)
U.S. Treasury securities	$	—		—	$	—	$	14.0	9	$	—
U.S. government agency securities		—		—		—		0.8	1		—
Corporate debt securities		4.0	7			—		63.3	61		—
	$	4.0	7		$	—	$	78.1	71	$	—

	Foreign Currency Translation Adjustments			Unrealized Loss On Treasury Locks, Net			Unrealized Loss on Foreign Exchange Contracts			Unfunded Employee Benefit Obligations			Total
Balance at January 1, 2019	$	(0.4	)	$	(10.2	)	$	(0.3	)	$	(127.9	)	$	(138.8	)
Amounts reclassified from AOCI, net of tax		—			2.9			—			7.1			10.0
Balance at September 30, 2019	$	(0.4	)	$	(7.3	)	$	(0.3	)	$	(120.8	)	$	(128.8	)

Exhibit Number		Description

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

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

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

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

101.SCH		Inline XBRL Taxonomy Extension Schema Document. †

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

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

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

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

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

		Packaging Corporation of America

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