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Original Source: FD (FAIR DISCLOSURE) WIRE
UNIDENTIFIED SPEAKER: We are pleased that Ron Domanico, Chief Financial Officer from Caraustar, is here to begin the presentation on the Company. But as you know, before we begin we are required to make a number of conflict of interest and related disclosures in connection with our participation at this conference and the Company that we may discuss. If you would like to review these important disclosures, they are in the back of the room in packet form, and for those of you on the Web, they are online as well.
Let me leave it there. Again, we are very pleased that Ron Domanico, CFO of Caraustar, is here today. Ron as you know joined Caraustar as Vice President and CFO in October of '02 and was named to Caraustar's Board of Directors in 2006. Ron? Take it away, please.
RON DOMANICO, CFO, CARAUSTAR: Thank you, George, and thanks to the Bank of America for the invitation to join your conference today.
Before we get started I would like to introduce Janice Kuntz, who is responsible for Investor Relations at Caraustar. If you would like to be added to our mailing list or have any additional questions, please contact her.
As George just went through the rules of the road for B of A in this conference we do have a forward-looking statement as well and I am not going to read it, but we will obviously follow the rules and move forward from there.
Caraustar is a vertically integrated recycled boxboard manufacturer. We have four principal businesses. We've got a recovered fiber group that collects brokers and sells approximately 2.5 million tons of recovered fiber. The numbers you see on this chart represents trade business only. It does not include intercompany business which is eliminated upon consolidation.
The recovered fiber loses about 5.8% of its weight as it moves into our recycled boxboard operations. We have 10 URB mills uncoated recycled (technical difficulties), and one coated recycled boxboard mill in Tama, Iowa. Approximately 48% of the boxboard produced at these mills is sold to the trade. The other 52% is converted into two classes of products.
On the lower left on this chart you can see one class is our tube and core operations which, in 2007, had approximately $300 million of revenue. We are the number two producer of tubes and cores in the United States with approximately a 30% share of the market. On the right hand side of the chart you can see the other form of converted products which are folding cartons. Caraustar is number five following the Graphic Altivity merger in the past few weeks. Revenue for that business is just about $215 million in 2007.
Caraustar is the largest uncoated recycled boxboard producer in United States with over 1100 tons of capacity if you include our joint venture mill in premier boxboard in Indiana. We have sales that are divided in three principal categories, chips and [facing] paper, tube and core, and specialty products.
Specialty products represent boxboard that is used in bookbinding, binder stiffeners, ledger backing, picture frame backing, air filters, furniture and puzzles in games. You can see the other competitors on this chart.
Long before it was popular to be green, Caraustar has been. From our inception 70 years ago we have been committed to preserving the environment. We produce only 100% recycled paperboard and every ton of recycled paper saves approximately 17 trees and three cubic yards of landfill. So the boxboard that we produce, approximately 1.1 million tons last year, would represent about 18.7 million saved trees and the business that we collect through the recovery of fiber and production (technical difficulty) in our boxboard saves almost 50 million trees in one year.
Caraustar has been very active in the sustainability movement. We are members of the Sustainability Packaging Coalition Institute of Packaging Professionals and other organizations listed on this chart. But we have been focused on renewable, recyclable, responsible and sustainability for over 70 years.
Our industry is a difficult one. Manufacturing continues to migrate offshore. That pace has slowed as what has moved offshore is about all that can go offshore. This country will still produce food products which require packaging and manufacturing of construction materials which need to be close to home, based on their value to weight ratio.
We continue to feel the unfavorable effects of product substitution. That's products formerly in boxes such as detergent and food products can move to plastic packaging or resealable pouches. Our primary raw material recovered fiber is very volatile, especially due to external forces from the United States, and prices tend to move up and down as does availability of product due to normal cycles in the United States.
Energy costs, I don't need to tell anybody in this room, are historically high and volatile. Oil last night was just under $106 a …