Caraustar Reports Loss for Quarter

Caraustar Industries, Inc. announced that sales from continuing operations for the fourth quarter were $211.0 million compared to sales of $211.7 million for the same quarter in 2004. Loss from continuing operations for the fourth quarter of 2005 was $35.6 million, compared to 2004 fourth quarter net income from continuing operations of $8.4 million.

The $52.8 million decline in pre-tax operating results was primarily attributable to higher restructuring and impairment costs, higher energy and freight costs, partially offset by lower fiber costs and a $1.1 million increase in equity in income of unconsolidated affiliates.

Mill volume, excluding joint ventures and discontinued operations, for the fourth quarter decreased about 2,600 tons compared to the same quarter last year, as demand was relatively comparable across all paperboard grades. Gypsum facing paper at the company's 50 percent owned unconsolidated Premier Boxboard Limited LLC (PBL) joint venture increased in volume by 22.5 percent over fourth quarter 2004.

For the year sales from continuing operations were $862.4 million, a decrease of 1.0 percent from sales of $871.5 million in 2004.

The $41.4 million decline in pre-tax operating results was primarily attributable to higher restructuring and impairment costs, higher energy and freight costs, partially offset by higher mill selling prices and an $11.8 million increase in equity in income of unconsolidated affiliates. Strong pricing and volume growth in the two joint ventures were more than offset by lower sales, higher energy, freight and selling, general and administrative costs in the consolidated group for the year ended December 31, 2005.

Michael Keough, president and CEO of Caraustar, commented, "We reported positive results for both fourth quarter and the full- year 2005 after considering restructuring costs and discontinued operations. While volumes continued reasonably strong in the seasonally lower fourth quarter, we are still challenged by high fuel and energy costs which were up about $18 per mill ton versus the same quarter last year and $10 per mill ton when compared to the third quarter of 2005. As a result of the continued high energy costs, we recently announced a $40 per ton price increase on uncoated recycled boxboard, which includes the conversion of a previously implemented $25 per ton energy surcharge. Our mill group operated at 92.7 percent in the fourth quarter while the industry operated at 91.8 percent of capacity.