<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 25, 2000   Commission File Number: 1-13868
--------------------------------------------------------------------------------

                               CROWN VANTAGE INC.
                            (Debtor-In-Possession)
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


               Virginia                               54-1752384
--------------------------------------------------------------------------------
     (State or other jurisdiction of               (I.R.S. Employer
     incorporation or organization)               Identification No.)


     4445 Lake Forest Drive, Cincinnati, OH              45242
--------------------------------------------------------------------------------
     (Address of principal executive offices)          (Zip Code)


      (513) 769-7555
--------------------------------------------------------------------------------
     (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 3, 2000:
                               10,574,019 Shares
                      -------------------------------------

<PAGE>

                                     INDEX

                               CROWN VANTAGE INC.
                             (Debtor-In-Possesion)

PART I:  Financial Information

         Item 1.  Financial Statements

                 .  Condensed Consolidated Balance Sheets - June 25, 2000 and
                    December 26, 1999.

                 .  Condensed Consolidated Statements of Operations - Six months
                    and second quarter ended June 25, 2000 and June 27, 1999.

                 .  Condensed Consolidated Statements of Cash Flows - Six months
                    ended June 25, 2000 and June 27, 1999.

                 .  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 VANTAGE INC.
                             (Debtor-In-Possession)
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                           (in thousands of dollars)

<TABLE>
<CAPTION>
ASSETS                                                    June 25, 2000         December 26, 1999
                                                          -------------         -----------------
                                                           (Unaudited)
                                                           -----------
<S>                                                       <C>                   <C>
Current Assets:
  Cash and cash equivalents                                 $     208               $   2,434
  Accounts receivable, net                                     71,905                  36,871
  Inventories                                                  73,033                  73,975
  Prepaid expenses and other current assets                    15,427                  13,504
                                                            ---------               ---------
       Total current assets                                   160,573                 126,784
Property, plant and equipment, net                            335,645                 349,149
Other assets                                                   52,386                  54,106
Intangibles, net                                               26,165                  26,727
                                                            ---------               ---------
      Total Assets                                          $ 574,769               $ 556,766
                                                            =========               =========
LIABILITIES AND DEFICIT
Current Liabilities:
  Accounts payable                                          $  25,825               $  45,113
  Accrued liabilities                                          42,982                  57,162
  Current portion of long-term debt                           240,924                 583,634
  Liabilities subject to compromise                           430,999                       -
                                                            ---------               ---------
     Total current liabilities                                740,730                 685,909
Long-term debt                                                 41,500                       -
Accrued postretirement benefits other than pensions            79,153                  80,436
Other long-term liabilities                                     9,848                  29,469
                                                            ---------               ---------
     Total Liabilities                                        871,231                 795,814
                                                            ---------               ---------
Shareholders' Equity (Deficit):
  Preferred Stock, no par value;
     Authorized - 500,000 shares;
     Issued and outstanding - None
  Common Stock, no par value;
     Authorized - 50,000,000 shares;
     Issued and outstanding 10,574,019 and
     10,576,670 shares at June 25, 2000
     and December 26, 1999, respectively                       48,560                  48,569
  Unearned ESOP shares and other                                 (215)                   (398)
  Other comprehensive (loss):
  Minimum pension liability                                      (481)                   (481)
  Cumulative foreign currency translation adjustment           (2,208)                    658
  Retained deficit                                           (342,118)               (287,396)
                                                            ---------               ---------
                                                             (296,462)               (239,048)
                                                            ---------               ---------
Total Liabilities and Deficit                               $ 574,769               $ 556,766
                                                            =========               =========
</TABLE>

See notes to condensed consolidated financial statements

                                       3
<PAGE>

                               CROWN VANTAGE INC.
                             (Debtor-In-Possession)
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          For the Six Months (26 weeks) and Second Quarter (13 weeks)
                     Ended June 25, 2000 and June 27, 1999
                  (in thousands of dollars, except per share)


<TABLE>
<CAPTION>
                                                        Second Quarter                         Six Months
                                                  2000             1999               2000               1999
                                                ---------        ---------          ---------          ---------
                                                        (Unaudited)                          (Unaudited)
<S>                                             <C>                                 <C>                <C>
Net sales                                       $ 153,134        $ 204,882          $ 312,835          $ 406,047
Cost of goods sold                                155,934          191,887            314,588            384,930
                                                ---------        ---------          ---------          ---------
Gross margin                                       (2,800)          12,995             (1,753)            21,117
Selling and administrative expenses                (9,439)         (15,243)           (21,891)           (30,667)
Other operating income, net                          (447)                              1,601
Property tax accrual reversal                                                                              8,957
Adjustment of assets held for sale
     to net realizable value                                                                             (16,175)
                                                ---------        ---------          ---------          ---------
     Operating Loss                               (12,686)          (2,248)           (22,043)           (16,768)
Interest expense (Contractual
interest for 2000 is $18.7
million for the quarter and $36.0
million for six months)                            (8,089)         (15,965)           (25,380)           (31,517)
Other income, net                                     143              152                137                294
Reorganization expense                             (4,337)                             (7,040)
                                                ---------        ---------          ---------          ---------
     Loss before income taxes                     (24,969)         (18,061)           (54,326)           (47,991)
Provision for income taxes                            250              631                396              1,063
                                                ---------        ---------          ---------          ---------
     NET LOSS                                   $ (25,219)       $ (18,692)         $ (54,722)         $ (49,054)
                                                =========        =========          =========          =========
Basic loss per share                            $   (2.39)       $   (1.78)         $   (5.19)         $   (4.71)
                                                =========        =========          =========          =========
</TABLE>


See notes to condensed consolidated financial statements.

                                       4
<PAGE>

                               CROWN VANTAGE INC.
                             (Debtor-In-Possession)
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         For the Six Months (26 weeks)
                     Ended June 25, 2000 and June 27, 1999
                           (in thousands of dollars)

<TABLE>
<CAPTION>
                                                                                        Six Months
                                                                               --------------------------
                                                                                  2000             1999
                                                                               ---------        ---------
                                                                                       (Unaudited)
<S>                                                                            <C>              <C>
Cash Provided by (Used for) Operating Activities:
     Net loss                                                                  $ (54,722)       $ (49,054)
     Items not affecting cash:
         Depreciation and cost of timber harvested                                28,094           31,300
         Amortization of goodwill and other intangibles                              562              562
         Non-cash interest and other                                               4,875            7,764
         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                                                     (35,034)            (187)
         Inventories                                                                 942            4,574
         Other current assets                                                     (6,146)           5,442
         Accounts payable                                                         19,069            1,443
         Accrued interest                                                          9,455               45
         Other current liabilities                                                   183           (4,813)
     Other, net                                                                  (11,932)          (8,332)
                                                                               ---------        ---------
         Cash Used for Operating Activities                                      (44,654)          (4,038)
                                                                               ---------        ---------

Cash Provided by (Used for) Investing Activities:
     Expenditures for property, plant and equipment                              (15,152)         (15,813)
     Other, net                                                                      562              257
                                                                               ---------        ---------
         Cash Used for Investing Activities                                      (14,590)         (15,556)
                                                                               ---------        ---------

Cash Provided by (Used for) Financing Activities:
     Proceeds from revolving line of credit                                        23,721          60,000
     Payments for revolving line of credit                                         (5,000)        (41,000)
     Proceeds from DIP Financing, net                                              38,185               -
     Other, net                                                                       112            (500)
                                                                               ----------       ---------
         Cash Provided by Financing Activities                                     57,018          18,500
                                                                               ----------       ---------

Increase (decrease) in cash and cash equivalents                                   (2,226)         (1,094)
Cash and cash equivalents at beginning of year                                      2,434           9,806
                                                                               ----------      ----------
Cash and cash equivalents at end of period                                     $      208      $    8,712
                                                                               ==========      ==========
</TABLE>

See notes to condensed consolidated financial statements.

                                       5
<PAGE>

                               CROWN VANTAGE INC.
                             (Debtor-in-Possession)
              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 Vantage Inc. (the
"Company" or the "Parent"), Crown Paper Co. ("Crown Paper"), and Crown Paper
Co.'s consolidated subsidiaries.

The sustained losses in recent years resulted in the violation of a tangible net
worth covenant of the senior secured credit facility (the "Credit Agreement")
that occurred upon closing the accounting records for October 1999.  The Company
obtained a waiver for this violation and renegotiated a series of amendments to
the Credit Agreement to provide sufficient liquidity for operations through
early March 2000.  The amount of liquidity available under these new amendments
was significantly reduced from the levels of liquidity available prior to the
tangible net worth covenant violation.  The amendments did not provide for
sufficient liquidity for the Company to pay its interest payment on the 11%
Senior Subordinated Notes due March 1, 2000.  As a result of filing for
bankruptcy and not making the March interest payments, the Company is in default
of all debt agreements.  On March 15, 2000, the Company, except for its
operating subsidiary in the United Kingdom, filed a voluntary petition seeking
reorganization under Chapter 11 of Title 11 ("Chapter 11") of the United States
Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the Northern District of California, Oakland Division (the "Bankruptcy
Court").  An Official Committee of Unsecured Creditors (the "Committee"), which
represents the interests of all unsecured creditors of the Debtors, has been
appointed.  Also, the receivable securitization agreement between Crown Paper,
various lenders and Crown Paper Funding Corp. (a bankruptcy remote and wholly
owned subsidiary of Crown Paper) has been terminated due to the filing of
Chapter 11.  The approximately $32 million that was outstanding as of March 15,
2000 under the receivables agreement was settled.

As a result of the filing, liabilities in the amount of $431 million are subject
to compromise under a plan of reorganization.  The composition of the
liabilities subject to compromise is outlined below:


                                            Liabilities Subject to
                                                   Compromise
                                            ----------------------
                                                   (millions)

         Accounts payable                            $ 38.4
         Senior subordinated notes, net               246.0
         Pay-in-kind notes, net                       110.1
         Accrued interest                              23.5
         Other liabilities                             13.0
                                                     ------
          Total liabilities subject to compromise    $431.0
                                                     ------

To provide the Company with operating capital during the restructuring process,
the Company obtained a commitment of $100 million in debtor-in-possession
("DIP") financing from two lenders under the prepetition Credit Agreement
including the agent bank.  The Company is in the process of developing a
restructuring program to reduce costs, improve operating efficiencies and
increase financial flexibility.  A plan of reorganization is being developed.
The plan of reorganization may include a sale of a major portion of the assets
of the Company.  The Company is in possession of its properties and assets and
continues to operate with its existing directors and officers as a debtor-in-
possession.  As a debtor-in-possession, the Company is authorized to operate its
business, but may not engage in transactions outside of the normal course of
business

                                       6
<PAGE>

without approval, after notice and hearing, of the Bankruptcy Court. Pursuant to
the provisions of the Bankruptcy Code, as of the petition date, actions to
collect prepetition indebtedness owed by the Company are stayed and other
prepetition contractual obligations may not be enforced against the Company. In
addition, as a debtor-in-possession, the Company has the right, subject to the
Bankruptcy Court's approval and certain other conditions, to assume or reject
any prepetition executory contracts and unexpired leases. As of June 25, 2000,
no action has occurred regarding executory contracts and unexpired leases.
Parties affected by these rejections may file claims with the Bankruptcy Court
in accordance with the reorganization process. The Company cannot presently
determine or reasonably estimate the ultimate liability that may result from
rejecting such contracts or leases or from the filing of claims, and no
provisions have been made for these items. Differences between amounts reflected
in such schedules and claims filed by creditors will be investigated and
amicably resolved or adjudicated before the Bankruptcy Court. The ultimate
amount and settlement terms for such liabilities are subject to a plan of
reorganization, and accordingly, are not presently determinable. The Bankruptcy
Court has approved payment of certain prepetition liabilities such as employee
wages and benefits. Furthermore, we expect the Bankruptcy Court to allow for the
retention of legal and financial professionals to advise in the bankruptcy
proceedings.

On July 26, 2000, the Company signed a Letter of Intent with Crown Acquisition
Corporation ("CAC") to sell substantially all of the assets of the Company's
wholly owned subsidiary, Crown Paper to CAC. The assets are being sold under
Section 363 of the Bankruptcy Code. As consideration for these assets CAC will
pay $375.9 million in cash, assume approximately $39.1 million in Industrial
Revenue Bonds, issue stock purchase options to acquire 10% of CAC at closing of
the sale, and warrants exercisable over seven years for 5% of CAC at an exercise
price of three times the price paid by co-investors in CAC. The Letter of Intent
is subject to various risks and uncertainties, including, but not limited to;
the buyer's completion of due diligence, the ability to secure financing and the
Court's approval. Proceeds from the sale will be distributed based upon the
determination of the Court.

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
26, 1999 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 25, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000.  For further information, refer to the consolidated financial
statements and footnotes thereto included in Crown Vantage Inc.'s Form 10-K for
the year ended December 26, 1999.

NOTE 2 --BASIC LOSS PER SHARE
------

The computations of basic loss per share for the quarters and six months ended
June 25, 2000 and June 27, 1999 are based on the weighted average number of
shares of common stock outstanding during the periods (10,574,000 and 10,494,000
for the quarters ended June 25, 2000 and June 27, 1999, respectively, and
10,550,000 and 10,412,000 for the six months ended June 25, 2000 and June 27,
1999, respectively).

NOTE 3  -- INCOME TAX
------

The tax provisions for June 25, 2000 and June 27, 1999 are for certain non-
income based state taxes and foreign income taxes.  During the first six months
of 2000 and 1999 the Company recorded a $20.5 million  and a $17.5 million
valuation allowance, respectively, against the deferred tax assets reducing the
tax benefit of the net operating loss to $0.  The valuation allowances recorded
in the second quarters of 2000 and 1999 were $9.2 million and $6.0 million,
respectively.

                                       7
<PAGE>

NOTE 4  -- DEBT
------

Consolidated debt consists of the following:

<TABLE>
<CAPTION>
                                                                                 June 25        December 26
                                                                                   2000             1999
                                                                                 -------        -----------
                                                                                  (in thousands of dollars)
<S>                                                                              <C>            <C>
CROWN PAPER CO.
     Credit Facility:
          Revolving line of credit                                               $123,221         $104,500
          Term Loan B                                                              80,008           80,216
                                                                                 --------         --------
                                                                                  203,229          184,716
     11% Senior Subordinated Notes*                                               245,950          250,000
     Industrial Revenue Bonds+                                                     39,115           39,101
     Debtor-in-Possession financing ("DIP")                                        41,500                0
                                                                                 --------         --------
                                                                                  529,794          473,817

CROWN VANTAGE INC.
     11.45% Senior Pay-in-Kind Notes*                                             110,123          109,817
                                                                                 --------         --------
     Total debt                                                                   639,917          583,634
          Less current portion                                                    598,417          583,634
                                                                                 --------         --------
     Long-term debt                                                              $ 41,500         $      0
                                                                                 ========         ========
</TABLE>

     *  Liabilities subject to compromise
     +  A net $1,420 of the Industrial Revenue Bonds is subject to compromise

On March 15, 2000, the Company filed a voluntary petition seeking reorganization
under Chapter 11 of Title 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Northern District of California, Oakland
Division. As a result of the Company's review of its debt covenants, the
bankruptcy filing and cross acceleration provisions of various debt covenants,
all debt, except for the DIP financing, is considered current.

NOTE 5  -- INVENTORIES
------

<TABLE>
<CAPTION>
                                                               June 25, 2000    December 26, 1999
                                                               -------------    -----------------
                                                                   (in thousands of dollars)
<S>                                                            <C>              <C>
Raw materials                                                     $ 21,674           $ 21,992
Work in process                                                      5,490              5,163
Finished goods                                                      36,656             35,977
Stores and supplies                                                 20,606             20,418
                                                                  --------           --------
                                                                    84,426             83,550
Reduction to state inventories at last-in, first-out cost          (11,393)            (9,575)
                                                                  --------           --------
                                                                  $ 73,033           $ 73,975
                                                                  ========           ========
</TABLE>

NOTE 6  -- 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


                                       8
<PAGE>

consolidated financial position of the Company but could materially affect
consolidated results of operations in a given year.

The Company has accrued $10.2 million at June 25, 2000 and $10.8 million at
December 26, 1999 primarily for estimated landfill site restoration, post-
closure and monitoring costs. The Company anticipates to accrue on average less
than $.2 million per year over the approximately 2 to 47 year useful life of the
landfills with slightly higher accruals expected in the next two years. Balances
will be paid out over an extended period of time ranging from 2000 through 2040
and beyond with no material payments estimated for any given year. 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 13 of those sites. At 5 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 under way 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 $1.0 million at June 25, 2000 and $1.1
million at December 26, 1999. 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 understanding of the rules, the Company estimates that
approximately $22 million of capital expenditures may be required to comply with
the rules with compliance dates beginning in 1999 and extending over the next
two to five years. The Company has incurred $1.5 million in the first six months
of 2000 and anticipates capital expenditures of approximately $8 million during
2000 for compliance with the Cluster Rules. Total capital spending since
inception for compliance with the Cluster Rules is $8.3 million. 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 governmental agencies that is substantially different from the
Company's interpretation, or other items.

NOTE 7 - ASSET IMPAIRMENT ANALYSIS
------

During the first six months of 2000, the specialty papers segment experienced
negative cash flows (see Note 12). Also certain mills within the printing and
publishing papers segment experienced negative cash flows during this period.
The Company is in the process of evaluating theses mills, including possible
mill closures, potential changes in product mix, idling certain machines, or
other cost reduction efforts. Management anticipates completing this analysis,
including cash flow projections during the third quarter of 2000 to determine
whether impairment has occurred. On July 26, 2000, Crown Vantage signed a Letter
of Intent with Crown Acquisition Corporation ("CAC") to sell substantially all
of the assets of Crown Paper, to CAC. This sale, which is subject to Court
approval and Section 363 of the Bankruptcy Code, would have a significant impact
on the results of any impairment assessment.

                                       9
<PAGE>

NOTE 8 -- 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 2000 and 1999, the Company's total comprehensive loss was
$27.6 million and $19.0, respectively, and for the six months ended June 25,
2000 and June 27, 1999 the Company's total comprehensive loss was $57.6 million
and $50.6 million, respectively.

NOTE 9 -- SETTLEMENT OF BERLIN PROPERTY TAX CASE
------

On February 1, 1999, the Company finalized an agreement with the City of Berlin,
NH, concerning assessed values and taxability of factory machinery. The Company
reversed a property tax accrual of approximately $8.9 million in the first
quarter of 1999, which relates to amounts over accrued for previous tax years.

NOTE 10 -- BERLIN-GORHAM SALE
-------

On July 9, 1999, Crown Vantage completed the sale of the Berlin-Gorham pulp and
paper mills to the American Tissue Company ("ATC"). The sale resulted in a
charge of $16.2 million, which was recorded in the first quarter of 1999 and is
included within "Asset impairment and other charges," 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 of other benefit plans             (6.2)
                                                    ---------
Total Charge                                         $ 16.2
                                                    =========


Net proceeds from the sale of Berlin-Gorham were approximately $42.5 million of
which $15 million was used to pay down Term Loan B, with the remainder used to
pay down the revolving credit facility. In connection with the sale, the Company
retained accounts payable and certain other short-term operating liabilities of
approximately $15 million at July 9, 1999. ATC assumed all environmental
liabilities, except for some immaterial balances that were settled during 1999
as part of Berlin-Gorham operating liabilities retained by the Company. Also the
Company recorded a settlement gain of $12 million for the settlement that
occurred when the post retirement medical liability was assumed by ATC for on-
going employees of Berlin-Gorham.

NOTE 11 -- SETTLEMENT OF CO-GENERATION LEASE
--------

In the fourth quarter of 1998, management determined that the leased gas turbine
co-generation facility at the St. Francisville, LA mill no longer provided
substantive use or benefit. Accordingly, a $16.9 million charge was recognized
in the fourth quarter of 1998 that represented discounted net future lease
payments.

On July 18, 1999 an explosion occurred at the St. Francisville mill with damage
limited primarily to the leased co-generation facility, discussed above. As
allowed under the lease terms, the Company terminated the lease in exchange for
a $16.3 million termination payment in the third quarter of 1999. The
termination payment, which approximated the net present value of future lease
payments, was charged against the reserve established in the fourth quarter of
1998. As a result of the lease termination, the Company took title to the leased
facility and was released from a $24.7 million letter of credit. A $5.1 million
gain from insurance proceeds as a result of the explosion was recorded during
the latter part of 1999. In the first quarter of 2000, an additional $2.4
million gain was recognized (in "Other operating income, net"), which was a
combination of $1.3 million in insurance proceeds and a $1.1 million gain on
sale of the asset.

                                       10
<PAGE>

NOTE 12-- SEGMENT INFORMATION
-------

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

<TABLE>
<CAPTION>
                                                  Second Quarter                         Six Months
-----------------------------------------------------------------------------------------------------------
(amounts in millions)                             2000             1999              2000              1999
-----------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>              <C>                <C>
Operating income (loss):
   Printing & Publishing Papers                 $  (.8)          $  4.2           $   1.3            $  3.7
   Specialty Papers                              (11.9)            (3.9)            (23.3)             (7.9)
   Berlin-Gorham                                                   (2.6)                              (12.6)
-----------------------------------------------------------------------------------------------------------
   Total                                        $(12.7)          $ (2.3)          $ (22.0)           $(16.8)
-----------------------------------------------------------------------------------------------------------
EBITDA:
   Printing & Publishing Papers                 $  6.4           $ 23.5           $  17.7            $ 23.7
   Specialty Papers                               (4.7)             1.6             (11.1)              2.9
   Berlin-Gorham                                                  (11.9)                               (4.0)
-----------------------------------------------------------------------------------------------------------
   Total                                        $  1.7           $ 13.2           $   6.6            $ 22.6
-----------------------------------------------------------------------------------------------------------
Net sales:
   Printing & Publishing Papers                 $ 87.7           $ 82.0           $ 175.8            $161.1
   Specialty Papers                               65.4             82.3             137.0             164.2
   Berlin-Gorham                                                   40.5                                80.7
-----------------------------------------------------------------------------------------------------------
   Total                                        $153.1           $204.8           $ 312.8            $406.0
-----------------------------------------------------------------------------------------------------------
</TABLE>

EBITDA represents income (loss) before income taxes, interest expense and
depreciation and amortization. The EBITDA calculation for 2000 excludes
reorganization expense of $4.3 million for the second quarter and $7.0 million
for the six months ended June 25, 2000. The EBITDA calculation for the six
months ended June 27, 1999 for Berlin-Gorham excludes the effect of the $16.2
million charge for the adjustment to its net realizable value and $8.9 million
property tax accrual reversal. Total assets for Specialty Papers decreased by
approximately $4.4 million as of June 25, 2000 compared to December 26, 1999.
This decrease is primarily a result of depreciation expense exceeding capital
spending for this segment.

                                       11
<PAGE>

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

Crown Vantage Inc. and subsidiaries (the "Company" or "Crown Vantage") is a
major producer and marketer of value-added paper products for a diverse array of
end-uses. 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.

The Company operates 9 facilities using 26 paper machines, and its paper
production was approximately 50% 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. The Company
also produces uncoated printing and publishing papers, primarily text, cover and
writing papers, at its non-integrated facilities in Adams, MA; Ypsilanti, MI,
and Dalmore and Guardbridge, Scotland. In addition to its primary papermaking
operations, the Company operates a cast-coating facility in Richmond, VA, that
converts purchased base paper and board into coated product 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,
MI, and Milford, NJ and on the two uncoated specialty-converting machines at St.
Francisville. On July 9, 1999, the Company completed the sale of its Berlin-
Gorham pulp and paper mills ("Berlin-Gorham") to American Tissue Holdings Inc.
("ATC") with net proceeds of approximately $42.5 million (See Note 10). Net
proceeds from the sale of Berlin-Gorham were used to fund certain retained
liabilities and pay down debt. Berlin-Gorham primarily produced uncoated
printing and publishing papers as well as market pulp.

On July 23, 2000, the contract with the union representing the hourly employees
at the Company's Parchment, MI mill expired. A strike vote was taken and it
passed. However, the workforce continues to work under the terms of the expired
labor agreement. If a strike were to occur it is anticipated that it would not
have a material financial impact on the Company.

The Company's operating results for fiscal years 1999, 1998 and 1997 were
severely affected by, among other things, an overall extended depressed pricing
cycle that began in 1997 partly as a consequence of increased levels of low-
priced imports from Asia and the resultant deteriorating market conditions and
continued due to other competitive and operational issues (see "Consolidated
Results of Operations" of Form 10-K). This led to the Company's overall decline
in average net sales price per ton and decreased volumes of grades of paper that
normally command higher average net sales prices thereby causing a decrease in
liquidity and increases in losses. The increase in losses resulted in a
violation of a tangible net worth covenant of the senior secured credit facility
(the "Credit Agreement") that occurred upon closing the accounting records for
October 1999. The Company obtained a waiver for this violation and renegotiated
a series of amendments to the Credit Agreement to provide sufficient liquidity
for operations through early March 2000. The amount of liquidity available under
these new amendments was significantly reduced from the levels of liquidity
available prior to the tangible net worth covenant violation. The amendments did
not provide for sufficient liquidity for the Company to pay its interest payment
on the 11% Senior Subordinated Notes due March 1, 2000. As a result of filing
for bankruptcy and not making the March interest payments, the Company is in
default of all debt agreements. All debt balances, with the exception of the DIP
agreement discussed below, were classified as current on December 26, 1999. On
March 15, 2000, the Company, except for its operating subsidiary in the United
Kingdom, filed a voluntary petition seeking reorganization under Chapter 11 of
Title 11 ("Chapter 11") of the United States Bankruptcy Code (the "Bankruptcy
Code") in the United States Bankruptcy Court for the Northern District of
California, Oakland Division (the "Bankruptcy Court"). An Official Committee of
Unsecured Creditors (the "Committee"), which represents the interests of all
unsecured creditors of the Debtors, has been appointed. Also, the receivable
securitization agreement between Crown Paper, various lenders and Crown Paper
Funding Corp. (a bankruptcy remote and wholly owned subsidiary of Crown Paper)
has been terminated due to the filing of Chapter 11. The approximately $32
million that was outstanding as of March 15, 2000 under the receivables
agreement was settled.

                                       12
<PAGE>

As a result of the filing, liabilities in the amount of $431 million are subject
to compromise under a plan of reorganization (See Note 1). The ultimate amount
and settlement terms for such liabilities are subject to a plan of
reorganization, and accordingly, are not presently determinable.

To provide the Company with operating capital during the restructuring process,
the Company obtained a commitment of $100 million in debtor-in-possession
("DIP") financing from two lenders under the prepetition Credit Agreement
including the agent bank. The Company is continuing to implement a restructuring
program to reduce costs, improve operating efficiencies and increase financial
flexibility. A plan of reorganization is being developed. The plan of
reorganization may include a sale of a major portion of the assets of the
Company. This sale is subject to Court approval and Section 363 of the
Bankruptcy Code. The Company is in possession of its properties and assets and
continues to operate with its existing directors and officers as a debtor-in-
possession. As a debtor-in-possession, the Company is authorized to operate its
business, but may not engage in transactions outside of the normal course of
business without approval, after notice and hearing, of the Bankruptcy Court.
Pursuant to the provisions of the Bankruptcy Code, as of the petition date,
actions to collect prepetition indebtedness owed by the Company are stayed and
other prepetition contractual obligations may not be enforced against the
Company. In addition, as a debtor-in-possession, the Company has the right,
subject to the Bankruptcy Court's approval and certain other conditions, to
assume or reject any prepetition executory contracts and unexpired leases. As of
June 25, 2000, no action has occurred regarding executory contracts and
unexpired leases. Parties affected by these rejections may file claims with the
Bankruptcy Court in accordance with the reorganization process. The Company
cannot presently determine or reasonably estimate the ultimate liability that
may result from rejecting such contracts or leases or from the filing of claims,
and no provisions have been made for these items. Differences between amounts
reflected in such schedules and claims filed by creditors will be investigated
and amicably resolved or adjudicated before the Bankruptcy Court. The ultimate
amount and settlement terms for such liabilities are subject to a plan of
reorganization, and accordingly, are not presently determinable. The Bankruptcy
Court has approved payment of certain prepetition liabilities such as employee
wages and benefits. Furthermore, we expect the Bankruptcy Court to allow for the
retention of legal and financial professionals to advise in the bankruptcy
proceedings.

On July 26, 2000, the Company signed a Letter of Intent with Crown Acquisition
Corporation ("CAC") to sell substantially all of the assets of the Company's
wholly owned subsidiary, Crown Paper Company, to CAC. The assets are being sold
under Section 363 of the Bankruptcy Code. As consideration for these assets CAC
will pay $375.9 million in cash, assume approximately $39.1 million in
Industrial Revenue Bonds, issue stock purchase options to acquire 10% of CAC at
closing of the sale, and warrants exercisable over seven years for 5% of CAC at
an exercise price of three times the price paid by co-investors in CAC. The
Letter of Intent is subject to various risks and uncertainties, including, but
not limited to; the buyer's completion of due diligence, the ability to secure
financing and the Court's approval. Proceeds from the sale will be distributed
based upon the determination of the Court.

Among the factors that could cause actual results to differ materially are the
following: The confirmation of the plan of reorganization by the Bankruptcy
Court; the Company's ability to achieve satisfactory levels of profitability and
cash flow from operations; maintaining compliance with post-petition loan
agreements; the availability of sufficient capital to service the Company's debt
obligations and to finance the Company's business plans on terms satisfactory to
the Company; the success of the Company's restructuring plan and the pursuit of
financing alternatives; the impact of competitive products and pricing; changes
in labor, equipment, and capital costs; changes in, or the failure to comply
with, regulations affecting the Company's business; future acquisitions or
strategic partnerships; general business and economic conditions; and factors
described from time to time in the Company's reports filed with the Securities
and Exchange Commission.

                                       13
<PAGE>

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 25, 2000               June 27, 1999
                                                  ----------------------    ----------------------
                                                    Tons          Sales        Tons        Sales
                                                  --------      --------    ----------    --------
                                                        (millions)                  (millions)
<S>                                               <C>           <C>         <C>           <C>
Printing and Publishing Papers
    Coated groundwood                                 68.3       $  53.1          73.5     $  51.9
    Uncoated and other                                22.9          34.6          19.8        30.1
Specialty Papers                                      62.9          65.4          85.9        82.2
Berlin-Gorham                                                                     71.4        40.6
                                                  --------      --------    ----------    --------
                                                     154.1       $ 153.1         250.6     $ 204.8
                                                  ========      ========    ==========    ========
</TABLE>

<TABLE>
<CAPTION>
                                                        Net Sales and Tonnage by Segment
                                                           for the Three Months Ended
                                                     June 25, 2000               June 27, 1999
                                                  ----------------------    ----------------------
                                                    Tons          Sales        Tons         Sales
                                                  --------      --------    ----------    --------
                                                        (millions)                  (millions)
<S>                                               <C>           <C>         <C>           <C>
Printing and Publishing Papers
    Coated groundwood                                142.3       $ 108.2         144.4     $ 102.4
    Uncoated and other                                44.5          67.6          37.8        58.7
Specialty Papers                                     136.0         137.0         168.3       164.2
Berlin-Gorham                                                                    148.3        80.7
                                                  --------      --------    ----------    --------
                                                     322.8       $ 312.8         498.8     $ 406.0
                                                  ========      ========    ==========    ========
</TABLE>

Net Sales

The Company's net sales, excluding Berlin-Gorham, for the six months ended June
25, 2000 declined 3.8% compared to the same period in 1999. The main contributor
to this decline was a 19.2% decrease in tons sold in the Specialty Papers
segment, which was partially offset by an increase of 6.4% in the average price
per ton sold in the Printing and Publishing Papers segment. Net sales for the
second quarter of 2000, excluding Berlin-Gorham, declined 6.8% compared to the
second quarter of 1999. The decline is the result of a 26.8% decrease in tons
sold in the Specialty Papers segment, which was partially offset by a Company-
wide increase of 8.5% in the average price per ton 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 25,
2000 were $108.2 million, an increase of 5.7% compared to the same period in
1999. This increase is due to an increase of 7.2% in the average price per ton
sold. Second quarter 2000 sales showed a slight increase of 2.3% compared to the
second quarter of 1999. The increase is primarily due to a 10% increase in
average net sales price per ton that was partially offset by a 7.1% decrease in
tons sold during the quarter.

Net sales of uncoated and other products increased $8.9 million (or 15.2%) in
the first six months of 2000 as compared to the same period in 1999. The
increase is primarily due to $10.0 million sold through a selling agreement
entered into with ATC in conjunction with the third quarter of 1999 sale of
Berlin-Gorham, whereby Berlin-Gorham produces certain grades of paper for the
Company. The increase in tons sold was partially offset by a 2.2% decrease in
average net sales price per ton due to a change in product mix as a result of
the inclusion of papers sold under the selling agreement discussed above. Second
quarter 2000 net sales for

                                       14
<PAGE>

this segment increased $4.5 million compared to the second quarter of 1999. This
increase is mostly the result of $5.2 million sold through the selling agreement
with ATC mentioned above.

Specialty papers' net sales totaled $137.0 million during the first six months
of 2000, a $27.2 million decline from the same period in 1999. The 16.6%
decrease in net sales is primarily the result of a 19.2% decrease in tons sold
during the six months ended June 25, 2000 compared to the six months ended June
27, 1999. Net sales for the Specialty Papers segment during the second quarter
of 2000 were $65.4 million, compared with net sales of $82.2 million during the
second quarter of 1999. This decrease of 20.4% was the result of a decline of 23
million tons sold for this segment in 2000 compared to 1999.

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 25, 2000     June 27, 1999         June 25, 2000   June 27, 1999
                                             -------------     -------------         -------------   -------------
                                                        (millions)                              (millions)
<S>                                          <C>               <C>                   <C>             <C>
Printing and Publishing Papers                  $   <.8>           $   4.2               $   1.3          $   3.7
Specialty Papers                                  <11.9>              <3.9>                <23.3>            <7.9>
Berlin-Gorham                                                         <2.6>                                 <12.6>
                                                -------            -------               -------          -------
                                                $ <12.7>           $  <2.3>              $ <22.0>         $ <16.8>
                                                =======            =======               =======          =======
</TABLE>

Operating Income

The Company had an operating loss of $22.0 million for the six months ended June
25, 2000 compared to a $16.8 million loss for the same period in 1999. The
decline in operating results was primarily due to lower sales in the Specialty
Papers segment and an overall increase in the cost of pulp. This decline in
Operating Income is made worse when the $7.3 million net charge that was the
result of two unusual items, a $16.2 million charge to reduce Berlin-Gorham to
its net realizable value and an $8.9 million reversal of a property tax accrual
due to a settlement with the City of Berlin, is removed from the 1999 results.
These charges are included in the operating results of Berlin-Gorham. Excluding
Berlin-Gorham, operating results decreased $17.8 million in the first half of
2000 compared to the same period in 1999. The 2000 results include a gain of
$2.4 million related to insurance proceeds and sale of the co-generation
facility at St. Francisville, LA. This gain was recorded in "Other operating
income, net" and was partially reduced by a severance charge of $.4 million. The
operating loss for the second quarter of 2000 was $12.7 million compared to a
profit of $.3 million for the second quarter of 1999, excluding the effects of
Berlin-Gorham.

The Printing and Publishing segment had a $1.3 million operating profit during
the first six months of 2000 compared to an operating profit $3.7 million for
the same period in 1999. The decline is primarily due to an increase in pulp
costs, which was offset to some extent by a $1.8 million gain as a result of the
insurance proceeds and sale of the co-generation facility at St. Francisville.
In the second quarter of 2000 this segment had an operating loss of $.8 million
compared to an operating profit of $4.2 million in the second quarter of 1999.

Specialty Papers operating results decreased by $15.4 million to an operating
loss of $23.3 million for the first six months of 2000 compared to an operating
loss of $7.9 million for the same period last year. The decrease is primarily
attributable to a 19.2% decrease in tons sold and increased pulp costs.
Partially, offsetting these items was $.6 million of income recognized in this
segment related to insurance proceeds and gain on the sale of the St.
Francisville, LA co-generation facility (See Note 11) and a 3.2% increase in
average net selling price per ton. During the six months of 2000, the Specialty
Papers segment experienced negative cash flows. The Company is in the process of
evaluating the mills in this segment, including potential changes in product
mix, idling certain machines, or other cost reduction efforts. Management
anticipates completing this analysis, including cash flow projections during the
third quarter of 2000 to determine whether impairment has occurred. On July 26,
2000, Crown Vantage signed a Letter of Intent with Crown Acquisition Corporation
("CAC") to sell substantially all of the assets of Crown Paper, to CAC. This
sale, which is subject to Court

                                       15
<PAGE>

approval and Section 363 of the Bankruptcy Code, would have a major impact on
the results of any impairment assessment. Also, management anticipates
additional accruals as part of cost reduction efforts underway within the
packaging segment. These charges may be material to the result of operations of
the Company. The operating loss for the second quarter of 2000 for this segment
was $11.9 million compared to an operating loss of $3.9 million for the second
quarter of 1999. The reasons for this disappointing performance in the second
quarter were again increased pulp costs and a decline of 26.8% in tons sold.

Selling and administrative expenses decreased $8.8 and $5.8 million for the
first six months and the second quarter of 2000, respectively, compared to the
same periods in 1999. The decrease is the result of several items: The Year 2000
compliance expense that occurred during 1999, commission income and expense
reimbursement under various agreements with ATC that were not present during the
first half of 1999, the cost savings related to the termination of the accounts
receivable securitization agreement in the second quarter of 2000 and the
reduction of certain expenses related to the relocation of the Corporate offices
from Oakland, CA to Cincinnati, OH that occurred in March, 2000.

Interest Expense

Interest expense for the six-month period of 2000 and 1999 was $25.4 million and
$31.5 million, respectively. Interest expense for the second quarter of 2000
decreased $7.9 million when compared to the same period in 1999. The decrease in
interest expense is due to the cessation of interest accruals as of the Chapter
11 filing date (March 15, 2000) for the $357.5 million of debt that is subject
to compromise. The contractual interest for 2000 is $18.7 million for the second
quarter and $36.0 million for the six months ended June 25, 2000.

Liquidity and Sources of Capital

To provide the Company with operating capital during the restructuring process,
the Company obtained a commitment of $100 million in debtor-in-possession
("DIP") financing from two lenders under the prepetition Credit Agreement
including the agent bank. The DIP financing agreement has a stated maturity date
of September 14, 2001 and interest is charged at a rate of the Prime Rate, plus
1.75%. There is also a commitment fee associated with this financing arrangement
of 0.5% of the unused portion of the loan. As of June 25, 2000 the Company has
borrowed $41.5 million under the DIP financing of which $3.3 million was used
for deferred financing costs. Total available DIP financing is limited by
amounts calculated weekly in a borrowing base that consists primarily of trade
receivables, finished goods inventory and pulp and wood raw material
inventories. As of June 25, 2000 the total available DIP financing was limited
by the borrowing base calculation to $85 million. The cash flow relief of
withholding payment of pre-petition date liabilities until the plan of
reorganization is developed, approved and executed was offset by the requirement
to pay down the receivable securitization facility from collection of
receivables and the need to prepay certain vendors to ensure delivery of
critical supplies.

In connection with the DIP credit facility entered into on March 21, 2000, Crown
Paper Co. is required to comply with certain monthly financial covenants that
include meeting minimum EBITDA targets and limits on capital expenditures. As of
August 9, we are in compliance with these covenants.

Cash used by operating activities was $44.7 million for the six months ended
June 25, 2000 compared to $4.0 million for the six months ended June 27, 1999.
The decrease was primarily due to the affects of filing Chapter 11 on working
capital balances, particularly the requirement to pay off the receivable
securitization (approximately $32 million). Earnings before interest, taxes,
depreciation and amortization (EBITDA), excluding the Berlin-Gorham charge,
property tax accrual reversal and reorganization expense were $6.7 million for
the first six months of 2000 as compared to $22.6 million for the comparable
period in 1999.

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 25, 2000 were $15.2
million compared to $15.8 million in the same period in 1999. The expenditures
in 2000 and 1999 primarily

                                       16
<PAGE>

represented capital maintenance projects that are substantially focused on
projects with the quickest returns on investment. The Company's capital spending
plan for 2000 is approximately $35 million. These capital expenditures are
primarily for capital maintenance and required environmental projects. These
capital projects are expected to be financed by cash flows from operations and
available financing sources.

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 words 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 the Company's ability to successfully execute its business strategy and
recapitalize the balance sheet; business conditions and the general economy,
both global and domestic; prices for the Company's products; competitive
factors; maintaining good labor relations; the Company's ability to comply with
the DIP covenants, and maintaining good customer relations.

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

     N/A

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 Vantage Inc.
(Registrant)


/s/ R. Neil Stuart                      /s/ Kent A. Bates
----------------------------            ------------------------------
R. Neil Stuart                          Kent A. Bates
Executive Vice President,               Vice President and
Chief Financial Officer                 Corporate Controller
(Duly Authorized
Officer)


August 9, 2000

                                       17