News Release Details

Packaging Corporation of America Reports 23% Improvement in Earnings Doubled Compared to First Quarter 2000 Results

April 16, 2001

Lake Forest, IL. April 16, 2001 – Packaging Corporation of America (NYSE:PKG) reported first quarter net income of $28 million, or $0.26 per share. The reported net income represents a 23% improvement over first quarter 2000 net income of $23 million, or $0.22 per share. Net sales for the first quarter were $455 million, compared to $476 million in the first quarter of 2000. First quarter results for 2000 exclude a one-time charge of $16 million related to the redemption of PCA's 12-3/8% senior preferred stock using proceeds from the initial public offering of its common stock in January 2000.

The improved earnings for the quarter compared to a year ago were driven by lower interest expense and higher prices for containerboard and corrugated products, partially offset by lower containerboard production and corrugated products volume, and slightly higher energy costs.

During the first quarter of 2001, annual maintenance outages were completed at the Counce and Valdosta linerboard mills. Including these outages, as well as other market related downtime and machine slowbacks, containerboard production in the first quarter of 2001 was down 32,000 tons compared to the first quarter of 2000, and down 46,000 tons compared to the fourth quarter of 2000. PCA ended the quarter with its total containerboard inventory at an all time low level.

The effect of higher energy prices on PCA has been relatively modest. Purchased energy costs in the first quarter, including both fuels and purchased electricity, compared to the fourth quarter of 2000, were up only about $1 million, impacting earnings by less than one cent per share. Compared to the first quarter of 2000, higher energy costs lowered earnings by about three cents per share.

Paul T. Stecko, Chairman and CEO of PCA, said, "We are very pleased that our earnings were up 23% over last year's first quarter despite the much larger amount of maintenance and market related downtime we took in the first quarter of 2001. Our containerboard inventories are now at historically low levels as we enter the typically stronger second quarter. As a result, I expect the operating rate in our mill system to increase, which will benefit us in the second quarter."

PCA is the sixth largest producer of containerboard and corrugated packaging products in the United States with sales of $1.9 billion in 2000. PCA operates four paper mills and 65 corrugated product plants in 25 states across the country.

Packaging Corporation of America

Consolidated Earnings Results

Unaudited

3 Months Ended March 31,

(in Millions, except per share data)

2001

2000

Net Sales

 (1)

$ 454.7

$ 475.9

Operating Income

(2)		 $   66.0

$   72.7

Interest Expense

 19.6

30.2

Income Tax Expense

18.3

  17.3

Income Before Cumulative Effect of a      Change in Accounting Principle 28.1 25.2
Cumulative   Effect  of a  Change  in        Accounting Principle, Net of Tax (3) (0.5) -

Net Income

27.6

25.2

Preferred Stock Dividends and       Accretion of Preferred Stock          Issuance Costs

 -

 

18.6

 

(5)
Net Income Available to Common Stockholders $  27.6 $  6.6 (5)

Earnings Per Share:

Basic Earnings Per Share $  0.26 $  0.07 (5)
Diluted Earnings Per Share $  0.25 $  0.06 (5)
Net Income Available to Common Stockholders Excluding Non-Recurring items related to the change in Accounting Principle and the Redemption of Preferred Stock $  28.1


$  22.9


(6)
Diluted Earnings Per Share Excluding Non-Recurring items related to the Change in Accounting Principle and the Redemption of Preferred Stock $  0.26


$  0.22


(6)

EBITDA

(4)		 $ 100.2

$ 108.5

Basic Common Shares Outstanding 106.4

101.6

Diluted Common Shares Outstanding 109.0

104.9

(1)

 Includes the adoption of EITF 00-10 in 2000, classifying all shipping and handling billings to a customer in a sales transaction as revenue and all shipping and handling costs as cost of sales.  Net sales and cost of sales include $18.2 million and $19.8 million of such shipping and handling amounts for the first quarter of 2001 and 2000, respectively.

(2)

"Operating income" is defined as income before interest, taxes and extraordinary items.

(3)

Represents the impact of the adoption of FAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" on January 1, 2001.

(4)

 "EBITDA" is defined as operating income plus depreciation, depletion and amortization.

(5)

Includes non-recurring charges of $13.1 million for a required redemption fee to redeem the 12 3/8% senior preferred stock, and a $3.2 million non-cash charge to record the write-off of the remaining preferred stock issuance costs.

(6)

 Excludes non-recurring charges of $13.1 million for a required redemption fee to redeem the 12 3/8% senior preferred stock, and $3.2 million non-cash charge to record the write-off of the remaining preferred stock issuance costs.