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                      SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                   Form 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                                     of the
                        SECURITIES EXCHANGE ACT OF 1934

    For the year ended                                  Commission File
     December 28, 1997                                   Number 1-7911


                             FORT JAMES CORPORATION
             (Exact name of registrant as specified in its charter)


<TABLE>
<S>                                     <C>
                  VIRGINIA                   54-0848173
    (State or Other Jurisdiction of       (I.R.S. Employer
     Incorporation or Organization)     Identification No.)
</TABLE>

                              1650 Lake Cook Road
                         Deerfield, Illinois 60015-4753
                    (Address of Principal Executive Offices)


               Registrant's Telephone Number, Including Area Code
                                 (847) 317-5000

          Securities registered pursuant to Section 12(b) of the Act:



<TABLE>
<CAPTION>
                                              Name of Each Exchange
           Title of Each Class                 on Which Registered
-----------------------------------------   ------------------------
<S>                                         <C>
         Common Stock, $.10 par value       New York Stock Exchange

         Rights to Purchase Series M        New York Stock Exchange
         Cumulative Participating
         Preferred Stock, $10 par value

         Series K $3.375 Cumulative         New York Stock Exchange
         Convertible Exchangeable
         Preferred Stock, $10 par value

         Depositary Shares Representing     New York Stock Exchange
         Series L $14.00 Cumulative
         Convertible Exchangeable
         Preferred Stock, $10 par value
</TABLE>

     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, and (2) has been subject to such filing
requirements for the past 90 days.                                 Yes   x  No
                                                                        ---


     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]



<TABLE>
<S>                                                                     <C>
Aggregate market value of voting stock held by non-affiliates
 of the registrant, at close of business, February 23, 1998 .........    $8,800,283,804
Number of shares of $.10 par value common stock outstanding,
 as of February 23, 1998 ............................................       199,722,753
</TABLE>

                      Documents Incorporated by Reference:


     (1) Portions of the registrant's Annual Report to Shareholders for the
year ended December 28, 1997, incorporated into Parts I and II hereof; and (2)
Portions of the registrant's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on April 23, 1998, incorporated into Part III
hereof.

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<PAGE>

                            FORT JAMES CORPORATION

                           Annual Report on Form 10-K
                               December 28, 1997


                               TABLE OF CONTENTS


                                     PART I

<TABLE>
<CAPTION>
                                                                         Page
                                                                        -----
<S>          <C>                                                        <C>

Item 1.      Business                                                     3
Item 2.      Properties                                                  11
Item 3.      Legal Proceedings                                           12
Item 4.      Submission of Matters to a Vote of Security Holders         12
             Executive Officers of the Registrant                        13

                                     PART II

Item 5.      Market for Registrant's Common Equity and
             Related Stockholder Matters                                 14
Item 6.      Selected Financial Data                                     15
Item 7.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations                         15
Item 8.      Financial Statements and Supplementary Data                 15
Item 9.      Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure                         15

                                     PART III

Item 10.     Directors and Executive Officers of the Registrant          15
Item 11.     Executive Compensation                                      15
Item 12.     Security Ownership of Certain Beneficial Owners
             and Management                                              16
Item 13.     Certain Relationships and Related Transactions              16

                                     PART IV

Item 14.     Exhibits, Financial Statement Schedules and
             Reports on Form 8-K                                         16
</TABLE>

                                       2

<PAGE>

                                     PART I


                                ITEM 1. BUSINESS

(a) General Development of Business

     Fort James Corporation ("Fort James" or the "Company") is a preeminent
worldwide manufacturer and marketer of paper-based consumer products, including
towel and tissue products as well as disposable tabletop and foodservice
products. Fort James is the result of the merger of a subsidiary of James River
Corporation of Virginia ("James River") with and into Fort Howard Corporation
("Fort Howard") in August 1997 (the "Merger"). In connection with the Merger,
James River was renamed "Fort James Corporation."

     The Company's principal towel and tissue products include bathroom tissue,
paper towels, table napkins, boxed facial tissue and wipers. Disposable
tabletop and foodservice products include paper and plastic cups, paper plates,
and plastic cutlery. Fort James is the world's second largest producer of
tissue products, with approximately three million tons of worldwide capacity.
In the United States, Fort James ranks number one in tissue-making, with 2.1
million tons of annual capacity, representing approximately 30% of the U.S.
tissue industry capacity. In Europe, where Fort James has 860,000 tons of
annual tissue capacity, representing approximately 17% of European tissue
industry capacity, the Company believes it is tied for the number two position
in the European tissue industry. Fort James also produces and markets
paper-based packaging for food and pharmaceuticals and communications papers.

     The Company believes that it is among the lowest-cost producers of tissue
products in North America. Fort James' operating margins in its North American
Consumer Products Business have increased steadily over the last several years,
rising to 19.4% for 1997, excluding restructuring charges. The Company believes
its cost advantage in North America is derived from a number of factors,
including the size and scale of certain of its manufacturing plants, the
competitive state of its tissue-making manufacturing assets and proprietary
deinking technology.

     Portions of the Fort James Corporation Annual Report to Shareholders for
the year ended December 28, 1997, (the "1997 Annual Report") are incorporated
in this Form 10-K by specific reference.


     Business Initiatives

     Fort James' near-term business initiatives focus on three areas:
leveraging revenue growth opportunities, pursuing aggressive cost reduction,
including merger synergies, and achieving financing cost savings through both
refinancing activities and debt reduction.


     Leveraging Revenue Growth Opportunities

     As a result of the Merger, Fort James has a larger manufacturing and
customer base upon which to grow, greater critical mass and an improved
geographic balance. Additionally, the Company has attractive international
growth opportunities through which it can take advantage of less developed,
faster growing markets.

     Fort James has a broader, more complete product line offering than did
either James River or Fort Howard separately. With the majority of its tissue
capacity based on virgin pulp-based products, James River had focused its
product offerings primarily in the near-premium to premium end of the product
quality spectrum. Conversely, Fort Howard, because of its use of wastepaper for
substantially all of its fiber requirements, had focused its product offerings
primarily in the value and economy end of the product quality spectrum. The
combination of these two targeted product lines has given Fort James a more
complete range of product offerings, expanding revenue growth opportunities
across a broader line of products and a broader customer base.

     The Merger has also enabled the Company to improve its geographical
balance. Although James River's eight domestic tissue manufacturing facilities
were located across the U.S., its away-from-home tissue sales were more highly
concentrated in the western U.S., from its three northwestern mills. The former
Fort Howard, on the other hand, concentrated both its away-from-home and retail
tissue sales primarily in midwestern and eastern markets surrounding its mills
in Wisconsin, Georgia and Oklahoma. Fort James' broader geographical balance
has created revenue growth opportunities, as premium product offerings can be
more fully developed in the east and midwest, and value and economy product
offerings can be more fully developed in the west.


                                       3

<PAGE>

     Fort James also has attractive international revenue growth opportunities
both in Europe and in selected emerging markets. In Europe, the Company
believes it has greater than average growth opportunities resulting from a
combination of factors. Geographically, Fort James has a strong presence in
southern European countries such as Spain, Italy, Greece and Turkey, where per
capita consumption of tissue products is growing faster than in the northern
and western European regions. Additionally, the Company is well-positioned to
take advantage of the less-developed, faster growing away-from-home channel in
Europe through the former Fort Howard's away-from-home expertise and
proprietary deinking technology. The Company is also pursuing growth
opportunities for tissue sales in selected emerging markets. In 1997, Fort
James opened a tissue converting plant in Russia, and in 1995, the Company
formed a joint venture for a tissue converting operation in Shanghai, China. In
1998, the Company announced a 50,000 ton per year tissue capacity expansion at
its Turkish joint venture, which should strengthen the venture's already
leading position in Turkey, as well as providing it with greater access to
neighboring markets in the Middle East, Asia, Russia and other former Soviet
republics.

     Finally, the Company believes it is well-positioned to support these
revenue growth activities. Prior to the Merger, Fort Howard had begun
construction of a new world-class tissue machine at its Rincon, Georgia, site
and James River was aggressively pursuing incremental tissue capacity growth
through streamlined operations. This additional capacity, augmented by
productivity gains expected to occur from technology sharing between former
Fort Howard and James River operations on product formation and tissue machine
optimization, will provide a broader manufacturing base to support additional
revenue growth.


     Aggressive Cost Reduction

     Fort James believes the Merger will enable it to achieve significant cost
reductions that were not available to either Fort Howard or James River
individually. By combining complementary technologies, optimizing product
manufacturing and logistics across the combined system, increasing purchasing
efficiencies, eliminating redundant overhead costs and consolidating work
forces where duplication exists, Fort James expects to reduce costs and
increase productivity. As a result of these integration efforts, Fort James
expects to realize cost savings estimated to be at a $150 million annual run
rate by the end of 1998, increasing to $200 million per year over time.

     Approximately 30% of the synergy savings opportunities are expected to be
derived from technology transfers between the former Fort Howard and James
River. These opportunities include the benefits of applying Fort Howard's
proprietary deinking technology in James River's deinked-based mills, both
domestically and in Europe. This proprietary deinking process has historically
allowed Fort Howard to incur lower raw material costs than its competitors.
Additional technology transfer benefits are expected to accrue from
transferring James River product formation and development technologies to
former Fort Howard products, including the application of James River's
"multi-layer" technology in Fort Howard multi-ply tissue products.

     An additional approximately 30% of the synergy savings opportunities are
expected to result from savings in logistics, distribution and transportation
costs. These savings will be achieved through increased mill-to-customer
shipments, improved geographic coverage, reduced outside warehouse needs and
increased opportunities to back-haul.

     Purchasing cost savings are expected to account for another approximately
30% of total synergy savings. Historically, both Fort Howard and James River
purchased significant amounts of similar raw materials, including commodities
such as wastepaper, chemicals and packaging materials. Opportunities are
arising to lower the cost of these purchased raw materials by not only
comparing current purchasing costs and moving to the low-cost supplier, but
also by taking advantage of increased economies of scale. The remaining synergy
savings are expected to accrue from eliminating organizational redundancies and
making staffing reductions.


     Financing Cost Savings

     Fort James is focusing on reducing financing costs, both through
refinancing of higher-cost debt and through aggressive debt reduction. In
connection with the Merger, Fort James refinanced an aggregate of approximately
$2 billion principal amount of its $4 billion of total debt. The refinancing is
discussed in Note 9 of Notes to Consolidated Financial Statements in the 1997
Annual Report, which information is incorporated herein by reference. On a
combined basis, these debt refinancing activities are expected to result in an
annual reduction in interest expense of approximately $50 million. In addition,
Fort James plans to continue to reduce interest costs through an aggressive
focus on debt reduction, which will be the primary use of the Company's free
cash flow in the near-term future.


                                       4

<PAGE>

     Following the Merger, the Company also simplified its capital structure
and reduced cash dividend requirements. In the fall of 1997, the Company
converted its Series P 9% Cumulative Convertible Preferred Stock, with a face
value of $287.5 million, into 15.3 million shares of Common Stock and redeemed
its Series O 8 1/4% Preferred Stock for $98.1 million in cash. In March 1998,
the Company called all of its remaining convertible preferred stocks, having a
face value of $352.7 million, for redemption as of April 10, 1998. Based on the
premium versus the applicable conversion prices, the Company believes
substantially all of these remaining preferred stocks will be converted into
9.6 million common shares. On a combined basis, these conversions and
redemptions are expected to reduce the Company's annual net dividend
requirements by approximately $44 million while increasing interest expense by
only $7 million.


(b) Financial Information About Industry Segments

     Fort James operates in three principal business segments: (1) consumer
products, which includes towel and tissue products such as bathroom and facial
tissue and paper towels and napkins, and disposable tabletop and foodservice
products, such as paper and plastic cups, paper plates and plastic cutlery; (2)
packaging, which includes paper-based folding cartons for food and
pharmaceuticals; and (3) communications papers, which includes uncoated
printing, publishing and office copy papers. In 1997, consumer products,
packaging and communications papers products accounted for 84%, 10%, and 6%,
respectively, of consolidated revenues. These businesses accounted for 91%, 7%
and 2%, respectively, of 1997 income from operations before general corporate
expenses and restructuring and other unusual items. Financial information on
the Company's segments for the three years ended December 28, 1997, is
presented in Note 16 of Notes to Consolidated Financial Statements in the 1997
Annual Report, which information is incorporated herein by reference.


(c) Narrative Description of Business

     Principal Products

     Fort James processes basic raw material, such as wood, wood pulp,
wastepaper, paperboard and plastic resins, into products which generally are
close to or in their end use form.


     Consumer Products Business

     Fort James' Consumer Products Business is currently conducted primarily in
North America and Europe. In 1997, the North American Consumer Products
Business had sales of $4.4 billion, representing 59% of consolidated total
sales, and the European Consumer Products Business had sales of $1.8 billion,
representing 25% of consolidated total sales. The North American Consumer
Products Business reported operating profits, before restructuring and other
unusual items, of $845.4 million in 1997, and the European Consumer Products
Business reported operating profits, before restructuring and other unusual
items, of $202.4 million in 1997.

     North American Consumer Products Business. Within Fort James' North
American Consumer Products Business, tissue-based products account for
approximately 76% of current annual sales, tabletop products account for
approximately 18% of sales, and sales of virgin and recycled pulp and fiber
account for the remaining 6% of sales. The Company's consumer tissue and
tabletop products are each sold through both retail and away-from-home
distribution channels. Sales into retail channels are supported by both branded
and private label product offerings. In North America, approximately 60% of the
Company's sales of consumer tissue and tabletop products are into retail
distribution channels and the remaining approximately 40% are into
away-from-home distribution channels.

     In the U.S. retail channel, Fort James produces both branded and private
label products. The Company's principal U.S. retail tissue brands (rankings are
based on industry statistics for the 52 week period ended December 21, 1997)
include QUILTED NORTHERN bathroom tissue (the number two domestic bathroom
tissue brand), BRAWNY paper towels (the number two domestic paper towel brand),
MARDI GRAS printed napkins (the leading domestic paper napkin brand) and paper
towels, VANITY FAIR premium dinner napkins (the number three domestic paper
napkin brand), NORTHERN paper napkins, SOFT'N GENTLE bath and facial tissue,
SO-DRI paper towels, and GREEN FOREST, the leading domestic line of
environmentally positioned, recycled tissue products. The Company's principal
retail tabletop brand is its number two-ranked DIXIE brand of disposable cups
and plates.

     Fort James believes it is also the leading supplier of private label
tissue products, where it estimates its share in excess of 40% of U.S. private
label tissue sales. The Company's private label customers include retailers
such as Wal-Mart, Kroger, Aldi and Federated Stores. Additionally, the Company
believes it is the leading supplier of both tissue and disposable tabletop
products to the warehouse club channel, which includes Price/Costco and Sam's
Clubs.


                                       5

<PAGE>

     The U.S. away-from-home channel, in which the Company sells its tissue and
tabletop products to foodservice, janitorial supply and sanitary paper
distributors for use in restaurants, offices, factories, hospitals, schools and
hotels, is also an important distribution channel for the Company. Fort James
believes it is the leading producer of tissue products for the 2.2 million ton
U.S. away-from-home channel, where it estimates its share at approximately 40%
of total industry revenues. Based on internal Company estimates, Fort James
believes it holds the leading position in the sale of away-from-home towels,
bathroom tissue, and napkins and the number two position in away-from-home
wipers and facial tissue. Fort James is also one of the largest producers of
disposable cups, plates and related products for the away-from-home foodservice
industry.

     European Consumer Products Business. Within Fort James' European Consumer
Products Business, tissue-based products account for approximately 85% of
current annual sales, feminine hygiene products account for 6% of sales,
ancillary products, such as health care and pharmacy items, account for 5% of
sales, and unconverted tissue parent rolls account for the remaining 4% of
sales. Fort James sells its tissue products through both retail and
away-from-home distribution channels in Europe. Sales into retail channels are
supported by both branded and private label product offerings. In Europe,
approximately 75% of sales of consumer products are into retail distribution
channels and the remaining approximately 25% are into away-from-home channels.

     With production facilities in 10 countries, Fort James has a broad,
pan-European base, and is among the category leaders in most European
countries, with the exception of Germany, Austria and Switzerland, where the
Company has no operations. The Company's largest European operations are in
France and the United Kingdom, which account for approximately 40% and 30%,
respectively, of the European Consumer Products Business' sales. Based on its
estimates, the Company believes it holds the leading position in French tissue
sales, with a share greater than 35%, and the number two position in the
British Isles, with a share greater than 30%. Fort James is also
well-represented in the faster-growing southern European and Mediterranean
regions including Spain, Italy, Greece and Turkey, where the Company believes
its shares of tissue sales approximate 14%, 10%, 16% and 60%, respectively.

     The Company's principal European brands include LOTUS bathroom tissue and
VANIA feminine hygiene products, both of which hold leading positions in
France, COLHOGAR, a leading Spanish bathroom tissue, TENDERLY bathroom tissue
sold in Italy, and KITTENSOFT and INVERSOFT, bathroom tissue brands sold in the
British Isles.


     Packaging Business

     The Packaging Business is conducted primarily in North America. In 1997,
the Packaging Business had sales of $783 million, representing 10% of
consolidated sales, and operating profits before restructuring and other
unusual items of $81.3 million. During 1996, the Company downsized this
business through the sale of the plastic-based Flexible Packaging and the
related Inks Divisions, which had combined annual sales of approximately $500
million. Following these divestitures, the Packaging Business is concentrated
primarily on the sale of paper-based folding cartons for packaging food, health
care products and other consumer products. Folding cartons and other converted
packaging account for more than 80% of the business' current annual sales, with
the balance represented by sales of unconverted paperboard.

     The Company's carton operations are backward integrated to a 300,000 ton
per year bleached paperboard operation and a 320,000 ton per year coated
recycled paperboard operation. The bleached paperboard mill also provides cup
and plate stock for the Company's DIXIE line of disposable tabletop products.
The Company estimates it is currently ranked number three in sales of folding
cartons in the United States, and it believes it holds leading positions in the
sale of cartons for ice cream, cereal, meats, frozen foods and microwave
packaging.


     Communications Papers Business

     The Communications Papers Business is conducted primarily in the western
United States. In 1997, the Communications Papers Business had sales of $468
million, representing 6% of total consolidated sales, and operating profits
before restructuring and other unusual items of $19.8 million. In 1995, the
Company spun off Crown Vantage Inc., which represented a large part of the
Company's Communications Papers Business, thus decreasing its exposure to the
cyclical printing and publishing papers market. Following the spin-off, the
Communications Papers Business is concentrated on the sale of printing and
publishing papers used in brochures, catalogs, manuals, direct mail and
advertising inserts, and on cut-size office printing and copying papers used in
high-speed printers, copiers and offset duplicators.


     Marketing

     The Company's North American Consumer Products Business has organized its
marketing efforts along distribution channels and by product line. Marketing of
the Company's packaging products and communications papers is managed at


                                       6

<PAGE>

the product group level. Fort James' consumer products are marketed directly to
customers both through national and regional sales organizations. The Company's
retail sales force markets both consumer tissue and tabletop products directly
to grocery stores, drug stores and mass merchandisers. Separate sales forces
market the Company's away-from-home tissue products and its away-from-home
foodservice products. Away-from-home tissue products are largely sold through
outside distributors, who generally focus on specific market segments. Regional
distribution centers located throughout the United States are utilized to
minimize inventories and transportation costs.

     Marketing of Fort James' consumer products within Europe is generally
similar to such efforts in the United States. However, national (individual
country) sales organizations are necessary due to customer preferences and
language and cultural differences among countries. Additionally, logistics and
distribution costs remain much higher in Europe than in the United States, and
thus, the majority of products are produced and sold within national or
regional markets.


     Raw Materials and Supplies

     Fort James utilizes a variety of raw materials in its manufacturing
processes. These include wood, wood pulp, wastepaper, selected base papers and
boards, plastic films, resins and chemicals. Fort James believes there is
generally a sufficient supply of these or substitutable raw materials.

     In addition to these materials, pulp and paper production depends on an
adequate supply of water, electric power and various forms of fuel for the
generation of steam and electricity. The Company's major sources of purchased
energy include electricity, natural gas, coal and petroleum coke. The Company
generates approximately 45% of its North American electrical power needs, with
a number of cogeneration facilities at its major facilities.

     The Company's paper products are manufactured principally from wood pulp
and wastepaper both of which are produced internally as well as purchased from
external sources. The Company produces secondary fiber pulp through the
recycling of wastepaper and other reclaimable fiber sources. The capacity of
Fort James' pulping facilities, in North America and Europe, is summarized as
follows:



<TABLE>
<CAPTION>
                              Capacity
Pulp Type                  (Tons Per Year)
------------------------- ----------------
<S>                       <C>
     Chemical ...........     1,895,000
     Mechanical .........       120,000
     Secondary ..........     1,963,000
                              ---------
     Total ..............     3,978,000
                              =========
</TABLE>

     In addition to the Company's internal sources, several types of pulp are
purchased from other suppliers in the United States, Canada and other parts of
the world. Purchased pulp is used to supply partially integrated paper mills,
to obtain types of pulp not produced by the Company, or to minimize
transportation costs. Fort James is a net seller in North America of
approximately 250,000 tons per year of market pulp. These market pulp sales are
reported in the North American Consumer Products Business. The Company's paper
machines in Europe are supplied through a combination of Fort James' North
American pulp production, secondary fiber pulp and purchased chemical pulp.
Substantially all of the pulp acquired within the United States is purchased at
or below prevailing market prices.

     The former Fort Howard lead the industry in developing tissue products
from recycled wastepaper. Currently, the Company recycles approximately 2.6
million tons of wastepaper annually. The Company uses wastepaper in making a
large portion of its consumer and away-from-home tissue products in both North
America and Europe, as well as in making its coated recycled paperboard for
folding cartons and in certain communications papers. The Company believes that
its use of wastepaper gives it a cost advantage over other tissue-producing
competitors. The Company has developed a network for obtaining deinking and
other grades of wastepaper. A large portion of the domestic wastepaper
requirements for tissue products is sourced through Harmon Associates, a
wholly-owned subsidiary. The remainder of the Company's wastepaper requirements
are sourced through either independent collection agents or through an in-house
wastepaper purchasing group.

     Pulpwood and woodchips used in Fort James' pulp mills are principally
obtained from leased lands, lands covered by long-term cutting rights
agreements, pulpwood and woodchip supply contracts and open market purchases.
All of the timberlands controlled by Fort James or it affiliates are managed on
a sustained-yield basis, and the rate of harvesting is generally equal to or
less than the average growth rate. Fort James presently has controlled access to
the timber supply from a total of approximately 2.8 million acres of timberland.
The majority of this acreage is located in Canada and leased by Fort
James-Marathon, Ltd.  and its joint venture affiliate, Dubreuil Forest Products
Limited.


                                       7

<PAGE>

     Fort James also purchases bleached paperboard from outside vendors for use
in folding cartons, plates and cups. Fort James produces approximately
three-quarters of its bleached paperboard needs at its Naheola, Alabama, mill.
The balance of the Company's requirements is purchased from outside bleached
producers, over two-thirds of which is acquired pursuant to long-term contracts
with prices that are at or below prevailing market prices.

     Fort James purchases a significant amount of plastic resins, which are
utilized in the production of tabletop products. The North American Consumer
Products Business uses approximately 160 million pounds per year of polystyrene
and polypropylene plastic resins in producing plastic cups and other
containers; lids for plastic and paper containers; and plastic cutlery. The
Company purchases plastic resins pursuant to negotiated arrangements with a
variety of suppliers.


     Trademarks and Patents

     Fort James has a large number of trademarks and trade names registered
domestically and in certain foreign countries under which it conducts its
business. Trademarks include, among others, QUILTED NORTHERN, BRAWNY, MARDI
GRAS, VANITY FAIR, NICE'N SOFT, SOFT'N GENTLE, VANIA, MARINA, DIXIE, SUPERWARE,
SO-DRI, GREEN FOREST, LOTUS, COLHOGAR, TENDERLY, ENVISION, PREFERENCE,
DIXIE/MARATHON, QUILT-RAP, QWIK-CRISP, EUREKA!, and WORD PRO. The Company
considers its trademarks, in the aggregate, to be material to its business, and
consequently, seeks trademark protection by all available means. The Company
also has a variety of material patents and licenses related to its business.
While, in the aggregate, the foregoing patents and licenses are of material
importance to Fort James' business, the Company believes the loss of any one or
any related group of such intellectual property rights would not have a
material adverse effect on its operations.


     Seasonal Business

     While seasonal variation in demand is not a major factor in the Company's
business, the first and fourth quarters of the year are generally the lowest in
net sales and operating income. Net sales and profit margins in the Consumer
Products Business are generally higher in the spring and summer (second and
third quarters) compared to the winter (fourth and first quarters) due to the
seasonal volume strength of the retail DIXIE paper cup and plate business
during the summer months. In addition, the away-from-home tissue portion of the
Consumer Products Business generally experiences softer sales volumes in the
fourth quarter, when many industrial customers are on extended holiday
shutdowns. Profit margins for the Company have also historically been lower in
the first and fourth quarters because of holiday, vacation and maintenance
shutdowns and higher seasonal energy costs.


     Customers

     Sales to Fort James' five largest customers in the aggregate accounted for
approximately 15% of consolidated net sales in 1997. For 1997, sales to the
five largest customers of the Consumer Products Business in North America and
Europe accounted for approximately 25% and 22% of sales, respectively; sales to
the five largest customers of the Packaging Business represented approximately
31% of its sales; and sales to the five largest customers of the Communications
Paper Business accounted for approximately 47% of its sales. There were no
individual customers, however, to which sales exceeded 10% of Fort James'
consolidated net sales. The Company believes the loss of any single customer
would not have a material adverse effect on its financial condition.


     Order Backlog

     In the Consumer Products and Packaging Businesses, the Company maintains
product inventories to meet delivery requirements of its customers; therefore,
the backlog of customer orders for these segments is not significant. In the
Communications Papers Business, the Company's backlogs were generally 10 to 30
days depending on the product, as of December 28, 1997, and 10 to 25 days as of
December 29, 1996. Order backlog does not vary substantially on a seasonal
basis.


     Competition

     Fort James experiences intense competition in both North America and
Europe. Fort James' competitors include a number of large diversified paper and
consumer products companies, such as The Procter & Gamble Company,
Kimberly-Clark Corporation and Georgia-Pacific Corporation and large European
companies such as Svenska Cellulosa Aktiebolaget (SCA). Fort James also
competes with smaller low-cost regional producers that seek to displace the
Company's private label products mainly through price competition. The Company
competes on the basis of price, product quality and performance, product
development effectiveness, service and sales and distribution support.
Aggressive competitive pricing actions, which may become more intense due to
changing industry conditions, could reduce revenues and could adversely affect
the Company's operating results or financial condition. Increased marketing
expenditures by manufacturers of competing branded


                                       8

<PAGE>

products could prompt the Company to increase its advertising or promotional
expenditures for key branded products. Markets for consumer products are
generally regional or national, with limited imports and exports, due to the
high bulk and low density of these products, as well as brand recognition
factors. Markets for communications papers, however, can be impacted by
increased imports from Europe, Asia and Latin America.


     Research and Development

     Fort James' major research and development facilities are located in
Neenah, Wisconsin and Kunheim, France. During 1997, the Company announced that
research and development facilities previously located in Camas, Washington;
Milford, Ohio and Green Bay, Wisconsin would be consolidated into the facility
in Neenah, Wisconsin. The former Fort Howard laboratories located in Green Bay,
Wisconsin will also be consolidated into the Neenah facility. The Company also
has pilot plants located in Neenah, Wisconsin and Kunheim, France. The pilot
plant facilities previously located in Camas, Washington and Milford, Ohio will
be consolidated into the Neenah facility. The Company has engineering centers
located in Green Bay, Wisconsin; Kalamazoo, Michigan and Kunheim, France. The
former James River engineering center located in Neenah, Wisconsin will be
consolidated into the Green Bay facility.

     The primary efforts at these facilities are to improve existing products,
develop new processes and products, improve product quality and process
control, and provide technical assistance in adhering to regulatory standards.
In addition, emphasis is placed upon expanding the Company's capability to
deink a broader range of wastepaper grades and improving environmental
processes. Other information with respect to Fort James' research and
development efforts is set forth in Note 1 of Notes to Consolidated Financial
Statements in the 1997 Annual Report, which information is incorporated herein
by reference.


     Environmental Matters

     Like its competitors, Fort James is subject to extensive regulation by
various federal, state, provincial, and local agencies concerning compliance
with environmental control statutes and regulations. These regulations impose
limitations on the discharge of materials into the environment, including
effluent and emission limitations, as well as require the Company to obtain and
operate in compliance with the conditions of permits and other governmental
authorizations.

     Fort James has made and will continue to make substantial capital
investments and operating expenditures, as well as production adjustments, in
order to comply with increasingly stringent standards for air, water, and solid
and hazardous waste regulations. During 1997, capital expenditures totaling
approximately $15 million were made by Fort James for pollution control
facilities and equipment. Capital expenditures for such purposes on existing
facilities are estimated to be approximately $19 million for 1998. The
estimated 1998 capital expenditures exclude any expenditures which may be
required by the U.S. Environmental Protection Agency's ("EPA") "cluster
rules" as set forth in "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Environmental Matters," in the 1997
Annual Report which information is incorporated herein by reference. Estimates
of costs for future environmental compliance are necessarily imprecise due to,
among other things, the continuing emergence of new environmental laws and
regulations and environmental control or process technology developments. While
the Company believes that its environmental control costs are likely to
increase as environmental regulations become broader and more stringent, Fort
James is unable to predict the amount or timing of such increases. Such future
regulations could materially increase the Company's capital requirements in
future years.

     Further information pertaining to hazardous substance cleanup, accrued
environmental liabilities and other environmental matters affecting the Company
is set forth in "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Environmental Matters" and Note 15 of Notes to
Consolidated Financial Statements in the 1997 Annual Report, which information
is incorporated herein by reference.


     Year 2000 Date Conversion

     In 1997, the Company commenced an enterprise-wide Year 2000 date
conversion project to address all necessary code conversion, software
replacement, testing and implementation. The financial impact of making the
required system modifications and replacements to remedy Year 2000 issues prior
to December 31, 1999, has not been and is not expected to be material to the
Company's consolidated financial position or results of operations. The Company
expects its Year 2000 conversion to be completed on a timely basis; however,
due to the interdependent nature of computer systems there can be no assurance
that the systems of other entities on which the Company's systems rely will
also be timely converted or that any such failure to convert by another entity
would not have an adverse effect on the Company's systems.


                                       9

<PAGE>

     Personnel

     Fort James currently employs approximately 29,000 people. Contracts
covering approximately 1,000 domestic and Canadian employees are scheduled for
renegotiation in 1998.


(d) Financial Information About Foreign and Domestic Operations and Export
   Sales

     Financial information regarding the Company's domestic and foreign
operations is included in Note 16 of Notes to Consolidated Financial Statements
in the 1997 Annual Report, which information is incorporated herein by
reference. International operations are generally characterized by the same
conditions discussed in the narrative description of business and may also be
affected by additional elements including changing currency values and
different rates of inflation and economic growth. The effects of these
additional elements are more significant in the Consumer Products segment,
which includes substantially all of the Company's international business.

                                       10

<PAGE>

                               ITEM 2. PROPERTIES

     The pulp and papermaking facilities of Fort James, the number of paper or
paperboard machines, and the principal types of products produced at each
facility are as follows:



<TABLE>
<CAPTION>

Business Unit                        Facility Locations (A)                       Machines    Principal Products
----------------------------------   -----------------------------------------   ----------   ---------------------
<S>                                  <C>                                         <C>          <C>
 Consumer Products-North America     Pennington, Alabama (Naheola)(B)                 5       Tissue
                                     Savannah, Georgia(C)                             4
                                     Old Town, Maine(B)                               2
                                     Muskogee, Oklahoma(C)                            5
                                     Halsey, Oregon(C)                                2
                                     Clatskanie, Oregon (Wauna)(B)                    3
                                     Camas, Washington(B)                             6
                                     Green Bay, Wisconsin (East)(C)                   6
                                     Green Bay, Wisconsin (West)(C)                  11
                                     Marathon, Canada                                         Kraft pulp
 Consumer Products-Europe            Nokia, Finland(C)                                3       Tissue
                                     Gien, France                                     3
                                     Louviers (Hondouville), France(E)                2
                                     Muntzenheim (Kunheim), France                    2
                                     Patras (Achaia), Greece                          1
                                     Castelnuovo, Italy                               1
                                     Cava dei Tirreni, Italy                          1
                                     Potenza (Avigliano), Italy                       1
                                     Cuijk, Netherlands(E)                            2
                                     Allo, Spain                                      2
                                     Karamursel, Turkey(C)(F)                         2
                                     Ramsbottom, U.K.                                 3
                                     Mid-Glamorgan (Bridgend), U.K.(C)                3
                                     Larne, U.K.(C)                                   2
                                     North Sheffield (Oughtibridge), U.K.(C)          2
 Packaging                           Kalamazoo, Michigan(B)                           2       Recycled paperboard
                                     Pennington, Alabama (Naheola)(B)                 2       Bleached paperboard
 Communications Papers               Clatskanie, Oregon (Wauna)(B)(D)                 2       Uncoated groundwood,
                                                                                               uncoated freesheet
                                     Camas, Washington(B)                             6       Uncoated freesheet
                                                                                     --
   Total                                                                             86
                                                                                     ==
</TABLE>

---------
(A) The locations listed for Fort James' consolidated subsidiaries are held in
fee by the Company.
(B) Includes one chemical pulp facility.
(C) Includes one secondary fiber facility.
(D) Includes one groundwood pulp facility.
(E) Includes two secondary fiber facilities.
(F) Unconsolidated subsidiary.

                                       11

<PAGE>

     Fort James' network of manufacturing facilities provides for an annual
virgin and recycled pulp capacity of approximately 4.0 million tons and an
annual paper and paperboard capacity of approximately 4.3 million tons. The
Company believes that its production facilities are suitable for their purposes
and are adequate to support their businesses. The extent of utilization of
individual facilities varies. During 1997, Fort James' pulp and paper mills
generally had production levels of over 90% of capacity.

     Fort James also operates converting plants which perform a variety of
converting operations. These converting plants (excluding converting operations
which may be performed at pulp and papermaking facilities already listed above)
are summarized as follows:



<TABLE>
<CAPTION>
                                                        Number of Converting Plants
                                                   -------------------------------------
Principal Products                                  Domestic     International     Total
------------------------------------------------   ----------   ---------------   ------
<S>                                                <C>          <C>               <C>
Paper and plastic foodservice products .........      10                4           14
Folding cartons and other packaging ............      15                            15
Tissue and other converting ....................                       12           12
                                                      --               --           --
   Total .......................................      25               16           41
                                                      ==               ==           ==
</TABLE>

     Fort James' manufacturing and converting facilities are complemented by an
integrated network of sales offices and distribution terminals. The Company
also operates a warehouse and terminal service that provides tug, barge,
freight interchange and other services on the Columbia, Willamette and Snake
Rivers in the Pacific Northwest.


                           ITEM 3. LEGAL PROCEEDINGS

     During 1994, James River was sued in Connecticut and Alabama by certain
former holders of James River's 10- 3/4% Debentures due on October 1, 2018, all
of which were retired by means of a tender offer to all holders or redeemed on
November 2, 1992. In June 1997, the Alabama court (Circuit Court, Morgan County,
Alabama) granted James River summary judgement, and dismissed the action. The
plaintiffs have appealed to the Alabama Supreme Court. In 1996 and 1997, the
Company settled the claims of an institutional holder and the Connecticut
plaintiffs, representing approximately 55% of the debentures. In May 1997, the
Attorney General of the State of Florida filed a civil action in the Gainesville
Division of the United States District Court for the Northern District of
Florida against the Company and eight other manufacturers of sanitary paper
products alleging violations of federal and state antitrust and unfair
competition laws. Fort James believes these cases are without merit and intends
to defend them vigorously. These legal proceedings are discussed in further
detail in Note 15 of Notes to Consolidated Financial Statements in the Company's
1997 Annual Report, which information is incorporated herein by reference.

     In 1997, Fort James received a notice of violation from the Maine
Department of Environmental Protection concerning alleged air emission license
violations between 1991 and 1997 and proposed a penalty of approximately
$130,000. The Company is currently negotiating a settlement.

     Other than the cases discussed above and the information set forth in Note
15 of Notes to Consolidated Financial Statements in the Company's 1997 Annual
Report, the Company is not involved in any litigation the outcome of which
management believes would have a materially adverse effect on the Company's
results of operations, financial condition or competitive position.


          ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders during the last
           quarter of 1997.

                                       12

<PAGE>

                      EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table reflects the name, age, length of service as an
officer of Fort James, and current position for each of the current executive
officers of the Company as of February 23, 1998. Previous positions and areas
of responsibility over the past five years are included in the footnotes that
follow the table. Each officer is elected by the Board of Directors to serve a
one-year term. There is no family relationship between any of these officers or
between any such officer and any director of the Company; nor is there any
arrangement or understanding between any officer and any other person pursuant
to which the officer was selected.



<TABLE>
<CAPTION>
                                           Calendar
                                          Year First
                                          Elected as
Name                              Age     an Officer    Current Position
------------------------------   -----   ------------   ----------------------------------------------------------
<S>                              <C>     <C>            <C>
Miles L. Marsh (1)                50     1995           Chairman of the Board of Directors,
                                                        Chief Executive Officer

Michael T. Riordan (2)            47     1997           President and Chief Operating Officer

Clifford A. Cutchins, IV (3)      49     1990           Senior Vice President, General Counsel,
                                                        Corporate Secretary

Daniel J. Girvan (4)              49     1993           Senior Vice President, Human Resources and Administration

James K. Goodwin (5)              51     1991           President, North American Consumer Products

Ernst A. Haberli (6)              49     1996           Executive Vice President and Chief Financial Officer

R. Michael Lempke (7)             45     1997           Senior Vice President and Treasurer

John F. Lundgren (8)              46     1995           President, European Consumer Products

Joseph W. McGarr (9)              46     1996           Senior Vice President, Planning and Strategy

Joe R. Neil (10)                  59     1996           President, Communications Papers

William A. Paterson (11)          54     1996           Senior Vice President and Controller

Timothy G. Reilly (12)            47     1997           President, North American Commercial Products

John F. Rowley (13)               57     1997           Executive Vice President, Operations and Logistics

B. Gregory Stroh (14)             50     1997           President, Packaging
</TABLE>

---------
(1) Mr. Marsh assumed his current position in 1997 in connection with the
    merger of Fort Howard Corporation and James River Corporation. He joined
    James River in October 1995 as Chief Executive Officer and was appointed
    to the position of Chairman of the Board of Directors of James River in
    January 1996. From 1991 to 1995, he served as Chairman and Chief Executive
    Officer of Pet, Inc. He also served as President and Chief Operating
    Officer of Pet's former parent company, Whitman Corporation, from 1989 to
    1991. Prior to that, he spent eight years in executive positions with
    various divisions of Dart & Kraft Inc., Kraft Inc. and General Foods USA,
    all of which are part of Philip Morris Companies, Inc.

(2) Mr. Riordan assumed his current position in 1997 in connection with the
    merger of Fort Howard Corporation and James River Corporation. He had
    served as Chief Executive Officer of Fort Howard since September 1996 and
    was elected to the postion of Chairman of the Board of Directors of Fort
    Howard in February 1997. He had also served as President and Chief
    Operating Officer of Fort Howard since 1992 and as Vice President of Fort
    Howard from 1983 to 1992. Prior to that, he held management positions with
    International Mineral & Chemical Corporation, Rockwell International, and
    Rexnord, Inc.

(3) Mr. Cutchins assumed his current position in 1997 in connection with the
    merger of Fort Howard Corporation and James River Corporation. He had
    served as Senior Vice President, General Counsel, Corporate Secretary, for
    James River since he joined the company in 1990. From 1982 to 1990, he
    served as Partner with the law firm of McGuire, Woods, Battle & Boothe,
    L.L.P., which he joined in 1975.

(4) Mr. Girvan assumed his current position in 1997 in connection with the
    merger of Fort Howard Corporation and James River Corporation. He had
    served as Senior Vice President, Human Resources, for James River since
    1993. He joined James River in 1986 as Director, Human Resources,
    Communications Papers, in connection with the acquisition of Crown
    Zellerbach Corporation, which he joined in 1977.


                                       13

<PAGE>

(5) Mr. Goodwin assumed his current position in 1997 in connection with the
    merger of Fort Howard Corporation and James River Corporation. He had
    served as President, North American Consumer Products, for James River
    since 1992. He joined James River in 1991 as Vice President, Corporate
    Marketing Strategy. Prior to joining James River, he served as Vice
    President, Corporate Sales, for The Procter & Gamble Company, which he
    joined in 1968.

(6) Mr. Haberli assumed his current position in 1997 in connection with the
    merger of Fort Howard Corporation and James River Corporation. He had
    served as Senior Vice President, Strategy, for James River, since he
    joined the Company in 1996. From 1990 to 1995, he served as President of
    Pet International. He also held various executive positions in strategic
    planning and development and international business management with Kraft
    General Foods, Kraft International and Kraft Inc. since 1985.

(7) Mr. Lempke assumed his current position in 1997 in connection with the
    merger of Fort Howard Corporation and James River Corporation. He had
    served as Vice President and Treasurer of Fort Howard since 1994 and as
    Treasurer since 1989. He joined Fort Howard in 1987 as Manager of Treasury
    Operations. Prior to that, he had spent 10 years in the financial services
    industry.

(8) Mr. Lundgren assumed his current position in 1997 in connection with the
    merger of Fort Howard Corporation and James River Corporation. He had
    served as President, European Consumer Products, for James River since
    1995. He joined James River in 1982 as Director of Marketing, Northern
    Paper Products, in connection with the acquisition of American Can
    Company. He served in various managerial and executive positions from 1982
    to 1995.

(9) Mr. McGarr assumed his current position in 1997 in connection with the
    merger of Fort Howard Corporation and James River Corporation. He had
    served as Vice President, Cost and Systems Effectiveness, for James River
    since 1996. He joined James River in 1982 as Director of Strategy,
    Consumer Products Business, in connection with the acquisition of American
    Can Company. He served in various managerial and executive positions from
    1982 to 1996.

(10) Mr. Neil assumed his current position in 1997 in connection with the
     merger of Fort Howard Corporation and James River Corporation. He had
     served as President, North American Commercial Products, for James River
     since 1996. He joined James River in 1986 as Vice President, General
     Manager, White Papers Business, in connection with the Crown Zellerbach
     acquisition. He held various managerial and executive positions from 1986
     to 1996.

(11) Mr. Paterson assumed his current position in 1997 in connection with the
     merger of Fort Howard Corporation and James River Corporation. He joined
     James River in 1996 as Vice President, Controller and during that same
     year was named Senior Vice President and Controller. Prior to joining
     James River, he served as Senior Vice President Finance and
     Administration, for General Foods Corporation, and held various executive
     positions in finance with Hobart Corporation, Dart Industries and Kraft
     Inc.

(12) Mr. Reilly assumed his current position in 1997 in connection with the
     merger of Fort Howard Corporation and James River Corporation. He had
     served as Senior Vice President, Commercial Sales and Marketing, for Fort
     Howard since 1996 and as Vice President, Commercial Marketing, from 1987
     to 1996. He joined Fort Howard in 1978 and held various managerial and
     executive positions from 1978 to 1996.

(13) Mr. Rowley assumed his current position in 1997 in connection with the
     merger of Fort Howard Corporation and James River Corporation. He had
     served as Executive Vice President, Operations, for Fort Howard since
     1988. He joined Fort Howard in 1984 with executive responsibility for the
     company's paper manufacturing facility in Muskogee, Oklahoma, and served
     as Vice President, Manufacturing, for Fort Howard, from 1985 to 1988.

(14) Mr. Stroh joined Fort James in 1997 as President, Packaging. He had served
     as President and Chief Executive Officer of Custom Industries since 1995.
     From 1992 to 1995 he served as Executive Vice President, Operations and
     Technology, for Pet, Inc. He also held various executive and operating
     management positions with Kraft Inc. for over 22 years, including the
     position of Vice President and Director of Commercial Operations and
     Business Development, from 1989 to 1991.


                                    PART II


 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's common stock is listed on the New York Stock Exchange.
Information with respect to quarterly high and low sales prices for Fort James'
common stock, quarterly dividends and other quarterly information related to
common shares is contained in Note 18 of Notes to Consolidated Financial
Statements in the 1997 Annual Report, which information is incorporated herein
by reference. The payment of dividends and the amounts thereof will be
dependent upon Fort


                                       14

<PAGE>

James' earnings, financial position, cash requirements and other relevant
factors. Common shares of the Company reserved for issuance are described in
Note 11 of Notes to Consolidated Financial Statements in the 1997 Annual
Report, which information is incorporated herein by reference. In addition,
covenants of certain of the Company's senior note agreements impose
restrictions on the amount of net worth which, in turn, may limit the funds
available for the payment of dividends; these covenants are described under the
heading "Liquidity and Capital Resources -- Financing Activities" in
Management's Discussion and Analysis of Financial Condition and Results of
Operations and in Note 9 of Notes to Consolidated Financial Statements in the
1997 Annual Report, which information is incorporated herein by reference. On
February 23, 1998, there were approximately 11,800 shareholders of record of
the Company's common stock.


                        ITEM 6. SELECTED FINANCIAL DATA

     See Selected Financial Data on page 59 of the 1997 Annual Report, which
information for fiscal years 1993 through 1997 is incorporated herein by
reference. The merger with Fort Howard was accounted for as a
pooling-of-interests; accordingly, the Company's consolidated financial data
has been restated for all periods prior to the business combination to include
the combined results of James River and Fort Howard. For all other
acquisitions, the data presented for each period reflects operations acquired
from the respective acquisition dates. Acquisitions, dispositions and other
transactions from 1995 through 1997 are described in Note 2 of Notes to
Consolidated Financial Statements in the 1997 Annual Report, which information
is incorporated herein by reference.


      ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 21 through 30 of the 1997 Annual Report, which
information is incorporated herein by reference.


              ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See the consolidated financial statements and selected quarterly financial
information, under the headings "Consolidated Statements of Operations,"
"Consolidated Balance Sheets," "Consolidated Statements of Cash Flows,"
"Consolidated Statements of Changes in Capital Accounts" and "Notes to
Consolidated Financial Statements" on pages 31 through 57 of the 1997 Annual
Report, which information is incorporated herein by reference.


      ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                           AND FINANCIAL DISCLOSURE

     There have been no changes in or disagreements with accountants on
accounting and financial disclosures prior to the date of the most recent
financial statements included herein.


                                    PART III


          ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     For information with respect to the Company's Directors, see "Election of
Directors," "Information on Nominees," "Board of Directors and Committees" and
"Compensation of Directors" on pages 1 through 4 and "Section 16(a) Beneficial
Ownership Reporting Compliance" on page 15 of the Company's Proxy Statement for
the Annual Meeting of Shareholders to be held on April 23, 1998 (the "1998
Proxy Statement"), which information is incorporated herein by reference.
Information with respect to the Company's Executive Officers is contained under
the heading "Executive Officers of the Registrant" on pages 13 and 14 of Part I
of this Form 10-K Annual Report.


                        ITEM 11. EXECUTIVE COMPENSATION

     See "Compensation of Directors," "Stock Option Plan for Outside Directors"
and "Retirement Plan for Outside Directors" on pages 3 and 4, "Executive
Compensation" on pages 7 through 11, "Performance Graph" on page 11, and
"Report of the Compensation Committee of the Board of Directors on Executive
Compensation" on pages 12 through 14 of the Company's 1998 Proxy Statement,
which information is incorporated herein by reference.


                                       15

<PAGE>

    ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     See "Stock Ownership of Directors and Executive Officers" and "Principal
Shareholders" on pages 5 and 6 of the Company's 1998 Proxy Statement, which
information is incorporated herein by reference.


            ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     See "Information on Nominees" on pages 2 and 3 of the Company's 1998 Proxy
Statement, which information is incorporated herein by reference.


                                    PART IV


    ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents Filed as Part of This Report:

 1) Financial Statements:

   The Consolidated Financial Statements of Fort James Corporation and
   Subsidiaries, the Notes to Consolidated Financial Statements, and the
   Report of Independent Accountants listed below are incorporated herein by
   reference from pages 31 through 58 of the Company's 1997 Annual Report.
   With the exception of the aforementioned information, and the information
   incorporated by reference in numbered Items 1, 3, 5, 6, 7 and 8, no other
   data appearing in the 1997 Annual Report is deemed to be "filed" as part of
   this Form 10-K Annual Report.

   "Consolidated Statements of Operations" for each of the three fiscal years
   in the period ended December 28, 1997, (see page 31 of the 1997 Annual
   Report)

   "Consolidated Balance Sheets" as of December 28, 1997, and December 29,
   1996, (see page 32 of the 1997 Annual Report)

   "Consolidated Statements of Cash Flows" for each of the three fiscal years
   in the period ended December 28, 1997, (see page 33 of the 1997 Annual
   Report)

   "Consolidated Statements of Changes in Capital Accounts" for each of the
   three fiscal years in the period ended December 28, 1997, (see page 34 of
   the 1997 Annual Report)

   "Notes to Consolidated Financial Statements" (see pages 35 through 57 of
   the 1997 Annual Report)

   "Report of Independent Accountants" (see page 58 of the 1997 Annual Report)
   with respect to the financial statements listed above


 2) Financial Statement Schedules:

     None required

                                       16

<PAGE>

 3) Exhibits:

   Each Exhibit is listed according to the number assigned to it in the
   Exhibit Table of Item 601 of Regulation S-K. The Exhibits identified with
   an asterisk (*) are management contracts or compensatory plans available to
   certain key employees or directors.



<TABLE>
<CAPTION>
Exhibit
  Number                                                    Description                                                  Section
----------   --------------------------------------------------------------------------------------------------------   --------
<S>          <C>                                                                                                        <C>
2(a)         Agreement and Plan of Merger dated as of May 4, 1997, among the Company, James River
             Delaware, Inc. and Fort Howard Corporation (incorporated by reference to Exhibit 10.1 to the
             Company's Current Report on Form 8-K dated May 14, 1997).

3(a)         James River Corporation of Virginia Amended and Restated Articles of Incorporation, as amended
             effective January 4, 1990 (incorporated by reference to Exhibit 3(a) to the Company's Annual Report
             on Form 10-K for the year ended December 26, 1993).

3(b)         James River Corporation of Virginia Articles of Amendment to the Amended and Restated Articles of
             Incorporation Designating the Series O 8 1/4% Cumulative Preferred Stock ($10.00 par value),
             effective October 1, 1992 (incorporated by reference to Exhibit 3(b) to the Company's Annual
             Report on Form 10-K for the year ended December 26, 1993).

3(c)         Articles of Amendment to the Amended and Restated Articles of Incorporation of James River
             Corporation of Virginia Designating the Series P 9% Cumulative Convertible Preferred Stock
             ($10.00 par value) (incorporated by reference to Exhibit 3.1 to the Company's Current Report on
             Form 8-K dated June 29, 1994).

3(d)         Articles of Amendment to the Amended and Restated Articles of Incorporation as of August 13, 1997
             (incorporated by reference to Exhibit 3(d) to the Company's Quarterly Report on Form 10-Q for the
             quarter ended September 28, 1997).

3(e)         Amended and Restated Bylaws of Fort James Corporation as of August 13, 1997 (incorporated by
             reference to Exhibit 3(e) to the Company's Quarterly Report on Form 10-Q for the quarter ended
             September 28, 1997).

4(a)         Amended and Restated Rights Agreement dated May 12, 1992, between James River Corporation of
             Virginia and Nations Bank of Virginia, N.A., as Rights Agent, and Amendment No. 1 to such
             Agreement, dated June 8, 1992 (incorporated by reference to Exhibits 2 and 3, respectively, to the
             Company's filing of Amendment 1 dated July 28, 1992, to its Form 8-A dated March 3, 1989).

4(b)         Amendment No. 2 to Amended and Restated Rights Agreement dated May 12, 1992, as amended by
             Amendment No. 1, dated June 8, 1992, between James River Corporation of Virginia and Wachovia
             Bank of North Carolina, N.A. dated January 31, 1996 (incorporated by reference to Exhibit 4(b) to
             the Company's Annual Report on Form 10-K for the year ended December 31, 1995).

4(c)         Fort James Corporation $2,500,000,000 Credit Agreement dated as of August 13, 1997, amended and
             restated as of October 31, 1997 (incorporated by reference to Exhibit 10(g) to the Company's
             Quarterly Report on Form 10-Q for the quarter ended September 28, 1997).

4(d)         In reliance upon Item 601(b)(4)(iii)(A) of Regulation S-K, various other instruments defining the
             rights of holders of long-term debt of the Registrant and its subsidiaries are not being filed because
             the total amount of securities authorized and outstanding under each such instrument does not exceed
             10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant
             hereby agrees to furnish a copy of any such instrument to the Commission upon request.

10(a)*       Amended and Restated Employment Agreement, dated as of June 10, 1997 between James River and
             Miles L. Marsh (incorporated by reference to Exhibit 10.3 to the Company's filing of Form S-4 dated
             June 26, 1997).

10(b)*       Amended and Restated Employment Agreement, dated as of June 10, 1997 between James River and
             Michael T. Riordan (incorporated by reference to Exhibit 10.4 to the Company's filing of Form S-4
             dated June 26, 1997).
</TABLE>

                                       17

<PAGE>


<TABLE>
<CAPTION>
Exhibit
Number                                                  Description                                                Section
--------   -----------------------------------------------------------------------------------------------------   --------
<S>        <C>                                                                                                     <C>
10(c)*     Form of Employment Agreement between the Registrant and executive officers of Fort Howard
           (incorporated by reference to Exhibit 10.5 to the Company's filing of Form S-4 dated June 26, 1997).

10(d)*     Form of Employment between the Registrant and executive officers of the Registrant (incorporated
           by reference to Exhibit 10.6 to the Company's filing of Form S-4 dated June 26, 1997).

10(e)*     James River Corporation of Virginia Deferred Compensation Plan for Outside Directors, amended
           and restated effective as of July 1, 1989 (incorporated by reference to Exhibit 10(c) to the
           Company's Annual Report on Form 10-K for the year ended April 30, 1989).

10(f)*     James River Corporation of Virginia Stock Option Plan for Outside Directors, amended and restated
           as of April 11, 1991 (incorporated by reference to Exhibit 10(e) to the Company's Transition Report
           on Form 10-K for the transition period from April 30, 1990 to December 30, 1990).

10(g)*     James River Corporation of Virginia Retirement Plan for Outside Directors, 1994 Amendment and
           Restatement, effective February 18, 1994 (incorporated by reference to Exhibit 10(h) to the
           Company's Annual report on Form 10-K for the year ended December 26, 1993).

10(h)*     James River Corporation of Virginia Director Stock Ownership Plan, effective April 25, 1996
           (incorporated by reference to Exhibit B to the Company's Proxy Statement dated March 13, 1996).

10(i)*     James River Corporation of Virginia Amended and Restated Stock Option Plan, dated April 12,
           1984, and subsequently amended through October 1, 1990 (incorporated by reference to Exhibit 4 to
           the Company's Registration Statement on Form S-8 (Post-Effective Amendment No. 1 to
           Registration Statement No. 2-83979), dated December 18, 1984, and Exhibit 10(c) to the Company's
           Quarterly Report on Form 10-Q for the quarter ended October 28, 1990).

10(j)*     James River Corporation of Virginia 1987 Stock Option Plan, 1993 Amendment and Restatement,
           effective as of December 16, 1993 (incorporated by reference to Exhibit 10(j) to the Company's
           Annual Report on Form 10-K for the year ended December 26, 1993).

10(k)*     James River Corporation of Virginia 1996 Stock Incentive Plan, effective April 25, 1996
           (incorporated by reference to Exhibit A to the Company's Proxy Statement dated March 13, 1996).

10(l)*     James River Corporation of Virginia Deferred Stock Plan, 1993 Amendment and Restatement,
           effective December 16, 1993 (incorporated by reference to Exhibit 10(l) to the Company's Annual
           Report on Form 10-K for the year ended December 26, 1993).

10(m)*     James River Corporation of Virginia Supplemental Deferral Plan, 1993 Amendment and
           Restatement, effective as of January 1, 1994 (incorporated by reference to Exhibit 10(m) to the
           Company's Annual Report on Form 10-K for the year ended December 26, 1993).

10(n)*     James River Corporation of Virginia Management Incentive Plan, effective as of January 25, 1996
           (incorporated by reference to Exhibit 10(l) to the Company's Annual Report on Form 10-K for the
           year ended December 31, 1995).

10(o)*     James River Corporation of Virginia Supplemental Benefit Plan, amended and restated effective
           June 1, 1991 (incorporated by reference to Exhibit 10(m) to the Company's Annual Report on Form
           10-K for the year ended December 29, 1991).

10(p)*     1994 Amendment to the James River Corporation of Virginia Supplemental Benefit Plan, dated
           March 1, 1994 (incorporated by reference to Exhibit 10(q) to the Company's Annual Report on Form
           10-K for the year ended December 25, 1994).
</TABLE>

                                       18

<PAGE>


<TABLE>
<CAPTION>
Exhibit
Number                                                 Description                                              Section
--------   --------------------------------------------------------------------------------------------------   --------
<S>        <C>                                                                                                  <C>
10(q)*     Amended and Restated James River Corporation of Virginia Miles L. Marsh Supplemental
           Retirement Plan, effective as of March 1, 1997 (incorporated by reference to Exhibit 10(p) to the
           Company's Annual Report on Form 10-K for the year ended December 29, 1996).

12         Computation of Ratio of Earnings to Fixed Charges, filed herewith.                                      E-1

13         Certain sections of the Company's Annual report to Shareholders for the year ended
           December 28, 1997, filed herewith.                                                                      E-2

21         Subsidiaries of the Company as of December 28, 1997, filed herewith.                                    E-3

23         Consent of Independent Accountants, filed herewith.                                                     E-4

27         Financial Data Schedules for the year ended December 28, 1997 (filed electronically only).
</TABLE>

(b) Reports on Form 8-K:

     During the last quarter of 1997 and subsequent thereto, the Company filed
the following Current Reports on Form 8-K:



<TABLE>
<CAPTION>
   Date of Report                                       Event Reported
-------------------- -----------------------------------------------------------------------------------
<S>                  <C>
    August 13, 1997  The Company filed consolidated financial statements of Fort James Corporation as
                     of December 29, 1996, December 31, 1995, and June 29, 1997, for each of the years
                     in the three-year period ended December 29, 1996, and for the quarters and six
                     months ended June 29, 1997, and June 30, 1996, together with the related schedules
                     and Management's Discussion and Analysis of Results of Operations and Financial
                     Condition, in each case as restated for the merger.

    October 23, 1997 The Company published a press release announcing its results of operations for the
                     third quarter and nine months ended September 28, 1997.

    February 3, 1998 The Company published a press release announcing its results of operations for the
                     fourth quarter and year ended December 28, 1997.

    March 2, 1998    The Company filed certain information concerning Fort James Corporation that was
                     filed in a registration statement subsequent to the merger.

    March 9, 1998    The Company filed consolidated financial statements of Fort James Corporation as
                     of December 28, 1997, and December 29, 1996, for each of the three years ended
                     December 28, 1997, together with Management's Discussion and Analysis of Results
                     of Operations and Financial Condition.
</TABLE>

                                       19

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.


<TABLE>
<S>                     <C>
                               FORT JAMES CORPORATION
                        -------------------------------------
                                     Registrant

                        By: /s/      ERNST A. HABERLI
                        -------------------------------------
                                  Ernst A. Haberli

                        Executive Vice President and Chief
                               Financial Officer
                        (Principal Financial Officer)

                        By: /s/    WILLIAM A. PATERSON
                        -------------------------------------
                                 William A. Paterson
                        Senior Vice President and Controller
                           (Principal Accounting Officer)

Date: March 23, 1998
</TABLE>

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


<TABLE>
<S>                     <C>
                                 Signature and Title
                        -------------------------------------
Date: March 23, 1998
                        By: /s/     MILES L. MARSH
                        -------------------------------------
                                   Miles L. Marsh
                                    Chairman and
                               Chief Executive Officer

                        By: /s/      ERNST A. HABERLI
                        -------------------------------------
                                  Ernst A. Haberli

                        Executive Vice President and Chief
                                 Financial Officer
                        (Principal Financial Officer)

                        By: /s/    WILLIAM A. PATERSON
                        -------------------------------------
                                 William A. Paterson
                        Senior Vice President and Controller
                           (Principal Accounting Officer)
</TABLE>

     Pursuant to General Instruction D to Form 10-K, this report has been
signed below by a majority of the Board of Directors:


<TABLE>
<S>                                        <C>
      /s/      BARBARA L. BOWLES           March 13, 1998
----------------------------------------
             Barbara L. Bowles

      /s/      WILLIAM T. BURGIN           March 23, 1998
----------------------------------------
             William T. Burgin

      /s/      DR. JAMES L. BURKE          March 23, 1998
----------------------------------------
            Dr. James L. Burke

      /s/      WORLEY H. CLARK, JR.        March 23, 1998
----------------------------------------
           Worley H. Clark, Jr.

      /s/      WILLIAM T. COMFORT, JR.     March 23, 1998
----------------------------------------
          William T. Comfort, Jr.

      /s/      GARY P. COUGHLAN            March 23, 1998
----------------------------------------
             Gary P. Coughlan

      /s/      WILLIAM V. DANIEL           March 13, 1998
----------------------------------------
             William V. Daniel
</TABLE>

                                       20

<PAGE>


<TABLE>
<S>                                     <C>
      /s/       MILES L. MARSH          March 23, 1998
-------------------------------------
             Miles L. Marsh

      /s/       ROBERT H. NIEHAUS       March 23, 1998
-------------------------------------
           Robert H. Niehaus

      /s/      ROBERT M. O'NEIL         March 13, 1998
-------------------------------------
            Robert M. O'Neil

      /s/       MICHAEL T. RIORDAN      March 23, 1998
-------------------------------------
           Michael T. Riordan

      /s/      RICHARD L. SHARP         March 23, 1998
-------------------------------------
            Richard L. Sharp

      /s/        FRANK V. SICA          March 23, 1998
-------------------------------------
             Frank V. Sica

      /s/     ANNE MARIE WHITTEMORE     March 12, 1998
-------------------------------------
         Anne Marie Whittemore
</TABLE>


                                       21