01—Abstract
Summary
Summary of the 10-K filed March 20, 2002. Cited figures are marked; the original filing is the authoritative source.
Packaging Corporation of America (PCA) reported 2001 net sales of $1,789,956 thousanda ($1.79 billion), down from $1,921,868 thousand in 2000, with the filing attributing the decline primarily to decreased sales prices, reduced containerboard volume sold to third parties, and slightly lower corrugated products volume.
Operating income (income before interest and taxes) was $249,455 thousandb, versus $404,834 thousand in 2000, which included a $60.4 million gain on timberland sales. Net income was $106,418 thousand, or $0.98 diluted earnings per share, compared with $161,901 thousand in 2000. Net cash provided by operating activities was $313,426 thousand.
The company's balance sheet shows total assets of $1,971,780 thousandc and long-term debt of $795,163 thousand, down from $869,175 thousand a year earlier, reflected in $74,021 thousand of net interest expense and $74.0 million of term loan and receivables facility prepayments. Cash and cash equivalents rose to $82,465 thousand at year-end 2001. The company has never paid dividends and has no current plans to do so.
Management stated it was in compliance with all debt covenants at December 31, 2001. The filing also describes an ongoing Sherman Act class action relating to linerboard pricing, with trial set for January 2003, which management believes lacks merit and should not have a material adverse effect. Capital expenditures are estimated at approximately $105.0 milliond for 2002, and the company states that operating cash flow should be adequate to meet its needs for the next 12 months.
02—Key points
Key Highlights
- Net sales of $1,789,956 thousand in 2001, down from $1,921,868 thousand in 2000, mainly due to lower sales prices and reduced containerboard volume sold to third parties.
- Operating income of $249,455 thousand in 2001 versus $404,834 thousand in 2000, which included a $60.4 million timberland sale gain; gross profit margin declined to 23.3% of sales from 26.2%.
- Net income of $106,418 thousand, or $0.98 per diluted share, compared with $161,901 thousand in 2000.
- Total long-term debt reduced to $795,163 thousand from $869,175 thousand, with senior credit facility term loans of $119.0 million and no revolver borrowings at year-end 2001.
- Net cash provided by operating activities of $313,426 thousand in 2001; cash and cash equivalents increased to $82,465 thousand.
- The company operates four mills with total containerboard capacity of 2,295,000 tons and 65 corrugated products plants, and produced about 2.1 million tons of containerboard in 2001.
- Pending Sherman Act class action over alleged linerboard price-fixing is set for trial in January 2003; management believes the claims have no merit.
03—Questions
Frequently Asked Questions
Why did PCA's net income decline in 2001?
The filing attributes the decline primarily to decreased sales prices for containerboard and corrugated products, reduced volume of containerboard sold to third parties, and slightly lower corrugated products volume. Operating income also fell because 2000 included a $60.4 million gain on timberland sales.
Has PCA paid dividends to shareholders?
No. PCA has never paid dividends on its common stock and currently has no plans to do so. Future dividends would depend on earnings, financial condition, capital requirements and restrictions under its debt agreements and Delaware law.
How is PCA's debt position changing?
Total long-term debt declined to $795,163 thousand at December 31, 2001 from $869,175 thousand a year earlier. The company made debt prepayments of approximately $74.0 million in 2001, and the senior revolving credit facility had no borrowings outstanding at year-end.
What are the main risks mentioned in the filing?
The filing cites the pending Sherman Act class action related to linerboard pricing, with trial set for January 2003, and covenant restrictions under its senior credit facility, where failure to comply could trigger acceleration of indebtedness. It also notes that containerboard is a commodity-type product and that Cluster Rule environmental compliance will require future spending, estimated at about $23.6 million from 2002 to 2005.
What capital spending does PCA plan for 2002?
PCA estimates approximately $105.0 million in capital expenditures for 2002, to be used primarily for maintenance capital, cost reduction, business growth and environmental compliance.
04—Continue