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): July 21, 2008
Packaging Corporation of America
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation) |
1-15399 (Commission File Number) |
36-4277050 (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)) |
The information furnished in this Current Report on Form 8-K, including all exhibits,
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.
| Item 2.02. | Results of Operations and Financial Condition. |
On July 21, 2008, Packaging Corporation of America issued a press release announcing
second quarter 2008 financial results and providing earnings guidance for the third quarter of
2008. The press release is furnished as Exhibit 99.1 to this report on Form 8-K and is
incorporated herein by reference.
| Item 7.01. | Regulation FD Disclosure. |
On July 21, 2008, Packaging Corporation of America issued a press release announcing the
start-up of a bio-gas refinery at its Filer City, Michigan mill. The press release is furnished as
Exhibit 99.2 to this report on Form 8-K and is incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
| (D) | Exhibits |
| 99.1 | Second Quarter 2008 Earnings Press Release dated July 21, 2008. | ||
| 99.2 | Bio-Gas Refinery Press Release dated July 21, 2008. |
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/ PAUL T. STECKO | |||
| Chairman and Chief Executive Officer | ||||
| By: | /s/ RICHARD B. WEST | |||
| Senior Vice President and Chief Financial Officer | ||||
Date: July 21, 2008
Exhibit 99.1
FOR IMMEDIATE RELEASE
PACKAGING CORPORATION OF AMERICA REPORTS SECOND QUARTER 2008 RESULTS
Lake Forest IL, July 21, 2008 — Packaging Corporation of America (NYSE:PKG) today reported second
quarter 2008 net income of $35 million, or $0.34 per share, compared to second quarter 2007 net
income of $46 million, or $0.44 per share, and first quarter 2008 net income of $32 million or
$0.31 per share. Net sales for the second quarter were up 5.2% to $616 million compared to $586
million in last year’s second quarter.
Second quarter 2008 results include special expense items totaling $3 million, or $0.03 per share,
for tornado damage at two facilities, start-up costs for two major mill projects, and costs related
to debt refinancing. The remaining $0.07 per share reduction in reported earnings, compared to
second quarter 2007 earnings, was primarily the result of higher transportation costs of $0.06,
purchased fuel and electricity costs of $0.05, chemical costs of $0.03, annual outage costs of
$0.03, labor costs of $0.02, and other costs of $0.02. These higher costs were partially offset by
higher sales prices, which improved earnings by $0.15 per share.
Net income for the first six months of 2008 was $67 million, or $0.65 per share, compared to $77
million, or $0.74 per share, in 2007. Year-to-date net sales are $1.19 billion compared to $1.14
billion in 2007.
PCA’s containerboard production was 614,000 tons, down 0.3% compared to last year’s second quarter
while outside containerboard sales were up 3.3%. Total corrugated products shipments were down
0.4% compared to last year, but up 4.3% compared to this year’s first quarter. On a per workday
basis, corrugated product shipments were down 2.0% compared to last year, and up 2.7% over the
first quarter. PCA’s containerboard inventories were down 3,000 tons compared to the end of the
first quarter and are down 8,000 tons for the year.
Paul T. Stecko, Chairman and CEO of PCA, said, “Our business remained quite strong throughout the
quarter. Production and sales volumes were near record levels, and our containerboard inventories
continued to decline. Pricing was up substantially over last year’s second quarter and up over
this year’s first quarter. Unfortunately, escalation in energy and energy related costs was so
severe, that it more than offset the earnings benefits of higher prices and good operations.”
“Looking forward to the third quarter,” Mr. Stecko added, “we currently expect improved earnings
primarily from announced price increases, but an entire quarter’s earnings benefit from these price
increases does not occur until the fourth quarter. We also expect seasonally lower energy usage,
but higher costs for energy and energy-related items will continue to adversely impact earnings.
Considering all of these items, we currently expect third quarter earnings of about $0.41 per
share.”
PCA is the sixth largest producer of containerboard and corrugated packaging products in the United
States with sales of $2.3 billion in 2007. PCA operates four paper mills and 67 corrugated product
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 2nd Quarter 2008 Earnings Conference Call | |
WHEN:
|
Tuesday, July 22, 2008 10:00 a.m. Eastern Time |
|
NUMBER:
|
(866) 291-4322 (U.S. and Canada) and (703) 639-1279 (International) Dial in by 9:45 a.m. Eastern Time Conference Call Leader: Mr. Paul Stecko |
|
WEBCAST:
|
http://www.packagingcorp.com | |
REBROADCAST DATES:
|
July 22, 2008 1:00 p.m. Eastern Time through August 5, 2008 11:59 p.m. Eastern Time |
|
REBROADCAST NUMBER:
|
(888) 266-2081 (U.S. and Canada) and (703) 925-2533 (International) Passcode: 1258231 |
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, 2007 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 June 30, | ||||||||
| (in millions, except per share data) | 2008 | 2007 | ||||||
Net sales |
$ | 616.2 | $ | 585.6 | ||||
Cost of sales |
(489.0 | ) | (445.5 | ) | ||||
Gross profit |
127.2 | 140.1 | ||||||
Selling and administrative expenses |
(43.5 | ) | (42.8 | ) | ||||
Corporate overhead |
(14.0 | ) | (14.8 | ) | ||||
Other expense, net |
(5.5 | ) | (2.3 | ) | ||||
Income before interest and taxes |
64.2 | 80.2 | ||||||
Interest expense, net |
(8.2 | ) | (6.9 | ) | ||||
Income before taxes |
56.0 | 73.3 | ||||||
Provision for income taxes |
(20.8 | ) | (27.1 | ) | ||||
Net income |
$ | 35.2 | $ | 46.2 | ||||
Earnings per share: |
||||||||
Basic |
$ | 0.34 | $ | 0.44 | ||||
Diluted |
$ | 0.34 | $ | 0.44 | ||||
Basic common shares outstanding |
103.1 | 104.6 | ||||||
Diluted common shares outstanding |
103.9 | 105.5 | ||||||
Supplemental financial information: |
||||||||
Capital spending |
$ | 31.1 | $ | 21.1 | ||||
Long term debt, including current maturities |
807.3 | 687.1 | ||||||
Cash balance |
297.6 | 208.1 | ||||||
Packaging Corporation of America
Consolidated Earnings Results
Unaudited
Consolidated Earnings Results
Unaudited
| Six Months Ended June 30, | ||||||||
| (in millions, except per share data) | 2008 | 2007 | ||||||
Net sales |
$ | 1,193.7 | $ | 1,144.8 | ||||
Cost of sales |
(948.4 | ) | (891.7 | ) | ||||
Gross profit |
245.3 | 253.1 | ||||||
Selling and administrative expenses |
(87.1 | ) | (84.8 | ) | ||||
Corporate overhead |
(27.7 | ) | (27.6 | ) | ||||
Other expense, net |
(9.2 | ) | (3.8 | ) | ||||
Income before interest and taxes |
121.3 | 136.9 | ||||||
Interest expense, net |
(14.5 | ) | (14.1 | ) | ||||
Income before taxes |
106.8 | 122.8 | ||||||
Provision for income taxes |
(39.5 | ) | (45.4 | ) | ||||
Net income |
$ | 67.3 | $ | 77.4 | ||||
Earnings per share: |
||||||||
Basic |
$ | 0.65 | $ | 0.74 | ||||
Diluted |
$ | 0.65 | $ | 0.74 | ||||
Basic common shares outstanding |
103.4 | 104.4 | ||||||
Diluted common shares outstanding |
104.3 | 105.3 | ||||||
Supplemental financial information: |
||||||||
Capital spending |
$ | 65.6 | $ | 41.9 | ||||
Exhibit 99.2
FOR IMMEDIATE RELEASE
PACKAGING CORPORATION OF AMERICA ANNOUNCES START-UP OF A BIO-GAS REFINERY AT ITS FILER CITY
SEMI-CHEMICAL MEDIUM MILL
Lake Forest IL, July 21, 2008 — Packaging Corporation of America (NYSE:PKG) announced today the
successful start-up of a bio-gas refinery to produce methane gas from wood fiber at its Filer City
semi-chemical medium mill. The bio-refinery takes the by-product liquor of the pulp cooking
process and utilizes bacteria as a vehicle to convert the liquor directly to methane gas. The
methane is then burned as fuel in an existing power boiler, replacing natural gas and coal. The
process employs and is dependent upon proprietary pulping and papermaking technology developed
internally by PCA.
Since the pulping liquor is converted directly to methane gas, the process does not require
recovery boilers or high energy consuming evaporators, which remove water from the liquor so that
it can be burned. The evaporators and the chemical recovery unit at Filer City, which is a
fluidized bed version of a recovery boiler, have been shut down.
The bio-refinery is currently operating at about 75% of capacity and is expected to achieve full
capacity and efficiency within a few months. The investment in this project was approximately $20
million and annual savings of about $10 million are anticipated. These savings equate to about a
$25 per ton reduction in cost to produce semi-chemical medium at Filer City.
Paul T. Stecko, Chairman and CEO of PCA, said, “The start-up of the bio-refinery at Filer City
represents not only a significant milestone for PCA, but also for the development and use of low
cost, green energy. The economics on the project are particularly good considering that the
returns are based, in part, on replacing primarily coal, a relatively low cost fuel, with methane
in our boilers.”
PCA is the sixth largest producer of containerboard and corrugated packaging products in the United
States with sales of $2.3 billion in 2007. PCA operates four paper mills and 67 corrugated product
plants in 26 states across the country.
Some of the statements in this press release are forward-looking statements. 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, 2007 filed with the Securities and Exchange Commission and
available at the SEC’s website at “www.sec.gov”.
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