Oct. 17, 2007 (Press Release) - Packaging Corp. of America today reported record third quarter 2007 net income of $49 million, or $0.46 per share, compared to third quarter 2006 net income of $44 million, or $0.42 per share, and second quarter 2007 net income of $46 million, or $0.44 per share. Third quarter net sales were $591 million, up 2.8% compared to $575 million in the third quarter of 2006.

Net income for the first nine months of 2007 was $126 million, or $1.20 per share, compared to $87 million, or $0.83 per share in 2006. Net sales for the first nine months of 2007 were $1.74 billion compared to $1.63 billion in the first nine months of 2006.

In a separate release, PCA also reported today that it intends to increase the quarterly dividend on its common stock from an annual payout of $1.00 per share to $1.20 per share, and repurchase up to $150 million of its common stock over the next eighteen months.

The $0.04 per share increase in earnings, compared to the third quarter of 2006, was driven primarily by higher pricing and volume of $0.08 per share. This improvement was partially offset by higher recycled fiber and labor and benefits costs, which totaled $0.04 per share.

PCA's containerboard production was 632,000 tons, up 11,000 tons or 1.8% from last year's third quarter. Outside sales of containerboard were up about 12,000 tons and total corrugated products shipments were up 1.3%, or about 7,000 tons, compared to last year's third quarter. Containerboard inventories ended the quarter almost 3,500 tons below 2006 year-end levels.

Paul T. Stecko, Chairman and CEO of PCA, said, "We had another quarter of record earnings and solid operations, driven by strong sales volumes and outstanding operations in both our mills and box plants. Our $40 per ton containerboard price increase was implemented in August, and we began the implementation of our announced box price increase in September."

Commenting on today's announced dividend increase and share repurchase plan, Mr. Stecko noted, "These actions reflect both our commitment to return value to our shareholders and the operating and financial strength of the company."

"Looking ahead", Mr. Stecko added, "we expect earnings to improve from higher box prices in the fourth quarter. This will be partially offset by seasonally lower volume, higher fiber costs, and higher energy costs associated with colder weather. Considering all of these items, fourth quarter earnings are expected to be about $0.49 to $0.50 per share."

PCA is the sixth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.2 billion in 2006. PCA operates four paper mills and 67 corrugated product plants in 26 states across the country.

SOURCE: Packaging Corp. of America