UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549




---

FORM 10-Q

|           |  |                                                                                          
|---------- |  | -----------------------------------------------------------------------------------------
|          
|          
|          
|          
|(Mark One) |  |                                                                                          
|[X]        |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934 
|           |  | For the quarterly period ended September 30, 2000                                        
|OR        
|          
|          
|          
|          
|[  ]       |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES 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
	incorporation or organization) |  | (I.R.S. Employer
	Identification Number)
|                                                               
|                                                               
|                                                               
|                                                               
|                                                               
|3100 Joe Jerkins Blvd., Austell, Georgia                        |  | 30106                                   
|(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.

Yes 
[X]                    No 
 [   ]

Indicate the number of shares outstanding of each of
issuers classes of common stock, as of the latest
practicable date, November 9, 2000.

|                             |  |              
|---------------------------- |  | -------------
|Common Stock, $.10 par value |  | 26,204,567   
|                             |  |              
|(Class)                      |  | (Outstanding)



---






---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000

CARAUSTAR INDUSTRIES, INC.

TABLE OF CONTENTS

|              |  |                                                                                                                                                                                     |    |      |    | 
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|              |  |                                                                                                                                                                                     |    | Page
|              |  |                                                                                                                                                                                     |    |     
|PART I       |  | FINANCIAL INFORMATION                                                                                                                                                               |    |      |    | 
|Item 1.       |  | Condensed Consolidated Financial Statements:                                                                                                                                        |    |      |    | 
|             
|             
|             
|             
|              |  | Condensed Consolidated Balance Sheets as of September 30, 2000
	and
	December 31, 1999.                                                                                             |    |      | 3  | 
|             
|             
|             
|             
|              |  | Condensed Consolidated Statements of Income for the three-month
	and nine-month periods ended September 30, 2000 and September
	30, 1999.                                           |    |      | 4  | 
|             
|             
|             
|             
|              |  | Condensed Consolidated Statements of Cash Flows for the
	nine-month periods ended September 30, 2000 and September 30,
	1999.                                                       |    |      | 5  | 
|             
|             
|             
|             
|              |  | Notes to Condensed Consolidated Financial Statements                                                                                                                                |    |      | 6  | 
|             
|             
|             
|             
|Item 2.       |  | Managements Discussion and Analysis of Financial Condition
	and Results of Operations for the three-month and nine-month
	periods ended September 30, 2000 and September 30, 1999. |    |      | 11 | 
|             
|             
|             
|             
|Item 3.       |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                          |    |      | 20 | 
|             
|             
|             
|             
|             
|PART II      |  | OTHER INFORMATION                                                                                                                                                                   |    |      |    | 
|             
|             
|             
|             
|Item 1.       |  | Legal Proceedings                                                                                                                                                                   |    |      | 21 | 
|             
|             
|             
|             
|Item 6.       |  | Exhibits and Reports on Form 8-K                                                                                                                                                    |    |      | 21 | 
|             
|             
|             
|             
|Signatures    |  |                                                                                                                                                                                     | 22 |     
|             
|             
|             
|             
|Exhibit Index |  |                                                                                                                                                                                     | 23 |     

2



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000

PART I, ITEM 1.


CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)


|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |          |         | 
|--------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ------- | ------------ | ------- | - | ------- | -------- | ------- | 
|                                        |                                                                                                                                                                                 | September 30,             |         | December 31,
|                                        |                                                                                                                                                                                 | 2000                      |         | 1999*       
|                                        |                                                                                                                                                                                 |                           |         |             
|                                        |                                                                                                                                                                                 | (Unaudited)               |         |             
|ASSETS                                 
|                                       
|                                       
|                                       
|                                       
|CURRENT ASSETS:                         |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and cash equivalents                                                                                                                                                       |                           | $       | 855          |         |   | $       | 18,771   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Receivables, net                                                                                                                                                                |                           |         | 108,798      |         |   |         | 108,819  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Inventories                                                                                                                                                                     |                           |         | 101,996      |         |   |         | 89,770   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Refundable income taxes                                                                                                                                                         |                           |         | 11,614       |         |   |         | 1,985    |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other current assets                                                                                                                                                            |                           |         | 11,807       |         |   |         | 7,777    |        
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                        |                                                                                                                                                                                 | Total current assets      |         |              | 235,070 |   |         |          | 227,122 | 
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|PROPERTY, PLANT AND EQUIPMENT:          |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                       
|                                       
|                                       
|                                       
|                                        | Land                                                                                                                                                                            |                           |         | 12,663       |         |   |         | 12,312   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Buildings and improvements                                                                                                                                                      |                           |         | 125,948      |         |   |         | 125,126  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Machinery and equipment                                                                                                                                                         |                           |         | 600,153      |         |   |         | 580,892  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Furniture and fixtures                                                                                                                                                          |                           |         | 11,606       |         |   |         | 8,984    |        
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                        |                                                                                                                                                                                 |                           |         |              | 750,370 |   |         |          | 727,314 | 
|                                       
|                                       
|                                       
|                                       
|                                        | Less accumulated depreciation                                                                                                                                                   |                           |         | (276,297     | )       |   |         | (247,458 | )      
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                        | Property, plant and equipment, net                                                                                                                                              |                           |         | 474,073      |         |   |         | 479,856  |        
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|GOODWILL, net                           |                                                                                                                                                                                 |                           | 147,911 |              |         |   | 140,763 |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|INVESTMENT IN UNCONSOLIDATED AFFILIATES |                                                                                                                                                                                 |                           | 72,648  |              |         |   | 22,111  |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|OTHER ASSETS                            |                                                                                                                                                                                 |                           | 6,528   |              |         |   | 8,791   |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                        |                                                                                                                                                                                 |                           |         | $            | 936,230 |   |         | $        | 878,643 | 
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                       
|                                       
|                                       
|                                       
|LIABILITIES AND SHAREHOLDERS EQUITY   
|                                       
|                                       
|                                       
|                                       
|CURRENT LIABILITIES:                    |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                       
|                                       
|                                       
|                                       
|                                        | Current maturities of long-term debt                                                                                                                                            |                           | $       | 16,583       |         |   | $       | 16,615   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable                                                                                                                                                                |                           |         | 53,462       |         |   |         | 62,454   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued liabilities                                                                                                                                                             |                           |         | 43,432       |         |   |         | 43,755   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Dividends payable                                                                                                                                                               |                           |         | 4,699        |         |   |         | 4,572    |        
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                        |                                                                                                                                                                                 | Total current liabilities |         |              | 118,176 |   |         |          | 127,396 | 
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|REVOLVING CREDIT LOANS                  |                                                                                                                                                                                 |                           | 194,000 |              |         |   | 140,000 |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|LONG-TERM DEBT, less current maturities |                                                                                                                                                                                 |                           | 269,730 |              |         |   | 269,739 |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|DEFERRED INCOME TAXES                   |                                                                                                                                                                                 |                           | 58,964  |              |         |   | 49,153  |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|DEFERRED COMPENSATION                   |                                                                                                                                                                                 |                           | 2,685   |              |         |   | 3,164   |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|OTHER LIABILITIES                       |                                                                                                                                                                                 |                           | 7,448   |              |         |   | 9,786   |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|MINORITY INTEREST                       |                                                                                                                                                                                 |                           | 1,108   |              |         |   | 946     |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|COMMITMENTS AND CONTINGENCIES           |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                       
|                                       
|                                       
|                                       
|SHAREHOLDERS EQUITY:                   |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                       
|                                       
|                                       
|                                       
|                                        | Preferred stock, $.10 par value; 5,000,000 shares authorized;
	none issued                                                                                                      |                           |         | 0            |         |   |         | 0        |        
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock, $.10 par value; 60,000,000 shares authorized,
	26,186,734 and 25,488,280 shares issued and outstanding at
	September 30, 2000 and December 31, 1999, respectively |                           |         | 2,619        |         |   |         | 2,549    |        
|                                       
|                                       
|                                       
|                                       
|                                        | Additional paid-in capital                                                                                                                                                      |                           |         | 160,276      |         |   |         | 149,509  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Retained earnings                                                                                                                                                               |                           |         | 121,982      |         |   |         | 126,935  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated other comprehensive income                                                                                                                                          |                           |         | (758         | )       |   |         | (534     | )      
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                        |                                                                                                                                                                                 |                           | 284,119 |              |         |   | 278,459 |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         
|                                        |                                                                                                                                                                                 | $                         | 936,230 |              |         | $ | 878,643 |         
|                                        |                                                                                                                                                                                 |                           |         |              |         |   |         |         






The accompanying notes are an integral part of these condensed
consolidated balance sheets.

3



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000 
 PART I, ITEM 1.

CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)


|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |         |         |  
|------------------------------------------------------- | --------------------------------------------- | ------------------ | ------- | ----------------- | ------- | ---- | ------- | ------ | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                                        |                                               |                    |         |                  
|                                                        |                                               | Three Months Ended |         | Nine Months Ended
|                                                        |                                               | September 30,      |         | September 30,    
|                                                        |                                               |                    |         |                  
|                                                        |                                               | 2000               |         | 1999              |         | 2000 |         | 1999  
|                                                        |                                               |                    |         |                   |         |      |         |       
|                                                        |                                               |                    |         |                  
|                                                        |                                               | (Unaudited)        |         | (Unaudited)      
|                                                       
|                                                       
|                                                       
|                                                       
|SALES                                                   |                                               | $                  | 249,592 |                   |         | $    | 254,349 |        |         | $ | 779,073 |         |         | $ | 675,959 |        
|                                                       
|                                                       
|                                                       
|                                                       
|FREIGHT                                                 |                                               |                    | 12,861  |                   |         |      | 13,057  |        |         |   | 38,710  |         |         |   | 34,646  |        
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|                                                        |                                               | Net sales          |         |                   | 236,731 |      |         |        | 241,292 |   |         |         | 740,363 |   |         |         | 641,313 |  
|                                                       
|                                                       
|                                                       
|                                                       
|COST OF SALES                                           |                                               |                    | 188,909 |                   |         |      | 188,015 |        |         |   | 581,608 |         |         |   | 487,955 |        
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|                                                        |                                               | Gross profit       |         |                   | 47,822  |      |         |        | 53,277  |   |         |         | 158,755 |   |         |         | 153,358 |  
|                                                       
|                                                       
|                                                       
|                                                       
|SELLING, GENERAL AND ADMINISTRATIVE EXPENSES            |                                               |                    | 34,459  |                   |         |      | 33,326  |        |         |   | 109,510 |         |         |   | 93,968  |        
|                                                       
|                                                       
|                                                       
|                                                       
|RESTRUCTURING COSTS                                     |                                               |                    | 8,564   |                   |         |      | 0       |        |         |   | 15,477  |         |         |   | 0       |        
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|                                                        |                                               | Operating income   |         |                   | 4,799   |      |         |        | 19,951  |   |         |         | 33,768  |   |         |         | 59,390  |  
|                                                       
|                                                       
|                                                       
|                                                       
|OTHER (EXPENSE) INCOME:                                 |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Interest expense                              |                    |         | (9,063            | )       |      |         | (7,552 | )       |   |         | (24,674 | )       |   |         | (17,802 | )      
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Interest income                               |                    |         | 59                |         |      |         | 100    |         |   |         | 316     |         |   |         | 465     |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Equity in income of unconsolidated affiliates |                    |         | 816               |         |      |         | 2,912  |         |   |         | 7,186   |         |   |         | 7,355   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Other, net                                    |                    |         | (259              | )       |      |         | (132   | )       |   |         | (609    | )       |   |         | (220    | )      
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|                                                        |                                               |                    |         |                   | (8,447  | )    |         |        | (4,672  | ) |         |         | (17,781 | ) |         |         | (10,202 | )
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|(LOSS) INCOME BEFORE INCOME TAXES AND MINORITY INTEREST |                                               |                    | (3,648  | )                 |         |      | 15,279  |        |         |   | 15,987  |         |         |   | 49,188  |        
|                                                       
|                                                       
|                                                       
|                                                       
|MINORITY INTEREST                                       |                                               |                    | (28     | )                 |         |      | (95     | )      |         |   | (161    | )       |         |   | (291    | )      
|                                                       
|                                                       
|                                                       
|                                                       
|(BENEFIT) PROVISION FOR INCOME TAXES                    |                                               |                    | (1,115  | )                 |         |      | 5,129   |        |         |   | 6,778   |         |         |   | 17,111  |        
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|NET (LOSS) INCOME                                       |                                               | $                  | (2,561  | )                 |         | $    | 10,055  |        |         | $ | 9,048   |         |         | $ | 31,786  |        
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|BASIC                                                   |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|NET (LOSS) INCOME PER COMMON SHARE                      |                                               | $                  | (0.10   | )                 |         | $    | 0.40    |        |         | $ | 0.35    |         |         | $ | 1.27    |        
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|Weighted average number of shares outstanding           |                                               |                    | 25,932  |                   |         |      | 25,100  |        |         |   | 25,780  |         |         |   | 24,942  |        
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|DILUTED                                                 |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|NET (LOSS) INCOME PER COMMON SHARE                      |                                               | $                  | (0.10   | )                 |         | $    | 0.40    |        |         | $ | 0.35    |         |         | $ | 1.27    |        
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        
|Diluted weighted average number of shares outstanding   |                                               |                    | 25,932  |                   |         |      | 25,212  |        |         |   | 25,791  |         |         |   | 25,069  |        
|                                                        |                                               |                    |         |                   |         |      |         |        |         |   |         |         |         |   |         |        

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

4



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
2000

PART I, ITEM 1.


CARAUSTAR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)


|                                                     |                                |                                                  |                                           |        |         |         |        |        |          |          |  
|---------------------------------------------------- | ------------------------------ | ------------------------------------------------ | ----------------------------------------- | ------ | ------- | ------- | ------ | ------ | -------- | -------- | -
|                                                     |                                |                                                 
|                                                     |                                | Nine Months Ended                               
|                                                     |                                | September 30,                                   
|                                                     |                                |                                                 
|                                                     |                                | 2000                                             |                                           | 1999  
|                                                     |                                |                                                  |                                           |       
|                                                     |                                |                                                 
|                                                     |                                | (Unaudited)                                     
|Cash provided by (used in)                           |                                |                                                  |                                           |        |         |         |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Operating activities:          |                                                  |                                           |        |         |         |        |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Net income                                       |                                           | $      | 9,048   |         |        | $      | 31,786   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Depreciation and amortization                    |                                           |        | 45,170  |         |        |        | 37,283   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Restructuring costs                              |                                           |        | 12,588  |         |        |        | 0        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Other noncash adjustments                        |                                           |        | 1,434   |         |        |        | (2,250   | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Changes in current assets and liabilities        |                                           |        | (34,913 | )       |        |        | (7,517   | )       
|                                                     |                                |                                                  |                                           |        |         |         |        |       
|                                                     |                                |                                                  | Net cash provided by operating activities |        |         | 33,327  |        |        |          | 59,302   |  
|                                                     |                                |                                                  |                                           |        |         |         |        |       
|                                                     | Investing activities:          |                                                  |                                           |        |         |         |        |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Purchases of property, plant and equipment       |                                           |        | (47,110 | )       |        |        | (25,923  | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Acquisitions of businesses, net of cash acquired |                                           |        | (4,007  | )       |        |        | (177,881 | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Investment in unconsolidated affiliates          |                                           |        | (50,809 | )       |        |        | 0        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Other                                            |                                           |        | 10,818  |         |        |        | 2,160    |         
|                                                     |                                |                                                  |                                           |        |         |         |        |       
|                                                     |                                |                                                  | Net cash used in investing activities     |        |         | (91,108 | )      |        |          | (201,644 | )
|                                                     |                                |                                                  |                                           |        |         |         |        |       
|                                                     | Financing activities:          |                                                  |                                           |        |         |         |        |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Proceeds from revolving credit loans             |                                           |        | 144,000 |         |        |        | 153,000  |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Repayments of revolving credit loans             |                                           |        | (90,000 | )       |        |        | (150,000 | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Proceeds from note issuance                      |                                           |        | 0       |         |        |        | 196,733  |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Repayments of long-term debt                     |                                           |        | (115    | )       |        |        | (33,672  | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Dividends paid                                   |                                           |        | (13,831 | )       |        |        | (13,424  | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Proceeds from issuances of stock                 |                                           |        | 460     |         |        |        | 1,024    |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                | Other                                            |                                           |        | (649    | )       |        |        | (616     | )       
|                                                     |                                |                                                  |                                           |        |         |         |        |       
|                                                     |                                |                                                  | Net cash provided by financing activities |        |         | 39,865  |        |        |          | 153,045  |  
|                                                     |                                |                                                  |                                           |        |         |         |        |       
|Net (decrease) increase in cash and cash equivalents |                                |                                                  | (17,916                                   | )      |         |         | 10,703 |       
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents at beginning of period     |                                |                                                  | 18,771                                    |        |         |         | 2,610  |       
|                                                     |                                |                                                  |                                           |        |         |         |        |       
|Cash and cash equivalents at end of period           |                                | $                                                | 855                                       |        |         | $       | 13,313 |       
|                                                     |                                |                                                  |                                           |        |         |         |        |       
|Supplemental Disclosures:                            |                                |                                                  |                                           |        |         |         |        |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cash payments for interest     |                                                  | $                                         | 17,229 |         |         | $      | 12,261 |         
|                                                     |                                |                                                  |                                           |        |         |         |        |       
|                                                     | Cash payments for income taxes |                                                  | $                                         | 8,939  |         |         | $      | 14,373 |         
|                                                     |                                |                                                  |                                           |        |         |         |        |       
|                                                     | Stock issued for acquisitions  |                                                  | $                                         | 10,547 |         |         | $      | 17,963 |         
|                                                     |                                |                                                  |                                           |        |         |         |        |       

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

5



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
2000

PART I, ITEM 1.


CARAUSTAR INDUSTRIES, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER 30, 2000


(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 nine months ended
September 30, 2000 are not necessarily indicative of the
results to be expected for the full year.



|         |             
|-------- | ------------
|Note  2. | Acquisitions

Each of the following acquisitions is being accounted for under
the purchase method of accounting, applying the provisions of
Accounting Principles Board Opinion No. 16. As a result,
the Company records the assets and liabilities of the acquired
companies at their estimated fair value with the excess of the
purchase price over these amounts being recorded as goodwill.
Actual allocations of goodwill and other identifiable assets
will be based on further studies and may change during the
allocation period, generally one year following the date of
acquisition. The pro forma impact of the following acquisitions
are not material to the interim operating results for the period
ending September 30, 2000.

In February 2000, the Company acquired all of the outstanding
stock of MilPak, Inc. in exchange for 248,132 shares of the
Companys common stock valued at $4.7 million and $4.7
million in cash. MilPak operates a facility located in Pine
Brook, New Jersey that provides blister packaging, cartoning and
labeling, and other contract packaging services. Goodwill of
approximately $6.0 million was recorded in connection with the
acquisition and is being amortized over 40 years.

In September 2000, the Company acquired all of the outstanding
stock of Arrow Paper Products in exchange for 342,743 shares of
the Companys common stock valued at $5.1 million. Arrow is
located in Saginaw, Michigan and operates two tube and core
converting facilities that serve customers in the automotive,
film, housewares and other specialty tube and core markets.
Goodwill of approximately $3.6 million was recorded in
connection with the acquisition and is being amortized over
40 years.



|         |                     
|-------- | --------------------
|Note  3. | Comprehensive Income

Total comprehensive income (loss), consisting of net income
(loss) plus other nonowner changes in equity, for the three
months ended September 30, 2000 and 1999 was ($2,587,000)
and $10,190,000, respectively. For the nine months ended
September 30, 2000 and 1999, total comprehensive income was
$8,824,000 and $31,771,000, respectively.



|         |                              
|-------- | -----------------------------
|Note  4. | New Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. SFAS
No. 133 established accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. It also requires that
an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure
those instruments at

6



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
2000


PART I, ITEM 1.




|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|fair value. In June 1999, the FASB issued SFAS No. 137,
        Accounting for Derivative Instruments and Hedging
        Activities  Deferral of the Effective Date of FASB
        Statement 133. This statement defers the effective
        date of SFAS No. 133 until the fiscal year ending
        December 31, 2001. In June 2000, the FASB issued SFAS
        No. 138, Accounting for Certain Derivative
        Instruments and Certain Hedging Activities (an amendment of FASB
        No. 133). This statement amends the accounting and
        reporting standards of SFAS No. 133 for certain derivative
        instruments and hedging activities. Management does not expect
        these pronouncements to have a significant impact on the
        Companys financial statements and will adopt the
        provisions of the pronouncements effective January 1, 2001.



|         |                    
|-------- | -------------------
|Note  5. | Segment Information

The Company operates principally in three business segments
organized by products. The paperboard segment consists of
facilities that manufacture 100 percent recycled uncoated
and clay-coated paperboard and facilities that collect recycled
paper and broker recycled paper and other paper rolls. The tube,
core and composite container segment is principally made up of
facilities that produce spiral and convolute-wound tubes, cores
and cans. The carton and custom packaging segment consists of
facilities that produce printed and unprinted folding and set-up
cartons and facilities that provide contract manufacturing and
contract packaging services. Intersegment sales are recorded at
prices which approximate market prices. Operating income
includes all costs and expenses directly related to the segment
involved. Corporate expenses include corporate, general,
administrative and unallocated information systems expenses.



|                                                                                                                   
|-------------------------------------------------------------------------------------------------------------------
|The following table presents certain business segment
        information for the periods indicated (in thousands):

|                                |                                    |                     |   |                     |         |      |   |         |         |  |   |         |         |  |   |         |         | 
|------------------------------- | ---------------------------------- | ------------------- | - | ------------------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                |                                    |                     |   |                    
|                                |                                    | Three Months        |   | Nine Months        
|                                |                                    | Ended September 30, |   | Ended September 30,
|                                |                                    |                     |   |                    
|                                |                                    | 2000                |   | 1999                |         | 2000 |   | 1999   
|                                |                                    |                     |   |                     |         |      |   |        
|Net sales (external customers): |                                    |                     |   |                     |         |      |   |         |         |  |   |         |         |  |   |        
|                               
|                               
|                               
|                               
|                                | Paperboard                         |                     | $ | 96,714              |         |      | $ | 105,045 |         |  | $ | 313,997 |         |  | $ | 272,772 |        
|                               
|                               
|                               
|                               
|                                | Tube, core and composite container |                     |   | 67,583              |         |      |   | 64,150  |         |  |   | 201,230 |         |  |   | 190,925 |        
|                               
|                               
|                               
|                               
|                                | Carton and custom packaging        |                     |   | 72,434              |         |      |   | 72,097  |         |  |   | 225,136 |         |  |   | 177,616 |        
|                                |                                    |                     |   |                     |         |      |   |         |         |  |   |         |         |  |   |        
|                                |                                    | Total               |   | $                   | 236,731 |      |   | $       | 241,292 |  |   | $       | 740,363 |  |   | $       | 641,313 | 
|                                |                                    |                     |   |                     |         |      |   |         |         |  |   |         |         |  |   |        
|Net sales (intersegment):       |                                    |                     |   |                     |         |      |   |         |         |  |   |         |         |  |   |        
|                               
|                               
|                               
|                               
|                                | Paperboard                         |                     | $ | 39,716              |         |      | $ | 32,654  |         |  | $ | 106,836 |         |  | $ | 88,896  |        
|                               
|                               
|                               
|                               
|                                | Tube, core and composite container |                     |   | 994                 |         |      |   | 814     |         |  |   | 3,372   |         |  |   | 2,106   |        
|                               
|                               
|                               
|                               
|                                | Carton and custom packaging        |                     |   | 243                 |         |      |   | 161     |         |  |   | 793     |         |  |   | 318     |        
|                                |                                    |                     |   |                     |         |      |   |         |         |  |   |         |         |  |   |        
|                                |                                    | Total               |   | $                   | 40,953  |      |   | $       | 33,629  |  |   | $       | 111,001 |  |   | $       | 91,320  | 
|                                |                                    |                     |   |                     |         |      |   |         |         |  |   |         |         |  |   |        
|Operating income:               |                                    |                     |   |                     |         |      |   |         |         |  |   |         |         |  |   |        
|                               
|                               
|                               
|                               
|                                | Paperboard(A)                      |                     | $ | 1,320               |         |      | $ | 13,714  |         |  | $ | 20,403  |         |  | $ | 43,216  |        
|                               
|                               
|                               
|                               
|                                | Tube, core and composite container |                     |   | 4,576               |         |      |   | 5,373   |         |  |   | 14,784  |         |  |   | 15,592  |        
|                               
|                               
|                               
|                               
|                                | Carton and custom packaging        |                     |   | 2,634               |         |      |   | 4,158   |         |  |   | 8,607   |         |  |   | 9,383   |        
|                                |                                    |                     |   |                     |         |      |   |         |         |  |   |         |         |  |   |        
|                                |                                    | Total               |   | $                   | 8,530   |      |   | $       | 23,245  |  |   | $       | 43,794  |  |   | $       | 68,191  | 

7



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
2000


PART I, ITEM 1.


|                                                        |                                               |                     |        |                     |   |      |        |        |   |   |         |         |   |   |        |         |  
|------------------------------------------------------- | --------------------------------------------- | ------------------- | ------ | ------------------- | - | ---- | ------ | ------ | - | - | ------- | ------- | - | - | ------ | ------- | -
|                                                        |                                               |                     |        |                    
|                                                        |                                               | Three Months        |        | Nine Months        
|                                                        |                                               | Ended September 30, |        | Ended September 30,
|                                                        |                                               |                     |        |                    
|                                                        |                                               | 2000                |        | 1999                |   | 2000 |        | 1999  
|                                                        |                                               |                     |        |                     |   |      |        |       
|Corporate expense                                       |                                               | $                   | (3,731 | )                   |   | $    | (3,294 | )      |   | $ | (10,026 | )       |   | $ | (8,801 | )      
|                                                        |                                               |                     |        |                     |   |      |        |        |   |   |         |         |   |   |        |        
|Operating income                                        |                                               |                     | 4,799  |                     |   |      | 19,951 |        |   |   | 33,768  |         |   |   | 59,390 |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Interest expense                              |                     |        | (9,063              | ) |      |        | (7,552 | ) |   |         | (24,674 | ) |   |        | (17,802 | )
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Interest income                               |                     |        | 59                  |   |      |        | 100    |   |   |         | 316     |   |   |        | 465     |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Equity in income of unconsolidated affiliates |                     |        | 816                 |   |      |        | 2,912  |   |   |         | 7,186   |   |   |        | 7,355   |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Other (net)                                   |                     |        | (259                | ) |      |        | (132   | ) |   |         | (609    | ) |   |        | (220    | )
|                                                        |                                               |                     |        |                     |   |      |        |        |   |   |         |         |   |   |        |        
|Income (loss) before income taxes and minority interest |                                               | $                   | (3,648 | )                   |   | $    | 15,279 |        |   | $ | 15,987  |         |   | $ | 49,188 |        
|                                                        |                                               |                     |        |                     |   |      |        |        |   |   |         |         |   |   |        |        






| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (A) | During the first quarter of 2000, the Company recorded a charge
	to operations of approximately $6.9 million in restructuring
	costs related to the closing of the Baltimore, Maryland
	paperboard mill. During the third quarter of 2000, the Company
	also recorded a charge to operations of approximately $8.6
	million in restructuring costs related to the closing of the
	Camden, New Jersey paperboard mill. Both of these restructuring
	costs were related to the paperboard segment and are reflected
	in the segments operating income (See Note 6).



|         |                    
|-------- | -------------------
|Note  6. | Restructuring Costs

In February 2000, the Company initiated a plan to close its
paperboard mill located in Baltimore, Maryland and recorded a
charge to operations of approximately $6.9 million. The plan to
close the mill was adopted in conjunction with the
Companys ongoing efforts to increase manufacturing
efficiency and reduce costs in its mill system. The $6.9 million
charge included a $5.7 million noncash asset impairment charge
to write-down machinery and equipment to net realizable value.
The charge also included a $604 thousand accrual for severance
and termination benefits for 21 salaried and 83 hourly
employees terminated in connection with this plan and a $613
thousand accrual for post-closing security, utilities and other
exit costs. As of September 30, 2000, one employee remained
to assist in marketing the land and building. The Company will
complete the exit plan upon the sale of the property, which is
anticipated to occur prior to December 31, 2001. The
remaining severance and termination benefits will be paid by
December 31, 2000.

The following is a summary of restructuring activity from plan
adoption to September 30, 2000 (unaudited):

|                                  |         |            |           |               |  |            |          |         |  |   |          |         |  |   |           |           | 
|--------------------------------- | ------- | ---------- | --------- | ------------- |  | ---------- | -------- | ------- |  | - | -------- | ------- |  | - | --------- | --------- | 
|                                  |         |            |           | Severance and |  |            |          |        
|                                  |         |            |           | Other         |  |            |          |        
|                                  |         | Asset      |           | Termination   |  | Other Exit |          |        
|                                  |         | Impairment |           | Benefits      |  | Costs      |          | Total  
|                                  |         |            |           |               |  |            |          |        
|First quarter 2000 provision      |         | $          | 5,696,000 |               |  | $          | 604,000  |         |  | $ | 613,000  |         |  | $ | 6,913,000 |          
|                                 
|                                 
|                                 
|                                 
|                                  | Noncash |            |           | 5,696,000     |  |            |          | 0       |  |   |          | 0       |  |   |           | 5,696,000 | 
|                                  |         |            |           |               |  |            |          |         |  |   |          |         |  |   |           |          
|                                  | Cash    |            |           | 0             |  |            |          | 604,000 |  |   |          | 613,000 |  |   |           | 1,217,000 | 
|                                 
|                                 
|                                 
|                                 
|First quarter 2000 cash activity  |         |            | 0         |               |  |            | (275,000 | )       |  |   | (204,000 | )       |  |   | (479,000  | )        
|                                  |         |            |           |               |  |            |          |         |  |   |          |         |  |   |           |          
|Balance as of March 31, 2000      |         | $          | 0         |               |  | $          | 329,000  |         |  | $ | 409,000  |         |  | $ | 738,000   |          
|                                  |         |            |           |               |  |            |          |         |  |   |          |         |  |   |           |          
|Second quarter 2000 cash activity |         |            | 0         |               |  |            | (183,000 | )       |  |   | (309,000 | )       |  |   | (492,000  | )        
|                                  |         |            |           |               |  |            |          |         |  |   |          |         |  |   |           |          
|Balance as of June 30, 2000       |         | $          | 0         |               |  | $          | 146,000  |         |  | $ | 100,000  |         |  | $ | 246,000   |          
|                                  |         |            |           |               |  |            |          |         |  |   |          |         |  |   |           |          
|Third quarter 2000 cash activity  |         |            | 0         |               |  |            | (141,000 | )       |  |   | (63,000  | )       |  |   | (204,000  | )        
|                                  |         |            |           |               |  |            |          |         |  |   |          |         |  |   |           |          
|Balance as of September 30, 2000  |         | $          | 0         |               |  | $          | 5,000    |         |  | $ | 37,000   |         |  | $ | 42,000    |          
|                                  |         |            |           |               |  |            |          |         |  |   |          |         |  |   |           |          

8



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
2000


PART I, ITEM 1.


In September 2000, the Company initiated a plan to close its
paperboard mill located in Camden, New Jersey and recorded a
pretax charge to operations of approximately $8.6 million. The
mill experienced a slowdown in wallboard shipments during the
third quarter of 2000, and the shut down was precipitated by the
refusal of the Companys largest gypsum facing paper
customer to continue purchasing facing paper under a long term
supply agreement. The $8.6 million charge included a $6.9
million noncash asset impairment write-down of fixed assets to
estimated net realizable value and a $558 thousand accrual for
severance and termination benefits for 19 salaried and
46 hourly employees terminated in connection with this
plan, as well as a $1.1 million accrual for post-closing
utility, security, leases, and other exit costs. As of
September 30, 2000, seven employees remained to collect
receivables, process payables and provide human resources
services to terminated employees. The remaining severance and
termination benefits will be paid by December 31, 2001.
This mill contributed net sales and operating income of $11.6
million and $1.2 million, respectively, for the nine months
ended September 30, 2000 and $13.7 million and $0.9
million, respectively, for the nine months ended
September 30, 1999. The Company is marketing the land and
building and will complete the exit plan upon the sale of the
property, which is anticipated to occur prior to
December 31, 2001.

The following is a summary of restructuring activity from plan
adoption to September 30, 2000 (unaudited):

|                                 |         |            |           |               |  |            |          |         |  |   |           |           |  |   |           |           | 
|-------------------------------- | ------- | ---------- | --------- | ------------- |  | ---------- | -------- | ------- |  | - | --------- | --------- |  | - | --------- | --------- | 
|                                 |         |            |           | Severance and |  |            |          |        
|                                 |         |            |           | Other         |  |            |          |        
|                                 |         | Asset      |           | Termination   |  | Other Exit |          |        
|                                 |         | Impairment |           | Benefits      |  | Costs      |          | Total  
|                                 |         |            |           |               |  |            |          |        
|Third quarter 2000 provision     |         | $          | 6,890,000 |               |  | $          | 558,000  |         |  | $ | 1,116,000 |           |  | $ | 8,564,000 |          
|                                
|                                
|                                
|                                
|                                 | Noncash |            |           | 6,890,000     |  |            |          | 0       |  |   |           | 0         |  |   |           | 6,890,000 | 
|                                 |         |            |           |               |  |            |          |         |  |   |           |           |  |   |           |          
|                                 | Cash    |            |           | 0             |  |            |          | 558,000 |  |   |           | 1,116,000 |  |   |           | 1,674,000 | 
|                                
|                                
|                                
|                                
|Third quarter 2000 cash activity |         |            | 0         |               |  |            | (378,000 | )       |  |   | (99,000   | )         |  |   | (477,000  | )        
|                                 |         |            |           |               |  |            |          |         |  |   |           |           |  |   |           |          
|Balance as of September 30, 2000 |         | $          | 0         |               |  | $          | 180,000  |         |  | $ | 1,017,000 |           |  | $ | 1,197,000 |          
|                                 |         |            |           |               |  |            |          |         |  |   |           |           |  |   |           |          



|         |                              
|-------- | -----------------------------
|Note  7. | Commitments and Contingencies

The Company is currently in litigation with its largest gypsum
facing paper customer, Georgia-Pacific Corporation
(G-P), over G-Ps refusal to continue
purchasing certain requirements of gypsum facing paper pursuant
to the terms of a long-term supply contract between the Company
and G-P. The contract was executed in April 1996 and terminates
on August 20, 2005, unless extended. The Company believes
that the express language of the contract requires G-P to
purchase all paper products used in wallboard manufacturing at
the G-P wallboard plants designated in the contract, and the
parties generally have performed their respective obligations
under the contract in accordance with this requirement since
inception. In the third quarter of 2000, G-P asserted the
position that the contract does not include certain grades of
facing paper and that G-P would manufacture these grades for
itself. Since then, G-P has substantially curtailed its
purchases of gypsum facing paper from the Company.

On August 16, 2000, the Company filed suit against G-P in
the General Court of Justice, Superior Court Division, of
Mecklenburg County, North Carolina (Case No. 
00-CVS-12302), asserting a claim for breach of contract based on
G-Ps refusal to continue making purchases under the
contract. The complaint seeks damages in excess of $100 million,
and was amended in October 2000 to request an injunction
requiring G-P to specifically perform its obligations under the
contract.

On September 1, 2000, G-P filed a separate action in the
Superior Court of Fulton County, Georgia (Case No. 
2000CV-27684), seeking a declaratory judgment in support of its
interpretation of the contract that its actions are not in
breach of the contract.

9



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
2000


PART I, ITEM 1.


The Company, as defendant in the Georgia case, has filed an
answer and motion seeking dismissal or stay of the Georgia case
pending resolution of the North Carolina case, and G-P has done
likewise with respect to the North Carolina case, but the
respective courts have yet to rule on these motions.

The Company and G-P also have engaged in settlement discussions
from time to time during the dispute, but have failed to reach
any agreement to date.

The Company intends to vigorously prosecute the North Carolina
action and defend the Georgia case in order to vindicate its
interpretation of the contract, but can give no assurance as to
the timing or outcome of the litigation. Based on the nature of
litigation generally and the course of developments in the North
Carolina and Georgia actions to date, the Company does not
believe that any resolution of the pending dispute will be
forthcoming in the near future. Accordingly, the Company
believes that its operating results and financial condition will
continue to be materially and adversely affected by the loss of
contract volume from G-P.

The Company is involved in certain other litigation arising in
the ordinary course of business. In the opinion of management,
the ultimate resolution of these matters (other than the
litigation described above with G-P) will not have a material
adverse effect on the Companys financial condition or
results of operations.

The Company has guaranteed one-half of the debt of its two
50-percent-owned joint ventures with Temple-Inland Forest
Products Corporation (Temple-Inland). At
September 30, 2000, the Companys portion of this
guaranteed debt totaled approximately $43.1 million. These joint
ventures are being accounted for under the equity method of
accounting.



|         |                  
|-------- | -----------------
|Note  8. | Subsequent Events

In October 2000, the Company completed the acquisition of
100  percent of the membership interests in Crane Carton
Company, LLC in exchange for 1,659,790 shares of the
Companys common stock valued at $18.9 million plus $6.4
million of assumed debt. Crane operates a single folding carton
manufacturing facility located in suburban Chicago, Illinois.

10



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000

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.

General

The Company is a major manufacturer of recycled paperboard and
converted paperboard products, operating principally in three
business segments. The paperboard segment consists of facilities
that manufacture 100 percent recycled uncoated and
clay-coated paperboard and facilities that collect recycled
paper and broker recycled paper and other paper rolls. The tube,
core and composite container segment is principally made up of
facilities that produce spiral and convolute-wound tubes, cores
and cans. The carton and custom packaging segment consists of
facilities that produce printed and unprinted folding and set-up
cartons and facilities that provide contract manufacturing and
contract packaging services.

The Company is vertically integrated to the extent that a large
portion of its paperboard production is consumed internally by
its converting segments (approximately 38 percent in the
first nine months of 2000). As part of its strategy to optimize
capacity utilization, the Company regularly purchases paperboard
from other manufacturers in an effort to minimize the potential
impact of demand declines on the Companys own mill system.
Additionally, each of the Companys mills can produce
recycled paperboard for more than one end-use product market,
which allows it to shift production between mills in response to
customer or market demands. The Company is also the only major
manufacturer to serve all four recycled boxboard end-use
markets: tube and core, folding carton, gypsum wallboard facing
paper and other specialty.

Recovered fiber, which is derived from recycled paper stock, is
the Companys only significant raw material. Historically,
the cost of recovered fiber has fluctuated significantly due to
market and industry conditions. Recovered fiber cost per ton
averaged $78 during 1999. Fiber costs rose steadily throughout
1999 and the first half of this year before beginning to
decrease, averaging $108 during the first nine months of 2000.
Although the Company raises its selling prices in response to
increases in raw material costs, it often is unable to maintain
its operating margins in the face of dramatic cost increases,
and it experiences short-term margin shrinkage during all
periods of price increases due to customary time lags in the
implementation of price increases. 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. There also can be no assurance that, even if the
Company is able to recoup such cost increases, its operating
margins and results of operations will not be materially and
adversely affected by time delays in the implementation of price
increases.

11



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000


PART I, ITEM 2.


Three Months Ended September 30, 2000 and 1999

The following tables set forth certain operating data regarding
the Companys volume and gross paper margins for the
periods indicated. The volume information shown below includes
shipments of unconverted paperboard and converted paperboard
products. Tonnage volumes from the Companys business
segments are combined and presented along end-use market lines.
Net sales and operating income are reported by segment in Note 5
to the consolidated financial statements as part of Part 1,
Item 1 of this report.

|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |       |       |      |       |  
|--------------------------------------------------------- | ------------------------------------- | ------------------------------ | -------------------------------------- | ---------------------------------- | ---- | ------ | ----- | ------ | ---- | --- | ----- | ----- | ----- | -- | ----- | ----- | ----- | ---- | ----- | -
|                                                          |                                       |                                |                                        |                                    |      |       
|                                                          |                                       | Three Months                   |                                        |                                    |      |       
|                                                          |                                       | Ended                          |                                        |                                    |      |       
|                                                          |                                       | September 30,                  |                                        |                                    |      |       
|                                                          |                                       |                                |                                        |                                    |      | %     
|                                                          |                                       | 2000                           |                                        | 1999                               |      | Change |       | Change
|                                                          |                                       |                                |                                        |                                    |      |        |       |       
|Production source of paperboard tons sold (in thousands): |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | From paperboard mill production       |                                |                                        | 242.0                              |      |        |       | 293.2  |      |     |       | (51.2 | )     |    |       | 17.5 | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Outside purchases                     |                                |                                        | 28.9                               |      |        |       | 24.7   |      |     |       | 4.2   |       |    |       | 17.0  | %    
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          |                                       |                                |                                        | Total paperboard tonnage           |      |        | 270.9 |        |      |     | 317.9 |       |       |    | (47.0 | )     |       |      | 14.8 | %
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          | Tons sold by market (in thousands):   |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |       |      
|                                                          | Tube, core and can volume             |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |       |      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Paperboard (internal)          |                                        |                                    | 52.6 |        |       |        | 52.1 |     |       |       | 0.5   |    |       |       | 1.0   | %   
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Outside purchases              |                                        |                                    | 6.3  |        |       |        | 5.3  |     |       |       | 1.0   |    |       |       | 18.9  | %   
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          | Tube, core and can converted products |                                |                                        | 58.9                               |      |        |       | 57.4   |      |     |       | 1.5   |       |    |       | 2.6   | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Unconverted paperboard                |                                |                                        | 11.1                               |      |        |       | 9.7    |      |     |       | 1.4   |       |    |       | 14.4  | %    
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          |                                       |                                |                                        | Tube, core and can volume          |      |        | 70.0  |        |      |     | 67.1  |       |       |    | 2.9   |       |       |      | 4.3   | %
|                                                          | Folding carton volume                 |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |       |      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Paperboard (internal)          |                                        |                                    | 15.6 |        |       |        | 20.1 |     |       |       | (4.5  | )  |       |       | 22.4 | %   
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Outside purchases              |                                        |                                    | 20.4 |        |       |        | 16.2 |     |       |       | 4.2   |    |       |       | 25.9  | %   
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          | Folding carton converted products     |                                |                                        | 36.0                               |      |        |       | 36.3   |      |     |       | (0.3  | )     |    |       | 0.8  | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Unconverted paperboard                |                                |                                        | 67.5                               |      |        |       | 84.0   |      |     |       | (16.5 | )     |    |       | 19.6 | %    
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          |                                       |                                |                                        | Folding carton volume              |      |        | 103.5 |        |      |     | 120.3 |       |       |    | (16.8 | )     |       |      | 14.0 | %
|                                                          | Gypsum facing paper volume            |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |       |      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Unconverted paperboard         |                                        |                                    | 44.3 |        |       |        | 73.0 |     |       |       | (28.7 | )  |       |       | 39.3 | %   
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Outside purchases (for resale) |                                        |                                    | 0.0  |        |       |        | 0.6  |     |       |       | (0.6  | )  |       |       | 100  | %   
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          |                                       |                                |                                        | Gypsum facing volume               |      |        | 44.3  |        |      |     | 73.6  |       |       |    | (29.3 | )     |       |      | 39.8 | %
|                                                          | Other specialty volume                |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |       |      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Paperboard (internal)          |                                        |                                    | 22.9 |        |       |        | 24.2 |     |       |       | (1.3  | )  |       |       | 5.4  | %   
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Outside purchases              |                                        |                                    | 2.2  |        |       |        | 2.6  |     |       |       | (0.4  | )  |       |       | 15.4 | %   
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          | Other specialty converted products    |                                |                                        | 25.1                               |      |        |       | 26.8   |      |     |       | (1.7  | )     |    |       | 6.3  | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Unconverted paperboard                |                                |                                        | 28.0                               |      |        |       | 30.1   |      |     |       | (2.1  | )     |    |       | 7.0  | %    
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          |                                       |                                |                                        | Other specialty volume             |      |        | 53.1  |        |      |     | 56.9  |       |       |    | (3.8  | )     |       |      | 6.7  | %
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          |                                       |                                |                                        | Total paperboard tonnage           |      |        | 270.9 |        |      |     | 317.9 |       |       |    | (47.0 | )     |       |      | 14.8 | %
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|Gross paper margins ($/ton):                              |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Paperboard mill:               |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |       |       |     
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       |                                | Average same-mill net selling price    |                                    | $    | 448    |       |        | $    | 412 |       |       | $     | 36 |       |       |       | 8.7  | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       |                                | Average same-mill recovered fiber cost |                                    |      | 99     |       |        |      | 97  |       |       |       | 2  |       |       |       | 2.1  | %    
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          |                                       |                                |                                        | Paperboard mill gross paper margin |      | $      | 349   |        |      | $   | 315   |       |       | $  | 34    |       |       |      | 10.8  | %
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          |                                       | Tube and core:                 |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |       |       |     
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       |                                | Average net selling price              |                                    | $    | 797    |       |        | $    | 724 |       |       | $     | 73 |       |       |       | 10.1 | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       |                                | Average paperboard cost                |                                    |      | 455    |       |        |      | 388 |       |       |       | 67 |       |       |       | 17.3 | %    
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      
|                                                          |                                       |                                |                                        | Tube and core gross paper margin   |      | $      | 342   |        |      | $   | 336   |       |       | $  | 6     |       |       |      | 1.8   | %
|                                                          |                                       |                                |                                        |                                    |      |        |       |        |      |     |       |       |       |    |       |      

12



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000


PART I, ITEM 2.


Consolidated net sales for the quarter ended September 30,
2000 decreased 1.9 percent to $236.7 million from $241.3 million
in the same quarter of 1999. Acquisitions accounted for $8.2
million of net sales during the third quarter of 2000. Excluding
acquisitions, net sales decreased 5.3 percent. This
decrease was primarily due to lower volume in the paperboard
segment and lower sales in the carton and custom packaging
segment, partially offset by higher selling prices in the
paperboard and the tube, core and composite container segments.

Total paperboard tonnage for the quarter decreased
14.8 percent to 270.9 thousand tons from 317.9 thousand
tons. This decrease was the result of lower shipments of
unconverted paperboard to external customers, primarily to
customers in the gypsum facings and folding carton end-use
markets. Outside purchases increased 17.0 percent to 28.9
thousand tons compared to prior year. Tons sold from paperboard
mill production decreased 17.5 percent for the quarter to
242.0 thousand tons compared with 293.2 thousand tons in the
third quarter of last year. Total tonnage converted was
essentially unchanged at 120.0 thousand tons in the third
quarter of 2000 compared to 1999, but decreased 2.1 percent
excluding acquisitions.

Gross margin for the third quarter of 2000 decreased to
20.2 percent of net sales from 22.1 percent in 1999.
This margin decrease was due primarily to lower volume and a
revaluation of recovered fiber inventory to reflect the rapid
decline in recovered fiber prices in the paperboard segment, and
higher fuel and energy costs for all business segments,
partially offset by higher margins in the paperboard and the
tube, core and composite container segments.

In September 2000, the Company initiated a plan to close its
paperboard mill located in Camden, New Jersey and recorded a
pretax charge to operations of approximately $8.6 million. The
mill experienced a slowdown in wallboard shipments during the
third quarter of 2000, and the shut down was precipitated by the
refusal of the Companys largest gypsum facing paper
customer, Georgia-Pacific Corporation, to continue purchasing
facing paper under a long term supply agreement. The $8.6
million charge included a $6.9 million noncash asset impairment
write-down of fixed assets to estimated net realizable value and
a $558 thousand accrual for severance and termination benefits
for 19 salaried and 46 hourly employees terminated in connection
with this plan, as well as a $1.1 million accrual for
post-closing utility, security, leases, and other exit costs. In
the third quarter of 2000, the Company paid $378 thousand in
severance and termination benefits and $99 thousand in other
exit costs. As of September 30, 2000, seven employees
remained to collect receivables, process payables and provide
human resources services to terminated employees. The remaining
severance and termination benefits will be paid by
December 31, 2001. This mill contributed net sales and
operating income of $11.6 million and $1.2 million,
respectively, for the nine months ended September 30, 2000
and $13.7 million and $0.9 million, respectively, for the nine
months ended September 30, 1999. The Company is marketing
the land and building and will complete the exit plan upon the
sale of the property, which it anticipates will occur prior to
December 31, 2001.

Operating income for the third quarter of 2000 was $4.8 million,
a decrease of $15.2 million, or 75.9 percent, from the
third quarter of 1999. Operating income for comparable
facilities and excluding restructuring costs decreased $7.9
million, or 39.5 percent, from the prior year. This
decrease was the result of lower operating income from all
business segments, with the paperboard and carton and custom
packaging segments showing the most significant decreases.
Selling, general and administrative expenses increased $1.1
million in the third quarter of 2000 versus 1999 due primarily
to acquisitions.

Interest expense increased 20.0 percent to $9.1 million for
the third quarter of 2000 from $7.6 million in 1999. This
increase was primarily due to higher average borrowings and
higher interest rates on the revolving credit facility.

Equity income from unconsolidated affiliates for the third
quarter of 2000 was $816 thousand, down $2.1 million, or
72.0 percent, from 1999 primarily due to lower operating
results from the Companys gypsum wallboard joint venture
with Temple-Inland, combined with start-up costs at Premier
Boxboard Limited LLC, the Companys containerboard mill
joint venture with Temple-Inland.

13



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000


PART I, ITEM 2.


As discussed above, results for the third quarter of 2000
included a nonrecurring restructuring charge recorded in
conjunction with the closing of the Companys Camden, New
Jersey paperboard mill of $8.6 million ($5.3 million, net of tax
benefit, or $0.21 per common share on a diluted basis).
Excluding this charge, net income was $2.8 million, or $0.11 per
common share. Including the restructuring charge, the net loss
was $2.6 million in the third quarter of 2000 compared with net
income of $10.1 million last year. Including the restructuring
charge, diluted net loss per common share was $0.10 in the third
quarter of 2000 compared with diluted net income per common
share of $0.40 in 1999.

Nine Months Ended September 30, 2000 and 1999

The following tables set forth certain operating data regarding
the Companys volume and gross paper margins for the
periods indicated. The volume information shown below includes
shipments of unconverted paperboard and converted paperboard
products. Tonnage volumes from the Companys business
segments are combined and presented along end-use market lines.

|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |      |       |       |  
|--------------------------------------------------------- | ------------------------------------- | ------------------------------ | ------------------------- | ----- | ----- | ------ |  | ------ | ----- | ----- |  | ----- | ----- | ----- | - | ---- | ----- | ----- | -
|                                                          |                                       |                                |                           |       |       |       
|                                                          |                                       | Nine Months                    |                           |       |       |       
|                                                          |                                       | Ended                          |                           |       |       |       
|                                                          |                                       | September 30,                  |                           |       |       |       
|                                                          |                                       |                                |                           |       |       | %     
|                                                          |                                       | 2000                           |                           | 1999  |       | Change |  | Change
|                                                          |                                       |                                |                           |       |       |        |  |       
|Production source of paperboard tons sold (in thousands): |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | From paperboard mill production       |                                |                           | 776.9 |       |        |  | 791.8  |       |       |  | (14.9 | )     |       |   | 1.9 | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Outside purchases                     |                                |                           | 89.8  |       |        |  | 62.6   |       |       |  | 27.2  |       |       |   | 43.5 | %    
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                          |                                       |                                | Total paperboard tonnage  |       |       | 866.7  |  |        |       | 854.4 |  |       |       | 12.3  |   |      |       | 1.4   | %
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                          | Tons sold by market (in thousands):   |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |      |      
|                                                          | Tube, core and can volume             |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |      |      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Paperboard (internal)          |                           |       | 155.8 |        |  |        | 153.9 |       |  |       | 1.9   |       |   |      | 1.2   | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Outside purchases              |                           |       | 18.8  |        |  |        | 14.3  |       |  |       | 4.5   |       |   |      | 31.5  | %    
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                          | Tube, core and can converted products |                                |                           | 174.6 |       |        |  | 168.2  |       |       |  | 6.4   |       |       |   | 3.8  | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Unconverted paperboard                |                                |                           | 29.4  |       |        |  | 32.1   |       |       |  | (2.7  | )     |       |   | 8.4 | %    
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                          |                                       |                                | Tube, core and can volume |       |       | 204.0  |  |        |       | 200.3 |  |       |       | 3.7   |   |      |       | 1.8   | %
|                                                          | Folding carton volume                 |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |      |      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Paperboard (internal)          |                           |       | 51.4  |        |  |        | 49.4  |       |  |       | 2.0   |       |   |      | 4.0   | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Outside purchases              |                           |       | 64.4  |        |  |        | 38.8  |       |  |       | 25.6  |       |   |      | 66.0  | %    
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                          | Folding carton converted products     |                                |                           | 115.8 |       |        |  | 88.2   |       |       |  | 27.6  |       |       |   | 31.3 | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Unconverted paperboard                |                                |                           | 209.2 |       |        |  | 213.0  |       |       |  | (3.8  | )     |       |   | 1.8 | %    
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                          |                                       |                                | Folding carton volume     |       |       | 325.0  |  |        |       | 301.2 |  |       |       | 23.8  |   |      |       | 7.9   | %
|                                                          | Gypsum facing paper volume            |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |      |      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Unconverted paperboard         |                           |       | 155.9 |        |  |        | 194.8 |       |  |       | (38.9 | )     |   |      | 20.0 | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Outside purchases (for resale) |                           |       | 0.5   |        |  |        | 3.5   |       |  |       | (3.0  | )     |   |      | 85.7 | %    
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                          |                                       |                                | Gypsum facing volume      |       |       | 156.4  |  |        |       | 198.3 |  |       |       | (41.9 | ) |      |       | 21.1 | %
|                                                          | Other specialty volume                |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |      |      
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Paperboard (internal)          |                           |       | 90.6  |        |  |        | 67.0  |       |  |       | 23.6  |       |   |      | 35.2  | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                       | Outside purchases              |                           |       | 6.1   |        |  |        | 6.0   |       |  |       | 1.0   |       |   |      | 1.7   | %    
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                          | Other specialty converted products    |                                |                           | 96.7  |       |        |  | 73.0   |       |       |  | 23.7  |       |       |   | 32.5 | %    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Unconverted paperboard                |                                |                           | 84.6  |       |        |  | 81.6   |       |       |  | 3.0   |       |       |   | 3.7  | %    
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                          |                                       |                                | Other specialty volume    |       |       | 181.3  |  |        |       | 154.6 |  |       |       | 26.7  |   |      |       | 17.3  | %
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     
|                                                          |                                       |                                | Total paperboard tonnage  |       |       | 866.7  |  |        |       | 854.4 |  |       |       | 12.3  |   |      |       | 1.4   | %
|                                                          |                                       |                                |                           |       |       |        |  |        |       |       |  |       |       |       |   |     

14



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000


PART I, ITEM 2.


|                             |                  |                                        |                                    |      |     |        |  |        |     |     |  |   |    |   |  |  |      |     |  
|---------------------------- | ---------------- | -------------------------------------- | ---------------------------------- | ---- | --- | ------ |  | ------ | --- | --- |  | - | -- | - |  |  | ---- | --- | -
|                             |                  |                                        |                                    |      |     |       
|                             |                  | Nine Months                            |                                    |      |     |       
|                             |                  | Ended                                  |                                    |      |     |       
|                             |                  | September 30,                          |                                    |      |     |       
|                             |                  |                                        |                                    |      |     | %     
|                             |                  | 2000                                   |                                    | 1999 |     | Change |  | Change
|                             |                  |                                        |                                    |      |     |        |  |       
|Gross paper margins ($/ton): |                  |                                        |                                    |      |     |        |  |        |     |     |  |   |    |   |  | 
|                            
|                            
|                            
|                            
|                             | Paperboard mill: |                                        |                                    |      |     |        |  |        |     |     |  |   |    |   |  |  |     
|                            
|                            
|                            
|                            
|                             |                  | Average same-mill net selling price    |                                    | $    | 443 |        |  | $      | 404 |     |  | $ | 39 |   |  |  | 9.7  | %  
|                            
|                            
|                            
|                            
|                             |                  | Average same-mill recovered fiber cost |                                    |      | 108 |        |  |        | 78  |     |  |   | 30 |   |  |  | 38.5 | %  
|                             |                  |                                        |                                    |      |     |        |  |        |     |     |  |   |    |   |  | 
|                             |                  |                                        | Paperboard mill gross paper margin |      | $   | 335    |  |        | $   | 326 |  |   | $  | 9 |  |  |      | 2.8 | %
|                             |                  |                                        |                                    |      |     |        |  |        |     |     |  |   |    |   |  | 
|                             | Tube and core:   |                                        |                                    |      |     |        |  |        |     |     |  |   |    |   |  |  |     
|                            
|                            
|                            
|                            
|                             |                  | Average net selling price              |                                    | $    | 781 |        |  | $      | 719 |     |  | $ | 62 |   |  |  | 8.6  | %  
|                            
|                            
|                            
|                            
|                             |                  | Average paperboard cost                |                                    |      | 437 |        |  |        | 383 |     |  |   | 54 |   |  |  | 14.1 | %  
|                             |                  |                                        |                                    |      |     |        |  |        |     |     |  |   |    |   |  | 
|                             |                  |                                        | Tube and core gross paper margin   |      | $   | 344    |  |        | $   | 336 |  |   | $  | 8 |  |  |      | 2.4 | %
|                             |                  |                                        |                                    |      |     |        |  |        |     |     |  |   |    |   |  | 

Consolidated net sales for the nine months ended
September 30, 2000 increased 15.4 percent to $740.4
million from $641.3 million in 1999. Acquisitions accounted for
$90.1 million of net sales during the first nine months of 2000.
Excluding acquisitions, net sales increased 1.4 percent.
This increase was due primarily to higher sales from the tube,
core and composite container and the carton and custom packaging
segments, partially offset by lower sales from the paperboard
segment.

Total paperboard tonnage for the first nine months of 2000
increased 1.4 percent to 866.7 thousand tons from 854.4 thousand
tons in 1999. Excluding acquisitions, total paperboard tonnage
decreased 5.5 percent to 807.5 thousand tons from the prior
year. This decrease was due to lower shipments of unconverted
paperboard to the gypsum facings and folding carton end-use
markets, partially offset by higher outside purchases. Excluding
acquisitions, outside purchases increased 17.7 percent to
73.6 thousand tons. Tons sold from paperboard mill production
decreased 1.9 percent for the first nine months of 2000 to
776.9 thousand tons and decreased 7.7 percent excluding
acquisitions. Total tonnage converted increased
17.7 percent for the first nine months of 2000 to 387.1
thousand tons and increased 4.4 percent excluding
acquisitions. Excluding acquisitions, volumes in the folding
carton and other specialty end-use markets decreased
7.9 percent and increased 9.7 percent, respectively.

Gross margin for the first nine months of 2000 decreased to
21.4 percent of net sales from 23.9 percent in 1999.
This margin decrease was due primarily to the acquisition of
operations with lower margins, as a percent of sales, than the
Companys other operations, combined with lower margins in
the paperboard segment.

In February 2000, the Company initiated a plan to close its
paperboard mill located in Baltimore, Maryland and recorded a
charge to operations of approximately $6.9 million. The plan to
close the mill was adopted in conjunction with the
Companys ongoing efforts to increase manufacturing
efficiency and reduce costs in its mill system. The $6.9 million
charge included a $5.7 million noncash asset impairment charge
to write-down machinery and equipment to net realizable value.
The charge also included a $604 thousand accrual for severance
and termination benefits for 21 salaried and 83 hourly employees
terminated in connection with this plan and a $613 thousand
accrual for post-closing security, utilities and other exit
costs. In the first, second and third quarters of 2000, the
Company paid $275 thousand, $183 thousand and $141 thousand,
respectively, in severance and termination benefits and paid
$204 thousand, $309 thousand and $63 thousand, respectively, in
other exit costs. As of September 30, 2000, one employee
remained to assist in marketing the land and building. The
Company will complete the exit plan upon the sale of the
property, which it anticipates will occur prior to
December 31, 2001. The remaining severance and termination
benefits will be paid by December 31, 2000. The Company
does not expect the mill closure to have a material impact on
future operations.

Operating income for the first nine months of 2000 was $33.8
million, a decrease of $25.6 million, or 43.1 percent from
the year-earlier period. Operating income at comparable
facilities and excluding restructuring costs declined $9.8
million, or 16.6 percent. This decline was due to lower
operating income in all business

15



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000


PART I, ITEM 2.


segments, with the paperboard and carton and custom packaging
segments showing the most significant decreases from prior year.
Selling, general and administrative expenses increased $15.5
million in the first nine months of 2000 versus 1999 due
primarily to acquisitions and higher information technology
costs.

Interest expense increased 38.6 percent to $24.7 million
for the first nine months of 2000 from $17.8 million in 1999.
This increase was primarily due to the June 1, 1999 public
debt securities offering, higher average borrowings and higher
interest rates on the revolving credit facility.

Equity income from unconsolidated affiliates for the first nine
months of the year was $7.2 million, down 2.3 percent from
1999 due to start-up costs at Premier Boxboard Limited LLC, the
Companys containerboard mill joint venture with
Temple-Inland, partially offset by improved results in the first
half of 2000 for the Companys gypsum wallboard joint
venture with Temple-Inland.

As discussed above, results for the first nine months of 2000
included nonrecurring restructuring charges, recorded in
conjunction with the closings of the Companys Baltimore,
Maryland and Camden, New Jersey paperboard mills, of $15.5
million ($9.7 million, net of tax benefit, or $0.38 per common
share on a diluted basis). Excluding these charges, net income
was $18.7 million, or $0.73 per common share. Including the
restructuring charges, net income decreased 71.5 percent to
$9.0 million for the first nine months of 2000 from $31.8
million last year. Diluted net income per common share,
including the restructuring charges, decreased 72.4 percent
to $0.35 for the nine months ended September 30, 2000 from
$1.27 in the same period of 1999.

Liquidity and Capital Resources

On September 30, 2000, the Company had loans of $194.0
million outstanding under its revolving credit facility versus
$150.0 million on September 30, 1999 and $140.0 million on
December 31, 1999. Loans under the revolving credit
facility bear interest, payable monthly, at the Eurodollar rate
plus a margin based upon the Companys investment grade
rating, as defined in the revolving credit agreement. For the
nine months ended September 30, 2000 and 1999 and for the
year ended December 31, 1999, the weighted average
borrowings outstanding under the revolving credit facility
during such periods bore interest at 6.28 percent,
5.36 percent and 5.44 percent, respectively. Other
long-term debt consisted of the following (in thousands):

|                            |  |               |         |              |  |      |         |  |  |   |         | 
|--------------------------- |  | ------------- | ------- | ------------ |  | ---- | ------- |  |  | - | ------- | 
|                            |  |               |         |             
|                            |  | September 30, |         | December 31,
|                            |  |               |         |             
|                            |  | 2000          |         | 1999         |  | 1999
|                            |  |               |         |              |  |     
|7.375 percent 10-year notes |  | $             | 198,766 |              |  | $    | 198,667 |  |  | $ | 198,691 | 
|                           
|                           
|                           
|                           
|7.74 percent senior notes   |  |               | 82,750  |              |  |      | 82,750  |  |  |   | 82,750  | 
|                           
|                           
|                           
|                           
|Other notes payable         |  |               | 4,797   |              |  |      | 4,871   |  |  |   | 4,913   | 
|                            |  |               |         |              |  |      |         |  |  |   |         | 
|                            |  |               | 286,313 |              |  |      | 286,288 |  |  |   | 286,354 | 
|                           
|                           
|                           
|                           
|Less current maturities     |  |               | 16,583  |              |  |      | 90      |  |  |   | 16,615  | 
|                            |  |               |         |              |  |      |         |  |  |   |         | 
|                            |  | $             | 269,730 |              |  | $    | 286,198 |  |  | $ | 269,739 | 
|                            |  |               |         |              |  |      |         |  |  |   |         | 

In 1998, the Company registered with the Securities and Exchange
Commission a total of $300 million in public debt securities for
issuance in one or more series and with such specific terms as
to be determined from time to time. On June 1, 1999, the
Company issued $200 million in aggregate principal amount of its
7.375 percent notes due June 1, 2009. The
7.375 percent notes were issued at a discount to yield an
effective interest rate of 7.473 percent, are unsecured
obligations of the Company and pay interest semiannually.

The Company has a $400 million, five-year bank revolving credit
facility which may be increased up to $500 million and its
maturity extended by up to three additional years beyond the
second quarter of 2002, subject to certain conditions and
approvals. The Company can use the facility to fund ongoing
working capital needs and for general corporate purposes,
including acquisitions. Interest under the facility is computed
using the Companys choice of: (a) the Eurodollar rate
plus a margin; or (b) the higher of (i) the Federal
Funds Rate plus a margin or (ii) the banks prime
lending rate. The Company can also choose the basis for
determining

16



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000


PART I, ITEM 2.


the margin above the Eurodollar rate as either: (a) its
consolidated leverage ratio; or (b) its investment grade
rating. The revolving credit agreement contains certain
restrictive covenants regarding, among other matters, the
incurrence of additional indebtedness and the maintenance of
certain leverage and interest coverage ratios, as defined in the
agreement. During the third quarter of 2000 the Company
completed an amendment to the credit agreement renegotiating
certain debt covenant provisions. This amendment will require
the Company to compute the interest margin using its
consolidated leverage ratio beginning in the fourth quarter of
2000.

Cash generated from operations was $33.3 million for the nine
months ended September 30, 2000 compared with $59.3 million
for the same period last year. The decrease in the first nine
months of 2000 compared to the same period last year was due
primarily to lower net income and unfavorable changes in working
capital.

Capital expenditures, excluding acquisitions of businesses, were
$47.1 million in the first nine months of 2000 versus $25.9
million for the same period last year. Significant projects
contributing to the increase in 2000 over 1999 included a major
upgrade to the stock preparation system at the Sprague mill, the
purchase of two die-cutters and a state-of-the-art, high-speed
printing press for the carton and custom packaging segment and a
capacity expansion at a specialty converted products facility.
Aggregate capital expenditures of approximately $57.9 million
are anticipated for 2000.

In February 2000, the Company acquired all of the outstanding
stock of MilPak, Inc. in exchange for 248,132 shares of the
Companys common stock valued at $4.7 million and $4.7
million in cash. MilPak operates a facility located in Pine
Brook, New Jersey that provides blister packaging, cartoning and
labeling, and other contract packaging services.

In September 2000, the Company acquired all of the outstanding
stock of Arrow Paper Products in exchange for 342,743 shares of
the Companys common stock valued at $5.1 million. Arrow is
located in Saginaw, Michigan and operates two tube and core
converting facilities that serve customers in the automotive,
film, housewares and other specialty tube and core markets.

In October 2000, the Company completed the acquisition of
100 percent of the membership interests in Crane Carton
Company, LLC in exchange for 1,659,790 shares of the
Companys common stock valued at $18.9 million plus $6.4
million of assumed debt. Crane operates a single folding carton
manufacturing facility located in suburban Chicago, Illinois.

Cash dividends of $13.8 million were paid in the first nine
months of 2000 versus $13.4 million in the same period last
year. The Companys debt agreements contain no specific
limitations on the payment of dividends.

The Company did not purchase any shares of its common stock
during the first nine months of 2000 pursuant to its common
stock purchase plan. The Company has cumulatively purchased
3,169,000 shares since January 1996. The Companys board of
directors has authorized purchases of up to 831,000 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.

During the second quarter of 1999, the Company formed a joint
venture with Temple-Inland to own and operate Temples
Newport, Indiana containerboard mill. The joint venture, Premier
Boxboard Limited LLC (PBL), undertook a 14-month,
$75 million project to modify the mill to enable it to produce a
new, lightweight gypsum facing paper along with other
containerboard grades. The mill began operations as modified
during the third quarter of 2000. Under the joint venture
agreement, the Company contributed $50 million to the joint
venture during the second quarter of 2000 and Temple contributed
the net assets of the mill. The Company and Temple each have a
50 percent interest in the joint venture.

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 and the issuance of debt
securities in the public markets.

17



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000


PART I, ITEM 2.


Georgia-Pacific Litigation

As previously reported, the Company is currently in litigation
with its largest gypsum facing paper customer, Georgia-Pacific
Corporation (G-P), over G-Ps refusal to
continue purchasing certain requirements of gypsum facing paper
pursuant to the terms of a long-term supply contract between the
Company and G-P. The contract was executed in April 1996 and
terminates on August 20, 2005, unless extended. The Company
believes that the express language of the contract requires G-P
to purchase all paper products used in wallboard manufacturing
at the G-P wallboard plants designated in the contract, and the
parties generally have performed their respective obligations
under the contract in accordance with this requirement since
inception. In the third quarter of 2000, G-P asserted the
position that the contract does not include certain grades of
facing paper and that G-P would manufacture these grades for
itself. By the end of the third quarter, G-Ps purchases
fell by more than 80% from the 7,000 tons per month that
prevailed in the first half of 2000. Shipments to G-P are
expected to fall below 500 tons per month in the fourth quarter.
As a result of this loss in volume the Company, as previously
reported, closed its Camden paperboard mill and lost volume
amounting to approximately 40% of the capacity of its Buffalo
paperboard mill.

On August 16, 2000, the Company filed suit against G-P in
the General Court of Justice, Superior Court Division, of
Mecklenburg County, North Carolina (Case No. 00-CVS-12302),
asserting a claim for breach of contract based on G-Ps
refusal to continue making purchases under the contract. The
compliant seeks damages in excess of $100 million, and was
amended in October 2000 to request an injunction requiring G-P
to specifically perform its obligations under the contract.

On September 1, 2000, G-P filed a separate action in the
Superior Court of Fulton County, Georgia (Case
No. 2000CV-27684), seeking a declaratory judgment in
support of its interpretation of the contract that its actions
are not in breach of the contract.

The Company, as defendant in the Georgia case, has filed an
answer and motion seeking dismissal or stay of the Georgia case
pending resolution of the North Carolina case, and G-P has done
likewise with respect to the North Carolina case, but the
respective courts have yet to rule on these motions.

The Company and G-P has engaged in settlement discussions from
time to time during the dispute, but have failed to reach any
agreement to date.

The Company intends to vigorously prosecute the North Carolina
action and defend the Georgia case in order to vindicate its
interpretation of the contract, but can give no assurance as to
the timing or outcome of the litigation. Based on the nature of
litigation generally and the course of developments in the North
Carolina and Georgia actions to date, the Company does not
believe that any resolution of the pending dispute will be
forthcoming in the near future. Accordingly, the Company
believes that its operating results and financial condition will
continue to be materially and adversely affected by the loss of
contract volume from G-P.

Forward-Looking Information

This Report on Form 10-Q, including Managements
Discussion and Analysis of Financial Condition and Results of
Operations, and Legal Proceedings 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

18



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000


PART I, ITEM 2.


fluctuations in raw material prices and the economy in general,
the outcome of the Companys pending dispute and litigation
with Georgia-Pacific Corporation and the Companys ability
to minimize the impact of, or recover from Georgia-Pacific,
losses resulting from this dispute, 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.

19



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
2000

PART I, ITEM 3.


CARAUSTAR INDUSTRIES, INC.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of certain market risks related to the Company,
see Part II, Item 7A, Quantitative and
Qualitative Disclosures about Market Risk, in the
Companys Annual Report on Form 10-K for the fiscal
year ended December 31, 1999. There have been no
significant developments with respect to the Companys
exposure to interest rate market risk.

20



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
2000

PART II, ITEM 1.


PART II. OTHER INFORMATION

ITEM  1.     LEGAL
PROCEEDINGS

The Company is currently in litigation with its largest gypsum
facing paper customer, Georgia-Pacific Corporation
(G-P), over G-Ps refusal to continue
purchasing certain requirements of gypsum facing paper pursuant
to the terms of a long-term supply contract between the Company
and G-P. The contract was executed in April 1996 and terminates
on August 20, 2005, unless extended. The Company believes
that the express language of the contract requires G-P to
purchase all paper products used in wallboard manufacturing at
the G-P wallboard plants designated in the contract, and the
parties generally have performed their respective obligations
under the contract in accordance with this requirement since
inception. In the third quarter of 2000, G-P asserted the
position that the contract does not include certain grades of
facing paper and that G-P would manufacture these grades for
itself. Since then, G-P has substantially curtailed its
purchases of gypsum facing paper from the Company.

On August 16, 2000, the Company filed suit against G-P in
the General Court of Justice Superior Court Division, of
Mecklenburg County, North Carolina (Case No. 00-CVS-12302),
asserting a claim for breach of contract based on G-Ps
refusal to continue making purchases under the contract. The
complaint seeks damages in excess of $100 million, and was
amended in October 2000 to request an injunction requiring G-P
to specifically perform its obligations under the contract.

On September 1, 2000, G-P filed a separate action in the
Superior Court of Fulton County, Georgia (Case
No. 2000CV-27684), seeking a declaratory judgment in
support of its interpretation of the contract that its actions
are not in breach of the contract.

The Company, as defendant in the Georgia case, has filed an
answer and motion seeking dismissal or stay of the Georgia case
pending resolution of the North Carolina case, and G-P has done
likewise with respect to the North Carolina case, but the
respective courts have yet to rule on these motions.

The Company and G-P also have engaged in settlement discussions
from time to time during the dispute, but have failed to reach
any agreement to date.

The Company intends to vigorously prosecute the North Carolina
action and defend the Georgia case in order to vindicate its
interpretation of the contract, but can give no assurance as to
the timing or outcome of the litigation. Based on the nature of
litigation generally and the course of developments in the North
Carolina and Georgia actions to date, the Company does not
believe that any resolution of the pending dispute will be
forthcoming in the near future. Accordingly, the Company
believes that its operating results and financial condition will
continue to be materially and adversely affected by the loss of
contract volume from G-P.

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

The Company filed two current reports on Form 8-K during
the quarter ended September 30, 2000. The first report,
filed on September 12, 2000, incorporated by reference the
contents of a Company press release regarding the Companys
contract dispute with Georgia-Pacific Corporation.

The second report, filed on September 12, 2000,
incorporated the contents of a Company press release regarding
the possible effect of certain developments on the
Companys third quarter operating results.

21



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
2000

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.



| |     |                       
| | --- | ----------------------
| | By: | /s/ H. LEE THRASH, III

| |                                              
| | ---------------------------------------------
| |                                              
| | H. Lee Thrash, III                           
| | Vice President and Chief Financial
	Officer  
| | (Principal Financial and Accounting
	Officer)



22



---



FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30,
2000



EXHIBIT INDEX


|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                         
|------- | ----- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|No.     |       | Description
|        |       |            
|        | 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 Registration
        Statement on Form S-4 [SEC File No. 333-29937])                                                                                                                                                                             
|        | 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  |             |  | Amended and Restated Rights Agreement, dated as of May 24,
        1999, between Caraustar Industries, Inc. and The Bank of New
        York as Rights Agent (Incorporated by reference 
        Exhibit 10.1 to current report on Form 8-K dated
        June 1, 1999 [SEC File No. 020646])                                                          
|        | 4.05  |             |  | Indenture, dated as of June 1, 1999, between Caraustar
        Industries, Inc. and The Bank of New York, as Trustee
        (Incorporated by reference  Exhibit 4.05 to
        report on Form 10-Q for the quarter ended June 30,
        1999 [SEC File No. 0-20646])                                                                               
|        | 4.06  |             |  | First Supplemental Indenture, dated as of June 1, 1999,
        between Caraustar Industries, Inc. and The Bank of New York, as
        Trustee (Incorporated by reference  Exhibit 4.06
        to report on Form 10-Q for the quarter ended June 30,
        1999 [SEC File No. 0-20646])                                                            
|        | 10.01 |             |  | 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])                             
|        | 10.02 |             |  | 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])   
|        | 10.03 |             |  | Amendment Agreement, dated as of July 23, 1997, 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 June 30,
        1997 [SEC File No. 0-20646])       
|        | 10.04 |             |  | Amendment Agreement, dated as of August 12, 1998, between
        the Company and the Prudential Insurance Company of America
        regarding the Companys 7.89% Senior Subordinated Notes
        (Incorporated by reference  Exhibit 10.04 to
        report on Form 10-Q for the quarter ended
        September 30, 1998 [SEC File No. 0-20646])
|        | 10.05 |             |  | 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])                                                                                                                                
|        | 10.06 |            |  | Paperboard Agreement, dated as of April 10, 1996, between
        the Company and Georgia-Pacific Corporation.                                                                                                                                                                                                                                          

23



---



|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | ----- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|No.     |       | Description
|        |       |            
|        | 10.07 |             |  | 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])                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10.08 |             |  | 1987 Executive Stock Option Plan (Incorporated by
        reference  Exhibit 10.09 to Registration
        Statement on Form S-1 [SEC File No. 33-50582])                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10.09 |             |  | 1993 Key Employees Share Ownership Plan (Incorporated by
        reference  Exhibit 10.10 to Registration
        Statement on Form S-1 [SEC File No. 33-50582])                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.10 |             |  | 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])                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.11 |             |  | 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])                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10.12 |             |  | 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])                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10.13 |             |  | Amendment No. 1 to the Companys 1996 Director Equity
        Plan, dated July 16, 1998 (Incorporated by
        reference  Exhibit 10.2 to Current Report on
        Form 8-K dated June 1, 1999 [SEC File
        No. 0-20646])                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.14 |             |  | 1998 Key Employee Incentive Compensation Plan, as amended
        (Incorporated by reference  Exhibit 10.14 to
        report on Form 10-Q for the quarter ended March 31,
        2000 [SEC File No. 0-20646])                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10.15 |             |  | Credit Agreement, dated as of July 23, 1997, by and among
        the Company, as Borrower, the banks listed therein, Bankers
        Trust Company, as Administrative Agent, NationsBank, N.A., as
        Syndication Agent, SunTrust Bank, Atlanta, as Documentation
        Agent, First Union National Bank, as Managing Agent and each of
        Credit Lyonnais, The Bank of New York, The Bank of Nova Scotia,
        The Bank of Tokyo  Mitsubishi, Ltd., and Wachovia Bank, as
        Co-Agents (Incorporated by reference 
        Exhibit 10.13 to report on Form 10-Q for the Quarter
        Ended June 30, 1997 [SEC File No. 0-20646])                                    
|        | 10.16 |             |  | Amendment No. 1 to Credit Agreement, dated as of
        October  8, 1997, by and among the Company, as Borrower,
        the banks listed therein, Bankers Trust Company, as
        Administrative Agent, NationsBank, N.A., as Syndication Agent,
        SunTrust Bank, Atlanta, as Documentation Agent, First Union
        National Bank, as Managing Agent and each of Credit Lyonnais,
        The Bank of New York, The Bank of Nova Scotia, The Bank of
        Tokyo  Mitsubishi, Ltd., and Wachovia Bank, as
        Co-Agents (Incorporated by reference 
        Exhibit 10.15 to report on Form 10-Q for the quarter
        ended September 30, 1998 [SEC File No. 0-20646]) 
|        | 10.17 |             |  | Amendment No. 2 to Credit Agreement, dated as of
        October  30, 1998, by and among the Company, as Borrower,
        the banks listed therein, Bankers Trust Company, as
        Administrative Agent, NationsBank, N.A., as Syndication Agent,
        SunTrust Bank, Atlanta, as Documentation Agent, First Union
        National Bank, as Managing Agent and each of Credit Lyonnais,
        The Bank of New York, The Bank of Nova Scotia, The Bank of Tokyo
         Mitsubishi, Ltd., and Wachovia Bank, as Co-Agents
        (Incorporated by reference  Exhibit 10.16 to
        report on Form 10-Q for the quarter ended
        September 30, 1998 [SEC File No. 0-20646])
|        | 10.18 |            |  | Amendment No. 4 to Credit Agreement, dated as of
        September  29, 2000, by and among the Company, as Borrower,
        the banks Listed therein, Bankers Trust Company, as
        Administrative Agent, Bank of America, N.A., as Syndication
        Agent, SunTrust Bank, Atlanta, as Documentation Agent, First
        Union National Bank, as Managing Agent and each of Credit
        Lyonnais, The Bank of New York, The Bank of Nova Scotia, The
        Bank of Tokyo  Mitsubishi, Ltd., and Wachovia Bank,
        as Co-Agents                                                                                                                                             

24



---



|        |        |             |  |                                                                                                                                                                                                                                                                                    
|------- | ------ | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |            
|No.     |        | Description
|        |        |            
|        | 10.19  |             |  | Asset Purchase Agreement between Caraustar Industries, Inc.,
	Sprague Paperboard, Inc. and International Paper Company, dated
	as of March 4, 1999 (Incorporated by reference 
	Exhibit 10.17 to report on Form 10-Q for the quarter
	ended March 31, 1999 [SEC File No. 0-20646])
|        | 11.01 |             |  | Computation of Earnings Per Share                                                                                                                                                                                                                                                  
|        | 27.01 |             |  | Financial Data Schedule (For SEC purposes only)                                                                                                                                                                                                                                    






| |                 
| | ----------------
| |  Filed herewith

25