SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of
Securities Exchange Act of 1934
For the year ended December 31, 1997
Commission file number 1-7911
A. Full title of the plan and the address of the plan,
if different from that of the issuer named below:
FORT JAMES CORPORATION
CANADIAN EMPLOYEES STOCK PURCHASE PLAN
B. Name of issuer of the securities held pursuant to the
Plan and the address of its principal executive office:
FORT JAMES CORPORATION
1650 Lake Cook Road, Deerfield, Illinois 60015
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FORT JAMES CORPORATION
CANADIAN EMPLOYEES STOCK PURCHASE PLAN
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Items 1. and 2. Financial Statements and Exhibits
Pages
a. Financial statements:
Report of independent accountants 3
Statements of financial condition as of
December 31, 1997 and 1996 4
Statements of income and changes in plan equity for
the years ended December 31, 1997, 1996 and 1995 5
Notes to financial statements 6-10
Schedules I, II and III are omitted because they are not applicable or because
substantially all of the information is provided within the financial
statements.
b. Exhibits:
4.0 Fort James Corporation Canadian Employees Stock Purchase Plan, as
amended and restated effective August 28, 1995 (incorporated by
reference to Exhibit 4 to Fort James Corporation Canadian Stock
Purchase Plan Annual Report on Form 11-K for the year ended December
31, 1995).
4.1 Amendment to Fort James Corporation Canadian Employees Stock
Purchase Plan, effective January 1, 1997 - filed herewith.
23 Consent of independent accountants - filed herewith.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Retirement Plans Management Committee of
Fort James Corporation:
We have audited the accompanying statements of financial condition of the Fort
James Corporation Canadian Employees Stock Purchase Plan (the "Plan") as of
December 31, 1997 and 1996, and the related statements of income and changes in
plan equity for each of the three years in the period ended December 31, 1997.
These financial statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Plan as of December 31,
1997 and 1996, and the income and changes in plan equity for each of the
three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
February 6, 1998
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FORT JAMES CORPORATION
CANADIAN EMPLOYEES STOCK PURCHASE PLAN
STATEMENTS OF FINANCIAL CONDITION
as of December 31, 1997 and 1996
1997 1996
ASSETS
Cash $ 1,108 $ 149,111
Contributions receivable:
Employer:
Basic 25,581 40,250
Additional 16,538 17,270
Employee 50,368 77,814
Investment in common stock,
at market value:
Fort James (historical cost: 1997-
$1,853,577 and 1996-$1,619,753) 2,257,898 1,968,519
Crown Vantage Inc. (historical
cost: 1997-$44,570 and 1996-
$63,273) 14,539 25,177
Total assets $2,366,032 $2,278,141
LIABILITIES AND PLAN EQUITY
Payable to withdrawing participants $ 19,473
Plan equity $2,366,032 2,258,668
Total liabilities and plan equity $2,366,032 $2,278,141
The accompanying notes are an integral part of the financial statements.
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FORT JAMES CORPORATION
CANADIAN EMPLOYEES STOCK PURCHASE PLAN
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
for the years ended December 31, 1997, 1996 and 1995
1997 1996 1995
Investment income:
Cash dividends on
Common Stock $ 32,879 $ 29,996 $ 32,765
Realized gain on sale
of investments 29,274
Interest on bank deposits 38 758 1,152
Total investment income 62,191 30,754 33,917
Change in net unrealized
appreciation or depreciation
in fair value of investments 63,620 424,064 11,197
Contributions and deposits:
Deposits by participating
employees 635,794 557,847 479,655
Contributions by employer:
Basic 326,212 290,448 256,521
Additional 16,856 17,131 15,181
Administrative costs 26,113 21,153 21,268
Loss funded by Trustee 34,046
Total contributions and
deposits 1,039,021 886,579 772,625
Withdrawals and expenditures:
Distributions to participants (1,023,473) (769,239) (635,411)
Administrative costs (26,113) (21,153) (21,268)
Total withdrawals and
expenditures (1,049,586) (790,392) (656,679)
Stock distribution of Crown
Vantage Inc. 133,338
Foreign currency remeasurement
gain (loss) (7,882) 135 (401)
Net increase in plan equity 107,364 551,140 293,997
Plan equity, beginning of year 2,258,668 1,707,528 1,413,531
Plan equity, end of year $2,366,032 $ 2,258,668 $ 1,707,528
The accompanying notes are an integral part of the financial statements.
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FORT JAMES CORPORATION
CANADIAN EMPLOYEES STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
1. General:
The Fort James Corporation Canadian Employees Stock Purchase Plan (the "Plan"),
formerly the James River Corporation of Virginia Canadian Employees Stock
Purchase Plan, was adopted by the Board of Directors of Fort James
Corporation ("Fort James" or the "Company") for the benefit of the employees
of certain operating subsidiaries of Fort James located in Canada (the
"Participating Companies"). As of December 31, 1997, the Participating
Companies included Fort James Marathon, Ltd. ("Marathon") and Fort James
Canada, Inc. ("FJ Canada"). In 1997, James River Corporation of Virginia
("James River") and Fort Howard Corporation ("Fort Howard") merged, with Fort
Howard shareholders receiving 1.375 James River common shares for each Fort
Howard common share, and James River shareholders retaining their holdings.
In connection with the merger James River was renamed Fort James Corporation.
2. Summary of Significant Accounting Policies:
Cash
Substantially all contributions to the Plan are initially invested in an
interest-bearing account pending their investment in Fort James' common
stock, $.10 par value ("FJ Common Stock"). Interest earned on such cash
balances is credited to the Participants' accounts. Cash balances are stated
at cost, which approximates market value.
Investment Valuation
The investments include FJ Common Stock and Crown Vantage Inc. common stock
("CV Common Stock") (See Note 3). The investments in FJ Common Stock and CV
Common Stock are stated at market value, based on the closing price on the New
York Stock Exchange Composite Tape on the last trading day of the period. The
closing market value per share of FJ Common Stock was $38.25 and $33.125 on
December 31, 1997, and December 31, 1996, respectively. The closing market
value per share of CV Common Stock was $7.00 and $8.50 on December 31, 1997,
and December 31, 1996, respectively.
Security Transactions and Related Investment Income
Security transactions are accounted for as of the trade date, and dividend
income is recorded as of the date of declaration. The cost of securities sold
is determined on an average-cost basis. The assets of the Plan are held under
a trust Agreement, dated August 23, 1989, with National Trust Company. During
1996, National Trust Company sold its institutional custody business to Canada
Trust thereby resulting in a transfer of the assets of the Plan to Canada Trust
(the "Trustee").
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NOTES TO FINANCIAL STATEMENTS
(continued)
Contributions and Deposits
Employee and employer contributions are recorded on an accrual basis as of the
date the employees' contributions are withheld from the employees' compensation.
Employee and employer contributions are transferred to the Trustee on a monthly
basis. The Trustee uses such contributions to periodically purchase shares of
FJ Common Stock which are allocated to each Participant's account. Residual
cash amounts held by the Trustee are carried forward to the next month.
Foreign Currency Remeasurement
The functional currency of the Plan is the U.S. dollar. Assets and liabilities
of the Plan (except investments in common stock which are stated at U.S. dollar
market value) are remeasured from Canadian dollars to U.S. dollars at the
applicable year-end exchange rate. The cost of investments in common stock and
the related unrealized appreciation or depreciation are remeasured at
applicable historical exchange rates. Investment income, contributions and
deposits, and withdrawals and expenditures are remeasured at average
exchange rates for the years ended December 31, 1997, 1996, and 1995. Foreign
currency remeasurement gains and losses are included in the net increase in
plan equity.
Withdrawals
Withdrawals of common stock from the Plan by Participants are accounted for at
the average historical cost of the common stock distributed, plus cash paid in
lieu of fractional shares, where applicable. Withdrawals in cash or in
connection with shares sold for distributions of fractional shares are
accounted for at the fair market value of the related common stock. Any
Participant contributions which have not yet been applied to the
purchase of common stock will also be paid to each withdrawing Participant.
Administrative Costs
The Plan is reimbursed by the Participating Companies for its administrative
and operating costs, except for brokerage fees. Brokerage fees are included
in the cost of acquiring common stock and thus are borne by the Participants.
Loss Funded by Trustee
The loss funded by the Trustee is for reimbursements to Participant's accounts
in an amount equal to the appreciation in FJ Common Stock price for funds that
were not invested by the Trustee in the FJ Common Stock in a timely manner.
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NOTES TO FINANCIAL STATEMENTS
(continued)
3. Description of the Plan:
The Plan was established to enable eligible employees of certain Fort James
subsidiaries located in Canada to acquire an ownership interest in Fort James,
the ultimate holding company. The Plan is a non-taxable employees profit
sharing plan as defined in Section 144(1) of the Income Tax Act (Canada) (the
"Canadian Tax Act").
On August 28, 1995, the Company spun off part of its Communications Papers
Business, as well as the specialty paper based portion of its Packaging
Business, into a new Company, Crown Vantage Inc. ("Crown Vantage"). The
existing shareholders of the Company on record as of August 25, 1995,
received one share of CV Common Stock for each ten shares of FJ Common Stock
held by the shareholder. The Plan was amended to allow for inclusion of an
investment in CV Common Stock. As a result, during 1995, the plan received
a stock distribution of 6,649 shares of Crown Vantage valued at $133,338.
Participants may elect to contribute into the Plan, through payroll deductions,
from 1% to 10% of their compensation to be used to purchase FJ Common Stock for
their benefit. Participant contributions of up to six percent of compensation
("Basic Member Contributions") are matched by the Participating Companies
("Basic Employer Contributions") based on the following schedule:
Participating Company's
Contributions as a percentage
Participant's contributions of Participant's contributions
1% of compensation 100%
2% of compensation 65%
3% to 6% of compensation 50%
The Participating Companies make no contributions with respect to a
Participant's contribution in excess of six percent of the Participant's
compensation.
The Participating Companies make "Additional Employer Contributions" on or
before March 31 of each calendar year with respect to each Participant in its
employ on the preceding December 31 who has not withdrawn any common stock
from his Restricted Account (hereinafter defined) during either of the two
immediately preceding calendar years. The amount of the Additional Employer
Contribution allocated to the Participant's account equals 10% of the
aggregate Basic Employer Contributions made with respect to the Participant
during the earlier of such two immediately preceding calendar years. Each
Participant's "Restricted Account" includes the Basic Member Contributions
and Basic Employer Contributions made at any time during the current or
immediately preceding calendar year, and any FJ Common Stock or CV Common
Stock purchased with such contributions. The Additional Employer
Contribution receivable reflected on the Statement of Financial Condition as
of December 31, 1997 represents the accrued contribution related to the 1996
Basic Employer Contributions of qualifying Participants to be paid to
the Plan on March 31, 1998. The Additional Employer Contribution accrued
as of December 31, 1996, which related to the 1995 Basic Employer
Contributions of qualifying Participants, was paid to the Plan on March 31,
1997.
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NOTES TO FINANCIAL STATEMENTS
(continued)
Each Participant is fully vested in his contributions, in Basic Employer
Contributions, in Additional Employer Contributions, and in any earnings
thereon at all times. The Plan had approximately 471 Participants as of
December 31, 1997, and 412 Participants as of December 31, 1996.
4. Contributions to the Plan:
Employee and employer contributions for the years ended December 31,
1997, 1996 and 1995 were as follows:
1997 1996 1995
Employee Employer Employee Employer Employee Employer
Marathon $471,740 $267,973 $413,090 $238,437 $351,162 $208,213
FJ Canada 164,054 101,208 144,757 90,295 128,493 84,757
$635,794 $369,181 $557,847 $328,732 $479,655 $292,970
5. Investment in Common Stock:
The unrealized appreciation or depreciation of investment in common stock as
of December 31, 1997, 1996 and 1995 and the change in such amount during each
period were as follows:
Unrealized
Market Appreciation
Value Cost (Depreciation)
December 31, 1994 $1,428,476 $1,553,067 $(124,591)
Change for the year ended
December 31, 1995 164,981 153,784 11,197
December 31, 1995 $1,593,457 $1,706,851 $(113,394)
Change for the year ended
December 31, 1996 400,239 (23,825) 424,064
December 31, 1996 1,993,696 1,683,026 310,670
Change for year ended
December 31, 1997 278,741 215,121 63,620
December 31, 1997 $2,272,437 $1,898,147 $ 374,290
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(continued)
The Plan held 59,030 and 59,427 shares of FJ Common Stock on December 31,
1997, and December 31, 1996, respectively. In addition, the Plan held 2,077
and 2,962 shares of CV Common Stock on December 31, 1997, and December 31,
1996, respectively.
6. Tax Status:
The Plan is an employee profit sharing plan and is subject to the Canadian
Tax Act; all amounts contributed to a Participant's account are taxable to
such Participant under Canadian income tax rules. The only U.S. taxes paid
are U.S. withholding taxes on cash dividends, which are withheld on behalf
of Participants. No such withholdings occurred in 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Committee who administer the Plan have duly caused this annual
report to be signed by the undersigned hereunto duly authorized.
March 23, 1998 /s/Clifford A. Cutchins, IV
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Date Committee Member - Clifford A. Cutchins, IV
March 23, 1998 /s/Daniel J. Girvan
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Date Committee Member - Daniel J. Girvan
March 23, 1998 /s/Ernst A. Haberli
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Date Committee Member - Ernst A. Haberli
March 23, 1998 /s/R. Michael Lempke
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Date Committee Member - R. Michael Lempke
March 23, 1998 /s/William A. Paterson
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Date Committee Member - William A. Paterson
March 23, 1998 /s/Michael T. Riordan
- -------------- ------------------------------------------
Date Committee Member - Michael T. Riordan
Amendments to Fort James Corporation
Canadian Employees Stock Purchase Plan
The Fort James Corporation Canadian Employees Stock Purchase Plan (the "Plan")
is hereby amended, effective January 1, 1997, as follows:
1. Section 7 of the Plan (Additional Employer Contributions) is amended by
replacing the first sentence with the following:
A Participating Employer shall make out of profits an Additional Employer
Contribution on or before March 31 of each calendar year (other than, for
greater certainty, 1990) in respect of each Accountholder employed by it
on the preceding December 31 who has not, during either of the two
calendar years immediately preceding such March 31, made a withdrawal
from his Restricted Account.
2. Section 8 of the Plan (Accounts and Allocations to Accountholders) is
amended by replacing section 8(a) with the following:
8. ACCOUNTS AND ALLOCATIONS TO ACCOUNTHOLDERS
(a) The Trustee shall establish and maintain the following accounts:
(i) a Restricted Account, to which shall be credited at any
particular time Basic Member Contributions made in
respect of an Accountholder at any time during the current
or immediately preceding calendar year, any Basic Employer
Contributions made in respect of the Accountholder at any
time during the current or immediately preceding calendar
year, any Shares purchased with any such contributions and
the net proceeds received by or credited to the Trustee in
respect of any sale of such Shares; and
(ii) an Unrestricted Account, to which shall be credited all other
contributions, the amounts referred to in paragraph (c) hereof,
any Shares purchased with such contributions or amounts and
the net proceeds received by or credited to the Trustee in
respect of any sale of such Shares.
3. Section 8A of the Plan (Crown Vantage Account) is amended by deleting
the word "and" at the end of subparagraph 8A(a)(ii), replacing the period at
the end of paragraph 8A(a)(iii) with "; and", and adding the following
subparagraph 8A(a)(iv):
(iv) the net proceeds received by or credited to the Trustee in
respect of any sale of any Crown Vantage Shares held in the
Accountholder's Crown Vantage Account.
4. Section 11 (Payments Out of the Plan) is amended by replacing Section 11(c)
with the following:
(c) A distribution (other than a distribution from an
Accountholder's Crown Vantage Account, which shall be treated
as a distribution from the Unrestricted Account) shall be
deemed to be made from an Accountholder's Accounts in the
following order:
(i) the Unrestricted Account (other than the portion thereof
represented by the Accountholder's Crown Vantage
Account); and
(ii) the Restricted Account.
5. Section 11 is further amended by adding the following Section 11(e):
(e) An Accountholder may, in lieu of receiving a distribution of
whole Shares or Crown Vantage Shares as provided in section
11(a) or (b) hereof, direct in his application to the Plan
Administrator that all or a portion of the Shares or Crown
Vantage Shares to which he would otherwise be entitled
be sold and the net proceeds distributed to him.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
of Fort James Corporation on Form S-8 (File No. 33-57153) of our report dated
February 6, 1998, on our audits of the financial statements of the Fort James
Corporation Canadian Employees Stock Purchase Plan as of December 31, 1997
and 1996, and for each of the three years in the period ended December 31,
1997, which report is included in this Annual Report on Form 11-K.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
March 23, 1998
