# Packaging Corp of America: Form 10-Q for the period ended Jun 30, 2009

- Company: [Packaging Corp of America](/companies/pkg.md) (CIK 75677)
- Form: 10-Q
- Filed: 2009-08-07
- Accepted by EDGAR: Aug 7, 2009, 19:49 ET
- Period: 2009-06-30
- Accession: 0000950123-09-032063
- Inline XBRL: no
- Main document: https://www.sec.gov/Archives/edgar/data/75677/000095012309032063/c52762e10vq.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/75677/000095012309032063/

## Management's discussion and analysis

As filed, 29,557 characters.

### Overview

Packaging Corporation of America, or PCA, is the fifth largest producer of containerboard and corrugated products in the United States, based on production capacity. We produce a wide variety of corrugated products ranging from basic corrugated shipping containers to specialized packaging, such as wax-coated boxes for the agriculture industry. We also have multi-color printing capabilities to make high-impact graphics boxes and displays that offer our customers more attractive packaging. Our operating facilities and customers are located primarily in the United States.

In analyzing our operating performance, we focus on the following factors that affect our business and are important to consider when reviewing our financial and operating results:

- corrugated products demand;
- corrugated products and containerboard pricing;
- containerboard inventories; and
- cost trends and volatility for our major costs, including wood and recycled fiber, purchased energy, labor and fringe benefits, and transportation costs.

The cost to manufacture containerboard is dependent, in large part, on the costs of wood fiber, recycled fiber, purchased fuels, electricity and labor and fringe benefits. Excluding the cost of containerboard, labor and benefits costs make up the largest component of corrugated products’ manufactured costs.

The market for containerboard is generally subject to changes in the U.S. economy. Historically, supply and demand, as well as industry-wide inventory levels, have influenced prices of containerboard. In addition to U.S. shipments, approximately 10% of all domestically produced containerboard has been exported annually for use in other countries.

### Industry Conditions

The U.S. economy experienced a severe downturn in the fourth quarter of 2008 which continued through the first and second quarters of 2009 with some improvement seen in the second quarter. Industry-wide shipments of corrugated products decreased 9.9% for the three months ended June 30, 2009 compared to the same period in 2008, but were up 5.3% compared to the first quarter of 2009. Reported second quarter 2009 industry containerboard production decreased 9.0% from the second quarter of 2008. Industry published prices for containerboard stabilized in June and July after decreasing for the previous six consecutive months. July average published transaction prices for linerboard were $70 per ton lower than November 2008, which was prior to the six consecutive monthly price decreases, and transaction prices for corrugating medium were $80 per ton below November 2008. Reported industry containerboard inventory levels at the end of June 2009 decreased approximately 181,000 tons from the end of the first quarter 2009, or 7.5%, and ended approximately 47,000 tons lower than June 2008. The June 2009 ending industry containerboard inventory levels were at their lowest level in 30 years.

### PCA Operations Summary

During the second quarter of 2009, we produced approximately 555,000 tons of containerboard at our mills, of which about 80% was consumed in our corrugated products manufacturing plants, 12% was sold to domestic customers and 8% was sold in the export market. Production in the second quarter was down about 59,000 tons compared to the second quarter of 2008. Annual maintenance downtime at our Counce, Tomahawk and Filer City mills reduced production by 50,000 tons and market-related downtime reduced production by an additional 10,000 tons.

Our corrugated products manufacturing plants sold about 7.3 billion square feet (“bsf”) of corrugated products during the second quarter of 2009. Corrugated products shipments were up 10.1% compared to the first quarter of 2009, but were 7.8% below second quarter 2008. Sales prices of containerboard and corrugated products prices were lower than the second quarter 2008 due to the published price decreases described above. In addition, recycled fiber, transportation and energy costs were lower than last year’s second quarter. However, the improvement from decreased costs was more than offset by the impact of lower sales volume due to the weak economy. Sales volume has improved compared to the first quarter of 2009 but has not yet rebounded to prior year levels.

Looking ahead to the third quarter, earnings are expected to be impacted by lower selling prices resulting from previously published changes in prices of containerboard. We expect corrugated products and containerboard shipments to increase in the third quarter of 2009 compared to the second quarter; however, some market-related downtime is still likely. In addition, recycled fiber costs are expected to be significantly higher than the second quarter with some offset from lower caustic soda prices. Considering these items and without regard to any alternative fuel mixture tax credit, described in Note 13 to the financial statements included elsewhere in this report, we expect our third quarter 2009 earnings to be lower than our earnings in the second quarter of 2009.

### Results of Operations

### Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008

The historical results of operations of PCA for the three months ended June 30, 2009 and 2008 are set forth below:

*(In thousands)*

|  | Three Months Ended June 30, 2009 | 2008 | Change |
| --- | ---: | ---: | ---: |
| Net sales | $549,381 | $616,183 | $(66,802) |
| Income from operations | $135,717 | $64,173 | $71,544 |
| Interest expense, net | (8,830) | (8,197) | (633) |
| Income before taxes | 126,887 | 55,976 | 70,911 |
| Provision for income taxes | (18,006) | (20,784) | 2,778 |
| Net income | $108,881 | $35,192 | $73,689 |

### Net Sales

Net sales decreased by $66.8 million, or 10.8%, for the three months ended June 30, 2009 from the comparable period in 2008, primarily as a result of decreased sales volume of corrugated products and containerboard to third parties ($64.0 million), and the impact of decreased sales prices ($2.8 million). Sales prices decreased as a result of monthly published industry containerboard price decreases from December 2008 through May 2009 which reduced linerboard and corrugating medium transaction prices by a total $70 per ton or 11.5% and $80 per ton or 13.6%, respectively, compared to November 2008 published price levels.

Corrugated products shipments on a per-workday basis for the second quarter decreased 6.3% compared to the second quarter of 2008. Total corrugated products volume sold for the three months ended June 30, 2009 decreased 7.8% to 7.3 billion square feet (“bsf”) compared to 8.0 bsf in the second quarter of 2008. The percentage decrease, on a shipments-per-workday basis, was lower due to one less workday in the second quarter of 2009 (63 days), those days not falling on a weekend or holiday, than the second quarter of 2008 (64 days). Containerboard volume sold to domestic and export customers was 23.2% lower for the three months ended June 30, 2009 compared to the three months ended June 30, 2008. Containerboard mill production for the three months ended June 30, 2009 was 555,000 tons compared to 614,000 tons during the same period in 2008, down 59,000 tons as a result of the annual mill maintenance and market-related downtime taken during the second quarter.

### Income from Operations

Income from operations increased by $71.5 million, or 111.5%, for the three months ended June 30, 2009 compared to the three months ended June 30, 2008, primarily due to an alternative fuel mixture tax credit ($79.7 million). Please see Note 13 to the financial statements included in this report for a description of the alternative fuel mixture tax credit. Excluding the alternative fuel mixture tax credit, income from operations was

$8.2 million below the previous year’s second quarter as a result of the impact of lower sales volume ($23.7 million), increased labor and fringe benefit costs ($2.8 million) and decreased sales prices of corrugated products and containerboard ($2.8 million). These items were partially offset by decreased costs of recycled fiber ($8.8 million), transportation ($6.8 million) and lower energy costs ($4.5 million).

Gross profit decreased $8.7 million, or 6.8%, for the three months ended June 30, 2009 from the comparable period in 2008. Gross profit as a percentage of net sales increased from 20.6% of net sales in the three months ended June 30, 2008 to 21.6% of net sales in the current quarter due primarily to the decreased recycled fiber and energy costs described above.

Selling and administrative expenses decreased $0.8 million, or 1.7%, for the three months ended June 30, 2009 compared to the same period in 2008, as a result of reduced expenses for travel, entertainment and meetings ($1.0 million) partially offset by other items which were individually insignificant.

Corporate overhead increased $1.1 million, or 7.8%, for the three months ended June 30, 2009 compared to the same period in 2008, primarily attributable to an increase in salary expense due to the timing of both share-based compensation and incentive compensation ($1.0 million).

Other expense for the three months ended June 30, 2009 decreased $0.9 million or 17.4% compared to the second quarter of 2008, primarily due to tornado damage to one of our facilities in the second quarter of 2008 ($0.8 million).

### Interest Expense, Net and Income Taxes

Net interest expense increased $0.6 million, or 7.7%, for the three months ended June 30, 2009 from the three months ended June 30, 2008, primarily as a result of lower interest income ($2.0 million) earned on PCA’s cash equivalents, partially offset by lower interest expense ($1.4 million) related to PCA’s outstanding debt balances. The $2.0 million decrease in interest income was primarily due to lower interest income rates during the three months ended June 30, 2009 compared to the same period in 2008. The $1.4 million decrease in interest expense was primarily related to PCA’s 43/8% senior notes that were repaid in August of 2008.

PCA’s effective tax rate was 14.2% for the three months ended June 30, 2009 and 37.1% for the comparable period in 2008. The effective tax rate varies from the U.S. federal statutory tax rate of 35% principally due to the impact of the alternative fuel mixture tax credit, state and local income taxes, and the domestic manufacturers’ deduction.

### Six Months Ended June 30, 2009 Compared to Six Months Ended June 30, 2008

The historical results of operations of PCA for the six months ended June 30, 2009 and 2008 are set forth below:

*(In thousands)*

|  | For the Six Months Ended June 30, 2009 | 2008 | Change |
| --- | ---: | ---: | ---: |
| Net sales | $1,061,759 | $1,193,657 | $(131,898) |
| Income from operations | $185,324 | $121,319 | $64,005 |
| Interest expense, net | (17,568) | (14,500) | (3,068) |
| Income before taxes | 167,756 | 106,819 | 60,937 |
| Provision for income taxes | (33,199) | (39,554) | 6,355 |
| Net income | $134,557 | $67,265 | $67,292 |

### Net Sales

Net sales decreased by $131.9 million, or 11.0%, for the six months ended June 30, 2009 from the comparable period in 2008 primarily as a result of decreased sales volume of corrugated products and containerboard to third parties ($150.6 million), partially offset by higher average prices for the first half of 2009 ($18.7 million) compared to the first half of 2008. Sales prices increased as a result of the July 2008 containerboard price increase and the realization of those increases in our sales prices of corrugated products and containerboard. These price increases have been partially offset in the first half of 2009 by the published price reductions since December 2008 described earlier.

First half 2009 corrugated products shipments per workday decreased 8.7% compared to the same period in 2008. On a total shipments basis, corrugated products volume decreased 1.6 bsf or 10.1% to 14.0 bsf in the first half of 2009 compared to 15.6 bsf in the first half of 2008. The percentage decrease, on a shipments-per-workday basis, was lower due to two fewer workdays in the first six months of 2009 (125 days), those days not falling on a weekend or holiday, than the first half of 2008 (127 days). Containerboard volume sold to domestic and export customers was 27.0% lower for the six months ended June 30, 2009 compared to the six months ended June 30, 2008. Containerboard mill production during the first half of 2009 was approximately 1,070,000 tons compared to 1,199,000 tons produced in the first half of 2008, down 129,000 tons as a result of market-related downtime, planned annual maintenance outages and machine slowbacks.

### Income from Operations

Income from operations increased by $64.0 million, or 52.8%, for the six months ended June 30, 2009 compared to the six months ended June 30, 2008, primarily attributable to the alternative fuel mixture tax credit of $79.7 million described previously. Excluding the alternative fuel mixture tax credit, income from operations decreased $15.7 million for the six months ended June 30, 2009 compared to the six months ended June 30, 2008 primarily attributable to lower sales volume ($56.2 million) and increased labor and fringe benefit costs ($7.2 million). These items were partially offset by increased sales prices of corrugated products and containerboard ($18.7 million), and decreased costs of recycled fiber ($16.5 million), transportation ($9.8 million), and energy ($4.0 million).

Gross profit decreased $16.9 million, or 6.9%, for the six months ended June 30, 2009 from the comparable period in 2008. Gross profit as a percentage of net sales increased from 20.6% of net sales in the six months ended June 30, 2008 to 21.5% of net sales in the first half of 2009 due primarily to the higher sales prices and cost decreases described above.

Selling and administrative expenses decreased $1.1 million, or 1.2%, for the six months ended June 30, 2009 compared to the same period in 2008, primarily as a result of lower expenses related to travel, and entertainment ($0.8 million), and advertising costs ($0.3 million).

Corporate overhead for the six months ended June 30, 2009 increased $0.5 million or 1.8% compared to the same period in 2008, primarily due to increased salary expense related to the timing of both share-based compensation and incentive compensation ($0.6 million).

Other expense for the six months ended June 30, 2009 decreased $0.6 million or 7.2% below other expense for the first half of 2008, primarily due to tornado damage to one of our facilities in the second quarter of 2008 ($0.8 million).

### Interest Expense, Net and Income Taxes

Net interest expense increased $3.1 million, or 21.2%, for the six months ended June 30, 2009 from the six months ended June 30, 2008, primarily as a result of lower interest income ($3.9 million) earned on PCA’s cash equivalents, partially offset by lower interest expense ($0.8 million) related to PCA’s outstanding debt balances. The $3.9 million decrease in interest income was primarily due to lower interest income rates during the six months ended June 30, 2009 compared to the same period in 2008. The $0.8 million decrease in interest expense was primarily due to a decrease in interest expense related to the Company’s receivables credit facility due to lower interest rates.

PCA’s effective tax rate was 19.8% for the six months ended June 30, 2009 and 37.0% for the comparable period in 2008. The effective tax rate varies from the U.S. federal statutory tax rate of 35% principally due to the impact of the alternative fuel mixture tax credit, state and local income taxes, and the domestic manufacturers’ deduction. The Company had no material changes impacting FIN No. 48 during the first half of 2009.

### Liquidity and Capital Resources

The following table presents a summary of our cash flows for the periods presented:

*(In thousands)*

| Net cash provided by (used for): | Six Months Ended June 30, 2009 | 2008 | Change |
| --- | ---: | ---: | ---: |
| Operating activities | $141,248 | $110,785 | $30,463 |
| Investing activities | (52,066) | (67,474) | 15,408 |
| Financing activities | (45,635) | 26,150 | (71,785) |
| Net increase in cash and cash equivalents | $43,547 | $69,461 | $(25,914) |

### Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2009 was $141.2 million compared to $110.8 million for the six months ended June 30, 2008, an increase of $30.5 million, or 27.5%. Net income excluding the impact of the alternative fuel mixture tax credits described in Note 13 to the financial statements included in this report was $54.3 million for the first six months of 2009 compared to $67.3 million for the comparable period in 2008, a decrease of $13.0 million that reduced net cash provided by operating activities. This decrease was more than offset by reduced cash requirements, including a $18.7 million reduction in federal tax payments in the second quarter of 2009 as a result of the alternative fuel mixture tax credits. Cash requirements for operating activities are subject to PCA’s operating needs, which were impacted by the weakened business conditions during the first six months of 2009, the timing of collection of receivables and payments of payables and expenses, and seasonal fluctuations in the Company’s operations.

### Investing Activities

Net cash used for investing activities for the six months ended June 30, 2009 decreased $15.4 million, or 22.8%, to $52.1 million, compared to the six months ended June 30, 2008. The decrease was primarily related to lower additions to property, plant and equipment of $15.3 million during the six months ended June 30, 2009 compared to the same period in 2008.

### Financing Activities

Net cash used for financing activities totaled $45.6 million for the six months ended June 30, 2009, a difference of $71.8 million, or 274.5%. The difference was primarily attributable to $144.7 million in net proceeds received from PCA’s notes offering in 2008 described below, partially offset by a debt prepayment of $20.0 million made in the first quarter of 2008, $36.8 million in repurchases of PCA common stock during the first six months of 2008, and lower common stock dividends paid of $16.7 million during the first six months of 2009 compared to the same period in 2008.

In connection with the senior notes offering in March of 2008, PCA received proceeds, net of discount, of $149.9 million and paid $4.4 million for settlement of a treasury lock that it entered into to protect it against increases in the ten-year U.S. Treasury rate, which served as a reference in determining the interest rate applicable to the notes. PCA also incurred financing costs in the amount of $0.8 million in connection with the senior notes offering. PCA later used the proceeds of this offering, together with cash on hand, to repay all of the $150.0 million of outstanding 43/8% senior notes due 2008 on August 1, 2008.

PCA’s primary sources of liquidity are net cash provided by operating activities, borrowings under PCA’s revolving credit facility, and additional borrowings under PCA’s receivables credit facility. As of June 30, 2009, PCA had $172.2 million in unused borrowing capacity under its existing credit agreements, net of the impact on this borrowing capacity of $18.8 million of outstanding letters of credit. Currently, PCA’s primary uses of cash are for capital expenditures, debt service and declared common stock dividends, which it expects to be able to fund from these sources.

The following table provides the outstanding balances, excluding unamortized debt discount of $1.4 million, and the weighted average interest rates as of June 30, 2009 for PCA’s revolving credit facility, the receivables credit facility, and the senior notes:

*(In thousands)*

| Borrowing Arrangement | Balance at June 30, 2009 | Weighted Average Interest Rate | Projected Annual Cash Interest Payments |
| --- | ---: | ---: | ---: |
| Revolving Credit Facility | $— | N/A | N/A |
| Receivables Credit Facility | 109,000 | 2.19% | $2,386 |
| 53/4% Senior Notes (due August 1, 2013) | 400,000 | 5.75 | 23,000 |
| 61/2% Senior Notes (due March 15, 2018) | 150,000 | 6.50 | 9,750 |
| Total | $659,000 | 5.33% | $35,136 |

The above table excludes from the projected annual cash interest payments, the non-cash income from the annual amortization of the $22.8 million received in July 2003 and the non-cash expense from the annual amortization of the $4.4 million paid in March 2008 to settle the treasury locks related to the 53/4% senior notes due 2013 and 61/2% senior notes due 2018. The amortization is being recognized over the terms of the 53/4% senior notes due 2013 and 61/2% senior notes due 2018 and is included in interest expense, net.

On April 15, 2009, PCA extended its $150.0 million receivables-backed credit facility through April 14, 2010.

The instruments governing PCA’s indebtedness contain financial and other covenants that limit, among other things, the ability of PCA and its subsidiaries to:

- enter into sale and leaseback transactions,
- incur liens,
- incur indebtedness at the subsidiary level,
- enter into certain transactions with affiliates, or
- merge or consolidate with any other person or sell or otherwise dispose of all or substantially all of the assets of PCA.

These limitations could limit corporate and operating activities.

In addition, PCA must maintain minimum net worth and maximum debt to total capitalization and minimum interest coverage ratios under the revolving credit facility. A failure to comply with the restrictions contained in the revolving credit facility could lead to an event of default, which could result in an acceleration of any outstanding indebtedness and/or prohibit PCA from drawing on the revolving credit facility. Such an acceleration may also constitute an event of default under the senior notes indentures and the receivables credit facility. As of June 30, 2009, PCA was in compliance with these covenants.

PCA currently expects to incur capital expenditures of about $100.0 million in 2009. These expenditures will be used primarily for maintenance capital, cost reduction, business growth and environmental compliance. As of June 30, 2009, PCA spent $50.3 million for capital expenditures and had committed to spend an additional $28.0 million in the remainder of 2009 and beyond.

On February 26, 2009, PCA announced that it had reduced its quarterly common stock dividend from $0.30 per share to $0.15 per share effective for the dividend payable April 15, 2009 to shareholders of record as of March 13, 2009.

PCA believes that net cash generated from operating activities, available cash reserves and available borrowings under its committed credit facilities and available capital through access to capital markets will be adequate to meet its liquidity and capital requirements, including payments of any declared common stock dividends, for the foreseeable future. As its debt or credit facilities become due, PCA will need to repay, extend or replace such facilities, which will be subject to future economic conditions and financial, business and other factors, many of which are beyond PCA’s control.

### Market Risk and Risk Management Policies

PCA is exposed to the impact of interest rate changes and changes in the market value of its financial instruments. PCA periodically enters into derivatives in order to minimize these risks, but not for trading purposes. As of June 30, 2009, PCA was not a party to any derivative instruments.

The interest rates on approximately 84% of PCA’s debt are fixed. A one percent increase in interest rates related to variable rate debt would have resulted in an increase in interest expense and a corresponding decrease in income before taxes of $1.1 million annually. In the event of a change in interest rates, management could take actions to mitigate its exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in PCA’s financial structure.

### Environmental Matters

PCA is subject to, and must comply with, a variety of federal, state and local environmental laws, particularly those relating to air and water quality, waste disposal and the cleanup of contaminated soil and groundwater. The most significant of these laws affecting the Company are:

- Resource Conservation and Recovery Act (RCRA);
- Clean Water Act (CWA);
- Clean Air Act (CAA);
- The Emergency Planning and Community Right-to-Know-Act (EPCRA);
- Toxic Substance Control Act (TSCA); and
- Safe Drinking Water Act (SDWA).

PCA believes that it is currently in material compliance with these and all applicable environmental rules and regulations. Because environmental regulations are constantly evolving, the Company has incurred, and will continue to incur, costs to maintain compliance with these and other environmental laws. PCA works diligently to anticipate and budget for the impact of applicable environmental regulations, and does not currently expect that future environmental compliance obligations will materially affect its business or financial condition.

### Impact of Inflation

PCA does not believe that inflation has had a material impact on its financial position or results of operations during the three- and six-month periods ending June 30, 2009 and 2008.

### Off-Balance Sheet Arrangements

PCA does not have any off-balance sheet arrangements as of June 30, 2009 that would require disclosure under SEC FR-67, “Disclosure in Management’s Discussion and Analysis About Off-Balance Sheet Arrangement and Aggregate Contractual Obligations.”

### Critical Accounting Policies and Estimates

Management’s discussion and analysis of PCA’s 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 the Company 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 bad debts, inventories, intangible assets, pensions and other postretirement benefits, income taxes, contingencies and litigation. 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 Annual Report on Form 10-K for the year ended December 31, 2008, a discussion of its critical accounting policies which it believes affect its more significant judgments and estimates used in the preparation of its consolidated financial statements. PCA has not made any changes in any of these critical accounting policies during the first six months of 2009.

### Forward-Looking Statements

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

- the impact of general economic conditions;
- containerboard and corrugated products general industry conditions, including competition, product demand and product pricing;
- fluctuations in wood fiber and recycled fiber costs;
- fluctuations in purchased energy costs;
- the possibility of unplanned outages or interruptions at our principal facilities; and
- legislative or regulatory actions or requirements, particularly concerning environmental or tax matters.

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. In view of 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, 2008.

## Market risk

As filed, 238 characters.

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.

## Controls and procedures

As filed, 1,618 characters.

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 June 30, 2009. 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 June 30, 2009.

During the quarter ended June 30, 2009, there were no changes in internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, PCA’s internal control over financial reporting.

### PART II

### OTHER INFORMATION

## Risk factors

As filed, 162 characters.

There have been no material changes to the risk factors disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2008.

Filed Aug 7, 2009.
Source: SEC EDGAR, the filing index for accession 0000950123-09-032063. Last ingested by Listed: Nov 5, 2026, 13:32 ET. No prices; not investment advice.