EX-12.1 8 a2118661zex-12_1.htm EXHIBIT 12.1
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Exhibit 12.1

Packaging Corporation of America
Computation of Ratios of Earnings to Fixed Charges
(Dollars in Thousands)

 
   Group (1)
   PCA
  
 
    
   Jan. 1,
1999
through
Apr. 11,
1999
    
    
    
    
    
    
   Pro Forma(2)
  
 
    
   Apr. 12, 1999
through
Dec. 31,
1999
   Years Ended December 31,
   Six Months Ended June 30,
  
 
   Year Ended
1998
   Year Ended
Dec. 31, 2002
   Six Months
Ended
Jun. 30, 2003
  
 
   2000
   2001
   2002
   2002
   2003
  
Income before taxes, cumulative effect of accounting change and extraordinary item   $ 118,968   $ (212,315 ) $ 84,636   $ 268,794   $ 174,434   $ 77,614   $ 35,248   $ 29,313   $ 105,614   $ 43,313  
Interest expense (3)     2,782     221     107,594     121,249     75,661     69,375     35,155     32,237     41,375     18,237  
Extraordinary item, grossed up for tax (4)     —     —     11,400     18,358     1,000     —     —     —     —     —  
Interest portion of rent expense (5)     32,064     8,470     5,000     8,200     8,900     9,000     4,400     4,500     9,000     4,500  
   
 
 
 
 
 
 
 
 
 
 
Total add backs     34,846     8,691     123,994     147,807     85,561     78,375     39,555     36,737     50,375     22,737  
   
 
 
 
 
 
 
 
 
 
 
Earnings   $ 153,814   $ (203,624 ) $ 208,630   $ 416,601   $ 259,995   $ 155,989   $ 74,803   $ 66,050   $ 155,989   $ 66,050  
   
 
 
 
 
 
 
 
 
 
 
Interest expense (3)   $ 2,782   $ 221   $ 107,594   $ 121,249   $ 75,661   $ 69,375   $ 35,155   $ 32,237   $ 41,375   $ 18,237  
Extraordinary item, grossed up for tax (4)     —     —     11,400     18,358     1,000     —     —     —     —     —  
Interest portion of rent expense (5)     32,064     8,470     5,000     8,200     8,900     9,000     4,400     4,500     9,000     4,500  
Capitalized interest     —     —     100     581     883     448     204     62     448     62  
   
 
 
 
 
 
 
 
 
 
 
Total fixed charges   $ 34,846   $ 8,691   $ 124,094   $ 148,388   $ 86,444   $ 78,823   $ 39,759   $ 36,799   $ 50,823   $ 22,799  
   
 
 
 
 
 
 
 
 
 
 
Ratio of Earnings to Fixed Charges     4.41 x   See Note 6     1.68 x   2.81 x   3.01 x   1.98 x   1.88 x   1.79 x   3.07 x   2.90 x

(1)    PCA acquired the containerboard and corrugated products business of Pactiv Corporation (the "Group") on April 12, 1999. Historical financial data presented above for the year ended December 31, 1998 and for the period January 1, 1999 through April 11, 1999 represents the financial results of the Group prior to PCA's acquisition of the business. Historical financial data shown subsequent to April 11, 1999 represents the financial results of PCA.

(2)    The following assumptions were used in calculating the pro forma ratios of earnings to fixed charges for the year ended December 31, 2002 and the six months ended June 30, 2003:

      •
      The offering of the old notes occurred on January 1, 2002.

      •
      The effective interest rates on the $400 million 10-year notes and the $150 million 5-year notes were approximately 5.3% and 4.1%, respectively, after giving effect to the settlement of the U.S. treasury locks and the amortization of the transaction costs and the original discount on the old notes.

      •
      The aggregate principal amount of 95/8% notes validly tendered and accepted for payment was $546.4 million, and $3.6 million of aggregate principal amount of 95/8% notes remain outstanding.

The tender offer premium as well as any writeoff of deferred financing fees associated with the tender offer are considered nonrecurring and are excluded from the calculations of the pro forma ratios.

(3)    Interest expense represents interest expense reported before the reclassification of the gross interest expense component of the early extinguishment of debt exclusive of interest income.

(4)    In accordance with SFAS No. 145, the gross interest expense component of the early extinguishment of debt for the period April 12, 1999 through December 31, 1999 and for the years ended December 31, 2000 and 2001 should be reclassified to interest expense and is included in fixed charges for purposes of these calculations. The extraordinary item recorded during the period January 1, 1999 through April 11, 1999 represents a premium payment due to the early retirement of debt and is excluded from these ratio calculations as it is considered nonrecurring.

(5)    The interest portion of rent expense represents the estimated interest component of such rental payments.

(6)    Due to the net loss, earnings were insufficient to cover fixed charges by $212,315 for the period January 1, 1999 through April 11, 1999.




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