UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): January 24, 2011
Packaging Corporation of America
(Exact name of registrant as specified in its charter)
| Delaware | 1-15399 | 36-4277050 | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification | ||
| No.) |
1900 West Field Court, Lake Forest, Illinois 60045
(Address of Principal Executive Offices, including Zip Code)
(Address of Principal Executive Offices, including Zip Code)
(847) 482-3000
(Registrant’s Telephone Number, Including Area Code)
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2 (b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c)) |
Item 2.02. Results of Operations and Financial Condition.
The information furnished in this Current Report on Form 8-K, including the exhibit
described below, shall not be deemed “filed” hereunder for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing
under the Securities Exchange Act of 1933, as amended, or the Exchange Act, except as shall be
expressly set forth by specific reference in such a filing.
On January 24, 2011, Packaging Corporation of America issued a press release announcing fourth
quarter and full year 2010 financial results. The press release is furnished as Exhibit 99.1 to
this report on Form 8-K and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(D) Exhibits
| 99.1 | Fourth Quarter and Full Year 2010 Earnings Press Release dated January 24, 2011. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PACKAGING CORPORATION OF AMERICA (Registrant) |
||||
| By: | /s/ MARK W. KOWLZAN | |||
| Chief Executive Officer | ||||
| By: | /s/ RICHARD B. WEST | |||
| Senior Vice President and Chief Financial Officer | ||||
Date: January 24, 2011
Exhibit 99.1
PACKAGING CORPORATION OF AMERICA REPORTS RECORD FOURTH QUARTER AND FULL YEAR 2010 RESULTS
Lake Forest, IL, January 24, 2011 — Packaging Corporation of America (NYSE: PKG) today reported
fourth quarter 2010 net income of $55 million, or $0.54 per share. Reported results include a $5
million, or $0.05 per share, addition to income from cellulosic bio-fuel tax credits generated in
2009, and after-tax, non-cash charges totaling $3 million, or $0.03 per share, from asset disposals
related to major energy projects and other assets no longer in service. Reported results for the
fourth quarter of 2009 were $59 million, or $0.57 per share, which included income of $44 million,
or $0.42 per share, from alternative fuel mixture tax credits and energy project asset disposal
charges of $1 million, or $0.01 per share. Net sales in the fourth quarter were a record $627
million, up 18% compared to fourth quarter 2009 net sales of $532 million.
Excluding income from bio-fuel tax credits and asset disposal charges, net income was a record $53
million, or $0.52 per share, compared to fourth quarter 2009 net income of $16 million, or $0.16
per share. This $0.36 per share increase was driven by higher containerboard and corrugated
products price and mix ($0.44) and higher volume ($0.05). These increases were partially offset by
higher costs for recycled fiber ($0.05), labor ($0.04), transportation ($0.02), chemicals ($0.02),
and a higher tax rate ($0.01).
Excluding income from bio-fuel tax credits and asset disposal and closure charges, full year
earnings for 2010 were $166 million, or a record $1.62 per share, compared to $96 million, or $0.94
per share in 2009. Net sales in 2010 were a record $2.44 billion compared to $2.15 billion in
2009.
Corrugated products shipments were up 3.1%, compared to last year’s fourth quarter, and outside
sales of containerboard were up 8.6%. Containerboard production was 639,000 tons, up 39,000 tons,
or 6.4%, over the fourth quarter of 2009. PCA ended the year with its containerboard inventories
about 25,000 tons above 2009 year-end levels.
Mark W. Kowlzan, CEO of PCA, said, “We had another outstanding quarter driven by record corrugated
product shipments, strong outside containerboard sales, and highly productive and efficient mill
operations. We were also able to build about half of the containerboard inventory needed to offset
production losses during the two planned recovery boiler rebuilds at our Counce, TN mill in the
second half of 2011. Finally, we set records for both sales and earnings per share in the fourth
quarter and for the full year as our volumes returned to pre-economic downturn levels.”
“Looking ahead to the first quarter,” Mr. Kowlzan added, “our Valdosta, GA and Counce, TN mills
will be down for annual maintenance outages in the first quarter which will lower production and
increase costs. Higher fiber and energy costs associated with colder weather, along with higher
timing related benefit costs and a higher tax rate, are also expected. Considering these items, we
currently estimate our first quarter earnings at about $0.42 per share.”
PCA is the fifth largest producer of containerboard and corrugated packaging products in the United
States with sales of $2.44 billion in 2010. PCA operates four paper mills and 67 corrugated
products plants in 26 states across the country.
CONTACT:
Barbara Sessions
Packaging Corporation of America
INVESTOR RELATIONS: (877) 454-2509
PCA’s Website: www.packagingcorp.com
Packaging Corporation of America
INVESTOR RELATIONS: (877) 454-2509
PCA’s Website: www.packagingcorp.com
Conference Call Information:
WHAT:
|
Packaging Corporation of America’s 4th Quarter and Full Year 2010 Earnings Conference Call |
|
WHEN:
|
Tuesday, January 25, 2011 10:00 a.m. Eastern Time |
|
NUMBER:
|
(866) 244-4630 (U.S. and Canada) or (703) 639-1177 (International) Dial in by 9:45 a.m. Eastern Time Conference Call Leader: Mr. Mark Kowlzan |
|
WEBCAST:
|
http://www.packagingcorp.com |
REBROADCAST DATES:
|
January 25, 2011 2:00 p.m. Eastern Time through February 8, 2011 11:59 p.m. Eastern Time |
|
REBROADCAST NUMBER:
|
(888) 266-2081 (U.S. and Canada) or for International: (703) 925-2533 Passcode: 1506444 |
Some of the statements in this press release are forward-looking statements. Forward-looking
statements include statements about our future earnings and 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; the possibility of unplanned outages or
interruptions at our principal facilities; 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, 2009 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
Consolidated Earnings Results
Unaudited
| Three Months Ended Dec. 31, | ||||||||
| (in millions, except per share data) | 2010 | 2009 | ||||||
Net sales |
$ | 626.7 | $ | 532.2 | ||||
Cost of sales (1) |
(479.4 | ) | (444.7 | ) | ||||
Gross profit |
147.3 | 87.5 | ||||||
Selling and administrative expenses |
(46.3 | ) | (43.1 | ) | ||||
Corporate overhead |
(14.6 | ) | (12.5 | ) | ||||
Other income, net (2) |
10.0 | 38.9 | ||||||
Income before interest and taxes |
96.4 | 70.8 | ||||||
Interest expense, net |
(7.6 | ) | (9.0 | ) | ||||
Income before taxes |
88.8 | 61.8 | ||||||
Provision for income taxes (3) |
(33.9 | ) | (3.1 | ) | ||||
Net income |
$ | 54.9 | $ | 58.7 | ||||
Earnings per share: |
||||||||
Basic |
$ | 0.54 | $ | 0.58 | ||||
Diluted |
$ | 0.54 | $ | 0.57 | ||||
Basic common shares outstanding |
101.0 | 101.8 | ||||||
Diluted common shares outstanding |
102.0 | 102.7 | ||||||
Supplemental financial information: |
||||||||
Cash balance |
$ | 196.6 | $ | 260.7 | ||||
Capital spending |
$ | 89.3 | $ | 45.6 | ||||
Notes to Consolidated Earnings Results
(1) Includes expense of $1.2 million in fourth quarter 2010 and $2.0 million in fourth quarter 2009 from energy
project asset disposals.
(2) Fourth quarter 2010 results include additional income of $16.4 million from fuel tax credits related to the
amendment of the 2009 Federal tax return for the Filer City mill bio-fuel gallons, partially offset by disposal charges
of $3.6 million primarily related to other assets no longer in service. Fourth quarter 2009 results include
income of $41.6 million related to the recording of the alternative fuel mixture tax credits for the Counce,
Valdosta and Tomahawk mill gallons.
(3) Fourth quarter 2010 results include a tax expense of $10.6 million from fuel tax credits related to the amendment of the 2009
Federal tax return for the Filer City mill bio-fuel gallons generated in 2009, and a tax benefit of $1.7 million from asset disposals
related to the energy projects and other assets no longer in service. Fourth quarter 2009 results include a tax benefit
of $2.8 million related to expenses associated with the alternative fuel mixture tax credits and energy project asset disposal charges.
Packaging Corporation of America
Consolidated Earnings Results
Unaudited
Consolidated Earnings Results
Unaudited
| Full Year Ended Dec. 31, | ||||||||
| (in millions, except per share data) | 2010 | 2009 | ||||||
Net sales |
$ | 2,435.6 | $ | 2,147.6 | ||||
Cost of sales (1) |
(1,903.4 | ) | (1,721.0 | ) | ||||
Gross profit |
532.2 | 426.6 | ||||||
Selling and administrative expenses |
(182.5 | ) | (173.4 | ) | ||||
Corporate overhead |
(58.1 | ) | (54.6 | ) | ||||
Other income (expense), net (2) |
(106.2 | ) | 153.9 | |||||
Income before interest and taxes |
185.4 | 352.5 | ||||||
Interest expense, net |
(32.3 | ) | (35.5 | ) | ||||
Income before taxes |
153.1 | 317.0 | ||||||
(Provision) benefit for income taxes (3) |
52.3 | (51.1 | ) | |||||
Net income |
$ | 205.4 | $ | 265.9 | ||||
Earnings per share: |
||||||||
Basic |
$ | 2.02 | $ | 2.62 | ||||
Diluted |
$ | 2.00 | $ | 2.60 | ||||
Basic common shares outstanding |
101.7 | 101.6 | ||||||
Diluted common shares outstanding |
102.6 | 102.4 | ||||||
Supplemental financial information: |
||||||||
Capital Spending |
$ | 320.2 | $ | 114.2 | ||||
Notes to Consolidated Earnings Results
| (1) | Includes expense of $5.5 million in 2010 and $2.0 million in 2009 from energy project asset disposals. | |
| (2) | Full year 2010 results include expenses of $86.3 million from recording cellulosic bio-fuel producer credits, and $7.7 million in asset disposal charges related to plant closures and other assets no longer in service. Full year 2009 results include income of $168.4 million related to the recording of the alternative fuel mixture tax credits for the Counce, Valdosta and Tomahawk mill gallons. | |
| (3) | Full year 2010 results include a tax benefit of $135.5 million from recording cellulosic bio-fuel producer credits and a tax benefit of $4.7 million from asset disposals related to the energy projects, plant closures and other assets no longer in service. Full year 2009 results include a tax benefit of $3.5 million related to expenses associated with the alternative fuel mixture tax credits and energy project asset disposals. |
Packaging Corporation of America
Reconciliation of Non-GAAP Financial Measures (1)
Unaudited
Reconciliation of Non-GAAP Financial Measures (1)
Unaudited
| Three Months Ended December 31, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
| (in millions, except per share data) | Net Income | EPS | Net Income | EPS | ||||||||||||
As reported |
$ | 54.9 | $ | 0.54 | $ | 58.7 | $ | 0.57 | ||||||||
Special items: |
||||||||||||||||
Alternative fuel mixture credits (2) |
(16.4 | ) | (0.16 | ) | (43.7 | ) | (0.42 | ) | ||||||||
Cellulosic biofuel credits(3) |
11.3 | 0.11 | — | — | ||||||||||||
Asset disposal charges (4) |
3.2 | 0.03 | 1.2 | 0.01 | ||||||||||||
Total special items |
(1.9 | ) | (0.02 | ) | (42.5 | ) | (0.41 | ) | ||||||||
Excluding special items |
$ | 53.0 | $ | 0.52 | $ | 16.2 | $ | 0.16 | ||||||||
| Year Ended December 31, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
| (in millions, except per share data) | Net Income | EPS | Net Income | EPS | ||||||||||||
As reported |
$ | 205.4 | $ | 2.00 | $ | 265.9 | $ | 2.60 | ||||||||
Special items: |
||||||||||||||||
Alternative fuel mixture credits (2) |
86.3 | 0.85 | (171.2 | ) | (1.67 | ) | ||||||||||
Cellulosic biofuel credits(3) |
(134.0 | ) | (1.31 | ) | — | — | ||||||||||
Asset disposal charges (4) |
8.6 | 0.08 | 1.2 | 0.01 | ||||||||||||
Total special items |
(39.1 | ) | (0.38 | ) | (170.0 | ) | (1.66 | ) | ||||||||
Excluding special items |
$ | 166.3 | $ | 1.62 | $ | 95.9 | $ | 0.94 | ||||||||
Notes to Reconciliation of Non-GAAP Financial Measures
| (1) | Net income and earnings per share excluding special items are non-GAAP financial measures. The after-tax effect of special items are excluded as management considers such items to be unusual in nature. Management uses these measures to focus on PCA’s 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) | 2010 amount represents the income statement impact from allocating the alternative fuel gallons produced in 2009 between the alternative fuel mixture tax credit and the cellulosic biofuel producer credit. 2009 amount represents income from recording the alternative fuel mixture tax credits. | |
| (3) | Represents the income impact on an after-tax basis from recording a portion of the alternative fuel gallons produced in 2009 as cellulosic biofuel producer credits. | |
| (4) | Represents charges from asset disposals related to the energy projects and, additionally for 2010 only, plant closures and other assets no longer in service. |