Packaging Corporation of America Reports Fourth Quarter and Full Year 2005 Results

Full year 2005 net income was $53 million, or $0.49 per share,compared to $69 million, or $0.64 per share, in 2004. As shown in theattached table, adjusted net income, which excludes special items, was$47 million, or $0.44 per share, in 2005, compared to $52 million, or$0.48 per share, in 2004. Net sales for 2005 and 2004 were $2.0billion and $1.9 billion, respectively.

The reduction in fourth quarter earnings, compared to last year'sadjusted net income, was driven primarily by higher transportation,fuel and electricity costs of $0.09 per share, lower pricing of $0.06per share, and higher labor and benefit costs of $0.02 per share.Lower earnings for the full year, compared to 2004, were driven by thesame cost items that affected the fourth quarter and, for the mostpart, were offset by higher pricing and volume.

PCA's corrugated products shipments were up 4.8% compared to lastyear's fourth quarter and up 4.6% for the full year. Excluding ourMidland Container acquisition, fourth quarter and full year shipmentswere up 3.0% and 3.4%, respectively. Containerboard production in thefourth quarter was 596,000 tons, down 0.6% compared to last year'sfourth quarter, and 2,347,000 tons for the year, up 1.2% compared to2004.

Paul T. Stecko, Chairman and CEO of PCA, said, "Our millefficiency, production and costs were outstanding in the fourthquarter. We were able to support our strong corrugated productsgrowth, up 4.8%, while at the same time, reduce natural gasconsumption in our mills to just over 3% of purchased fuels comparedto 9% in the fourth quarter of 2004. This is a remarkably low number,which we believe gives us a rather unique, low cost, energy positionwithin our industry."

"Looking ahead", Mr. Stecko added, "our biggest challenge will beto maintain adequate containerboard inventories in our box plants inorder to support corrugated products growth. We expect higher pricesfor both containerboard and corrugated products as a result ofpreviously announced price increases. Our October price increasesshould be fully realized in the first quarter while our January priceincreases will not be fully realized until the second quarter as theflow-through to box prices is completed. Our Counce, TN linerboardmill undergoes its annual maintenance outage in March, which willreduce production and increase costs, and we also expect seasonallyhigher energy consumption. All in all, we currently expect firstquarter earnings of about $0.08 per share."

PCA is the sixth largest producer of containerboard and corrugatedpackaging products in the United States with sales of $2.0 billion in2005. PCA operates four paper mills and 68 corrugated product plantsin 27 states across the country.
Conference Call Information:

WHAT: Packaging Corporation of America 4th Quarter 2005 Earnings
Conference Call

WHEN: Tuesday, January 24, 2006
11:00 a.m. Eastern Time

NUMBER: (866) 253-6509 (U.S. and Canada) and
(703) 639-1208 (International)
Dial in by 10:45 a.m. Eastern Time
Conference Call Leader: Mr. Paul Stecko

WEBCAST: http://www.packagingcorp.com

REBROADCAST DATES: January 24, 2006 2:00 p.m. Eastern Time through
February 8, 2006 12:00 a.m. Eastern Time

REBROADCAST NUMBER: (888) 266-2081 (U.S. and Canada), or
(703) 925-2533 (International)
Passcode: 835925

Some of the statements in this press release are forward-lookingstatements. Forward-looking statements include statements about ourfuture financial condition, our industry and our business strategy.Statements that contain words such as " will", "should", "anticipate","believe", "expect", "intend", "estimate", "hope" or similarexpressions, are forward-looking statements. These forward-lookingstatements are based on the current expectations of PCA. Becauseforward-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 todiffer materially from PCA's current expectations include thefollowing: the impact of general economic conditions; containerboardand corrugated products general industry conditions, includingcompetition, product demand and product pricing; fluctuations in woodfiber and recycled fiber costs; fluctuations in purchased energycosts; and legislative or regulatory requirements, particularlyconcerning environmental matters, as well as those identified underthe section "Risk Factors" in PCA's registration statement filed onDecember 16, 2005 with the Securities and Exchange Commission andavailable at the SEC's website at "www.sec.gov".
Packaging Corporation of America
Consolidated Earnings Results
Unaudited


Three Months Ended
December 31,
---------------------
(in millions, except per share data) 2005 2004
---------- ----------
Net sales $472.7 $492.6
Cost of sales (415.6) (404.2)
---------- ----------
Gross profit 57.1 88.4
Selling and administrative expenses (35.7) (36.3)
Joint venture dividend, net of expenses - 27.8
Other expense, net (2.5) (0.9)
Corporate overhead (10.9) (11.5)
---------- ----------
Income before interest and taxes 8.0 67.5
Interest expense, net (6.9) (7.2)
---------- ----------
Income before taxes 1.1 60.3
(Provision) benefit for income taxes 0.6 (21.9)
---------- ----------
Net income $1.7 $38.4
========== ==========
Earnings per share:
Basic earnings per share $0.02 $0.36
========== ==========
Diluted earnings per share $0.02 $0.36
========== ==========

Basic common shares outstanding 107.2 106.8
Diluted common shares outstanding 107.9 107.9

Supplemental financial information (in millions):
Capital spending $26.3 $32.2
Long term debt 695.2 694.9
Cash balance 112.7 213.3



Packaging Corporation of America
Consolidated Earnings Results
Unaudited



For the Year Ended
December 31,
---------------------
(in millions, except per share data) 2005 2004
---------- ----------
Net sales $1,993.6 $1,890.1
Cost of sales (1,686.8) (1,592.4)
---------- ----------
Gross profit 306.8 297.7
Selling and administrative expenses (146.5) (136.2)
Joint venture dividends, net of expenses 14.0 27.8
Other expense, net (10.7) (4.2)
Corporate overhead (47.5) (44.6)
---------- ----------
Income before interest and taxes 116.1 140.5
Interest expense, net (28.1) (29.6)
---------- ----------
Income before taxes 88.0 110.9
Provision for income taxes (35.4) (42.2)
---------- ----------
Net income $52.6 $68.7
========== ==========
Earnings per share:
Basic earnings per share $0.49 $0.65
========== ==========
Diluted earnings per share $0.49 $0.64
========== ==========

Basic common shares outstanding 107.3 106.4
Diluted common shares outstanding 108.1 107.6

Supplemental financial information (in millions):
Capital spending $125.3 $108.6
Acquisitions of businesses 48.7 $38.4



Packaging Corporation of America
Reconciliation of Net Income as Reported
To Adjusted Net Income Before Special Items (1)
Unaudited


Three Months For the Year
Ended Ended
December 31, December 31,
--------------- ---------------
2005 2004 2005 2004
------- ------- ------- -------
(in millions)

Net Income as Reported $1.7 $38.4 $52.6 $68.7

Special Items:

Dividend from Joint Venture (2) - (16.9) (7.0) (16.9)

Restructuring and Severance
Charges (3) 0.2 - 1.6 -
------- ------- ------- -------
Total Special Items 0.2 (16.9) (5.4) (16.9)
------- ------- ------- -------
Adjusted Net Income Before Special
Items $1.9 $21.5 $47.2 $51.8
======= ======= ======= =======
Diluted Earnings per Share Before
Special Items $0.02 $0.20 $0.44 $0.48
======= ======= ======= =======


Notes to Reconciliation of Net Income as Reported
to Adjusted Net Income Before Special Items

(1) Adjusted net income before special items, a non-GAAP financial
measure, excludes the after-tax effect of the special items as
management considers such items to be unusual in nature.
Management uses this measure to focus on 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) Represents dividend payments of $12.5 million and $29.3 million
($7.0 million and $16.9 million net of expenses and taxes)
received in the second quarter of 2005 and the fourth quarter of
2004, respectively, from Southern Timber Venture, a timberlands
joint venture in which PCA holds a 31.33% equity interest. Each of
the dividend payments resulted from Southern Timber Venture's sale
of a major portion of its timberland holdings. Expenses include
legal fees and special bonuses for successful completion of the
timberlands sales.

(3) Represents restructuring and severance charges, net of tax,
recorded primarily for the November 2005 closure of a corrugated
products plant.