<PAGE>   1


================================================================================

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549  

                                   FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
         EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1997

                                       or

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         AND EXCHANGE ACT OF 1934

For the transition period from                    to
                               ------------------    ------------------

                     Commission File Number:     0-20646   
                                              ------------

                           CARAUSTAR INDUSTRIES, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          North Carolina                                   58-1388387         
--------------------------------------          -------------------------------
 (State or other jurisdiction of                (I.R.S. Employer Identification
 incorporation or organization)                              Number)

                             3100 Washington Street
                            Austell, Georgia  30001          
                    ----------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (770) 948-3101     
                               ------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                              X  Yes      No
                             ---      ---

Indicate the number of shares outstanding of each of issuer's classes of common
stock, as of the latest practicable date, May 7, 1997.


  Common Stock, $.10 par value                          24,612,160
----------------------------------                   ----------------
          (Class)                                      (Outstanding)

                                                                              
================================================================================
<PAGE>   2

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997



                          CARAUSTAR INDUSTRIES, INC.




                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                                      PAGE
<S>                                                                                                                    <C>
PART I - FINANCIAL INFORMATION

Item 1.             Condensed Consolidated Financial Statements:                                                        

                    Condensed Consolidated Balance Sheets as of March 31, 1997                                          3
                    and December 31, 1996

                    Condensed Consolidated Statements of Income for the three-month                                     4
                    periods ended March 31, 1997 and March 31, 1996

                    Condensed Consolidated Statements of Cash Flows for the three-month                                 5
                    periods ended March 31, 1997 and March 31, 1996

                    Notes to Condensed Consolidated Financial Statements                                                6

Item 2.             Management's Discussion and Analysis of Financial                                                   7
                    Condition and Results of Operations for the three-month
                    periods ended March 31, 1997 and March 31, 1996


PART II - OTHER INFORMATION

Item 4.             Submission of Matters to a Vote of Security Holders                                                11

Item 6.             Exhibits and Reports on Form 8-K                                                                   12


SIGNATURES                                                                                                             13

EXHIBIT INDEX                                                                                                          14


</TABLE>


                                      -2-
<PAGE>   3

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART I, ITEM 1.


                  CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                                                                  March 31,               December 31,
                                                                                    1997                     1996*   
                                                                                  --------                ------------
                                                                                 (Unaudited)
<S>                                                                               <C>                     <C>
                                                          ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                                      $  15,635               $  11,989
   Receivables, net                                                                  65,110                  59,789
   Inventories                                                                       46,170                  46,468
   Refundable income taxes                                                             -                      5,620
   Other current assets                                                               5,067                   3,187
                                                                                  ---------               ---------
              Total current assets                                                  131,982                 127,053
                                                                                  ---------               ---------
PROPERTY, PLANT AND EQUIPMENT:
   Land                                                                               5,640                   5,640
   Buildings and improvements                                                        77,486                  74,837
   Machinery and equipment                                                          327,021                 313,379
   Furniture and fixtures                                                             9,226                   9,098
                                                                                  ---------               ---------
                                                                                    419,373                 402,954
   Less accumulated depreciation                                                   (152,745)               (146,120)
                                                                                  ---------               ---------
   Property, plant and equipment, net                                               266,628                 256,834
                                                                                  ---------               ---------
GOODWILL, net                                                                        85,817                  81,124
                                                                                  ---------               ---------
OTHER ASSETS                                                                         11,360                  11,269
                                                                                  ---------               ---------
                                                                                  $ 495,787               $ 476,280
                                                                                  =========               =========

                                          LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
   Current maturities of long-term debt                                           $      29               $      29
   Cash overdraft                                                                    10,455                  11,230
   Accounts payable                                                                  30,535                  31,117
   Accrued liabilities                                                               29,120                  28,840
   Income taxes payable                                                                 980                    -
   Dividends payable                                                                  3,463                   3,501
                                                                                  ---------               ---------
              Total current liabilities                                              74,582                  74,717
                                                                                  ---------               ---------
REVOLVING CREDIT LOANS                                                              120,000                 100,000
                                                                                  ---------               ---------
LONG-TERM DEBT, less current maturities                                              85,458                  83,261
                                                                                  ---------               ---------
DEFERRED INCOME TAXES                                                                25,878                  24,787
                                                                                  ---------               ---------
DEFERRED COMPENSATION                                                                 5,669                   5,727
                                                                                  ---------               ---------
OTHER LIABILITIES                                                                     3,700                   3,782
                                                                                  ---------               ---------
MINORITY INTEREST                                                                    13,798                  13,436
                                                                                  ---------               ---------
COMMITMENTS AND CONTINGENCIES (NOTE 4)

SHAREHOLDERS' EQUITY:
   Preferred stock, $.10 par value; 5,000,000 shares authorized;
       none issued                                                                     -                       -
   Common stock, $.10 par value; 60,000,000 shares authorized,
       24,820,763 and 25,053,460 shares issued and outstanding
       at March 31, 1997 and December 31, 1996, respectively                          2,482                   2,505
   Additional paid-in capital                                                       128,015                 140,144
   Retained earnings                                                                 36,205                  27,921
                                                                                  ---------               ---------
                                                                                    166,702                 170,570
                                                                                  ---------               ---------
                                                                                  $ 495,787               $ 476,280
                                                                                  =========               =========
</TABLE>

   *Condensed from audited financial statements.
   The accompanying notes are an integral part of these condensed consolidated
   balance sheets.


                                     -3-

                                       
<PAGE>   4

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART I, ITEM 1.


                  CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                         Three Months Ended
                                                                                              March 31,              
                                                                                  ---------------------------------
                                                                                    1997                    1996
                                                                                    ----                    ----
                                                                                             (Unaudited)
<S>                                                                               <C>                     <C>
SALES                                                                             $ 164,535               $ 151,619
FREIGHT                                                                               6,952                   7,100
                                                                                  ---------               ---------
       Net sales                                                                    157,583                 144,519

COST OF SALES                                                                       113,763                 101,179
                                                                                  ---------               ---------
       Gross profit                                                                  43,820                  43,340

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                         21,710                  19,054
                                                                                  ---------               ---------
       Operating income                                                              22,110                  24,286

OTHER (EXPENSE) INCOME:
Interest expense                                                                     (3,255)                 (2,154)
Interest income                                                                          70                     132
Equity in income of unconsolidated affiliates                                           816                    -
Other, net                                                                              (59)                      5
                                                                                  ---------               ---------
                                                                                     (2,428)                 (2,017)
                                                                                  ---------               ---------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST                                     19,682                  22,269

MINORITY INTEREST                                                                      (362)                   -

PROVISION FOR INCOME TAXES                                                            7,579                   8,718
                                                                                  ---------               ---------
NET INCOME                                                                        $  11,741               $  13,551
                                                                                  =========               =========

PRIMARY
-------

NET INCOME PER COMMON SHARE                                                       $    0.47              $     0.53
                                                                                  =========               =========
Primary weighted average number of shares outstanding                             $  25,163               $  25,538
                                                                                  =========               =========

FULLY DILUTED
-------------

NET INCOME PER COMMON SHARE                                                       $    0.47               $    0.53
                                                                                  =========               =========
Fully diluted weighted average number of shares outstanding                       $  25,163               $  25,611
                                                                                  =========               =========

</TABLE>

The accompanying notes are an integral part of these condensed consolidated
statements of income.



                                     -4-

<PAGE>   5

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART I, ITEM 1.


                  CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         Three Months Ended
                                                                                              March 31,              
                                                                                  ---------------------------------
                                                                                    1997                    1996
                                                                                    ----                    ----
                                                                                           (Unaudited)
<S>                                                                               <C>                     <C>
Cash provided by (used in)
   Operating activities:
       Net income                                                                 $  11,741               $  13,551
       Adjustments for noncash charges                                                7,802                   5,568
       Changes in current assets and liabilities                                     (1,043)                 12,461
                                                                                  ---------               ---------
       Net cash provided by operating activities                                     18,500                  31,580
                                                                                  ---------               ---------
   Investing activities:
       Purchases of property, plant and equipment                                   (10,949)                 (7,835)
       Acquisitions of businesses                                                      -                    (22,365)
       Other                                                                          1,818                    (589)
                                                                                  ---------               ---------
       Net cash used for investing activities                                        (9,131)                (30,789)
                                                                                  ---------               ---------
   Financing activities:
       Proceeds from revolving credit loans                                          20,000                  35,000
       Repayments of revolving credit loans                                            -                    (10,000)
       Repayments of long-term debt                                                     (72)                    (22)
       Dividends paid                                                                (3,501)                 (3,076)
       Proceeds from issuances of stock                                               1,643                     629
       Purchases of stock                                                           (23,605)                (20,312)
       Other                                                                           (188)                   (156)
                                                                                  ---------               --------- 
       Net cash (used in) provided by
         financing activities                                                        (5,723)                  2,063
                                                                                  ---------               ---------
   Net increase in cash and cash equivalents                                          3,646                   2,854
   Cash and cash equivalents at beginning of period                                  11,989                   8,785
                                                                                  ---------               ---------
   Cash and cash equivalents at end of period                                     $  15,635               $  11,639
                                                                                  =========               =========

   Cash payments for:
       Interest                                                                   $   1,622               $     441
                                                                                  =========               =========
       Income taxes                                                               $     874               $   1,054
                                                                                  =========               =========



</TABLE>

The accompanying notes are an integral part of these condensed consolidated
statements of cash flows.


                                       -5-


<PAGE>   6

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART I, ITEM 1.


                           CARAUSTAR INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1997
                                  (UNAUDITED)


Note 1.       Basis of Presentation

              The financial information included herein is unaudited; however,
              such information reflects all adjustments (consisting of normal
              recurring adjustments) which are, in the opinion of management,
              necessary for a fair statement of results for the interim
              periods.  The results of operations for the three months ended
              March 31, 1997 are not necessarily indicative of the results to
              be expected for the full year.

Note 2.       Common Stock Purchase Plan

              During the first quarter of 1997, the Company purchased and
              retired approximately 875,000 shares of its common stock pursuant
              to a plan authorized and approved by its board of directors.
              These purchases were made in a series of open market transactions
              at an aggregate cost of $23.6 million and at prices ranging from
              $22.25 to $31.94 per share.  The Company has cumulatively
              purchased 1,895,000 shares since January 1996.  The Company's
              board of directors has authorized purchases of up to 2,105,000
              additional shares.

Note 3.       Acquisitions

              On March 31, 1997, the Company acquired all of the outstanding
              stock of The New General Packaging Service, Inc. ("NGP") in
              exchange for approximately 416,000 shares of the Company's common
              stock, valued at $10.0 million.  NGP, located in Clifton, New
              Jersey, is a primary packager of pharmaceutical and medical
              products as well as numerous health, beauty and personal care
              products.  The Company has accounted for this acquisition as a
              purchase and has accordingly allocated the purchase price to the
              acquired assets and liabilities assumed based on their estimated
              fair values at the date of acquisition.  This allocation
              resulted in goodwill of $5.3 million which will be amortized over
              40 years.  The NGP acquisition is not expected to have a material
              effect on the operations of the Company.

Note 4.       Commitments and Contingencies

              The Company is involved in certain litigation arising in the
              ordinary course of business.  In the opinion of management, the
              ultimate resolution of these matters will not have a material
              adverse effect on the Company's financial position or results of
              operations.



                                     -6-

<PAGE>   7

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART I, ITEM 2.



                           CARAUSTAR INDUSTRIES, INC.
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS


The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial condition and operating
results during the periods included in the accompanying condensed consolidated
financial statements.


QUARTERS ENDED MARCH 31, 1997 AND 1996

Net sales for the quarter ended March 31, 1997 increased 9.0 percent to $157.6
million from $144.5 million in the same period last year.  The Company's 80
percent-owned joint venture with Tenneco Packaging, Inc., acquired in the third
quarter of 1996, accounted for $24.8 million of sales during the first quarter
of 1997.  On a same-plant basis, excluding this acquisition from the current
quarter's sales and dispositions from the year-earlier quarter's sales, net
sales declined 2.6 percent.  This decline was due primarily to lower average
selling prices for paperboard and tube and core converted products combined
with lower unit volume for converted folding cartons, partially offset by
higher sales of paperstock to outside customers.  Average same-mill paperboard
net selling price per ton was down $12, or 3.0 percent, in the quarter to $390
versus the first quarter of 1996.  Average net selling price per ton for
converted tubes and cores was down $30, or 4.1 percent, to $700.

The following tables set forth certain operating data regarding the Company's
volume and gross paper margins for the periods indicated:


<TABLE>
<CAPTION>
                                                             The Quarter
                                                           Ended March 31,                               
                                                           ---------------                               % 
                                                          1997           1996          Change         Change
                                                          ----           ----          ------         ------
<S>                                                       <C>            <C>            <C>            <C>
Production source of tons sold (in thousands):
     From paperboard mill production                      227.7          176.3          51.4            29.1%
     Outside purchases                                     18.4           24.0          (5.6)          -23.3%
                                                          -----          -----         -----                
          Total paperboard tonnage                        246.1          200.3          45.8            22.9%
                                                          =====          =====         =====                
Tons sold by market (in thousands):
     Tube, core and can volume                             61.9           61.9           0.0             0.0%
     Folding carton volume                                 69.5           27.6          41.9           151.8%
     Gypsum facing paper volume                            65.2           62.5           2.7             4.3%
     Other specialty volume                                49.5           48.3           1.2             2.5%
                                                          -----          -----         -----                
          Total paperboard tonnage                        246.1          200.3          45.8            22.9%
                                                          =====          =====         =====                

</TABLE>

                                     -7-


<PAGE>   8

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART I, ITEM 2.



<TABLE>
<CAPTION>
                                                             The Quarter
                                                           Ended March 31,                                
                                                           ---------------                               %
                                                          1997           1996          Change         Change
                                                          ----           ----          ------         ------
<S>                                                       <C>            <C>           <C>            <C>
Gross paper margins ($/ton):

     Mill
          Average same-mill net selling price             $ 390          $ 402          $ (12)          -3.0%
          Average same-mill recovered fiber cost             74             71              3            4.2%
                                                          -----          -----          -----               
                Mill gross paper margin                   $ 316          $ 331          $ (15)          -4.5%
                                                          =====          =====          =====               

     Tube and core
          Average net selling price                       $ 700          $ 730          $ (30)          -4.1%
          Average paperboard cost                           389            400            (11)          -2.8%
                                                          -----          -----          -----               
                Tube and core gross paper margin          $ 311          $ 330          $ (19)          -5.8%
                                                          =====          =====          =====               

</TABLE>

Tons sold from paperboard mill production (consisting of sales to outside
customers and transfers to the Company's converting operations) increased 29.1
percent to 227.7 thousand tons in the quarter compared with the first quarter
of 1996.  On a same-mill basis, tons sold were essentially unchanged from the
year-earlier quarter at 176.5 thousand tons.  Purchases of paperboard from
outside manufacturers (primarily gypsum facing paper for resale, tube, core and
can grades for internal conversion, and folding carton grades for internal
conversion) decreased 23.3 percent from the year-earlier quarter to 18.4
thousand tons.  Total paperboard tonnage thus increased 22.9 percent to 246.1
thousand tons in 1997 versus 200.3 thousand tons in the first quarter last
year.  On a same-plant basis, total paperboard tonnage increased 1.6 percent to
203.5 thousand tons for the first quarter.  Tube, core and can volume was
unchanged on a quarter-over- quarter basis; folding carton volume (including
the Tenneco Packaging joint venture) increased 151.8 percent; gypsum facing
paper volume increased 4.3 percent; and other specialty volume increased 2.5
percent.  On a same-plant basis, folding carton volume increased 2.6 percent.

The Company's gross margin decreased to 27.8 percent of net sales from 30.0
percent in the first quarter of 1996.  This margin decrease was due primarily
to lower gross paper margins (selling prices less raw materials costs) at the
Company's paperboard mills and tube and core converting facilities combined
with the acquisition of other operations with lower margins, as a percent of
sales, than the Company's other operations.  Recovered fiber, which is derived
from recycled paperstock, is the Company's only significant raw material.
Historically, the cost of recovered fiber has fluctuated significantly due to
market and industry conditions.  For example, the Company's average recovered
fiber cost per ton of paperboard produced increased from $43 per ton in 1993 to
$144 per ton in 1995, an increase of 235 percent, before dropping to $66 per
ton in 1996.  Although the Company raised its selling prices in response to the
increase in raw material costs, it was not able to maintain its operating
margins during the entire period.  There can be no assurance that the Company
will be able to recoup any future increases in the cost of recovered fiber by
raising the prices of its products.  Average same-mill recovered fiber cost per
ton produced was $3 higher for the first quarter of 1997 at $74 versus $71 for
the same period last year.  This increase combined with the $12 per ton
decrease in average net selling price resulted in a $15 per ton lower gross
paper margin for paperboard.  Average paperboard cost per ton consumed at the
Company's tube and core converting facilities decreased $11 to $389.  This
decrease offset by the $30 per ton decrease in average net selling price
resulted in a $19 per ton decrease in the gross paper margin for tube and core
converted products in the first quarter of 1997 versus the same period last
year.

Operating income declined $2.2 million, or 9.0 percent, to $22.1 million from
$24.3 million in the first quarter of 1996.  Operating income at comparable
facilities (excluding the impact of the acquisitions and dispositions) declined
$3.2 million, or 13.5 percent, due primarily to lower margins at the Company's
paperboard mills and tube and core converting operations and a 7.0 percent
decline in unit volume of converted folding cartons.  Selling, general and
administrative expenses increased $2.7 million in the first quarter of 1997
compared with the same period of last year.  Excluding the acquisition and
dispositions, these expenses were unchanged from the year-earlier period.

Interest expense increased to $3.3 million in the first quarter of 1997 from
$2.2 million in the first quarter of 1996 as the result of higher outstanding
balances under the Company's revolving credit facility.


                                     -8-


<PAGE>   9

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART I, ITEM 2.



Income from unconsolidated affiliates was $816 thousand for the first quarter
of 1997 versus none for the same period of last year.  This income was
primarily derived from the Company's 50 percent equity interest in the joint
venture with Temple-Inland, formerly Standard Gypsum Corporation, which has
operated as a joint venture since the second quarter of 1996.

Net income decreased 13.4 percent from $13.6 million in the first quarter of
1996 to $11.7 million.  Fully diluted net income per common share decreased
11.3 percent from $0.53 to $0.47 for the first quarter of 1997.  Fully diluted
weighted average shares outstanding declined 1.7 percent to 25,163,000 shares 
for the first quarter of 1997, primarily due to share purchases under the 
Company's stock purchase program.


LIQUIDITY AND CAPITAL RESOURCES

On March 31, 1997, the Company had loans of $120.0 million outstanding under its
revolving credit facility versus $35.0 million on March 31, 1996 and $100.0
million on December 31, 1996.  The additional borrowings since December 31, 1996
along with internally generated cash were used to fund the Company's purchases
of shares under its stock purchase program.  Loans under the revolving credit
facility bear interest, payable monthly, at the Eurodollar rate plus a margin
based on the Company's consolidated leverage ratio, as defined in the revolving
credit agreement.  For the three months ended March 31, 1997 and 1996 and for
the year ended December 31, 1996, the weighted average borrowings outstanding
under the revolving credit facility during such periods bore interest at 5.74
percent, 5.79 percent and 5.71 percent, respectively. Other long-term debt, less
current maturities, primarily the Company's senior  notes on which interest
accrues at 7.74 percent, was $85.5 million at March 31, 1997 versus $83.4
million at March 31, 1996 and $83.3 million at December 31, 1996.  The increase
was due to the Company's assumption of approximately $2.3 million of debt in
conjunction with the March 31, 1997 acquisition of The New General Packaging
Service, Inc. (NGP).  The Company subsequently repaid this  debt during the
second quarter of 1997.

Cash generated from operations was $18.5 million for the first quarter of 1997
compared with $31.6 million for the same period last year.  The decrease in
1997 compared to the first quarter of 1996 was primarily due to unfavorable
changes in working capital including inventory, other current assets, accounts
payable and accrued liabilities combined with lower net income.

Capital expenditures, excluding acquisitions, were $10.9 million in the first
quarter of 1997 versus $7.8 million for the same period last year.  Capital
expenditures of approximately $52.5 million are anticipated for 1997.

Cash dividends of $3.5 million were paid in the first quarter of 1997 versus
$3.1 million in the same period last year.  The Company's senior notes
agreement contains a provision which limits the payment of dividends, on a
cumulative basis, to a base amount plus 33 percent of the Company's cumulative
consolidated net income since October 1992.  The Company does not believe that
this provision will limit its ability to pay dividends at its
current rate or limit its ability to increase dividends in the future.  The 
revolving credit facility contains no specific limitations on the payment of 
dividends.

On March 31, 1997, the Company acquired all of the outstanding stock of NGP in
exchange for approximately 416,000 shares of the Company's common stock, valued
at $10.0 million.  NGP, located in Clifton, New Jersey, is a primary packager
of pharmaceutical and medical products as well as numerous health, beauty and
personal care products.

During the first quarter of 1997, the Company purchased and retired
approximately 875,000 shares of its common stock.  These purchases were made in
a series of open market transactions, at prices ranging from $22.25 to $31.94
per share, totaling $23.6 million.  These purchases were primarily funded with
borrowings under the revolving credit facility.  The Company has cumulatively
purchased 1,895,000 shares since January 1996.  The Company's board of
directors has authorized purchases of up to 2,105,000 additional shares, and
the Company intends to continue such purchases, subject to market conditions
and availability, but there can be no assurance as to the completion, timing or
prices of such future purchases.


                                     -9-


<PAGE>   10

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART I, ITEM 2.



The Company anticipates that it will be able to meet its funding needs for the
possible acquisition of additional facilities, working capital, capital
expenditures and additional stock purchases through internally generated cash
and borrowings under its revolving credit facility.


FORWARD-LOOKING INFORMATION

This Report on Form 10-Q, including "Management's Discussion and Analysis of
Financial Condition and Results of Operations," may contain various
"forward-looking statements," within the meaning of Section 21E of the
Securities Exchange Act of 1934, that are based on management's belief and
assumptions, as well as information currently available to management.  When
used in this document, the words "anticipate," "estimate," "expect," and similar
expressions may identify forward-looking statements.  Although the Company
believes that the expectations reflected in any such forward- looking statements
are reasonable, it can give no assurance that such expectations will prove to be
correct.  Any such statements are subject to certain risks, uncertainties and
assumptions.  Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, the Company's actual financial
results, performance or condition may vary materially from those anticipated,
estimated or expected.  Among the key factors that may have a direct bearing on
the Company's actual financial results, performance or condition are
fluctuations in raw material prices and the economy in general, the degree and
nature of competition, demand for the Company's products, changes in government
regulations, the Company's ability to complete acquisitions and integrate the
operations of acquired businesses and other matters discussed in this Report and
the Company's other filings with the Securities and Exchange Commission.



                                     -10-

<PAGE>   11

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART I, ITEM 4.



Item 4.       Submission of Matters to a Vote of Security Holders

       The Company's annual shareholders' meeting was held on April 16, 1997.
       The matters voted upon at the meeting were (1) a proposal to elect three
       Class II directors (Bob M. Prillaman, Russell M. Robinson, II and H. Lee
       Thrash, III), (2) a proposal to ratify the selection of Arthur Andersen
       LLP as the Company's independent public accountants for fiscal 1997 and
       (3) a shareholder proposal concerning the elimination of staggered terms
       for directors.  Proposals (1) and (2) were approved, and proposal (3)
       was not approved, by the following margins:

<TABLE>
<CAPTION>
                                                  Votes         Votes Against                             Broker
         Proposal                                  For           or Withheld         Abstentions         Nonvotes
         --------                                  ---           -----------         -----------         --------
         <S>                                   <C>               <C>                 <C>                 <C>
         Election of Directors
             Bob M. Prillaman                  21,501,093          54,270                --                 --
             Russell M. Robinson, II           21,497,553          57,810                --                 --
             H. Lee Thrash, III                21,500,868          54,495                --                 --

</TABLE>



<TABLE>
<CAPTION>
                                                Votes           Votes Against                             Broker
         Proposal                                For             or Withheld         Abstentions         Nonvotes
         --------                                ---             -----------         -----------         --------
         <S>                                   <C>              <C>                  <C>                 <C>
         Ratification of Selection
             of Independent Public
             Accountants                       21,519,512             12,763             23,088              --

         Shareholder Proposal                   5,986,742         13,107,575            167,016           2,628,062

</TABLE>


                                     -11-

<PAGE>   12

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
PART II, ITEM 6.

                           CARAUSTAR INDUSTRIES, INC.


                          PART II.  OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K

            (a)  Exhibits

                 The Exhibits to this Report on Form 10-Q are listed in the
                 accompanying Exhibit Index.

            (b)  Reports on Form 8-K

                 There were no Current Reports on Form 8-K for the quarter
                 ended March 31, 1997.


                                     -12-


<PAGE>   13

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997



                                  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.


                                 CARAUSTAR INDUSTRIES, INC.
                                 
                                 
                                 
Dated:  May 14, 1997             /s/ H. Lee Thrash, III                        
                                 ---------------------------------------------
                                 By:  H. Lee Thrash, III
                                      Vice President and Chief Financial Officer
                                      (Principal Financial and Accounting 
                                      Officer)




                                     -13-

<PAGE>   14

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997



                              INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit No.     Description                                                                            Filed Herewith (*)
-----------     -----------                                                                            ------------------
<S>             <C>                                                                                    <C>
2.01            Contribution Agreement between Tenneco Packaging Inc. and Caraustar
                Industries, Inc. regarding the formation of a Partnership, dated as of
                June 21, 1996 (including Annex A, Form of Partnership Agreement), as amended
                by Amendment to Contribution Agreement dated July 15, 1996 (Incorporated by
                reference - Exhibit 2 to Current Report on Form 8-K dated July 15, 1996 [SEC
                File No. 0-20646])

3.01            Amended and Restated Articles of Incorporation of the Company (Incorporated by
                reference - Exhibit 3.01 to Annual Report for 1992 on Form 10-K [SEC File No.
                0-20646])

3.02            Second Amended and Restated Bylaws of the Company (Incorporated by reference -
                Exhibit 3.02 to Annual Report for 1992 on Form 10-K [SEC File No. 0-20646])

4.01            Specimen Common Stock Certificate (Incorporated by reference - Exhibit 4.01 to
                Registration Statement on form S-1 [SEC File No. 33-50582])

4.02            Articles 3 and 4 of the Company's Amended and Restated Articles of
                Incorporation (included in Exhibit 3.01)

4.03            Article II of the Company's Second Amended and Restated Bylaws (included in
                Exhibit 3.02)

4.04            Rights Agreement, dated as of April 19, 1995, between Caraustar Industries,
                Inc. and First Union National Bank of North Carolina, as Rights Agent
                (Incorporated by reference - Exhibit 1 to Current Report on Form 8-K dated
                April 19, 1995 [SEC File No. 0-20646])

10.01           Credit Agreement, dated as of June 2, 1995, by and among the Company, the
                Banks signatory thereto from time to time, NationsBank, N.A. (Carolinas) as
                Administrative and Managing Agent, Bankers Trust Company, as Managing Agent
                and CIBC, Inc., as Co-Agent, as amended by First Amendment to Credit
                Agreement, dated as of July 31, 1995 (Incorporated by reference - Exhibit
                10.01 to Report on Form 10-Q for the quarter ended September 30, 1995 [SEC
                File No. 0-20646])

10.02           Note Agreement, dated as of October 1, 1992, between the Company and the
                Prudential Insurance Company of America, regarding the Company's 7.89% Senior
                Subordinated Notes (Incorporated by reference - Exhibit 10.02 to Annual Report
                for 1992 on Form 10-K [SEC File No. 0-20646])

10.03           Amendment Agreement, dated as of June 2, 1995, between the Company and the
                Prudential Insurance Company of America regarding the Company's 7.89% Senior
                Subordinated Notes (Incorporated by reference - Exhibit 10.03 to Report on
                Form 10-Q for the quarter ended September 30, 1995 [SEC File No. 0-20646])

</TABLE>


                                     -14-

<PAGE>   15

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997




<TABLE>
<S>             <C>                                                                                  <C>

10.04           Employment Agreement, dated December 31, 1990, between the Company and Thomas
                V. Brown (Incorporated by reference - Exhibit 10.06 to Registration Statement
                on Form S-1 [SEC File No. 33-50582])

10.05           Asset Purchase Agreement, dated August 7, 1992, between the Company and Domtar
                Gypsum Inc. (Incorporated by reference - Exhibit 10.07 to Registration
                Statement on Form S-1 [SEC File No. 33-50582])

10.06           Deferred Compensation Plan, together with copies of existing individual
                deferred compensation agreements (Incorporated by reference - Exhibit 10.08 to
                Registration Statement on Form S-1 [SEC File No. 33-50582])

10.07           1987 Executive Stock Option Plan (Incorporated by reference - Exhibit 10.09 to
                Registration Statement on Form S-1 [SEC File No. 33-50582])

10.08           1993 Key Employees' Share Ownership Plan (Incorporated by reference - Exhibit
                10.10 to Registration Statement on Form S-1 [SEC File No. 33-50582])

10.09           Energy Purchase Agreement, dated December 18, 1989, between Camden Paperboard
                Corporation and Camden Cogen, L.P. (Incorporated by reference - Exhibit 10.11
                to Registration Statement on Form S-1 [SEC File No. 33-50582])

10.10           Incentive Bonus Plan of the Company (Incorporated by reference - Exhibit 10.10
                to Annual Report for 1993 on Form 10-K [SEC File No. 0-20646])

10.11           Agreement and Plan of Merger, dated as of September 13, 1995, among the
                Company, CSAR Acquisition, Inc., GAR Holding Company and each of the
                stockholders, warrantholders and optionees of GAR Holding Company, as amended
                by Amendment No. 1 to Agreement and Plan of Merger dated as of October 31,
                1995 (Incorporated by reference - Exhibit 10.11 to Report on Form 10-Q for the
                quarter ended September 30, 1995 [SEC File No. 0-20646])

10.12           1996 Director Equity Plan of the Company (Incorporated by reference - Exhibit
                10.12 to Report on Form 10-Q for the quarter ended March 31, 1996 [SEC File
                No. 0-20646])

11.01           Computation of Earnings per Share                                                    *

27.01           Financial Data Schedule (For SEC purposes only)                                      *

</TABLE>



                                     -15-