8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: November 6, 2007
(Date of Earliest Event Reported)
Commission file number: 1-3203
CHESAPEAKE CORPORATION
(Exact name of registrant as specified in its charter)
Virginia			54-0166880
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
1021 East Cary Street
Richmond, Virginia			23219
(Address of principal executive offices)			(Zip Code)
Registrant's telephone number, including area code: 804-697-1000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ]Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ]Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ]Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ]Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On November 6, 2007 Chesapeake Corporation (the "Company" or "Chesapeake") issued a press release announcing third quarter 2007 results. The information contained in the press release, which is attached as Exhibit 99.1 to this report, is incorporated herein by reference. On November 6, 2007 Chesapeake held a conference call with investors to discuss the third quarter 2007 results. The manuscript of this conference call, which is attached as Exhibit 99.2 to this report, is incorporated herein by reference. The information in this Form 8-K and the exhibits attached shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing made by Chesapeake under the Securities Act of 1933, as amended.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c)	Exhibits
	99.1	Press release, issued on November 6, 2007, announcing third quarter 2007 results
	99.2	Manuscript for conference call held on November 6, 2007, discussing third quarter 2007 results

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CHESAPEAKE CORPORATION
		(Registrant)
Date:  November 6, 2007	BY:	/s/ Guy N. A. Faller
		Guy N. A. Faller
		Controller
		(Principal Accounting Officer)

EXHIBIT INDEX
Exhibit No.	Description of Exhibit
99.1	Press release, issued on November 6, 2007, announcing third quarter 2007 results
99.2	Manuscript for conference call held on November 6, 2007, discussing third quarter 2007 results

EX-99.1

Exhibit 99.1

NEWS RELEASE

For Immediate Release

November 6, 2007

Chesapeake Reports Third-Quarter 2007 Results

RICHMOND, Va. - Chesapeake Corporation (NYSE: CSK) today reported financial results for the third quarter of 2007.

Third-Quarter 2007 Financial Highlights

w  Net sales of $266.4 million were up 7 percent when compared to the third quarter of 2006, and were up 1 percent excluding the effect of changes in foreign currency exchange rates.

w  Operating income exclusive of gains or losses on divestitures and restructuring expenses, asset impairments and other exit costs (collectively "special items") was $13.2 million, up $1.5 million when compared to the third quarter of 2006, and was up $0.3 million compared to the third quarter of 2006 excluding the effect of changes in foreign currency exchange rates.

w  Income from continuing operations was $3.7 million, or $0.19 per share, compared to $5.4 million, or $0.28 per share, for the third quarter of 2006. Excluding special items, income from continuing operations was $6.6 million, or $0.34 per share, compared to $2.6 million, or $0.13 per share, for the third quarter of 2006.

"We remain on track to have improved operating results for 2007 compared to 2006," said Andrew J. Kohut, Chesapeake president & chief executive officer. "Solid earnings growth in our plastics packaging business and benefits from our global cost savings program have offset competitive market conditions in certain end-use markets in our paperboard packaging business. We have made significant progress in aligning the organization and focusing our people to capture growth opportunities with our customers."

Segment Results

The following discussion compares the results of the business segments for the third quarter of 2007 with the third quarter of 2006 and excludes the effect of changes in foreign currency exchange rates and special items.

Paperboard Packaging

Net sales for the third quarter of 2007 were down 2 percent, or $4.8 million, compared to the same period in 2006. The decline in sales for the third quarter was primarily due to lower sales of branded products packaging. The sales decline in branded products packaging was due to decreased sales of tobacco packaging resulting from the previously announced loss of substantial business with a major customer, partially offset by increased sales of confectionery packaging. Sales of pharmaceutical packaging in the third quarter of 2007 were comparable with the same period in 2006.

Operating income for the third quarter of 2007 increased 4 percent, or $0.5 million, compared to the same period in 2006. The improvement in operating income was primarily due to reductions in pension and other postretirement benefits expense, partially offset by lower operating income from sales of tobacco packaging and startup costs due to the introduction of a new tube product for the alcoholic drinks market.

Plastic Packaging

Net sales for the third quarter of 2007 increased 19 percent, or $6.3 million, over the comparable quarter in 2006. The increase in net sales during the quarter was due to increased volume throughout the segment, particularly in the South Africa beverage operation, and the partial pass-through of higher raw material costs.

Operating income for the third quarter of 2007 was up 7 percent, or $0.2 million, compared to the same period in 2006. The increase in operating income was primarily due to increased volume throughout the segment, partially offset by higher raw material costs and a less favorable product mix.

Special Items

In November 2005, the company announced a $25-million global cost savings program aimed at improving or rationalizing underperforming operations, improving operational processes and reducing the overall company-wide cost structure. Since the program's inception, the company has recorded net pre-tax charges for divestitures and restructuring, asset impairments and other exit costs of approximately $32.5 million ($7.9 million of which are included in discontinued operations) and made cash payments related to program initiatives of approximately $29.5 million. In addition, the company has recovered approximately $26.7 million of cash in sale proceeds on operations and other assets divested under this program. During 2006 and 2007 the company has realized annualized cost savings in excess of our $25-million goal. The company is now evaluating potential additional restructuring and cost savings actions.

Special items for the third quarter of 2007 included restructuring expenses, asset impairments and other exit costs of $3.3 million. These charges were primarily associated with planned workforce reductions in the tobacco packaging business as a result of reduced volume, as well as other workforce reductions under the company's $25-million global cost savings program. Special items for the third quarter of 2006 included restructuring expenses, asset impairments and other exit costs of $1.6 million, which were more than offset by a gain on divestiture of $4.1 million.

Cash Flow

Net cash generated by operating activities was $15.4 million for the first nine months of 2007, compared to $1.5 million for the first nine months of 2006. The increase in net cash generated by operating activities was primarily due to decreased spending associated with the global cost savings program, reduced pension funding and lower working capital requirements. Exclusive of restructuring spending, net cash generated by operating activities was $24.2 million for the first nine months of 2007 compared to $14.6 million for the first nine months of 2006.

Total debt at September 30, 2007 was $503.2 million compared to $467.8 million at December 31, 2006. Changes in foreign currency exchange rates increased total debt approximately $18.2 million at the end of the third quarter of 2007 compared to the end of year 2006.

Income Taxes

The company's effective income tax rate is heavily influenced by the relationship of U.S. to non-U.S. pre-tax income (losses), as well as by management's expectations as to the recovery of its U.S. and certain foreign jurisdiction deferred income tax assets and any settlements of income tax contingencies with income tax authorities.

During July 2007, the company completed negotiations with a non-U.S. tax authority to allow additional deductions of certain interest payments. As a result, in the third quarter of 2007, the company recorded a $3.5 million income tax benefit related to the 2005 and 2006 tax years and a $1.5 million benefit related to the first six months of 2007. In addition, the company recorded a net tax benefit of $1.2 million in the third quarter of 2007 resulting from changes in U.K. tax law and changes in statutory tax rates in Germany and the U.K.

Conference Call

Chesapeake will hold a conference call today at 11 a.m. Eastern Standard Time to discuss its third-quarter 2007 results. The conference call may be accessed via the Investor Relations section of Chesapeake Corporation's website at http://www.cskcorp.com. Simply click on the "Investor Relations" button in the left column, then on "Conference Calls." A replay of the webcast will be available later today in that same section of Chesapeake's website.

About Chesapeake Corporation

Chesapeake Corporation is a leading international supplier of value-added specialty paperboard and plastic packaging with headquarters in Richmond, Va. The company is one of Europe's premier suppliers of folding cartons, leaflets and labels, as well as plastic packaging for niche markets. Chesapeake has 47 locations in Europe, North America, Africa and Asia and employs approximately 5,500 people worldwide.

Forward-looking Statements

This news release, including the comments by Andrew J. Kohut, contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause Chesapeake's actual results to differ materially from those expressed in the forward-looking statements including, but not limited to: the company's inability to realize the full extent of the expected savings or benefits from the $25-million global cost savings program and to complete such activities in accordance with its planned timetable and within the expected cost range; the effects of competitive products and pricing; changes in production costs, particularly for raw materials such as folding carton and plastics materials, and the ability of the company to pass through increases in raw material costs to its customers; fluctuations in demand; possible recessionary trends in U.S. and global economies; changes in government policies and regulations; changes in interest rates and credit availability; fluctuations in foreign currency exchange rates; the ability of the company to remain in compliance with its debt covenants; and other risks that are detailed from time to time in reports filed by the company with the Securities and Exchange Commission.

Chesapeake Corporation
Consolidated Income Statements (Unaudited)
(in millions, except per share data)
	Third Quarter						Year-to-Date
	2007			2006			2007			2006
Net sales	$	266.4		$	247.9		$	789.3		$	737.4
Costs and expenses:
Cost of products sold		219.0			205.2			649.3			608.6
Selling, general and administrative expenses		35.2			31.9			104.5			99.1
Restructuring expenses, asset impairments and other exit costs (a)		3.3			1.6			15.0			7.7
Gain on divestitures (b)		-			(4.1	)		-			(3.1	)
Other income, net		1.0			0.9			2.0			3.1
Operating income		9.9			14.2			22.5			28.2
Interest expense, net		11.5			10.1			33.0			29.1
Loss on extinguishment of debt		-			-			-			0.6
(Loss) income from continuing operations before taxes		(1.6	)		4.1			(10.5	)		(1.5	)
Income tax benefit		(5.3	)		(1.3	)		(3.4	)		(2.4	)
Income (loss) from continuing operations		3.7			5.4			(7.1	)		0.9
Discontinued operations, net of taxes (c)		(0.5	)		(1.3	)		(1.6	)		(6.3	)
Net income (loss)	$	3.2		$	4.1		$	(8.7	)	$	(5.4	)
Diluted earnings per share:
Income (loss) from continuing operations	$	0.19		$	0.28		$	(0.37	)	$	0.04
Discontinued operations, net of taxes		(0.03	)		(0.07	)		(0.08	)		(0.32	)
Net income (loss)	$	0.16		$	0.21		$	(0.45	)	$	(0.28	)
Weighted average shares and equivalents outstanding - diluted		19.4			19.4			19.4			19.4
(a) Restructuring expenses, asset impairments and other exit costs in 2006 primarily represents costs associated
with restructuring initiatives under the company's $25-million global cost savings program. These charges for
2007 also include employee related costs for planned workforce reductions at tobacco packaging
manufacturing facilities.
(b) Gain on divestitures for 2006 reflects the net gain on the sale of the company's plastic packaging operation in
Northern Ireland.
(c) Discontinued operations during 2006 primarily reflects the historical operating results of the company's
French luxury packaging business. For 2007 discontinued operations is primarily related to the tax treatment
of the disposition of assets of Wisconsin Tissue Mills Inc. in 1999.

Chesapeake Corporation
Consolidated Balance Sheets (Unaudited)
($ in millions)
	September 30,		December 31,
	2007		2006
Assets
Current assets:
Cash and cash equivalents	$	4.3	$	7.8
Accounts receivable, net		161.9		146.7
Inventories, net		124.0		109.4
Other current assets		36.6		23.0
Total current assets		326.8		286.9
Property, plant and equipment, net		366.1		354.1
Goodwill		396.1		381.2
Other assets		101.7		92.6
Total assets	$	1,190.7	$	1,114.8
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	244.1	$	220.7
Current portion of long-term debt		11.3		11.8
Income taxes payable		3.5		18.1
Dividends payable		-		4.4
Total current liabilities		258.9		255.0
Long-term debt		491.9		456.0
Pension and postretirement benefits		90.8		102.7
Deferred income taxes		5.3		9.6
Long-term income taxes payable		28.0		-
Other long-term liabilities		70.3		57.8
Stockholders' equity		245.5		233.7
Total liabilities and stockholders' equity	$	1,190.7	$	1,114.8

Chesapeake Corporation
Business Segment Highlights (Unaudited)
($ in millions)
	First			Second			Third			Year-to-
	Quarter			Quarter			Quarter			Date
Net sales:
2007
Paperboard Packaging	$	225.3		$	207.2		$	224.6		$	657.1
Plastic Packaging		46.7			43.7			41.8			132.2
	$	272.0		$	250.9		$	266.4		$	789.3
2006
Paperboard Packaging	$	205.8		$	202.1		$	214.4		$	622.3
Plastic Packaging		47.4			34.2			33.5			115.1
	$	253.2		$	236.3		$	247.9		$	737.4
Operating income (loss):
2007
Paperboard Packaging	$	12.8		$	7.0		$	13.7		$	33.5
Plastic Packaging		7.0			6.0			3.1			16.1
Corporate		(3.8	)		(4.7	)		(3.6	)		(12.1	)
Restructuring expenses, asset impairments and
other exit costs		(0.8	)		(10.9	)		(3.3	)		(15.0	)
	$	15.2		$	(2.6	)	$	9.9		$	22.5
2006
Paperboard Packaging	$	9.5		$	10.4		$	12.3		$	32.2
Plastic Packaging		5.7			3.5			2.7			11.9
Corporate		(4.0	)		(4.0	)		(3.3	)		(11.3	)
Restructuring expenses, asset impairments and
other exit costs		(4.0	)		(2.1	)		(1.6	)		(7.7	)
(Loss) gain on divestitures		(1.0	)		-			4.1			3.1
	$	6.2		$	7.8		$	14.2		$	28.2
Depreciation and amortization:
2007
Paperboard Packaging	$	11.4		$	10.9		$	11.4		$	33.7
Plastic Packaging		1.7			1.8			1.8			5.3
Corporate		0.1			-			-			0.1
	$	13.2		$	12.7		$	13.2		$	39.1
2006
Paperboard Packaging	$	12.2		$	12.0		$	12.2		$	36.4
Plastic Packaging		2.4			1.9			1.8			6.1
Corporate		-			0.1			-			0.1
Discontinued Operations		0.1			0.1			-			0.2
	$	14.7		$	14.1		$	14.0		$	42.8

Chesapeake Corporation
Non-GAAP Financial Measures (Unaudited)
($ in millions, except per share data)
Non-GAAP Financial Measures
The company presents the following non-GAAP measures of results: operating income; income (loss) from continuing operations; earnings per share from continuing operations; and cash flows from operating activities. Each is adjusted to exclude special items which include goodwill impairment charges, gains (losses) on the extinguishment of debt, gains (losses) on divestitures, restructuring expenses, asset impairments and other exit costs, and cash spending for restructuring activities.
The company's management believes these non-GAAP measures provide investors, potential investors, securities analysts and others with useful information to evaluate the performance of the business, because they exclude gains and losses that management believes are not indicative of the ongoing operating results of the business. In addition, these non-GAAP measures are used by management to evaluate the operating performance of the company. The presentation of this additional information is not meant to be considered in isolation or as a substitute for operating income, income from continuing operations, earnings per share from continuing operations or cash flows from operating activities as determined in accordance with GAAP.
	Third Quarter												Year-to-Date
							Excluding												Excluding
	GAAP Basis						Special Items						GAAP Basis						Special Items
CONSOLIDATED RESULTS	2007			2006			2007			2006			2007			2006			2007			2006
Operating income (loss)	$	9.9		$	14.2		$	13.2		$	11.7		$	22.5		$	28.2		$	37.5		$	32.8
Income/(loss) from continuing operations		3.7			5.4			6.6			2.6			(7.1	)		0.9			5.8			4.3
Earnings/(loss) per share from continuing operations		0.19			0.28			0.34			0.13			(0.37	)		0.04			0.29			0.21
Net cash (used in) provided by operating activities		-			2.5			4.6			5.6			15.4			1.5			24.2			14.6
Capital expenditures		8.8			5.5			8.8			5.5			33.7			25.9			33.7			25.9
	Third Quarter						Percent Change						Year-to-Date						Percent Change
							GAAP			Local									GAAP			Local
SEGMENT RESULTS	2007			2006			Basis			Currency				2007			2006		Basis			Currency
Net sales:
Paperboard Packaging	$	224.6		$	214.4			4.8	%		-2.2	%	$	657.1		$	622.3			5.6	%		-2.2	%
Plastic Packaging		41.8			33.5			24.8	%		18.8	%		132.2			115.1			14.9	%		12.9	%
	$	266.4		$	247.9			7.5	%		0.6	%	$	789.3		$	737.4			7.0	%		0.1	%
Operating income:
Paperboard Packaging	$	13.7		$	12.3			11.4	%		4.1	%	$	33.5		$	32.2			4.0	%		-4.0	%
Plastic Packaging		3.1			2.7			14.8	%		7.4	%		16.1			11.9			35.3	%		28.6	%
Corporate		(3.6	)		(3.3	)		9.1	%		9.1	%		(12.1	)		(11.3	)		7.1	%		7.1	%
Restructuring expenses, asset
impairments, and other exit costs		(3.3	)		(1.6	)		106.3	%		93.8	%		(15.0	)		(7.7	)		94.8	%		80.5	%
Gain on divestitures		-			4.1			-100.0	%		-100.0	%		-			3.1			-100.0	%		-100.0	%
	$	9.9		$	14.2			-30.3	%		-37.3	%	$	22.5		$	28.2			-20.2	%		-28.4	%

Chesapeake Corporation
Non-GAAP Financial Measures (Unaudited)
($ in millions, except per share data)
	Third Quarter					Year-to-Date
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES	2007		2006			2007			2006
Operating income	$	9.9	$	14.2		$	22.5		$	28.2
Add: restructuring expenses, asset impairments and other
exit costs		3.3		1.6			15.0			7.7
Add: (gain) loss on divestitures		-		(4.1	)		-			(3.1	)
Operating income exclusive of special items	$	13.2	$	11.7		$	37.5		$	32.8
Income (loss) from continuing operations	$	3.7	$	5.4		$	(7.1	)	$	0.9
Add: restructuring expenses, asset impairments and other
exit costs after taxes		2.9		1.3			12.9			5.7
Add: (gain) loss on divestitures after taxes		-		(4.1	)		-			(2.9	)
Add: loss on extinguishment of debt after taxes		-		-			-			0.6
Income from continuing operations exclusive of special
items and extinguishment of debt	$	6.6	$	2.6		$	5.8		$	4.3
Earnings (loss) per share from continuing operations	$	0.19	$	0.28		$	(0.37	)	$	0.04
Add: restructuring expenses, asset impairments and other
exit costs after taxes		0.15		0.06			0.66			0.29
Add: (gain) loss on divestitures after taxes		-		(0.21	)		-			(0.15	)
Add: loss on extinguishment of debt after taxes		-		-			-			0.03
Earnings per share from continuing operations exclusive of special items
and extinguishment of debt	$	0.34	$	0.13		$	0.29		$	0.21
Cash flows from operating activities	$	-	$	2.5		$	15.4		$	1.5
Add: cash spending for restructuring activities		4.6		3.1			8.8			13.1
Cash flows from operating activities exclusive of special items	$	4.6	$	5.6		$	24.2		$	14.6
# # #
Media Relations Contact:
Joseph C. Vagi
Manager - Corporate Communications
(804) 697-1110
joe.vagi@cskcorp.com
www.cskcorp.com
Investor Relations Contact:
Joel K. Mostrom
Executive Vice President & Chief Financial Officer
(804) 697-1147
joel.mostrom@cskcorp.com
www.cskcorp.com

EX-99.2

Exhibit 99.2

3Q CONFERENCE CALL SCRIPT

November 6, 2007

JKM Opening Comments

Good morning and welcome to Chesapeake Corporation's third-quarter conference call. I'm Joel Mostrom, executive vice president and chief financial officer, and joining me today is Andy Kohut, our president and chief executive officer.

Andy will begin with some overall comments on our business. I will then provide a financial review of the results for the third quarter. After that we will be available for questions.

Before we get started, I want to advise all participants that this call is being recorded by Chesapeake Corporation and is copyrighted material. It cannot be recorded or rebroadcast without Chesapeake's express permission. Furthermore, the comments on this call may include "forward-looking statements" as defined in the Private Securities Litigation Reform Act. The accuracy of such forward-looking statements is subject to a number of risks, uncertainties and assumptions that may cause Chesapeake's actual results to differ materially from those expressed in the forward-looking statements. Certain of those risks, uncertainties and assumptions are set forth in the summary of this conference call, which will be posted on the Company's web site at the conclusion of this call. Additionally, during this call there may be references to certain non-GAAP financial information. This information has been reconciled to GAAP in the Company's earnings release which will also be posted on the Company's website at the conclusion of this call.

Now I will turn the call over to Andy.

AJK Comments

Thanks Joel.

We remain on track to have improved operating results, exclusive of special items, for calendar year 2007. Solid earnings growth in our plastic packaging segment and benefits from our global cost savings program have more than offset the effects of competitive market conditions in certain end-use markets in our paperboard packaging business. Additionally, we have made significant progress in aligning the organization and focusing our people on capturing growth opportunities with our customers.

We are also positioning ourselves for future growth and earnings improvement by expanding our footprint into additional markets. Within our plastics division, our new joint venture in Hungary to produce plastic containers for the specialty chemicals market started up in the third quarter, which was ahead of schedule. Our plastic packaging business in Africa also continues to provide us with numerous growth opportunities. In addition to the capacity we have added in South Africa, we are continuing to evaluate other growth opportunities in the region.

Within our pharmaceutical and healthcare division, our new paperboard packaging plant in China was dedicated in October. This facility offers advanced security and anti counterfeiting capabilities and I am pleased with the interest from our existing multinational customers who have scheduled trials for the facility

We are also continuing to work with our customers to develop innovative packaging solutions to meet their global needs. For example our pharmaceutical and healthcare division was recently named the primary provider of print material in Europe for one of our largest customers for a new weight loss drug being launched in Europe in 2008. Our ability to provide cartons, leaflets, labels and supply chain management services was instrumental in Chesapeake being chosen for this project. Likewise, during the quarter our branded products division obtained some significant commitments from customers for new business beginning in the first quarter of 2008 that will help offset the decline in tobacco packaging.

I continue to believe we compete in end use markets which provide solid growth opportunities with strong operating margins. However our debt levels remain high and are masking the underlying strength of our portfolio. I want to assure you that we are watching our cash usage and are focused on cash flow generation. At the same time it is important that we improve our competitiveness through a combination of cost savings and growth initiatives. However, those initiatives will require additional financial flexibility to implement and we are reviewing various options to facilitate these actions.

Joel will now provide more details on the third quarter results.

JKM COMMENTS

Thanks Andy.

This morning we reported third-quarter income from continuing operations of $3.7 million, or $0.19 per share, compared to $5.4 million, or $0.28 per share, for the third quarter of 2006.

We incurred charges for special items in the third quarters of both 2006 and 2007. The pre-tax charge of $3.3 million in the third quarter of 2007 included $1.0 million related to workforce reductions resulting from reduced tobacco packaging volume and $2.3 million related to companywide workforce reductions, process improvements and facility rationalizations included in our $25-million cost savings program. The pre-tax benefit of $2.5 million in the third quarter of 2006 included a gain of $4.1 million on the sale of our plastic packaging operation in Northern Ireland and charges of $1.6 million related to our cost savings program.

After taking those items into account, our operating income, exclusive of special items, for the third quarter of 2007 was $13.2 million, an increase of $1.5 million compared to operating income of $11.7 million for the third quarter of 2006.

Our operating income for the third quarter of 2007 was favorably impacted by changes in foreign currency exchange rates and decreased pension expense, which was the trend for the first two quarters as well. For the third quarter, changes in foreign currency exchange rates increased operating income approximately $1.2 million, and lower pension expense increased operating income approximately $1.2 million when compared to the third quarter of 2006.

I'll now review our operating results starting with the Paperboard Packaging segment. As has been our past practice, my discussion of segment operating income excludes goodwill impairments, restructuring expenses, asset impairments and gains or losses related to divestitures, or what we have referred to as special items.

Third quarter net sales of $225 million for the Paperboard Packaging segment were up 5% compared to net sales for the third quarter of 2006. Excluding changes in foreign currency exchange rates, net sales were down 2% quarter-over-quarter. The decrease in sales for the third quarter resulted from reduced sales of branded products packaging. Within the branded products packaging market, the sales decline was primarily due to decreased sales of tobacco packaging resulting from the previously announced loss of substantial business with a major customer. This decline was partially offset by increased sales of confectionery packaging, primarily within the German market. Sales of pharmaceutical and healthcare packaging were comparable quarter-over-quarter as increased sales in North America generally offset reduced sales in Europe.

The Paperboard Packaging segment's operating income for the third quarter of 2007 was $13.7 million, an increase of $1.4 million, or 11%, compared to the third quarter of 2006. Excluding changes in foreign currency exchange rates, which increased segment operating income $1.0 million for the quarter, segment operating income was up 4% compared to the third quarter of 2006. The increase in operating income for the quarter was primarily due to reduced pension expense, partially offset by the lower sales of tobacco packaging, as well as start-up costs we incurred with the introduction of new multi-shaped tubes for premium alcoholic drinks. The new product offering has been well received by our customers, but we are having some start-up production issues which are negatively impacting the profitability of this innovative product.

The Plastic Packaging segment had sales of $42 million in the third quarter of 2007, an increase of 25% from the third quarter of 2006. Excluding changes in foreign currency exchange rates, net sales were up 19% for the quarter. The increase in net sales for the third quarter resulted from increased sales in all of our markets due to both increased volume and the partial pass-through of higher raw material costs. Our beverage packaging operation in Africa continued to experience strong demand through the third quarter, and our specialty chemicals operation continued the strong performance we have seen all year.

The Plastic Packaging segment’s operating income was $3.1 million for the third quarter of 2007, an increase of $400,000, or 15%, from the third quarter of 2006. Excluding changes in foreign currency exchange rates, which increased segment operating income $200,000 for the quarter, segment operating income was up 7% compared to the third quarter of 2006. The increase in operating income for the third quarter was primarily due to increased sales of both beverage and specialty chemical packaging, partially offset by higher raw material costs and a less favorable product mix.

Turning back now to our consolidated results, we recorded income tax benefits in the third quarters of both 2007 and 2006. As I mentioned last quarter, in July we completed negotiations with a non-U.S. tax authority to allow additional deductions of certain interest payments. As a result, in the third quarter of 2007 we recorded a $3.5 million income tax benefit related to our 2005 and 2006 tax years and a $1.5 million income tax benefit related to the first half of 2007. In addition we recorded a net tax benefit of $1.2 million in the third quarter of 2007 resulting from changes in UK tax law and changes in the statutory tax rates in Germany and the UK. In the third quarter of 2006 we recorded an income tax benefit of $2.3 million resulting from our reassessment of the recoverability of deferred income tax assets in France following the sale of our French luxury packaging business.

Net cash generated by operating activities was $15.4 million for the first nine months of 2007, an increase of $13.9 million over the first nine months of 2006. The increase in operating cash flow was primarily due to a decrease in spending of $4.3 million associated with our restructuring activities, a decrease in pension funding of approximately $5.1 million, and lower working capital requirements. Excluding cash used for restructuring, net cash provided by operating activities was $24.2 million for the first nine months of 2007, compared to $14.6 million for the first nine months of 2006.

                Total debt at September 30, 2007 was $503.2 million compared to $467.8 million at December 31, 2006. Changes in foreign currency exchange rates increased total debt approximately $18.2 million at the end of the third quarter of 2007 compared to the end of year 2006. Likewise, foreign exchange rates increased interest expense approximately $500,000 during the third quarter of 2007, over the comparable quarter in 2006.

At the end of the third quarter our senior credit facility utilization was $154 million and we were in compliance with all of our debt covenants. Under our senior secured credit facility our total leverage ratio decreases and our interest coverage ratio increases at the end of the first quarter 2008. These covenants have been in place since the credit facility was originated in 2004. The credit facility matures in February 2009 and our intent has always been to refinance the credit agreement before these covenants take effect. However, if we do not refinance the credit agreement before the end of the first quarter there is a reasonable possibility that we will not be able to comply with these covenants. Although we anticipate that we will refinance the credit facility by the end of the first quarter of 2008, we are also evaluating other options and working closely with our lenders to ensure our future compliance with these covenants.

Before we entertain questions, I want to summarize the results of our global cost savings program. Since the inception of the $25 million cost savings program, we have recorded net charges for divestitures and restructuring, asset impairments and other exit costs of approximately $32.5 million for the program, of which $7.9 million is included in discontinued operations. We have made cash payments related to program initiatives of approximately $29.5 million, but we have also recovered approximately $26.7 million in cash proceeds for operations and other assets divested under this program. Over the course of 2006 and 2007 we have realized annualized cost savings in excess of our $25 million goal. We are continuing to evaluate the possible closure, downsizing, consolidation or sale of additional facilities and additional cost savings measures beyond the original $25 million cost savings program.

Now at this time we would be happy to take your questions.

JKM Close

I'd like to remind everyone today's call will be available for replay on our website, www.cskcorp.com or can be accessed by calling 888-203-1112 or 719-457-0820 (code 6807094).

This concludes today's call. Thank you for participating.