Jul 31, 2006. /Lesprom Network/. Caraustar Industries, Inc. announced that sales from continuing operations for the second quarter ended June 30, 2006 were $233.8 million, an increase of 7.6% over sales of $217.2 million for the same quarter in 2005. Loss from continuing operations for the second quarter of 2006 was $8.1 million, or $0.28 per share, compared to 2005 second quarter income from continuing operations of $1.1 million, or $0.04 per share. The second quarter 2006 and 2005 results included restructuring and impairment costs of approximately $3.6 million and $0.3 million pre-tax, or $0.08 and $0.01 per share, respectively. The second quarter 2006 results also included $0.7 million ($0.02 per share) in accelerated depreciation related to four closed facilities, severance cost of $0.5 million ($0.01 per share), an inventory write-down of $0.5 million ($0.01 per share) and a cost of $12.4 million ($0.27 per share) associated with the redeemed senior subordinated notes ($10.3 million loss on redemption and $2.1 million interest expense). The company accrued $1.5 million ($0.03 per share) related to a vendor claim in the second quarter of 2006. The vendor claims that it under billed the company and the company expects that the amounts it has accrued regarding this matter will be sufficient. Sales from continuing operations for the six-month period ended June 30, 2006 were $468.1 million, an increase of 7.0% compared to sales of $437.4 million for the same period in 2005. Income from continuing operations for the six-month period in 2006 was $77.1 million, or $2.69 per share, compared to income from continuing operations for the six-month period in 2005 of $3.1 million, or $0.11 per share. Income from continuing operations for the first half of 2006 included restructuring charges of $3.6 million, a gain of $135.2 million on the sale of the company's 50-% interest in its Standard Gypsum joint venture, and a cost of $18.8 million associated with the redeemed senior subordinated notes ($10.3 million loss on redemption and $8.5 million interest expense). Income from operations decreased from $10.2 million for the six-month period ended June 30, 2005 to $4.5 million for the same period in 2006. The primary factors for this decrease in income from operations were higher fuel and energy costs in the paperboard mills of approximately $3.7 million, higher restructuring and impairment costs of $2.8 million, expense of $1.5 million related to a vendor claim and increased selling, general and administrative costs of $2.1 million. These factors were partially offset by higher selling prices and lower recovered fiber costs. Selling, general and administrative costs were higher due primarily to a $1.2 million settlement of a patent infringement claim recorded in the first quarter of 2006 and $0.5 million related to severance. The sale of Caraustar's 50-% interest in Standard Gypsum on January 17, 2006 resulted in the reduction in equity in income of unconsolidated affiliates from $17.9 million in 2005 to $3.7 million in 2006. Michael J. Keough, president and chief executive officer of Caraustar, commented, "On a look-through basis, after adjustments for restructuring and other costs, we view our performance as slightly ahead of expectations. Volume improved for uncoated recycled grades as Caraustar was up about 6 thousand tons. Our paperboard mills operated at 95.7% in the second quarter of 2006, up from 93.0% a year ago, but down when compared to 96.9% for the first quarter 2006. Pricing is improving but still lags input cost increases. Recently announced price increases should positively impact the third quarter. "In the second quarter 2006, we consolidated our tube and core and custom packaging businesses into the converted products group and have redirected our focus to make this business more efficient and effective in serving customers. There were write-offs this quarter of non-strategic assets with this change in operating philosophy, and we continue to evaluate the impact of consolidating these businesses.” "Subsequent to quarter end, we completed the sale of our Sprague paperboard mill to Cascades, Inc. for $14.5 million and applied the proceeds to our revolving line of credit. This transaction and the continuing negotiations for the sale of Caraustar's other two coated recycled boxboard mills and the contract packaging business are part of the company's previously announced decision to exit non-core businesses." Caraustar, a recycled packaging company, is one of the world's largest integrated manufacturers of converted recycled paperboard and is dedicated to providing customers with outstanding value through innovative products and services. Caraustar has developed its leadership position in the industry through diversification and integration from raw materials to finished products. Caraustar serves the four principal recycled boxboard product end- use markets: tubes, cores and composite cans; folding cartons; gypsum facing paper and miscellaneous other specialty paperboard products.