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


                                    FORM 10-Q


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



For Quarter Ended: September 24, 2000            Commission File Number: 1-7911
--------------------------------------------------------------------------------


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



          Virginia                                  54-0848173
--------------------------------------------------------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)



1650 Lake Cook Road, Deerfield, IL                     60015-4753
--------------------------------------------------------------------------------
(Address of principal executive offices)                (Zip Code)



Registrant's telephone number, including area code: (847) 317-5000
--------------------------------------------------------------------------------


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


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.

                                             Yes      X      No
                                                 --------       ----------

Number of shares of $.10 par value common stock outstanding as of October 20,
2000:

                               204,773,712 shares


<PAGE>


                             FORT JAMES CORPORATION
                          QUARTERLY REPORT ON FORM 10-Q
                               September 24, 2000


                                TABLE OF CONTENTS
                                                                       Page No.

PART I.  FINANCIAL INFORMATION:

   ITEM 1.   Financial Statements:

             Consolidated Balance Sheets as of September 24, 2000
                 and December 26, 1999                                       3

             Consolidated Statements of Operations for the
                  quarters and nine months ended September 24,
                  2000 and September 26, 1999                                4

             Consolidated Statements of Cash Flows for the nine
                 months ended September 24, 2000 and
                 September 26, 1999                                          5

             Notes to Consolidated Financial Statements                      6

   ITEM 2.   Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                        15

   ITEM 3.   Quantitative and Qualitative Disclosures About
                 Market Risk                                                21


PART II.  OTHER INFORMATION:

   ITEM 1.     Legal Proceedings                                            21

   ITEM 2.     Changes in Securities                                        21

   ITEM 3.     Defaults Upon Senior Securities                              21

   ITEM 4.     Submission of Matters to a Vote of Security Holders          21

   ITEM 5.     Other Information                                            21

   ITEM 6.     Exhibits and Reports on Form 8-K                             21

   SIGNATURES                                                               22


<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.           Financial Statements

                             FORT JAMES CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                    September 24, 2000 and December 26, 1999
<TABLE>
<CAPTION>

<S>                                                        <C>           <C>
                                                        September       December
(in millions, except share data)                         2000            1999
--------------------------------------------------------------------------------
Assets:
Current assets:
    Cash and cash equivalents                                $ 9.1       $ 10.3
    Accounts receivable                                      880.9        880.5
    Inventories                                              784.7        790.4
    Deferred income taxes                                     94.1        111.5
    Other current assets                                      28.6         35.7
--------------------------------------------------------------------------------
      Total current assets                                 1,797.4      1,828.4
--------------------------------------------------------------------------------
Property, plant and equipment                              7,973.4      7,858.0
Accumulated depreciation                                  (3,769.5)    (3,505.9)
--------------------------------------------------------------------------------
    Net property, plant and equipment                      4,203.9      4,352.1
Goodwill, net                                                463.1        528.8
Other assets                                                 499.1        548.9
--------------------------------------------------------------------------------
      Total assets                                        $6,963.5    $ 7,258.2
================================================================================
Liabilities and Shareholders' Equity:
Current liabilities:
    Accounts payable                                       $ 599.5      $ 619.1
    Accrued liabilities                                      522.3        568.7
    Current portion of long-term debt                         59.6         81.9
--------------------------------------------------------------------------------
      Total current liabilities                            1,181.4      1,269.7
--------------------------------------------------------------------------------
Long-term debt                                             3,269.5      3,432.0
Deferred income taxes                                        802.3        748.6
Accrued postretirement benefits other than pensions          402.1        417.1
Other long-term liabilities                                  254.4        263.5
--------------------------------------------------------------------------------
      Total liabilities                                    5,909.7      6,130.9
--------------------------------------------------------------------------------
Common stock, $.10 par value, 500 million shares
 authorized; 204.8  million shares outstanding at
 September 24, 2000 and 214.0 million at
 December 26, 1999                                            20.5         21.4
Additional paid-in capital                                 2,857.4      3,045.0
Accumulated other comprehensive loss                        (336.8)      (227.1)
Accumulated deficit                                       (1,487.3)    (1,712.0)
--------------------------------------------------------------------------------
      Total shareholders' equity                           1,053.8      1,127.3
--------------------------------------------------------------------------------
      Total liabilities and shareholders' equity          $6,963.5    $ 7,258.2
================================================================================

The  accompanying  notes  are an  integral  part of the consolidated financial
 statements.

</TABLE>

<PAGE>


                             FORT JAMES CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     For the Quarters and Nine Months Ended
                    September 24, 2000 and September 26, 1999

<TABLE>
<CAPTION>


                                                                            Quarter           Nine Months
                                                                   --------------------------------------------
 <S>                                                                    <C>        <C>        <C>        <C>
(in millions, except per share data)                                   2000       1999       2000       1999
---------------------------------------------------------------------------------------------------------------
Net sales                                                           $ 1,796.2  $ 1,739.3  $ 5,229.4  $ 5,126.8
Cost of goods sold                                                   (1,259.7)  (1,207.7)  (3,692.7)  (3,518.4)
Selling and administrative expenses                                    (306.3)    (363.4)    (893.5)    (951.6)
Restructure and other items                                             (18.9)      13.4      (10.3)      14.5
---------------------------------------------------------------------------------------------------------------
Income from operations                                                  211.3      181.6      632.9      671.3
Interest expense                                                        (58.3)     (53.6)    (173.9)    (175.5)
Other income, net                                                         4.8        0.4       16.5       18.5
---------------------------------------------------------------------------------------------------------------
    Income from continuing operations before income taxes,
        extraordinary items, and cumulative effect of a change
        in accounting principle                                         157.8      128.4      475.5      514.3
Income tax expense                                                      (53.0)     (34.3)    (157.9)    (166.7)
---------------------------------------------------------------------------------------------------------------
     Income from continuing operations before extraordinary
     items and cumulative effect of a change in accounting principle    104.8       94.1      317.6      347.6
Loss from discontinued operations, net of taxes                             -       (1.5)         -       (6.4)
---------------------------------------------------------------------------------------------------------------
     Income before extraordinary items and cumulative effect
         of a change in accounting principle                            104.8       92.6      317.6      341.2
Extraordinary loss on early extinguishment of debt, net of taxes            -          -          -      (33.2)
Extraordinary gain on sale of discontinued operations, net of taxes         -      232.5          -      232.5
Cumulative effect of a change in accounting principle, net of taxes         -          -          -      (22.1)
---------------------------------------------------------------------------------------------------------------
    Net income                                                        $ 104.8    $ 325.1    $ 317.6    $ 518.4
===============================================================================================================
Basic earnings per share:
    Income from continuing operations before extraordinary items
        and cumulative effect of a change in accounting principle      $ 0.52     $ 0.43     $ 1.54     $ 1.58
    Loss from discontinued operations, net of taxes                         -      (0.01)         -      (0.03)
    Extraordinary loss on early extinguishment of debt, net of taxes        -          -          -      (0.15)
    Extraordinary gain on sale of discontinued operations, net of taxes     -       1.06          -       1.06
    Cumulative effect of a change in accounting principle, net of taxes     -          -          -      (0.10)
---------------------------------------------------------------------------------------------------------------
    Net income                                                         $ 0.52     $ 1.48     $ 1.54     $ 2.36
---------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding                              204.0      219.2      206.5      219.4
===============================================================================================================
Diluted earnings per share:
    Income from continuing operations before extraordinary items
        and cumulative effect of a change in accounting principle      $ 0.51     $ 0.43     $ 1.53     $ 1.58
    Loss from discontinued operations, net of taxes                         -      (0.01)         -      (0.03)
    Extraordinary loss on early extinguishment of debt, net of taxes        -          -          -      (0.15)
    Extraordinary gain on sale of discontinued operations, net of taxes     -       1.05          -       1.05
    Cumulative effect of a change in accounting principle, net of taxes     -          -          -      (0.10)
---------------------------------------------------------------------------------------------------------------
    Net income                                                         $ 0.51     $ 1.47     $ 1.53     $ 2.35
---------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding - assuming dilution          205.1      220.2      207.1      220.5
===============================================================================================================
Cash dividends per common share                                        $ 0.15     $ 0.15     $ 0.45     $ 0.45
===============================================================================================================

The  accompanying  notes  are an  integral  part of the consolidated financial statements.
</TABLE>


<PAGE>


                             FORT JAMES CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
       For the Nine Months Ended September 24, 2000 and September 26, 1999

<TABLE>
<CAPTION>

<S>                                                              <C>        <C>

(in millions)                                                    2000      1999
--------------------------------------------------------------------------------
Cash provided by (used for) operating activities:
  Net income                                                  $ 317.6   $ 518.4
  Depreciation expense                                          350.6     332.9
  Amortization of goodwill                                       12.8      14.2
  Deferred income tax provision                                  87.4      52.7
  Restructure and other items                                    10.3     (14.5)
  Loss from discontinued operations, net of taxes                   -       6.4
  Gain on sale of discontinued operations, net of taxes             -    (232.5)
  Loss on early extinguishment of debt, net of taxes                -      33.2
  Cumulative effect of a change in accounting
  principle, net of taxes                                           -      22.1
  Change in current assets and liabilities, excluding
  effects of acquisitions and dispositions:
   Accounts receivable                                          (75.1)   (125.0)
   Inventories                                                  (14.3)    (16.3)
   Other current assets                                           5.6      (6.1)
   Accounts payable and accrued liabilities                       3.8     (26.6)
  Other, net                                                    (52.0)    (16.1)
--------------------------------------------------------------------------------

   Cash provided by operating activities                        646.7     542.8
--------------------------------------------------------------------------------
Cash provided by (used for) investing activities:
  Expenditures for property, plant and equipment               (336.9)   (346.5)
  Proceeds from sale of assets                                   93.0       3.9
  Cash paid for acquisitions, net                                   -     (56.7)
  Proceeds from sale of discountinued operations                    -     825.8
  Increase in net assets of discontinued operations                 -     (34.4)
  Other, net                                                     (1.0)     (1.7)
--------------------------------------------------------------------------------

   Cash provided by (used for) investing activities            (244.9)    390.4
--------------------------------------------------------------------------------
Cash provided by (used for) financing activities:
  Additions to long-term debt                                     4.1     357.3
  Payments of long-term debt                                    (49.8)   (340.5)
  Net decrease in revolving debt                                (67.6)   (764.9)
  Premiums paid on early extinguishment of debt and
   debt issuance costs                                              -     (56.2)
  Common stock dividends paid                                   (94.3)    (98.9)
  Proceeds from exercise of stock options                         3.6      15.0
  Common stock purchases                                       (198.9)    (53.6)
  Other, net                                                     (0.1)     11.0
--------------------------------------------------------------------------------

   Cash used for financing activities                          (403.0)   (930.8)
--------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents                 (1.2)      2.4
Cash and cash equivalents, beginning of period                   10.3       5.3
--------------------------------------------------------------------------------

Cash and cash equivalents, end of period                        $ 9.1     $ 7.7
================================================================================

The  accompanying  notes  are an  integral  part of the consolidated financial
 statements.

</TABLE>

<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies

   Basis of Presentation:

        In the opinion of management, the accompanying  unaudited consolidated
   financial  statements  of  Fort  James  Corporation  ("Fort  James"  or  "the
   Company")  contain all  adjustments  (including  normal  recurring  accruals)
   necessary to present fairly the Company's  consolidated financial position as
   of September 24, 2000 and its results of operations for the quarters and nine
   months ended September 24, 2000 and September 26, 1999 and its cash flows for
   the nine months ended  September 24, 2000 and September 26, 1999. The balance
   sheet as of December 26, 1999 was derived from audited  financial  statements
   as of that date.  The results of  operations  for the quarter and nine months
   ended September 24, 2000 are not necessarily  indicative of the results to be
   expected for the full year.

   Prospective Accounting Pronouncements:

         In June 1998,  the Financial  Accounting  Standards  Board  ("FASB")
   issued Statement No. 133, "Accounting for Derivative Instruments and Hedging
   Activities" ("FAS No. 133"). This statement  requires the recognition of all
   derivative  instruments in the statement of financial  position as either
   assets or liabilities and their  measurement at fair value.  Depending upon
   the nature of the derivative, changes in fair value are either recognized in
   other comprehensive  income or in earnings.  Certain sections of FAS No. 133
   were amended in June 2000,  when the FASB issued  Statement No. 138,
   "Accounting  for Certain  Derivative  Instruments and Certain  Hedging
   Activities,  an amendment of FASB Statement No. 133" ("FAS No. 138").  FASB
   Statement No. 137 defers the Company's required  adoption of FAS No. 133 and
   FAS No. 138 until  fiscal 2001.  The Company has a program in place to
   evaluate its  financial instruments and contracts.  The Company  believes
   that FAS No. 133 and FAS No. 138 will not have a material impact on its
   results of operations or financial position.

         In December 1999, the Securities and Exchange Commission  issued Staff
   Accounting  Bulletin No. 101, "Revenue  Recognition in Financial  Statements"
   ("SAB  101").  SAB 101  summarizes  certain of the staff's  views in applying
   generally accepted accounting  principles to revenue recognition in financial
   statements.  The  Company  is  required  to  implement  SAB 101 in the fourth
   quarter of fiscal  2000.  The Company  believes  that SAB 101 will not have a
   material effect on its results of operations or financial position.

         In May 2000, the Emerging Issues Task Force ("EITF") reached  consensus
   on Issue No. 00-14, "Accounting for Certain Sales Incentives" ("EITF 00-14").
   EITF 00-14  requires that certain sales  incentives to customers be accounted
   for as a reduction of revenue. The Company is required to adopt EITF 00-14 in
   the  fourth   quarter  of  fiscal   2000.   The   adoption   will  require  a
   reclassification  of  certain  sales  incentives  from  selling  expense to a
   reduction of revenue.  The Company has not  determined  the  magnitude of the
   effect EITF 00-14 will have on revenue.  However,  EITF 00-14 will not affect
   the Company's income from operations.

2. Dispositions

         In  January  2000,  the  Company  completed  the  sale of Fort  James -
   Marathon LTD  ("Marathon"),  a  non-integrated  pulp mill located in Ontario,
   Canada,  to a joint  venture  between  Tembec Inc.  and Kruger Inc. for $69.1
   million. In February 2000, the Company closed its groundwood paper operations
   (the  "Groundwood  Business") at the Wauna mill in Clatskanie,  Oregon.  Both
   Marathon and the Groundwood Business, which had a combined net asset value of
   $220.8 million, were included in the Communications Papers and Fiber segment.
   Anticipated  losses of $149.9 million for asset write-downs and $7.2 million
   of other costs  related to the sale and closure were  originally  recorded in
   the fourth quarter of 1999 on the  "Restructure  and other items" line of the
   Consolidated  Statements of  Operations.  In the second  quarter of 2000, the
   Company reversed $8.6 million ($5.6 million after taxes, or $0.03 per diluted
   share) originally  recorded at the end of 1999, as part of the estimated loss
   on the sale of Marathon.  The revision was recorded on the  "Restructure  and
   other  items"  line  of  the  Consolidated  Statements  of  Operations,   and
   represents the final determination of the purchase price and an adjustment of
   estimated  transaction  costs to  reflect  actual  costs  paid.  For  further
   information  regarding unusual and  non-recurring  items, see Note 3, Unusual
   and Non-recurring Items.

         Net sales  and  income  (loss)  from  operations  of  Marathon  and the
   Groundwood  Business for the quarter  ended  September  26, 1999 and the nine
   months ended September 24, 2000 and September 26, 1999 were as follows:

<TABLE>
<CAPTION>

                                                                   Quarter               Nine Months
<S>                                                                 <C>             <C>            <C>
                                                           --------------- ------------------------------
(in millions)                                                       1999           2000            1999
---------------------------------------------------------------------------------------------------------
Net sales of assets held for disposal                              $ 31.5         $ 18.3          $ 90.9
Income (loss) from operations of assets held for disposal           $ 0.3          $ 1.8          $ (3.8)

</TABLE>

         In  August  1999,  Fort  James  sold  its  Packaging  business  to  ACX
   Technologies,  Inc.  for  $836.3  million  in  cash.  The sale  included  the
   operations,   assets,  and  liabilities  of  the  Company's  folding  carton,
   healthcare,  and microwave packaging manufacturing facilities.  The Packaging
   business is treated as a discontinued operation.  The results of discontinued
   operations  include the operating  results for the Packaging  business and an
   allocation  of  interest   expense  and  taxes,  for  periods  prior  to  the
   disposition date.

         Results for the Packaging business for the quarter and nine months
   ended September 26, 1999 were as follows:

<TABLE>
<CAPTION>

                                                               1999
<S>                                                       <C>             <C>
                                                   -----------------------------
(in millions)                                            Quarter     Nine Months
----------------------------------------------------------------- --------------
Net sales                                                 $ 51.6        $ 330.5
================================================================================
Loss from discontinued operations                         $ (2.3)       $  (9.1)
Tax benefit                                                  0.8            2.7
--------------------------------------------------------------------------------
Loss from discontinued
   operations, net of taxes                               $ (1.5)        $ (6.4)
================================================================================

</TABLE>


3. Unusual and Non-Recurring Items

   Unusual Items

         Income from  operations  for the third  quarter  and nine months  ended
   September 24, 2000 included  unusual  charges of $24.0 million ($14.8 million
   after  taxes,  or $0.07  per  diluted  share)  for  accruals  related  to the
   settlement of certain  antitrust  litigation  claims  related to the Tissue -
   North  America  business,  as well as charges  for legal fees and other costs
   associated with the pending sale of Fort James to Georgia-Pacific Corporation
   ("Georgia-Pacific")  (see Note 11,  Pending Merger  Transaction). The unusual
   charges of $24.0 million were recorded in costs of good sold ($12.5 million)
   and selling and administrative expenses ($11.5 million).

         Income from  operations  for the third  quarter  and nine months  ended
   September 26, 1999, included $46.0 million of unusual items for severance and
   other costs  related to a  reduction-in-force  program and for  antitrust and
   other  litigation  accruals,  of which $17.8  million was included in cost of
   goods sold and $28.2  million  was  included  in selling  and  administrative
   expenses.

   Restructure and Other Items

         Income from  operations  for the third  quarter  and nine months  ended
   September 24, 2000,  included  non-recurring  charges of $18.9 million ($12.0
   million  after  taxes,  or $0.06 per  diluted  share)  for the  write-off  of
   remaining unsecured notes receivable and accruals for contingent  liabilities
   resulting from the bankruptcy of Crown Vantage Inc. ("Crown"), which was spun
   off from  the  Company  in  1995.  See  Note 9,  Commitments  and  Contingent
   Liabilities, for further information on Crown. Income from operations for the
   nine months ended  September 24, 2000 also included  non-recurring  income of
   $8.6 million ($5.6 million after taxes,  or $0.03 per diluted  share) related
   to the Marathon divestiture (see Note 2, Dispositions).

         Income from  operations  for the third  quarter  and nine months  ended
   September 26, 1999 included a charge of $30.0  million  ($18.4  million after
   taxes, or $0.08 per diluted share) for a write-down of notes  receivable from
   Crown.  In addition,  income from  operations  for the third quarter and nine
   months ended September 26, 1999 included net  non-recurring  credits of $43.4
   million  ($30.4  million after taxes,  or $0.14 per diluted  share) and $44.5
   million   ($31.1   million  after  taxes,   or  $0.14  per  diluted   share),
   respectively.  Non-recurring  credits related to the reversal of certain 1997
   merger-related restructure accruals, as a result of unexpected and protracted
   regulatory reviews that were expected to delay certain  initiatives into late
   2000.  In addition,  certain  initiatives  were  cancelled  due to changes in
   economic  circumstances,  which  indicated  that the  initiatives  would  not
   provide the economic benefits initially projected.  The initiatives that were
   delayed or cancelled  primarily related to operations of the Company's Tissue
   - Europe business.

4.       Other Income

         The  components  of other income for the quarters and nine months ended
   September 24, 2000 and September 26, 1999 were as follows:

<TABLE>
<CAPTION>

                                                         Quarter                  Nine Months
                                                ------------------------ -----------------------------
<S>                                                 <C>            <C>             <C>           <C>
(in millions)                                       2000           1999           2000           1999
------------------------------------------------------------------------------------------------------
Equity in earnings of unconsolidated affiliates    $ 2.5          $ 1.2          $ 6.7          $ 3.7
Foreign currency exchange gains                      4.9            0.8            1.6            5.5
Minority interest                                   (3.3)          (2.7)         (10.1)          (7.7)
Gains (losses) on sale of assets                     1.6           (0.4)          16.0            0.3
Interest on income tax refunds                         -              -              -            9.3
Other, net                                          (0.9)           1.5            2.3            7.4
------------------------------------------------------------------------------------------------------
  Total other income                               $ 4.8          $ 0.4         $ 16.5         $ 18.5
======================================================================================================

</TABLE>

5.       Stock Purchase Program

         In August 1999,  the Company  began  execution of a $500 million  stock
   purchase  program.  For the nine months ended September 24, 2000, the Company
   purchased  9.4  million  common  shares  at a cost of $198.9  million.  As of
   September 24, 2000, the Company had purchased 16.5 million common shares at a
   cost of $398.6 million since the inception of the program. As a result of the
   pending  merger of Fort  James  with  Georgia-Pacific  (see Note 11,  Pending
   Merger Transaction), the Company's stock purchase program has been suspended.

6.       Balance Sheet Information

   Reduction-in-Force

         In the third  quarter of 1999,  the Company  recorded a charge of $25.0
   million for the cost of termination benefits for a reduction-in-force program
   that has reduced headcount by approximately 1,300 employees.  The program was
   substantially  completed in the first  quarter of 2000.  As of September  24,
   2000,  termination  benefits of $17.4 million had been paid and approximately
   $2.3  million  of salary  continuation  benefits  will be paid in the  future
   according to contract terms.

   Inventories

        The components of inventories as of September 24, 2000 and December 26,
   1999 were as follows:

<TABLE>
<CAPTION>
<S>                                                     <C>               <C>
                                                     September         December
(in millions)                                             2000             1999
--------------------------------------------------------------------------------
Raw materials                                          $ 183.8          $ 178.3
Finished goods and work in process                       472.5            464.8
Stores and supplies                                      177.4            165.4
--------------------------------------------------------------------------------
                                                         833.7            808.5
Reduction to state certain inventories
 at last-in, first-out cost                              (49.0)           (18.1)
--------------------------------------------------------------------------------
    Total inventories                                  $ 784.7          $ 790.4
================================================================================

</TABLE>

7.       Comprehensive Income

         Comprehensive  income for the  quarters  ended  September  24, 2000 and
   September 26, 1999 was $32.4 million and $364.5  million,  respectively.  For
   the  nine  months  ended   September   24,  2000  and   September  26,  1999,
   comprehensive income was $207.9 million and $429.6 million, respectively. The
   difference  between  net  income and  comprehensive  income is due to foreign
   currency translation gains and losses.

8.       Income Per Common Share and Common Share Equivalent

         Income and share  information  used in  determining  earnings per share
   for the quarters and nine months ended  September 24, 2000 and
   September 26, 1999 were as follows:

<TABLE>
<CAPTION>

                                                                               2000                 1999
                                                                     -----------------------------------------
<S>                                                                       <C>      <C>        <C>        <C>
(in millions)                                                           Income    Shares     Income    Shares
--------------------------------------------------------------------------------------------------------------
Third Quarter:
Amounts used to compute basic earnings per share:
    Income from continuing operations before extraordinary items
        and cumulative effect of a change in accounting principle      $ 104.8                $94.1
    Weighted average common shares outstanding                                     204.0                219.2
Effect of dilutive securities:
     Options (a)                                                                     1.1                  1.0
--------------------------------------------------------------------------------------------------------------
Amounts used to compute diluted earnings per share                     $ 104.8     205.1      $94.1     220.2
==============================================================================================================
Nine months:
Amounts used to compute basic earnings per share:
    Income from continuing operations before extraordinary items
        and cumulative effect of a change in accounting principle      $ 317.6               $347.6
    Weighted average common shares outstanding                                     206.5                219.4
Effect of dilutive securities:
     Options (a)                                                                     0.6                  1.1
--------------------------------------------------------------------------------------------------------------
Amounts used to compute diluted earnings per share                     $ 317.6     207.1     $347.6     220.5
==============================================================================================================

</TABLE>


(a)  For the quarter and nine  months  ended  September  24,  2000,  outstanding
     options to purchase  5.5 million  and 8.3 million  shares of common  stock,
     respectively,  for which the  exercise  price was greater  than the average
     market price of the common  shares were excluded  from the  computation  of
     diluted earnings per share. For the quarter and nine months ended September
     26, 1999,  such  amounts were 5.6 million and 4.7 million  shares of common
     stock, respectively.

9.  Commitments and Contingent Liabilities

    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, including effluent and emission limitations, on the discharge of
   materials into the environment,  as well as require the Company to obtain and
   operate in compliance  with the conditions of permits and other  governmental
   authorizations.  Future  regulations could materially  increase the Company's
   capital requirements and certain operating expenses in future years.

         Fort James,  along with others,  has been  identified  as a potentially
   responsible  party ("PRP") at various U.S.  Environmental  Protection  Agency
   ("EPA")  designated  Superfund  sites  and  is  involved  in  other  remedial
   investigations  and actions under federal and state laws. These sites include
   the Lower Fox River in Wisconsin,  where the Company and six other  companies
   have been  identified  as PRPs for  contamination  of the river by  hazardous
   substances,  and the  Kalamazoo  River in  southwestern  Michigan,  where the
   Company, along with other PRPs, is participating in the funding of a remedial
   investigation/feasibility study.

         In the Fox River matter,  various state and federal agencies and tribal
   entities are seeking both sediment restoration and natural resources damages.
   In February  1999,  the Wisconsin  Department of Natural  Resources  ("WDNR")
   released for public comment a draft remedial  investigation/feasibility study
   of the Fox  River.  While  the  draft  study did not  advocate  any  specific
   sediment restoration alternatives,  it included estimated total costs ranging
   from zero for "no action" to  approximately  $720  million,  depending on the
   alternative or combination of alternatives selected. In May 2000, the Company
   reached an agreement with the WDNR and the EPA for the voluntary  restoration
   of one sediment area on the Fox River. In exchange,  the Company will receive
   a release  from future  liability  for that  particular  area,  provided  the
   restoration  goals are  achieved.  The  project  began in August  2000 and is
   expected to conclude in the fourth quarter of 2000.

         In October  2000,  the U. S. Fish and  Wildlife  Service  released  for
   public  comment its  Restoration  and  Compensation  Determination  Plan (the
   "Plan")  for  natural  resources  damages  in  connection  with its Lower Fox
   River/Green Bay Natural  Resource Damage  Assessment.  According to the Plan,
   claims for past  damages and present and future  losses  allegedly  resulting
   from  contamination of the Fox River by hazardous  substances range from $176
   million to $333 million, depending on the sediment restoration alternative or
   combinations of alternatives selected. The actual costs of projects to settle
   natural resource damage claims could be significantly lower.

          In the Kalamazoo  River matter,  the PRPs  submitted a draft  remedial
   investigation/feasibility  study to the Michigan  Department of Environmental
   Quality ("DEQ") on October 30, 2000. This draft document  identified a number
   of remedial restoration  alternatives with estimated total costs ranging from
   zero  for  "no  action"  to  approximately  $2.6  billion,  depending  on the
   alternative  selected.  The PRP group's preferred alternative is estimated to
   cost  approximately  $73  million.  The DEQ has  announced  its  intention to
   publish a Record  of  Decision,  which  will  contain  its  proposed  remedy,
   sometime during 2001.

         The  final  restoration  alternatives  and the  Company's  share of the
   related  costs,  for both the Fox  River and  Kalamazoo  River  matters,  are
   unknown at this time.

         It  is  the  Company's  policy  to  accrue   remediation  costs  on  an
   undiscounted  basis  when  such  costs  are  probable  and  estimable.  As of
   September 24, 2000, Fort James' accrued environmental liabilities,  including
   remediation, natural resource damages and landfill closure costs, totaled
   $70.7  million. It is reasonably possible, however, that some of the  matters
   discussed in the foregoing paragraphs could be decided unfavorably to the
   Company and could  require  the Company  to pay  damages,  or make  other
   expenditures, in amounts or a range  of amounts  that cannot  be  estimated.
   The Company believes,  based on its current analysis, that its share of the
   costs for its current remediation  sites will not  have a material  adverse
   impact on its  consolidated  financial position or its cash flows but could
   have a material effect on consolidated results of operations in a given
   period.

   Litigation:

         The Company is party to various legal proceedings  generally incidental
   to its business.  As is the case with other companies in similar  industries,
   Fort  James  faces  exposure  from  actual  or  potential  claims  and  legal
   proceedings.

   Antitrust

         In May 1997, the Attorney General of the State of Florida filed a civil
         action in the United States District Court for the Northern District of
         Florida at  Gainesville  (the "Florida  District  Court"),  against the
         Company and seven other  manufacturers  of  sanitary  commercial  paper
         products alleging  violations of federal and state antitrust and unfair
         competition  laws. The complaint  sought damages on behalf of the state
         under  Florida  law of $1  million  against  each  defendant  for  each
         violation, unspecified treble damages and injunctive relief. Four other
         state  attorneys  general  brought  similar  suits.  In April 2000, the
         defendants  settled  with  the  State of  Florida  and the  matter  was
         dismissed.  In June 2000,  settlements  were reached with the states of
         New York, West Virginia,  and Maryland.  The case filed by the State of
         Kansas  was  dismissed  earlier.  In no case did the  Company  admit to
         wrongdoing.

         Numerous  private  suits  on  behalf  of an  alleged  class  of  direct
         purchasers  were also  filed in federal  courts,  all  seeking  similar
         damages for similar alleged violations. In July 1998, the private suits
         were conditionally  certified as a class action in the Florida District
         Court.  In  August  2000,  a  settlement  offer  was  accepted  by  the
         plaintiffs and  preliminarily  approved by the Florida  District Court.
         Fort  James'  portion  of the offer is  approximately  49% of the total
         settlement, which is generally reflective of the combined market shares
         of the  former  Fort  Howard  Corporation  and the former  James  River
         Corporation. The Company did not admit to wrongdoing.

         Private  class  action suits were also filed in  Minnesota,  Wisconsin,
         California,  and  Tennessee  on behalf of an alleged  class of indirect
         purchasers,  seeking  similar  damages for similar  alleged  violations
         under state law. The Minnesota court refused to certify a class in that
         state,  and the case in Wisconsin was  voluntarily  dismissed  prior to
         certification.  A settlement has been agreed upon in principle with the
         California  plaintiffs,  prior to class certification,  and is awaiting
         court approval. There has been no significant activity in the Tennessee
         case.  The Company  believes that these  outstanding  cases are without
         merit and is vigorously  defending the remaining  state actions.  In no
         case has the Company admitted to wrongdoing.

   Crown Vantage, Inc.

         In 1995,  the Company  completed the spin off of certain  assets of its
         Communications  Papers and Packaging  businesses to Crown. On March 15,
         2000,  Crown  filed  for  Chapter  11  bankruptcy  protection  from its
         creditors and secured $100 million of "debtor in possession" financing.
         On July 26, 2000,  Crown announced the signing of a letter of intent by
         its wholly owned subsidiary,  Crown Paper Co. ("Crown Paper") providing
         for the sale of substantially all of the assets of Crown Paper to Crown
         Acquisition  Corp. On October 9, 2000,  Crown announced that the letter
         of intent  between Crown Paper and Crown  Acquisition  Corporation  had
         been terminated.

         In the third quarter of 2000,  Fort James  obtained a schedule from the
         Bankruptcy  Court of  Crown's  assets  and  liabilities  and an initial
         indication  of amounts of secured  and  unsecured  claims  against  the
         estate.  This schedule  reported  Crown's  liabilities in excess of its
         assets. Based on this information,  Fort James recorded a third quarter
         charge of $18.9 million for the write-off of remaining  unsecured notes
         receivable from Crown and accruals for contingent liabilities resulting
         from the bankruptcy.  These contingent  liabilities primarily relate to
         environmental and pension costs at certain Crown facilities.

         On October 19,  2000,  the official  committee  of unsecured  creditors
         assembled  by the Crown  Bankruptcy  Trustee  served two motions on the
         Company  seeking  authority to  investigate  and  possibly  initiate an
         action  based  upon  certain  facts   surrounding  the  1995  spin  off
         transaction.  The first motion seeks  authority  under Rule 2004 of the
         Federal  Rules of  Bankruptcy  Procedure  to  initiate  discovery  with
         respect to the valuation of property  transferred  to Crown in relation
         to the  property  received by the  Company in the spin off.  The second
         motion seeks authority to investigate  these facts further and possibly
         commence a proceeding  against the Company if the  unsecured  creditors
         committee  concludes  that property was  transferred to the Company for
         other than fair  consideration.  The first motion is currently pending.
         The second  motion has been set for hearing on December 1, 2000.  As of
         the filing date, no claims have been asserted;  therefore,  the Company
         is unable to estimate a range of possible loss  regarding this matter,
         if any.  The Company believes that the actions taken in connection with
         the 1995 spin off transaction were entirely proper and appropriate and,
         if called upon, will vigorously defend any claims to the contrary.

         Although the ultimate  disposition of the various legal  proceedings to
   which the Company is a party cannot be predicted  with  certainty,  it is the
   Company's policy to accrue  settlement costs when such costs are probable and
   estimable.  It is  reasonably  possible,  however,  that some of the  matters
   discussed in the foregoing  paragraphs  could be decided  unfavorably  to the
   Company and could require the Company to make  expenditures,  in amounts or a
   range of amounts that cannot be estimated. The Company believes, based on its
   current  analysis,  that  the  outcome  of any  claim  which  is  pending  or
   threatened,  either  individually  or on a  combined  basis,  will not have a
   material adverse effect on the consolidated financial condition of Fort James
   but could have a material effect on its cash flows or consolidated results of
   operations in a given period.

<PAGE>


10. Segments

       The Company's measure of segment  profitability is income from operations
   excluding corporate  restructuring  programs,  merger-related  activities and
   other  corporate  non-operating  activities.  Segment  sales and income  from
   operations  for the  quarters and nine months  ended  September  24, 2000 and
   September  26, 1999 and total assets as of September  24, 2000 and  September
   26, 1999 were as follows:

<TABLE>
<CAPTION>

                                                   Tissue                    Communi-     Inter-
                                           -----------------------           cations      company
                                              North                          Papers and   and
(in millions)                                 America      Europe    Dixie   Fiber        Corporate     Total
<S>                                             <C>         <C>        <C>       <C>      <C>           <C>
----------------------------------------------------------------------------------------------------------------
Quarter ended September 2000
Net sales                                   $ 1,026.6     $ 431.9  $ 216.1   $ 239.9    $(118.3)      $ 1,796.2
Intercompany sales                               32.5           -      0.4      85.4          -           118.3
Income from operations before
   restructure and other items (a)              191.9        27.6     30.0      10.9      (30.2)          230.2
Restructure and other items                         -           -        -         -      (18.9)          (18.9)
----------------------------------------------------------------------------------------------------------------
Income from operations                          191.9        27.6     30.0      10.9      (49.1)          211.3
Interest expense                                    -           -        -         -      (58.3)          (58.3)
Other income                                        -           -        -         -        4.8             4.8
----------------------------------------------------------------------------------------------------------------
Income before income taxes (b)                $ 191.9      $ 27.6    $30.0    $ 10.9    $(102.6)        $ 157.8
================================================================================================================
Quarter ended September 1999
Net sales                                     $ 950.3     $ 452.1  $ 195.2   $ 209.3     $(67.6)      $ 1,739.3
Intercompany sales                               24.2           -      0.8      42.6          -            67.6
Income from operations before
   restructure and other items (a)              125.6        50.8     20.3       1.8      (30.3)          168.2
Restructure and other items                         -           -        -         -       13.4            13.4
----------------------------------------------------------------------------------------------------------------
Income from operations                          125.6        50.8     20.3       1.8      (16.9)          181.6
Interest expense                                    -           -        -         -      (53.6)          (53.6)
Other income                                        -           -        -         -        0.4             0.4
----------------------------------------------------------------------------------------------------------------
Income before income taxes (b)                $ 125.6      $ 50.8    $20.3     $ 1.8     $(70.1)        $ 128.4
================================================================================================================

Nine months ended September 2000
Net sales                                   $ 2,890.8   $ 1,315.4  $ 635.9   $ 703.9    $(316.6)      $ 5,229.4
Intercompany sales                               98.1           -      1.2     217.3          -           316.6
Income from operations before
   restructure and other items (a)              508.1        81.1     86.7      35.4      (68.1)          643.2
Restructure and other items                         -           -        -         -      (10.3)          (10.3)
----------------------------------------------------------------------------------------------------------------
Income from operations                          508.1        81.1     86.7      35.4      (78.4)          632.9
Interest expense                                    -           -        -         -     (173.9)         (173.9)
Other income                                        -           -        -         -       16.5            16.5
----------------------------------------------------------------------------------------------------------------
Income before income taxes (b)                $ 508.1      $ 81.1    $86.7    $ 35.4    $(235.8)        $ 475.5
================================================================================================================
Total assets                                $ 3,296.9   $ 1,973.1  $ 462.3   $ 574.5     $656.7       $ 6,963.5
================================================================================================================
Nine months ended September 1999
Net sales                                   $ 2,763.4   $ 1,374.3  $ 591.1   $ 606.2    $(208.2)      $ 5,126.8
Intercompany sales                               80.1           -      2.4     125.7          -           208.2
Income from operations before
   restructure and other items (a)              501.2       169.3     78.2     (21.0)     (70.9)          656.8
Restructure and other items                         -           -        -         -       14.5            14.5
----------------------------------------------------------------------------------------------------------------
Income from operations                          501.2       169.3     78.2     (21.0)     (56.4)          671.3
Interest expense                                    -           -        -         -     (175.5)         (175.5)
Other income                                        -           -        -         -       18.5            18.5
----------------------------------------------------------------------------------------------------------------
Income before income taxes (b)                $ 501.2     $ 169.3    $78.2    $(21.0)   $(213.4)        $ 514.3
================================================================================================================
Total assets                                $ 3,020.3   $ 2,299.1  $ 420.2   $ 804.3     $732.5       $ 7,276.4
================================================================================================================

</TABLE>

(a)       Third quarter and  year-to-date  2000 income from operations  included
          unusual  charges of $24.0  million for  litigation  accruals and legal
          fees and other  costs,  of which $12.5  million is included in cost of
          goods sold and $11.5 million is included in selling and administrative
          expense.  Third quarter and  year-to-date  1999 income from operations
          included unusual charges of $46.0 million for severance and litigation
          accruals,  of which $17.8  million was  included in cost of goods sold
          and $28.2 million was included in selling and administrative expenses.
          Details by segment are as follows:

<TABLE>
<CAPTION>

                                                                         Income From Operations Excluding Unusual Items
                                                                   -----------------------------------------------------------
                                            Unusual Items                Third Quarter                   Year-To-Date
                                       -------------------------   -----------------------------   ---------------------------
<S>                                          <C>            <C>            <C>           <C>              <C>           <C>
                                             2000           1999           2000          1999             2000          1999
------------------------------------------------------------------------------------------------------------------------------
    Tissue - North America                 $ 13.3        $ 34.7          $ 205.2       $ 160.3          $ 521.4       $ 535.9
    Tissue - Europe                             -             -             27.6          50.8             81.1         169.3
    Dixie                                     0.2           0.9             30.2          21.2             86.9          79.1
    Communications Papers and Fiber           0.2           2.1             11.1           3.9             35.6         (18.9)
    Corporate                                10.3           8.3            (19.9)        (22.0)           (57.8)        (62.6)
------------------------------------------------------------------------------------------------------------------------------
      Total                                $ 24.0        $ 46.0          $ 254.2       $ 214.2          $ 667.2        $ 702.8
==============================================================================================================================

</TABLE>

(b)       Income from continuing  operations before income taxes,  extraordinary
          items, and cumulative effect of a change in accounting principle.

11.Pending Merger Transaction

       On July 17,  2000,  Fort  James and  Georgia-Pacific  announced  that the
   boards of directors of both companies  signed a definitive  merger  agreement
   for  Georgia-Pacific  to  acquire  Fort  James  in a  transaction  valued  at
   approximately $11 billion in cash, stock and assumed debt. Under the terms of
   the agreement,  Georgia-Pacific  will acquire all outstanding  shares of Fort
   James for  $29.60  per  share in cash and  0.2644  shares of  Georgia-Pacific
   stock.  The maximum value that can be received by Fort James  shareholders is
   $40 per share  (comprised  of $29.60  in cash and  $10.40 in  Georgia-Pacific
   stock). Therefore, the 0.2644 shares of Georgia-Pacific included in the offer
   is subject to downward  adjustment  in the event its  average  share price is
   greater than $39.33.

       On October 13, 2000,  Georgia-Pacific launched its exchange offer for all
   outstanding  shares of the Company's stock.  Subject to regulatory  approval,
   the  transaction  is expected to be completed in the fourth quarter of fiscal
   2000.  For additional  information,  see the Company's Form 8-K filed on July
   17,  2000 and on  September  1, 2000 and  Forms SC TO-T,  SC TO-C and SC 14D9
   filed on October 13, 2000,  Form SC 14D9A filed on October 16, 2000,  Form SC
   14D9A filed on October 18, 2000, and Form SC 14D9A filed on October 26, 2000.

<PAGE>


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

Results of Operations

         During the  quarters  and nine  months  ended  September  24,  2000 and
September  26, 1999,  the Company  recorded  certain  unusual and  non-recurring
items.  Results for the quarters and nine months  ended  September  24, 2000 and
September 26, 1999, as reported and excluding unusual and  non-recurring  items,
are summarized as follows:

<TABLE>
<CAPTION>
                                                                 Quarter                   Nine Months
                                                            ---------------------------------------------
<S>                                                              <C>       <C>       <C>        <C>
(in millions, except per share data)                           2000 (a)    1999 (b)   2000 (c)    1999 (d)
----------------------------------------------------------------------------------------------------------
Net sales                                                    $ 1,796.2   $ 1,739.3  $ 5,229.4   $ 5,126.8
==========================================================================================================

Income from operations                                         $ 211.3     $ 181.6    $ 632.9     $ 671.3
  Adjusted for unusual and non-recurring items:
   Cost of goods sold                                             12.5        17.8       12.5        17.8
   Selling and administrative expenses                            11.5        28.2       11.5        28.2
   Restructure and other items                                    18.9       (13.4)      10.3       (14.5)
----------------------------------------------------------------------------------------------------------
Income from operations, before unusual and non-recurring items $ 254.2     $ 214.2    $ 667.2     $ 702.8
==========================================================================================================

Net income                                                     $ 104.8     $ 325.1    $ 317.6     $ 518.4

  Adjusted for unusual and non-recurring items, each net of taxes:
   Cost of goods sold                                              7.7        10.9        7.7        10.9
   Selling and administrative expenses                             7.1        17.2        7.1        17.2
   Restructure and other items                                    12.0       (12.0)       6.4       (12.7)
   Loss from discontinued operations                                 -         1.5          -         6.4
   Extraordinary items                                               -      (232.5)         -      (199.3)
   Cumulative effect of a change in accounting principle             -           -          -        22.1
----------------------------------------------------------------------------------------------------------
Net earnings, before unusual and non-recurring items           $ 131.6     $ 110.2    $ 338.8     $ 363.0
==========================================================================================================
Diluted earnings per share:
   Net income                                                   $ 0.51      $ 1.47     $ 1.53      $ 2.35
  Adjusted for:
   Unusual items, net                                             0.07        0.13       0.07        0.13
   Restructure and other items                                    0.06       (0.06)      0.03       (0.06)
   Discontinued operations                                           -        0.01          -        0.03
   Extraordinary items, net                                          -       (1.05)         -       (0.90)
   Cumulative effect of a change in accounting principle             -           -          -        0.10
----------------------------------------------------------------------------------------------------------
   From earnings, before unusual and non-recurring items        $ 0.64      $ 0.50     $ 1.63      $ 1.65
==========================================================================================================


</TABLE>

(a)  Results for the third  quarter of 2000  included  unusual  charges of $24.0
     million ($14.8 million after taxes) for the settlement of certain antitrust
     litigation  claims related to the Company's Tissue - North America business
     as well as charges  for legal and other costs  associated  with the pending
     merger. In addition,  non-recurring charges of $18.9 million ($12.0 million
     after taxes) were recorded for the write-off of remaining notes  receivable
     and accruals for  contingent  liabilities  resulting from the bankruptcy of
     Crown Vantage, which was spun off from the Company in 1995.

(b)  Results for the third  quarter of 1999  included  unusual  charges of $46.0
     million  ($28.1  million  after taxes) and  non-recurring  credits of $13.4
     million ($12.0  million after taxes).  In addition,  net income  included a
     loss from discontinued operations of $1.5 million and an extraordinary gain
     on the sale of the Packaging business of $232.5 million.

(c)  Results for the first nine months of 2000 included unusual charges of $24.0
     million ($14.8 million after taxes) for the settlement of certain antitrust
     litigation  claims related to the Company's Tissue - North America business
     as well as charges  for legal and other costs  associated  with the pending
     merger.  In addition,  net  non-recurring  charges of $10.3  million  ($6.4
     million  after taxes) were  recorded for the  write-off of remaining  notes
     receivable  and  accruals for  contingent  liabilities  resulting  from the
     bankruptcy of Crown  Vantage,  which was spun off from the Company in 1995,
     partially offset by an income adjustment for the final determination of the
     net purchase price on the Marathon sale.

(d)  Results for the first nine months of 1999 included unusual charges of $46.0
     million  ($28.1  million  after taxes) and  non-recurring  credits of $14.5
     million ($12.7  million after taxes).  In addition,  net income  included a
     loss from discontinued operations of $6.4 million, charges of $33.2 million
     for an extraordinary  loss on early  extinguishment  of debt, $22.1 million
     for the  cumulative  effect of a change in accounting  principle and $232.5
     million for an extraordinary gain on the sale of the Packaging business.

         Net sales increased more than 2 percent for the quarter and nine months
ended  September  24,  2000  compared  to a year ago.  Excluding  the effects of
currency  translation and divested  operations,  net sales increased more than 8
percent and 6 percent, respectively.  Third quarter 2000 income from operations,
both excluding and including unusual and non-recurring items, increased compared
to last year's  quarter;  however,  income from  operations  for the nine months
ended September 24, 2000, was below last year's levels.  Significantly  improved
performance in all business  segments except Tissue - Europe  contributed to the
stronger  results in the third  quarter;  however,  the  decline in income  from
operations  for the nine  months was driven by reduced  earnings in the Tissue -
Europe and Tissue - North America  businesses as a result of higher raw material
costs,  partially offset by increased earnings in the Communications  Papers and
Fiber businesses and the Dixie business.

Results by Segment

         The  Company's   measure  of  segment   profitability  is  income  from
operations excluding corporate restructuring programs, merger-related activities
and other corporate non-operating activities.

Tissue - North America
----------------------

<TABLE>
<CAPTION>

                                                            Quarter                     Nine Months
                                                 -------------------------------------------------------------
<S>                                                <C>       <C>        <C>      <C>       <C>        <C>
(in millions)                                      2000      1999    Inc/(Dec)   2000      1999     Inc/(Dec)
--------------------------------------------------------------------------------------------------------------
Net sales                                        $ 1,026.6  $ 950.3      8.0 % $ 2,890.8 $ 2,763.4      4.6 %
Income from operations                               191.9    125.6     52.8 %     508.1     501.2      1.4 %
Income from operations, before unusual items         205.2    160.3     28.0 %     521.4     535.9     (2.7)%
==============================================================================================================

</TABLE>

         The increase in third  quarter net sales and income from  operations in
the Tissue - North America business was the result of improved  pricing,  volume
growth and manufacturing cost reductions partially offset by higher raw material
costs.  Distribution and warehousing  costs were  significantly  lower than last
year,  with continued  improvement  from the first half of 2000,  despite higher
fuel costs.

         In the  retail  category,  pricing  was  higher  than the  prior  year,
primarily due to list price increases implemented in the second quarter of 2000.
Retail volumes  increased more than 4 percent  compared to the prior year,  with
significant  gains in bath tissue and napkins,  partially  offset by lower towel
volumes.

         In the  away-from-home  category,  pricing was higher than in the third
quarter of 1999, but decreased  slightly compared to the second quarter of 2000.
Volumes were approximately equal to those of the prior year.

         The  year-to-date  increase  in net sales was the  result of  increased
pricing  in  both  the  retail  and  away-from-home   categories.   Income  from
operations,  excluding unusual items,  declined in the first nine months of 2000
compared to the prior year as cost reduction benefits and increased pricing were
more than offset by significant inflationary increases in wastepaper.

Tissue - Europe
---------------

<TABLE>
<CAPTION>

                                           Quarter                              Nine Months
                            ----------------------------------   --------------------------------------
(in millions)                 2000        1999      Inc/(Dec)       2000          1999        Inc/(Dec)
<S>                            <C>         <C>         <C>           <C>           <C>            <C>
-------------------------------------------------------------------------------------------------------
Net sales                     $ 431.9    $ 452.1     (4.5)$       1,315.4       $ 1,374.3        (4.3)%
Income from operations           27.6       50.8    (45.7)%          81.1           169.3       (52.1)%
=======================================================================================================

</TABLE>

         Third  quarter  net sales and income  from  operations  of the Tissue -
Europe  business  declined  compared to the prior  year.  The  weakening  of the
European  currencies  against  the U.S.  dollar  negatively  affected  sales and
operating  profits by  approximately  $55 million and $6 million,  respectively,
compared to last year's quarter.  Third quarter 2000 operating profits were also
negatively  impacted  by  almost  $40  million  of  continued  fiber  inflation,
including the effect of currency  movements,  which was only partially offset by
increased  pricing.  Finished  goods  sales  volumes in the third  quarter  were
slightly ahead of last year's quarter.

          During the first nine months of the year,  weakening  of the  European
currencies  against the U.S. dollar negatively  affected net sales and operating
profits by approximately  $143 million and $17 million,  respectively.  Finished
goods volume  increased in most of the Company's  European  markets,  except the
United Kingdom, which was impacted by intense competitive pricing conditions due
in part to the entry of a major new  competitor.  However income from operations
for the nine months ended September 24, 2000 declined as a result of significant
raw material  inflation  that was only  partially  offset by  increased  selling
prices and cost reduction efforts.

Dixie
-----
<TABLE>
<CAPTION>

                                                                 Quarter                      Nine Months
                                                 --------------------------------   -------------------------------
<S>                                                  <C>       <C>       <C>          <C>        <C>       <C>
(in millions)                                        2000      1999    Inc/(Dec)      2000       1999    Inc/(Dec)
-------------------------------------------------------------------------------------------------------------------
Net sales                                         $ 216.1    $ 195.2     10.7 %      $ 635.9    $ 591.1     7.6 %
Income from operations                               30.0       20.3     47.8 %         86.7       78.2    10.9 %
Income from operations, before unusual items         30.2       21.2     42.5 %         86.9       79.1     9.9 %
===================================================================================================================

</TABLE>

          Net sales and income  from  operations,  both  excluding  and
including  unusual items,  for the third quarter and nine months ended September
24, 2000  increased  compared to a year ago.  The sales and profit  improvements
were driven by the  combination of higher  prices,  which  substantially  offset
higher  plastic resin and other raw material  costs,  solid volume and mix gains
and continued strong cost reduction  benefits.  Volumes increased by more than 4
percent in both the retail and foodservice categories, with notable volume gains
reported  in retail  plates,  and  foodservice  plastic  cutlery  and  cups.  In
addition, successful new product introductions such as Winnie the Pooh bath cups
and Rinse & ReUse  disposable  stoneware  continued  to enhance  volume  growth.
During  the  quarter,  Dixie  launched  PERFECTOUCH  To-Go  cups into the Retail
channels,  which  targets  commuters  by  combining,  for the  first  time,  the
innovative PERFECTOUCH hot cup and lids in the same package.

         On October  2, 2000,  Fort James  completed  the  previously  announced
purchase  of a plastic  thermoforming  plant in  Sandusky,  Ohio,  from  Whirley
Industries,  Inc.  The  plant,  which  produces  plastic  cups,  lids  and  food
containers,  will provide  Dixie with  additional  plastic,  graphic  design and
printing  capacity to fuel its growth,  as well as  providing  an entry into key
emerging  segments  such as plastic  CARCUPS  used for takeout by  quick-service
restaurants and convenience stores.

<PAGE>

Communications Papers and Fiber
-------------------------------
<TABLE>
<CAPTION>

                                                            Quarter                     Nine Months
                                                 ------------------------------   ------------------------------
<S>                                                <C>       <C>       <C>          <C>       <C>         <C>
(in millions)                                      2000      1999    Inc/(Dec)      2000      1999     Inc/(Dec)
----------------------------------------------------------------------------------------------------------------
Net sales                                          $ 239.9  $ 209.3     14.6 %    $ 703.9   $ 606.2       16.1 %
Income (loss) from operations                         10.9      1.8    505.6 %       35.4     (21.0)     268.6 %
Income (loss) from operations, before unusual items   11.1      3.9    184.6 %       35.6     (18.9)     288.4 %
================================================================================================================

</TABLE>

         The improved net sales and  earnings in the  Communications  Papers and
Fiber  businesses  were the  result  of  significantly  higher  market  pulp and
uncoated  freesheet prices.  While uncoated  freesheet prices were significantly
higher than in 1999,  they declined  modestly  compared to the second quarter of
2000.

Interest Expense and Other Income

         Third quarter 2000 interest  expense  increased $4.7 million  primarily
due to higher interest costs on variable-rate borrowings; however, lower average
debt levels resulted in a $1.6 million decrease in interest expense for the nine
months ended  September 24, 2000.  Other income for the quarter was $4.8 million
compared to $0.4 million in 1999.  This  increase was  primarily  due to foreign
currency  gains.  Other  income for the nine  months  ended  September  24, 2000
decreased  to $16.5  million  from $18.5  million  in 1999.  This  decrease  was
primarily  due  to  higher  foreign   currency  gains  in  1999  than  in  2000.
Additionally,  income  related to a land sale  recorded in the first  quarter of
2000 was comparable to income  received in the second quarter of 1999 related to
interest on prior year income tax refunds.

Dispositions

         In January  2000, the Company completed the sale of Fort James-Marathon
LTD ("Marathon"),  a non-integrated  pulp mill located in Ontario,  Canada, to a
joint venture between Tembec Inc. and Kruger Inc. for $69.1 million. In February
2000,  the Company  closed its  groundwood  paper  operations  (the  "Groundwood
Business")  at the Wauna  mill in  Clatskanie,  Oregon.  Both  Marathon  and the
Groundwood  Business,  which had a combined  net asset value of $220.8  million,
were included in the Communications Papers and Fiber segment. Anticipated losses
of $149.9 million for asset  write-downs and $7.2 million of other costs related
to the sale and closure were  originally  recorded in the fourth quarter of 1999
on the  "Restructure  and other items" line of the  Consolidated  Statements  of
Operations.  In the second  quarter of 2000,  the Company  reversed $8.6 million
($5.6 million after taxes,  or $0.03 per diluted share)  originally  recorded at
the end of 1999,  as part of the  estimated  loss on the sale of  Marathon.  The
revision  was  recorded  on  the  "Restructure  and  other  items"  line  of the
Consolidated Statements of Operations, and represents the final determination of
the purchase price and an adjustment of estimated  transaction  costs to reflect
actual costs paid.

         In  August  1999,  Fort  James  sold  its  Packaging  business  to  ACX
Technologies, Inc. for $836.3 million in cash. The sale included the operations,
assets,  and  liabilities  of the  Company's  folding  carton,  healthcare,  and
microwave packaging manufacturing facilities.

         For  further  information,  see  Note 2 to the  Consolidated  Financial
Statements.

Unusual and Non-Recurring Items

Unusual Items

       Income  from  operations  for the third  quarter  and nine  months  ended
September 24, 2000 included  unusual  charges of $24.0  million  ($14.8  million
after taxes, or $0.07 per diluted share) for accruals  related to the settlement
of certain  antitrust  litigation  claims  related to the Tissue - North America
business,  as well as charges for legal fees and other costs associated with the
pending sale of Fort James to  Georgia-Pacific  (see Note 11 to the Consolidated
Financial Statements). The unusual charges of $24.0 million were recorded in
costs of good sold($12.5 million) and selling and administrative expenses ($11.5
million).

       Income  from  operations  for the third  quarter  and nine  months  ended
September  26, 1999,  included  $46.0 million of unusual items for severance and
other costs related to a reduction-in-force  program and for antitrust and other
litigation  accruals,  of which $17.8 million was included in cost of goods sold
and $28.2 million was included in selling and administrative expenses.

Restructure and Other Items

       Income  from  operations  for the third  quarter  and nine  months  ended
September  24, 2000,  included  non-recurring  charges of $18.9  million  ($12.0
million after taxes,  or $0.06 per diluted share) for the write-off of remaining
unsecured  notes  receivable and accruals for contingent  liabilities  resulting
from the  bankruptcy of Crown,  which was spun off from the Company in 1995. See
Note 9 to the  Consolidated  Financial  Statements  for further  information  on
Crown.  Income from operations for the nine months ended September 24, 2000 also
included  non-recurring  income of $8.6 million ($5.6  million  after taxes,  or
$0.03 per diluted share) related to the Marathon  divestiture (see Note 2 to the
Consolidated Financial Statements).

       Income  from  operations  for the third  quarter  and nine  months  ended
September  26, 1999  included a charge of $30.0  million  ($18.4  million  after
taxes,  or $0.08 per diluted  share) for a write-down of notes  receivable  from
Crown. In addition, income from operations for the third quarter and nine months
ended  September  26, 1999 included net  non-recurring  credits of $43.4 million
($30.4 million after taxes, or $0.14 per diluted share) and $44.5 million ($31.1
million after taxes,  or $0.14 per diluted share),  respectively.  Non-recurring
credits  related to the  reversal  of certain  1997  merger-related  restructure
accruals,  as a result of unexpected and protracted regulatory reviews that were
expected to delay  certain  initiatives  into late 2000.  In  addition,  certain
initiatives  were  cancelled  due to changes in  economic  circumstances,  which
indicated that the initiatives would not provide the economic benefits initially
projected.  The initiatives that were delayed or cancelled  primarily related to
operations of the Company's Tissue - Europe business.

Financial Condition

         Cash provided by operating  activities  totaled  $646.7  million in the
first nine months of 2000,  compared with $542.8  million in the prior year. The
increase was  primarily due to lower  investments  in working  capital.  Capital
expenditures  were  $336.9  million for the nine months  ended  September  2000,
compared to $346.5  million for the same period in the prior year.  In the first
nine months of 2000,  the Company  received  cash proceeds of $93.0 million from
the sale of assets,  including  $69.1  million  from the sale of  Marathon.  The
Company's  current  ratio was 1.5 as of  September  2000 and 1.4 as of  December
1999, while working capital  increased to $616.0 million from $558.7 million for
the same  periods.  The increase in working  capital was  primarily due to lower
accounts  payable and a reduction in the current  portion of long-term debt. The
lower accounts payable is due to timing of payments.

         As  of  September  2000,  total  indebtedness  was  $3.3  billion  and,
including the effect of interest rate swaps, included approximately $1.8 billion
of fixed rate and $1.5  billion of  floating  rate  obligations.  As of December
1999, total  indebtedness was $3.5 billion and, including the effect of interest
rate swaps,  included  $2.2  billion of fixed rate and $1.3  billion of floating
rate obligations.  Outstanding  borrowings of $0.9 billion at September 2000 and
December 1999, were supported by commercial  paper,  revolving  credit and money
market facilities.  Under the most restrictive  provisions of the Company's debt
agreements,  the Company had additional borrowing capacity of approximately $1.6
billion as of September 2000.



<PAGE>


Stock Purchase Program

         In August 1999,  the Company  began  execution of a $500 million  stock
purchase  program.  For the nine months ended  September  24, 2000,  the Company
purchased 9.4 million common shares at a cost of $198.9 million. As of September
24, 2000,  the Company had  purchased  16.5 million  common  shares at a cost of
$398.6  million since the  inception of the program.  As a result of the pending
merger of Fort  James  with  Georgia-Pacific  (see  Note 11 to the  Consolidated
Financial Statements), the Company's stock purchase program has been suspended.

Inflation

         Beginning in the second half of 1999 and  continuing  through the first
half of 2000, the Company experienced  significant  increases in the cost of its
base raw materials,  principally wastepaper,  purchased pulp and plastic resins.
In the first half of 2000,  these  costs  increased  faster than the Company was
able to implement  price  increases.  In the third quarter of 2000,  the Company
began to partially recover inflationary  increases as a result of higher selling
prices  and a  moderation  of  inflationary  cost  pressures.  There  can  be no
assurance;  however,  that the Company will be able to maintain  current pricing
levels or will be able to increase prices  sufficiently in the future to recover
inflationary increases.

Effect of New Accounting Standards

         See Note 1 to the Consolidated Financial Statements.

Information  Concerning  Forward-Looking  Statements

         Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities  Litigation Reform Act of 1995. Such
forward-looking  statements  are not  guarantees of future  performance  and are
subject to risks and  uncertainties  that could cause actual results and Company
plans and objectives to differ  materially from those projected.  Such risks and
uncertainties  include,  but are not limited to,  general  business and economic
conditions;  competitive  pricing  pressures  for the  Company's  products;  the
ability to successfully introduce new products;  changes in raw material, energy
and  other  costs;  the  ability  to  achieve  projected  net  cost  reductions;
opportunities  that  may  be  presented  to and  pursued  by  the  Company;  and
determinations by regulatory and governmental authorities.


<PAGE>


Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         There have been no material  changes in the Company's market risk since
December  26,  1999.  For  additional  information,  refer to pages 30-31 of the
Company's  Annual Report to Shareholders  for the fiscal year ended December 26,
1999.

PART II.  OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS.

        See Note 9 to the Consolidated  Financial  Statements of this Quarterly
Report on Form 10-Q.

Item 2.   CHANGES IN SECURITIES.

          None.

Item 3.   DEFAULTS UPON SENIOR SECURITIES.

          None.

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

          None.

Item 5.   OTHER INFORMATION.

          None.

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K.

          (a)      Exhibits:

                  The exhibits  listed below are filed as part of this quarterly
                  report.  Each  exhibit  is  listed  according  to  the  number
                  assigned to it in the Exhibit  Table of Item 601 of Regulation
                  S-K.

                  Exhibit
                  Number

                  10(a)  James River  Corporation  of Virginia 1987 Stock Option
                         Plan,  (1993  amendment and  restatement)  and the Fort
                         James   Corporation   1996  Stock  Incentive  Plan  (as
                         Amended) amendment and restatement effective as of July
                         13, 2000.

                  10(b) Fort James  Corporation  Supplemental  Retirement Plan
                        for Miles Marsh,  amendment and  restatement  effective
                        January 1, 1999.

                  27    Financial Data Schedule for the nine months ended
                        September 24, 2000 (filed electronically only).

(b)      Reports on Form 8-K:

                  Form 8-K was filed on July 17, 2000,  announcing that
                  the  boards  of  Georgia-Pacific   and  Fort  James  signed  a
                  definitive merger agreement for Georgia-Pacific to acquire all
                  outstanding  shares of Fort James.  The  Agreement and Plan of
                  Merger  among  the  companies,  the  joint  press  release  of
                  Georgia-Pacific  Corporation and Fort James  Corporation,  and
                  Amendment  No. 1 to the Rights  Agreement  between  Fort James
                  Corporation and Wells Fargo Bank Minnesota, N.A. (successor to
                  Norwest Bank  Minnesota,  N.A.), as Rights Agent were filed as
                  exhibits to this Form 8-K.

                           Form 8-K was filed on July 20, 2000,  containing  as
                  an  exhibit,  the  Company's  second  quarter  earnings  press
                  release issued on July 19, 2000.

                           Form 8-K was filed on September 1, 2000,  containing
                  as an  exhibit,  a joint  press  release  by the  Company  and
                  Georgia-Pacific  announcing  that they have received a request
                  from the U.S. Department of Justice for additional information
                  under  the   Hart-Scott-Rodino   Antitrust   Improvements  Act
                  regarding the proposed merger between the two companies.

                           Form 8-K was filed on October 19, 2000, containing as
                  an exhibit,  the  announcement of the Company's fourth quarter
                  dividend.

                           Form 8-K was filed on October 26, 2000, containing as
                  an exhibit, the Company's third quarter earnings press release
                  issued on October 26, 2000.


SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                     FORT JAMES CORPORATION


                       By:/s/ Joseph W. McGarr
                          Joseph W. McGarr
                          Executive Vice President and Chief Financial Officer

                       By:/s/ Catherine M. Freeman
                          Catherine M. Freeman
                          Vice President and Corporate Controller
                            (Principal Accounting Officer)

  Date:  November 2, 2000