Segment Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

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

Packaging. We manufacture and sell a wide variety of corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays with strong visual appeal that help to merchandise the packaged product in retail locations. In addition, we are a large producer of packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.

Paper. We manufacture and sell a range of white papers, including communication papers, and pressure sensitive papers, and market pulp. Our white papers can be manufactured as either commodity papers or specialty papers with specialized or custom features, such as colors, coatings, high brightness, or recycled content. We ship to customers both directly from our mills and through distribution centers. In 2015, our sales to Office Depot, our largest paper segment customer, represented 45% of our Paper segment sales revenue.

Corporate and Other. Our Corporate and Other segment includes corporate support staff services and related assets and liabilities, and foreign exchange gains and losses. This segment also includes transportation assets, such as rail cars and trucks, which we use to transport our products from some of our manufacturing sites and assets related to LTP. See Note 17, Transactions With Related Parties, for more information related to LTP. Sales in this segment relate primarily to LTP and our rail and truck business. We provide transportation services not only to our own facilities but also, on a limited basis, to third parties when geographic proximity and logistics are favorable. Rail cars and trucks are generally leased.

Each segments' profits and losses are measured on operating profits before interest expense and interest income. For many of these allocated expenses, the related assets and liabilities remain in the Corporate and Other segment.

Segment sales to external customers by product line were as follows (dollars in millions):

	Year Ended December 31
	2015		2014		2013
Packaging sales	$	4,477.3	$	4,540.3	$	3,431.7
Paper sales
White papers	1,089.6		1,138.5		207.0
Market pulp	53.5		62.9		9.9
	1,143.1		1,201.4		216.9
Corporate and Other	121.3		110.9		16.7
	$	5,741.7	$	5,852.6	$	3,665.3

Sales to foreign unaffiliated customers during the years ended December 31, 2015, 2014, and 2013 were$177.2 million, $378.8 million, and $162.4 million, respectively.At December 31, 2015, we do not have significant long-lived assets held by foreign operations. At December 31, 2014, the net carrying value of long-lived assets held by foreign operations, all of which were in our Packaging segment, was $12.4 million. The sales to foreign unaffiliated customers and the net carrying value of long-lived assets held by foreign operations decreased in 2015 as we completed the sale of our Hexacomb corrugated manufacturing operations in Europe and Mexico on April 1, 2015.

An analysis of operations by reportable segment is as follows (dollars in millions):

	Sales, net								Operating Income (Loss)				Depreciation, Amortization, and Depletion		Capital Expenditures (l)		Assets
Year Ended December 31, 2015	Trade		Inter- segment			Total
Packaging	$	4,474.1	$	3.2		$	4,477.3		$	714.9		(a)	$	297.3	$	250.3	$	4,027.9
Paper	1,143.1		—			1,143.1			112.5			(b)	54.9		58.5		976.5
Corporate and Other	124.5		133.8			258.3			(77.4		)	(c)	4.3		5.7		280.2
Intersegment eliminations	—		(137.0		)	(137.0		)	—				—		—		—
	$	5,741.7	$	—		$	5,741.7		750.0				$	356.5	$	314.5	$	5,284.6
Interest expense, net									(85.5		)
Income before taxes									$	664.5

	Sales, net								Operating Income (Loss)				Depreciation, Amortization, and Depletion		Capital Expenditures (l)		Assets
Year Ended December 31, 2014	Trade		Inter- segment			Total
Packaging	$	4,534.5	$	5.8		$	4,540.3		$	663.2		(d)	$	323.0	$	362.1	$	4,105.3
Paper	1,201.4		—			1,201.4			135.4				50.6		51.7		968.6
Corporate and Other	116.7		144.9			261.6			(95.9		)	(e)	7.4		6.4		198.9
Intersegment eliminations	—		(150.7		)	(150.7		)	—				—		—		—
	$	5,852.6	$	—		$	5,852.6		702.7				$	381.0	$	420.2	$	5,272.8
Interest expense, net									(88.4		)	(f)
Income before taxes									$	614.3

	Sales, net								Operating Income (Loss)				Depreciation, Amortization, and Depletion		Capital Expenditures (l)		Assets
Year Ended December 31, 2013 (g)	Trade		Inter- segment			Total
Packaging	$	3,431.3	$	0.4		$	3,431.7		$	554.2		(h)	$	190.2	$	222.2	$	3,988.5
Paper	216.9		—			216.9			13.5			(i)	9.1		10.0		938.4
Corporate and Other	17.1		28.0			45.1			(85.8		)	(j)	2.5		2.2		269.3
Intersegment eliminations	—		(28.4		)	(28.4		)	—				—		—		—
	$	3,665.3	$	—		$	3,665.3		481.9				$	201.8	$	234.4	$	5,196.2
Interest expense, net									(58.3		)	(k)
Income before taxes									$	423.6

____________

(a) Includes net charges of $2.0 million primarily related to restructuring activities at our mill in DeRidder, Louisiana and $4.1 million of Boise acquisition integration-related and other costs.

(b) In September 2015, we sold the remaining land, buildings, and equipment at our paper mill site in St. Helens, Oregon where we ceased paper production in December 2012. We recorded a $6.7 million gain on the sale.

(c) Includes $9.3 million of Boise acquisition integration-related and other costs. These costs primarily relate to professional fees, severance, retention, relocation, travel, and other integration-related costs.

(d) Includes $65.8 million of costs related primarily to the conversion of the No. 3 newsprint machine at our DeRidder, Louisiana mill to produce lightweight linerboard and corrugating medium, and our exit from the newsprint business in September 2014. Includes $4.9 million of Boise acquisition integration-related and other costs.

(e) Includes $13.5 million of Boise acquisition integration-related and other costs and $17.6 million of costs for the settlement of the Kleen Products LLC v Packaging Corp. of America et al class action lawsuit. See Note 19, Commitments, Guarantees, Indemnifications, and Legal Proceedings, for more information.

(f) Includes $1.5 million of expense related to the write-off of deferred financing costs in connection with the debt refinancing discussed in Note 10, Debt.

(g) On October 25, 2013, we acquired Boise Inc. (Boise). Our financial results include Boise subsequent to acquisition.

(h) Includes $18.0 million of expense for the acquisition inventory step-up and $1.4 million of integration-related and other costs incurred in connection with the acquisition of Boise in fourth quarter 2013.

(i) Includes $3.5 million of expense for acquisition inventory step-up and $1.9 million of income for integration-related and other costs.

(j) Includes $17.2 million of acquisition-related costs and $17.9 million of integration-related and other costs.

(k) Includes $10.5 million of expenses for financing the Boise acquisition and $1.1 million of expense for the write-off of deferred financing costs.

(l) Includes "Additions to property, plant, and equipment" and excludes cash used for "Acquisitions of businesses, net of cash acquired" as reported on our Consolidated Statements of Cash Flows.