Thank you for joining Packaging Corporation of America's First Quarter 2008 Earnings Conference Call. Your host today will be Paul Stecko, Chairman and CEO. Upon conclusion of the narrative, there will be a Q&A session. I will now turn the conference over to Mr. Stecko. Please go ahead when you are ready.

Thank you, and good morning, and welcome the PCA's first quarter earnings release call. With me on the call today, as usual, is Bill Sweeney, who runs our corrugated products business; Mark Kowlzan, who runs our mill operations; and Rick West, our Chief Financial Officer. I would like to thank you for participating in advance, as always, I will try to take all of your questions at the end of our presentation. So, let me begin with a summary of our results and then I'll try to provide some detail. Yesterday, we reported first quarter earnings of $32 million, or $0.31 share a share compared to first quarter 2007 earnings of $31 million or $0.30 a share. Net sales for the first quarter were $577 million and as compared to $559 million in last year's first quarter. Higher containerboard and corrugated products prices improved our earnings by $0.14 a share compared to last year's first quarter. This increase was [indiscernible] than our original 2008 first quarter forecast. Recycled fiber and labor costs were each $0.02 a share higher than last year's first quarter and chemical costs and bad debt expenses which together totaled $0.02 per share are higher than both, last year's first quarter and our first quarter 2008 forecast. During the quarter, we did complete annual maintenance outages at our two large linerboard mills Counce and Valdosta. Counce was down about six days, reducing production by 18,000 tons and Valdosta was down for eight days, reducing production by 11,000 tons. The total earnings impact of these two outages from lower production and increased costs was about $0.06 per share. At our Valdosta mill we completed a major upgrade on one of our combination fuel boilers through [ph] the outage that significantly increased the boiler's efficiency. This upgrade which cost…

Thank you. [Operator Instructions]. Our first question comes from Richard Skidmore of Goldman Sachs.

Good morning, Paul. Just follow-up, you talked a lot about the cost side of the equation in your comments, but didn't touch on sort of the revenue side. You mentioned box shipments might... would be up in the second quarter, but you were out there with the price increase in March. Can you just talk about what you need to see in order to see the prices move higher from here? And what if you don't get any of [ph] that price in the second quarter?

Well, I will just go back a little bit. One, you talked about the revenue side, we did have all-time record revenues in the first quarter this year. So, we're kind of happy about the revenue side of the equation, and as I said earlier, our demand we thought was pretty good. It was comfortable with the strong level demand we have seen in the last few years. So, you are right, on the demand side and the price side, it was an acceptable quarter. And on the cost side, we're like everybody else. Escalation of key cost elements hurts. Fortunately for us, we are not hurt as much because our low dependence on certain of these cost elements. I can't for antitrust [ph] reason give any forward pricing type guidance on a call like this because you just can't do that. But I will say that I was very disappointed that our price increase did not materialize in the timeframe that it was announced. And the reason for that is when you reflect and you look at the situation, we have an industry that's running 97% of capacity, and our inventories are at historically all-time low levels. And in the past they were the facts, they drove pricing actions, and that didn't happen this time and I was little disappointed in reading some of the dialogue in one of the publications that reports on price that some brokers and independents, primarily in the North East, said, hey, papers not that tight. It was what they said and it's just hard for me to believe when you are at 97% of capacity and inventories are at all time low levels, that's not an environment that we could have had a better result. So hopefully, while the people that analyze this look at the fundamentals as opposed to redirect [ph] by quite frankly people that don't want to see the price go up, we'll get a better result. But all in all I was disappointed and I won't kid you about that.

Thanks for that. Just in terms of... maybe on the box side of things. Have you seen a lot more intense competition in your box business over the last couple of months?

Well the box business is always an intense business from a competition point of view. But has there been a... it has always been that way. Has there been any change in the last couple of months? The short answer to that is, no, we haven't seen any dramatic changes in the level of competition. It's always been stiff, its steel stiff.

Okay, great. Thanks Paul.

Thank you our next question comes from Mark Weintraub of Buckingham Research.

Thank you. Two things. First of all, just wanted to get an update on some of the cash flow items such as Cap spending expectations for this year and I don't know if it's too early, if you have kind a read, should we expect some of types of levels next year. And then kind of relatedly, its very striking that your dividend yield at this point is actually higher then your after tax costs of debt. Does that give any desire to perhaps leverage up a bit to buyback stocks, since actually it would be a cash beneficial action to do? Just share some of your thoughts is you would on that concept.

Okay, well on the first question, in terms of CapEx, we reported $35 million in the first quarter. We'd given guidance at the beginning of the year of about 110 and that number still looks pretty good. We don't go out more than a year on CapEx. So, come near the end of this year, I'll give you some updates on CapEx. Because soon as I give two years guidance, somebody is going to want five. So we go out one quarter in advance on earnings and we go out about a year in advanced on CapEx. So, I'll get you the answer to that question a little in the year. With regard to the dividend, the best way to fix my dividend yield being so high for the stock price to go up a little bit. So, I'm rooting for that first, short of that I agree with you, one of the nice things about having a share buyback in place at this time is that... I generate cash also by... in a way by buying back shares because I eliminate the dividend yield which is higher than the after tax cost of my debt. So that's a plus and so that is I think a benefit that we're going to enjoy going forward unless our sock price trades up a bit more. So, in terms of borrowing to do that, we still have a fair amount of money less than our 150 million buybacks, so we would not consider anything like that until we burn through that first 150 million and we're continuing to generate cash, so we may able to... our goal would be to continue to buy back shares long term, but not borrow to do it. We think we got the ability to generate the cash to do it and that is our primary mode of... motivation going forward.

Okay, fine. Could you just remind us where you are on the reauthorization, how much of that 150 is left?

At the end of the first quarter we had a 110 million remaining.

Great, thank you.

So we got a fair amount of fire power as they say Mark. Operator: Thank you. Our next question comes from George Staphos, of

Thanks. Hi, everyone. Good morning. Paul, a question for you; in the quarter that just pass, was there any other non-operating items that we should be mindful of? I thought I saw a news item recently about you laying off a few people, I can't remember where I saw that, I don't know if that was material or immaterial. That's why I just want to check on that.

I'll tell you what. If we laid off a couple of people in one plant, I don't know about it.

Okay

A few is the operative word, and so, no. But there is long answer, I don't know of any thing, other costs that are unusual or note worthy, other than the fact that we did report... we got hit with about a penny a share in bad debt, we'd always had very, very good bad debt experience. But that is not much of it. But we did have one measure customer go bankrupt and that was a big surprise for us.

Okay and at the Valdosta was a new woodyard, that won't lead any net change employment, right? That's just going to make you more efficient and had... give you more fiber flexibity, correct?

Yeah, we are... it will result in the change of employment. We'll... we will reduce head count at the Valdosta mill because our old woodyard which was... it added a new dimension to a woodyard it needed replaced and we were able to secure a contracted woodyard with a long term chip buy agreement. And the beauty of this is that we have made no capital investments, and we will save about $5 million a year in costs, and that's roughly 10 bucks a ton. So, return on an investment like that, as you know, is infinite when the denominator is zero.

Yes. Alright, may be that was what we had seen. I guess taking another approach on the question of price versus cost. I mean your paper customers usually don't like price cycles, they don't say they do. Yet, box pricing there doesn't move unless board goes up, and you can't offset input costs that are moving higher, unless you get a box price hike rhetorically. So, how can you, I'm not talking to ask you to speak that initially [ph] but how often you perhaps fairly get pricing to offset some of these variable costs that continue to head higher in this kind of environment?

Well, I... this is... the market says this is capital. I got to follow all the words of language I do. So, the only thing that you can do is hope that the economics gets such that the... that when and if any price action commences it gets accepted into the marketplace. And again, I think an earlier caller hit on this, I just hope that through the journals, through trade publications, this does not degenerate as it is I think in a last month or so into a lobbing exercise where a lot of customers I think are lobbing Pulp & Paper Week to be specific, and they report all of their sources, but they are not by name. And quite frankly, I think what we have got a hope for is that the facts are with that, and the facts are operating rates, the facts are inventory levels, and then all other industries that I know well that usually results in better economics. Now, can you name anther industry George, 97% operating rate, lowest inventories on record that would have difficult to getting a price increase.

Yes, the box industry.

No, I said another one. Other than this one, I know this.

Yes.

But my point is I'm optimistic. Usually the facts... and it may time, but the facts usually went out over spin factors, and so that's my hope. The only thing that we can do is continue to report to our customers the facts, and I think overtime the facts will went out.

Let me leave that with that, but one last question. Rich do you have any details on working capital in the quarter, what the use of cash was in 1Q? Thanks.

Yes, working capital, George, with all the first quarter payments that we make was the negative $35 million. We do expect that to turn positive in the second quarter as that always does.

Yes.

So that was the big item influencing our cash in the first quarter, but it's no different than any other quarter.

Alright. Thanks

Any other first quarter, generally pick up in the second quarter, third and fourth.

Understand. Thank you.

Thank you. [Operator Instructions]. Our next question comes from Chip Dillon of Citigroup.

Hi. Good morning Paul.

Good morning, Chip.

Hey. I wanted to explore something with you. We have noticed... and I know these prices certainly on apples-to-apples, but spreads are what they are over time. And we have noticed that the kraft liner price... kraft linerboard price in the U.S. is now up to a $145 a ton below what Testliner II has quoted for in Germany. And again I know that's on apples-to-apples. But normally, our kraft linerboard is about 40 bucks a ton higher than what's quoted over there. And I'm just wondering you mentioned shipping vessels, is it inevitable that you guys should be getting more board in another parts of the world, or our people who make boxes in other parts of the world just happy using and paying more for recycled board with by what I guess is lower quality than our virgin board?

Well,I can give you pin [ph]. It's like you used the right word Chip when you said explore. My feelings are that we have congestion at the ports, and when you have congestion at the ports, a lot of the warehouses are the problem, getting ocean bound freights are problem. But I think there is couple of other things going on. If you have any uncertainty over delivery schedule, it's probably little safer to buy it in your own market, until the dependability of exports coming from the US improves, and I think over time that's going to shake out. And I think that's going to be very, very positive for the industry, because we do have congestion at the ports. And we've missed some shipments, we've had to delay some shipments, not many, but it doesn't take many to upset somebody. I think the other thing that's going on to is that some of the shippers are also decided to take advantage of the very weak dollar. And they know exactly what you said our linerboard is a real buy in Europe. And so... and most of our customers, in our case, we ship SLB [ph] port customer picks up the freight. So the customers would be in gouge a little bit on some ocean bound freight for a lot of the reasons that I talked about, in terms of congestion, et cetera. But I think when that thing works itself out and it looks like its working itself out over time as we go I think that really bodes well, and people in Europe or like people in the U.S., they are looking for value and you hit the nail right on the head. U.S. kraft linerboard is one heck of a value in Europe. And we just got to get the doors open so more people can get to the store as the say. And I think that situation is slowly improved.

Makes sense that it would take a while for people to kind of trust the traffic. Now speaking of shipping, could you talk a little bit about the whole OCC situation, which I know fortunately for you is important, but wouldn't a shipper be much more willing to ship containerboard as oppose to OCC as is it possible we could be seeing, as we have seen in the stock prices and the margins of some of the Chinese players come down quite hard. Is it possible that we could see a two tier system develop where the price is much higher in prices like Asia then here because it's... I would think it's the last thing a shipper would want to send on a boat?

I don't really... I'm not that familiar Chip with the type of boats used for OCC. OCC use to get a favorable rate because there is a lot more empty boats going back to China then full boats coming from China here. But with the balance of trade changing, that situations change too, because we are exporting more. So we are not big exporters of anything to China, we basically pulled out of the Chinese market for a linerboard because we are full and as you said we provide great value in Europe and also South America. So it's not that I'm ducking, the question is, I don't think I know enough about it to give you a really good answer.

And then, just last question. I know in the past you've often given us some glimpse into the current month and obviously the economy hasn't been great, but then again, the mix of the containerboard customers has become less cyclical. What is your April look like so far, can you tell us?

Yeah, sure. I've got data on the first half of the month, that's 11 out of 22 work days. Its basically steady eddy, we're about at the same level as last year and we had a very good April last year. Our bookings, which reflect orders for the month, are dead flat with last year and our billings, in other words, what we build against those bookings are actually 1% behind. So, billings totally flat, bill... excuse me, bookings totally flat and billings done 1%, so, all in all fairly flat with last year. But we had a good last year. So our business has remained quite steady.

And any note in the mix of your customers? Some gotten stronger and some weaker, that you can think of, but not by name, but by industry?

Yeah, I can't... Bill is silently sitting right here, he might deduce a little closer to it than me. Any particular area, Bill?

Well the durables sector is way down, building products, sighting, things like that. But in the industry, durables use to be 35% of the industry; it is now 15% of industry. So the non-durables are dominating the industry and so the effect of... future effect today is a lot less than it was in the past. So we would expect industry box shipments will not be that much off, even though durables are way down, 15% of the industry is an all time low.

Got it.

And that's a plus, because the non-durables tend to grow with population growth and as you know we're still growing in population.

Yep. And the last question. I have to ask you this. In the past, Paul, you've talked about... and you've certainly demonstrated a good discipline toward returning very good cash flows to shareholders with the box plant acquisition here or their. If circumstances in the industry... force certain parties to have to divest, say, entire mills. Is that something that you would look at if you thought the value was good or is that something that you are not inclined to do and that you would just mainly look at converting assets?

Well, the answer to that is really... it hasn't changed over the last five years. Our primary vehicle to grow is through our box plant acquisitions because we have been able to make money in both places, i.e. in the mills and in the box plants and this is a tough business and you got to make money in both places to get the kind of returns shareholders want. So that why we want to continue to add our box plant system and increase our integration level. With regard to adding mill capacity, although that has not been a primary driver of our strategy, the right mill at the right price, we would always look at. And the right price is a very important part of that equation. If a real value came along, we would look at it. But we don't have a basic strategy of wanting to add capacity. Our basic strategy is wanting to add shareholder value, and if an opportunity came along that looks like that would be the case we'd be interested. And again, I go back to an old story I like to talk about is, we were acquired by Madison Dearborn, they are no longer holder of the company stock, but I don't know if I am the good CEO or not but they made me better than I was, let's put it that way. Their mentality is you look for a 40% or 50% return on something, not a 20% return like I would look at in the old days. So my standard is pretty high, if would look at mill capacity. I want a Madison Dearborn type return on something that is not core to our central strategy which box plan acquisitions.

Got you. Thank you.

Thank you. Our next question comes from Mark Wilde of Deutsche Bank.

Good morning Paul.

Good morning Mark.

We have talked a lot about the all the mill costs that the industry is facing. I just wondered if you could help us understand what's going on down at the converting plant level, because the box plant uses energy, a box plant uses a lot of starch, a box plant has a transport stuff to the customers. Can you give us any sense of whether your costs per converting unit have gone up over the last five years, or whether you have been able offset that with productivity.

Well, the answer is our costs have gone up over the last five years, and we have offset some of that, but not all of that with productivity. And just to give you some quantification, about 10% of our energy is in the box plants, and that's... and it's generated via either natural gas or oil, and you know what's happened to them. And so our costs there have gone up, and we are not... we have no real competitive advantages in that area. We can't burn coal or do some other things that lot quicker on the box plant. Starch price is higher, and we expect a long term that starch prices will probably continue to move higher with what's happening in agriculture these days and alternative uses for agricultural products mainly into the energy arena. Our labor costs have gone up, but so of everybody else's, and we ship freight... we ship boxes like everybody else shrewd [ph] truckers and those costs have gone up. Now that's the bad news that all these costs elements have gone up. And fortunately for us, if you go back, and I think you're familiar with this data, if you go back and look at our volume growth over the last seven, eight years, we're up about 30% at a time that the industry has been flat. So obviously, we have with that increased volume have been able to do a better job with productivity than most of our competitors, because we have been able to grow our volume, primarily because of the fact that we provide the best value. And Bill Sweeney showed me some data just the other day, and it's interesting on how the heck did you grow your volumes during this time period. And I think it might be good Bill you just mentioned that.

Hey Mark. The way we run our values we select the customers that understand that the values not buying the box, but are using the box and using the box as a promotional material. So, we try to select customers that want us to be a 100% supplier. Now over the last seven years we've grow with our current customers from 54% of their business, 68% their business. We like to do business with people that we're a 100% supplier because of value important teams bring proprietary information, which I don't want to share with our competitors, and that information is how to the design a box and use a box internally boost [ph] cost and if and where appropriate, how to market your products through the box is the cheapest form of advertising. So, we've been growing with our current customer base, and obviously is less price pressure in that arena.

But net, net, net as I say our costs have gone up in the box plants, we probably offset more than most. But we have by for not set off all these costs, and that hurts profitability, but again we are not hurt as much as most, but we are hurt.

Okay. And then just as a follow on, Paul you have mentioned this offshore freight issue. I know that a lot of your exports go down to Latin America, I think for the produced box business somehow to Valdosta. Can you give us any sense of how much those have gone up and just whether kind of cost of buying [ph] that have hurt you at all in terms of export sales.

No, that's not something I'm willing to share on this call. It's competitive information. And I don't mind telling you, but I don't want to tell my competitors.

Okay. Fair enough.

Thank you. [Operator Instructions]. Our next question comes from John Emrich [ph] of Ironworks Capital.

Thanks. Just to... I'm a new shareholder, just to go back to the price question. If I remember sitting down with Rick a couple of times in the last few months, and talked about what was going out with the cost structure in the industry and how prices had to go up. And it have to go up more for everybody else because of their relatively greater exposure to the commodities that are moving them most, oil and gas and then of course the recycled materials. In your press release you talk about volumes and price being about what we expected. But then earlier in the call you talked about it being... you are disappointed that I'm guessing the price increase that Rick was tell me about in March either didn't go through at all or didn't hold on, could you just clarify those two

Real simple, if the price increase had have gone through in March, since it would have been a past on the boxes yet we would have gotten very, very little benefit in the first quarter. So my disappointment will be reflected in the second quarter even if you got the price increase in March you would have increased boxes in April and you would not have... and since we're 80 some percent vertically integrated, until we get the box price increase, still we haven't helped ourselves not much earnings wise. So --.

So price increase in... prices in March were about what you expected?

No, prices probably... speaking of the entire first quarter .

Quarter. That's what I meant, the March quarter. And --.

So, our price forecast for the quarter was basically accurate.

Okay. So --.

We where a touch lower, but our mix was a touch better. So, we were about where we thought, but would price benefit we would have received in the first quarter had the March price increase for containerboard gone through, would have been relatively small in the first quarter, but relatively large in the second quarter.

I understand. And relative to the second quarter guidance, is 0% if it go through or how much of --?

Pulp and paper reported that the price increase did not go through.

Just didn't go through it all?

Right, that's what they reported

Okay, then on the energy side of things. I'm looking at this PowerPoint presentation, you have... it looks like, after 65% of your energy coming from renewable resources, you have four plus five, that's 9% from natural gas and oil. I mean, incredibly small amount. I know its going up a lot but, where... number one, where else or... its not... I've put pencil to paper on this but it seems like you are being hurt more than I would have expected, given your exposure to gas and oil, despite the fact that I appreciate they've gone up a lot.

Run the number again and assume we use 35% and it'll bring tears to your eye. We do use very little, and we are going to be using even less because the only place we really burned a lot of fuel in a boiler was at about Valdosta, where we burnt oil and we've been running Valdosta without any oil in the boiler. Now where we do burn gas and oil is in our lime kilns and the lime kilns... there's no substitute of basically and we have to burn it up. But that is a smaller part of it. But the 9% on total fuel, on purchased fuel, about 25% of our fuel is in gas and oil. And what brings that down to the 9 or 10% is when you throw in the fact that half our fuel's black liquor and is self generated, that knocks that number way down. But the number most people talk about is, how much of your purchased fuel is gas and oil, and we are about 25%. But that number is going down probably to 20% after we... where we are now, I haven't... we haven't run the new numbers yet, because of the fact we are burning oil at Valdosta and boilers any more. And about 10% of our gas and oil is in the box plants and there is no substitute there. So those numbers are very accurate and... but let me tell you, with oil and gas prices where they are today, even a little bit of price incre... even a little bit of consumption hurts you. And so... yeah, we may be hurt more then you would think but oil prices are up 70%, gas prices are up 20, they are big numbers. And again it was a very wet and cold winter and our consumption was up 4%, that's a lot, I mean 4% is a lot, and hopefully the weather is going to be little better the rest of this year.

Second to last question is, you do buy more cold than gas and oil. Coal is quite often purchased on relatively long term contracts, kind of an industry standard, by some of the buyers. How much... and coal has move to fair bit. I'm not sure whether you are buying --.

Yeah,but coal... if coal is three box a million BTU's and it goes up 10%, its 330, I mean gas goes up that by an hour in a day. So, inflation in coal does hurt you a little bit, but you start with a small number to begin with. Now don't get me wrong, I don't like to see any price... any costs go up. But its not... it doesn't nearly hurt you as much as gas or oil.

Could you just clarify though, your buying habits there relative to long term contracts, buying spot, Appalachian coal, long term buybacks?

We don't buy very much spot, we have contracts of some duration and in specifics, we don't get into.

That's fair enough. Thank you very much.

Sure, thank you.

Thank you. Our next question comes from Michael Lucacus [ph] of Appalusa [ph].

Yeah. How are you doing? I'm just curious. In terms of... this industry's lead is confusing me.

Thank you.

You have one of the highest operating rates I've ever looked that in the commodity industry. How come you think your prices fell? Is it discipline within other competitors, I don't understand?

Well, I would say that if you look at operating rates and inventories and you looked at that from afar, you would say this is a fairly discipline industry. And that may or may not be the case. But it certainly hasn't translated, at least this last time, in improved pricing. And my answer to that is, I think when the analysis is done, there is got to be more emphasis on fact and not spin, that various people put on it, and that's really all I want to say on that.

Thank you. Our next question comes from David Thomas [ph] of Highsight Capital. David Thomas of Highsight Capital Hey Paul, good morning. Just to follow up again on this question of pricing, because as you can imagine, this is first and foremost in our mind, we are looking around at the rest of the industry and seeing that this is really the only rate of pulp and paper that's not getting price increases right now. Despite it having the best supply dynamics, high operating rates of business, demand profile is not exactly [ph] the decline like newsprint or uncoated freesheet, and the weak dollar which should be benefiting in the export demand. But you guys have got this really bizarre concept in the industry. Obviously, this is not specific to you, it's industry problem where...

I am glad to... excuse me from that, you are going to group of anything because I'm truly independent.

No I am with you. I'm saying more just as the way the pricing works in this industry, where pricing is not set on negotiation, direct negotiation with buyers and sellers, it's set by the sort of referee arbitrator who at the end of the day has a set of clients to the both buyers and sellers, instead of from one high determine to your sheet, what the price is going to be? And it's not something we see in any other industry and I think it's pretty clear when you look at the cost pressure the industry is facing and the rest of the pulp and paper industry that doesn't reflect economic reality. So, I guess my question is what do we do to fix this, is this beyond what's happening, I know maybe this is a question for some of your other competitors, because you are only 7% of the market. But how long can this go on and what is the more radical solution to fix this? I mean we need to go away from the idea of taking contracts to pulp and paper weekly, if this is ultimately not going reflect economic reality in the industry.

Well, the short answer is that I don't know. The longer answer is that I'm an optimist. I think that eventually the facts went out, and quite frankly that happened last year. We had price increase announced that failed, when inventories were very, very lower, et cetera. But it finally didn't go through. And to call a lot of people who reported on it, it went through the box faster than any previous price increase. And so, I hear what you are saying, I don't disagree with what you said. And my only answer is I think that eventually facts went out over opinion. And in the end you for to go with the facts and I'm optimistic that that will be the case in this industry because for instance there are problems.

Yes. Getting down [ph] from the equity perspective it's just a question and you guys are turning your cost of capital industry doesn't, which is why I think a lot of investors look at you is probably the only real investment in this space. But at some point, I think it's going to be difficult to continue justifying from equity holders' point of view subsiding customers in a market where there is a lot of pricing power is not being exercised. So I'd just leave it with that thought. But thanks very much.

I appreciate your thoughts.

Thank you. [Operator Instructions]. Our next question comes from Louis Holland of Highland Capital [ph].

Hey Paul, how are you?

Hello Lou.

Well I would just call you have done the [ph] good work and look forward to seeing you at your Board meeting.

Thank you very much. I do appreciate the call.

As one would say you are getting better with age.

The age part is true. There are few listeners out there. Lou Holland is a retiring member of our Board of Directors. He has been a big asset for the company, and despite my strong long tactics he decided to retire and go on to do other things. Lou I do appreciate to call.

Yes. But I'm still going to see you at the Board meeting.

Absolutely.

Okay Paul.

Thank you. [Operator Instructions]. Our next question comes from John Emrix [ph] of Ironworks Capital.

Thanks, just last one and a kind of a follow up as a same idea as the last caller. Given your cost structure ranges relative to your peers, if you're hurt even just as much as you are which isn't too dramatic, by recycled cost and energy cost. Your peers are going to get crushed by this, I don't know how they actually endure much more without a significant price increase, in time, am I thinking about that right?

Well, we certainly use less recycled fiber than I think everybody but one company and our energy position is fairly different than other ones in terms of use of gas an oil and so on those two cost elements I think you are right on. The rest of them, who knows, and you best asking them about their cost other than me because my knowledge of their cost obviously are not very great. But it bring me to a point that despite the fact we've had a tough quarter cost wise, we still did have a first quarter record for earnings, $0.31 to $0.32... excuse me, $0.31, 32 million net income, $0.31 was our best first quarter ever. So, we are not satisfied with that but again, even despite all of the bad things that have gone on, we still had a have decent quarter. I'm hoping for a full decent quarter next quarter, but we'll see.

Yeah, but now I guess the outlook is that we're slipping into... kind of down year-over-year earnings comparisons and I think unless the profitability level, correct me if I am wrong, it changes improves in the rest of the year it looks like your dividend payments may exceed your net income anyway. I know you might have other sources of cash flow, but than that kind of changes the whole --.

You better check your calculator.

Okay.

I think you pushed a bad button, but I'm going to give full year forecast, but we are going to pay out $1.20 in dividends and we are not giving a full year cash flow, so I'm saying it. But double check your numbers.

You're right, I think I did do some error in that.

Yeah, you got to hit the right numbers.

All right.

It better answer's that way.

Okay.

Okay.

Pardon me sir, I am showing there are no further questions.

Well if that's the case I want to thank you for your participation on the call, looking forward to talking to you next quarter and lets all root for the U.S. economy. Thank you much.

Ladies and gentlemen thank you for your participation in today's conference, this concludes the program, you may now disconnect. Thank you and have a nice day.