UNITED STATES
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 26, 2000 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,
2000:
205,770,164 shares
<PAGE>
FORT JAMES CORPORATION
QUARTERLY REPORT ON FORM 10-Q
March 26, 2000
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements:
Consolidated Balance Sheets as of March 26, 2000 and
December 26, 1999 3
Consolidated Statements of Operations for the quarters
ended March 26, 2000 and March 28, 1999 4
Consolidated Statements of Cash Flows for the quarters ended
March 26, 2000 and March 28, 1999 5
Notes to Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 14
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings 14
ITEM 2. Changes in Securities 14
ITEM 3. Defaults Upon Senior Securities 14
ITEM 4. Submission of Matters to a Vote of Security Holders 14
ITEM 5. Other Information 14
ITEM 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 16
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FORT JAMES CORPORATION
CONSOLIDATED BALANCE SHEETS
March 26, 2000 and December 26, 1999
<TABLE>
<CAPTION>
March December
(in millions, except share data) 2000 1999
<S> <C> <C>
- --------------------------------------------------------------------------------
Assets:
Current assets:
Cash and cash equivalents $ 8.5 $ 10.3
Accounts receivable 849.3 880.5
Inventories 816.0 790.4
Deferred income taxes 104.9 111.5
Other current assets 36.7 35.7
- --------------------------------------------------------------------------------
Total current assets 1,815.4 1,828.4
- --------------------------------------------------------------------------------
Property, plant and equipment 7,858.6 7,858.0
Accumulated depreciation (3,562.5) (3,505.9)
- --------------------------------------------------------------------------------
Net property, plant and equipment 4,296.1 4,352.1
Goodwill, net 505.6 528.8
Other assets 490.4 548.9
- --------------------------------------------------------------------------------
Total assets $ 7,107.5 $ 7,258.2
================================================================================
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable $ 572.9 $ 619.1
Accrued liabilities 585.8 568.7
Current portion of long-term debt 71.5 81.9
- --------------------------------------------------------------------------------
Total current liabilities 1,230.2 1,269.7
- --------------------------------------------------------------------------------
Long-term debt 3,438.5 3,432.0
Deferred income taxes 739.5 748.6
Accrued postretirement benefits other than pensions 410.8 417.1
Other long-term liabilities 260.0 263.5
- --------------------------------------------------------------------------------
Total liabilities 6,079.0 6,130.9
- --------------------------------------------------------------------------------
Common stock, $.10 par value, 500.0 million shares authorized;
207.9 million shares outstanding at March 26, 2000
and 214.0 million at December 26, 1999 20.8 21.4
Additional paid-in capital 2,922.5 3,045.0
Accumulated comprehensive loss (268.1) (227.1)
Accumulated deficit (1,646.7) (1,712.0)
- --------------------------------------------------------------------------------
Total shareholders' equity 1,028.5 1,127.3
- --------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 7,107.5 $ 7,258.2
================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
FORT JAMES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters Ended March 26, 2000 and March 28, 1999
<TABLE>
<CAPTION>
(in millions, except per share amounts) 2000 1999
- -------------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 1,676.6 $ 1,669.0
Cost of goods sold (1,201.3) (1,135.5)
Selling and administrative expenses 288.1) (297.1)
- --------------------------------------------------------------------------------
Income from operations 187.2 236.4
Interest expense (57.0) (62.5)
Other income, net 14.8 3.9
- --------------------------------------------------------------------------------
Income from continuing operations
before income taxes, extraordinary items, and
cumulative effect of a change in accounting principle 145.0 177.8
Income tax expense (48.6) (60.2)
- --------------------------------------------------------------------------------
Income from continuing operations
before extraordinary items and cumulative effect
of a change in accounting principle 96.4 117.6
Income from discontinued operations, net of taxes - 4.4
- --------------------------------------------------------------------------------
Income before extraordinary items
and cumulative effect of a change in accounting principle 96.4 122.0
Extraordinary loss on early
extinguishment of debt, net of taxes - (2.2)
Cumulative effect of a change
in accounting principle, net of taxes - (22.1)
- --------------------------------------------------------------------------------
Net income $ 96.4 $ 97.7
================================================================================
Basic earnings per share:
Income from continuing operations
before extraordinary items and cumulative effect
of a change in accounting principle $ 0.46 $ 0.54
Income from discontinued operations, net of taxes - 0.02
Extraordinary loss on early
extinguishment of debt, net of taxes - (0.01)
Cumulative effect of a change in
accounting principle, net of taxes - (0.10)
- --------------------------------------------------------------------------------
Net income $ 0.46 $ 0.45
- --------------------------------------------------------------------------------
Weighted average common shares outstanding 210.1 219.5
================================================================================
Diluted earnings per share:
Income from continuing operations
before extraordinary items and cumulative effect
of a change in accounting principle $ 0.46 $ 0.53
Income from discontinued operations, net of taxes - 0.02
Extraordinary loss on early
extinguishment of debt, net of taxes - (0.01)
Cumulative effect of a change in
accounting principle, net of taxes - (0.10)
- --------------------------------------------------------------------------------
Net income $ 0.46 $ 0.44
- --------------------------------------------------------------------------------
Weighted average common shares and
common share equivalents outstanding 210.4 220.4
================================================================================
Cash dividends per common share $ 0.15 $ 0.15
================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
FORT JAMES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Quarters Ended March 26, 2000 and March 28, 1999
<TABLE>
<CAPTION>
(in millions) 2000 1999
<S> <C> <C>
- -----------------------------------------------------------------------------
Cash provided by (used for) operating activities:
Net income $96.4 $ 97.7
Depreciation expense 115.8 110.2
Amortization of goodwill 4.4 4.7
Deferred income tax provision 2.5 22.2
Income from discontinued operations, net of taxes - (4.4)
Loss on early extinguishment of debt, net of taxes - 2.2
Cumulative effect of a change in accounting
principle, net of taxes - 22.1
Change in current assets and liabilities, excluding
effects of acquisitions and dispositions:
Accounts receivable 10.2 (57.9)
Inventories (31.2) (24.9)
Other current assets (0.9) (3.7)
Accounts payable and accrued liabilities (13.0) (65.1)
Other, net (27.4) (44.3)
- -----------------------------------------------------------------------------
Cash provided by operating activities 156.8 58.8
- -----------------------------------------------------------------------------
Cash provided by (used for) investing activities:
Expenditures for property, plant and equipment (104.0) (99.2)
Decrease in net assets of discontinued operations - 3.9
Proceeds from sale of assets 86.7 0.7
Other, net (0.5) (0.6)
- -----------------------------------------------------------------------------
Cash used for investing activities (17.8) (95.2)
- -----------------------------------------------------------------------------
Cash provided by (used for) financing activities:
Additions to long-term debt - 0.5
Payments of long-term debt (21.2) (73.6)
Net increase in revolving debt 36.0 144.1
Premiums paid on early extinguishment
of debt and debt issuance costs - (4.1)
Common stock dividends paid (32.2) (33.0)
Proceeds from exercise of stock options 0.3 2.4
Common stock purchases (123.7) -
- -----------------------------------------------------------------------------
Cash provided by (used for) financing activities (140.8) 36.3
- -----------------------------------------------------------------------------
Decrease in cash and cash equivalents (1.8) (0.1)
Cash and cash equivalents, beginning of period 10.3 5.3
- -----------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 8.5 $ 5.2
=============================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<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 (including normal recurring accruals) necessary to
present fairly the Company's consolidated financial position as of March 26,
2000 and its results of operations and cash flows for the quarters ended March
26, 2000 and March 28, 1999. The balance sheet as of December 26, 1999 was
derived from audited financial statements as of that date. The results of
operations for the quarter ended March 26, 2000 are not necessarily indicative
of the results to be expected for the full year.
As a result of the sale of a discontinued operation, information for the
quarter ended March 28, 1999 has been restated.
Prospective Accounting Pronouncements:
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("FAS No. 133"). This statement requires the recognition of all
derivatives in the statement of financial position as either assets or
liabilities and their measurement at fair value. Depending upon the nature of
the derivative, changes in fair value are either recognized in other
comprehensive income or in earnings. FASB Statement No. 137 defers the Company's
required adoption of FAS No. 133 until fiscal 2001. The Company has not
determined what affect, if any, FAS No. 133 will have on its results of
operations or financial position.
2. Dispositions
In January 2000, the Company completed the sale of Fort James - Marathon
LTD ("Marathon"), a non-integrated pulp mill located in Ontario, Canada, to a
joint venture between Tembec Inc. and Kruger Inc. for $69.1 million. In February
2000, the Company closed its groundwood paper operations at the Wauna mill in
Clatskanie, Oregon.The loss on the sale of Marathon and costs related to the
closure of groundwood operations were recorded in the fourth quarter of 1999.
Net sales and income (loss) from operations of Marathon and the goundwood
paper business for the quarters ended March 26, 2000 and March 28, 1999 were as
follows:
<TABLE>
<CAPTION>
(in millions) 2000 1999
<S> <C> <C>
- --------------------------------------------------------------------------------
Net sales of assets held for disposal $ 18.3 $ 29.4
Income (loss) from operations of assets held for disposal $ 1.8 $ (0.8)
</TABLE>
In August 1999, Fort James sold its Packaging business to ACX Technologies,
Inc. for $836.3 million in cash. The sale included the operations, assets, and
liabilities of the Company's folding carton, healthcare, and microwave packaging
manufacturing facilities.The Packaging business is treated as a discontinued
operation and the financial statements have been restated for periods prior to
the disposal date. The results of discontinued operations include the operating
profits for the Packaging business and an allocation of interest expense and
taxes.
<PAGE>
Results for the Packaging business for the quarter ended March 28, 1999
were as follows:
<TABLE>
<CAPTION>
(in millions) 1999
<S> <C>
- --------------------------------------------------------------------------------
Net sales $ 139.0
================================================================================
Income from discontinued operations $ 7.9
Tax expense (3.5)
- --------------------------------------------------------------------------------
Income from discontinued
operations, net of taxes $ 4.4
================================================================================
</TABLE>
3. Stock Purchase Program
In August 1999, the Company began execution of a $500 million stock
purchase program. During the first quarter of 2000, 6.1 million shares of common
stock were purchased at a cost of $123.7 million. As of March 26, 2000, the
Company had purchased 13.2 million shares at a cost of $323.4 million since the
inception of the program.
4. Balance Sheet Information
Reduction-in-Force
In the third quarter of 1999, the Company recorded a charge of $25.0
million for the cost of termination benefits for a reduction-in-force program
that has reduced headcount by approximately 1,300. As of March 26, 2000, the
program was substantially complete and termination benefits of $15.3 million had
been paid. Approximately $4.7 million of salary continuation benefits will be
paid out according to contract terms.
Inventories
The components of inventories were as follows as of March 26, 2000 and
December 26, 1999:
<TABLE>
<CAPTION>
March December
(in millions) 2000 1999
<S> <C> <C>
- --------------------------------------------------------------------------------
Raw materials $ 177.4 $ 178.3
Finished goods and work in process 507.6 464.8
Stores and supplies 170.7 165.4
- --------------------------------------------------------------------------------
855.7 808.5
Reduction to state certain inventories
at last-in, first-out cost (39.7) (18.1)
- --------------------------------------------------------------------------------
Total inventories $ 816.0 $ 790.4
================================================================================
</TABLE>
5. Comprehensive Income
Comprehensive income for the quarters ended March 26, 2000 and March 28,
1999 was $55.4 million and $7.4 million, respectively. The difference between
net income and comprehensive income is due to oreign currency translation
losses.
<PAGE>
6. Income Per Common Share and Common Share Equivalent
Income and share information used in determining earnings per share for the
quarters ended March 26, 2000 and March 28, 1999 were as follows:
<TABLE>
<CAPTION>
2000 1999
---------------------------------------
(in millions) Income Shares Income Shares
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Amounts used to compute basic earnings per share:
Income from continuing operations
before extraordinary items and
cumulative effect of a change in
accounting principle $ 96.4 $ 117.6
Weighted average common
shares outstanding 210.1 219.5
Effect of dilutive securities:
Options (a) 0.3 0.9
- --------------------------------------------------------------------------------
Amounts used to compute diluted
earnings per share $ 96.4 210.4 $ 117.6 220.4
================================================================================
</TABLE>
(a) For the quarters ended March 26, 2000 and March 28, 1999, outstanding
options to purchase 9.7 million and 5.7 million shares of common stock,
respectively, for which the exercise price was greater than the average
market price of the common shares were excluded from the computation of
diluted earnings per share.
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 other remedial
investigations and actions under federal and state laws. These sites include the
Lower Fox River in Wisconsin, where the Company and six other companies have
been identified as PRPs for contamination of the river by hazardous substances.
Various state and federal agencies and tribal entities are seeking sediment
restoration and natural resources damages. In February 1999, the Wisconsin
Department of Natural Resources released for public comment a draft remedial
investigation/feasibility study of the Fox River. While the draft study did not
advocate any specific restoration alternatives, it included estimated total
costs ranging from zero for `no action' to approximately $720 million, depending
on the alternative or combination of alternatives selected. The Company, along
with other PRPs, is also participating in the funding of a remedial
investigation/feasibility study of contamination of the Kalamazoo River in
Michigan. The Michigan Department of Environmental Quality ("DEQ") has announced
its intention to publish a record of decision, which will contain the DEQ's
proposed remedy, sometime during 2001. The final restoration alternative and the
Company's share of the related costs, for both these sites, are unknown at this
time.
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 26, 2000, Fort James' accrued
environmental liabilities, including remediation and landfill closure costs,
totaled $64.4 million. 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 period.
<PAGE>
Litigation:
The Company is party to various legal proceedings generally incidental to
its business. As is the case with other companies in similar industries, Fort
James faces exposure from actual or potential claims and legal proceedings.
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 sought
damages on behalf of the state under Florida law of $1 million against each
defendant for each violation, unspecified treble damages and injunctive relief.
Four other state attorney generals brought similar suits. In April, 2000, the
defendants settled with the State of Florida and the matter was dismissed. The
Company admitted no wrongdoing. Agreement in principle has been reached to
settle the cases brought by the States of New York, Maryland and West Virginia.
A case filed by the State of Kansas was dismissed earlier. Numerous private
suits on behalf of an alleged class of direct purchasers have also been filed in
federal courts, all seeking similar damages for similar alleged violations. In
July 1998, the private suits were conditionally certified as a class action in
the Florida District Court. Private class action suits also were filed in four
states on behalf of an alleged class of indirect purchasers, seeking similar
damages for similar alleged violations under state law. The Minnesota state
court refused to certify a class in that state, and the case in Wisconsin was
voluntarily dismissed prior to certification. The class certification petition
was recently argued in California, but no decision has been rendered. No
activity has been forthcoming in Tennessee. The Company believes that these
remaining cases are without merit and is vigorously defending both the federal
and state actions.
Although the ultimate disposition of the various legal proceedings to which
the Company is a party cannot be predicted with certainty, it is the Company's
policy to accrue settlement costs when it is probable that such costs will be
incurred and when a range of loss can be reasonably estimated. It is the opinion
of the Company's management that the outcome of any claim which is pending or
threatened, either individually or on a combined basis, will not have a material
adverse effect on the consolidated financial condition of Fort James but could
have a material effect on consolidated results of operations in a given period.
Other:
In 1995, the Company completed the spin-off of certain assets of its
Communications Papers and Packaging businesses to Crown Vantage Inc. ("Crown").
On March 15, 2000, Crown filed for Chapter 11 bankruptcy protection from its
creditors and secured $100 million of "debtor in possession" financing. As a
result of the bankruptcy filing, the Company is currently evaluating possible
liabilities it may have related to its former ownership of Crown operations.
Management believes that the outcome of any potential claims related to Crown,
will not have a material adverse effect on the consolidated financial condition
of Fort James but could have a material effect on consolidated results of
operations in a given period.
<PAGE>
8. Segments
Segment sales and income from operations for the quarters ended March 26,
2000 and March 28, 1999 and total assets as of March 26, 2000 and March 28, 1999
were as follows:
<TABLE>
<CAPTION>
Tissue Communi- Inter-
--------------- cations company
North Papers and and
(in millions) America Europe Dixie Fiber Corporate Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2000
Net sales $ 913.2 $ 449.9 $ 179.2 $ 237.2 $(102.9) $ 1,676.6
Intercompany sales 33.7 - 0.4 68.8 - 102.9
Income from operations 144.1 29.1 19.4 14.3 (19.7) 187.2
Total assets 3,318.8 2,086.7 450.8 586.1 665.1 7,107.5
=============================================================================================
1999
Net sales $ 899.4 $ 465.9 $ 175.6 $ 196.0 $(67.9) $ 1,669.0
Intercompany sales 25.6 - 0.9 41.4 - 67.9
Income from operations 192.1 61.1 19.3 (14.2) (21.9) 236.4
Total assets 2,997.2 2,168.3 402.2 818.5 1,212.4 (a) 7,598.6
=============================================================================================
</TABLE>
(a) Includes net assets of discontinued operations, which were previously
reported as a separate segment.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Overview
<TABLE>
<CAPTION>
2000 1999 (a)
-------------- -------------------------------------
<S> <C> <C> <C>
(in millions, Excluding Unusual
except per share data) Reported Reported and Non-recurring
- -------------------------------------------------------------------------------
Net sales $ 1,676.6 $ 1,669.0 $ 1,669.0
Income from operations 187.2 236.4 236.4
Net income 96.4 97.7 117.6
Diluted earnings per share $ 0.46 $ 0.44 $ 0.53
===============================================================================
</TABLE>
(a) Net income for the first quarter of 1999 included income from discontinued
operations of $4.4 million or $0.02 per diluted share, a charge for the
cumulative effect of a change in accounting for start-up costs of $22.1
million or $0.10 per diluted share and an extraordinary loss on the early
extinguishment of debt of $2.2 million or $0.01 per diluted share.
Tissue - North America
- ----------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(in millions) 2000 1999 Inc/(Dec)
- -----------------------------------------------------------------------
Net sales $ 913.2 $ 899.4 1.5%
Income from operations 144.1 192.1 -25.0%
=======================================================================
</TABLE>
Volumes increased in the current quarter compared to the first quarter of
1999, with volume gains in away-from-home bath tissue and retail bath tissue and
towel. The decline in income from operations for both the retail and
away-from-home categories is the result of rising raw material costs,
principally wastepaper. The away-from-home category was able to slightly offset
the increase in costs as announced first quarter list price increases, averaging
9 percent to 10 percent, began to take effect. Additional away-from-home list
price increases of up to 12 percent, effective April 17, 2000, have been
announced. Net pricing in the retail category, which declined last year with
increased promotional spending in all product categories, remained below last
year's first quarter level. However, during the quarter, the retail category
announced price increases averaging 6 percent to 7 percent effective March 31,
2000. The retail category introduced several new products in the quarter
including Quilted Northern Bathroom Tissue Super Family Pack, Brawny 3 Roll
Pick-A-Size and Quilted Northern Thick `n Strong Napkins.
Tissue - Europe
- ---------------
<TABLE>
<CAPTION>
(in millions) 2000 1999 Inc/(Dec)
<S> <C> <C> <C>
- -----------------------------------------------------------------------
Net sales $ 449.9 $ 465.9 -3.4%
Income from operations 29.1 $61.1 -52.4%
=======================================================================
</TABLE>
Changes in currency exchange rates negatively affected sales and operating
profits by approximately $44 million and $5 million, respectively, compared to
last year's quarter. European finished goods volumes increased by more than 4
percent compared to the prior year quarter with strength in key markets in
France and Spain. Significant increases in raw material costs and competitive
pricing conditions in the United Kingdom drove year over year declines in
operating profits. In response to the increase in raw material costs, pricing
initiatives have been announced in all markets.
<PAGE>
Dixie
- -----
<TABLE>
<CAPTION>
(in millions) 2000 1999 Inc/(Dec)
<S> <C> <C> <C>
- -----------------------------------------------------------------------
Net sales $ 179.2 $ 175.6 2.1%
Income from operations 19.4 19.3 0.5%
=======================================================================
</TABLE>
The current quarter's results reflected positive volume growth and cost
reductions, offset by inflation in plastic resin and other costs. Price
increases for the foodservice and club categories have been announced to recover
these inflationary cost increases. Dixie shipments increased due to volume gains
in dense-pack cutlery and retail plates. During the first quarter, Dixie rolled
out Rinse & ReUse disposable stoneware and UltraStrong Giant 11-inch plates,and
continued the expansion of the PerfecTouch hot cup.
Communications Papers and Fiber
- -------------------------------
<TABLE>
<CAPTION>
(in millions) 2000 1999 Inc/(Dec)
<S> <C> <C> <C>
- -----------------------------------------------------------------------
Net sales $ 237.2 $ 196.0 21.0%
Income (loss) from operations 14.3 (14.2) 200.7%
=======================================================================
</TABLE>
The improved earnings in the first quarter of 2000 were the result of
significantly higher pulp and uncoated freesheet prices, partially offset by
lower pulp volumes as a result of the January 2000 sale of Marathon, LTD
(Marathon) the companys non-integrated pulp mill located in Ontario, Canada.
For further informatin on dispositions, see Note 2 to the Consolidated Financial
Statements.
Interest Expense and Other Income
Lower debt levels and reduced borrowing costs resulted in a $5.5 million
decrease in interest expense for the quarter. Other income for the quarter ended
March 26, 2000 increased to $14.8 million from $3.9 million in 1999, primarily
due to a land sale gain.
Dispositions
In January 2000, the Company completed the sale of Marathon to a joint
venture between Tembec Inc. and Kruger Inc. for $69.1 million. In February 2000,
the Company closed its groundwood paper operations at the Wauna mill in
Clatskanie, Oregon.
In August 1999, Fort James sold its Packaging business to ACX Technologies,
Inc. for $836.3 million in cash. The sale included the operations, assets, and
liabilities of the Company's folding carton, healthcare, and microwave packaging
manufacturing facilities.
Financial Condition
Cash provided by operating activities totaled $156.8 million in the first
quarter of 2000, compared with $58.8 million in the prior year. The increase is
primarily due to lower accounts receivable and higher accounts payable and
accrued liabilities. Capital expenditures were $104.0 million for the three
months ended March 2000, compared to $99.2 million for the same period in the
prior year. In the first quarter of 2000, the Company received cash proceeds of
$86.7 million from the sale of assets, including $69.1million from the sale of
Marathon. In addition, the Company exited the groundwood business by closing the
groundwood paper operation at its Wauna mill in the first quarter. The Company's
current ratio was 1.5 as of March 2000 and 1.4 as of December 1999, while
working capital increased to $585.2 million from $558.7 million for the same
periods. The increase in working capital is primarily due to lower accounts
payable.
<PAGE>
As of March 2000, total indebtedness was $ 3.5 billion and, including the
effect of interest rate swaps, included approximately $1.9 billion of fixed rate
and $1.6 billion of floating rate obligations. As of December 1999, total
indebtedness was $3.5 billion and, including the effect of interest rate swaps,
included $2.2 billion of fixed rate and $1.3 billion of floating rate
obligations. Outstanding borrowings of $1.0 billion at March 2000 and December
1999, were supported by commercial paper, revolving credit and money market
facilities. Under the most restrictive provisions of the Company's debt
agreements, the Company had additional borrowing capacity of approximately $1.2
billion as of March 2000.
Stock Purchase Program
In August 1999, the Company began execution of a $500 million stock
purchase program. During the first quarter of 2000, 6.1 million shares of common
stock were purchased at a cost of $123.7 million. As of March 26, 2000, the
Company had purchased 13.2 million shares at a cost of $323.4 million since the
inception of the program.
Inflation
For several years prior to 1999, the Company had experienced moderate
levels of inflation. In the second half of 1999 and through the first quarter of
2000, the Company began to see significant increases in the cost of its base raw
materials, principally wastepaper and purchased pulp. Management believes that
these costs will continue to escalate for the remainder of 2000. Although the
Company has announced price increases in all businesses, the timing and effect
of these increases are uncertain and therefore, the degree of recoverability of
these cost increases is uncertain.
Effect of New Accounting Standards
See Note 1 to the Consolidated Financial Statements.
Information Concerning Forward-Looking Statements
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties that could cause actual results and Company
plans and objectives to differ materially from those projected. Such risks and
uncertainties include, but are not limited to, general business and economic
conditions; competitive pricing pressures for the Company's products; the
ability to successfully introduce new products; changes in raw material, energy
and other costs; the ability to achieve projected net cost reductions;
opportunities that may be presented to and pursued by the Company; and
determinations by regulatory and governmental authorities.
<PAGE>
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.
The Annual Meeting of Shareholders was held on April 27, 2000. At this
meeting, all of management's nominees for members of the Board of Directors were
elected.
Shareholders of record of the Company's common stock at the close of
business on February 28, 2000, were entitled to vote at the Annual Meeting.
Votes were cast as follows:
<TABLE>
<CAPTION>
Votes
------------------------------------- Broker
For Against Withheld Non-Votes
<S> <C> <C> <C> <C>
------------------------------------- ------------
Nominees for election of Directors
Barbara L. Bowles 181,166,758 7,214,473
William E. Bradford 182,904,181 5,477,050
William T. Burgin 182,879,857 5,501,374
Dr. James L. Burke 182,929,936 5,451,295
Worley H. Clark, Jr. 182,667,882 5,713,349
Gary P. Coughlan 182,931,212 5,450,019
William V. Daniel 182,753,874 5,627,357
Ernst A. Haberli 182,601,653 5,779,578
Miles L. Marsh 155,024,967 33,356,264
Robert M. O'Neil 182,674,020 5,707,211
Anne Marie Whittemore 182,880,633 5,500,598
</TABLE>
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.
<PAGE>
Exhibit
Number
10(a) Separation Agreement between Fort James Corporation
and Robert Michael Lempke, filed herewith
27(a) Financial Data Schedules for the three months ended
March 26, 2000
(filed electronically only)
27(b) Financial Data Schedules restated for the three
months ended March 28, 1999
(filed electronically only)
27(c) Financial Data Schedules restated for the twelve
months ended December 27, 1998
(filed electronically only)
27(d) Financial Data Schedules restated for the nine months
ended September 27, 1998
(filed electronically only)
27(e) Financial Data Schedules restated for the six months
ended June 26, 1998
(filed electronically only)
27(f) Financial Data Schedules restated for the three
months ended March 29, 1998
(filed electronically only)
27(g) Financial Data Schedules restated for the twelve
months ended December 28, 1997
(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 26, 2000, 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/ Joseph W. McGarr
Joseph W. McGarr
Executive Vice President and Chief Financial Officer
By:/s/ Catherine M. Freeman
Catherine M. Freeman
Vice President and Corporate Controller
(Principal Accounting Officer)
Date: May 1, 2000
SEPARATION AGREEMENT
This is a Separation Agreement dated as of April 18, 2000 between Fort
James Operating Company, its parent, affiliates, subsidiaries, predecessors,
successors and assigns (collectively "Fort James" or the "Company") and Robert
M. Lempke ("Lempke").
A. Lempke has been employed by Fort James as Senior Vice President &
Treasurer under his employment agreement dated as of June 6, 1997 (the
"Employment Agreement"). Fort James and Lempke have agreed on the terms under
which he will terminate his employment with the Company. The parties desire to
resolve matters involving Lempke's employment, the Employment Agreement and
Lempke's separation from employment with Fort James.
B. Lempke and Fort James further desire to settle, resolve and release
any and all existing or potential claims, controversies, differences, disputes
or disagreements, known or unknown, that Lempke may have with Fort James in
exchange for Fort James' agreement to provide Lempke certain compensation and
benefits to which he otherwise may not be entitled.
C. Fort James also desires to provide Lempke with additional
compensation in return for Lempke agreeing (i) not to compete against Fort
James, (ii) not to hire Fort James employees and (iii) to cooperate with Fort
James.
THEREFORE, in consideration of the above premises and the mutual
covenants and promises contained herein, Lempke and Fort James agree as follows:
1. Termination of Employment. Lempke agrees to voluntarily
terminate his employment effective at the close of business on August 13, 2000
(his "Date of Termination"). He will be paid all of his regular compensation and
benefits through that date. In addition, Lempke agrees to relinquish effective
on the date hereof his rights in restricted shares of the Company, and in
consideration therefore, the Company agrees to pay Lempke an amount equal to the
equivalent value of 4,234 shares of common stock of the Company on August 13,
2000, with the value of the shares of common stock being determined by averaging
the high and low price of the common stock or the New York Stock Exchange on
such date. Fort James shall pay such amount to Lempke on or before August 31,
2000.
2. Severance Payments. Fort James shall pay Lempke the amount
of $847,826.00 representing two (2) times the sum of (i) his current base salary
and (ii) his 1998 Management Incentive Bonus. This amount shall be paid as
follows: $423,913.50 on August 14, 2000 and $423,913.50 on August 12, 2001.
Notwithstanding the preceding sentence, if an investor or investor group
acquires more than fifty percent (50%) of the Company's voting common stock or
if Miles L. Marsh is no longer CEO of Fort James, the Company agrees to pay
Lempke within thirty (30) days after a shareholder files a report with the
Securities and Exchange Commission reporting such ownership or after Miles L.
Marsh ceases to be CEO the full amount of any unpaid payments as provided in the
preceding sentence.
3. MIP Bonus Payments. Fort James shall pay Lempke,on
August 14, 2000, $114,798.74 representing his bonus under the 2000 Management
Incentive Plan.
4. Pension and Other Benefits.
(a) All Company provided medical, prescription and
dental coverage and life insurance (including the split dollar life insurance
currently provided to Lempke) in which Lempke is currently enrolled shall be
provided to Lempke and eligible members of his family for two (2) years
following August 13, 2000, to the extent provided in his Employment Agreement.
(b) Lempke is the beneficiary of 7,620 performance
shares issued pursuant to the 1996 Stock Incentive Plan (the "Plan"). Lempke
agrees to relinquish all right to the performance shares as of August 13, 2000.
(c) The Company will pay Lempke, on August 14, 2000,
in a lump sum $13,554.54 equal to his interest in the Fort James Salaried
Employees Retirement Plan and related additional SERP.
(d) Nothing herein shall forfeit or otherwise affect
Lempke's right to vested benefits in the Fort James 401(k) Plan and related
SERP, which benefits shall be paid to Lempke according to such plan.
(e) Lempke shall not be entitled to any other
bonus payments or profit sharing awards including any additional payments under
the Management Incentive Plan.
(f) All payments referred to herein are gross
payments from which Fort James may withhold legal and authorized amounts for
payment to taxing authorities as required by law.
(g) The Company shall pay Lempke, on August 14, 2000,
$7,000 for tax advice and tax preparation expenses.
(h) The Company will pay Lempke, on August 14, 2000,
$17,414.68 representing the mortgage buydown on his Lake Forest, Illinois
residence.
(i) The Company will reimburse Lempke for reasonable
legal expenses in connection with the negotiation of this Separation Agreement,
not to exceed $2,500. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal fees and expenses which Lempke may reasonablyn incur
as a result of any contest (regardless of the outcome thereof) by the Company,
Lempke or others of the validity or enforceability of, or liability under, any
provision of the Employment Agreement or this Separation Agreement or any
guarantee of performance thereof (including as a result of any contest by Lempke
about the amount of any payment pursuant to this Agreement),plus in each case
interest on any delayed payment at the applicable Federal rate provided for in
Section 7872 (f) (2) (A) of the Internal Revenue Code of 1986, as amended (the
"Code").
(j) Unless exercised, Lempke's options to purchase
60,000 shares granted on January 6, 1998 and 10,000 shares granted on January 6,
1999 shall expire on his Date of Termination.
5. Method of Payment. All cash payments required by this
Agreement shall be made by wire transfer to Lempke's account or accounts which
he shall designate in writing to the Company's Senior Vice President, General
Counsel. Such transfers shall be authorized and released in advance so as to
arrive in Lempke's account(s) by applicable due dates.
6. General Release.
(a) In consideration of all payments due him hereunder or
under the Employment Agreement, Lempke hereby agrees, for himself, his
successors, heirs, representatives, executors, agents and assigns, to release
and forever discharge Fort James, including its affiliates, subsidiaries,
parents, predecessors, successors and assigns and their respective directors,
officers, employees and agents thereof from any and all claims, debts,
responsibilities and liabilities of every kind and character whatsoever, known
or unknown, suspected or unsuspected, which he has ever had or may have against
Fort James, including but not limited to, any and all claims arising out of
Lempke's employment or termination of employment with Fort James. Lempke
acknowledges that this Release includes any and all claims whether in contract
or in tort, claims that may be brought on his behalf by others, claims brought
before any court or administrative agency, or claims under any national,federal,
state or local statute or ordinance, including any claims under Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act, the
Americans with Disabilities Act or any other law.
It is acknowledged that this Separation Agreement does not
release Lempke's right to any vested benefits in the Fort James Corporation
StockPlus Plan (the "StockPlus Plan") and related SERP. Lempke's eligibility for
benefits in the StockPlus Plan will be controlled by the terms of the plan.
(b) Fort James, including its affiliates, subsidiaries,
parents, predecessors, successors and assigns and their respective directors,
officers, employees and agents thereof hereby release and forever discharge
Lempke, his successors, heirs, representatives, executors, agents and assigns
from any and all claims, which it has ever had or may have against Lempke or any
of the foregoing persons, arising out of (x) Lempke's employment or termination
of employment with Fort James or (y) any event, condition or circumstance that
existed or arose on or prior to the Date of Termination. The foregoing release
will not apply to Lempke's obligations under this Separation Agreement. Fort
James acknowledges that this Release includes all claims whether in contract or
in tort, claims that may be brought on its behalf by others, claims brought
before any court or administrative agency, or claims under any national,
federal, state or local statute or ordinance.
7. Special Release Notification. This Separation Agreement
includes a release of all claims under the Age Discrimination in Employment Act,
("ADEA"), and, therefore, pursuant to the requirements of the ADEA, Lempke
acknowledges that he has been advised (1) that this release includes but is not
limited to, all rights or claims arising under the ADEA up to and including the
date of execution of this release, but does not waive rights or claims that may
arise after the date of execution; (2) to consult with an attorney or other
advisor of his choosing concerning his rights and obligations under this
release; (3) to fully consider this release before executing it, and that he has
been offered at least twenty-one (21) days to do so; (4) that this release shall
become effective and enforceable seven (7) days following execution of this
Separation Agreement, during which seven (7) day period Lempke understands that
he may revoke his acceptance of this Separation Agreement by delivering written
notice to Clifford A. Cutchins, IV, Senior Vice President and General Counsel,
Fort James Corporation, 1650 Lake Cook Road, Deerfield, Illinois 60015.
8. Post Employment Restrictions, Obligations
(a) Lempke agrees to comply with the terms of his
Confidentiality Agreement executed as part of his Employment Agreement and not
to otherwise use or disclose Fort James confidential information in the future.
(b)In return for the payment of the amounts on August 14,
2000 as set forth in Section 2, Lempke agrees, in order to protect the Company's
goodwill, trade secrets and confidential information and thereby help ensure the
long-term success and development of the business, not to engage in competitive
activities on behalf of a competitive business for a period of two (2) years
following the Date of Termination with the Company for whatever reason, without
first obtaining written permission from either the Senior Vice President and 3
General Counsel or the Senior Vice President, Human Resources, which shall not
be unnecessarily withheld or delayed. "Engage in competitive activities" means
rendering services or being involved directly or indirectly in any way or in any
capacity whether as an officer, director, employee, agent, owner, shareholder or
consultant (excluding ownership of less than 5% of the stock of a publicly
traded company), in the manufacture, development, promotion or sale of any towel
or tissue product or tabletop product of the type manufactured by Fort James
(the "Covered Products"). A "competitive business" means any person or entity
engaged in the manufacture or non-retail sale of the Covered Products. Lempke
acknowledges that products of the Company are sold throughout North America and
Western Europe. Accordingly, the geographic area covered by this restraint shall
include any county, city, town, province or comparable unit of local government
where the Covered Products are manufactured, marketed or sold by the Company.
The parties agree that this non-compete provision supersedes all prior
agreements between them on this subject.
(c) Lempke agrees to favorably represent the Company and
to cooperate in the transition of his responsibilities to his successor.
(d) Lempke agrees for a period of two (2) years not to
solicit directly or indirectly for employment any employee or former employee of
Fort James or its affiliates, as of January 1, 2000, without the written consent
of the Senior Vice President, Human Resources for the Company, which shall not
be unreasonably withheld or delayed. Further, Lempke agrees that if any such
Fort James employee approaches him for employment, he will refer them to the
appropriate hiring official of his employer and will have no involvement either
in the hiring of the employee or in working with the employee should such
employee work for the same company for which Lempke works.
(e) Lempke agrees that as Senior Vice President & Treasurer
he possesses intimate knowledge about all aspects of the Company's business,
business plans and other confidential or propriety information. He also agrees
that these restrictions are reasonable and necessary to protect the Company's
business and in consideration of the substantial benefits provided him
hereunder. If Lempke violates any of his obligations under this paragraph 8, the
Company shall have no further obligation to him under this Agreement as on the
date of breach. Lempke agrees that the Company will be irreparably harmed and
will be entitled to immediate injunctive relief in the event of such breach in
addition to any other monetary remedies.
(f) If any aspect of the above post employment
restrictions are deemed void or unenforceable by any court of competent
jurisdiction, the parties agree that the court should modify these restrictions
to a point they would be enforceable and enforce the restrictions to that
extent.
9. Indemnity. Fort James agrees to continue to indemnify and
save Lempke harmless from all claims, actions and liabilities which may arise in
connection with his reasonable performance of his duties for the Company. Such
indemnification shall be to the same extent as its indemnification of active
executives of equal rank but shall relate only to Lempke's alleged actions or
failure to act during the period in which he was employed by the Company.
10. Future Cooperation. Lempke agrees to cooperate
in providing transition assistance related to his departure as may be reasonably
required of him by Fort James, including presences as a witness in legal
proceedings as may be necessary, both before and after his Date of Termination.
11. Resignation. By his signature hereto, Lempke hereby
resigns his position as Senior Vice President & Treasurer and any and all other
positions with the Company, its subsidiaries, its parent and its affiliates;
provided, however, Lempke shall remain employed as provided in Paragraph 1 until
the Date of Termination.
12. Confidentiality. Lempke agrees that he will not divulge
the contents of this Separation Agreement which are agreed to be confidential in
nature except (a) Lempke may divulge the contents to his spouse, attorney,
financial advisor and income tax preparer; or (b) except as may be required to
comply with legal process. It is further agreed by Lempke that if it is
necessary that this Agreement or a significant portion be disclosed to those
listed above, Lempke agrees to instruct and request each of them, or use such
other efforts as may be reasonable, to keep any information so disclosed
confidential. If Lempke materially breaches this provision, the Company will
have no further obligation to him under this Agreement.
13. Entire Agreement. Lempke understands and agrees that all
terms of this Separation Agreement are contractual and are not a mere recital.
The parties represent and warrant that in negotiating and executing this
Separation Agreement, each have had an opportunity to consult with legal counsel
or other representatives of their own choosing concerning the meaning and effect
of each term or provision hereof, and that there are no representations,
promises or agreements other than those specifically referred to or set forth in
writing herein.
The parties represent and warrant that they have read this
Separation Agreement in its entirety, fully understand and agree to its term and
provisions, and intend and agree that it is a final and legal binding settlement
and release of all claims Lempke or Fort James may have.
15. Severability. If any portions of this Separation Agreement
are void or deemed unenforceable for any reason, the unenforceable portions
shall be deemed severed from the remaining portions of this Agreement which
shall otherwise remain in full force and effect.
16. No Waiver. The decision of either party not to assert a
claim for breach of the Separation Agreement shall not be construed as a waiver
of that or any subsequent breach which might occur.
17. Corporate Authority. The officer executing this Separation
Agreement on behalf of Fort James represents that he has full corporate
authority to do so and to bind the Company, its parents, affiliates,
subsidiaries, predecessors, successors and assigns.
18. Governing Law. This Agreement shall be governed and
construed according to the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties have affixed their signatures:
By:/s/Robert M. Lempke
Robert M. Lempke
FORT JAMES OPERATING COMPANY
By:/s/Daniel J. Girvan
Daniel J. Girvan
Senior Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM FORT JAMES
CORPORATION'S MARCH 26, 2000,
FORM 10-Q FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<NAME> FORT JAMES CORPORATION
<CIK> 0000053117
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-26-2000
<CASH> 9
<SECURITIES> 0
<RECEIVABLES> 849
<ALLOWANCES> 0
<INVENTORY> 816
<CURRENT-ASSETS> 1,815
<PP&E> 7,859
<DEPRECIATION> 3,563
<TOTAL-ASSETS> 7,108
<CURRENT-LIABILITIES> 1,230
<BONDS> 3,439
0
0
<COMMON> 21
<OTHER-SE> 1,008
<TOTAL-LIABILITY-AND-EQUITY> 7,108
<SALES> 1,677
<TOTAL-REVENUES> 1,677
<CGS> (1,201)
<TOTAL-COSTS> (1,489)
<OTHER-EXPENSES> 15
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (57)
<INCOME-PRETAX> 145
<INCOME-TAX> (49)
<INCOME-CONTINUING> 96
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 96
<EPS-BASIC> 0.46
<EPS-DILUTED> 0.46
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM FORT JAMES
CORPORATION'S MARCH 28, 1999,
FORM 10-Q FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<NAME> FORT JAMES CORPORATION
<CIK> 0000053117
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-END> MAR-28-1999
<CASH> 5
<SECURITIES> 0
<RECEIVABLES> 881
<ALLOWANCES> 0
<INVENTORY> 822
<CURRENT-ASSETS> 1,882
<PP&E> 7,457
<DEPRECIATION> 3,267
<TOTAL-ASSETS> 7,599
<CURRENT-LIABILITIES> 1,444
<BONDS> 3,690
0
0
<COMMON> 22
<OTHER-SE> 1,006
<TOTAL-LIABILITY-AND-EQUITY> 7,599
<SALES> 1,669
<TOTAL-REVENUES> 1,669
<CGS> (1,136)
<TOTAL-COSTS> (1,433)
<OTHER-EXPENSES> 4
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (63)
<INCOME-PRETAX> 178
<INCOME-TAX> (60)
<INCOME-CONTINUING> 118
<DISCONTINUED> 4
<EXTRAORDINARY> (2)
<CHANGES> (22)
<NET-INCOME> 98
<EPS-BASIC> 0.45
<EPS-DILUTED> 0.44
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM FORT JAMES
CORPORATION'S DECEMBER 27, 1998,
FORM 10-Q FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<NAME> FORT JAMES CORPORATION
<CIK> 0000053117
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-START> DEC-28-1997
<PERIOD-END> DEC-27-1998
<CASH> 5
<SECURITIES> 0
<RECEIVABLES> 858
<ALLOWANCES> 0
<INVENTORY> 807
<CURRENT-ASSETS> 1,856
<PP&E> 7,544
<DEPRECIATION> 3,225
<TOTAL-ASSETS> 7,720
<CURRENT-LIABILITIES> 1,556
<BONDS> 3,646
0
0
<COMMON> 22
<OTHER-SE> 1,029
<TOTAL-LIABILITY-AND-EQUITY> 7,720
<SALES> 6,803
<TOTAL-REVENUES> 6,803
<CGS> (4,547)
<TOTAL-COSTS> (5,782)
<OTHER-EXPENSES> (5)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (265)
<INCOME-PRETAX> 751
<INCOME-TAX> (259)
<INCOME-CONTINUING> 492
<DISCONTINUED> 8
<EXTRAORDINARY> (3)
<CHANGES> 0
<NET-INCOME> 498
<EPS-BASIC> 2.28
<EPS-DILUTED> 2.26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM FORT JAMES
CORPORATION'S SEPTEMBER 27, 1998,
FORM 10-Q FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<NAME> FORT JAMES CORPORATION
<CIK> 0000053117
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-END> SEP-27-1998
<CASH> 20
<SECURITIES> 0
<RECEIVABLES> 922
<ALLOWANCES> 0
<INVENTORY> 807
<CURRENT-ASSETS> 1,935
<PP&E> 7,453
<DEPRECIATION> 3,199
<TOTAL-ASSETS> 7,814
<CURRENT-LIABILITIES> 1,471
<BONDS> 3,933
0
0
<COMMON> 22
<OTHER-SE> 940
<TOTAL-LIABILITY-AND-EQUITY> 7,814
<SALES> 5,114
<TOTAL-REVENUES> 5,114
<CGS> (3,432)
<TOTAL-COSTS> (4,305)
<OTHER-EXPENSES> (2)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (203)
<INCOME-PRETAX> 604
<INCOME-TAX> (208)
<INCOME-CONTINUING> 396
<DISCONTINUED> 9
<EXTRAORDINARY> (3)
<CHANGES> 0
<NET-INCOME> 402
<EPS-BASIC> 1.85
<EPS-DILUTED> 1.83
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM FORT JAMES
CORPORATION'S JUNE 28, 1998,
FORM 10-Q FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<NAME> FORT JAMES CORPORATION
<CIK> 0000053117
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-END> JUN-28-1998
<CASH> 6
<SECURITIES> 0
<RECEIVABLES> 876
<ALLOWANCES> 0
<INVENTORY> 790
<CURRENT-ASSETS> 1,884
<PP&E> 7,311
<DEPRECIATION> 3,104
<TOTAL-ASSETS> 7,699
<CURRENT-LIABILITIES> 1,434
<BONDS> 4,064
0
0
<COMMON> 22
<OTHER-SE> 739
<TOTAL-LIABILITY-AND-EQUITY> 7,699
<SALES> 3,400
<TOTAL-REVENUES> 3,400
<CGS> (2,299)
<TOTAL-COSTS> (2,866)
<OTHER-EXPENSES> 3
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (137)
<INCOME-PRETAX> 399
<INCOME-TAX> (151)
<INCOME-CONTINUING> 248
<DISCONTINUED> 6
<EXTRAORDINARY> (3)
<CHANGES> 0
<NET-INCOME> 251
<EPS-BASIC> 1.15
<EPS-DILUTED> 1.14
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM FORT JAMES
CORPORATION'S MARCH 29, 1998,
FORM 10-Q FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<NAME> FORT JAMES CORPORATION
<CIK> 0000053117
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-END> MAR-29-1998
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 778
<ALLOWANCES> 0
<INVENTORY> 810
<CURRENT-ASSETS> 1,852
<PP&E> 7,246
<DEPRECIATION> 3,046
<TOTAL-ASSETS> 7,684
<CURRENT-LIABILITIES> 1,447
<BONDS> 4,154
0
0
<COMMON> 21
<OTHER-SE> 631
<TOTAL-LIABILITY-AND-EQUITY> 7,684
<SALES> 1,669
<TOTAL-REVENUES> 1,669
<CGS> (1,135)
<TOTAL-COSTS> (1,417)
<OTHER-EXPENSES> 8
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (69)
<INCOME-PRETAX> 191
<INCOME-TAX> (76)
<INCOME-CONTINUING> 115
<DISCONTINUED> 2
<EXTRAORDINARY> (2)
<CHANGES> 0
<NET-INCOME> 115
<EPS-BASIC> 0.53
<EPS-DILUTED> 0.52
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM FORT JAMES
CORPORATION'S DECEMBER 28, 1997,
FORM 10-Q FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<NAME> FORT JAMES CORPORATION
<CIK> 0000053117
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> DEC-28-1997
<CASH> 34
<SECURITIES> 0
<RECEIVABLES> 750
<ALLOWANCES> 0
<INVENTORY> 791
<CURRENT-ASSETS> 1,814
<PP&E> 7,202
<DEPRECIATION> 2,964
<TOTAL-ASSETS> 7,666
<CURRENT-LIABILITIES> 1,529
<BONDS> 4,155
0
353
<COMMON> 21
<OTHER-SE> 211
<TOTAL-LIABILITY-AND-EQUITY> 7,666
<SALES> 6,703
<TOTAL-REVENUES> 6,703
<CGS> (4,631)
<TOTAL-COSTS> (6,149)
<OTHER-EXPENSES> 19
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (320)
<INCOME-PRETAX> 253
<INCOME-TAX> (158)
<INCOME-CONTINUING> 95
<DISCONTINUED> 10
<EXTRAORDINARY> (132)
<CHANGES> 0
<NET-INCOME> (27)
<EPS-BASIC> (0.36)
<EPS-DILUTED> (0.28)
</TABLE>
