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:  March 29, 1998       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
            incorporation or organization)                Identification No.)

           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 May 1, 1998:

                               220,409,791 shares
                               ------------------

<PAGE>


                             FORT JAMES CORPORATION

                         QUARTERLY REPORT ON FORM 10-Q
                                 March 29, 1998

                               TABLE OF CONTENTS
<TABLE>
<S> <C>
                                                                                                  Page No.
                                                                                                  --------
PART I.  FINANCIAL INFORMATION:

         ITEM 1.  Financial Statements:

                  Consolidated Balance Sheets as of March 29, 1998 and
                      December 28, 1997                                                              3

                  Consolidated Statements of Operations for the quarters ended
                      March 29, 1998 and March 30, 1997                                              5

                  Consolidated Statements of Cash Flows for the quarters ended
                      March 29, 1998 and March 30, 1997                                              6

                  Notes to Consolidated Financial Statements                                         7

         ITEM 2.  Management's Discussion and Analysis of Financial
                       Condition and Results of Operations                                          13

PART II.  OTHER INFORMATION:

         ITEM 1.  Legal Proceedings                                                                 16

         ITEM 2.  Changes in Securities                                                             16

         ITEM 3.  Defaults Upon Senior Securities                                                   16

         ITEM 4.  Submission of Matters to a Vote of Security Holders                               16

         ITEM 5.  Other Information                                                                 16

         ITEM 6.  Exhibits and Reports on Form 8-K                                                  17

         SIGNATURES                                                                                 18

</TABLE>
<PAGE>



PART I.    FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS


                             FORT JAMES CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                      March 29, 1998 and December 28, 1997
                        (in millions, except share data)
<TABLE>
<CAPTION>
                                                                           March             December
                                                                            1998               1997
                                                                            ----               ----
<S> <C>
ASSETS

Current assets:

  Cash and cash equivalents                                                $21.7                $33.6
  Accounts receivable                                                      820.1                787.8
  Inventories                                                              872.6                854.3
  Deferred income taxes                                                    215.4                214.4
  Prepaid expenses and other current assets                                 30.1                 26.4
                                                                         -------              --------

    Total current assets                                                 1,959.9              1,916.5
                                                                         -------              --------

Property, plant and equipment                                            7,840.3              7,784.1
Accumulated depreciation                                                (3,308.3)            (3,218.8)
                                                                        --------            ----------

    Net property, plant and equipment                                    4,532.0              4,565.3

Other assets                                                               628.7                614.5

Goodwill                                                                   620.1                636.9
                                                                        --------             --------
    Total assets                                                        $7,740.7             $7,733.2
                                                                        ========             =========
</TABLE>


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


<PAGE>


                             FORT JAMES CORPORATION
                     CONSOLIDATED BALANCE SHEETS, Continued
                        (in millions, except share data)
<TABLE>
<CAPTION>
                                                                            March               December
                                                                             1998                 1997
                                                                            -----                 ----
<S> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

  Accounts payable                                                         $584.3               $636.5
  Accrued liabilities                                                       879.6                913.0
  Current portion of long-term debt                                          31.3                 34.4
                                                                         --------             --------

    Total current liabilities                                             1,495.2              1,583.9
                                                                         --------             --------

Long-term debt                                                            4,154.6              4,155.5
Deferred income taxes                                                       698.5                650.8
Accrued postretirement benefits
  other than pensions                                                       472.8                474.8
Other long-term liabilities                                                 267.7                283.9
                                                                         --------             --------

    Total liabilities                                                     7,088.8              7,148.9
                                                                         --------             --------

Preferred stock, $10 par value, 5.0 million
 shares authorized, issuable in series;
 shares outstanding, March 29, 1998 - 1.7
 million and December 28, 1997 3.3 million                                  270.1                352.7


Common stock, $.10 par value, 500.0
 million shares authorized; shares
 outstanding, March 29, 1998 -- 212.8 million and
  December 28, 1997 -- 209.3 million                                         21.3                 20.9
Additional paid-in capital                                                2,912.1              2,807.9
Accumulated comprehensive loss                                             (170.8)              (137.6)
Accumulated deficit                                                      (2,380.8)            (2,459.6)
                                                                         --------             --------

    Total shareholders' equity                                              651.9                584.3
                                                                         --------             --------
    Total liabilities and shareholders' equity                           $7,740.7             $7,733.2
                                                                         ========             ========
</TABLE>



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


<PAGE>


                             FORT JAMES CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                       For the Quarters (13 Weeks) Ended
                       March 29, 1998 and March 30, 1997
                    (in millions, except per share amounts)
<TABLE>
<CAPTION>
                                                                                                 1998                 1997
                                                                                                 ----                 ----
<S> <C>
Net sales                                                                                    $1,795.6             $1,817.8
Cost of goods sold                                                                            1,243.1              1,278.1
Selling and administrative expenses                                                             283.8                288.9
Restructure and other unusual items                                                               7.5
                                                                                              -------              --------
    Income from operations                                                                      261.2                250.8

Interest expense                                                                                 75.0                 95.8
Other income, net                                                                                 8.8                  7.1
                                                                                              -------              --------
    Income before income taxes and extraordinary item                                           195.0                162.1

Income tax expense                                                                               77.4                 64.9
                                                                                              -------              --------
     Income before extraordinary item                                                           117.6                 97.2

Extraordinary loss on early extinguishment of debt,

      net of taxes of $1.6 million in 1998 and $ .9 million in 1997                              (2.6)                 (1.3)
                                                                                              -------              --------
    Net income                                                                                 $115.0                 $95.9
                                                                                              =======              ========

Preferred dividend requirements                                                                  (5.2)                (14.6)
                                                                                              -------              --------
    Net income applicable to common shares                                                     $109.8                 $81.3
                                                                                              =======              ========
Net income per share:

    Before extraordinary item                                                                    $.54                   $.44
    Extraordinary loss on early extinguishment of debt                                           (.01)                  (.01)
                                                                                              -------              ---------
         Net income per common share                                                             $.53                   $.43
                                                                                              =======              =========

Weighted average number of common shares                                                       208.5                  187.9
                                                                                              =======              =========
Net income per diluted share:

    Before extraordinary item                                                                    $.53                   $.43
    Extraordinary loss on early extinguishment of debt                                           (.01)
                                                                                              -------              ---------
         Net income per common share and common share equivalent                                 $.52                   $.43
                                                                                              =======              =========

Weighted average number of common shares
   and common share equivalents                                                                 210.9                  205.7
                                                                                              =======              =========

Cash dividends per common share                                                                  $.15                   $.15
                                                                                              -------              ---------

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


<PAGE>


                             FORT JAMES CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                       For the Quarters (13 Weeks) Ended
                       March 29, 1998 and March 30, 1997
                                 (in millions)
<TABLE>
<CAPTION>
                                                                                           1998                 1997
                                                                                           ----                 ----
<S> <C>
Cash provided by (used for) operating activities:
  Net income                                                                             $115.0                $95.9
  Depreciation expense and cost of timber harvested                                       114.1                122.1
  Amortization of goodwill                                                                  4.8                  5.2
  Deferred income tax provision                                                            49.2                 30.7
  Restructure and other unusual items                                                       7.5
  Loss on early extinguishment of debt, net of tax                                          2.6                  1.3
  Change in current assets and liabilities:
    Accounts receivable                                                                   (44.2)               (22.4)
    Inventories                                                                           (21.2)               (21.6)
    Prepaid expenses and other current assets                                              (4.8)                12.8
    Accounts payable and accrued liabilities                                              (50.7)               (93.6)
    Restructure and integration payments                                                  (50.7)                (6.5)
  Foreign currency hedge                                                                                       (31.5)
  Other, net                                                                              (13.2)                 (.6)
                                                                                       ---------              ---------

      Cash provided by operating activities                                               108.4                  91.8
                                                                                       ---------              ---------
Cash provided by (used for) investing activities:

  Expenditures for property, plant and equipment                                         (101.0)                (75.3)
  Cash received from sale of assets                                                         4.4                   1.6
  Other, net                                                                                1.1                   7.1
                                                                                       ---------              ---------
      Cash used for investing activities                                                  (95.5)                (66.6)
                                                                                       ---------              ---------
Cash provided by (used for) financing activities:

  Additions to long-term debt                                                             306.9                 134.9
  Payments of long-term debt                                                             (306.8)               (114.9)
  Common and preferred stock cash dividends paid                                          (37.3)                (27.4)
  Proceeds from exercise of stock options                                                  15.6                   6.4
  Other, net                                                                               (3.2)
                                                                                       ---------              ---------

      Cash used for financing activities                                                  (24.8)                 (1.0)
                                                                                       ---------              ---------

Increase (decrease) in cash and cash equivalents                                          (11.9)                 24.2
Cash and cash equivalents, beginning of period                                             33.6                  34.6
                                                                                       ---------              ---------

Cash and cash equivalents, end of period                                                  $21.7                 $58.8
                                                                                       =========              =========

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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Significant Accounting Policies

         Basis of Presentation:

         The consolidated financial statements of Fort James Corporation (the
"Company" or "Fort James") have been prepared to give retroactive effect to the
merger of a wholly-owned subsidiary of James River Corporation of Virginia
("James River") with and into Fort Howard Corporation ("Fort Howard") on August
13, 1997, which was accounted for as a pooling of interests. In connection with
the merger, James River was renamed Fort James Corporation. Accordingly, the
Company's consolidated financial statements have been restated for all periods
prior to the business combination to include the combined financial results of
James River and Fort Howard. In the opinion of management, the accompanying
unaudited consolidated financial statements of Fort James contain all
adjustments (consisting of only normal recurring accruals) necessary to present
fairly the Company's consolidated financial position as of March 29, 1998, and
its results of operations and cash flows for the quarters (13 weeks) ended March
29, 1998, and March 30, 1997. The balance sheet as of December 28, 1997, was
derived from audited financial statements as of that date. The results of
operations for the quarter ended March 29, 1998, are not necessarily indicative
of the results to be expected for the full year.

         Certain amounts in the financial statements and supporting footnote
disclosures have been reclassified to conform to the current year's
classification including a reclassification of minority interests and the
related income tax effects to other income.

         Adoption of Accounting Pronouncements:

         In 1998 the Company adopted, Financial Accounting Standards Board
("FASB") Statement No. 130, "Reporting Comprehensive Income." Comprehensive
income for the periods ended March 29, 1998, and March 30, 1997, was $81.8
million and $ 2.2 million, respectively. The difference between net income and
comprehensive income is primarily due to foreign currency translation.

         In 1997, the FASB issued Statement No. 131, "Disclosures about Segments
of an Enterprise and Related Information" which establishes standards for the
way public companies report information about operating segments, including
related disclosure about products and services, geographic areas and major
customers. The Company has not determined what, if any, impact Statement No. 131
will have on the reported operating segments and the related disclosures.
Statement No. 131 is effective for periods ending after December 15, 1998.

         In February  1998, the FASB issued  Statement No. 132,  "Employer's
Disclosures  about Pensions and Other Postretirement  Benefits--an  amendment to
FASB  Statements  No. 87, 88, and 106" which will require the Company to revise
disclosures  about  pension and other  postretirement  benefit  plans.
Statement  No. 132 is effective for fiscal years beginning after December 15,
1997.

2.        Restructure and Other Unusual Items

         Results for the first quarter of 1998 included charges of $7.5 million
($4.6 million net of taxes, or $.02 per diluted share) for merger-related
relocation and other costs paid during the quarter. During the current quarter,
the Company completed the permanent closures of two tissue mills and made
payments of $43.2 million for asset closures and employee-related costs.


<PAGE>


3.        Net Income Per Common Share and Common Share Equivalent

         In February 1997, the FASB issued Statement No. 128, "Earnings per
Share" ("SFAS 128"), which is effective for periods ending after December 15,
1997, including interim periods. Earnings per share for the quarters ended March
29, 1998, and March 30, 1997, were calculated under SFAS 128 as follows (in
millions):

<TABLE>
<CAPTION>
                                                      March 1998                March 1997
                                                      ----------                ----------
                                                  Income       Shares       Income       Shares
                                                  -------      -------      ------       ------
<S> <C>

Income before extraordinary item                   $117.6                     $97.2
Preferred stock dividends                            (5.2)                    (14.6)
                                                  --------                   -------
Amounts used to compute basic
  earnings per share                                112.4         208.5        82.6         187.9
Effect of dilutive securities:
   Options                                                          2.4                       2.5
   Convertible preferred stock                                                  6.5          15.3
                                                  --------       -------     -------       -------
Amounts used to compute diluted
  earnings per share                               $112.4         210.9       $89.1        205.7
                                                  ========       =======     =======       =======
</TABLE>

         Series K, L and N preferred stocks were antidilutive for all periods
presented. An immaterial number of options to purchase shares of common stock
were outstanding but not included in the computation of diluted earnings per
share because the option exercise price was greater than the average market
price of the common shares.

4.       Other Income

         The  components of other income were as follows for the quarters  ended
March 29, 1998, and March 30, 1997 (in millions):

<TABLE>
<CAPTION>
                                                                             March                March
                                                                              1998                 1997
                                                                             ------               ------
<S> <C>
Interest and investment income                                                 $.9                 $1.7
Equity in (loss) earnings of unconsolidated affiliates                         (.2)                 3.0
Gain on sale of assets                                                         2.0                  2.1
Minority interests                                                            (1.1)                  .1
Foreign currency exchange gain (loss)                                          5.3                  (.3)
Other, net                                                                     1.9                   .5
                                                                             ------               ------
    Total other income                                                        $8.8                 $7.1
                                                                             ======               ======
</TABLE>

5.       Income Taxes

         The Company's effective income tax rate was 39.7% for the quarter ended
March 29, 1998, compared to 40% for the first quarter of 1997. The decrease in
the effective tax rate from the prior year was primarily due to the reduced
relative size of permanent differences compared to pretax income.

6.       Inventories

         The components of inventories were as follows as of March 29, 1998, and
December 28, 1997 (in millions):

<TABLE>
<CAPTION>

                                                                  March             December
                                                                   1998                 1997
                                                                   ----                 ----
<S> <C>
Raw materials                                                    $172.0               $184.3
Finished goods and work in process                                575.0                550.2
Stores and supplies                                               163.4                159.4
                                                                 ------               ------
                                                                  910.4                893.9
Reduction to state certain inventories
  at last-in, first-out cost                                      (37.8)               (39.6)
                                                                 ------               ------
    Total inventories                                            $872.6               $854.3
                                                                 ======               ======
</TABLE>

7.       Financial Instruments

         The Company held $1,438 million and $1,138 million in notional amount
of interest rate swaps with fair value liabilities of $6 million and $8 million
as of March 29, 1998 and December 28, 1997, respectively. The fair value of the
Company's debt was approximately $100 million greater than book value of $4.2
billion as of March 29, 1998 and December 28, 1997, respectively. The estimated
fair values of the Company's financial instruments were based on quoted market
prices of comparable instruments and current market rates as of March 29, 1998
and December 28, 1997, respectively.

         Based on the Company's debt portfolio outstanding and current market
perception, a 100 basis point change in interest rates as of December 28, 1997
and March 29, 1998 would have changed the fair value of the debt portfolio by
approximately $116.8 million and $114.8 million, respectively. A 100 basis point
change in interest rates as of December 28, 1997 and March 29, 1998 would have
changed the fair value of the Company's interest rate swap portfolio by a
maximum of $4.8 million and $3.0 million, respectively.

8.       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 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. Future regulations could materially increase the Company's
capital requirements and certain operating expenses in future years.

         Fort James has been identified as a potentially responsible party
("PRP"), along with others, at various U.S. Environmental Protection Agency
("EPA") designated superfund sites and is involved in remedial investigations
and actions under federal and state laws. Among these sites, the Company, along
with six other current and former operators of pulp and paper facilities, has
been identified as a PRP by the U.S. Fish and Wildlife Service and other state
and federal agencies, including the EPA, and tribal entities, regarding
contamination of the lower Fox River by hazardous substances. These agencies and
tribes seek primary restoration of the river, and natural resources damages. At
this time, the Company, in conjunction with other PRPs, has agreed to
participate with the State of Wisconsin in the funding of primary restoration
studies and a natural resources damages assessment and is engaged in
negotiations with federal and state agencies and tribes to resolve outstanding
claims.

         It is Fort James' policy to accrue remediation costs on an undiscounted
basis when it is probable that such costs will be incurred and when a range of
loss can be reasonably estimated. As of March 29, 1998, Fort James' accrued
environmental liabilities, including remediation and landfill closure costs,
totaled $55.7 million. The Company periodically reviews the status of all
significant existing or potential environmental issues and adjusts its accrual
as necessary. The accruals do not reflect any possible future insurance
recoveries. Estimates of costs for future remediation are necessarily imprecise
due to, among other things, the identification of presently unknown remediation
sites and the allocation of costs among PRPs. The Company believes that its
share of the costs of cleanup for its current remediation sites will not have a
material adverse impact on its consolidated financial position, but could have a
material effect on consolidated results of operations in a given quarter or
year. As is the case with most manufacturing and many other entities, there can
be no assurance that the Company will not be named as a PRP at additional sites
in the future or that the costs associated with such additional sites would not
be material.

         Litigation:

         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, against the Company and eight other manufacturers of sanitary
commercial paper products alleging violations of federal and state antitrust and
unfair competition laws. James River and Fort Howard are both named defendants.
The complaint sought damages on behalf of the state under Florida law of $1
million for each violation against each defendant, unspecified treble damages
and injunctive relief. That filing was followed by additional filings on behalf
of an alleged class of injured plaintiffs in Gainesville and numerous other
federal and state courts, all seeking similar damages for similar alleged
violations. Pursuant to the order of the Judicial Panel for Multidistrict
Litigation, the federal cases were consolidated in the U.S. District Court for
the Northern District of Florida at Gainesville. State class actions were filed
in California and Tennessee on behalf of another alleged class of purchasers.
Discovery was commenced in the federal cases and briefs filed on the issue of
whether the class can be certified to proceed. No specific date for a decision
on this issue can be predicted. The Company believes that these cases are
without merit and is vigorously defending both the federal and state actions.

         Although the ultimate disposition of legal proceedings cannot be
predicted with certainty, it is the opinion of the Company's management that the
outcome of any claim which is pending or threatened, either individually or on a
combined basis, will not have a materially adverse effect on the consolidated
financial condition of Fort James but could materially affect consolidated
results of operations in a given quarter or year.


<PAGE>


9.       Segment Information

         Fort James' net sales and income from operations by business segment
were as follows for the quarters ended March 29, 1998, and March 30, 1997 (in
millions):

<TABLE>
<CAPTION>

                                                 Consumer Products
                                                 -----------------                                    Intersegment
                                                  North                             Communications    elimination/
                                                America     Europe   Packaging              Papers       Corporate       Total
<S> <C>                                        --------     ------   ---------      --------------    ------------       -----
March 1998

Net sales                                      $1,073.4     $458.0      $180.4              $126.9         $(43.1)    $1,795.6
Segment results before restructure
  and other unusual items                         214.4       55.7        10.3                10.9          (22.6)       268.7
Restructure and other unusual items                (2.6)                  (1.0)                              (3.9)        (7.5)
                                                 -------    -------     -------             -------         -------     -------
Income from operations                            211.8       55.7         9.3                10.9          (26.5)       261.2
                                                 -------    -------     -------             -------         -------     -------

March 1997
Net sales                                      $1,077.4     $472.6      $196.7              $119.3         $(48.2)    $1,817.8

Income from operations                            204.6       52.4        21.2                (3.6)         (23.8)       250.8
                                                 -------    -------     -------             -------         -------     -------

</TABLE>



<PAGE>


10.      Fort James Operating Company

         The Consolidated Financial statements for Fort James Operating Company
("FJOC"), which includes the merged operations of Fort Howard, have been omitted
because certain securities registered under the Securities Act of 1933, of which
FJOC is an obligor (thus subjecting them to reporting requirements under Section
13 or 15(d) of the Securities Exchange Act of 1934), are fully and
unconditionally guaranteed by Fort James and management has determined that such
information is not material to the holders of the Fort Howard securities.
Financial information relating to FJOC is presented herein in accordance with
Staff Accounting Bulletin No. 53 as an addition to the notes to the financial
statements of Fort James. Summarized financial information for FJOC is as
follows (in millions):

                                                    March                 March
                                                    1998                  1997
                                                    ----                  ----
Condensed income statement information:

   Net sales                                       $1,193.4           $1,204.5
   Gross profit                                       360.5              346.7
   Income before extraordinary item                    43.2               44.8
   Net income                                          40.6               43.5
                                                   --------           --------


                                                      March             December
                                                       1998               1997
                                                       ----               ----
Condensed balance sheet information:

    Current assets                                   $964.0             $928.4
    Noncurrent assets                               3,467.2            3,292.8
    Current liabilities                               754.7              861.1
    Noncurrent liabilities                          5,108.9            4,989.3
    Deficit                                        (1,432.4)          (1,629.2)
                                                   --------           --------


11.      Subsequent Events:

         In April 1998, the Company completed the redemption and conversion of
  its Series K $3.375 Cumulative Convertible Exchangeable Preferred Stock, its
  Series L $14.00 Cumulative Convertible Exchangeable Preferred Stock and its
  Series N $14.00 Cumulative Convertible Exchangeable Preferred Stock (the
  "Preferred Stock"). Substantially all of the outstanding Preferred Stock was
  converted into 9.5 million shares of common stock with the balance redeemed
  for $1.8 million in cash. The conversion will reduce annual dividend payments
  by $18.7 million and is not expected to impact 1998 diluted earnings per
  share.


<PAGE>


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

Results of Operations

Overview

         Fort James reported net income of $115.0 million, or $.52 per diluted
share, for the first quarter ended March 29, 1998, compared with $95.9 million,
or $.43 per diluted share for the same quarter of the prior year. Net sales for
the first quarter were $1,796 million, compared to $1,818 million in the prior
year. The comparability of these results was impacted by nonrecurring charges in
the first quarter of 1998.

Items Affecting Comparability

         Results for the first quarter of 1998 included merger-related charges
of $7.5 million ($4.6 million net of taxes, or $.02 per diluted share) which
could not be recognized in 1997 under applicable accounting principles and an
extraordinary loss for the early extinguishment of debt of $4.2 million ($2.6
million net of taxes, or $.01 per diluted share). Results for the first quarter
of 1997 included an extraordinary loss for the early extinguishment of debt of
$2.2 million ($1.3 million net of taxes).

North American Consumer Products Business

         Operating results before restructure and other unusual items for the
North American Consumer Products Business increased by 4.8%, from $204.6 million
in the first quarter of 1997 to $214.4 million in the current quarter. First
quarter 1998 net sales of $1,073 million were comparable to the $1,077 million
reported in 1997. The improvement in profitability was driven principally by a
combination of reduced manufacturing costs realized in connection with merger
synergies and other cost reductions, and marginally higher average pricing,
partially offset by higher fiber costs which reduced profitability by
approximately $15 million. Pricing for the overall retail business increased
approximately 2% versus the prior year reflecting both mix improvement and some
initial benefit from the recent retail tissue price increase. Away-from-home
tissue pricing was comparable to the prior year's first quarter. In comparison
to the exceptionally strong 1997 tissue volumes, retail tissue and tabletop
product volumes were generally similar to prior year levels, while
away-from-home volumes declined 1.8% from 1997 levels. The decline in the
away-from-home volumes was principally due to the Company's election to less
aggressively pursue certain lower-margin economy business.

         At the end of the first quarter, the Company completed the planned
permanent closures of its Ashland, Wisconsin and Carthage, New York tissue
mills. These mills, which produced approximately 84,000 tons per year of
primarily away-from-home products, were the Company's oldest, smallest and least
cost-competitive domestic tissue mills.

European Consumer Products Business

         Operating profits for the European Consumer Products Business increased
6.3% to $55.7 million compared to $52.4 million in the first quarter of 1997.
Net sales declined by 3.1% to $458 million in the current quarter from $473
million in 1997. Changes in foreign currency translation associated with the
strengthening of the U.S. dollar caused the decline in sales and also impacted
operating profits. Excluding the effect of foreign currency translation, the
current quarter sales would have increased 3.2% and operating profits would have
increased 12.6% compared to the prior year's quarter. The improvement in profits
resulted from a 5.6% increase in finished goods volumes, partially offset by
average selling prices which were 2% to 3% lower than the prior year.


<PAGE>


Packaging Business

         Operating results before restructure and other unusual items for the
Packaging Business declined by 51.4% to $10.3 million in the current quarter
from $21.2 million in the prior year's first quarter. Net sales decreased 8.3%
to $180 million from $197 million for the same periods. The decline in results
from prior year levels was due to a combination of 5.8% lower folding carton and
other converted packaging volumes associated with a turnover in its customer
base and a decline in average prices of 2.7%.

Communications Papers Business

         Operating profits for the Communications Papers Business increased to
$10.9 million from an operating loss of $3.6 million in the first quarter of
1997. Net sales improved by 6.4%, to $127 million in 1998 from $119 million in
the prior year. Increased sales and profits were principally the result of a
13.1% improvement in pricing for uncoated free sheet and uncoated groundwood
papers, partially offset by reduced volumes of 6.0% for both grades of papers.

Other Income and Expense Items

         General corporate expenses before restructure and other unusual items
of $22.6 million in the first quarter of 1998 were similar to the $23.8 million
reported in 1997. Interest expense decreased from $95.8 million to $75.0 million
between the first quarter of 1997 and the first quarter of 1998. This decrease
was attributable to the impact of the Company's debt refinancing activities in
1997 and 1998 which lowered average interest rates and reduced average
outstanding debt. Other income increased to $8.8 million in the current quarter
from $7.1 million in 1997 largely due to foreign currency exchange gains. The
Company's effective income tax rate was 39.7% for the quarter ended March 29,
1998, compared to 40% for the first quarter of 1997. The decrease in the
effective tax rate from the prior year was primarily due to the reduced relative
size of permanent differences compared to pretax income.

Effect of New Accounting Standards

         In 1997, the FASB issued Statement No. 131, "Disclosures about Segments
of an Enterprise and Related Information" which establishes standards for the
way public companies report information about operating segments, including
related disclosure about products and services, geographic areas and major
customers. The Company has not determined what, if any, impact Statement No. 131
will have on the reported operating segments and the related disclosures.
Statement No. 131 is effective for periods ending after December 15, 1998.

         In February  1998, the FASB issued  Statement No. 132,  "Employer's
Disclosures  about Pensions and Other Postretirement  Benefits -- an amendment
to FASB  Statements  No. 87, 88, and 106" which will require the Company to
revise  disclosures  about  pension and other  postretirement  benefit  plans.
Statement  No. 132 is effective for fiscal years beginning after December 15,
1997.

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 Company expects to spend a total of
approximately $40 million to $60 million between 1997 and 1999 to make the
required system modifications and replacements to remedy Year 2000 issues prior
to December 31, 1999. The financial impact of such spending 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.

Financial Condition

         Cash provided by operating activities totaled $108.4 million in the
first quarter of 1998, compared with the $91.8 million provided in the prior
year. This increase in cash provided by operating activities resulted primarily
from improved operating results. In the first quarter of 1998, the Company spent
$50.7 million on restructure-related items and achieved estimated synergy and
cost reduction savings of approximately $50 million. The Company anticipates
that substantially all restructure-related spending will be completed in 1998.
The Company's current ratio was 1.3 as of March 29, 1998, and 1.2 as of December
28, 1997, while working capital increased to $464.7 million from $332.6 million
for the same periods. Capital expenditures were $101.0 million in the current
quarter, compared to $75.3 million in the prior year's first quarter.

         Total indebtedness decreased slightly from $4,190 million as of
December 28, 1997, to $4,186 million as of March 29, 1998. The early
extinguishment of $64 million of 10% subordinated notes in the first quarter of
1998 contributed to this decline in debt levels. As of March 29, 1998, the
Company had outstanding borrowings of approximately $1,497 million supported by
revolving credit facilities compared to $1,732 million as of December 28, 1997.
In March 1998, the Company issued $300 million of 6.234% notes and used the
proceeds to reduce borrowings under revolving credit facilities. As of March 29,
1998, total outstanding debt (including the effect of interest rate swaps)
included approximately $2,191 million of fixed rate and $1,995 million of
floating rate obligations compared to $2,266 million and $1,924 million,
respectively, as of December 28, 1997. As of March 29, 1998, under the most
restrictive provisions of the Company's debt agreements, Fort James had
additional borrowing capacity of approximately $1.9 billion.

         Based on the Company's debt portfolio outstanding and current market
perception, a 100 basis point change in interest rates as of December 28, 1997
and March 29, 1998 would have changed the fair value of the debt portfolio by
approximately $116.8 million and $114.8 million, respectively. A 100 basis point
change in interest rates as of December 28, 1997 and March 29, 1998 would have
changed the fair value of the Company's interest rate swap portfolio by
approximately $4.8 million and $3.0 million, respectively.

         In April 1998, the Company completed the redemption and conversion of
its Series K $3.375 Cumulative Convertible Exchangeable Preferred Stock, its
Series L $14.00 Cumulative Convertible Exchangeable Preferred Stock and its
Series N $14.00 Cumulative Convertible Exchangeable Preferred Stock (the
"Preferred Stock"). Substantially all of the outstanding Preferred Stock was
converted into 9.5 million shares of common stock with the balance redeemed for
$1.8 million in cash. The conversion will reduce annual dividend payments by
$18.7 million and is not expected to impact 1998 diluted earnings per share.

         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; changes in
raw material, energy and other costs; and opportunities that may be presented to
and pursued by the Company; determinations by regulatory and governmental
authorities; the ability to successfully integrate the James River and Fort
Howard businesses; and the ability to achieve synergistic and other cost
reductions and efficiencies.


<PAGE>


PART II.  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS.

         In the fourth quarter of 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.

Item 2.  CHANGES IN SECURITIES.

         None.

Item 3.  DEFAULTS UPON SENIOR SECURITIES.

         None.

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

         The Annual Meeting of Shareholders was held on April 23, 1998, at which
time all of management's nominees for members of the Board of Directors were
elected. Shareholders of record of the Company's common stock at the close of
business on February 23, 1998, were entitled to vote at the Annual Meeting.
Votes were cast as follows:

<TABLE>
<CAPTION>
                                                                                             Vote
                                                        Voted            Voted          Withheld or       Broker
                                                         For            Against          Abstained       Non-Votes
                                                         ---            -------          ---------       ---------
<S> <C>
Nominees for election of Directors:

  Barbara L. Bowles                                  180,819,676                          567,233
  William T. Burgin                                  180,804,269                          582,640
  James L. Burke                                     180,822,312                          564,597
  Worley H. Clark, Jr.                               180,751,193                          635,716
  William T. Comfort, Jr.                            180,824,560                          562,349
  Gary P. Coughlan                                   180,826,761                          560,148
  William V. Daniel                                  180,756,805                          630,104
  Miles L. Marsh                                     180,785,765                          601,144
  Robert M. O'Neil                                   180,807,029                          579,880
  Michael T. Riordan                                 180,812,648                          574,261
  Richard L. Sharp                                   152,847,364                       28,539,545
  Anne M. Whittemore                                 180,768,996                          617,913

</TABLE>


Item 5.  OTHER INFORMATION.

         None.


<PAGE>


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.


<TABLE>
<CAPTION>
                  Exhibit                                                                                       Starts
                  Number                                                                                       on Page
                  ------                                                                                       -------
<S> <C>

                  3(a)         Amended and Restated  Bylaws of Fort James  Corporation
                               as of April 23, 1998.                                                             E-1

                  27(a)        Financial Data Schedules for the quarter ended
                               March 29, 1998 (filed electronically only).

                  27(b)        Financial Data Schedules restated for the quarter
                               ended March 30, 1997 (filed electronically only).

                  27(c)        Financial Data Schedules restated for the six
                               months ended June 29, 1997 (filed electronically
                               only).

                  27(d)        Financial Data Schedules restated for the nine
                               months ended September 28, 1997 (filed
                               electronically only).

</TABLE>
         (b)      Reports on Form 8-K:

                  During the quarter ended March 29, 1998, and subsequent
                  thereto, the Company filed the following Current Reports on
                  Form 8-K:

         Date of Report              Event Reported
         --------------              --------------
         February 3, 1998            The Company published a press release
                                     announcing its results of operations for
                                     the fourth quarter 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.


<PAGE>


                                                    SIGNATURES

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

                         FORT JAMES CORPORATION

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

                        By:/s/Ernst A. Haberli
                           ------------------------------------------------
                           Ernst A. Haberli
                           Executive Vice President and Chief Financial Officer
                           (Principal Financial Officer)

Date:  May 8, 1998