<PAGE>


                       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 29, 1997  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 8, 1997:

               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 29, 1997 
                       and December 29, 1996.

                    -  Condensed Consolidated Statements of Operations - 
                       Three months and six months ended June 29, 1997 and 
                       June 30, 1996.

                    -  Condensed Consolidated Statements of Cash Flows - Six 
                       months ended June 29, 1997 and June 30, 1996.

                    -  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 29, 1997  December 29, 1996
                                                      ------------   -----------------
                                                       (UNAUDITED)
                                                       -----------
<S>                                                    <C>           <C>

Current Assets:
     Cash and cash equivalents                         $    8,287    $    1,175
     Accounts receivable, net                              52,177        56,004
     Inventories                                           96,340        97,975
     Prepaid expenses and other current assets             12,864        15,217
     Deferred income taxes                                 14,191        14,191
                                                       ----------    ----------
          Total current assets                            183,859       184,562
Property, plant and equipment, net                        660,411       678,154
Other assets                                               37,519        36,759
Unamortized debt issue costs                               14,927        16,023
Intangibles, net                                           29,539        30,101
                                                       ----------    ----------
          Total Assets                                   $926,255      $945,599
                                                       ----------    ----------
                                                       ----------    ----------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
     Accounts payable                                   $  56,033     $  60,612
     Accrued liabilities                                   81,135        80,920
     Current portion of long-term debt                      7,358         6,761
                                                       ----------    ----------
          Total current liabilities                       144,526       148,293
Long-term debt                                            456,931       447,229
Accrued postretirement benefits other than pensions       102,371       101,273
Other long-term liabilities                                15,121        15,373
Deferred income taxes                                      92,340       102,468
                                                       ----------    ----------
           Total Liabilities                              811,289       814,636
                                                       ----------    ----------
Shareholder's Equity:
     Preferred Stock, no par value;
        Authorized - 5,000 shares;
        Issued and outstanding - None
     Common Stock, no par value;
        Authorized - 5,000 shares;
        Issued and outstanding one (1)
               share at June 29, 1997
               and December 29, 1996                      130,823       129,058
        Minimum pension liability                            (892)         (892)
        Cumulative foreign currency translation adjustment  1,491         3,365
        Retained deficit                                  (16,456)         (568)
                                                       ----------    ----------
                                                          114,966       130,963
                                                       ----------    ----------
Total Liabilities and Shareholder's Equity               $926,255      $945,599
                                                       ----------    ----------
                                                       ----------    ----------

</TABLE>

SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                      3

<PAGE>

                                 CROWN PAPER CO.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           For the Second Quarter (13 weeks) and Six Months (26 weeks)
                      Ended June 29, 1997 and June 30, 1996
                   (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE)

<TABLE>
<CAPTION>

                                                         Second Quarter                  Six Months
                                                   -------------------------     ------------------------
                                                      1997           1996           1997           1996
                                                   -----------  -----------      -----------   ----------
                                                          (UNAUDITED )                  (UNAUDITED )
<S>                                                <C>            <C>            <C>            <C>

Net sales                                          $ 224,932      $ 230,564      $ 453,573      $ 483,417
Cost of goods sold                                   214,180        207,515        425,657        427,474
                                                   -----------  -----------      -----------   ----------
Gross margin                                          10,752         23,049         27,916         55,943
Selling and administrative expenses                   12,263         12,367         28,769         24,340
                                                   -----------  -----------      -----------   ----------
        Operating Income (Loss)                       (1,511)        10,682           (853)        31,603
Interest expense                                     (12,628)       (12,487)       (25,043)       (25,371)
Other income, net                                        717            118            858            392
                                                   -----------  -----------      -----------   ----------
        Income (loss) before income taxes            (13,422)        (1,687)       (25,038)         6,624
Provision (benefit) for income taxes                  (4,898)          (672)        (9,150)         2,632
                                                   -----------  -----------      -----------   ----------
                NET INCOME (LOSS)                   $ (8,524)      $ (1,015)      $(15,888)        $3,992
                                                   -----------  -----------      -----------   ----------
                                                   -----------  -----------      -----------   ----------

</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 29, 1997 and June 30, 1996
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>

                                                               Six Months
                                                       --------------------------
                                                          1997           1996
                                                       -----------    -----------
                                                              (UNAUDITED)

<S>                                                     <C>            <C>
Cash Provided by (Used for) Operating Activities:
     Net income (loss)                                  $ (15,888)       $3,992
     Items not affecting cash:
          Depreciation and cost of timber harvested        41,228        37,583
          Amortization of goodwill and other intangibles      562           562
          Non-cash interest                                 1,110         1,485
          Other, net                                        1,061         1,645
     Changes in current assets and liabilities:
          Accounts receivable (includes
           $40,000 sold in 1996)                            3,827        53,483
          Inventories                                       1,635         1,061
          Other current assets                              2,353          (437)
          Accounts payable                                  1,496        (6,438)
          Other current liabilities                           215        (2,600)
     Decrease in deferred income taxes                    (10,128)         (246)
     Other, net                                            (1,703)        4,625
                                                       -----------    -----------
          Cash Provided by Operating Activities            25,768        94,715
                                                       -----------    -----------
Cash Provided by (Used for) Investing Activities:
     Expenditures for property, plant and equipment       (30,494)      (37,652)
     Other, net                                             1,556           353
                                                       -----------    -----------
          Cash Used for Investing Activities              (28,938)      (37,299)
                                                       -----------    -----------
Cash Provided by (Used for) Financing Activities:
     Proceeds from draw down of Revolving Credit           68,000       106,000
     Repayments of Revolving Credit                       (54,000)     (109,000)
     Repayments of Term Loans and other long-term debt     (3,718)      (47,047)
                                                       -----------    -----------
          Cash Provided by (Used for)
           Financing Activities                            10,282       (50,047)
                                                       -----------    -----------
Increase in cash and cash equivalents                       7,112         7,369
Cash and cash equivalents at beginning of year              1,175         5,335
                                                       -----------    -----------
Cash and cash equivalents at end of period               $  8,287      $ 12,704
                                                       -----------    -----------
                                                       -----------    -----------

</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.  Crown Paper Co. and 
subsidiaries (the "Company") is a wholly owned subsidiary of  Crown Vantage 
Inc. (the "Parent").  The Company became an independent company after the 
Board of Directors of James River Corporation of Virginia ("James River") 
approved the spin-off of assets, liabilities and operations which comprised a 
substantial part of James River's Communication Papers Business and the 
paper-based part of its Food and Consumer Packaging Business ("Predecessor 
Business").  At the close of business on August 25, 1995, James River 
distributed to its common shareholders all of the outstanding shares of the 
Parent (the "Distribution"). The Distribution was made in the form of a 
tax-free dividend on the basis of one share of the Parent's common stock for 
every ten shares of James River common stock.  A total of 8,446,362 shares of 
the Parent's common stock were issued and began trading on NASDAQ on August 
28, 1995.

     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 29, 1996 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 six months ended June 29, 1997 are not necessarily 
indicative of the results that may be expected for the year ended December 
28, 1997.  For further information, refer to the consolidated financial 
statements and footnotes thereto included in Crown Paper Co.'s Form 10-K for 
the year ended December 29, 1996.  Certain 1996 amounts have been 
reclassified to conform with 1997 presentation.

NOTE 2  --  INCOME TAX

     The income tax benefit for the quarter and six months ended June 29, 
1997 and the quarter ended June 30, 1996 and income tax expense for the six 
months ended June 30, 1996 have been provided at the Company's estimated tax 
rates of approximately 36.5% and 39.8%, respectively.


                                      6

<PAGE>

NOTE 3  --  LONG TERM DEBT

Consolidated long-term debt consists of the following:

<TABLE>
<CAPTION>

                                                     June 29        December 29
                                                      1997              1996
                                                    ---------       -----------
                                                     (IN THOUSANDS OF DOLLARS)
     <S>                                            <C>               <C>

     Bank Credit Facility:
          Revolving credit, due 2002                $ 39,000          $  25,000
          Term Loan A, due 2002                       43,234             45,712
          Term Loan B, due 2003                       98,500             99,000
                                                    ---------       -----------
                                                     180,734            169,712
     11% Senior Subordinated Notes, due 2005         250,000            250,000
     Industrial Revenue Bonds, payable to 2026        33,555             34,278
                                                    ---------       -----------
                                                     464,289            453,990
     Less current portion                              7,358              6,761
                                                    ---------       -----------
                                                    $456,931           $447,229
                                                    ---------       -----------
                                                    ---------       -----------
</TABLE>

     Maturities of long-term debt, excluding the revolving credit, for the 
next five fiscal year ends are:  1998 - $8.6 million;  1999 - $8.6 million; 
2000 - $11.1 million; 2001 - $7.5 million; and 2002 - $56.4 million.

NOTE 4 --  INVENTORIES
<TABLE>
<CAPTION>

                                                     June 29        December 29
                                                      1997              1996
                                                    ---------       -----------
                                                     (IN THOUSANDS OF DOLLARS)
<S>                                                 <C>               <C>

Raw materials                                      $  26,328            $26,283
Work in process                                        6,396              7,490
Finished goods                                        40,663             42,168
Stores and supplies                                   34,835             34,640
                                                    ---------       -----------
                                                     108,222            110,581
Reduction to state inventories at
 last-in, first-out cost                             (11,882)           (12,606)
                                                    ---------       -----------
                                                   $  96,340          $  97,975
                                                    ---------       -----------
                                                    ---------       -----------

</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 
which 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 period.

     The Company has accrued estimated landfill site restoration, 
post-closure and monitoring costs totalling $10.9 million and $11.1 million 
at June 29, 1997 and December 29, 1996, respectively.  In addition, the 
Company has been identified as a potentially responsible party ("PRP"), along 
with others, under the 

                                      7

<PAGE>

Comprehensive Environmental Response, Compensation and Liability Act or 
similar federal and state laws regarding the past disposal of wastes at 
approximately 18 sites in the United States.  The Company has previously 
settled its remediation obligations at many of these sites and is awaiting 
final delisting as a PRP.  At 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 certain other 
sites, remedial investigation is underway.  While it is reasonably possible 
that a loss may be incurred at these sites, an estimate of potential loss is 
not yet possible.  Based upon its previous experience with respect to the 
cleanup of hazardous substances as well as the regular detailed review of its 
known hazardous waste sites and estimated costs to remediate certain sites, 
the Company has accrued $ .6 million and $ .7 million at June 29, 1997 and 
December 29, 1996, respectively.  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 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 is of the opinion that its share of the 
costs of investigation and remediation of the sites of which it is currently 
aware will not have a material adverse effect upon the consolidated financial 
condition of the Company.

     However, because of 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.  In addition, as is the case with most manufacturing and 
many other entities, there can be no assurance that the Company will not be 
named as a PRP at additional sites in the future or that the costs associated 
with such additional sites would not be material.

     In December 1993, the EPA published draft rules which contain proposed 
regulations affecting pulp and paper industry discharges of wastewater and 
gaseous emissions ("Cluster Rules").  The final Cluster Rules were scheduled 
to be issued in late 1995; however, issuance has been repeatedly delayed.  
Current indications are that the rules will be issued in late 1997 with a 
compliance date of 2000 to 2001.  These Cluster Rules may require significant 
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 the Company's understanding of the proposed 
rules, the Company estimates that approximately $68 million of capital 
expenditures may be required to comply with the rules.

NOTE 6 -- STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 121

     Statement of Financial Accounting Standards No. 121 ("Accounting for the 
Impairment of Long-Lived Assets and for Long-Lived  Assets to Be Disposed 
Of"), requires that the Company assess 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 be 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 make certain estimates of future 
production volumes and costs, as well as future sales volumes, demand for the 
Company's product mix, and prices which are expected to occur from 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 actual performance could differ from such estimates which could 
result in a material impairment loss on its long-lived assets.


                                      8

<PAGE>

NOTE 7 -- EMPLOYEE STOCK  OWNERSHIP PLAN

     On May 2, 1997 the Company and the Parent entered into an agreement with 
the Crown Vantage Inc. Employee Stock Ownership Plan (the "ESOP") whereby the 
ESOP purchased $3.0 million of Common Stock from the Company.  The purchase 
was funded by a loan to the ESOP from the  Company which bears interest at 
11% and is due May 1, 2004.  The ESOP purchased 500,000 shares of Common 
Stock of the Parent at the average of the high and low prices for the 
previous 10 day trading period.  The shares are to be used to satisfy the 
Company's matching obligation with respect to the ESOP and are pledged as 
collateral for the ESOP's debt.  As the Company recognizes compensation 
expense for its matching contribution, shares are committed for release from 
collateral.

NOTE 8 -- NEW ACCOUNTING PRONOUNCEMENTS

     In June 1996, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards No. 125 ("Accounting for Transfers and 
Servicing of Financial Assets and Extinguishments of Liabilities").  
Statement of Financial Accounting Standards No. 125 ("SFAS No. 125") provides 
accounting and reporting standards for transfers and servicing of financial 
assets and extinguishments of liabilities.  SFAS No. 125  is effective for 
transactions occurring after December 31, 1996.  The Company's adoption of 
SFAS No. 125  in the first quarter of 1997 did not have a material effect on  
its financial position or results of operations.


                                      9

<PAGE>

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

     Crown Paper Co. and subsidiaries (the "Company") is a major producer of 
value-added paper products for a diverse array of end-uses.  The Company's  
two business sectors and corresponding principal product categories are (i) 
printing and publishing papers, for applications such as special interest 
magazines, books, custom business forms and corporate communications and 
promotions (e.g., annual reports and stationery); and  (ii) specialty papers, 
principally for food and  retail packaging applications and conversion into 
such items as coffee filters, cups and plates.

     The Company operates 11 facilities using 33 paper machines and is 
approximately 75% integrated with the Company's pulp operations.  The 
Company's two largest facilities are integrated operations located in St. 
Francisville, Louisiana and Berlin and Gorham, New Hampshire.  St. 
Francisville produces coated groundwood papers for magazines and catalogs and 
uncoated specialty converting papers. Berlin-Gorham primarily produces 
uncoated printing and publishing papers as well as  market pulp.  The Company 
also produces uncoated printing and publishing papers at its non-integrated 
facilities in Adams, Massachusetts; Newark, Delaware; Ypsilanti, Michigan; 
and Dalmore and Guardbridge, Scotland.  The Company's food and retail 
packaging papers are produced primarily at non-integrated  facilities in Port 
Huron and Parchment, Michigan and Milford, New Jersey.  In addition to its 
primary paper-making operations, the Company operates a cast-coating facility 
in Richmond, Virginia.

RESULTS OF OPERATIONS

     The Company's net sales for each business sector as well as pulp and 
miscellaneous, are as follows:

<TABLE>
<CAPTION>

                                                                   Net Sales and Tonnage by Sector
                                                                       for the Six Months Ended
                                                             June 29, 1997                June 30, 1996
                                                          --------------------------  ------------------------
                                                             Tons         Sales           Tons         Sales
                                                          ----------    -----------   -----------    ----------
                                                         (thousands)     (millions)   (thousands)    (millions)
<S>                                                       <C>           <C>           <C>            <C>
Printing and Publishing Papers
     Coated groundwood                                      142.9        $  95.1          124.0         $117.4
     Uncoated                                               123.6          120.1          121.8          124.5

Specialty Papers
     Food and retail packaging                              117.3          149.7          119.2          160.0
     Converting                                              88.7           80.0           80.6           75.1

Pulp and Miscellaneous                                       24.1            8.7           17.1            6.4
                                                          ----------    -----------   -----------    ----------
                                                            496.6        $ 453.6          462.7        $ 483.4
                                                          ----------    -----------   -----------    ----------
                                                          ----------    -----------   -----------    ----------

</TABLE>

                                     10

<PAGE>

<TABLE>
<CAPTION>

                                                                   Net Sales and Tonnage by Sector
                                                                       for the Six Months Ended
                                                             June 29, 1997                June 30, 1996
                                                          --------------------------  ------------------------
                                                             Tons         Sales           Tons         Sales
                                                          ----------    -----------   -----------    ----------
                                                         (thousands)     (millions)   (thousands)    (millions)
<S>                                                       <C>           <C>           <C>            <C>
Printing and Publishing Papers
     Coated groundwood                                       71.0         $ 47.9           60.4         $ 53.6
     Uncoated                                                60.1           58.6           60.3           58.8
Specialty Papers
     Food and retail packaging                               58.3           74.4           59.3           75.3
     Converting                                              45.1           39.3           43.2           38.5

Pulp and Miscellaneous                                       12.9            4.7           13.9            4.4
                                                          ----------    -----------   -----------    ----------
                                                            247.4         $224.9          237.1         $230.6
                                                          ----------    -----------   -----------    ----------
                                                          ----------    -----------   -----------    ----------
</TABLE>

NET SALES

     The Company's net sales decreased  6.2% to $453.6 million for the six 
months ended June 29, 1997 as compared to $483.4 million for the same period 
in 1996.  Net sales decreased 2.4% to $224.9 million for the quarter ended 
June 29, 1997 as compared to $ 230.6 million for the same period in 1996.  
The decrease for the six month period of 1997 resulted primarily from a 12.6% 
decline in average selling price per ton, which was partially offset by a 
7.3% increase in sales volume.  The decrease in net sales for the quarter 
ended June 29, 1997 as compared to the quarter ended June 30, 1996 was 
principally due to a 6.5% decline in average selling price per ton, which was 
partially offset by a 4.3% increase in sales volume.

     Net sales of coated groundwood paper (which is used principally in the 
production of magazines and catalogs) for the six month period ended June 29, 
1997 were $95.1 million, a decline of 18.9% as compared to the same period in 
1996.  Sales volume increased 18,900 tons for the first six months of 1997 
compared to 1996, while the average sales price per ton declined from $946 in 
1996 to $665 in 1997.  Net sales of coated groundwood papers decreased $5.7 
million in the second quarter of 1997 as compared to the second quarter of 
1996, a 10.6% decline.  This decrease in net sales is primarily due to a 
23.9% decline in average selling price per ton which was partially offset by 
a 17.5% increase in sales volume.

     Net sales of uncoated printing and publishing papers decreased $4.4 
million from $124.5 million for the first six months of 1996 to $120.1 
million for the first six months of 1997, a 3.6% decline.  Average selling 
price per ton for the first six months of 1997 declined by $51 (or 5.0%) as 
compared to the same period in 1996, while 1997 sales volume increased 1.5% 
as compared to 1996. Net sales of uncoated printing and publishing papers in 
the second quarter of 1997 were $58.6 million, which was virtually unchanged 
from the second quarter of 1996.  Sales volume and average sales price per 
ton did not significantly fluctuate from quarter to quarter.

                                     11

<PAGE>

     Food and retail packaging paper net sales totaled $149.7 million during 
the first six months of 1997, a $10.3 million decline from the same period in 
1996.  The 6.4% decrease in net sales is primarily the result of a 4.9% 
decrease in average selling price per ton and a 1.6% decline in sales volume 
during the six month period ended June 29, 1997 as compared to the same 
period in 1996.  Price movements within the Company's food and retail 
packaging papers business are closely aligned with pulp price changes.  
Industry pulp prices began to decline in first quarter 1996 and remained at 
low levels through the second quarter of 1997.  The decline in pulp prices 
negatively affected average selling prices per ton in the first and second 
quarter of 1997 as compared to the first and second quarter of 1996.  For the 
second quarter of 1997, net sales were $74.4 million which was virtually 
unchanged from second quarter 1996.  Sales volume and average sales price per 
ton did not significantly fluctuate from quarter to quarter.

     Net sales of specialty converting papers during the first six months of 
1997 were $80.0 million, a 6.5% increase compared to the first six months 
of 1996.  The increase is the result of a 9.9% increase in tons sold in 1997 
compared to 1996 which was partially offset by a 3.1% decrease in average 
selling price per ton.  Net sales of specialty converting papers in the 
second quarter of 1997 totaled $39.3 million, a 2.1% increase from second 
quarter 1996 net sales of $38.5 million.  Tons sold in the second quarter of 
1997 were 45,100, a 4.2% increase over the same period in 1996.  However, 
average selling price per ton in the second quarter of 1997 declined 2.1% as 
compared to the second quarter of 1996.

     Net sales of pulp and miscellaneous products increased to $8.7 million 
for the six months ended June 29, 1997 as compared to $6.4 million in the 
same period of 1996. Tons of pulp sold is a function of market demand as well 
as managing, to the Company's best advantage, internal pulp integration.  
Tons sold in the first half of 1997 increased to 24,100 compared to 17,100 in 
the same period of 1996.  In the second quarter of 1997 net sales increased 
to $4.7 million from $4.4 million in the second quarter of 1996. The increase 
in net sales for the second quarter is due to an increase in average selling 
price per ton of 13.8% which was partially offset by a decrease of 1,000 tons 
in sales volume.

OPERATING INCOME

<TABLE>
<CAPTION>

                                                       Operating Income by  Sector      Operating Income by Sector
                                                          for the Quarter Ended           for the Six Months Ended
                                                       ----------------------------     ----------------------------
                                                       June 29, 1997  June 30, 1996     June 29, 1997  June 30, 1996 
                                                       -------------  -------------     -------------  -------------
                                                               (Millions)                       (Millions)

<S>                                                    <C>            <C>               <C>            <C>
Printing and Publishing Papers                             $ (6.3)        $  8.2        $ (10.5)        $ 22.1
Food and retail packaging                                     2.9            3.7            4.4            5.2
Converting                                                    1.7            3.5            6.0            9.5
Pulp and Miscellaneous                                         .2           (4.7)          (.80)          (5.2)
                                                       -------------  -------------     -------------  -------------
                                                           $ (1.5)        $ 10.7         $  (.9)        $ 31.6
                                                       -------------  -------------     -------------  -------------
                                                       -------------  -------------     -------------  -------------

</TABLE>

     The Company had an operating loss of $.9 million for the six month 
period in 1997 compared to operating income of $31.6 million for the same 
period in 1996. Lower prices in the first two quarters of 1997 decreased 
operating income by $57.8 million as compared to the same period in 1996.  
Higher volumes and lower costs in the first half of 1997 as compared to the 
same period in 1996 improved operating performance by $19.6 million and $5.8 
million, respectively.  In the second quarter of 1997, the operating loss was 
$1.5 million, compared to operating income of $10.7 million for the second 
quarter of 1996.  Operating income declined in the second quarter of 1997 as 
compared to the second quarter of 1996 due to lower prices and higher costs 
which decreased operating performance by $14.4 million and 

                                     12

<PAGE>

$4.8 million respectively. Higher volumes of $6.9 million improved operating 
income in the second quarter of 1997 as compared to the same quarter of 1996. 
In addition, the increase in second quarter costs was caused by once-a-year 
scheduled maintenance downs and inspections at the Company's Berlin-Gorham, 
St. Francisville, and Richmond mills, which in the prior year had been spread 
across several quarters. These downs reduced operating results by 
approximately $9 million during the quarter.

     Operating income for printing and publishing papers decreased to a loss 
of $10.5 million in the six months of 1997 compared to income of $22.1 
million for the same period in 1996.  The decrease in operating income 
resulted primarily from the decrease in paper prices discussed above.  The 
operating loss of $6.3 million  in the second quarter of 1997 declined by 
$14.5 million from $8.2 million of operating income in the second quarter of 
1996.  The decrease was primarily due to the 23.9% decline in average selling 
price for coated groundwood papers and the once-a-year scheduled maintenance 
downs and inspections discussed above.

     Food and retail packaging operating income decreased from $5.2 million 
for the first six months of 1996 to $ 4.4 million in the first six months of 
1997. The decrease in operating profits is attributable to the decline in 
average selling price per ton discussed above.  However, reduced pulp prices 
and other cost saving initiatives during the first six months of 1997 as 
compared to the same period in 1996 benefitted operating results at the 
company's packaging mills which are non-integrated. Operating results 
declined from $3.7 million in the second quarter of 1996 to $2.9 million in 
the second quarter of 1997.  Second quarter 1997 operating results declined 
as a result of higher pulp costs in the second quarter of 1997 compared to 
the second quarter of 1996.

     Operating income for converting papers decreased to $6.0 million in the 
first six months of 1997 as compared to $9.5 million in the first six months 
of 1996. The decrease in operating profits is primarily attributable to the 
average selling price per ton decreasing 3.1% for the first six months of 
1997 compared to 1996.  Operating profits for the second quarter of 1997 were 
$1.7 million, a decrease from operating profits of $3.5 million in the second 
quarter of 1996. The decrease in operating profit is attributable to the 
decrease in average selling price per ton and the once-a-year scheduled 
maintenance down and inspection at the Richmond mill, which were partially 
offset by the increase of 1,900 tons sold from quarter to quarter.

     Selling and administrative expenses increased $4.4 million for the six 
month period of 1997, compared to the same period in 1996.  The increase is 
due to higher commissions (which are volume related) as well as higher 
depreciation on certain computer systems placed in service after June 30, 
1996.  The increases in the second quarter of 1997 and the first six months 
of 1997 over the same periods in 1996 are also attributable to expenses 
associated with the Company's accounts receivable securitization which were 
classified as interest expense in the first quarter and most of the second 
quarter in 1996.  Selling and administrative expenses were virtually the same 
for second quarter 1997 as compared to second quarter 1996.

INTEREST EXPENSE

     Interest expense for the six month period of 1997 and 1996 was $25.0 
million and $25.4 million, respectively.  Interest expense for the second 
quarter of 1997 and 1996 was $12.6 and $12.5, respectively.

                                     13

<PAGE>

LIQUIDITY AND SOURCES OF CAPITAL

     In connection with the Spin-Off, 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 from a group 
of banks (collectively, the "Financing").  The net proceeds from the 
Financing were paid to James River together with $100 million Senior 
Pay-in-Kind Notes issued by the Parent as a return of James River's capital 
investment.

     Under the bank 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 $43.9 million has been used at June 29, 1997) and can be 
used for general corporate purposes, working capital needs, letters of credit 
and permitted investments.  At June 29, 1997, $39.0 million of the revolving 
credit was outstanding and $67.1 million of the aggregate line was available 
if needed.

     Cash flows provided by operating activities were $25.8 million for the 
six months ended June 29, 1997 compared to $94.7 million for the six months 
ended June 30, 1996.  The decrease in operating cash flows is mainly 
attributable to the $15.9 million loss as compared to $4.0 million net income 
for the first six months of 1997 and 1996, respectively, and the sale of $40 
million of trade accounts receivable in June 1996.  Earnings before interest, 
taxes, depreciation and amortization (EBITDA) were $41.8 million for the 
first six months of 1997 as compared to $70.1 million for the comparable 
period in 1996.

     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 29, 1997 were $30.5 million compared to $37.7 million in the same period 
in 1996.  Approximately $7.9 million of 1997 capital expenditures represents 
amounts that were accrued at December 29, 1996 for which cash payments were 
made in 1997.  The majority of the $7.9 million represents final cash 
payments related to the rebuild of  a coated paper-machine at the Company's 
St. Francisville, Louisiana mill.  The remaining 1997 expenditures primarily 
represented capital maintenance projects. Capital expenditure projects during 
the first six months of 1996 related to capital maintenance projects, 
construction of a wastewater treatment plant at Parchment, Michigan, and the 
start of the Company's rebuild of the Number 1 paper machine at the St. 
Francisville mill.  The Company's strategic capital plan involves aggregate 
capital expenditures for the remainder of 1997 of approximately $30.5 
million.  These capital expenditures are primarily capital maintenance 
projects and are expected to be financed  by cash flows from operations.

                                     14

<PAGE>
 
PART II  --  OTHER INFORMATION


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

(a)  Exhibits
     Ex. 27               Financial Data Schedule (Electronic Filing Only)

(b)  Reports on Form 8-K --

     None

                                     15

<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
Senior Vice President,                Vice President,
Chief Financial Officer               Chief Accounting Officer
(Duly Authorized Officer)             (Duly Authorized
                                      Chief Accounting Officer)



August 12, 1997

                                     16