# Packaging Corp of America: Form 10-Q for the period ended Mar 31, 2011

- Company: [Packaging Corp of America](/companies/pkg.md) (CIK 75677)
- Form: 10-Q
- Filed: 2011-05-10
- Accepted by EDGAR: May 10, 2011, 20:04 ET
- Period: 2011-03-31
- Accession: 0000950123-11-048298
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/75677/000095012311048298/c63918e10vq.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/75677/000095012311048298/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2011-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2011-01-01 to 2011-03-31 | $629.5m | us-gaap:SalesRevenueNet |
| Cost of revenue | 3 months, 2011-01-01 to 2011-03-31 | $496.4m | us-gaap:CostOfGoodsSold |
| Gross profit | 3 months, 2011-01-01 to 2011-03-31 | $133.1m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2011-01-01 to 2011-03-31 | $48.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2011-01-01 to 2011-03-31 | $65.9m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2011-01-01 to 2011-03-31 | $21.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2011-01-01 to 2011-03-31 | $37.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2011-01-01 to 2011-03-31 | $0.37 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2011-01-01 to 2011-03-31 | $0.37 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2011-01-01 to 2011-03-31 | 101,909,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2011-01-01 to 2011-03-31 | $64.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2011-01-01 to 2011-03-31 | $64.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2011-01-01 to 2011-03-31 | $15.4m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2011-01-01 to 2011-03-31 | $19.1m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2011-03-31 | $173.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2011-03-31 | $772.1m | us-gaap:AssetsCurrent |
| Total assets | at 2011-03-31 | $2.22bn | us-gaap:Assets |
| Current liabilities | at 2011-03-31 | $387.3m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2011-03-31 | $549.2m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2011-03-31 | $1.02bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 26,704 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:

- containerboard and corrugated products demand;
- corrugated products and containerboard pricing and mix;
- cost trends and volatility for our major costs, including wood and recycled fiber, purchased fuels, electricity, labor and fringe benefits, and transportation costs; and
- cash flow from operations and capital expenditures.

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 and corrugated products. In addition to U.S. shipments, approximately 10% of domestically produced containerboard has been exported annually for use in other countries.

### Industry Conditions

Market conditions for containerboard and corrugated products remained favorable during the first quarter of 2011. As reported by the Fibre Box Association, industry-wide shipments of corrugated products increased 2.0% for the three months ended March 31, 2011 compared to the same period in 2010 and March corrugated products shipments were up 4.1% above March 2010 levels. Containerboard industry production increased 1.8% in the first quarter 2011 compared to the first quarter of 2010 and reported industry containerboard inventories at the end of the first quarter 2011 were at the second lowest level for March in 30 years at approximately 2.3 million tons. Published prices for containerboard did not change during first quarter 2011.

### PCA Operations Summary

During the first quarter of 2011, we produced approximately 602,000 tons of containerboard at our mills and sold about 7.9 billion square feet (“bsf”) of corrugated products. Our corrugated products shipments were up 3.1% compared to the first quarter of 2010. Containerboard volume sold to domestic and export customers increased 1.0% for the three months ended March 31, 2011 compared to the same period in 2010. Sales prices of containerboard and corrugated products were higher than the first quarter of 2010 as a result of January and April 2010 containerboard price increases and the pass-through of those price increases to corrugated products.

Industry published recycled fiber prices were up compared to the first quarter 2010 average price by almost 20% and increased approximately $5 per ton, or 3%, compared to the fourth quarter 2010. Purchased fuel costs in the first quarter of 2011 increased 7% compared to the fourth quarter 2010, and over the same time period electricity prices increased 4%. Transportation costs increased compared to both first quarter 2010 and fourth quarter 2010 driven by higher diesel prices. Energy costs in the second quarter of 2011 are expected to increase driven by increased electricity and fuel prices partially offset by lower usage associated with warmer weather. Chemical costs increased about 35% over first quarter 2010 and were up 5% over fourth quarter 2010 levels. Wood fiber costs increased compared to the fourth quarter of 2010 but were lower than last year’s first quarter.

As disclosed in Note 15 to the condensed consolidated financial statements, the Company is a producer of black liquor, which is considered an alternative fuel when mixed with diesel, making the black liquor an alternative fuel eligible for a $0.50 per gallon refundable alternative fuel mixture tax credit through December 31, 2009. During the first quarter of 2010, the IRS released a memorandum which provided clarification about the calculation of the alternative fuel mixture credit for black liquor. As a result, during the first quarter of 2010 the Company released the reserve of $9.2 million that was established in 2009 due to the ambiguity in the calculation of the credit. This reserve release resulted in additional income of $9.2 million, which was recorded in alternative fuel mixture tax credits on the income statement in the first quarter of 2010.

Excluding the impact of the tax credit described above and asset disposal charges related to our mill energy projects and facility closure costs, we earned net income of $39.5 million ($0.39 per diluted share) in the first quarter of 2011 compared with $12.5 million ($0.12 per diluted share) in the first quarter of 2010. Management uses these measures to focus on PCA’s on-going operations and assess its operating performance and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results. Reconciliations to the most comparable measure reported in accordance with GAAP are included elsewhere in this section under “Reconciliations of Non-GAAP Financial Measures to Reported Amounts.”

Looking ahead to the second quarter of 2011, our earnings, excluding special items, are expected to be lower than the first quarter of 2011 due to increased planned mill downtime and inflationary cost pressures. Annual maintenance outages and capital project related downtime will require planned downtime at each of our four mills. Total planned downtime and slowbacks will reduce mill production by about 39,000 tons, or about 17,000 tons more than the first quarter, and will increase production costs and annual outage related maintenance costs. We also expect inflationary cost pressures to continue as transportation, energy and chemical costs are currently higher than first quarter averages. Our corrugated products shipments are expected to increase and energy usage is expected to decrease with warmer weather.

### Results of Operations

### Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010

The historical results of operations of PCA for the three months ended March 31, 2011 and 2010 are set forth below:

*(In thousands)*

|  | Three Months Ended March 31, 2011 | 2010 | Change |
| --- | ---: | ---: | ---: |
| Net sales | $629,500 | $550,732 | $78,768 |
| Income from operations | $65,903 | $33,616 | $32,287 |
| Interest expense, net | (6,903) | (8,723) | 1,820 |
| Income before taxes | 59,000 | 24,893 | 34,107 |
| Provision for income taxes | (21,583) | (5,699) | (15,884) |
| Net income | $37,417 | $19,194 | $18,223 |

### Net Sales

Net sales increased by $78.8 million, or 14.3%, for the three months ended March 31, 2011 from the comparable period in 2010, primarily as a result of increased sales prices ($58.0 million) and higher sales volumes ($20.8 million) of corrugated products and containerboard to third parties.

Corrugated products shipments for the first quarter increased 3.1% compared to the first quarter of 2010 and on a shipments-per-workday basis increased 1.5%. Total corrugated products volume sold for the three months ended March 31, 2011 increased 0.3 billion square feet (“bsf”) to 7.9 bsf compared to 7.6 bsf in the first quarter of 2010. The percentage increase, on a shipments per workday basis, was lower due to one more workday in the first quarter of 2011 (64 days), those days not falling on a weekend or holiday, than the first quarter of 2010 (63 days).

Containerboard volume sold to outside domestic and export customers increased 1.0% for the three months ended March 31, 2011 compared to the same period in 2010. Containerboard mill production during the first quarter was 602,000 tons compared to 569,000 tons during the first quarter of 2010.

### Income from Operations

Income from operations increased by $32.3 million, or 96.1%, for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. Excluding special items, income from operations increased $40.8 million, primarily due to higher sales prices ($58.0 million) and volume ($9.7 million). Partially offsetting these items were increased costs for chemicals ($4.9 million), transportation ($4.8 million), labor ($3.8 million), medical and worker’s compensation ($3.1 million), incentive compensation ($3.0 million), recycled fiber ($1.7 million), other fringe benefits ($1.6 million) and the impact of severe winter weather ($3.5 million).

Gross profit increased $46.3 million, or 53.4%, for the three months ended March 31, 2011 from the comparable period in 2010, primarily due to the sales price and volume increases described above. Gross profit as a percentage of net sales increased to 21.2% of net sales for first quarter 2011 compared to 15.8% in the first quarter of 2010.

Selling and administrative expenses increased $3.7 million, or 8.3%, for the three months ended March 31, 2011 compared to the same period in 2010, as a result of higher salaries and fringe benefits ($2.6 million) from annual merit increases, as well as the timing of incentive compensation charges. Other increases included travel, entertainment and meeting costs ($0.6 million) and broker commissions ($0.3 million).

Corporate overhead increased $2.9 million, or 23.1%, for the three months ended March 31, 2011 compared to the same period in 2010, primarily due to higher salaries and fringe benefits ($2.4 million) from annual merit increases as well as the timing of incentive compensation charges and increased expenses related to outside services for legal matters ($0.6 million).

Other expense for the three months ended March 31, 2011 decreased $1.8 million or 32.3% compared to the first quarter of 2010, primarily due to expense related to the closure of the Ackerman, Mississippi sawmill in the first quarter of 2010 ($2.0 million).

### Interest Expense, Net and Income Taxes

Net interest expense decreased $1.8 million, or 20.9%, for the three months ended March 31, 2011 from the three months ended March 31, 2010, primarily as a result of higher capitalized interest ($1.3 million) being recorded related to the Counce and Valdosta major energy optimization projects during the three months ended March 31, 2011 compared to the same period in 2010.

PCA’s effective tax rate was 36.6% for the three months ended March 31, 2011 and 22.9% for the comparable period in 2010 due to the impact of recording the alternative fuel mixture tax credits in 2010. Excluding the impact of the tax credits, the 2010 effective tax rate would have been 36.4% for the three months ended March 31, 2010. 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 (in 2010), state and local income taxes, and the domestic manufacturers’ deduction. PCA had no material changes to its uncertain tax positions under ASC 740, “Income Taxes,” during the first quarter of 2011. In March 2011, the Company was notified by the Internal Revenue Service that it will begin its review of the 2008 and 2009 federal tax returns in the second quarter of 2011.

### 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): | Three Months Ended March 31, 2011 | 2010 | Change |
| --- | ---: | ---: | ---: |
| Operating activities | $63,950 | $14,504 | $49,446 |
| Investing activities | (66,487) | (64,262) | (2,225) |
| Financing activities | (21,005) | (13,368) | (7,637) |
| Net decrease in cash and cash equivalents | $(23,542) | $(63,126) | $39,584 |

### Operating Activities

Net cash provided by operating activities for the three months ended March 31, 2011 was $64.0 million compared to $14.5 million for the three months ended March 31, 2010, an increase of $49.4 million, or 340.9%. Net income, excluding the income from the tax credits (described in Note 15 to the financial statements included in this report) of $9.2 million in 2010, was $37.4 million and $10.0 million, respectively, for the first three months of 2011 and 2010, an increase of $27.4 million that increased net cash provided by operating activities. Additionally, requirements for operating assets and liabilities were lower by $21.2 million in 2011 compared to 2010. Cash requirements for operating activities are subject to PCA’s operating needs, the timing of collection of receivables and payments of payables and expenses, and seasonal fluctuations in the our operations.

### Investing Activities

Net cash used for investing activities for the three months ended March 31, 2011 increased $2.2 million, or 3.5%, to $66.5 million, compared to the three months ended March 31, 2010. The increase was primarily related to higher additions to property, plant and equipment of $1.6 million during the three months ended March 31, 2011 compared to the same period in 2010.

### Financing Activities

Net cash used for financing activities totaled $21.0 million for the three months ended March 31, 2011, a difference of $7.6 million, or 57.1%, compared to the same period in 2010. The difference was primarily attributable to repurchases of PCA common stock of $19.1 million during the first three months of 2011, partially offset by $9.9 million in proceeds from the settlement of treasury locks in February 2011. On February 22, 2011, PCA announced that its board of directors authorized an increase in the quarterly dividend from $0.15 to $0.20 per share of its common stock, beginning with the dividend paid on April 15, 2011. The timing and amount of future dividends are subject to the determination of PCA’s board of directors.

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 March 31, 2011, 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 operations, 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 and the weighted average interest rates as of March 31, 2011 for PCA’s revolving credit facility, the receivables credit facility, and the senior notes:

*(In thousands)*

| Borrowing Arrangement | Balance at March 31, 2011 | Weighted Average Interest Rate | Projected Annual Cash Interest Payments |
| --- | ---: | ---: | ---: |
| Revolving Credit Facility | $— | N/A | N/A |
| Receivables Credit Facility | 109,000 | 1.09% | $1,188 |
| 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 | 5.15% | $33,938 |

The above table excludes unamortized debt discount of $0.8 million at March 31, 2011. It also 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 March 1, 2011, PCA renewed the receivables credit facility, which was scheduled to expire on March 1, 2011, to February 28, 2012.

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 March 31, 2011, PCA was in compliance with these covenants.

PCA currently expects to incur capital expenditures of $255.0 million in 2011, including $115.0 million for major energy optimization projects at its Counce and Valdosta mills and $40.0 million for strategic projects in the box plants. The remaining $100.0 million in expenditures will be used primarily for maintenance capital, cost reduction, business growth and environmental compliance. As of March 31, 2011, PCA spent $64.7 million for capital expenditures and had committed to spend an additional $116.0 million in the remainder of 2011 and beyond.

PCA believes that net cash generated from operating activities, available cash reserves, 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.

### Reconciliations of Non-GAAP Financial Measures to Reported Amounts

Operating income, net income and diluted earnings per share excluding special items are non-GAAP financial measures. Reconciliations of those non-GAAP measures to the most comparable measure reported in accordance with GAAP for the three months ended March 31, 2011 and 2010 follow:

*(In millions, except per share amounts)*

|  | Three Months Ended March 31, 2011 Income from Operations | Net Income | Diluted EPS | 2010 Income from Operations | Net Income | Diluted EPS |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| As reported in accordance with GAAP | $65.9 | $37.4 | $0.37 | $33.6 | $19.2 | $0.19 |
| Special items: |  |  |  |  |  |  |
| Alternative energy tax credits | — | — | — | (9.2) | (9.2) | (0.09) |
| Asset disposal and facility closure charges | 3.2 | 2.1 | 0.02 | 3.9 | 2.5 | 0.02 |
| Total special items | 3.2 | 2.1 | 0.02 | (5.3) | (6.7) | (0.07) |
| Excluding special items | $69.1 | $39.5 | $0.39 | $28.3 | $12.5 | $0.12 |

### 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. For a discussion of derivatives and hedging activities, see Note 10 to PCA’s unaudited condensed consolidated financial statements included elsewhere in this report.

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.

In 2004, the U.S. Environmental Protection Agency (the “EPA”) published the Boiler MACT regulations affecting certain industrial boilers. These regulations were vacated and remanded by the U.S. Court of Appeals for the D.C. Circuit in 2007. The EPA proposed final regulations in 2011, which would require compliance in 2014. PCA is currently assessing the impact of these regulations on its operations which could require significant modifications to certain of PCA’s boilers. Due to the complexity of these regulations, and the potential for future regulatory or judicial modification to these regulations, the timing and amount of expenditures to be made by PCA are uncertain, but could be significant during the period before compliance is required.

### 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-month periods ending March 31, 2011 and 2010.

### Off-Balance Sheet Arrangements

PCA does not have any off-balance sheet arrangements as of March 31, 2011 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, 2010, 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 three months of 2011.

### 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

24

- 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, 2010.

## 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, 1,621 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 March 31, 2011. 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 March 31, 2011.

During the quarter ended March 31, 2011, 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, 2010.

Filed May 10, 2011.
Source: SEC EDGAR, the filing index for accession 0000950123-11-048298. Last ingested by Listed: Nov 5, 2026, 13:32 ET. No prices; not investment advice.