<PAGE>

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


                                   FORM 10-Q


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


For the Quarterly Period Ended: June 27, 1999  Commission File Number: 33-93494
-------------------------------------------------------------------------------

                                CROWN PAPER CO.
-------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


               Virginia                                      54-1752385
-------------------------------------------------------------------------------
     (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                     Identification No.)


     300 Lakeside Drive, Oakland, CA                         94612-3592
-------------------------------------------------------------------------------
     (Address of principal executive offices)                (Zip Code)


           (510) 874-3400
-------------------------------------------------------------------------------
     (Registrant's telephone number, including area code)


                                Not Applicable
-------------------------------------------------------------------------------
             (Former name, former address, and former fiscal year,
                         if changed since last report)

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 such 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
                                                  ----------       -----------

Number of shares of no par value common stock outstanding as of the close of
business on August 10, 1999:

              One (1) share, which is owned by Crown Vantage Inc.
              ---------------------------------------------------
<PAGE>

                                     INDEX
                                CROWN PAPER CO.



PART I:   Financial Information

          Item 1. Financial Statements

                 .  Condensed Consolidated Balance Sheets - June 27, 1999 and
                    December 27, 1998.

                 .  Condensed Consolidated Statements of Operations - Six months
                    and second quarter ended June 27, 1999 and June 28, 1998.

                 .  Condensed Consolidated Statements of Cash Flows - Six months
                    ended June 27, 1999 and June 28, 1998.

                 .  Notes to Condensed Consolidated Financial Statements.

          Item 2. Management's Discussion and Analysis of Financial Condition
                  and Results of Operations.

PART II:  Other Information

          Item 6. Exhibits and Reports on Form 8-K

SIGNATURES



                                       2
<PAGE>

PART I  --  FINANCIAL INFORMATION
------

ITEM 1  --  FINANCIAL STATEMENTS
------

                                CROWN PAPER CO.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                           (in thousands of dollars)

<TABLE>
<CAPTION>
ASSETS                                                    June 27, 1999        December 27, 1998
                                                          -------------        -----------------
                                                           (Unaudited)
                                                           -----------
Current Assets:
  <S>                                                      <C>                   <C>
  Cash and cash equivalents                                   $   8,712           $   9,806
  Accounts receivable, net                                       41,209              41,022
  Inventories                                                    71,781             102,397
  Prepaid expenses and other current assets                       2,285               3,481
  Assets held for sale                                           45,000
  Deferred income taxes                                          10,812              15,067
                                                              ---------           ---------
       Total current assets                                     179,799             171,773
Property, plant and equipment, net                              369,571             434,075
Other assets                                                     42,142              43,839
Unamortized debt issue costs                                     10,692              11,808
Due from Parent                                                  11,169              10,698
Intangibles, net                                                 27,290              27,852
                                                              ---------           ---------
      Total Assets                                            $ 640,663           $ 700,045
                                                              =========           =========
LIABILITIES AND DEFICIT

Current Liabilities:
  Accounts payable                                            $  42,359           $  40,916
  Accrued liabilities                                            61,894              75,268
  Current portion of long-term debt                               1,000               1,000
                                                              ---------           ---------
     Total current liabilities                                  105,253             117,184
Long-term debt                                                  477,762             459,249
Accrued postretirement benefits other than pensions              84,687             100,736
Other long-term liabilities                                      29,740              33,596
Deferred income taxes                                            12,832              16,406
                                                              ---------           ---------
     Total Liabilities                                          710,274             727,171
                                                              ---------           ---------
Shareholder's Equity (Deficit):
  Preferred Stock, no par value;
     Authorized - 500,000 shares;
     Issued and outstanding - None
  Common Stock, no par value;
     Authorized - 5,000 shares;
     1 Share issued and outstanding
     at June 27, 1999 and December 27, 1998                     138,756             137,751
  Other comprehensive Income (Loss):
  Minimum Pension Liability                                      (2,231)             (2,231)
  Cumulative foreign currency translation adjustment                 18               1,562
  Retained deficit                                             (206,154)           (164,208)
                                                              ---------           ---------
                                                                (69,611)            (27,126)
                                                              ---------           ---------
Total Liabilities and Deficit                                  $640,663           $ 700,045
                                                              =========           =========
</TABLE>

See notes to condensed consolidated financial statements.

                                       3

<PAGE>

                                CROWN PAPER CO.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          For the Six Months (26 weeks) and Second Quarter (13 weeks)
                     Ended June 27, 1999 and June 28, 1998
                           (in thousands of dollars)


<TABLE>
<CAPTION>
                                                         Second Quarter                           Six Months
                                                  ----------------------------           ---------------------------
                                                    1999                1998               1999               1998
                                                  --------            --------           --------           --------
                                                           (Unaudited)                             (Unaudited)
<S>                                               <C>                 <C>                <C>                <C>
Net sales                                         $204,882            $215,413           $406,047           $437,219
Cost of goods sold                                 191,887             203,431            384,930            416,239
                                                  --------            --------           --------           --------
Gross margin                                        12,995              11,982             21,117             20,980
Selling and administrative expenses                (15,243)            (15,003)           (30,667)           (29,789)
Property tax accrual reversal                                                               8,957
Adjustment of assets held for sale
       to net realizable value                                                            (16,175)
                                                  --------            --------           --------           --------
       Operating Loss                               (2,248)             (3,021)           (16,768)            (8,809)
Interest expense                                   (12,456)            (12,289)           (24,881)           (24,452)
Other income, net                                      392                 443                766                490
                                                  --------            --------           --------           --------
       Loss before income taxes                    (14,312)            (14,867)           (40,883)           (32,771)
Provision (benefit) for income taxes                   631              (5,204)             1,063            (11,470)
                                                  --------            --------           --------           --------
             NET LOSS                             $(14,943)           $ (9,663)          $(41,946)          $(21,301)
                                                  ========            ========           ========           ========

</TABLE>


See notes to condensed consolidated financial statements.


                                       4

<PAGE>

                                CROWN PAPER CO.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         For the Six Months (26 weeks)
                     Ended June 27, 1999 and June 28, 1998
                           (in thousands of dollars)


<TABLE>
<CAPTION>
                                                                                   Six Months
                                                                          -------------------------
                                                                              1999           1998
                                                                          ----------      ---------
                                                                                  (Unaudited)
<S>                                                                       <C>             <C>
Cash Provided by (Used for) Operating Activities:
     Net loss                                                             $ (41,946)      $ (21,301)
     Items not affecting cash:
         Depreciation and cost of timber harvested                           31,300          42,030
         Amortization of goodwill and other intangibles                         562             562
         Non-cash interest                                                    1,129           1,302
         Other, net                                                           1,006           2,867
         Property tax accrual reversal                                       (8,957)
         Adjustment of assets held for sale to net realizable value          16,175
     Changes in current assets and liabilities:
         Accounts receivable                                                   (187)         (1,958)
         Inventories                                                          4,574             647
         Other current assets                                                 5,442           2,359
         Accounts payable                                                     1,443         (10,574)
         Other current liabilities                                           (4,768)          4,656
         Deferred income taxes                                                  681         (14,005)
     Other, net                                                             (10,492)         (2,447)
                                                                          ---------       ---------
         Cash provided by (Used for) Operating Activities                    (4,038)          4,138
                                                                          ---------       ---------
Cash Provided by (Used for) Investing Activities:
     Expenditures for property, plant and equipment                         (15,813)        (20,429)
     Other, net                                                                 257             538
                                                                          ---------       ---------
         Cash provided by (Used for) Investing Activities                   (15,556)        (19,891)
                                                                          ---------       ---------
Cash Provided by (Used for) Financing Activities:
     Proceeds from draw down of Revolving Credit                             60,000          67,000
     Repayments of Revolving Credit                                         (41,000)        (52,000)
     Repayments of Term Loan                                                   (500)           (500)
                                                                          ---------       ---------
         Cash Provided by Financing Activities                               18,500          14,500
                                                                          ---------       ---------
Decrease in cash and cash equivalents                                        (1,094)         (1,253)
Cash and cash equivalents at beginning of year                                9,806          11,415
                                                                          ---------       ---------
Cash and cash equivalents at end of period                                $   8,712        $ 10,162
                                                                          =========       =========
</TABLE>
See notes to condensed consolidated financial statements.

                                       5


<PAGE>

                                CROWN PAPER CO.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


NOTE 1  --  ORGANIZATION AND BASIS OF PRESENTATION
------

     The accompanying unaudited condensed consolidated financial statements
include the consolidated operations, assets and liabilities of Crown Paper Co.,
and Crown Paper Co.'s consolidated subsidiaries (The "Company").  The Company is
a wholly owned subsidiary of Crown Vantage Inc. ("Crown Vantage" or the
"Parent").

     The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
financial statements.  The condensed consolidated balance sheet as of December
27, 1998 was derived from audited financial statements, but does not include all
disclosures required by generally accepted accounting principles for annual
financial statements.  In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.  Operating results for the quarter and six months ended June 27,
1999 are not necessarily indicative of the results that may be expected for the
year ended December 26, 1999.  For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Form 10-K for the year ended December 27, 1998.

NOTE 2  --  INCOME TAX
------

     The income tax benefits for the quarter and six months ended June 28, 1998
were provided based on the Company's estimated annual tax rate of 35.0%.  The
tax provisions for the quarter and six months ended June 27, 1999 are for
certain non-income based state taxes and foreign income taxes.  During 1999 the
Company has recorded a $14.8 million valuation allowance against the deferred
tax assets (of which approximately $5.1 million was recorded during the second
quarter of 1999) reducing the tax benefit of the 1999 net operating loss to $0.

NOTE 3  --  LONG TERM DEBT
------

<TABLE>
<CAPTION>

Consolidated long-term debt consists of the following:
                                                                           June 27       December 27
                                                                             1999           1998
                                                                           --------      ----------
                                                                           (in thousands of dollars)
               <S>                                                         <C>             <C>
                Credit Facility:
                     Revolving credit, due 2002                            $ 94,000        $ 75,000
                     Term Loan B, due 2003                                   95,675          96,175
                                                                           --------        --------
                                                                            189,675         171,175
                11% Senior Subordinated Notes, due 2005                     250,000         250,000
                Industrial Revenue Bonds, payable to 2026                    39,087          39,074
                                                                           --------        --------
                                                                            478,762         460,249

                Less current portion                                          1,000           1,000
                                                                           --------        --------
                                                                           $477,762        $459,249
                                                                           ========        ========
</TABLE>

     Maturities of long-term debt, excluding the revolving credit, for the next
five fiscal year-ends are:  1999 - $1.0 million; 2000 - $1.3 million; 2001 - $.8
million; 2002 - $47.0 million and 2003 - $46.1 million.

                                       6

<PAGE>


NOTE 4  --  INVENTORIES
------

<TABLE>
<CAPTION>
                                                                  June 27, 1999       December 27, 1998
                                                                  -------------       -----------------
                                                                        (in thousands of dollars)
<S>                                                                <C>                <C>
Raw materials                                                        $19,755             $ 24,716
Work in process                                                        5,682                6,757
Finished goods                                                        32,876               46,469
Stores and supplies                                                   22,070               34,142
                                                                    --------             --------
                                                                      80,383              112,084
Reduction to state inventories at last-in, first-out cost             (8,602)              (9,687)
                                                                    --------             --------
                                                                     $71,781             $102,397
                                                                    ========             ========

</TABLE>

NOTE 5  --  LITIGATION AND ENVIRONMENTAL MATTERS
------

     The Company is a party to various legal proceedings generally incidental to
its business and is subject to a variety of environmental protection statutes
and regulations.  As is the case with other companies in similar industries, the
Company faces exposure from actual or potential claims and legal proceedings
involving environmental matters.  Although the ultimate disposition of legal
proceedings cannot be predicted with certainty, it is the present opinion of the
Company's management that the outcome of any claim that is pending or
threatened, either individually or on a combined basis, will not have a
materially adverse effect on the consolidated financial position of the Company
but could materially affect consolidated results of operations in a given year.

     The Company has accrued $12.2 million at June 27, 1999 and December 27,
1998 primarily for estimated landfill site restoration, post-closure and
monitoring costs.  This liability includes $2.7 million and $2.4 million at June
27, 1999 and December 27, 1998, respectively, which represents estimated
liabilities at Berlin-Gorham that are included in the net assets held for sale
(see Note 9). In addition, the Company has been identified as a potentially
responsible party ("PRP"), along with others, under the Comprehensive
Environmental Response, Compensation and Liability Act or similar federal and
state laws regarding the past disposal of wastes at 19 sites in the United
States.  The Company has previously settled its remediation obligations at 12 of
those sites.  At 6 other sites, the Company is one of many potentially
responsible parties and its alleged contribution to the site and remediation
obligation is not considered significant.  At one other site, remedial
investigation is underway and a loss estimate for the potential remediation
effort costs is not yet possible.  However, the Company's accrual for the
remediation investigation effort was $.4 million at June 27, 1999 and December
27, 1998.  The liabilities can change substantially due to such factors as the
solvency of other potentially responsible parties, the Company's share of
responsibility, additional information on the nature or extent of contamination,
methods and associated costs of remediation required, and other actions by
governmental agencies or private parties.  While it is not feasible to predict
the outcome of all environmental liabilities, based on its most recent review,
management estimates the Company's share of the costs of investigation and
remediation of the known sites will not have a material adverse effect upon the
consolidated financial condition of the Company.

     Due to uncertainties associated with remediation activities, regulations,
technologies, and the allocation of costs among various other parties, actual
costs to be incurred at identified sites may vary from estimates.  Therefore,
management is unable to determine if the ultimate disposition of all known
environmental liabilities will have a material adverse effect on the Company's
consolidated results of operations in a given year.  As with most manufacturing
and many other entities, there can be no assurance that the Company will not be
named as a PRP or incur liabilities through other means at additional sites in
the future or that the costs associated with such additional sites would not be
material.

     The Environmental Protection Agency signed final rules affecting pulp and
paper industry discharges of wastewater and gaseous emissions ("Cluster Rules")
which became effective on April 15, 1998.  These Cluster Rules require changes
in the pulping, bleaching and/or wastewater treatment processes presently used
in some U.S. pulp and paper mills, including some of the Company's mills.  Based
on management's

                                       7

<PAGE>

understanding of the rules, the Company estimates that approximately $22 million
of capital expenditures may be required at the St. Francisville facility to
comply with the rules with compliance dates beginning in 1999 and extending over
the next two to five years. The Company has incurred capital spending of $2.5
million during 1999 and $6.1 million since inception to date to comply with the
cluster rules. There are risks and uncertainties associated with the Company's
estimate that could cause total capital expenditures and timing of such
expenditures to be materially different from current estimates, including
changes in technology, interpretation of the rules by government agencies that
is substantially different from the Company's interpretation, or other items.

NOTE 6  ASSET IMPAIRMENT ANALYSIS
------

     The Company assesses the recoverability of its investments in long-lived
assets to be held and used in operations whenever events or circumstances
indicate that their carrying amounts may be impaired.  Such assessment requires
that the future cash flows expected to result from use of the assets are
estimated and an impairment loss recognized when future cash flows are less than
the carrying value of such assets.  Estimating future cash flows requires the
Company to estimate useful lives of its long-lived assets, future production
volumes and costs, future sales volumes, demand for the Company's product mix
and prices that reflect the use of its long-lived assets and market conditions.
Although the Company believes it has a reasonable basis for its estimates, it is
reasonably possible that the Company's estimate of future cash flows could
change from current estimates, which could result in recognizing, in future
periods, impairment losses on its long-lived assets.

NOTE 7 -- COMPREHENSIVE INCOME
------

     Comprehensive income for the Company consists of net income, foreign
currency translation adjustments and minimum pension liability adjustments.
During the second quarter of 1999 and 1998, the Company's total comprehensive
loss was $15.2 million and $10.3 million, respectively, and for the six months
ended June 27, 1999 and June 28, 1998 the Company's total comprehensive loss was
$43.5 million and $21.4 million, respectively.

NOTE 8 -- SETTLEMENT OF BERLIN PROPERTY TAX CASE
------

     On February 1, 1999, the Company finalized an agreement with the City of
Berlin, N.H., concerning assessed values and taxability of factory machinery.
The Company reversed a property tax accrual, which was accrued at the higher
assessed values, of approximately $9 million in the first quarter of 1999, which
relates to amounts over accrued for previous tax years.

                                       8

<PAGE>

NOTE 9 -- BERLIN-GORHAM SALE
------

     In March 1999, the Company reached an agreement with American Tissue
Company ("ATC") for the sale of the Berlin-Gorham pulp and paper mills ("Berlin-
Gorham"). The sale was completed on July 9, 1999. In connection with the
Company's decision to sell Berlin-Gorham, a charge for $16.2 million was taken
in the first quarter of 1999 and consisted of the following elements:

(amounts in millions)
Fixed asset write-down                                     $16.5
Transaction costs                                            2.5
Loss on curtailment of pension plans                         3.4
Gain on curtailment/settlement of other benefit plans       (6.2)
                                                           -----
   Total Charge                                            $16.2
                                                           =====

     Berlin-Gorham had an operating loss for the second quarter of 1999 of $2.6
million and $13.3 million for the second quarter of 1998.  Berlin-Gorham had an
operating loss for the six months ended June 27, 1999 and June 28, 1998 of $12.6
million and $21.3 million, respectively.  The operating loss in the first six
months of 1999 included the reversal of a property tax accrual of $9.0 million
and the $16.2 million charge detailed above.  The net asset held for sale of $45
million consists of the estimated net realizable value of the assets to be sold
to ATC and estimated liabilities being assumed by ATC.

NOTE 10-- SEGMENT INFORMATION
-------

     The Company is organized around two segments based primarily on
similarities in products, the manufacturing process and customers.

<TABLE>
<CAPTION>

                                                   Six Months                         Second Quarter
---------------------------------------------------------------------------------------------------------------
(amounts in millions)                             1999             1998                 1999              1998
---------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>                 <C>                <C>
Operating income (loss):
   Printing & Publishing Papers               $ (8,884)         $(11,089)          $  1,604           $ (5,116)
   Specialty Papers                             (7,884)            2,280             (3,852)             2,095
---------------------------------------------------------------------------------------------------------------
   Total                                      $(16,768)         $ (8,809)          $ (2,248)          $ (3,021)
---------------------------------------------------------------------------------------------------------------
EBITDA:
   Printing & Publishing Papers               $ 19,749          $ 21,582           $ 11,698           $ 11,150
   Specialty Papers                              2,857            12,691              1,551              7,381
---------------------------------------------------------------------------------------------------------------
   Total                                      $ 22,606          $ 34,273           $ 13,249           $ 18,531
---------------------------------------------------------------------------------------------------------------
Net sales:
   Printing & Publishing Papers               $241,835          $260,586           $122,614           $128,864
   Specialty Papers                            164,212           176,633             82,268             86,549
---------------------------------------------------------------------------------------------------------------
   Total                                      $406,047          $437,219           $204,882           $215,413
---------------------------------------------------------------------------------------------------------------
</TABLE>

     Operating results for the first six months of 1999 for Printing and
Publishing Papers include a $16.2 million charge for the adjustment of Berlin-
Gorham to its net realizable value (Note 9) and a $9.0 million property tax
accrual reversal (Note 8). EBITDA represents income before income taxes,
interest expense and depreciation and amortization. EBITDA for the first six
months of 1999 for Printing and Publishing Papers excludes the effect of the
$16.2 million charge and $9 million property tax accrual reversal. Total assets
for Printing and Publishing Papers decreased by approximately $42.3 million
during the first six months of 1999 compared to December 27, 1998. The decrease
in total assets of Printing and Publishing Papers is primarily due to the $16.2
million charge discussed above, depreciation expense exceeding capital spending,
the reclassification of certain liabilities to net assets held for sale, and
changes in working capital.  Specialty Papers' total assets decreased by
approximately $5.3 million during the first six months of 1999 primarily due to
changes in working capital.

                                       9

<PAGE>

ITEM 2  --  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
------
FINANCIAL CONDITION

     Crown Paper Co. and subsidiaries (the "Company" or "Crown Paper") is a
major producer and marketer of value-added paper products for a diverse array of
end-uses. The Company is a wholly owned subsidiary of Crown Vantage Inc. (the
"Parent" or "Crown Vantage"). The Company operates in two segments: printing and
publishing papers and specialty papers. Printing and publishing papers are
primarily for applications such as special interest magazines, catalogs, books,
custom business forms, corporate communications and promotions (e.g. annual
reports and stationery) and other graphics applications. Specialty papers are
principally for food and retail packaging applications and conversion into such
items as coffee filters, labels, cups and plates.

     During the first six months of 1999 the Company operated 10 facilities
using 31 paper machines, and its paper production was approximately 75%
integrated with the Company's pulp operations. The Company's largest facility is
an integrated operation located in St. Francisville, La.  St. Francisville
produces coated groundwood papers for magazines and catalogs and uncoated
specialty converting papers. During the first quarter of 1999, the Company
announced the intended sale of its Berlin-Gorham pulp and paper mills ("Berlin-
Gorham") to American Tissue Holdings Inc. ("ATC") for $45 million. As a result
of this announced sale, which was completed July 9, 1999, the Company recorded a
charge for $16.2 million in the first quarter of 1999 to adjust the Berlin-
Gorham net assets to their estimated net realizable value. Net proceeds from the
sale of Berlin-Gorham will be used to fund certain related liabilities and pay
down debt. Berlin-Gorham primarily produces uncoated printing and publishing
papers as well as market pulp. The Company also produces uncoated printing and
publishing papers, primarily text, cover and writing papers,  at its non-
integrated facilities in Adams, Mass.; Ypsilanti, Mich., and Dalmore and
Guardbridge, Scotland. In addition to its primary paper-making operations, the
Company operates a cast-coating facility in Richmond, Va., that produces coated
paper and board for graphics and packaging uses. The Company's specialty papers
are produced primarily at non-integrated specialty packaging papers facilities
in Port Huron and Parchment, Mich., and Milford, N.J. and on the two uncoated
specialty converting machines at St. Francisville.

Results Of Operations
---------------------

     The Company's net sales for each business segment are as follows:
<TABLE>
<CAPTION>

                                           Net Sales and Tonnage by Segment
                                              for the Three Months Ended
                                          June 27, 1999           June 28, 1998
                                       ---------------------     -----------------
                                        Tons         Sales        Tons      Sales
                                       -------     ---------     -------  --------
                                                  (thousands)           (thousands)
<S>                                    <C>         <C>           <C>      <C>
Printing and Publishing Papers
    Coated groundwood                   73,507      $ 51,999     71,747   $ 59,097
    Uncoated                            63,302        55,662     59,446     56,296
    Other                               27,905        14,953     24,834     13,471
Specialty Papers                        85,902        82,268     82,192     86,549
                                       -------      --------    -------   --------
                                       250,616      $204,882    238,219   $215,413
                                       =======      ========    =======   ========
</TABLE>

                                      10

<PAGE>

<TABLE>
<CAPTION>

                                           Net Sales and Tonnage by Segment
                                               for the Six Months Ended
                                          June 27, 1999            June 28, 1998
                                       ---------------------     -----------------
                                        Tons         Sales        Tons     Sales
                                       -------      --------     -------  --------
                                                  (thousands)           (thousands)
<S>                                    <C>         <C>           <C>       <C>
Printing and Publishing Papers
      Coated groundwood                144,393      $102,458     143,040   $117,536
      Uncoated                         127,949       109,671     122,859    116,445
      Other                             58,135        29,706      48,702     26,605
Specialty Papers                       168,318       164,212     164,932    176,633
                                      --------      --------     -------   --------
                                       498,795      $406,047     479,533   $437,219
                                      ========      ========     =======   ========
</TABLE>
Net Sales

     The Company's net sales declined 7.1% for the six months ended June 27,
1999 compared to the same period in 1998. The decrease is primarily due to a
10.7% decrease in average price per ton from the first six months of 1999
compared to the first six months of 1998. The decline in average price per ton
was partially offset by an increase in tons sold of 19,262. Net sales for the
second quarter 1999 declined 4.9% when compared to the second quarter of 1998.
The decline in net sales is primarily due to a 9.6% decrease in average net
sales price per ton that was primarily offset by a 5.2% increase in tons sold.

     Net sales of coated groundwood paper (which is used principally in the
production of magazines and catalogs) for the six-month period ended June 27,
1999 were $102.5 million, a decrease of 12.8% compared to the same period in
1998. Sales volume was virtually the same for the first six months of 1999
compared to the same period in 1998, while average net sales price per ton
decreased 13.6% from the first six months of 1998 to the first six months of
1999.  Second quarter 1999 net sales declined 12.0% as compared to the second
quarter of 1998, primarily due to a 14.1% decrease in average net sales price
per ton that was partially offset by a 2.5% increase in tons sold.

     Net sales of uncoated printing and publishing papers in the first six
months of 1999 decreased 5.8% to $109.7 million from the first six months of
1998. The decline in net sales from the first six months 1999 to the first six
months 1998 is primarily due to an average net sales price per ton decrease of
9.6% that was partially offset by a 4.1% increase in tons sold. Even though net
sales during the second quarter of 1999 was not significantly different from net
sales for the second quarter of 1998, average net sales price per ton declined
7.1%, which was offset by a 6.5% increase in tons sold during the periods
compared.

     Other products reported within printing and publishing papers included the
Company's toweling, pulp and cast-coating operations. Net sales of other
products increased $3.1 million primarily due to an increase in tons sold of
toweling and pulp. This was partially offset by a 6.5% decline in average net
sales price per ton primarily related to toweling and pulp pricing during the
periods compared.  Net sales of other products increased 11% comparing the
second quarter of 1999 to the second quarter of 1998, primarily due to an
increase in tons sold of toweling and pulp.

     Specialty Papers' net sales totaled $164.2 million during the first six
months of 1999, a $12.4 million decrease from the same period in 1998.  The 7.0%
decrease in net sales is primarily the result of an 8.9% decrease in average net
sales price per ton during the six months ended June 27, 1999 compared to the
six months ended June 28, 1998, which was partially offset by a 2.1% increase in
tons sold. Net sales of specialty papers declined 4.9% during the second quarter
of 1999 compared to the second quarter of 1998, primarily due to a 9.1% decrease
in average net sales price per ton that was partially offset by a 4.5% increase
in tons sold.

                                      11

<PAGE>

Operating Income (Loss) for each business segment is as follows:

<TABLE>
<CAPTION>

                                            Operating Results by Segment                    Operating Results by Segment
                                              for the Quarter Ended                           for the Six Months Ended
                                         ------------------------------                   -------------------------------
                                          June 27, 1999   June 28, 1998                   June 27, 1999    June 27, 1998
                                         --------------   -------------                   -------------    --------------
                                                  (Thousands)                                       (Thousands)

<S>                                         <C>             <C>                           <C>              <C>
Printing and Publishing Papers               $ 1,604        $(5,116)                          $ (8,884)      $(11,089)
Specialty Papers                              (3,852)         2,095                             (7,884)         2,280
                                             -------        -------                            -------        -------
                                             $(2,248)       $(3,021)                           $(16,768)       (8,809)
                                             =======        =======                            =======        =======
</TABLE>

Operating Income

     Operating results for the first six months of 1999 decreased primarily due
to a charge of $16.2 million that adjusts Berlin-Gorham's net book value to its
estimated net realizable value. This charge was partially offset by a $9 million
reversal of a property tax accrual that resulted from the settlement of an
ongoing dispute with the City of Berlin. Also impacting operating results was an
adverse price variance of approximately $48.7 million in the first six months of
1999 compared to the first six months of 1998 that was substantially offset by
favorable manufacturing cost and volume variances of $48.9 million. Operating
results for the second quarter of 1999 improved by approximately $.8 million
primarily due to favorable manufacturing cost variances of approximately $18.1
million and favorable volume variances of $4.6 million when compared to the
second quarter of 1998. The favorable cost and volume variances were
substantially offset by the decline in average net sales price per ton discussed
above.

     Operating results for Printing and Publishing Papers improved by $2.2
million during the first six months of 1999 compared to the same period in 1998.
The improved operating results are primarily due to a favorable cost variance of
approximately $34.3 million and the increase in tons sold discussed above. These
were partially offset by the unfavorable price variance discussed above. The
reduced costs were primarily due to lower depreciation expense as a result of
the 1998 asset impairment charge and other charges, reduced compensation due to
the 1998 workforce reduction, lower wood and pulp costs and improved operating
efficiencies. Operating results were also impacted by the Berlin-Gorham charge
of $16.2 million that was partially offset by the $9 million property tax
accrual reversal. Operating results improved by approximately $6.7 million
during the second quarter of 1999 compared to the second quarter of 1998. The
improved operating results for the second quarter of 1999 is primarily due to
lower costs for the reasons discussed above and the increase in tons sold also
discussed above. This was partially offset by the decrease in average net sales
price per ton for the periods compared that was discussed above.

     Specialty Papers operating results decreased $10.2 million to an operating
loss of $7.9 million for the first six months of 1999 compared to operating
income of $2.3 million for the first six months of 1998.  The decline in
operating results is primarily attributable to an 8.9% decline in average net
sales price per ton discussed above.  Partially offsetting the declining prices
was a favorable cost variance of approximately $6.8 million primarily from lower
pulp costs, improved mill efficiencies and other cost saving initiatives.
Operating results for the second quarter of 1999 declined by $9.9 million
compared to the second quarter of 1998.  The decline in second quarter of 1999
results is primarily due to a 9.1% decrease in average net sales price per ton,
which was partially offset by the increase in tons sold and favorable cost
variances discussed above.

     Selling and administrative expenses increased $.9 million for the first six
months of 1999 compared to the same period in 1998.  The increase is primarily
due to an increase in Year 2000 readiness expenditures of $1.1 million during
the first six months of 1999 over the first six months of 1998 that was
partially offset by reduced costs in other areas. Selling and administrative
expenses increased by approximately $.2 million during the second quarter of
1999 compared to the second quarter of 1998 primarily due to increased Year 2000
readiness expenditures of $.7 million.

                                      12

<PAGE>

Interest Expense
----------------

     Interest expense for the six-month period of 1999 and 1998 was $24.9
million and $24.5 million, respectively.  Interest expense for the second
quarter of 1999 compared to the same period in 1998 was not significantly
different.

Liquidity and Sources of Capital
--------------------------------

     In connection with a spin-off in August of 1995, the Company obtained $250
million in financing through a public offering of Senior Subordinated Notes and
$253 million initial borrowings under a $350 million credit facility
(collectively, the "Financing").  The net proceeds from the Financing were paid
to James River Corporation of Virginia, now known as Fort James Corporation
("Fort James"), together with $100 million Senior Pay-in-Kind Notes issued by
the Parent as a return of James River's capital investment.

     Under the credit facility, the revolving credit available is in the
aggregate amount of $150 million with a $75 million sublimit for letters of
credit (of which $38.6 million has been used at June 27, 1999) and can be used
for general corporate purposes, working capital needs and permitted investments.
At June 27, 1999, $94.0 million of the revolving credit was outstanding and
$17.4 million of the aggregate line was available if needed. Management
estimates that the Berlin-Gorham sale will result in a net increase of
approximately $20 million in available funds from the aggregate line once all
payments to the Term Loan and the remaining operating payables of Berlin-Gorham
are paid (see Berlin-Gorham Sale). The estimated increase to the available
aggregate line includes the release of a $5.8 million letter of credit, which
was related to Berlin-Gorham.

     Cash flows used by operating activities were $4.0 million for the six
months ended June 27, 1999 compared to cash flows provided by operations of $4.1
million for the six months ended June 28, 1998.  The decline in operating cash
flows is mainly related to the decline in average net sales price per ton
discussed in Net Sales.  Earnings before interest, taxes, depreciation and
amortization (EBITDA), the Berlin-Gorham charge and property tax accrual
reversal were $22.6 million for the first six months of 1999 as compared to
$34.3 million for the comparable period in 1998.

     The Company's business is capital intensive.  Pulp and paper mills
generally consist of an extensive network of buildings, machinery, and
equipment, which require continual upgrades, replacement, modernization and
improvement.  The Company's capital expenditures for the six months ended June
27, 1999 were $15.8 million compared to $20.4 million in the same period in
1998.  1999 and 1998 expenditures primarily represented capital maintenance
projects that are substantially focused on projects with the quickest returns on
investment.  The Company's capital spending plan remains at approximately $40
million for 1999.  These capital expenditures are primarily for capital
maintenance projects and are expected to be financed by cash flows from
operations and available financing sources.

Settlement of Berlin Property Tax Case
--------------------------------------

     On February 1, 1999, the Company finalized an agreement with the City of
Berlin, N.H., concerning assessed values and taxability of factory machinery.
The Company reversed  a property tax accrual, which was accrued at higher
assessed values, of approximately $9 million in the first quarter of 1999, which
relates to amounts over-accrued for previous tax years.

                                       13
<PAGE>

Berlin-Gorham Sale
-------------------

     In March 1999, the Company reached an agreement with American Tissue
Company ("ATC") for the sale of Berlin-Gorham. The sale was completed on July 9,
1999. In connection with the Company's decision to sell Berlin-Gorham, a charge
for $16.2 million was taken in the first quarter of 1999 and consisted of the
following elements:
(TABLE)
(CAPTION)

(amounts in millions)
Fixed asset write-down                                     $16.5
Transaction costs                                            2.5
Loss on curtailment of pension plans                         3.4
Gain on curtailment/settlement of other benefit plans       (6.2)
                                                          -------
   Total Charge                                            $16.2
                                                          =======

     Berlin-Gorham had an operating loss for the second quarter of 1999 of $2.6
million and an operating loss for the second quarter of 1998 of $13.3 million.
Berlin-Gorham had an operating loss for the six months ended June 27, 1999 and
June 28, 1998 of $12.6 million and $21.3 million, respectively.  The operating
loss in the first six months of 1999 included the reversal of a property tax
accrual of $9.0 million and the $16.2 million charge detailed above.  The net
asset held for sale of $45 million consists of the estimated net realizable
value of the assets to be sold to ATC and estimated liabilities being assumed by
ATC.

Year 2000
---------

     The Year 2000 issue concerns the potential inability of computer
applications, information technology systems, and certain software-based
"embedded" control systems to properly recognize and process date-sensitive
information as the Year 2000 approaches and beyond.  The Company could suffer
material adverse impacts on its operations and financial results if the
applications and systems used by the Company, or by third parties with whom the
Company does business, do not accurately or adequately process or manage dates
or other information as a result of the Year 2000 issue.

     The Company has completed a review of its financial accounting system for
purposes of evaluating the Year 2000 issue.  The Company's software provider has
indicated that it will certify this financial accounting system as Year 2000-
compliant upon completion of the next scheduled upgrade.  This upgrade,
including independent testing performed by the Company, is substantially
complete as of the end of the second quarter of 1999 and should be completed
during the third quarter of 1999.  There can be no assurance that all Year 2000
issues in this software will be adequately resolved by this or other future
software releases.

     The Company also uses a variety of other software applications, business
information systems, accounting subsystems, process control systems and related
software, communication devices, and networking and other operating systems.
The Company has completed its inventory of all such systems and is currently in
the process of testing, upgrading, replacing, or otherwise modifying these
systems to adequately address the Year 2000 issue. The Company believes it will
be able to timely modify or replace its affected systems to prevent any material
detrimental effects on operations and financial results. The Company has
substantially completed this effort.  Possible risks of this process include but
are not limited to the ability of the Company's personnel and outside vendors to
adequately and timely identify and resolve all critical Year 2000 issues, and
the Company's ability to secure additional Year 2000 expertise during this time
of high demand if an unanticipated material problem requires skills the Company
or its third party vendors currently do not possess.  The Company can give no
assurance that all critical Year 2000 issues will be resolved in a timely manner
or that potentially unresolved issues would not have a material adverse impact
on the results of operations.

     The Company has certain key relationships with customers, vendors and
outside service providers. Failure by the Company's key customers, vendors and
outside service providers to adequately address the Year 2000 issue could have a
material adverse impact on the Company's operations and financial results. The
Company is currently assessing the Year 2000 readiness of these key customers,
vendors and outside service

                                       14
<PAGE>

providers and, at this time, cannot determine what the impact of their readiness
will be on the Company. This assessment includes but is not limited to
soliciting responses from each of these parties concerning their Year 2000
readiness and review of public documents filed by many of these parties.
Management continues to assess key customers, vendors and outside service
providers and is developing contingency plans as needed. The Company is
primarily relying upon the voluntary disclosures from third parties for this
review of their Year 2000 readiness.

     The Company anticipates that its affected systems will be remediated or
replaced to address the Year 2000 issue in a timely manner and is currently
focusing its resources in those areas.  The Company is also developing
contingency plans regarding the Year 2000 issue for its internal systems.  Many
of the identified risks from key customers, vendors and outside service
providers are both general and speculative in nature, such as possible power or
telecommunication failures, breakdowns in transportation systems, inability to
process financial transactions, and similar events affecting general business
services. As the Company completes its assessment of Year 2000 readiness of key
customers, vendors and outside service providers, management intends to develop
contingency plans to mitigate material known detrimental effects that may be
caused by their Year 2000 noncompliance.  However, it is unlikely that any
contingency plan would mitigate the adverse impact to the financial condition or
operations of the Company of any catastrophic event due to the Year 2000 issue
that leads to a prolonged disruption of essential services.

     Management believes that total Year 2000 costs will be approximately $3.5
million.  The costs associated with this effort are in addition to the Company's
regular information technology budget.   As of June 27, 1999 the Company has
incurred costs related to the Year 2000 issue of approximately $3.2 million.  In
addition to the costs mentioned above, the Company's capital spending for
planned upgrading of certain information systems to enhance the capabilities of
those systems was accelerated in part due to the Year 2000 issue.  The total
estimated increase in accelerated capital spending for these systems is
anticipated to be approximately $2.5 million.  The Company's current estimates
of the amount of time and costs necessary to remediate and test its computer
systems are based on the facts and circumstances existing at this time.  The
estimates were made using assumptions of future events including the continued
availability of certain resources, Year 2000 readiness plans, implementation
success by key third party vendors, and other factors.  New developments may
occur that could increase the Company's estimates of the amount of time and
costs necessary to modify and test its various information and non-information
systems.  These potential developments include but are not limited to the
availability and increased cost of personnel trained in this area of expertise,
the ability to locate and correct all relevant computer codes and equipment, and
any unanticipated Year 2000 problems from key customers, vendors, and outside
service providers.

Debt Covenants
--------------

     In connection with the credit facility as amended, Crown Paper Co. is
required to comply with certain financial covenants that include maintaining
minimum quarterly cash flow to debt and interest coverage ratios as well as
minimum tangible net worth. During the first quarter of 1999, Crown Paper Co.
amended certain financial covenants, which had been established at the Spin-Off
in 1995, for the fiscal year ended December 26, 1999. The Company remains in
compliance with the credit facility. The Company has amended the debt covenants
for each of the last three years as extended weakness in paper markets prevented
the Company from achieving the original financial covenants that were
established at the peak of the paper market cycle when the Company was spun off.
Without significant improvements in paper markets in 1999 and 2000, the Company
anticipates that it will need to revise its 2000 financial covenants when they
revert to the levels established at the peak of the paper market in 1995.

                                       15
<PAGE>

Listing on NASD Over-the Counter Bulletin Board
-----------------------------------------------

     On June 18, 1999 Crown Vantage's common stock was delisted from the NASDAQ
National Market and now trades on the NASD Over-the-Counter Bulletin Board.
Crown Vantage's common stock was delisted because it had not reached the minimum
bid price of $5 per share by June 18, 1999 to remain eligible for trading on the
National Market.

Forward Looking Statements
--------------------------

     Certain statements within Management's Discussion and Analysis and
elsewhere are forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995.  These statements are subject to various risks
and uncertainties that could cause the actual results to be materially different
from the Company's current expectations.  These forward-looking statements can
be identified by use of language such as plans, expects, estimates, anticipates,
believes, possible and other similar words or phrases.  In addition to the
factors discussed above, there are other factors that could cause the actual
results to differ materially.  These other factors include but are not limited
to business conditions and the general economy, both global and domestic; prices
for the Company's products; the duration and depth of the Asian economic crisis;
competitive factors; maintaining good labor relations; the Company's ability to
successfully implement its Year 2000 plans; the Company's ability to comply with
debt covenants, and maintaining good customer relations.

                                       16
<PAGE>

ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     Ex. 10.1    Amendment No. 8 to the Credit Agreement

     Ex. 27      Financial Data Schedule (Electronic Filing Only)

(b)  Reports on Form 8-K -

     Current Report, previously filed on Form 8-K dated June 18, 1999 relating
     to the delisting of Crown Vantage common stock from the NASDAQ National
     Market and subsequent listing of the common stock on the NASD Over-the-
     Counter Bulletin Board.

     Current Report, previously filed on Form 8-K dated July 9, 1999 relating to
     the completion of the sale of Crown Vantage's pulp an paper mills in Berlin
     and Gorham, New Hampshire to American Tissue Company.

                                       17
<PAGE>

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.

Crown Paper Co.
(Registrant)

/s/ R. Neil Stuart                           /s/ Michael J. Hunter
-----------------------------                -----------------------------
R. Neil Stuart                               Michael J. Hunter
Executive Vice President,                    Senior Vice President,
Chief Financial Officer                      Chief Accounting Officer
(Duly Authorized Officer)                    (Duly Authorized
                                             Chief Accounting Officer)

August 11, 1999

                                       18