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Notes to Consolidated Financial Statements
December 31, 2001, 2000 and 1999

11. 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.
Sales to external customers located in foreign countries accounted for approximately 7.3 percent of the Company's sales for 2001 and 6.4 percent for 2000 and 1999.

Operating income includes all costs and expenses directly related to the segment involved. Corporate expenses include corporate, general, administrative, and unallocated information systems expenses.

Identifiable assets are accumulated by facility within each business segment. Corporate assets consist primarily of cash and cash equivalents; refundable income taxes; property, plant, and equipment; and investments in unconsolidated affiliates.
The following table presents certain business segment information for the years ended December 31, 2001, 2000 and 1999
(in thousands):
2001 2000 1999
Sales (aggregate):
Paperboard $ 462,326 $ 566,060 $ 536,612
Tube, core, and composite container 265,985 281,613 269,112
Carton and custom packaging 325,743 309,118 256,037
Total $1,054,054 $1,156,791 $1,061,761
Less sales (intersegment):
Paperboard $ 135,854 $ 136,796 $ 120,465
Tube, core, and composite container 3,921 4,389 3,877
Carton and custom packaging 593 991 491
Total $ 140,368 $ 142,176 $ 124,833
Sales (external customers):
Paperboard $ 326,472 $ 429,264 $ 416,147
Tube, core, and composite container 262,064 277,224 265,235
Carton and custom packaging 325,150 308,127 255,546
Total $ 913,686 $1,014,615 $ 936,928
Operating income:
Paperboard (A) $ 31,418 $ 28,477 $ 58,686
Tube, core, and composite container 7,051 18,483 20,715
Carton and custom packaging (B) 2,706 8,673 13,010
41,175 55,633 92,411
Corporate expense (C) (14,484) (13,768) (11,878)
Operating income 26,691 41,865 80,533
Interest expense (41,153) (34,063) (25,456)
Interest income 986 412 603
Equity in (loss) income of unconsolidated affiliates (2,610) 6,533 9,224
Other, net (1,904) (918) (459)
(Loss) income before income taxes and minority interest (17,990) 13,829 64,445
Minority interest 180 (169) (356)
(Benefit) provision for income taxes (5,903) 5,485 23,142
Extraordinary loss from early extinguishment of debt,
net of tax benefit (2,695) -- --
Net (loss) income $ (14,602) $ 8,175 $ 40,947
Identifiable assets:
Paperboard $ 400,035 $ 429,646 $ 456,343
Tube, core, and composite container 134,462 134,069 126,994
Carton and custom packaging 252,207 275,408 242,925
Corporate 174,277 94,974 53,618
Total $ 960,981 $ 934,097 $ 879,880
Depreciation and amortization:
Paperboard $ 35,916 $ 36,623 $ 31,410
Tube, core, and composite container 7,537 7,196 7,580
Carton and custom packaging 16,827 15,531 12,657
Corporate 3,043 1,508 1,094
Total $ 63,323 $ 60,858 $ 52,741
Capital expenditures, excluding acquisitions of businesses:
Paperboard $ 15,334 $ 28,953 $ 23,745
Tube, core, and composite container 6,536 12,274 4,550
Carton and custom packaging 4,718 15,495 5,305
Corporate 1,471 1,584 2,096
Total $ 28,059 $ 58,306 $ 35,696

(A)

Results for 2001 include a charge to operations of $4,447,000 for restructuring costs related to the closing of the Chicago, Illinois paperboard mill. Results for 2001 also include a $7,100,000 reduction in reserves relating to expiring unfavorable supply contracts at the Sprague paperboard mill. Results for 2000 include charges to operations of $6,913,000 and $8,564,000 for restructuring costs related to the closing of the Baltimore, Maryland and Camden, New Jersey paperboard mills, respectively. These were related to the paperboard segment and are reflected in the segment's operating income. (Note 12)

(B)

Results for 2001 include a charge to operations of $2,636,000 related to the consolidation of the operations of the Salt Lake City, Utah carton plant into the Denver, Colorado carton plant. This charge was related to the carton and custom packaging segment and is reflected in the segment's operating income. (Note 12)

(C)

Results for 2000 include a nonrecurring charge of $1,300,000 related to the settlement of a dispute over abandoned property.

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Caraustar Industries, Inc.