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: June 27, 1999                  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 July 30, 1999:

                               220,988,390 shares


<PAGE>



                             FORT JAMES CORPORATION
                          QUARTERLY REPORT ON FORM 10-Q
                                  June 27, 1999


                                TABLE OF CONTENTS


PART I.  FINANCIAL INFORMATION:

ITEM 1.     Financial Statements:

            Consolidated Balance Sheets as
              of June 27, 1999 and December 27, 1998                           3

            Consolidated Statements of Operations for
              the quarters and six months ended  June 27, 1999
              and June 28, 1998                                                4

            Consolidated Statements of Cash Flows for
              the six months ended June 27, 1999
              and June 28, 1998                                                5

            Notes to Consolidated Financial Statements                         6

ITEM 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                               11

ITEM 3.     Quantitative and Qualitative Disclosures About Market Risk        16


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





<PAGE>



PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements
<TABLE>
<S>     <C>

                             FORT JAMES CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                       June 27, 1999 and December 27, 1998


                                                             June      December
(in millions, except share data)                             1999          1998
--------------------------------------------------------------------------------
Assets:
Current assets:
  Cash and cash equivalents                                  $ 7.7        $ 5.3
  Accounts receivable                                        920.3        857.5
  Inventories                                                819.2        806.5
  Deferred income taxes                                      110.9        162.7
  Prepaid expenses and other current assets                   34.5         24.3
--------------------------------------------------------------------------------
   Total current assets                                    1,892.6      1,856.3
--------------------------------------------------------------------------------
Property, plant and equipment                              7,501.4      7,547.0
Accumulated depreciation                                  (3,340.7)    (3,225.4)
--------------------------------------------------------------------------------
  Net property, plant and equipment                        4,160.7      4,321.6
Goodwill                                                     552.4        620.0
Net assets of discontinued operations                        426.2        403.4
Other assets                                                 551.4        526.7
--------------------------------------------------------------------------------
   Total assets                                          $ 7,583.3     $7,728.0
================================================================================
Liabilities and Shareholders' Equity:
Current liabilities:
  Accounts payable                                         $ 616.6      $ 679.2
  Accrued liabilities                                        558.1        644.6
  Current portion of long-term debt                          235.8        240.0
--------------------------------------------------------------------------------
   Total current liabilities                               1,410.5      1,563.8
--------------------------------------------------------------------------------
Long-term debt                                             3,658.5      3,646.4
Deferred income taxes                                        733.6        756.5
Accrued postretirement benefits other than pensions          438.9        446.8
Other long-term liabilities                                  281.6        263.1
--------------------------------------------------------------------------------
   Total liabilities                                       6,523.1      6,676.6
--------------------------------------------------------------------------------
Common stock, $.10 par value, 500.0 million
  shares authorized; 220.9 million shares
  outstanding at June 27, 1999 and 220.5
  million at December 27, 1998                                22.1         22.1
Additional paid-in capital                                 3,225.4      3,215.6
Accumulated comprehensive loss                              (217.0)       (88.8)
Accumulated deficit                                       (1,970.3)    (2,097.5)
--------------------------------------------------------------------------------
   Total shareholders' equity                              1,060.2      1,051.4
--------------------------------------------------------------------------------
   Total liabilities and shareholders' equity            $ 7,583.3     $7,728.0
================================================================================


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



<PAGE>
                             FORT JAMES CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      For the Quarters and Six months Ended
                         June 27, 1999 and June 28, 1998

                                              Quarter              Six Months
(in million,                            -------------------  -------------------
except per share amounts)                 1999      1998       1999      1998
--------------------------------------------------------------------------------
Net sales                               $1,718.5  $1,731.1   $3,387.5  $3,399.9
Cost of goods sold                      (1,175.2) (1,164.5)  (2,310.7) (2,299.4)
Selling and administrative expenses       (291.1)   (275.9)    (588.2)   (551.6)
Restructure and other unusual items          1.1      (8.8)       1.1     (15.3)
--------------------------------------------------------------------------------
  Income from operations                   253.3     281.9      489.7     533.6
Interest expense                           (59.4)    (68.0)    (121.9)   (137.4)
Other income, net                           14.2      (6.3)      18.1       2.5
--------------------------------------------------------------------------------
  Income from continuing operations
    before income taxes, extraordinary
    item, and cumulative effect of a
    change in accounting principle         208.1     207.6      385.9     398.7
Income tax expense                         (72.2)    (75.1)    (132.4)   (150.8)
--------------------------------------------------------------------------------
  Income from continuing operations
    before extraordinary item and
    cumulative effect of a change
    in accounting principle                135.9     132.5      253.5     247.9
Income (loss) from discontinued
  operations, net of taxes                  (9.3)      3.7       (4.9)      5.9
--------------------------------------------------------------------------------
  Income before extraordinary item
    and cumulative effect of a
    change in accounting principle         126.6     136.2      248.6     253.8
Extraordinary loss on early
  extinguishment of debt, net of taxes     (31.0)        -      (33.2)     (2.6)
Cumulative effect of a change in
  accounting principle, net of taxes           -         -      (22.1)        -
--------------------------------------------------------------------------------
  Net income                                95.6     136.2      193.3     251.2
Preferred dividend requirements                -         -          -      (5.2)
--------------------------------------------------------------------------------
  Net income available to
    common stockholders                   $ 95.6   $ 136.2    $ 193.3   $ 246.0
================================================================================
Basic earnings per share:
  Income from continuing operations
    before extraordinary item and the
    cumulative effect of a change in
    accounting principle                  $0.62     $0.61      $1.15      $1.13
  Income (loss) from discontinued
    operations, net of taxes              (0.04)     0.02      (0.02)      0.03
  Extraordinary loss on early
    extinguishment of debt                (0.14)        -      (0.15)     (0.01)
  Cumulative effect of a change
    in accounting principle                   -         -      (0.10)         -
-------------------------------------------------------------------------------
     Net income                           $0.44     $0.63      $0.88      $1.15
-------------------------------------------------------------------------------
Weighted average common
  shares outstanding                      219.6     217.6      219.6      213.1
===============================================================================
Diluted earnings per share:
  Income from continuing operations
    before extraordinary item and the
    cumulative effect of a change in
    accounting principle                  $0.62     $0.60      $1.15      $1.12
  Income (loss) from discontinued
    operations, net of taxes              (0.04)     0.02      (0.02)      0.03
  Extraordinary loss on early
    extinguishment of debt                (0.14)        -      (0.15)     (0.01)
  Cumulative effect of a change
    in accounting principle                   -         -      (0.10)         -
-------------------------------------------------------------------------------
     Net income                           $0.44     $0.62      $0.88      $1.14
-------------------------------------------------------------------------------
Weighted average common shares and
  common share equivalents outstanding    220.9     220.3      220.6      215.6
===============================================================================
Cash dividends per common share           $0.15     $0.15      $0.30      $0.30
================================================================================

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


<PAGE>



                             FORT JAMES CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            For the Six months Ended
                         June 27, 1999 and June 28, 1998

(in millions)                                               1999       1998
-----------------------------------------------------------------------------
Cash provided by (used for) operating activities:
   Net income                                              $193.3     $251.2
   Depreciation expense                                     220.4      211.6
   Amortization of goodwill                                   9.3        9.4
   Deferred income tax provision                             38.2      103.1
   Restructure and other unusual items                       (1.1)      (2.6)
   (Income) loss from discontinued operations                 4.9       (5.9)
   Loss on early extinguishment of debt, net of taxes        33.2        2.6
   Cumulative effect of a change in accounting
    principle, net of taxes                                  22.1          -
   Change in current assets and liabilities, excluding
    effects of discontinued operations:
     Accounts receivable                                   (115.7)    (130.6)
     Inventories                                            (28.1)       1.7
     Prepaid expenses and other current assets              (12.3)       2.6
     Accounts payable and accrued liabilities               (30.0)     (73.4)
   Other, net                                               (26.1)     (39.1)
-----------------------------------------------------------------------------

     Cash provided by operating activities                  308.1      330.6
-----------------------------------------------------------------------------
Cash provided by (used for) investing activities:
   Expenditures for property, plant and equipment          (220.7)    (205.1)
   Increase in net assets of discontinued operations        (34.5)     (15.5)
   Other, net                                                 2.5        3.7
-----------------------------------------------------------------------------

     Cash used for investing activities                    (252.7)    (216.9)
-----------------------------------------------------------------------------
Cash provided by (used for) financing activities:
   Additions to long-term debt                               19.9      384.8
   Payments of long-term debt                              (333.4)    (379.2)
   Net increase (decrease) in revolving debt                361.0      (84.8)
   Premiums paid on early extinguishment of debt
     and debt issuance costs                                (54.2)      (5.7)
   Redemption of preferred stock                                -       (6.6)
   Common and preferred stock cash dividends paid           (65.9)     (73.4)
   Proceeds from exercise of stock options                    8.6       23.6
   Other, net                                                11.0          -
-----------------------------------------------------------------------------

     Cash used for financing activities                     (53.0)    (141.3)
-----------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents              2.4      (27.6)
Cash and cash equivalents, beginning of period                5.3       33.6
-----------------------------------------------------------------------------

Cash and cash equivalents, end of period                    $ 7.7      $ 6.0
=============================================================================

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

<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  (consisting  of only  normal  recurring
   accruals)  necessary to present fairly the Company's  consolidated  financial
   position as of June 27, 1999,  its results of operations for the quarters and
   six months ended June 27, 1999 and June 28, 1998,  and its cash flows for the
   six months  ended June 27, 1999 and June 28,  1998.  The balance  sheet as of
   December 27, 1998 was derived from audited  financial  statements  as of that
   date. The results of operations for the quarter and six months ended June 27,
   1999 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.

   Prospective Accounting Pronouncements:

      In  June  1998,  the  FASB  issued  Statement  No.  133,  "Accounting  for
   Derivative  Instruments and Hedging Activities".  This statement requires the
   recognition  of all  derivatives  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.  FASB Statement No.
   137, which was issued in July 1999, defers the Company's required adoption of
   Statement  No. 133 until fiscal  2001.  The Company has not  determined  what
   affect, if any, Statement No. 133 will have on its results of operations or
   financial position.

2.    Discontinued Operations

      In the second quarter of 1999, the Company's Board of Directors approved a
   plan to sell the Company's  Packaging business to ACX Technologies,  Inc. for
   $830 million in cash.  The  Packaging  business  consists of the  operations,
   assets,  and  liabilities of the Company's  folding carton,  healthcare,  and
   microwave packaging  manufacturing  facilities.  The sale closed on August 2,
   1999.  These  operations  are presented as  discontinued  operations  for all
   periods in the Company's statement of operations.

      Results of the  Packaging  business  for the quarters and six months ended
   June 27, 1999 and June 28, 1998 were as follows:

                                                   Quarter          Six Months
                                                -------------     -------------
   (in millions)                                1999     1998     1999     1998
   ----------------------------------------------------------------------------
   Net sales                                  $139.9   $147.4   $278.9   $293.3
   =============================================================================
   Income (loss) from discontinued
     operations                               $(14.7)   $ 6.7   $ (6.8)  $ 10.6
   Tax benefit (expense)                         5.4     (3.0)     1.9     (4.7)
   -----------------------------------------------------------------------------
   Income (loss) from discontinued
     operations, net of taxes                 $ (9.3)   $ 3.7   $ (4.9)   $ 5.9
   =============================================================================

      At June 27, 1999, the assets and  liabilities of  discontinued  operations
   were $478.4 million and $52.2 million, respectively.

3.    Inventories

      The  components  of  inventories  were as follows as of June 27,  1999 and
   December 27, 1998:
                                                        June       December
   (in millions)                                        1999           1998
   -------------------------------------------------------------------------
   Raw materials                                     $ 146.8        $ 164.2
   Finished goods and work in process                  523.3          510.9
   Stores and supplies                                 165.6          163.2
   -------------------------------------------------------------------------
                                                       835.7          838.3
   Reduction to state certain inventories at
     last-in, first-out cost                           (16.5)         (31.8)
   -------------------------------------------------------------------------
       Total inventories                             $ 819.2        $ 806.5
   =========================================================================

4.    Comprehensive Income

      Comprehensive  income for the  quarters  ended June 27,  1999 and June 28,
   1998 was $57.7 million and $138.4 million,  respectively.  For the six months
   ended June 27, 1999 and June 28, 1998, comprehensive income was $65.1 million
   and $220.2  million,  respectively.  The  difference  between  net income and
   comprehensive income is due to foreign currency translation gains and losses.
   In 1998, comprehensive income also included unrealized losses on securities.

5.    Income Taxes

      The  Company's  effective  income  tax rate was 34.3  percent  for the six
   months ended June 27, 1999  compared to 37.8 percent for the first six months
   of 1998. The difference  between the Company's  effective income tax rate and
   the statutory  federal  income tax rate is primarily due to state and foreign
   income taxes and the benefits of tax planning strategies.

6.    Extraordinary Loss on Early Extinguishment of Debt

      The extraordinary loss on the early extinguishment of debt for the quarter
   ended June 27, 1999 was $50.8 million,  net of income taxes of $19.8 million.
   For the six months ended June 27, 1999 and June 28, 1998,  the  extraordinary
   loss on the early  extinguishment of debt was $54.4 million and $4.2 million,
   net of income taxes of $21.2 million and $1.6 million, respectively.

7.    Net Income Per Common Share and Common Share Equivalent

      Income and share  information  used in determining  earnings per share for
   the  quarters  and six  months  ended  June 27,  1999 and June 28,  1998 were
   calculated as follows:

                                                       1999            1998
                                                 -------------------------------
(in millions, except per share amounts)          Income  Shares   Income  Shares
--------------------------------------------------------------------------------
Quarter:
Amounts used to compute basic earnings per share:
  Income from continuing operations
    before extraordinary item and
    cumulative effect of a change
    in accounting principle                       135.9          $132.5
  Weighted average common
    shares outstanding                                   219.6            217.6
Effect of dilutive securities:
  Options                                                  1.3              2.7
--------------------------------------------------------------------------------
Amounts used to compute diluted
   earnings per share                            $135.9  220.9   $132.5   220.3
================================================================================

Six months:
Amounts used to compute basic earnings per share:
  Income from continuing operations
    before extraordinary item and
    cumulative effect of a change
    in accounting principle                      $253.5          $247.9
  Preferred stock dividends                                   -            (5.2)
--------------------------------------------------------------------------------
    Net income available to
      common stockholders                         253.5           242.7
  Weighted average common
     shares outstanding                                  219.6            213.1
Effect of dilutive securities:
  Options                                                  1.0              2.5
--------------------------------------------------------------------------------
Amounts used to compute
   diluted earnings per share                    $253.5  220.6   $242.7   215.6
================================================================================

Series K, L and N preferred  stocks,  which were  redeemed or  converted  in the
second quarter of 1998, were antidilutive in the first quarter of 1998.

8.    Fort James Operating Company

      Fort James Operating Company ("FJOC") is an obligor of certain  securities
   registered  under the Securities Act of 1933, thus subjecting it to reporting
   requirements  under  Section 13 or 15(d) of the  Securities  Exchange  Act of
   1934.  In  accordance  with Staff  Accounting  Bulletin No. 53, the following
   condensed  financial  information  for FJOC for the  quarters  and six months
   ended June 27, 1999 and June 28,  1998 and as of June 27,  1999 and  December
   27, 1998 is presented in lieu of consolidated  financial  statements  because
   the  securities  are fully and  unconditionally  guaranteed by Fort James and
   management  has  determined  that such  information  is not  material  to the
   holders of the  securities.  Prior  periods have been restated to reflect the
   Packaging business as a discontinued operation.
                                                Quarter            Six Months
                                           ----------------     ----------------
(in millions)                              1999       1998       1999     1998
--------------------------------------------------------------------------------
Condensed income statement information:
Net sales                                $1,220.1  $ 1,119.9  $ 2,267.9 $2,186.6
Gross profit                                373.9      365.9      688.8    707.6
Income from continuing operations
  before extraordinary item and the
  cumulative effect of a change in
  accounting principle                       38.6       47.3       43.1     85.0
Net income                                   36.9       54.5       32.6     95.1
================================================================================
                                                 June        December
(in millions)                                    1999          1998
---------------------------------------------------------------------
Condensed balance sheet information:
Current assets                                 $ 988.6       $ 865.8
Noncurrent assets                              3,553.3       3,575.7
Current liabilities                              496.2         651.0
Noncurrent liabilities                         5,358.0       5,129.5
=====================================================================



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.  The  Company is  involved  in various
   related   actions   under   federal  and  state  laws,   including   remedial
   investigations  to  determine  the  appropriate  remedy for such  sites.  The
   Company,  along with six other current and former operators of pulp and paper
   facilities,  has been  identified  as a PRP for  contamination  by  hazardous
   substance  of the lower Fox River.  Various  state and federal  agencies  and
   tribal  entities  are seeking  sediment  restoration  and  natural  resources
   damages.  In February  1999,  the Wisconsin  Department of Natural  Resources
   released for public comment a draft remedial  investigation/feasibility study
   of the Fox  River.  While  the  draft  study did not  advocate  any  specific
   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.  The final restoration  alternative
   and the Company's  share of the related  costs are unknown at this time.  The
   Company,  along with other PRPs,  is also  participating  in the funding of a
   remedial  investigation/feasibility  study of  contamination of the Kalamazoo
   River.  Management does not anticipate  selection of a remedy prior to fiscal
   2002. The Company believes that its share of the restoration  costs for these
   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 period.

      It is the Company's 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 June 27, 1999, Fort James' accrued
   environmental liabilities,  including remediation and landfill closure costs,
   totaled $67.7 million.

   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 (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  seeks  damages  on  behalf of the state  under  Florida  law of $1
   million against each defendant for each violation, unspecified treble damages
   and  injunctive  relief.  Three other state  attorney  generals  have brought
   similar suits which have been  consolidated in the Florida District Court. In
   addition,  numerous other filings have been filed in federal courts on behalf
   of an alleged class of direct  purchasers,  all seeking  similar  damages for
   similar  alleged  violations.  The class  actions  were  consolidated  in the
   Florida District Court, and in July 1998, the Court  conditionally  certified
   the class.  State class  actions also have been filed in certain  states,  on
   behalf of an alleged class of indirect  purchasers,  seeking  similar damages
   for similar  alleged  violations  under state law. 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  material  adverse  effect  on the
   consolidated  financial  condition  of Fort  James but could  have a material
   effect on consolidated results of operations in a given period.

10.      Segments

       Segment sales and income from operations  before  nonrecurring  and other
   unusual  items for the  quarters  and six months ended June 27, 1999 and June
   28,  1998 and  total  assets  as of June 27,  1999 and June 28,  1998 were as
   follows:


                                                      Tissue                       Communi-      Inter-
                                             ------------------------              cations      company
                                                    North                        Papers and       and
(in millions)                                     America     Europe     Dixie      Fiber      Corporate        Total
----------------------------------------------------------------------------------------------------------------------
Quarter ended June 1999
Net sales                                         $ 913.7     $456.3    $220.3     $200.9     $(72.7)       $ 1,718.5
Intercompany sales                                   30.3          -       0.7       41.7          -             72.7
Income from operations before
   restructure and other unusual items              183.5       57.4      38.6       (8.6)     (18.7)           252.2
======================================================================================================================
Quarter ended June 1998
Net sales                                         $ 904.6     $466.2    $224.5     $210.4     $(74.6)       $ 1,731.1
Intercompany sales                                   29.9          -       0.5       44.2          -             74.6
Income from operations before
   restructure and other unusual items              217.8       57.4      33.2        3.5      (21.2)           290.7
=======================================================================================================================
Six months ended June 1999
Net sales                                        $1,813.1     $922.2    $395.9     $396.9    $(140.6)       $ 3,387.5
Intercompany sales                                   55.9          -       1.6       83.1          -            140.6
Income from operations before
   restructure and other unusual items              375.6      118.5      57.9      (22.8)     (40.6)           488.6
Total assets                                      3,001.5    2,123.7     430.5      811.1    1,216.5  (a)     7,583.3
======================================================================================================================
Six months ended June 1998
Net sales                                        $1,793.7     $924.2    $397.3     $425.9    $(141.2)       $ 3,399.9
Intercompany sales                                   57.0          -       1.4       82.8          -            141.2
Income from operations before
   restructure and other unusual items              418.6      113.1      51.1        9.9      (43.8)           548.9
Total assets                                      3,013.8    2,216.8     405.1      857.2    1,206.5  (a)     7,699.4
======================================================================================================================

(a)  Includes  net  assets of  discontinued  operations  which  were  previously
reported as a separate segment.





<PAGE>

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

RESULTS OF OPERATIONS

   During the  quarters and six months ended June 27, 1999 and June 28, 1998 the
Company recorded certain unusual items. These items, which are further discussed
below,   included   merger-related   restructure  and  other  unusual   charges,
discontinued  operations,  extraordinary  losses on the early  extinguishment of
debt,  and the  cumulative  effect  of a change  in  accounting  principle.  The
following discussion of operating results by segment exclude these charges.

Overview

                                      1999 (a)(c)              1998 (b)(d)
(in millions,                   ----------------------    ----------------------
except per share data)          Reported     Recurring    Reported   Recurring
--------------------------------------------------------------------------------
Quarter:
Net sales                       $ 1,718.5    $ 1,718.5   $ 1,731.1   $ 1,731.1
Income from operations              253.3        252.2       281.9       290.7
Net income                           95.6        135.2       136.2       137.9
Diluted earnings per share         $ 0.44       $ 0.62      $ 0.62      $ 0.63
===============================================================================
Six months:
Net sales                       $ 3,387.5    $ 3,387.5   $ 3,399.9   $ 3,399.9
Income from operations              489.7        488.6       533.6       548.9
Net income                          193.3        252.8       251.2       257.4
Diluted earnings per share         $ 0.88       $ 1.15      $ 1.14      $ 1.17
===============================================================================


(a)  Income  from  operations  and net  income  for the  second  quarter of 1999
     included net  non-recurring  income of $1.1  million  ($0.7  million  after
     taxes) for the reversal of merger-related restructuring liabilities settled
     on terms more  favorable  than  anticipated  which were  largely  offset by
     merger-related  severance  costs.  Net  income  also  included  a loss from
     discontinued operations of $14.7 million ($9.3 million after taxes or $0.04
     per diluted  share) and $50.8 million  ($31.0  million after taxes or $0.14
     per diluted share) for an  extraordinary  loss on early  extinguishment  of
     debt.

(b)  Income  from  operations  and net  income  for the  second  quarter of 1998
     included  merger-related   relocation  costs of $8.8 million  ($5.4 million
     after taxes or $0.03 per diluted  share).  Net income also included  income
     from  discontinued  operations of $6.7 million ($3.7 million after taxes or
     $0.02 per diluted share).

(c)  Income  from  operations  and net  income  for the first six months of 1999
     included net  non-recurring  income of $1.1  million  ($0.7  million  after
     taxes) for the reversal of merger-related restructuring liabilities settled
     on terms more  favorable  than  anticipated  which were  largely  offset by
     merger-related   severance  costs.  Net  income  also  included a loss from
     discontinued  operations of $6.8 million ($4.9 million after taxes or $0.02
     per diluted  share)  and $54.4 million  ($33.2 million after taxes or $0.15
     per diluted share) for an  extraordinary  loss on early  extinguishment  of
     debt, and $34.1 million  ($22.1  million  after  taxes or $0.10 per diluted
     share) for the  cumulative  effect of a change in  accounting  for start-up
     costs.

(d)  Income  from  operations  and net  income  for the first six months of 1998
     included  merger-related   relocation  costs of $15.3 million ($9.5 million
     after taxes or $0.05 per diluted  share).  Net income also included  income
     from discontinued  operations of $10.6 million ($5.9 million after taxes or
     $0.03 per diluted  share) and  $4.2 million   ($2.6  million after taxes or
     $0.01 per diluted share) for an extraordinary loss on early  extinguishment
     of debt.


Tissue - North America

                                   Quarter                    Six months
                         ---------------------------  --------------------------
                                              Inc/                          Inc/
(in millions)              1999    1998      (Dec)     1999       1998     (Dec)
--------------------------------------------------------------------------------
Net sales                $ 913.7  $ 904.6     1.0%  $ 1,813.1  $ 1,793.7    1.1%
Income from operations     183.5    217.8   -15.7%      375.6      418.6  -10.3%
================================================================================


   Tissue - North  America  sales for both the quarter and six months ended June
1999 were driven by strong retail volume growth which was  substantially  offset
by lower prices, particularly in the away-from-home category.

   Retail prices  declined  modestly  compared to the same quarter of 1998,  but
were similar for the six months following a strong first quarter of 1999. Volume
growth was strong in both the quarter and the six months.  Each of the Company's
flagship retail brands,  including QUILTED NORTHERN bath tissue,  BRAWNY towels,
and MARDI GRAS and VANITY FAIR  napkins,  gained  market share during the second
quarter.  These  gains  were  principally  driven by the  combination  of highly
effective new advertising, product improvements, and effective merchandising.

   The majority of the decline in Tissue - North America profits occurred
in the away-from-home category. Away-from-home volumes were similar to the prior
year quarter and six months,  but pricing  declined due to competitive  industry
conditions.

   Quarter and  year-to-date  profits for both  retail and  away-from-home  were
negatively  affected by increased  distribution  costs.  These increases reflect
efforts to resolve  last year's  service  issues and costs  associated  with the
transition to a common order entry and  scheduling  system.  Results for the six
months were also affected by increased marketing and promotional expenses.

   Beginning in mid-July, Fort James began rolling out an improved QUILTED
NORTHERN bath tissue. This product, which is thicker,  stronger, more absorbent,
and significantly  softer,  has been favorably  received in consumer  preference
tests.

Tissue - Europe

                                   Quarter                    Six months
                         --------------------------   --------------------------
                                            Inc/                           Inc/
(in millions)              1999     1998   (Dec)        1999      1998    (Dec)
--------------------------------------------------------------------------------
Net sales                $ 456.3  $ 466.2   -2.1%     $ 922.2   $ 924.2   -0.2%
Income from operations      57.4     57.4       -       118.5     113.1    4.8%
================================================================================

   The  Tissue - Europe  business  reported  strong  volume  growth,  which  was
substantially  offset by  declining  prices for both the quarter and six months.
Changes  in foreign  currency  translation  rates also had a negative  effect on
sales and operating profits. Foreign currency is estimated to have reduced sales
and  operating  profits  by  approximately  3 percent  compared  to last  year's
quarter.  The  year-to-date  impact on both sales and operating  profits was not
significant.  Continuing  above  market  growth  trends  of the last few  years,
finished goods volumes for the quarter increased 4.5 percent, with notable gains
in France,  the British Isles,  Spain and Greece.  For the six months,  finished
goods volumes were 2.2 percent higher than the prior year. The benefits of these
volume  gains,  combined  with  cost  reductions  and lower  year-over-year  raw
material costs in both the quarter and six months, were substantially  offset by
the effect of competitive pricing conditions.

   On July 1st, the company  completed the previously  announced  acquisition of
Demak'Up, the leading European brand of make-up removal cotton pads.

Dixie

                                  Quarter                     Six months
                           -----------------------     -------------------------
                                              Inc/                         Inc/
(in millions)              1999     1998     (Dec)      1999     1998     (Dec)
--------------------------------------------------------------------------------
Net sales                 $220.3   $224.5    -1.9%     $395.9   $397.3    -0.4%
Income from operations      38.6     33.2    16.3%       57.9     51.1    13.3%
================================================================================

   Dixie's  profit  improvement  was  driven  by  cost  reduction,   foodservice
rationalization  activities, and retail volume increases. Retail performance for
the quarter and six months  benefited from strong volume growth in both cups and
plates,   driven  by  good  category   momentum  and  market  share  gains.  New
"value-pack"  offerings in cups and plates were the primary  contributors to the
strong volume growth.  While foodservice sales were significantly below those of
the prior year, reflecting the pruning of certain low-margin product lines, good
growth  was  posted  in key  targeted  areas  such as the  PERFECTOUCH  hot cup,
dense-pack cutlery, and QUILT-RAP premium food wraps.

Communications Papers and Fiber

                                     Quarter                  Six months
                              ---------------------    -------------------------
                                               Inc/                        Inc/
(in millions)                  1999     1998  (Dec)     1999     1998     (Dec)
--------------------------------------------------------------------------------
Net sales                     $200.9   $210.4  -4.5%   $396.9   $425.9    -6.8%
Income (loss)from operations    (8.6)     3.5   NM      (22.8)     9.9      NM
================================================================================

         NM - not meaningful

   Communications  Papers and Fiber  results for both the quarter and six months
continue to reflect lower pricing for uncoated free sheet, groundwood papers and
market pulp,  partially  offset by increased  uncoated free sheet paper and pulp
volumes. However, the operating loss narrowed from first quarter 1999 levels, as
firming commodity paper markets allowed modest price recovery.

Other Income

   Other income for the quarter was $14.2  million  compared to other expense of
$6.3  million  during  the  prior  year  quarter.   The  increase  is  primarily
attributable  to  interest  income on an IRS refund of $9.3  million and an $8.7
million increase in foreign currency gains (losses).  For the six months,  other
income  increased  from $2.5  million  in 1998 to $18.1  million  in 1999.  This
increase is  attributable  to the  interest  income on the IRS  refund,  foreign
currency gains, and increased earnings in unconsolidated subs .

Discontinued Operations

   In April, Fort James announced the signing of a definitive  agreement to sell
its Packaging business to ACX Technologies,  Inc. for approximately $830 million
in cash. The sale was completed in the third quarter. As a result, the Packaging
business has been shown in the financial statements as a discontinued  operation
and  information  for prior  periods has been  restated.  The income (loss) from
discontinued   operations   includes  Packaging   operating  profits,   one-time
non-operating  expenses,  and an allocation of interest  expense and taxes.  The
Company  plans to use the net proceeds from the sale to repay  revolving  credit
borrowings.

FINANCIAL CONDITION

   Cash provided by operating activities totaled $308.1 million in the first six
months of 1999,  compared with $330.6 million in the prior year. The decrease is
primarily due to lower earnings and increased working capital,  partially offset
by reduced  merger-related  restructure and integration spending.  The Company's
current  ratio  was 1.3 as of June  1999,  and 1.2 as of  December  1998,  while
working  capital  increased to $482.1  million from $292.5  million for the same
periods.  The  increase in working  capital is  primarily  due to  decreases  in
outstanding  payables  and  accrued  expenses  and higher  accounts  receivable,
partially   offset  by  decreased   current   deferred  income  taxes.   Capital
expenditures were $220.7 million for the six months ended June 1999, compared to
$205.1 million for the same period in the prior year.

   During the second quarter of 1999, the Company  refinanced  $125.3 million of
9.25%,  $64.0 million of 8.38%, and $62.0 million of 7.75% senior notes prior to
their scheduled maturities.  The debt was substantially replaced with additional
borrowings  under the revolving line of credit.  The  redemption  resulted in an
extraordinary  loss on the early  extinguishment of debt of $50.8 million ($31.0
million after taxes or $0.14 per diluted share).

   As of June 1999,  total  indebtedness  was $3.89  billion and,  including the
effect of interest rate swaps, included approximately $2.6 billion of fixed rate
and $1.3  billion of  floating  rate  obligations.  As of December  1998,  total
indebtedness  was also $3.89 billion and,  including the effect of interest rate
swaps,  included  $2.8 billion of fixed rate and $1.1  billion of floating  rate
obligations.  Outstanding borrowings of $1.3 billion were supported by revolving
credit facilities as of June 1999, compared to $0.9 billion as of December 1998.
Under the most  restrictive  provisions of the Company's  debt  agreements,  the
Company had additional  borrowing  capacity of approximately  $1.4 billion as of
June 1999.

Restructuring

         Merger-related  restructuring liabilities changed during the six months
as follows:
                                                   Estimate    Cash    Reclass-
                                           Deember   Revi-     Pay-     ifica-    June
(in millions)                                 1998   sions     ments    tions     1999
--------------------------------------------------------------------------------------
Facility closures and write-downs of
  redundant property, plant and equipment     $24.9   $0.6     $(6.9)   $(4.8)   $13.8
Severance and other employee-related costs     46.9    2.5     (13.2)       -     36.2
Costs of terminating contracts and other
  long-term agreements                          7.8   (0.6)     (1.6)    (2.6)     3.0
--------------------------------------------------------------------------------------
  Accrued restructure costs                   $79.6   $2.5    $(21.7)   $(7.4)   $53.0
======================================================================================

   The Company also announced plans to complete  previously  announced headcount
reduction programs.

Stock Repurchase Program

   During the second quarter,  the Company's  Board of Directors  authorized the
repurchase of up to $500 million of the Company's  common stock over the next 18
months.  The Company will  repurchase its common shares from time to time on the
open market or in negotiated  transactions,  depending  upon market  conditions,
applicable securities  regulations and other factors. No shares were repurchased
during the second quarter.

EFFECT OF NEW ACCOUNTING STANDARDS

   See Note 1 to the Consolidated Financial Statements.

YEAR 2000

         As outlined in the Company's  Form 10-K for the year ended December 27,
1998,  the Company has  established a Y2K Project  Office to coordinate its Year
2000 ("Y2K")  efforts.  The Y2K Project  Office is  organized  into various work
categories which,  where appropriate,  include specific work plans,  contingency
plans, schedules,  and goals. The vast majority of the Company's Y2K remediation
work has been completed according to previously  identified time schedules.  The
second quarter of 1999 completion dates for certain  remediation  efforts in the
Mainframe  - Internal  Systems  and  Infrastructure  work  categories  have been
revised to the third quarter of 1999.  Remaining efforts will focus on a limited
number of distinct modules and site specific  applications.  All work categories
are currently  estimated to be completed  prior to the end of the third quarter,
except Business Continuity Planning which will be ongoing through the end of the
fourth quarter to manage and track the Company's contingency planning process.

   Approximately  $8  million  and $20  million  in Y2K  related  expenses  were
incurred  during  the  quarter  and six months  ended  June 1999,  respectively.
Additional  expense of $2 million to $4 million is  expected  to be  incurred to
make and test the required Y2K system modifications and replacements.


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  implement  new  product  initiatives;  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 former James River and
Fort  Howard  businesses;  the  ability  to achieve  synergistic  and other cost
reductions and efficiencies; and the ability to successfully remediate Year 2000
problems.





<PAGE>



Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         None

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.

         The Annual Meeting of Shareholders  was held on April 22, 1999. At this
         meeting, the Shareholder proposal,  which urged the Board of Directors
         to redeem the  shareholders  rights issued pursuant to the Shareholders
         Rights Plan (the "Plan") unless he Plan was approved by a  majority of
         shareholders, was approved. Additionally, 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  24,  1999,  were  entitled to vote at the Annual
         Meeting. Votes were cast as follows:

                                              Votes
                             --------------------------------------     Broker
                                For          Against       Withheld    Non-Votes
                             -----------    ----------    ----------   ---------

Shareholder proposal         134,512,331    48,180,117    1,236,515    9,955,004


Nominees for election of Directors
   Barbara L. Bowles         187,202,121                  6,681,846
   William T. Burgin         187,260,521                  6,623,446
   Dr. James L. Burke        187,241,038                  6,642,929
   Worley H. Clark, Jr.      186,837,435                  7,046,532
   Gary P. Coughlan          187,237,686                  6,646,281
   William V. Daniel         187,220,436                  6,663,531
   Ernst A. Haberli          187,245,079                  6,638,888
   Miles L. Marsh            187,138,862                  6,745,105
   Robert M. O'Neil          187,258,958                  6,625,009
   Richard L. Sharp          187,244,215                  6,639,752
   Anne Marie Whittemore     187,273,230                  6,610,737


Item 5.  OTHER INFORMATION.

   The unaudited pro forma condensed  consolidated  balance sheet as of June 27,
1999 and the pro forma consolidated  statements of operations for the six months
ended June 27, 1999 and the year ended  December 27, 1998,  based on Fort James'
financial  statements,  as adjusted to give pro forma  effect to the sale of the
Packaging business, are filed herewith as exhibit 99.


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

     2  Asset Purchase Agreement Among Fort James Corporation, ACX Technologies,
        Inc. and Graphic Packaging Corporation, dated as of  April  25,  1999
        (schedules omitted).  Schedules  relating  to assets  and liabilities to
        be  transferred; financial  statements  of the Packaging  business;  and
        significant contracts, leases, and employee benefit and labor agreements
        have been omitted, but will be furnished supplementary to the Securities
        and Exchange Commission upon request.

     27 Financial Data Schedules  for the six months ended  June 27, 1999 (filed
        electronically only

     99  Unaudited pro  forma condensed  consolidated  balance sheet as of June
         27, 1999 and the pro forma  consolidated  statements of operations  for
         the six months ended June 27, 1999 and the year ended December 27, 1998
         to give pro forma effect to the sale of the Packaging  business,  filed
         herewith

(b) Reports on Form 8-K:

     No reports on Form 8-K were filed by the Company  during the quarter  ended
     June 27, 1999, and subsequent thereto.





<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)





Date:  August 10, 1999



</TABLE>