e11vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
|
|
|
þ |
|
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2010
or
|
|
|
o |
|
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-15399
A. Full title of the plan and the address of the plan, if different from that of the issuer
named below:
Packaging Corporation of America
Retirement Savings Plan for Salaried Employees
B. Name of the issuer of the securities held pursuant to the plan and the address of its
principal executive office:
Packaging Corporation of America
1900 West Field Court
Lake Forest, IL 60045
Packaging Corporation of America
Retirement Savings Plan for Salaried Employees
|
|
|
|
|
|
|
Page |
|
A. Financial Statements |
|
|
|
|
Report of Independent Registered Public Accounting Firm |
|
|
3 |
|
Financial Statements: |
|
|
|
|
Statements of Net Assets Available for Benefits |
|
|
4 |
|
Statements of Changes in Net Assets Available for Benefits |
|
|
5 |
|
Notes to Financial Statements |
|
|
6 |
|
B. Supplemental Schedule |
|
|
|
|
Schedule H, Line 4i Schedule of Assets (Held at End of Year) |
|
|
14 |
|
C. Exhibit |
|
|
|
|
Item 23.1 Consent of Independent Registered Public Accounting Firm |
|
|
|
|
2
Report of Independent Registered Public Accounting Firm
Benefits Administration Committee
Packaging Corporation of America Retirement Savings Plan for Salaried Employees
We have audited the accompanying statements of net assets available for benefits of the Packaging
Corporation of America Retirement Savings Plan for Salaried Employees as of December 31, 2010 and
2009, and the related statements of changes in net assets available for benefits for the years then
ended. These financial statements are the responsibility of the Plans management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. We
were not engaged to perform an audit of the Plans internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Plans internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 2010 and 2009, and the
changes in its net assets available for benefits for the years then ended, in conformity with U.S.
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken
as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December
31, 2010, is presented for the purpose of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department of Labors Rules
and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plans management. This supplemental
schedule has been subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
Chicago, Illinois
June 28, 2011
3
Packaging Corporation of America
Retirement Savings Plan for Salaried Employees
Statements of Net Assets Available for Benefits
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Assets |
|
|
|
|
|
|
|
|
Interest in Master Trust |
|
$ |
263,858,794 |
|
|
$ |
225,367,635 |
|
Notes receivable from participants |
|
|
5,179,309 |
|
|
|
4,892,800 |
|
Contributions receivable: |
|
|
|
|
|
|
|
|
Company |
|
|
395,883 |
|
|
|
369,523 |
|
Participant |
|
|
511,201 |
|
|
|
474,021 |
|
|
|
|
|
|
|
|
|
|
|
269,945,187 |
|
|
|
231,103,979 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Administrative expenses payable |
|
|
29,883 |
|
|
|
29,653 |
|
|
|
|
|
|
|
|
Net assets at fair value |
|
|
269,915,304 |
|
|
|
231,074,326 |
|
Adjustment from fair value to contract value |
|
|
329,927 |
|
|
|
2,283,978 |
|
|
|
|
|
|
|
|
Net assets available for benefits |
|
$ |
270,245,231 |
|
|
$ |
233,358,304 |
|
|
|
|
|
|
|
|
See accompanying notes.
4
Packaging Corporation of America
Retirement Savings Plan for Salaried Employees
Statements of Changes in Net Assets Available for Benefits
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Additions |
|
|
|
|
|
|
|
|
Contributions: |
|
|
|
|
|
|
|
|
Participants |
|
$ |
13,566,859 |
|
|
$ |
13,263,403 |
|
Company |
|
|
10,037,335 |
|
|
|
9,629,459 |
|
Rollover |
|
|
773,895 |
|
|
|
733,017 |
|
Net investment income from Master Trust |
|
|
29,690,966 |
|
|
|
49,991,804 |
|
Interest income from participant notes receivable |
|
|
209,079 |
|
|
|
246,599 |
|
|
|
|
|
|
|
|
Total additions |
|
|
54,278,134 |
|
|
|
73,864,282 |
|
Deductions |
|
|
|
|
|
|
|
|
Benefit payments |
|
|
17,082,711 |
|
|
|
11,996,320 |
|
Administrative expenses |
|
|
308,496 |
|
|
|
303,501 |
|
|
|
|
|
|
|
|
Total deductions |
|
|
17,391,207 |
|
|
|
12,299,821 |
|
|
|
|
|
|
|
|
Net increase |
|
|
36,886,927 |
|
|
|
61,564,461 |
|
Net assets available for benefits: |
|
|
|
|
|
|
|
|
Beginning of year |
|
|
233,358,304 |
|
|
|
171,793,843 |
|
|
|
|
|
|
|
|
End of year |
|
$ |
270,245,231 |
|
|
$ |
233,358,304 |
|
|
|
|
|
|
|
|
See accompanying notes.
5
Packaging Corporation of America
Retirement Savings Plan for Salaried Employees
Notes to Financial Statements
December 31, 2010 and 2009
1. Description of the Plan
The following description of the Packaging Corporation of America (the Company or PCA)
Retirement Savings Plan for Salaried Employees (the Plan) provides general information.
Participants should refer to the Summary Plan Description for a more complete description of the
Plans provisions.
General
The Plan is a defined-contribution plan, established February 1, 2000, and is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended. The Plan
covers salaried employees of the Company and each of its domestic subsidiaries that have adopted
the Plan who have completed six months of service, as defined.
Contributions
Upon enrolling in the Plan, participants may contribute between 1% and 50% of annual pretax
compensation, as defined, with such contributions limited to $16,500 in 2010 and 2009 for employees
under age 50 and $22,000 in 2010 and 2009 for employees age 50 and older. Participants may also
rollover qualifying distributions from other qualified plans.
The Company matches participant pretax contributions on the following basis:
|
|
|
The first 4% of pretax contributions are matched at a rate of 80%. |
|
|
|
|
The next 4% of pretax contributions are matched at a rate of 50%. |
In addition to the Companys matching contribution, the Company also makes a retirement
savings contribution to eligible employees after one year of service up to 5% of compensation based
on years of service, as defined. The contribution is made on behalf of the employee regardless of
whether or not the employee is contributing to the Plan.
Participant Accounts
Each participants account is credited with the participants contributions, Company
contributions, and an allocation of Plan earnings (losses) and is charged with an allocation of
administrative expenses. Allocations are based on each participants account balance, as defined,
in relation to the balance of all participants account balances. The benefit to which a
participant is entitled is the benefit that can be provided from the participants account.
Vesting
Participants are immediately 100% vested in the value of their pretax and Company matching
contributions and rollovers from other qualified plans.
The Company retirement savings contribution becomes 100% vested upon completion of three years
of service, or upon reaching 65 years of age, permanent disability, or death while employed by the
Company. Forfeited balances of nonvested terminated participants are applied to reduce future
Company contributions.
Investment Options
Participants may elect to invest their ongoing pretax contributions, the Company retirement
savings contribution, and the value of their entire accumulated account balance in any of the
available investment options provided by the Plan. All matching contributions are
6
invested in the PCA Common Stock Fund. Participants are eligible to transfer or withdraw
the value from the PCA Common Stock Fund immediately following the deposit into their account.
Participants may change their investment options on any business day, subject to certain
short-term trading restrictions outlined in the Summary Plan Description.
Benefit Payments
In the event of retirement (as defined in the Plan), death, permanent disability, or termination of
employment, the vested balance in the participants account will be distributed to the participant
or the participants beneficiary in a single lump-sum cash payment. The portion of the
participants account invested in the PCA Common Stock Fund will be distributed in cash unless an
election is made to be distributed in kind. In-service withdrawals of rollover contributions and
related earnings are available for any reason. In-service withdrawals of certain predecessor plan
account balances, as defined, are available for any reason. Participants age 55 or older may
withdraw the entire value, or any portion thereof, of their Company matching contributions and the
vested value of their Company retirement savings contribution at any time. Participants who have
attained the age of 59 1/2 may withdraw the entire value, or any portion thereof, of their account
balance at any time.
Administrative Expenses
Administrative expenses are paid from Plan assets, to the extent not paid by the Company.
Participant Loans
A participant may borrow an amount up to the lesser of $50,000 or 50% of their vested account
balance. The minimum loan amount is $1,000. Such loans bear interest at the prime rate as published
by The Wall Street Journal and are secured by the participants account balance in the Plan. Loans
must be repaid within 54 months, with principal and interest payments made primarily through
payroll deductions. Employees on unpaid leave may continue to repay loans via personal check or
money order during their period of absence. Participants also have the ability to elect to make a
one-time prepayment of their outstanding loan balance, of which payment can be made via personal
check or money order.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to
discontinue its contributions at any time and to terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
2. Significant Accounting Policies
Recent Accounting Pronouncements
In September 2010, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) 2010-25, Reporting Loans to Participants by Defined Contribution Pension
Plans, (ASU 2010-25). ASU 2010-25 requires participant loans to be measured at their unpaid
principal balance plus any accrued but unpaid interest and classified as notes receivable from
participants. Previously, loans were measured at fair value and classified as investments. ASU
2010-25 is effective for fiscal years ending after December 15, 2010, and is required to be applied
retrospectively. Adoption of ASU 2010-25 did not change the value of participant loans from the
amount previously reported as of December 31, 2009. Participant loans have been reclassified to
notes receivable from participants as of December 31, 2009.
In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic
820) Improving Disclosures about Fair Value Measurements, (ASU 2010-06). This ASU requires some
new disclosures and clarifies some existing disclosure requirements about fair value measurement as
set forth in Accounting Standards Codification (ASC) 820, Fair Value Measurements and
Disclosures. ASU 2010-06 amends ASC 820 to now require: (1) a reporting entity should disclose
separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value
measurements and describe the reasons for the transfers; and (2) in the
7
reconciliation for fair value measurements using significant unobservable
inputs, a reporting entity should present separately information about purchases, sales, issuances,
and settlements. In addition, ASU 2010-06 clarifies the requirements of existing disclosures. ASU
2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009,
except for the disclosures about purchases, sales, issuances, and settlements in the roll forward
of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years
beginning after December 15, 2010, and for interim periods within those fiscal years. Since ASU
2010-06 only affects fair value measurement disclosures, adoption of ASU 2010-06 did not have any
effect on the Plans net assets available for benefits or its changes in net assets available for
benefits.
Basis of Accounting
The financial statements have been prepared on the accrual basis of accounting.
Investment Valuation and Income Recognition
The Plans beneficial interest in the PCA Defined Contribution Master Trust (the Master
Trust) represents the Plans share of the Master Trusts investments stated at fair value. Fair
value is defined as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date (an exit
price). See Note 4 for further discussion and disclosures related to fair value measurements.
The Plan invests in fully benefit-responsive synthetic investment contracts (synthetic
GICs). These synthetic GICs are recorded at fair value (see Note 4); however, since these
contracts are fully benefit-responsive, an adjustment is reflected in the statements of net assets
available for benefits to present these investments at contract value. Contract value is the
relevant measurement attributable to synthetic GICs because contract value is the amount
participants would receive if they were to initiate permitted transactions under the terms of the
Plan. The contract value of the synthetic GICs represents contributions plus earnings, less
participant withdrawals and administrative expenses.
Purchases and sales of securities are recorded on the settlement date. Interest income is
recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Investment Contracts
The JP Morgan Stable Value Fund, a synthetic GIC, provides principal preservation plus accrued
interest through fully benefit-responsive wrap contracts issued by a third party. The account is
credited with interest as specified in the contract and charged for participant withdrawals and
administrative expenses. The investment contract issuer is contractually obligated to repay the
principal plus accumulated interest. The contract value represents contributions made under the
contracts, plus earnings, less participant withdrawals and administrative expenses. Participants
may direct the withdrawal or transfer of all or a portion of their investment at contract value.
There are no reserves against contract value for credit risk of the contract issuer. The
crediting interest rate for the wrap contracts is calculated on a quarterly basis (or more
frequently if necessary) using contract value, market value of the underlying fixed income
portfolio, the yield of the portfolio, and the duration of the index but cannot be less that zero.
In certain circumstances, the amount withdrawn from the wrap contract would be payable at fair
value rather than at contract value. These events include: (i) termination of the Plan, (ii) a
material adverse change to the provisions of the Plan, (iii) if the employer elects to withdraw
from a wrap contract in order to switch to a different investment provider, or (iv) if the terms of
a successor plan (in the event of the spin-off or sale of a division) do not meet the wrap contract
issuers underwriting criteria for issuance of a similar wrap contract.
Examples of events that would permit a wrap contract issuer to terminate a wrap contract upon
short notice include the Plans loss of its qualified status, uncured material breaches of
responsibilities, or material and adverse changes to the provision of the Plan. If one of these
events was to occur, the wrap contract issuer could terminate the wrap contract at the market value
of the underlying investments.
8
The average yields for the JP Morgan Stable Value Fund are as follows:
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
Based on actual earnings |
|
|
2.98 |
% |
|
|
3.80 |
% |
Based on interest rate credited to participants |
|
|
2.63 |
% |
|
|
2.51 |
% |
Contributions
Participant contributions are made through payroll deductions and recorded in the period the
deductions are made. Company contributions are deposited as soon as administratively practicable
after each pay period.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires the Plan Administrator to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual results could differ
from those estimates.
Notes Receivable from Participants
Notes receivable from participants represent participant loans that are recorded at their
unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable
from participants is recorded when it is earned. Related fees are recorded as administrative
expenses and are expensed when they are incurred. No allowance for credit losses has been recorded
as of December 31, 2010 or 2009. If a participant ceases to make loan repayments and the Plan
Administrator deems the participant loan to be a distribution, the participant loan balance is
reduced and a benefit payment is recorded.
3. Master Trust
The Master Trust includes assets of the Plan and the Packaging Corporation of America Thrift
Plan for Hourly Employees. All of the Plans investments are invested in the Master Trust. The
purpose of the Master Trust is the collective investment of assets of participating plans. Each
participating plans interest in the Master Trust is based on the aggregate account balances of the
participants in the respective participating plan. The Master Trust specifically identifies
contributions, benefit payments, and plan-specific expenses attributable to each participating
plan. Investment gains (losses) are allocated to each participating plan in the Master Trust on a
daily basis based on each plans separate interest in the Master Trust. At December 31, 2010, the
Plans interest in the net assets of the Master Trust at fair value was 65.3%, or $263,858,794.
At December 31, 2009, the Plans interest in the net assets of the Master Trust at fair value was 64.1%, or $225,367,635.
The investments held by the Master Trust and the Plans percentage interest in each of the
investments within the Master Trust are presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plans |
|
|
|
|
|
|
Plans |
|
|
|
December 31, |
|
|
Percentage |
|
|
December 31, |
|
|
Percentage |
|
|
|
2010 |
|
|
Interest |
|
|
2009 |
|
|
Interest |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fidelity Growth Company |
|
$ |
70,460,784 |
|
|
|
55.8 |
% |
|
$ |
57,922,428 |
|
|
|
53.1 |
% |
PIMCO Total Return Fund |
|
|
41,973,619 |
|
|
|
65.4 |
|
|
|
34,367,135 |
|
|
|
66.4 |
|
EuroPacific Growth |
|
|
28,512,855 |
|
|
|
67.1 |
|
|
|
32,570,421 |
|
|
|
64.8 |
|
Columbia Small Cap Growth I2 Fund |
|
|
27,777,076 |
|
|
|
65.6 |
|
|
|
15,707,216 |
|
|
|
64.8 |
|
American Balanced R4 |
|
|
16,743,068 |
|
|
|
60.5 |
|
|
|
12,563,818 |
|
|
|
55.8 |
|
Loomis Sayles Value Y Fund |
|
|
14,385,354 |
|
|
|
68.3 |
|
|
|
12,303,875 |
|
|
|
66.1 |
|
Rainer Mid Cap |
|
|
8,532,555 |
|
|
|
71.0 |
|
|
|
3,161,125 |
|
|
|
74.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mutual funds |
|
|
208,385,311 |
|
|
|
62.4 |
|
|
|
168,596,018 |
|
|
|
60.7 |
|
Common collective trust funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JP Morgan Liquidity Fund |
|
|
10,264,862 |
|
|
|
71.9 |
|
|
|
8,910,760 |
|
|
|
80.5 |
|
JP Morgan Intermediate Bond Fund |
|
|
98,720,118 |
|
|
|
51.7 |
|
|
|
95,714,345 |
|
|
|
49.6 |
|
BlackRock Equity Index Fund T |
|
|
19,714,120 |
|
|
|
73.7 |
|
|
|
17,248,812 |
|
|
|
71.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common collective trust funds |
|
|
128,699,100 |
|
|
|
56.7 |
|
|
|
121,873,917 |
|
|
|
55.0 |
|
Common stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PCA |
|
|
60,902,515 |
|
|
|
92.1 |
|
|
|
54,992,007 |
|
|
|
92.8 |
|
Pactiv |
|
|
|
|
|
|
|
|
|
|
4,352,736 |
|
|
|
80.1 |
|
Tenneco |
|
|
882,841 |
|
|
|
76.0 |
|
|
|
646,263 |
|
|
|
78.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common stocks |
|
|
61,785,356 |
|
|
|
91.8 |
|
|
|
59,991,006 |
|
|
|
91.7 |
|
Short-term investment fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments |
|
|
5,073,192 |
|
|
|
80.6 |
|
|
|
988,076 |
|
|
|
96.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value |
|
|
403,942,959 |
|
|
|
65.3 |
|
|
|
351,449,017 |
|
|
|
64.1 |
|
Adjustment from fair value to contract value |
|
|
763,088 |
|
|
|
43.2 |
|
|
|
4,571,186 |
|
|
|
50.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets |
|
$ |
404,706,047 |
|
|
|
65.3 |
% |
|
$ |
356,020,203 |
|
|
|
63.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
9
Investment income for the Master Trust was as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Interest income |
|
$ |
3,501,567 |
|
|
$ |
4,015,147 |
|
Dividends |
|
|
2,373,391 |
|
|
|
2,491,342 |
|
Other income |
|
|
435,361 |
|
|
|
473,856 |
|
Net realized and unrealized appreciation in fair value of: |
|
|
|
|
|
|
|
|
Mutual funds |
|
|
24,542,467 |
|
|
|
34,087,310 |
|
PCA common stock |
|
|
7,588,567 |
|
|
|
24,608,433 |
|
Other common stocks |
|
|
2,302,980 |
|
|
|
361,343 |
|
Common collective trust funds |
|
|
2,555,598 |
|
|
|
3,476,792 |
|
|
|
|
|
|
|
|
Total investment income |
|
$ |
43,299,931 |
|
|
$ |
69,514,223 |
|
|
|
|
|
|
|
|
4. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date (i.e., an
exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to
measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable
inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 Unadjusted quoted prices in active markets that are accessible to the reporting entity
at the measurement date for identical assets and liabilities.
Level 2 Inputs other than quoted prices in active markets for identical assets and liabilities
that are observable either directly or indirectly for substantially the full term of the asset or
liability. Level 2 inputs include the following:
|
|
|
quoted prices for similar assets and liabilities in active markets |
|
|
|
|
quoted prices for identical or similar assets or liabilities in markets that are
not active |
|
|
|
|
observable inputs other than quoted prices that are used in the valuation of the
assets or liabilities (e.g., interest rate and yield curve quotes at commonly quoted
intervals) |
|
|
|
|
inputs that are derived principally from or corroborated by observable market data
by correlation or other means |
Level 3 Unobservable inputs for the asset or liability (i.e., supported by little or no market
activity). Level 3 inputs include managements own assumption about the assumptions that market
participants would use in pricing the asset or liability (including assumptions about risk).
The level in the fair value hierarchy within which the fair value measurement is classified is
determined based on the lowest level input that is significant to the fair value measurement in its
entirety.
Following is a description of the valuation techniques and inputs used for each major class of
assets measured at fair value by the Plan.
10
Mutual funds and common stocks: valued at quotations obtained from national securities
exchanges.
Common collective trust funds: valued at the net asset value (NAV) provided by the
administrator of the fund. The NAV is based on the underlying assets owned by the fund, minus its
liabilities, and then divided by the number of shares outstanding. This category includes three
common/collective trusts.
The JP Morgan Liquidity Fund and the JP Morgan Intermediate Bond Fund, fixed income funds, are
contained within the JP Morgan Stable Value Fund option. This fund seeks to preserve the value of
money invested, perform better than the average money market fund, and earn consistent, reliable
returns. The fund invests in a high quality fixed income portfolio combined with investment
contracts called benefit responsive wraps. Participant directed redemptions have no restrictions;
however the Plan is required to provide up to a one year redemption notice to liquidate its entire
share in the fund.
The BlackRock Equity Index Fund T is an equity fund that seeks to match the performance of the
S&P 500 Index by investing in stocks that make up the index. Participant directed redemptions are
restricted as follows: participants who elect to transfer $5,000 or more out of any single
investment fund on any given trading day must wait 30 calendar days before they will be permitted
to reinvest $5,000 or more back into the same investment fund on any given trading day. The
restriction does not apply to regular contributions, loan payments, loans, withdrawals, or
distributions made out of the funds. The Plan is not required to provide an advance redemption
notice to liquidate its entire share in the fund.
Short-term investments: valued at cost, which approximates fair value.
The following tables set forth by level, within the fair value hierarchy, the Master Trusts
assets carried at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Master trust investments
Mutual funds |
|
|
|
|
|
|
|
|
|
|
|
|
Growth fund U.S. |
|
$ |
84,846,138 |
|
|
$ |
|
|
|
$ |
|
|
Growth fund non U.S. |
|
|
28,512,855 |
|
|
|
|
|
|
|
|
|
Intermediate term bond fund |
|
|
41,973,619 |
|
|
|
|
|
|
|
|
|
Blended fund |
|
|
16,743,068 |
|
|
|
|
|
|
|
|
|
Mid Cap stocks |
|
|
8,532,555 |
|
|
|
|
|
|
|
|
|
Small Cap stocks |
|
|
27,777,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mutual funds |
|
|
208,385,311 |
|
|
|
|
|
|
|
|
|
Common stocks |
|
|
|
|
|
|
|
|
|
|
|
|
Individual corporate stocks U.S. |
|
|
61,785,356 |
|
|
|
|
|
|
|
|
|
Short-term investment fund |
|
|
|
|
|
|
5,073,192 |
|
|
|
|
|
Common collective trust funds |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income |
|
|
|
|
|
|
108,984,980 |
|
|
|
|
|
Equity |
|
|
|
|
|
|
19,714,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common collective trust funds |
|
|
|
|
|
|
128,699,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total master trust investments |
|
$ |
270,170,667 |
|
|
$ |
133,772,292 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Master trust investments
Mutual funds |
|
|
|
|
|
|
|
|
|
|
|
|
Growth fund U.S. |
|
$ |
70,226,303 |
|
|
$ |
|
|
|
$ |
|
|
Growth fund non U.S. |
|
|
32,570,421 |
|
|
|
|
|
|
|
|
|
Intermediate term bond fund |
|
|
34,367,135 |
|
|
|
|
|
|
|
|
|
Blended fund |
|
|
12,563,818 |
|
|
|
|
|
|
|
|
|
Mid Cap stocks |
|
|
3,161,125 |
|
|
|
|
|
|
|
|
|
Small Cap stocks |
|
|
15,707,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mutual funds |
|
|
168,596,018 |
|
|
|
|
|
|
|
|
|
Common stocks |
|
|
|
|
|
|
|
|
|
|
|
|
Individual corporate stocks U.S. |
|
|
59,991,006 |
|
|
|
|
|
|
|
|
|
Short-term investment fund |
|
|
|
|
|
|
988,076 |
|
|
|
|
|
Common collective trust funds |
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income |
|
|
|
|
|
|
104,625,105 |
|
|
|
|
|
Equity |
|
|
|
|
|
|
17,248,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common collective trust funds |
|
|
|
|
|
|
121,873,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total master trust investments |
|
$ |
228,587,024 |
|
|
$ |
122,861,993 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
11
5. Tax Status
The Plan has received a determination letter from the Internal Revenue Service (the IRS)
dated May 9, 2001, stating that the Plan is qualified under Section 401(a) of the Internal Revenue
Code (the Code) and, therefore, that the related trust is exempt from taxation. Subsequent to
this determination by the IRS, the Plan was amended and restated. Once qualified, the Plan is
required to operate in conformity with the Code to maintain its qualification. The Plan
Administrator believes that the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan, as amended and restated, is
qualified and the related trust is tax-exempt.
Accounting principles generally accepted in the United States require plan management to
evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax
position are recognized when the position is more likely than not, based on the technical merits,
to be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions
taken by the Plan, and has concluded that as of December 31, 2010, there are no uncertain positions
taken or expected to be taken. The Plan has recognized no interest or penalties related to
uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however,
there are currently no audits in progress for any tax periods. The Plan Administrator believes it
is no longer subject to federal income tax examinations for years prior to 2007.
6. Risks and Uncertainties
The Master Trust invests in various investment securities. Investment securities are exposed
to various risks such as interest rate, market, and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably possible that changes in
the values of investment securities will occur in the near term and that such changes could
materially affect participants account balances and the amounts reported in the statements of net
assets available for benefits.
7. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for benefits per the financial
statements to Form 5500:
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
|
|
2010 |
|
|
2009 |
|
Net assets available for benefits per the
financial statements |
|
$ |
270,245,231 |
|
|
$ |
233,358,304 |
|
Amounts allocated to withdrawn participants |
|
|
|
|
|
|
(753 |
) |
Adjustment of investments from fair value to
contract value |
|
|
(329,927 |
) |
|
|
(2,283,978 |
) |
|
|
|
|
|
|
|
Net assets available for benefits per the Form 5500 |
|
$ |
269,915,304 |
|
|
$ |
231,073,573 |
|
|
|
|
|
|
|
|
The following is a reconciliation of net increase per the financial statements to Form 5500:
|
|
|
|
|
|
|
Year ended |
|
|
|
December 31, 2010 |
|
Total net increase per the financial statements |
|
$ |
36,886,927 |
|
Adjustment from fair value to contract value for fully
benefit-responsive investment contracts at beginning of the
period |
|
|
2,283,978 |
|
Adjustment from fair value to contract value for fully
benefit-responsive investment contracts at end of period |
|
|
(329,927 |
) |
Amounts allocated to withdrawing participants at December 31, 2009 |
|
|
753 |
|
|
|
|
|
Total net increase per the Form 5500 |
|
$ |
38,841,731 |
|
|
|
|
|
12
8. Related Party Transactions
The Master Trust invests in the common stock of the Company. These transactions qualify as
party-in-interest transactions; however, they are exempt from the prohibited transactions rules
under ERISA. During 2010, the Plan received $1,358,630 in common stock dividends from the Company.
9. Subsequent Events
Effective January 1, 2011, the portion of the Plan currently invested in PCA common stock, and
any future employee or employer contributions used to acquire PCA common stock, is designated as
invested in an Employee Stock Ownership Plan (ESOP). Plan participants will now have the ability
to instruct the Plans trustee to distribute directly to them future cash dividends paid on shares
of PCA common stock credited to their PCA common stock ESOP. The election to receive cash dividends
is made through the PCA Benefits Center, and dividends will be reported as taxable income.
Effective January 1, 2011 the Plan made a change to
the eligibility period for the Company Retirement Savings Contribution. The waiting period
was changed from 1 year of service to 6 months of service.
Also in 2011, the Packaging Corporation of Chicago (formerly Elwood Packaging. Inc.)
Retirement Savings Plan for Salaried Employees will be merged into the Plan. The transfer of assets
is expected to be complete on or about June 30, 2011. Elwood Packaging was acquired by PCA in 2009.
13
Supplemental Schedule
Packaging Corporation of America
Retirement Savings Plan for Salaried Employees
Schedule H, Line 4i Schedule of Assets
(Held at End of Year)
December 31, 2010
|
|
|
|
|
|
|
Current |
|
Description of Issue |
|
Value |
|
Notes receivable from participants Interest rates ranging from 3.25% to 8.50% * |
|
$ |
5,179,309 |
|
|
|
|
|
|
|
|
* |
|
Represents a party in interest to the Plan. |
14
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Benefits
Administration Committee of Packaging Corporation of America has duly caused this annual report to
be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
|
|
|
Packaging Corporation of America
Retirement Savings Plan for Salaried Employees
|
|
Date: June 28, 2011 |
|
/s/ STEPHEN T. CALHOUN
|
|
|
Stephen T. Calhoun |
|
|
Vice President-Human Resources |
|
15
INDEX TO EXHIBIT
|
|
|
Exhibit |
|
|
Number |
|
Description |
23.1
|
|
Consent of Independent Registered Public Accounting Firm |
16