Crown Vantage Reports First Quarter Earnings of 36 Cents Per Share.

OAKLAND, Calif.--(BUSINESS WIRE)--April 26, 1996--Crown Vantage Inc. (NASDAQ:CVAN) reported net income for the first quarter of 1996 of $3.1 million, or $.36 per share, compared to net income of $1.8 million, or $.21 per share, on a pro forma basis in the first quarter of 1995.

Net sales were $252.9 million in the first quarter of 1996 on volume of 225,000 tons, compared to $261.7 million on 256,000 tons sold in the year-ago quarter and $277.8 million on 246,000 tons in the fourth quarter of 1995, which included 14 weeks of operations.

The company said that despite market and manufacturing setbacks due to winter storms early in the quarter and continued overstocking at the consumer and producer levels, an improving mix of higher value-added products, which is central to the company's strategy, carried a higher average selling price per unit than the first quarter of 1995. Crown Vantage average selling price declined less than one percent from the fourth quarter 1995 as its growing mix of specialty papers provided pricing stability.

Operating profit for the 1996 first quarter totaled $20.4 million, up from $19.4 million on a pro forma basis in the first quarter a year ago and down from $34.3 million in the fourth quarter, which had one more week than the first quarter.

During the first quarter of 1996, Crown Vantage continued to reduce its bank credit facility by $3.8 million from year-end 1995. Since the company's incorporation in August 1995, the bank credit facility has been reduced more than $50 million. The company has $101 million available under its revolving credit line.

Earnings before interest, taxes and depreciation and amortization (EBITDA) were $40.7 million, compared to $38.9 million on a pro forma basis in the first quarter of 1995.

Crown Vantage operates in four business sectors: Coated Printing and Publishing Papers, Uncoated Printing and Publishing Papers, Food and Retail Packaging Papers, and Specialty Converting Papers.

The Coated Printing and Publishing Papers segment, which makes coated groundwood papers for magazines and catalogs, reported net sales of $64 million for the first quarter, compared to $56 million in the first quarter in the prior year and $78 million in the fourth quarter 1995. Although sales volume decreased from the fourth quarter 1995 due to higher inventory levels among publishers and printers and rising imports of coated papers, average sales price per ton remained higher than a year ago while declining slightly from the fourth quarter peak.

Uncoated Printing and Publishing Papers, including book, text and cover, and commercial printing papers, reported net sales of $66 million for the first quarter of 1996, compared to net sales of $68 million in the first quarter of 1995 and $72 million in the fourth quarter of 1995. While the commodity end of this uncoated freesheet segment experienced strong pressure on pricing due to lingering oversupply at the producer level, Crown Vantage's focus on value-added papers limited price erosion.

Food and Retail Packaging Papers, with net sales of $85 million, experienced improved volume over the fourth quarter 1995, despite weather-related weakness in its fast-food service papers early in the quarter. Net sales compare to $89 million in the year-ago quarter and $81 million in the fourth quarter of 1995.

Specialty Converting Papers, which include specialty papers made at St. Francisville, La., in addition to toweling and cast-coated papers, had sales totaling $36 million in the first quarter 1996 compared to $37 million in first quarter 1995 and $41 million in the fourth quarter of 1995. Volume and net sales decreased slightly, particularly on the St. Francisville grades, as competition from nonintegrated manufactures increased as market pulp prices fell.

Ernest S. Leopold, chairman and CEO, said, "This was a quarter of market transition, as prices for pulp and many kinds of paper continued to fall while consumers and producers worked down their inventories. Extreme weather conditions also took their toll in the form of reduced consumer demand, higher energy costs and weather-related downtime. While our sales volume was reduced somewhat by these conditions, our average selling price was stable, even though various products followed market declines. This reflects continued implementation of our strategy to shift to higher value-added printing, publishing and specialty papers.

"As a net buyer of 250,000 tons of pulp a year, we were favorably impacted almost $12 million by the dramatic decline in pulp prices from the fourth quarter of 1995. In addition, productivity improvement programs initiated in 1995 at two of the packaging papers mills produced an additional $1.7 million operating profit. We continue to emphasize these and other cost-reduction initiatives in order to improve profitability," Leopold continued.

"As we start the second quarter, pricing and volume continue to be under pressure, particularly in the coated sector. We are, however, starting to see an increase in demand as customers have worked through their oversupply, although markets for coated groundwood will stabilize somewhat later than the uncoated markets," Leopold said. "We also expect continuing benefit from lower pulp prices as we have worked down our own inventories of higher priced pulp and paper. While we expect the second quarter to continue to reflect market transition, our outlook for the second half of 1996 continues to be favorable."

The company lost 5,000 tons of production due to winter storms early in the quarter. Production was reduced another 12,000 tons due primarily to weak market conditions in some segments. During the quarter, 8,300 tons of inventory was built at St. Francisville, La., and Berlin-Gorham, N.H., inventoried 4,000 tons of pulp to serve the mill and customers during a scheduled maintenance down in the second quarter.

Crown Vantage, which includes nine paper mills in the United States and two in Scotland, specializes in printing, publishing and specialty papers. The company, which is headquartered in Oakland, Calif., had net sales in 1995 of $1.1 billion. -0-

                        CROWN VANTAGE INC.
          CONSOLIDATED SUMMARY STATEMENTS OF OPERATIONS
                     For the Quarters Ended
      March 31, 1996, March 26, 1995 and December 31, 1995
                              and
     PROFORMA CONSOLIDATED SUMMARY STATEMENT OF OPERATIONS
              For the Quarter Ended March 26, 1995
          (in thousands of dollars, except per share)
                          (unaudited)

                    Quarter ended   Quarter ended   Quarter ended
                    March, 1996     March, 1995     December, 1995
                                Historical  Proforma (a)

Net sales           $252,853    $261,677    $261,427    $277,797
Less:
Cost of goods sold   220,456     228,655     229,097     231,457
    Gross Margin      32,397      33,022      32,330      46,340
Selling & admin.
  expenses            11,952      12,959      12,959      12,019
    Operating Profit  20,445      20,063      19,371      34,321
Interest expense     (16,112)      ( 489)    (16,129)    (18,151)
Other income (expenses)  750        ( 49)       ( 49)        298
    Income before
      income taxes     5,083      19,525       3,193      16,468
Provision for
  income taxes       $(2,021)    $(7,779)    $(1,426)    $(6,543)
        NET INCOME    $3,062     $11,746      $1,767      $9,925
Earnings per share (b)  $.36                    $.21      $ 1.17

(a) The Proforma Summary Statement of Operations reflects proforma
adjustments, principally for interest expense at current rates as if
the Subordinated Notes and amounts under the Bank Credit Facility
outstanding in 1996 had been outstanding during the quarter ended
March 26, 1995.

(b) Earnings per share is based upon 8,527,765 weighted average (and
assumed weighted average) shares outstanding for the quarters ended
March 1996 and March 1995.  (The number of shares considered
outstanding does not include 351,899 shares held by the Employee
Stock Ownership Plan Trust at March 31, 1996.  In accordance with
generally accepted accounting principles, shares held by the Trust
are not considered outstanding for earnings per share calculations
until the shares are committed for release from the Trust.) Earnings
per share for the quarter ended December 1995 are based upon
8,494,310 weighted average shares outstanding.

                  OPERATING RESULTS BY SECTOR

                               Net Sales and Tonnage by Sector
                                    For the Quarter Ended

                          March 31      March 26     December 31
                            1996           1995          1995

                         Sales  Tons   Sales  Tons   Sales  Tons
                     (millions) (000)
Printing and
Publishing Papers:
   Coated groundwood      $64    64     $56     70    $78     76
   Uncoated                66    61      68     64     72     62
Specialty Papers:
   Food and retail pkg     85    60      89     66     81     55 (i)
   Converting              36    37      37     45     41     42
Pulp and Misc.              2     3      12     11      6     11
       Total Company     $253   225    $262    256   $278    246 (i)

(i) Adjusted from previous reports to remove intracompany transfers
to be consistent with sales.

                                 Operating Profit by Sector
                                       (in millions)
                                   For the Quarter Ended

                             March 31      March 26    December 31
                               1996         1995          1995
Operating Profit:
   Printing &
     Publishing Papers          $14          $13          $30
   Food & Retail Pkg              1           (1)          (7)
   Converting                     6            5            7
   Pulp and Misc.                (1)           3            4
       Total Operating Income    $20          $20         $34

                        CROWN VANTAGE INC.
             CONSOLIDATED CONDENSED BALANCE SHEETS
                     (in millions of dollars)

                                     March 31      December 31
                                       1996          1995
                                   (unaudited)
ASSETS
   Cash and cash equivalents          $  7.3        $  5.3
   Accounts receivable                  94.5         106.7
   Inventories                         104.2         100.4
   Other current assets                 18.9          23.8
         Total Current Assets          224.9         236.2
   Property, plant and equipment, net  666.4         668.3
   Other assets                         87.8          87.6
                                     --------      --------
                                      $979.1        $992.1

LIABILITIES AND SHAREHOLDERS' EQUITY
   Accounts payable &
     accrued expenses                 $125.4        $137.5
   Current portion of long-term debt    11.9          11.9
         Total Current Liabilities     137.3         149.4
   Long-term debt
     less current portion:
         Bank debt                     192.5         196.3
         Subordinated debt             250.0         250.0
         PIK notes                      91.8          85.4
         Other                          23.6          23.6
                                      -------       -------
                                       557.9         555.3

   Other long-term liabilities
     and deferred income taxes         236.6         242.2
                                       931.8         946.9
   Shareholders' equity                 47.3          45.2
                                     --------      --------
                                      $979.1        $992.1

CONTACT: Crown Vantage Inc., Oakland

Katie Cutler, 510/874-3458

Charles Shreve, 510/874-3475