LAKE FOREST, Ill.--(BUSINESS WIRE)--Jan. 21, 2004--Packaging
Corporation of America (NYSE: PKG) reported today breakeven fourth
quarter earnings after taking a one-time, after-tax charge of $10
million or $0.09 per share. This charge covers the settlement with
Pactiv Corporation of several benefit cost related matters dating back
to April 12, 1999 when PCA became a standalone company. Excluding this
one-time charge, earnings were $10 million or $0.09 per share compared
to $12 million or $0.12 per share in the fourth quarter of 2002. Net
sales for the fourth quarter were $431 million compared to $418
million in 2002.
As shown in the attached table, adjusted net income for 2003 was
$42 million or $0.40 per share compared to $48 million or $0.45 per
share in 2002. Adjusted net income for 2003 excludes one-time charges
of $0.44 per share in the third quarter for PCA's debt refinancing and
$0.09 per share in the fourth quarter for the benefit cost settlement.
Including these one-time charges, net income for 2003 was a loss of
$14 million or $0.14 per share. Full year sales were $1.7 billion, the
same as 2002.
PCA generated $245 million in cash from operating activities in
2003. Of this amount, $113 million was used for capital expenditures.
PCA ended the year with cash-on-hand of $172 million, and with $698
million in long-term debt.
Lower earnings for the quarter, compared to a year ago, were
primarily the result of lower prices which were partially offset by
higher containerboard and corrugated products volume and lower
interest expense. Lower earnings for the full year compared to 2002
were driven primarily by lower prices and increased costs for wood
fiber and energy, and higher depreciation expense. The negative
earnings impact of these items was partially offset by higher volume
and lower interest expense.
During the fourth quarter, PCA's corrugated products volume per
workday was up 7.5% compared to last year, and up 1.7% for the full
year. Containerboard production in the fourth quarter was 578,000
tons, and total production for 2003 was 2.2 million tons. PCA ended
the year with its containerboard inventories 7,000 tons below 2002
year-end levels.
Paul T. Stecko, Chairman and CEO of PCA, commenting on the fourth
quarter, said, "We are very pleased with the continued, strong
improvement in business conditions during the quarter. PCA's
corrugated products shipments per workday were up approximately 7% to
8% every month, and we had an all time record volume for a month of
December. We also exited the year with our containerboard inventories
at very low levels considering that we have two annual mill
maintenance outages scheduled in the first quarter of 2004."
"Looking ahead to 2004", Mr. Stecko added, "our earnings are
typically the lowest in the first quarter as a result of seasonally
higher energy and wood costs as well as higher operating costs and
less production related to our annual mill maintenance outages. We
also expect to see lower containerboard and corrugated product prices,
compared to the fourth quarter, driven, in part, by the published
December containerboard price decrease of $10 per ton as well as some
price erosion in corrugated products which occurred in the fourth
quarter. We have announced a $50 per ton price increase for
containerboard effective March 1st, but the substantial portion of any
increase would be realized in the second quarter as this increase
flows through to box prices. Considering these items, we currently
expect first quarter earnings to be a loss of about $0.02 per share."
PCA is the sixth largest producer of containerboard and corrugated
packaging products in the United States with sales of $1.7 billion in
2003. PCA operates four paper mills and 65 corrugated product plants
in 25 states across the country.
Conference Call Information:
WHAT: Packaging Corporation of America Earnings Conference Call
WHEN: Thursday, January 22, 2004 9:00 a.m. Eastern Time
NUMBER: (888) 243-0814 (U.S. and Canada) and (703) 925-2401
(International)
Dial in by 8:45 a.m. Eastern Time
Conference Call Leader: Mr. Paul Stecko
WEBCAST: http://www.packagingcorp.com
REBROADCAST DATES: January 22, 2004 12:00 p.m. Eastern Time
through
February 5, 2004 11:59 a.m. Eastern Time
REBROADCAST NUMBER: (888) 266-2081 (U.S. and Canada), or (703)
925-2533 (International)
Passcode: 362727
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; fluctuation
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
the exhibit "Risk Factors" in PCA's 2002 Annual Report on Form 10-K
and its Registration Statement of Form S-4, each filed with the
Securities and Exchange Commission and available at the SEC's website
at "www.sec.gov".
Packaging Corporation of America
Consolidated Earnings Results
Unaudited
Three Months Ended
(in millions, except per share data) December 31,
---------------------
2003 2002
---- ----
Net Sales $431.2 $418.2
------ ------
Operating Income (1) 6.5 35.5
Interest Expense (7.6) (16.4)
Income Tax (Expense) Benefit 1.3 (6.7)
------ ------
Net Income (Loss) $0.2 $12.4
====== ======
Earnings per Share:
Basic Earnings per Share $0.00 $0.12
====== ======
Diluted Earnings per Share $0.00 $0.12
====== ======
Basic Common Shares Outstanding 105.2 104.5
Diluted Common Shares Outstanding 106.7 106.4
Supplemental Financial Information:
Capital Spending $35.1 $35.0
Long Term Debt $698.0 $742.2
Cash Balance $172.0 $131.3
Twelve Months Ended
December 31,
-------------------
(in millions, except per share data) 2003 2002
---- ----
Net Sales $1,735.5 $1,735.9
-------- --------
Operating Income (1) 96.9 145.3
Interest Expense (121.8) (67.7)
Income Tax (Expense) Benefit 10.5 (29.4)
---- -----
Net Income (Loss) $(14.4) $48.2
====== =====
Earnings per Share:
Basic Earnings per Share $(0.14) $0.46
====== =====
Diluted Earnings per Share $(0.14) $0.45
====== =====
Basic Common Shares Outstanding 104.6 105.1
Diluted Common Shares Outstanding 104.6 107.2
Supplemental Financial Information:
Capital Spending $113.2 $107.4
Notes to Consolidated Earnings Results:
(1) "Operating Income" is defined as income before interest and
taxes
Packaging Corporation of America
Reconciliation of Net Income (Loss) as Reported
to Adjusted Net Income Before Nonrecurring Items (1)
Unaudited
Three Months Ended Twelve Months Ended
(in millions) December 31, December 31,
------------------ -------------------
2003 2002 2003 2002
---- ---- ---- ----
Net Income (Loss) as Reported $0.2 $12.4 $(14.4) $48.2
Nonrecurring Expense Items:
Cash Tender Offer Premium (2) -- -- 34.1 --
Write-off Deferred Financing
Fees due to Early
Extinguishment of Debt (3) -- -- 10.6 --
Fees and Expenses Related to
PCA's Refinancing
Efforts (4) -- -- 2.0 --
One-Time Charge for Benefits
Cost Settlement(5) 9.8 -- 9.8 --
----- ---- ----- ----
Total Nonrecurring Expense Items 9.8 -- 56.5 --
----- ---- ----- ----
Adjusted Net Income Before Nonrecurring
Expense Items $10.0 $12.4 $42.1 $48.2
===== ===== ===== =====
Diluted Earnings Per Share Before
Nonrecurring Expense Items $0.09 $0.12 $0.40 $0.45
===== ===== ===== =====
Notes to Reconciliation of Net Income (Loss) as Reported to Adjusted
Net Income Before Nonrecurring Items
1. Adjusted net income excludes the after-tax effect of expense
related to the Company's refinancing transaction in the third
quarter of 2003, and a one-time benefit cost settlement charge
in the fourth quarter of 2003 as management considers such
expense to be unusual in nature. Management uses this measure
to focus on on-going operations, and believes that it is
useful to investors because it enables them to perform
meaningful comparisons of past and present operating results.
2. Represents the premium paid for the tender of the 9 5/8% Series
B Senior Subordinated Notes completed July 22, 2003.
3. Represents the write-off of deferred financing fees related to
the 9 5/8% Series B Senior Subordinated Notes and PCA's
Amended and Restated Credit Agreement dated as of April 12,
1999 and amended and restated as of June 29, 2000.
4. Represents fees that were expensed related to the refinancing.
Other fees specifically related to the notes offering and the
new bank facility were capitalized. These fees will be
amortized over the lives of the respective agreements.
5. Represents a one-time after-tax charge to settle benefit cost
related matters between Pactiv Corporation and PCA dating back
to April 12, 1999 when PCA became a stand-alone company.
CONTACT: Packaging Corporation of America
Barbara Sessions (IR), 877-454-2509
www.packagingcorp.com
SOURCE: Packaging Corporation of America
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