Exhibit 10.1

 

PACKAGING CORPORATION OF AMERICA REPORTS FIRST QUARTER 2006  RESULTS

 

Lake Forest, IL April 18, 2006 – Packaging Corporation of America (NYSE: PKG)
today reported first quarter 2006 net income of $9 million, or $0.09 per share,
compared to first quarter 2005 net income of $13 million, or $0.12 per share.
Net sales for the first quarter were $508 million, up 4%, compared to $489
million in the first quarter of 2005.

 

Lower earnings, compared to last year’s first quarter, were driven primarily by
higher costs for energy of $0.05 per share, transportation of $0.03 per share,
labor and benefits, including the change in accounting for stock option expense,
of $0.03 per share, and overhead and interest expense of $0.02 per share. These
costs were partially offset by higher pricing and sales volume for both
containerboard and corrugated products, which together improved earnings by
$0.10 per share and lower recycled fiber costs which improved earnings by $0.02
per share. In addition, last year’s first quarter results included a dividend
from Southern Timber Venture which amounted to about one and a half cents per
share.

 

PCA’s corrugated products shipments were up 4.9% compared to last year’s first
quarter, and up 1.6% on a per workday basis after accounting for two more
workdays during this year’s first quarter. Containerboard production was 579,000
tons, up 2.4% from last year’s first quarter, and PCA’s containerboard
inventories at the end of the quarter fell by 15,000 tons compared to year-end
2005 levels.

 

Paul T. Stecko, Chairman and CEO of PCA, said, “We had a solid quarter
operationally and, as of April 1, completed essentially all of the pass through
of our January containerboard price increase to boxes. Our corrugated products
shipments also surpassed last year’s first quarter record volume. Energy and
transportation costs were higher compared to last year’s first quarter, but rose
only slightly compared to the fourth quarter of 2005.”

 

“Looking forward,” Mr. Stecko added, “both the Valdosta and Tomahawk mills will
take their annual maintenance outages in the second quarter, which will reduce
production and increase operating expenses. We expect higher prices as a result
of our April $50 per ton containerboard price increase, but the bulk of this
increase will not be fully realized until the third quarter when the pass
through to boxes is completed. Finally, corrugated products shipments should be
seasonally stronger in the second quarter. Considering all of these items, we
currently expect second quarter earnings of about $0.22 per share.”

 

PCA is the sixth largest producer of containerboard and corrugated packaging
products in the United States with sales of $2.0 billion in 2005. PCA operates
four paper mills and 68 corrugated product plants in 27 states across the
country.

 

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CONTACT:

 

Barbara Sessions

Packaging Corporation of America

INVESTOR RELATIONS:  (877) 454-2509

PCA’s Website: www.packagingcorp.com

 

Conference Call Information:

 

WHAT:

 

Packaging Corporation of America 1st Quarter 2006 Earnings Conference Call

 

 

 

WHEN:

 

Wednesday, April 19, 2006

 

 

10:00 a.m. Eastern Time

 

 

 

NUMBER:

 

(866) 835-8845 (U.S. and Canada) or (703) 639-1408 (International)

 

 

Dial in by 9:45 a.m. Eastern Time

 

 

Conference Call Leader: Mr. Paul Stecko

 

 

 

WEBCAST:

 

http://www.packagingcorp.com

 

REBROADCAST DATES:

 

April 19, 2006  1:00 p.m. Eastern Time through

 

 

May 4, 2006  12:00 a.m. Eastern Time

 

 

 

REBROADCAST NUMBER:

 

(888) 266-2081 (U.S. and Canada) or (703) 925-2533 (International)

 

 

Passcode: 887500

 

Some of the statements in this press release are forward-looking statements.
Forward-looking statements include statements about our future financial
condition, our industry and our business strategy. Statements that contain words
such as “ will”, “should”, “anticipate”, “believe”, “expect”, “intend”,
“estimate”, “hope” or similar expressions, are forward-looking statements. These
forward-looking statements are based on the current expectations of PCA. Because
forward-looking statements involve inherent risks and uncertainties, the plans,
actions and actual results of PCA could differ materially. Among the factors
that could cause plans, actions and results to differ materially from PCA’s
current expectations 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; and
legislative or regulatory requirements, particularly concerning environmental
matters, as well as those identified under Item 1A. Risk Factors in PCA’s Annual
Report on Form 10-K for the year ended December 31, 2005 filed with the
Securities and Exchange Commission and available at the SEC’s website at
“www.sec.gov”.

 

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Packaging Corporation of America

CONSOLIDATED EARNINGS RESULTS

Unaudited

 

 

 

Three Months Ended March 31,

 

(in millions, except per share data)

 

2006

 

2005

 

 

 

 

 

 

 

Net sales

 

$

507.9

 

$

489.4

 

Cost of sales

 

(434.3

)

(416.1

)

 

 

 

 

 

 

Gross profit

 

73.6

 

73.3

 

Selling and administrative expenses

 

(37.7

)

(35.3

)

Other income (expense), net

 

(2.2

)

1.1

 

Corporate overhead

 

(11.2

)

(11.6

)

 

 

 

 

 

 

Income before interest and taxes

 

22.5

 

27.5

 

Interest expense, net

 

(8.1

)

(7.0

)

 

 

 

 

 

 

Income before taxes

 

14.4

 

20.5

 

Provision for income taxes

 

(5.4

)

(7.9

)

 

 

 

 

 

 

Net income

 

$

9.0

 

$

12.6

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic earnings per share

 

$

0.09

 

$

0.12

 

Diluted earnings per share

 

$

0.09

 

$

0.12

 

 

 

 

 

 

 

Basic common shares outstanding

 

103.4

 

107.0

 

Diluted common shares outstanding

 

104.2

 

108.1

 

 

 

 

 

 

 

Supplemental financial information:

 

 

 

 

 

Capital spending

 

$

17.3

 

$

36.9

 

Long term debt

 

695.3

 

694.9

 

Cash balance

 

67.9

 

180.2

 

 

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