2
                       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 28, 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 April 15, 1999:

                               220,757,178 shares
<PAGE>


                             FORT JAMES CORPORATION
                          QUARTERLY REPORT ON FORM 10-Q
                                 March 28, 1999


                                TABLE OF CONTENTS

                                                                   Page No.     
PART I.  FINANCIAL INFORMATION:

ITEM 1.     Financial Statements:
 
            Consolidated Balance Sheets as
             of March 28, 1999 and December 27, 1998                  3
                                                                                
            Consolidated Statements of Operations for
             the quarters ended  March 28, 1999
             and March 29, 1998                                       4         

            Consolidated Statements of Cash Flows for
             the quarters ended March 28, 1999
             and March 29, 1998                                       5         

            Notes to Consolidated Financial Statements                6
 
ITEM 2.     Management's Discussion and Analysis of Financial
             Condition and Results of Operations                     10

ITEM 3.     Quantitative and Qualitative Disclosures
             About Market Risk                                       15
 
 
PART II.  OTHER INFORMATION:

ITEM 1.     Legal Proceedings                                        15
 
ITEM 2.     Changes in Securities                                    15

ITEM 3.     Defaults Upon Senior Securities                          15
 
ITEM 4.     Submission of Matters to a Vote of Security Holders      15

ITEM 5.     Other Information                                        15
 
ITEM 6.     Exhibits and Reports on Form 8-K                         15
 
SIGNATURES                                                           16
 
 
<PAGE>
PART I.   FINANCIAL INFORMATION
Item 1.   FINANCIAL STATEMENTS

                             FORT JAMES CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                      March 28, 1999 and December 27, 1998


                                                        March          December 
(in millions, except share data)                         1999              1998 
--------------------------------------------------------------------------------
Assets:
Current assets:
   Cash and cash equivalents                           $    5.2       $     5.3 
   Accounts receivable                                    917.6           891.5 
   Inventories                                            889.9           869.5 
   Deferred income taxes                                  146.7           162.7 
   Prepaid expenses and other current assets               29.0            25.1 
--------------------------------------------------------------------------------
    Total current assets                                1,988.4         1,954.1 
--------------------------------------------------------------------------------
Property, plant and equipment                           8,058.8         8,158.2 
Accumulated depreciation                               (3,548.4)       (3,503.9)
--------------------------------------------------------------------------------
   Net property, plant and equipment                    4,510.4         4,654.3 
Goodwill                                                  587.9           628.7 
Other assets                                              567.9           555.2 
--------------------------------------------------------------------------------
    Total assets                                      $ 7,654.6        $7,792.3 
================================================================================
Liabilities and Shareholders' Equity:
Current liabilities:
   Accounts payable                                   $   636.3        $  702.8 
   Accrued liabilities                                    613.8           672.5 
   Current portion of long-term debt                      236.4           240.0 
--------------------------------------------------------------------------------
    Total current liabilities                           1,486.5         1,615.3 
--------------------------------------------------------------------------------
Long-term debt                                          3,690.6         3,647.2 
Deferred income taxes                                     741.3           756.5 
Accrued postretirement benefits other than pensions       454.2           458.8 
Other long-term liabilities                               253.9           263.1 
--------------------------------------------------------------------------------
    Total liabilities                                   6,626.5         6,740.9 
--------------------------------------------------------------------------------
Common stock, $.10 par value, 500.0 million shares
     authorized; 220.7 million shares 
     outstanding at March 28, 1999
     and 220.5 million at December 27, 1998                22.1            22.1 
Additional paid-in capital                              3,218.0         3,215.6 
Accumulated comprehensive loss                           (179.1)          (88.8)
Accumulated deficit                                    (2,032.9)       (2,097.5)
--------------------------------------------------------------------------------
    Total shareholders' equity                          1,028.1         1,051.4 
--------------------------------------------------------------------------------
    Total liabilities and shareholders' equity        $ 7,654.6        $7,792.3 
================================================================================



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


                             



<PAGE>


                             FORT JAMES CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            For the Quarters Ended March 28, 1999 and March 29, 1998

(in millions, except per share amounts)                         1999       1998
--------------------------------------------------------------------------------
Net sales                                                   1,790.3   $1,795.6
Cost of goods sold                                          1,237.4    1,243.1
Selling and administrative expenses                           302.8      283.8
Restructure and other unusual items                               -        7.5
--------------------------------------------------------------------------------
   Income from operations                                     250.1      261.2

Interest expense                                              (68.1)     (75.0)
Other income, net                                               3.7        8.8
--------------------------------------------------------------------------------
   Income before income taxes, extraordinary item, and
     cumulative effect of a change in accounting principle    185.7      195.0

Income tax expense                                            (63.7)     (77.4)
--------------------------------------------------------------------------------
   Income before extraordinary item and
    cumulative effect of a change in accounting principle     122.0      117.6
Extraordinary loss on early extinguishment
 of debt, net of taxes                                         (2.2)      (2.6)
Cumulative effect of a change in 
 accounting principle, net of taxes                           (22.1)         -
--------------------------------------------------------------------------------
   Net income                                                  97.7      115.0

Preferred dividend requirements                                   -       (5.2)
--------------------------------------------------------------------------------
   Net income available to common stockholders               $ 97.7    $ 109.8
================================================================================
Basic earnings per share:
   Income before extraordinary item 
     and the cumulative effect of 
     a change in accounting principle                         $ 0.56     $ 0.54
   Extraordinary loss on early extinguishment of debt          (0.01)     (0.01)
   Cumulative effect of a change in accounting principle       (0.10)         -
--------------------------------------------------------------------------------
      Net income                                              $ 0.45     $ 0.53
--------------------------------------------------------------------------------
Weighted average common shares outstanding                    219.5      208.5
================================================================================
Diluted earnings per share:
   Income before extraordinary item and the 
     cumulative effect of a change in accounting principle    $ 0.55     $ 0.53
   Extraordinary loss on early extinguishment of debt          (0.01)     (0.01)
   Cumulative effect of a change in accounting principle       (0.10)         -
--------------------------------------------------------------------------------
      Net income                                              $ 0.44     $ 0.52
--------------------------------------------------------------------------------
Weighted average common shares and
   common share equivalents outstanding                        220.4      210.9
================================================================================

Cash dividends per common share                                 0.15     $ 0.15
================================================================================


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


                             FORT JAMES CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            For the Quarters Ended March 28, 1999 and March 29, 1998

(in millions)                                                   1999       1998
--------------------------------------------------------------------------------
Cash provided by (used for) operating activities:
  Net income                                                  $ 97.7     $115.0
  Depreciation expense                                         120.6      114.1
  Amortization of goodwill                                       4.9        4.8
  Deferred income tax provision                                 22.2       49.2
  Restructure and other unusual items                              -        1.2
  Loss on early extinguishment of debt, net of taxes             2.2        2.6
  Cumulative effect of a change in accounting
     principle, net of taxes                                    22.1          -
  Change in current assets and liabilities:
     Accounts receivable                                       (60.5)     (44.2)
     Inventories                                               (30.2)     (21.2)
     Prepaid expenses and other current assets                  (4.4)      (4.8)
     Accounts payable and accrued liabilities                  (73.6)     (95.1)
  Other, net                                                   (30.6)     (11.6)
--------------------------------------------------------------------------------
                                                                   
      Cash provided by operating activities                     70.4      110.0
--------------------------------------------------------------------------------
Cash provided by (used for) investing activities:
  Expenditures for property, plant and equipment              (106.9)     (97.4)
  Proceeds from sale of assets                                     -        4.4
  Other, net                                                     0.1       (2.5)
--------------------------------------------------------------------------------
      
      Cash used for investing activities                      (106.8)     (95.5)
--------------------------------------------------------------------------------
Cash provided by (used for) financing activities:
  Additions to long-term debt                                    0.5      306.9
  Payments of long-term debt                                   (73.6)     (75.3)
  Net increase (decrease) in revolving debt                    144.1     (231.5)
  Common and preferred stock cash dividends paid               (33.0)     (37.3)
  Proceeds from exercise of stock options                        2.4       15.6
  Other, net                                                    (4.1)      (4.8)
--------------------------------------------------------------------------------

      Cash provided by (used for) financing activities          36.3      (26.4)
--------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents                (0.1)     (11.9)
Cash and cash equivalents, beginning of period                   5.3       33.6
--------------------------------------------------------------------------------

Cash and cash equivalents, end of period                       $ 5.2     $ 21.7
================================================================================



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 March 28,
1999 and its results of operations  and cash flows for the quarters  ended March
28,  1999 and March 29,  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 ended March 28, 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. The Company has not determined what impact,
if any,  Statement No. 133 will have on the  Company's  results of operations or
financial  position.  Statement No. 133 is effective for fiscal years  beginning
after June 15, 1999.

2.       Change in Accounting Policy
         ---------------------------

     The Company adopted Statement of Position 98-5,  "Reporting on the Costs of
Start-Up  Activities"  which  requires that start-up and  organization  costs be
expensed as  incurred  as of the  beginning  of 1999.  The change in  accounting
policy has been applied  retroactively to unamortized start-up costs capitalized
in prior years.  As a result,  a charge of $34.1  million  ($22.1  million after
taxes or $0.10 per  diluted  share) was  recorded  as a  cumulative  effect of a
change in accounting principle in the current quarter.

3.       Inventories
         -----------

     The  components  of  inventories  were as follows as of March 28,  1999 and
December 27, 1998:
 
                                                             March     December
(in millions)                                                 1999         1998
--------------------------------------------------------------------------------
Raw materials                                              $ 169.1      $ 185.4
Finished goods and work in process                           579.8        558.2
Stores and supplies                                          170.2        170.9
--------------------------------------------------------------------------------
                                                             919.1        914.5
Reduction to state certain inventories
      at last-in, first-out cost                             (29.2)       (45.0)
--------------------------------------------------------------------------------
    Total inventories                                      $ 889.9      $ 869.5
================================================================================

4.       Comprehensive Income
         --------------------

     Comprehensive  income for the  quarters  ended March 28, 1999 and March 29,
1998 was $7.4 million and $81.8 million,  respectively.  The difference  between
net  income and  comprehensive  income is due to  foreign  currency  translation
losses.


5.       Income Taxes
         ------------

     The  Company's  effective  income tax rate was 34.3 percent for the quarter
ended March 28, 1999  compared  to 39.7  percent for the first  quarter 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 reversal in 1999 of a valuation allowance established in 1998.


6.       Net Income Per Common Share and Common Share Equivalent
         -------------------------------------------------------

     Income and share information used in determining earnings per share for the
quarters ended March 28, 1999 and March 29, 1998 were calculated as follows:

                                             1999                    1998
                                     -------------------------------------------
(in millions,
 except per share amounts)            Income      Shares     Income      Shares
--------------------------------------------------------------------------------
Income before extraordinary
 item and cumulative effect
 of a change in accounting principle $ 122.0                $ 117.6
Less:  Preferred stock dividends                               (5.2)
--------------------------------------------------------------------------------
Amounts used to compute 
 basic earnings per share              122.0       219.5      112.4       208.5
Effect of dilutive securities:
   Options                                           0.9                    2.4
--------------------------------------------------------------------------------
Amounts used to compute 
 diluted earnings per share          $ 122.0       220.4    $ 112.4       210.9
================================================================================

Series K, L and N preferred  stocks were  antidilutive in the first quarter
of 1998.


7.       Commitments and Contingent Liabilities
         --------------------------------------

   Environmental Matters:
 
     Like its  competitors,  Fort James is subject to  extensive  regulation  by
various federal,  state,  provincial,  and local agencies concerning  compliance
with  environmental  control statutes and regulations.  These regulations impose
limitations,  including effluent and emission  limitations,  on the discharge of
materials  into the  environment,  as well as require  the Company to obtain and
operate in  compliance  with the  conditions  of permits and other  governmental
authorizations.  Future  regulations  could  materially  increase the  Company's
capital requirements and certain operating expenses in future years.

     Fort  James,  along  with  others,  has been  identified  as a  potentially
responsible  party  ("PRP")  at various  U.S.  Environmental  Protection  Agency
("EPA")  designated  superfund sites and is involved in 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
(collectively,  the "Fox River Group"), 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 sediment  restoration and
natural resources damages. In February 1999, the Wisconsin Department of Natural
Resources (the "WDNR") released a draft remedial investigation/feasibility study
for public comment, which provides sediment restoration alternatives for the Fox
River.  While the draft  study did not  advocate  any  specific  alternative  or
combination  of  alternatives,  the estimated  total costs provided in the draft
study ranged from zero for 'no action' to approximately $720 million,  depending
on the  alternative  or combination of  alternatives  selected.  The Company has
reviewed the draft study and submitted timely comments both  individually and in
conjunction  with  the  Fox  River  Group.  After  consideration  of the  public
comments,  the draft  report may be revised to add to,  delete from or amend the
list of potential sediment restoration alternatives.  The WDNR and EPA will then
propose a  particular  alternative  for further  public  comment.  The  sediment
restoration  alternative  or  alternatives  which may be proposed or  ultimately
selected by the state and federal  agencies,  is unknown at this time. After the
alternative  is selected,  further  changes may occur as a result of discussions
among the PRP's and the state and  federal  agencies  concerning  resolution  of
government  claims. The Company believes that its share of the restoration costs
for the Fox River 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 year.

     The   Company  is  also   participating   in  the  funding  of  a  remedial
investigation/feasibility  study  of  contamination  of the  Kalamazoo  River by
hazardous substances.

     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 March 28, 1999,  Fort James'  accrued
environmental  liabilities,  including  remediation and landfill  closure costs,
totaled $52.5 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 are
expected to be 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 quarter or year.


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 ended March 28, 1999 and March
29, 1998 and as of March 28, 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:
                                                
                                                     
(in millions)                                          1999                1998
--------------------------------------------------------------------------------
Condensed income statement information:
Net sales                                         $ 1,168.9           $ 1,193.4
Gross profit                                          332.8               360.5
Income before extraordinary item and cumulative
    effect of a change in accounting principle         10.4                43.2
Net income (loss)                                      (8.5)               40.6
================================================================================
                                                      March            December
(in millions)                                         1999               1998
--------------------------------------------------------------------------------
Condensed balance sheet information:
Current assets                                   $  1,039.4         $     963.6
Noncurrent assets                                   3,475.6             3,521.9
Current liabilities                                   553.1               694.1
Noncurrent liabilities                              5,313.8             5,130.4
Deficit                                            (1,351.9)           (1,339.0)
================================================================================


9.       Segments
         --------

     Segment  sales and income from  operations  before  nonrecurring  and other
unusual items for the quarters ended March 28, 1999 and March 29, 1998 and total
assets as of March 28, 1999 and March 29, 1998 were as follows:
<TABLE>
<S> <C>   
                                                                                            Communi-       Inter-
                                                  Tissue                                     cations      company
                                               North                                      Papers and          and
(in millions)                                America      Europe       Dixie   Packaging       Fiber    Corporate    Total
---------------------------------------------------------------------------------------------------------------------------

Net sales                                    $ 852.0     $ 465.9     $ 175.6     $ 174.6    $ 196.0     $ (73.8)   $1,790.3
Intercompany sales                               0.3           -         0.9        28.5       44.1           -        73.8
Income from operations before
   restructure and other unusual items         194.9        61.1        19.3        10.9      (14.2)      (21.9)      250.1
Total assets                                 2,790.0     2,168.3       402.2       661.8      818.5       813.8     7,654.6
===========================================================================================================================


1998
Net sales                                    $ 841.9     $ 458.0     $ 172.8     $ 180.4    $ 215.5     $ (73.0)   $1,795.6
Intercompany sales                                 -           -         0.9        31.2       40.9           -        73.0
Income from operations before
   restructure and other unusual items         201.0        55.7        17.9        10.3        6.4       (22.6)      268.7
Total assets                                 2,813.1     2,159.6       405.8       666.7      874.6       820.9     7,740.7
===========================================================================================================================

</TABLE>

<PAGE>

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

Results of Operations

Overview
 
                                        1999                     1998
                             ------------------------   ------------------------
(in millions,                                Recur-                     Recur-
except per share data)        Reported       ring(a)     Reported       ring(b)
--------------------------------------------------------------------------------

Net sales                      $1,790.3     $ 1,790.3      $1,795.6    $ 1,795.6
Income from operations            250.1         250.1         261.2        268.7
Net income                         97.7         122.0         115.0        122.2
Diluted earnings per share       $ 0.44        $ 0.55        $ 0.52       $ 0.55
=============================================================================== 

     (a) Results include an extraordinary  charge on the early extinguishment of
debt of $3.6 million ($2.2 million after taxes or $0.01 per diluted share) and a
charge of $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.

     (b) Results  include a pretax  charge of $7.5 million  ($4.6  million after
taxes or $0.02 per diluted  share) for merger related  integration  costs and an
extraordinary  charge on the early  extinguishment of debt of $4.2 million ($2.6
million after taxes or $0.01 per diluted share).

North America - Tissue

(in millions)                               1999           1998       Inc/(Dec)
--------------------------------------------------------------------------------
Net sales                                 $ 852.0        $ 841.9        1.2%
Income from operations                      194.9          201.0       (3.0%)
================================================================================

     Average  selling  prices  in  the   Tissue-North   America   business  were
approximately  1 percent  lower  than the prior  year as higher  average  retail
prices were more than offset by declines in average away-from-home prices.

     Retail  tissue sales and  operating  profits  reached  record first quarter
levels on strong tissue volume and higher  average  prices.  Shipments were more
than 4 percent higher than prior year with increases in all product  categories.
New product  launches in the  quarter  included  SOFT 'N GENTLE 1000 count which
allows the Company to compete in the  extended  roll life  segment for the first
time;  and MARDI GRAS  Rainbow  Pack, a variety pack of four new colors in a 360
count  value pack size,  which  builds on the number one  position of MARDI GRAS
napkins.

     Away-from-home  sales and operating  profits declined versus the prior year
primarily due to lower average selling prices resulting from highly  competitive
market  conditions.  Volume  was  essentially  flat,  however,  good  growth was
reported in the Sofpull towel and COMPACT and MICRO-TWIN  tissue  differentiated
product  lines.  We continue to be encouraged by the success in test markets for
the innovative ACCLAIM multi-layer dispenser napkins.
        

Europe - Tissue

(in millions)                               1999           1998       Inc/(Dec)
--------------------------------------------------------------------------------
Net sales                                 $ 465.9        $ 458.0        1.7%
Income from operations                       61.1           55.7        9.7%
================================================================================

     Excluding  the   estimated   effects  of  foreign   currency   translation,
Tissue-Europe  sales  would have  decreased  by 1 percent  due to lower  average
selling prices. Cost reduction benefits and lower raw material prices, partially
offset by unfavorable  selling  prices,  were the primary reasons for the profit
improvement.  The "pure white"  kitchen roll line  continues to perform well and
recorded solid growth across Europe.
 
         

Dixie

(in millions)                               1999           1998       Inc/(Dec)
--------------------------------------------------------------------------------
Net sales                                 $ 175.6        $ 172.8        1.6%
Income from operations                       19.3           17.9        7.8%
================================================================================

     The  increased  Dixie  sales  were  the  result  of  strong  retail  volume
performance.  This growth was partially offset by reduced away-from-home volumes
resulting  from  product  line  rationalization  activities  and  lower  average
pricing.  The profit  improvement was driven by cost reduction  benefits and the
volume growth.  Key initiatives  which  contributed to favorable  volume include
larger size retail "value packs" and a new away-from-home plastic cutlery "dense
pack" which contains twice as much product per case as competitors' loose-filled
cutlery.

Packaging 

(in millions)                               1999           1998       Inc/(Dec)
--------------------------------------------------------------------------------
Net sales                                 $ 174.6        $ 180.4       (3.2%)
Income from operations                       10.9           10.3        5.8%
================================================================================
     
     Within the Packaging  business,  folding carton profits increased almost 50
percent  over  the  comparable  prior  year  quarter  due to  good  progress  in
controlling  costs and higher  volumes,  especially in the frozen food,  cereal,
dairy, dry food and personal care categories.  New customers,  including leading
consumer companies in the food and personal care industries,  have recently been
added. The improvement in folding carton, however, was largely offset by erosion
in paperboard earnings caused by softer market pricing.
        
Communications Papers and Fiber

(in millions)                               1999           1998       Inc/(Dec)
--------------------------------------------------------------------------------
Net sales                                 $ 196.0        $ 215.5       (9.0%)
Income (loss) from operations               (14.2)           6.4        NM
================================================================================
NM - not meaningful

     The decreases in operating profits and sales in the  Communications  Papers
and Fiber  businesses  were  primarily  the result of lower  uncoated free sheet
paper and market pulp  prices,  partially  offset by  increased  market pulp and
wastepaper  volumes.  During  the  second  quarter,  the  Communications  Papers
business announced a new entry in the EUREKA!  family - a recycled  reprographic
product aimed at  environmental  and cost conscious  customers  currently buying
non-recycled brands.

Financial Condition

     Cash  provided by operating  activities  totaled $70.4 million in the first
quarter of 1999, compared with $110.0 million in the prior year. The decrease is
primarily due to an increase in working capital. The Company's current ratio was
1.3 as of March 28, 1999, and 1.2 as of December 27, 1998, while working capital
increased  to $501.9  million  from  $338.8  million for the same  periods.  The
increase  in  working  capital  is  primarily  due  to  seasonal   decreases  in
outstanding  payables  and accrued  expenses.  Higher  accounts  receivable  and
inventory balances also contributed to the increase.  Capital  expenditures were
$106.9  million for the quarter ended March 28, 1999,  compared to $97.4 million
in the prior year.

     Accrued  liabilities related to restructuring  activities  decreased during
the year due to the settlement of such liabilities through cash payments of $5.8
million for severance,  $3.4 million for facility  closures and $0.7 million for
contract termination costs.

     During the first quarter of 1999, the Company  redeemed $58.8 million of 9%
senior  subordinated  notes prior to their  scheduled  maturity.  The redemption
resulted in an extraordinary  loss on the early  extinguishment  of debt of $3.6
million ($2.2 million after taxes or $0.01 per diluted  share).  As of March 28,
1999,  total  indebtedness  was $3.93  billion an increase of $39.8 million from
$3.89  billion as of December  27, 1998.  As of March 28, 1999,  the Company had
outstanding  borrowings of  approximately  $1.07 billion  supported by revolving
credit facilities  compared to $911 million as of December 27, 1998. As of March
28, 1999,  total  outstanding debt (including the effect of interest rate swaps)
included  approximately  $2.9 billion of fixed rate and $1.0 billion of floating
rate obligations compared to $2.8 billion and $1.1 billion,  respectively, as of
December 27, 1998. As of March 28, 1999, under the most  restrictive  provisions
of the Company's debt agreements,  Fort James had additional  borrowing capacity
of approximately $1.8 billion.


Effect of New Accounting Standards
----------------------------------

         See Note 1 to the Consolidated Financial Statements.

Year 2000
---------

     The Year 2000 ("Y2K")  issue is the result of computer  programs  using two
digits rather than four to define the applicable  year.  The Company's  computer
equipment,  information  technology  (IT)  software  and devices  with  imbedded
technology that are  time-sensitive  may recognize a date using "00" as the year
1900 rather than the year 2000. The problem goes beyond  standard IT application
software and includes phone systems,  security systems, process control and shop
floor  systems,  embedded  code,  data and  databases,  operating  systems,  and
electronic  networks.  Any device that contains a  microprocessor  is subject to
this problem.

     The Company established a Y2K Project Office to coordinate its Y2K efforts.
The Y2K  Project  Office is  comprised  of  representatives  from a  variety  of
departments  throughout  the  Company,   including  manufacturing,   legal,  and
corporate  communications,  and is  responsible  for all aspects of the project,
including IT and non-IT date  conversion  plans,  cost control,  risk management
action  plans,  and both internal and external  communications.  The Y2K Project
Office  reports to senior  management  and the Audit  Committee  of the Board of
Directors on a regular basis.

     The  Y2K  Project  is  organized  into  various  work   categories.   Where
appropriate,  each category  includes  specific work plans,  contingency  plans,
schedules  and goals.  A brief  description  and  status of the work  categories
follows:

     Mainframe - Internal  Systems:  Remediation  of core business  applications
that are not being  replaced  as a result of the  merger is in  process.  System
applications  for  logistics,   tax  and   intercompany   accounting  have  been
remediated,  tested and returned to  production.  Other  applications  are being
remediated  and tested,  where  necessary,  in  conjunction  with the  Company's
business systems merger activity. Completion is estimated for the second quarter
of 1999.

     Midrange:  Accounts  payable,  procurement and general ledger  applications
have been examined,  remediated, tested and returned to production.  Remediation
of the payroll  system is in process  with  completion  estimated  for the third
quarter of 1999. Remediation of custom code for accounts receivable is estimated
to be completed during the second quarter of 1999.
 
     Plants  &  Mills  -  (Distributed   Systems):   An  inventory  of  software
applications at the Company's plants and mills has been completed. Project plans
detailing specific  remediation  activities by application are being implemented
at each facility.  Approximately 70% of the applications inventoried have either
been  verified as Y2K ready or  remediated,  tested and returned to  production.
Completion is estimated for the third quarter of 1999.

     Electronic  Data  Interchange  ("EDI"):  The  Company is in the  process of
upgrading or remediating all of its EDI systems. Completion is estimated for the
third quarter of 1999.

     Process  Control  (Manufacturing  Operations):  Inventories of Programmable
Logic  Controllers  ("PLCs") and  Distributed  Control Systems ("DCS") have been
completed.  Verification of Y2K compliance and the  appropriate  remediation and
testing efforts are in process. Completion is estimated for the third quarter of
1999.

     Infrastructure:  An inventory of  intelligent  devices was completed in the
first quarter of 1998.  Examination of the inventoried  products  indicated that
only  phone  systems  required  upgrades.  Hardware  upgrades  for  devices  not
supported  by vendors  have been  completed.  Software  upgrades  are  currently
underway with completion estimated for the second quarter of 1999.

     Desktop -  includes  Local  Area  Network  ("LAN")  and Wide  Area  Network
("WAN"): A detailed  inventory of personal computers ("PCs"),  LANs and WANs has
been  completed.  PCs that are not Y2K ready have been  identified and are being
upgraded or replaced.  A listing of business critical software packages is being
compiled  and a  software  remediation  team and  process  has been  identified.
Additional  vendor  support  to  address  the Y2K  issues  has been  contracted.
Completion is estimated for the third quarter of 1999.

     Value Chain: The Company  completed a survey of its customers and suppliers
to identify and assess  potential  Y2K risks  presented by  significant  trading
partners. If it is determined that a materially significant supplier or customer
will not be Y2K ready,  the  potential  effect on the Company and the  Company's
response is being evaluated in Business  Continuity Planning as described below.
Completion of the Value Chain  assessment is estimated for the second quarter of
1999.

     Legal:  Legal counsel is responsible  for assuring that the Company's legal
rights are protected during the course of the Y2K Project.

     Business  Continuity  Planning:  The Business  Continuity  Planning project
consists of risk management,  contingency  planning,  and disaster recovery.  In
addition,  responses  provided to the Value Chain  assessment  are being used to
evaluate  material  external  exposures.  Completion is estimated for the fourth
quarter of 1999.

     The Company spent approximately $12 million during 1999, $35 million during
1998,  and $8 million  during 1997 on the Y2K  project.  The  Company  currently
estimates  additional  spending of  approximately  $30 million to $40 million to
make the required Y2K system  modifications and  replacements,  and for testing.
Costs for system  maintenance  and  modification  are expensed as incurred while
spending  for new software or to replace  existing  systems is  capitalized  and
amortized over the assets' useful lives.

     The  Company  expects its Y2K project 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 be  remediated in a timely  manner.  Though it is impossible to predict all
potential  Y2K  uncertainties,  the Company  believes  that its Y2K Project will
significantly reduce its risk of material loss in the event of non-compliance by
the Company, its vendors or its suppliers. In the opinion of management,  delays
in the  production or processing  of orders,  or the delivery of finished  goods
would be the most likely worst-case  scenario of the inability of the Company or
its customers or suppliers to resolve their Y2K problems.

     The foregoing  Y2K Project  timetable  and  assessments  of costs and risks
reflect  management's  best estimates. These estimates were derived  utilizing
numerous assumptions of future events. There can be no assurance,  however, that
these  estimates  will be  achieved  or that  actual  results  will  not  differ
materially  from those  anticipated.  Specific  factors  that  might  cause such
material  differences include, but are not limited to, the availability and cost
of  personnel  trained in this area,  the  ability  to locate  and  correct  all
relevant  computer codes,  and the ability of technology  vendors to deliver new
systems on  schedule.  In addition,  there are certain  material  external  risk
exposures represented by the Company's Value Chain, including but not limited to
the  delivery of adequate  energy  supplies,  for which the Company can exercise
minimal,  if any,  control.  There can be no assurance  that these  efforts will
prevent the failure to become Y2K ready from having a material adverse affect on
the Company's financial condition or results of operations.

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; 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 achieve  synergistic  and other cost reductions and
efficiencies; and the ability to successfully remediate Year 2000 problems.

Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         None

PART II.  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS.

         See Note 7 to the Consolidated  Financial  Statements of this Quarterly
         Report on Form 10-Q.

Item 2.  CHANGES IN SECURITIES.

         None.

Item 3.  DEFAULTS UPON SENIOR SECURITIES.

         None.

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

         None

Item 5.  OTHER INFORMATION.

         None.

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

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

         Exhibit                                           Starts
         Number                                            on Page

         27    Financial Data Schedules for the quarter ended
               March 28, 1999 (filed electronically only)

(b)      Reports on Form 8-K:

         No reports on Form 8-K were filed by the Company during the quarter
         ended March 28, 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:  April 22, 1999