Packaging Corporation of America Reports Record Fourth Quarter and Full Year 2007...

Packaging Corporation of America Reports Record Fourth Quarter and Full Year 2007 Results

LAKE FOREST, Ill.--(Business Wire)--Packaging Corporation of America (NYSE: PKG) today reported fourth
quarter 2007 net income of $44 million, or $0.42 per share, compared
to fourth quarter 2006 net income of $38 million, or $0.37 per share.
Fourth quarter 2007 earnings include a non-cash, after-tax charge of
$4 million, or $0.04 per share, to value the company's inventory on a
LIFO basis, compared to a similar charge of $2 million, or $0.02 per
share, in the fourth quarter of 2006. Fourth quarter 2007 net sales
were a record $580 million compared to fourth quarter 2006 net sales
of $553 million.

Full year 2007 net income was a record $170 million, or $1.61 per
share, compared to $125 million, or $1.20 per share, in 2006. Net
sales for 2007 and 2006 were $2.32 billion and $2.19 billion,
respectively.

The increase in earnings, compared to last year's fourth quarter,
was driven primarily by better pricing and volume, which together
improved earnings by $0.17 per share. This was partially offset by
higher fiber costs of $0.04 per share, higher labor and benefit costs
of $0.03 per share, the higher LIFO inventory charge of $0.02 per
share, and higher costs and lower production from the previously
reported, unplanned outage at the Counce mill which, net of insurance
recovery, lowered earnings by $0.03 per share.

PCA's containerboard production was 615,000 tons, up about 2,000
tons, or 0.3% from last year's fourth quarter. Total corrugated
products shipments were up 0.4%, and were down 1.2% on a per workday
basis. PCA's year-end containerboard inventories were essentially flat
with year-end 2006 levels.

Paul T. Stecko, Chairman and CEO of PCA, said, "We achieved record
fourth quarter earnings, excluding special items in a prior quarter,
and record mill production despite the major unplanned outage at the
Counce mill. Our total corrugated products shipments were up over last
year's fourth quarter and essentially equaled our all time fourth
quarter record, and we completed the pass-through of our
containerboard price increase to boxes. The LIFO inventory valuation
charge was about $0.03 per share more than we expected, primarily as a
result of higher costs of certain inventory items in the fourth
quarter."

"Looking ahead to the first quarter", Mr. Stecko added, "we expect
our total corrugated products volume to be higher than the fourth
quarter. Both our Counce and Valdosta linerboard mills will be down,
as normal, for their annual maintenance outages, which will negatively
impact earnings by about $0.06 per share. Certain timing-related
benefit costs are the highest in the first quarter, and we also expect
seasonally higher energy and fiber costs. Considering all of these
items, we currently expect first quarter earnings of about $0.36 per
share."

PCA is the sixth largest producer of containerboard and corrugated
packaging products in the United States. PCA operates four paper mills
and 67 corrugated product plants in 26 states across the country.

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Conference Call Information:

WHAT: Packaging Corporation of America
4th Quarter 2007 Earnings Conference Call

WHEN: Wednesday, January 23, 2008
10:00 a.m. Eastern Time

NUMBER: (866) 793-1341 (U.S. and Canada) or
(703) 639-1312 (International)
Dial in by 9:45 a.m. Eastern Time
Conference Call Leader: Mr. Paul Stecko

WEBCAST: http://www.packagingcorp.com

REBROADCAST DATES: January 23, 2008 1:00 p.m. Eastern Time through
February 7, 2008 11:59 p.m. Eastern Time

REBROADCAST NUMBER: (888) 266-2081 (U.S. and Canada), or
(703) 925-2533 (International)
Passcode: 1186815
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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, 2006
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
December 31,
----------------------
(in millions, except per share data) 2007 2006
---------- -----------

Net sales $ 580.2 $ 553.1
Cost of sales (447.9) (432.2)
---------- -----------

Gross profit 132.3 120.9
Selling and administrative expenses (42.7) (40.7)
Corporate overhead (13.4) (13.0)
Other expense, net (1.2) (0.9)
---------- -----------

Income before interest and taxes 75.0 66.3
Interest expense, net (5.7) (7.1)
---------- -----------

Income before taxes 69.3 59.2
Provision for income taxes (25.3) (20.8)
---------- -----------

Net income $ 44.0 $ 38.4(1)
========== ===========

Earnings per share:
Basic $ 0.42 $ 0.37(1)
=========== ===========
Diluted $ 0.42 $ 0.37(1)
=========== ===========

Basic common shares outstanding 104.5 103.9
Diluted common shares outstanding 105.6 104.8

Supplemental financial information:
Capital spending $ 44.6 $ 32.9
Long term debt 677.2 686.9
Cash balance 228.1 161.8

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(1) Net income and earnings per share for the three months ended
December 31, 2006 have been revised from the amounts previously
reported by $1.7 million, or $0.01 per share, to reflect new
accounting guidance for planned major maintenance activities.

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Packaging Corporation of America
Consolidated Earnings Results
Unaudited

Year Ended December 31,
------------------------
(in millions, except per share data) 2007 2006
----------- ------------

Net sales $ 2,316.0 $ 2,187.0
Cost of sales (1,791.0) (1,743.2)
----------- ------------

Gross profit 525.0 443.8
Selling and administrative expenses (169.5) (158.8)
Corporate overhead (55.0) (50.6)
Other expense, net (7.0) (8.5)
----------- ------------

Income before interest and taxes 293.5 225.9
Interest expense, net (25.6) (31.2)
----------- ------------

Income before taxes 267.9 194.7
Provision for income taxes ( 97.8) (69.7)
----------- ------------

Net income $ 170.1 $ 125.0
=========== ============

Earnings per share:
Basic $ 1.63 $ 1.21
=========== ============
Diluted $ 1.61 $ 1.20
=========== ============

Basic common shares outstanding 104.5 103.6
Diluted common shares outstanding 105.5 104.5

Supplemental financial information:
Capital spending $ 113.5 $ 88.2
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Packaging Corporation of America
Barbara Sessions
Investor Relations: (877) 454-2509
PCA's Website: www.packagingcorp.com

Copyright Business Wire 2008