<PAGE>
                                                            
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-Q


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


 For Quarter Ended:  September 29, 1996  Commission File Number:  1-7911


                       JAMES RIVER CORPORATION of Virginia
             (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.)


       120 Tredegar Street, Richmond, VA                  23219
   (Address of principal executive offices)            (Zip Code)


       Registrant's telephone number, including area code: (804) 644-5411


                                 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 November 1,
1996:

                                86,069,211 shares

<PAGE>

                             JAMES RIVER CORPORATION
                                   of Virginia
                          QUARTERLY REPORT ON FORM 10-Q
                               September 29, 1996


                                TABLE OF CONTENTS

                                                                        Page No.
PART I.  FINANCIAL INFORMATION:

         ITEM 1.  Financial Statements:

          Consolidated Balance Sheets as of September 29, 1996 and
           December 31, 1995                                                  3

          Consolidated Statements of Operations for the quarters and  
           nine months ended September 29, 1996 and September 24, 1995        5

          Consolidated Statements of Cash Flows for the nine months 
           ended September 29, 1996 and September 24, 1995                    6

          Notes to Consolidated Financial Statements                          7

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


PART II.  OTHER INFORMATION:

         ITEM 1.  Legal Proceedings                                          17

         ITEM 2.  Changes in Securities                                      17

         ITEM 3.  Defaults Upon Senior Securities                            17

         ITEM 4.  Submission of Matters to a Vote of Security Holders        17

         ITEM 5.  Other Information                                          17

         ITEM 6.  Exhibits and Reports on Form 8-K                           18

         SIGNATURES                                                          19


<PAGE>

PART I.    FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

                             JAMES RIVER CORPORATION
                          of Virginia and Subsidiaries
                           CONSOLIDATED BALANCE SHEETS
                    September 29, 1996 and December 31, 1995
                        (in millions, except share data)

                                                          September    December
                                                               1996        1995
                                                               ----        ----
ASSETS

Current assets:
  Cash and cash equivalents                              $     62.5  $     66.1
  Accounts receivable                                         787.2       847.3
  Inventories                                                 646.3       821.4
  Prepaid expenses and other current assets                    36.2        52.3
  Deferred income taxes                                        79.8        83.4

    Total current assets                                    1,612.0     1,870.5

Property, plant and equipment                               5,794.0     6,181.0
Accumulated depreciation                                   (2,070.4)   (2,106.9)

    Net property, plant and equipment                       3,723.6     4,074.1

Investments in affiliates                                     152.9       146.8

Other assets                                                  403.8       395.8

Goodwill                                                      732.4       771.7

    Total assets                                         $  6,624.7  $  7,258.9


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

<PAGE>

                             JAMES RIVER CORPORATION
                          of Virginia and Subsidiaries
                     CONSOLIDATED BALANCE SHEETS, Continued
                        (in millions, except share data)

                                                 September  December
                                                      1996      1995
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                 $ 547.8   $ 560.5
  Accrued liabilities                                552.6     493.7
  Current portion of long-term debt                   13.3      44.8


    Total current liabilities                      1,113.7   1,099.0


Long-term debt                                     2,033.6   2,503.0
Accrued postretirement benefits
  other than pensions                                458.0     464.7
Deferred income taxes                                461.7     489.3
Other long-term liabilities                          278.2     448.7


   Total liabilities                               4,345.2   5,004.7


Preferred stock, $10 par value, 5,000,000
  shares authorized, issuable in series;
  shares outstanding, 3,630,581                      738.4     740.3

Common stock, $.10 par value, 150,000,000
  shares authorized; shares outstanding,
  September 29, 1996 -- 85,964,212 and
  December 31, 1995 -- 84,890,342                      8.6       8.5

Additional paid-in capital                         1,300.4   1,294.1
Retained earnings                                    232.1     211.3


    Total shareholders' equity                     2,279.5   2,254.2


    Total liabilities and shareholders' equity   $ 6,624.7  $7,258.9

                                                                 

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

<PAGE>
                             JAMES RIVER CORPORATION
                          of Virginia and Subsidiaries
                      CONSOLIDATED STATEMENTS OF OPERATIONS
          For the Quarters (13 Weeks) and Nine Months (39 Weeks) Ended
                    September 29, 1996 and September 24, 1995
                     (in millions, except per share amounts)

                                            Third Quarter          Nine Months
                                          1996        1995       1996      1995
                                                                       
Net sales                             $1,407.4    $1,734.7   $4,390.8  $5,220.2
Cost of goods sold                     1,024.4     1,322.7    3,250.2   4,049.4
Selling and administrative expenses      252.1       271.6      804.1     799.5
Severance and other items 
  expenses (income)                      (30.3)       20.8         .1      25.8
                                                                       
    Income from operations               161.2       119.6      336.4     345.5

Interest expense                          40.4        54.5      128.5     176.3
Other income, net                          6.1        15.3       14.5      32.9
                                                                       
    Income before income taxes
       and minority interest             126.9        80.4      222.4     202.1

Income tax expense:
    Tax on current income                 55.9        34.6       97.9      86.9
    Effect of tax rate change                          8.3                  8.3
                                                                   
      Total income tax expense            55.9        42.9       97.9      95.2
                                                                       
     Income before minority interests     71.0        37.5      124.5     106.9

Minority interests                         (.1)        (.2)      (2.6)     (2.1)
                                                                      
    Net income                           $70.9      $ 37.3    $ 121.9   $ 104.8
                                                                       
Preferred dividend requirements           (8.1)      (14.6)     (43.9)    (43.8)
                                                                       
    Net income applicable to common 
     shares                              $62.8      $ 22.7    $  78.0   $  61.0
Net income per common share
   and common share equivalents          $ .62      $  .27    $   .91   $   .73
                                                                       
Cash dividends per common share          $ .15      $  .15    $   .45   $   .45
                                                                       
Weighted average number of common shares
   and common share equivalents           101.4       84.8       85.7      84.2
                                                                       






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

                             JAMES RIVER CORPORATION
                          of Virginia and Subsidiaries
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      For the Nine Months (39 Weeks) Ended
                    September 29, 1996 and September 24, 1995
                                  (in millions)
                                                               1996        1995

Cash provided by (used for) operating activities:
  Net income                                                $ 121.9     $ 104.8
  Depreciation expense and cost of timber harvested           304.2       352.3
  Amortization of goodwill                                     15.8        17.2
  Deferred income tax provision                                32.7        19.4
  Equity in earnings of unconsolidated affiliates              (5.7)      (18.4)
  Dividends received from unconsolidated affiliates             7.8        20.1
  Severance and other items                                      .1        25.8
  Retirement benefits expense in excess of funding             (3.2)        9.5
  Change in current assets and liabilities:
    Accounts receivable                                          .3       (63.8)
    Inventories                                                77.2       (54.3)
    Prepaid expenses and other current assets                   6.3        (5.6)
    Accounts payable and accrued liabilities                   52.9        45.7
  Other, net                                                  (38.4)      (12.1)

      Cash provided by operating activities                   571.9       440.6

Cash provided by (used for) investing activities:
  Expenditures for property, plant and equipment             (287.8)     (315.6)
  Cash paid for acquistions, net                             (199.9)
  Cash received from sale of assets                           440.9         8.5
  Proceeds on sale of partnership option                                   22.2
  Other, net                                                    5.9        18.7

      Cash used for investing activities                      (40.9)     (266.2)

Cash provided by (used for) financing activities:
  Additions to long-term debt                                   3.4         7.8
  Payments of long-term debt                                 (469.9)     (659.9)
  Proceeds on spin-off of Crown Vantage Inc.                              480.4
  Common and preferred stock cash dividends paid              (69.9)      (80.8)
  Common stock issued on exercise of stock options              3.7        62.5
  Other, net                                                   (1.9)

      Cash used for financing activities                     (534.6)     (190.0)

Decrease in cash and cash equivalents                          (3.6)      (15.6)
Cash and cash equivalents, beginning of period                 66.1        59.3

Cash and cash equivalents, end of period                    $  62.5     $  43.7


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


<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Basis  of  Presentation

     In the  opinion of  management,  the  accompanying  unaudited  consolidated
financial  statements of James River  Corporation  of Virginia and  Subsidiaries
(the "Company" or "James  River")  contain all  adjustments  (consisting of only
normal   recurring   accruals)   necessary  to  present   fairly  the  Company's
consolidated  financial  position as of September  29, 1996,  and its results of
operations  for the  quarters  (13 weeks) and the nine  months (39 weeks)  ended
September  29,  1996 and  September  24,  1995,  and its cash flows for the nine
months then ended.  The balance sheet as of December 31, 1995,  was derived from
audited financial  statements as of that date. The results of operations for the
nine months ended September 29, 1996, are not necessarily indicative of the 
results to be expected for the full year.

     In 1995, the Company changed the fiscal year end of Jamont N.V. ("Jamont"),
the  Company's  European  Consumer  Products  subsidiary,  from  November  30 to
December 31 to eliminate the one-month lag in reporting. Results for the quarter
and nine months ended September 24, 1995, have been restated. Certain amounts in
the prior year's financial  statements and supporting footnote  disclosures have
been reclassified to conform to the current year's presentation.

2.  Acquisitions  and  Dispositions
  
     On September 3, 1996,  the Company  purchased  the  remaining  14% minority
interest  in  Jamont  N.V.,  under  an  existing  put and call  agreement,  from
Europaper Inc. ("Europaper") for $199.9 million. Prior to the settlement,  James
River's consolidation of Jamont N.V. included the Europaper minority interest at
a book value of $151  million.  Concurrent  with the receipt of the put exercise
notice from Europaper on June 29, 1996,  James River recorded the acquisition of
the remaining 14% minority interest under the purchase method of accounting.

     On  August  22,  1996,  the  Company  completed  the  sale of its  Flexible
Packaging  group  for  gross  cash  proceeds  of $372.7  million.  The  Flexible
Packaging  group included ten  manufacturing  facilities  with 2,200  employees.
These  facilities  included four  lamination and coating  plants,  five film and
converting plants, and a rigid plastics container plant. Net assets sold totaled
$333.4 million,  net of total liabilities of $10.3 million.  For the nine months
ended  September 29, 1996,  the Flexible  Packaging  group reported net sales of
$285  million  and  operating  profit  of  $2.4  million.   Proceeds  from  this
transaction were used to settle the Europaper put and reduce long-term debt.

     Effective  May 5, 1996,  James River  completed  the sale of its  specialty
operations  business,  which was a part of the North American  Consumer Products
Business,  for cash proceeds of  approximately  $30 million and a combination of
subordinated  long-term  notes and preferred  stock.  The  specialty  operations
business,  with annual sales of  approximately  $125  million,  , consisted of a
party goods facility, a specialty mill, and a foodservice  specialties plant. In
January  1996,  the Company  completed  the  formation of a joint venture of its
Handi-Kup  foam cup  operations,  formerly part of the North  American  Consumer
Products Business,  with the WinCup foam cup operations of Benchmark Corporation
of Delaware.  The Handi-Kup operations contributed to the joint venture included
four foam cup plants,  with 1995 net sales of approximately  $96 million.  James
River received  consideration of $26 million of cash,  approximately $10 million
face value of subordinated  long-term notes, and a 45% minority  interest in the
joint venture. 
<PAGE>

 3.  Severance and Other Items

     Results for the first nine months of 1996 included net  nonrecurring
charges of $.1 million  consisting  of $35.3 million  ($21.7  million net of tax
benefits,  or $.26 per share) for costs  related to severance and exit costs for
approximately  500 employees  primarily at Corporate and North American Consumer
Products Business  locations and approximately 80 employees at European Consumer
Products  locations  offset by net gains on business unit  dispositions of $35.2
million ($17.0 million net of tax benefits,  or $.20 per share) at Packaging and
North  American  Consumer  Products  business  locations.  During  the past nine
months,  the Company made severance  payments on current and prior year accruals
of  $13.7  million.   Results  for  the  first  nine  months  of  1995  included
nonrecurring  charges of $25.8  million  ($17.6  million net of tax benefits and
minority  interests,  or $.20 per share) comprised of $21.0 million in severance
costs and $4.8  million of  transaction  costs  associated  with the spin-off of
Crown Vantage Inc.$4.8 million of transaction costs associated with the spin-off
of Crown Vantage Inc.

4.   Other Income
 
     The  components  of other  income were as follows for the nine months ended
September 29, 1996, and September 24, 1995 (in millions):
                                          September      September
                                               1996           1995
                                                    
Interest and investment income            $     5.4      $     6.4
Equity in earnings of
  unconsolidated affiliates                     5.7           17.9
Gain on sale of assets                          5.2            4.3
Foreign currency exchange gain (loss)            .4            (.5)
Other, net                                     (2.2)           4.8
                                                    
    Total other income                    $    14.5      $    32.9
                                                   

5.   Income Taxes

     The Company's  effective  income tax rate was 44% for the nine months ended
September  29,  1996,  compared  to 43% for the first nine  months of 1995.  The
increase in the  effective tax rate from the prior year was primarily due to the
relative size of non-tax-deductible permanent differences.

<PAGE>
6.   Inventories

     The components of inventories were as follows as of September 29, 1996, and
December 31, 1995 (in millions):
                                                     September     December
                                                          1996         1995
                                                                 
Raw materials                                       $    143.2    $   197.1
Finished goods and work in process                       414.7        557.6
Stores and supplies                                      135.6        151.4
                                                                
                                                         693.5        906.1
Reduction to state certain inventories
  at last-in, first-out cost                             (47.2)       (84.7)
                                                                 

    Total inventories                               $    646.3    $   821.4
                                                                


7.       Financial Instruments

     The estimated fair value of the Company's $1,286 million notional amount of
interest  rate swaps was a liability  of $25 million as of  September  29, 1996,
compared to a liability  of $3 million as of December 31,  1995.  The  estimated
fair value of the Company's debt portfolio decreased to a liability in excess of
book value of $56 million as of September  29, 1996,  from a liability in excess
of book value of $152 million as of December 31, 1995. As of September 29, 1996,
the carrying  value of foreign  exchange  contracts  was a net  liability of $59
million and the  estimated  fair value of such  contracts was a net liability of
$89  million,  compared to net  liabilities  of $87  million  and $108  million,
respectively,  as of December 31, 1995. Additionally,  as of September 29, 1996,
the pay-in-kind notes and related accrued interest received from the spin-off of
Crown Vantage Inc. with  original  gross book values  totaling $89 million had a
fair value of approximately $94 million. The estimated fair values were based on
quoted market prices of comparable  instruments  and current  market rates as of
September 29, 1996, and December 31, 1995.


8.   Commitments and Contingent Liabilities

          (a)  Environmental  Matters:
 
               Like  its  competitors,  James  River  is  subject  to  extensive
          regulation by various  federal,  state,  provincial and local agencies
          concerning   compliance  with   environmental   control  statutes  and
          regulations.  These regulations impose limitations on the discharge of
          materials  into  the  environment,  including  effluent  and  emission
          limitations,  as well as require  the Company to obtain and operate in
          compliance  with the  conditions  of  permits  and other  governmental
          authorizations.  Future  regulations  could  materially  increase  the
          Company's  capital  requirements  and  certain  operating  expenses in
          future years. 
 
               In  December  1993,  the  U.S.  Environmental  Protection  Agency
          ("EPA")  published  draft rules  which  contain  proposed  regulations
          affecting pulp and paper industry discharges of wastewater and gaseous
          emissions  ("cluster rules").  The final rules are likely to be issued
          in early 1997, with a nominal compliance date of 2000. These rules may
          require  significant  changes in the pulping and/or bleaching  process
          presently  used in some U.S.  pulp mills,  including  several of James
          River's  mills.  The  implementation  of the  rules  could  materially
          increase the  Company's  capital  expenditures  between 1998 and 2000.
          Based on its evaluation of the rules as they are currently expected to
          be  issued,   the  Company  believes  that  capital   expenditures  of
          approximately $100 million over a period of three or more years may be
          required to bring  James  River's  facilities  into  compliance.  This
          estimate could change, depending on several factors, including changes
          to the proposed  regulations,  new developments in control and process
          technology, and inflation.
<PAGE>
               In addition,  James River has been  identified  as a  potentially
          responsible   party  ("PRP"),   along  with  others,  at  various  EPA
          designated Superfund sites and is involved in remedial  investigations
          and actions under  federal and state laws. It is James River's  policy
          to accrue  remediation  costs when it is probable that such costs will
          be incurred and when a range of loss can be reasonably  estimated.  As
          of  September   29,  1996,   James   River's   accrued   environmental
          liabilities, including remediation and landfill closure costs, totaled
          $23.0  million.  The  Company  periodically  reviews the status of all
          significant existing or potential environmental issues and adjusts its
          accruals as necessary.  Estimates of costs for future  remediation are
          necessarily  imprecise due to, among other things,  the identification
          of presently  unknown  remediation  sites and the  allocation of costs
          among  PRP's.  The  Company  believes  that its  share of the costs of
          cleanup  for its  current  remediation  sites will not have a material
          adverse impact on its consolidated financial position but could have a
          material  effect on  consolidated  results  of  operations  in a given
          quarter or year. As is the case with most manufacturing and many other
          entities, there can be no assurance that the Company will not be named
          as a PRP  at  additional  sites  in  the  future  or  that  the  costs
          associated with such additional sites would not be material.
         
         (b) Bondholder Litigation:

               In 1994,  James River was sued in Morgan  County,  Alabama,  in a
          class action and in Bridgeport, Connecticut, by certain former holders
          of James River's 10-3/4% Debentures due October 1, 2018. Most of these
          Debentures  were  retired  by means of a tender  offer to all  holders
          commenced  on September  18,  1992.  The  remainder  were  redeemed on
          November 2, 1992.  Merrill  Lynch & Co.,  which acted as James River's
          dealer  manager  for the tender,  is also named as a defendant  in the
          Alabama  case.  In general,  the  complaints  allege  violations  of a
          covenant  prohibiting  use of lower cost borrowed  funds to redeem the
          Debentures   before  October  1,  1998,  and  of  various   disclosure
          obligations,  and seek damages in excess of $50 million plus  punitive
          damages in excess of $500 million. The Alabama case has been certified
          as a  class  action  and  holders  of  approximately  one-half  of the
          Debentures  elected  not to be part of the class.  Most of the holders
          electing  out of the class are  plaintiffs  in the  Connecticut  case.
          James River  believes  that these claims are without merit and intends
          to defend them vigorously.

               In May 1996, James River settled the claim of Teachers  Insurance
          and Annuity Association of America which had held approximately 16.54%
          of the Debentures, for $425,000 plus reimbursement of attorneys' fees.
                 
               Although the ultimate  disposition of legal proceedings cannot be
          predicted  with  certainty,   it  is  the  opinion  of  the  Company's
          management  that  the  outcome  of  any  claim  which  is  pending  or
          threatened,  either individually or on a combined basis, will not have
          a materially adverse effect on the consolidated financial condition of
          James  River but  could  materially  affect  consolidated  results  of
          operations in a given quarter or year.
<PAGE>
 9.  Segment Information

     James River's net sales and income from operations by business segment were
as follows for the  quarters  and nine months  ended  September  29,  1996,  and
September 24, 1995 (in millions):
                                          Third Quarter        Nine Months
                                       September September  September September
                                            1996      1995       1996      1995
                                                                       
Net sales:
  Consumer products:
     North America                     $   644.8 $   700.1  $ 2,014.3 $ 1,996.3
     Europe                                418.6     405.6    1,284.8   1,222.2
  Packaging                                271.0     411.2      919.3   1,263.0
  Communications papers                    107.7     269.7      321.4     896.9
  Intersegment elimination                 (34.7)    (51.9)    (149.0)   (158.2)
                                                                       

    Total net sales                    $ 1,407.4 $ 1,734.7  $ 4,390.8 $ 5,220.2
                                                                       
Operating profit (loss):
  Consumer Products:
     North America                     $    82.9 $    77.2  $   210.7 $   174.0
     Europe                                 47.8       8.5      114.4      30.2
  Packaging                                 20.5       8.5       70.7      43.0
  Communications papers                      5.0      60.8       12.2     165.5
  General corporate expenses               (25.3)    (14.6)     (71.5)    (41.4)
  Severance and other items 
   income (expense)                         30.3     (20.8)       (.1)    (25.8)
                                                                        
    Income from operations             $   161.2 $   119.6 $    336.4 $   345.5
                                                                       





<PAGE>
10.  Pro Forma Data 
    
     In August 1995,  James River  completed the spin-off to  shareholders  of a
large  part of the  Company's  Communications  Papers  Business,  along with the
specialty  paper-based  portion of its Packaging  Business forming Crown Vantage
Inc.  The  following  pro forma  information  assumes that the spin-off of Crown
Vantage  Inc.  occurred as of the  beginning  of 1995.  The pro forma  financial
information does not purport to be indicative of the results of operations which
would actually have been reported if the transaction had occurred for the period
indicated or which may be reported in the future.

Pro Forma Consolidated Operating Data       Quarter Ended    Nine Months Ended
(in millions, except per share data)   September 24, 1995   September 24, 1995
                                                         
Net sales:
     Consumer products:
        North America                        $     702.2          $   2,004.3
        Europe                                     405.6              1,222.2
     Packaging                                     357.7              1,061.2
     Communications papers                         153.4                451.0
     Intersegment elimination                      (51.1)              (155.2)
                                                         
                                                         
          Total net sales                     $  1,567.8          $   4,583.5
                                                        
Operating profit:
     Consumer products:
        North America                         $     77.8          $     176.0
        Europe                                       8.4                 30.1
     Packaging                                      11.3                 47.3
     Communications papers                          39.1                101.0
     General corporate expenses                    (12.5)               (35.5)
     Severance and other items                     (20.8)               (25.8)
                                                          
          Income from operations              $    103.3          $     293.1
                                                        
Net income                                    $     31.8          $      91.1
                                                         
Net income per common share                   $      .20          $       .56
                                                         


11.  Subsequent Event

     In October 1996,  James River  completed the sale of the CZ Inks  Division,
which was a part of the  Packaging  Business,  with sales of  approximately  $35
million for the nine  months  ended  September  29,  1996,  to  Progressive  Ink
Company, LLC, for gross cash proceeds of approximately $27 million.
<PAGE>

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

Results of Operations

Overview

     James River  reported net income of $70.9 million,  or $.62 per share,  for
the third quarter ended September 29, 1996, compared with $37.3 million, or $.27
per  share  for the same  quarter  of the  prior  year.  Net sales for the third
quarter were $1,407  million,  compared to $1,735 million in the prior year. For
the nine months ended September 29, 1996, net income was $121.9 million, or $.91
per share,  compared with $104.8  million,  or $.73 per share in 1995. Net sales
for the first nine months of 1996 were $4,391 million compared to $5,220 million
in  1995.  The  comparability  of  these  results  was  primarily   impacted  by
nonrecurring  charges,  the Flexible  Packaging  group  divestiture in August of
1996, and the spin-off to shareholders of Crown Vantage Inc.  (Crown  Vantage)
in August, 1995 (see Note 10 of Notes to Consolidated Financial Statements).

Items Affecting Comparability

     Nonrecurring  severance  and other items for the quarters and nine months
ended  September 29, 1996, and September 24, 1995, were as follows (in millions,
except per share amounts):
                      
                                    September 29, 1996      September 24, 1995
                               
                                            Net                     Net
                                          Income      Per         Income   Per
                                 Gross    Impact     Share  Gross Impact  Share

Quarters ended:
  Severance and related
    exit costs                     $16.6   $10.4     $.10   $16.0    $9.9  $.11
  Net gain on asset divestitures   (46.9)  (24.2)   ($.24)
  Spin-off transaction costs                                  4.8     4.1   .05
  
   Total expense (income)         ($30.3) ($13.8)   ($.14)  $20.8   $14.0  $.16

Nine months ended:
  Severance and related
    exit costs                     $35.3   $21.7     $.26   $21.0   $13.5  $.15
  Net gain on asset divestitures   (35.2)  (17.0)    (.20)
  Spin-off transaction costs                                  4.8     4.1   .05

     Total expense                   $.1    $4.7     $.06   $25.8   $17.6  $.20

     In the third quarter of 1996, the Company  completed the divestiture of its
Flexible Packaging group. The Flexible Packaging group operations  comprised $63
million and $128 million in net sales,  and $(2.8) million and $(7.6) million in
operating losses in the third quarter of 1996 and 1995,  respectively,  and $285
million and $363  million in net sales and $2.4  million and $(11.0)  million in
operating  profit  (loss) for the nine months  ended  September  29,  1996,  and
September 24, 1995, respectively.

<PAGE>
     The comparability of results was also affected by James River's spin-off of
Crown Vantage to common shareholders in August 1995, which included a large part
of what was formerly James River's Communications Papers Business as well as the
specialty  paper-based portion of its Packaging Business.  On a pro forma basis,
excluding the results  attributable to the operations spun off to Crown Vantage,
net income would have been $31.8 million, or $.20 per share in the third quarter
of 1995 and $91.1 million, or $.56 per share for the nine months ended September
24, 1995.

North American Consumer Products Business

     Operating  profits  for  the  North  American  Consumer  Products  Business
increased  by 7%,  from  $77.2  million  in the third  quarter  of 1995 to $82.9
million in the current  quarter,  while net sales  decreased by 8% over the same
period,  from $700 million to $645 million.  The decrease in sales for the third
quarter was largely due to decreases in net sales of 3% and 5% in the retail and
commercial   markets,   respectively,   partially  offset  by  volume  gains  of
approximately  26% in the club market.  The retail  market's net sales  declined
primarily due to average selling price decreases for towel and tissue  products.
The decline in net sales in the commercial  market stems from volume and pricing
decreases  in the  foodservice  product  lines.  Operating  profits  continue to
benefit  from the  increase  in club  volume,  decrease in raw  material  costs,
including  pulp  and  wastepaper  costs,  and  the  benefit  of  cost  reduction
initiatives. For the nine months ended September 29, 1996 operating profits were
$210.7  million,  an increase of 21% over the comparable nine months in 1995, on
relatively flat net sales levels for those same periods reflecting reductions in
raw material costs and continued cost reduction benefits.

European Consumer Products Business

     Operating  profits for the European  Consumer  Products Business climbed to
$47.8  million in the  current  quarter,  more than five times the $8.5  million
reported in the third  quarter of 1995,  while net sales  improved over the same
period to $419 million in 1996 from $406 million in 1995.  Operating profits for
this business for the nine months ended  September 29, 1996,  improved to $114.4
million  from  $30.2  million  for the same  period  in the  prior  year on a 5%
increase  in net  sales.  The  improvement  in the  European  Consumer  Products
Business' results for both periods was attributable to a combination of stronger
finished  products  volumes,  lower  raw  material  costs  and  continuing  cost
reductions. Finished products volumes were approximately 7% above the prior year
level, reflecting a combination of (i) weaker than normal 1995 volumes resulting
from price increase initiatives, (ii) product expansions benefiting 1996 volumes
and (iii) growth of volumes in certain smaller markets such as Spain,  Italy and
the Netherlands.  The volume increases have been somewhat offset by increases in
trade promotional spending as pricing has come under pressure due to significant
declines in the cost of market  pulp.  As a net buyer of  approximately  450,000
tons per year of market  pulp,  the  European  Consumer  Products  Business  has
benefited from the lower average pulp costs in 1996.

Packaging Business

    Excluding  the results  attributable  to the  operations  spun off to Crown
Vantage and the sale of the Flexible Packaging group,  operating profits for the
Packaging Business improved to $23.3 million and to $68.3 million in the current
quarter and first nine months,  respectively,  an increase of 23% in the quarter
and 17% for the nine months  above the $18.9  million and $58.3  million for the
comparable  periods of the prior year.  Net sales,  adjusted  for both the Crown
Vantage and Flexible Packaging  transactions,  declined 10% to $208 million from
$230  million for the current  quarter and 9% to $634  million from $698 million
for the nine months  compared  to prior year.  The  improved  profitability  was
principally  attributable to raw material and other cost  reductions,  partially
offset by unit volume declines.  The cost of pulp and wastepaper were below both
the prior year's third quarter and nine month levels.  For the nine months ended
September  29,  1996,  the  operations  sold with the Flexible  Packaging  group
(closed in August 1996) and the CZ Inks Division (closed October 1996) comprised
less than one percent of the Company's  consolidated operating profits and 9% of
the Packaging Business' operating profits.

<PAGE>

Communications Papers Business

     On a pro forma basis,  excluding the results attributable to the operations
spun off to Crown  Vantage,  operating  profits  for the  Communications  Papers
Business  declined  to $5.0  million  in the third  quarter  of 1996 from  $39.1
million in 1995 and the operating profits for the nine months decreased to $12.2
million from $101.0 million for the same period in 1995. On this same basis, net
sales  declined to $108 million and to $321  million in the current  quarter and
first  nine  months,  respectively,  both 29%  below the $153  million  and $451
million  reported  for the  comparable  periods  of the  prior  year.  Sales and
profitability  were  negatively  impacted by a combination of declining  selling
prices for uncoated free sheet grades of paper and reduced demand,  continuing a
trend begun in the fourth  quarter of 1995.  Third quarter  pricing for uncoated
free  sheet  was 32% to 37%  below  last  year's  third  quarter  while  volumes
increased 9% from the prior year's quarter.

Other Income and Expense Items

     General  corporate  expenses totaled $25.3 million and $71.5 million in the
third  quarter  and first nine months of 1996,  respectively,  compared to $14.6
million and $41.4  million for the same periods in the prior year.  The majority
of the increase  was related to costs  incurred for  installing  new  integrated
management information systems to support the Company's cost reduction programs.
Interest  expense  decreased from $176.3  million to $128.5 million  between the
first nine months of 1995 and the first nine months of 1996.  This  decrease was
attributable to a reduction in average  outstanding  debt of $501 million during
the first three quarters of 1996. Other income decreased to $14.5 million in the
first nine months of 1996 from $32.9 million in 1995, principally due to reduced
earnings  of  pulp-producing   unconsolidated  affiliates.  The  change  in  the
effective  tax  rate for 1996 is  discussed  in Note 5 of Notes to  Consolidated
Financial Statements.

Financial Condition 

     Cash provided by operating  activities  totaled $571.9 million for the nine
months ended  September 29, 1996,  compared with $440.6 million  provided in the
comparable  period of 1995. The Company's  current ratio was 1.5 as of September
29, 1996, and 1.7 as of December 31, 1995,  while working  capital  decreased to
$498  million from $772  million for the same  periods.  The decrease in working
capital  was  principally  due to  reductions  in both the  North  American  and
European Consumer Products businesses' inventories resulting from the lower cost
of  purchased  raw  materials  and  increased  sales  volumes,  as  well  as the
disposition of the Flexible Packaging group's assets in August, 1996.

     Capital expenditures were $287.8 million for the first nine months of 1996,
compared to $315.6  million  for the same period of 1995.  The change in capital
expenditures was primarily due to the spun-off Crown Vantage operations included
in 1995. The Company realized cash proceeds of approximately $441 million during
the first nine months of 1996 from the sale of the Flexible Packaging group, the
sale of the specialty  operations and the contribution of the Handi-Kup foam cup
operations  to a joint  venture  as  further  described  in Note 2 of  Notes  to
Consolidated  Financial Statements.  The Company paid approximately $200 million
during  the third  quarter  of 1996 for the  acquisition  of the  remaining  14%
interest  in  Jamont  N.V.  (See  Note  2 of  Notes  to  Consolidated  Financial
Statements).
<PAGE>

     Total  indebtedness  decreased by $501 million,  from $2,548  million as of
December  31, 1995,  to $2,047  million as of  September  29,  1996,  due to the
application of asset divestiture proceeds, operating cash flows and the positive
impact of foreign  currency  translation.  As of September 29, 1996, the Company
had outstanding  borrowings of approximately $471 million supported by revolving
credit facilities, including $386 million outstanding under such facilities, $34
million  of  commercial  paper and $51  million  of money  market  notes.  Total
outstanding debt as of September 29, 1996, included approximately $1,501 million
of fixed rate and $546 million of floating rate obligations.  Note 7 of Notes to
Consolidated  Financial  Statements  describes the Company's  interest rate swap
agreements and foreign currency contracts.

     James  River's  ratio of total debt to total  capitalization  decreased  to
47.2% as of the end of the third  quarter,  from 51.3% as of the prior year end,
resulting  from the decrease in debt levels.  For purposes of this  calculation,
the Company  defines  total  capitalization  as the sum of current and long-term
debt,  preferred and common equity and minority interests.  As of June 29, 1996,
minority  interests  decreased by approximately  $151 million resulting from the
consolidation  of Jamont  pursuant to the Europaper put agreement (See Note 2 of
Notes  to  Consolidated  Financial  Statements).   Under  the  most  restrictive
provisions  of  the  Company's  debt  agreements,  James  River  had  additional
borrowing capacity of approximately $1.48 billion and net worth in excess of the
minimum requirements  specified by such agreements of approximately $440 million
as of September 29, 1996. 

     In October 1996,  James River completed the sale of the CZ Inks Division of
the Packaging Business to Progressive Ink Company,  LLC, for gross cash proceeds
of approximately $27 million.

<PAGE>

PART II.  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS.

     As  previously  disclosed,  James  River had been  notified by the EPA of a
civil  action  filed in the federal  court in New  Hampshire  related to certain
environmental   violations  at  the  Company's   previously  owned  Berlin,  New
Hampshire,  mill.  The Company agreed to a settlement of $200,000 as well as the
implementation of  environmentally  beneficial  capital  improvements which cost
approximately  $500,000.  As part of the  Company's  spin-off  of certain of its
assets to Crown  Vantage Inc. on August 25, 1995,  the liability for the penalty
and the supplemental environmental improvement projects was transferred to Crown
Vantage Inc. The penalty was paid by Crown Vantage Inc. during the quarter ended
September 29, 1996, thereby concluding James River's potential liability in this
matter.

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.



<PAGE>

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

         (a)   Exhibits:

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

             Exhibit                                                     Starts
              Number                 Description                        on Page
                    
               10(a)  Employment Agreement for Miles L. Marsh,              E-1
                      dated August 22, 1996, filed herewith.

               10(b)  Form of Employment Agreement for Executive            E-2
                      Officers, filed herewith.

               11     Computation of Earnings per Share, filed herewith      20

               27(a)  Financial Data Schedules for the nine months ended 
                      September 29, 1996, (filed electronically only).

               27(b)  Financial Data Schedules restated for the nine months 
                      ended September 24, 1995, (filed electronically only).


         (b)      Reports on Form 8-K:

         During the quarter ended  September 29, 1996, and subsequent thereto,  
         the Company filed the following Current Reports on Form 8-K:

                  Date of Report                       Event Reported

                  None

<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.

                                     JAMES RIVER CORPORATION of Virginia

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


Date:  November 8, 1996