Caraustar Industries Retain Tama, Iowa, Mill; Complete Exit From Specialty Packaging Business

Atlanta, Georgia, USA, 20 December 2006 -- /PRNewswire/ -- Caraustar Industries, Inc. (NASDAQ:CSAR) today announced the retention of its Tama, Iowa, coated recycled boxboard (CRB) mill.

Caraustar exited the balance of its CRB mill system earlier this year and Tama had been held for sale as part of the CRB group. The employees at Tama have significantly improved both the performance and profitability of the Tama mill throughout 2006. Since the exit of Caraustar's other CRB mills earlier this year, the Tama mill has been generating significant cash flow. As a result of these efforts, the company believes that it is in its best interest to retain the mill.

The results of the Tama mill and the company's two other CRB mills, Sprague, Connecticut, and Rittman, Ohio, will be reclassified from discontinued operations to continuing operations. Caraustar sold the Sprague mill and the coating components of the Rittman mill during the third quarter of 2006. Results for the Sprague and Rittman mills will be reclassified as continuing operations only for the periods they were owned.

In addition to the reclassification, the company will also record a depreciation charge of approximately USD 800,000 in the fourth quarter of 2006 to recognize depreciation expense for the periods that the Tama mill was held for sale and not depreciated.

The company today also announced the completion of its exit from the specialty packaging business. Facilities in Birmingham, Alabama; Robersonville, North Carolina; Bucyrus, Ohio; Strasburg, Ohio; and Clifton, New Jersey, have all been sold or closed. Gross proceeds from all transactions were USD 5.6 million, of which USD 4.9 million was received in the fourth quarter 2006.

Caraustar, a recycled packaging company, is one of the world's largest integrated manufacturers of converted recycled paperboard and is dedicated to providing customers with outstanding value through innovative products and services. Caraustar has developed its leadership position in the industry through diversification and integration from raw materials to finished products. Caraustar serves the four principal recycled boxboard product end- use markets: tubes, cores and composite cans; folding cartons; gypsum facing paper and other specialty paperboard products. For additional information on Caraustar, visit the company's Web site at www.caraustar.com.

Source: Caraustar Industries, Inc.