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, 1999
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
<PAGE>
FORT JAMES CORPORATION
CANADIAN EMPLOYEES STOCK PURCHASE PLAN
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Accountants 3
Financial statements:
Statements of Financial Condition as of
December 31, 1999 and 1998 4
Statements of Income and Changes in Plan Equity for
the years ended December 31, 1999, 1998 and 1997 5
Notes to Financial Statements 6-10
Supplemental schedules:
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.
Signatures 11
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 (incorporated by
reference to Exhibit 4.1 to Fort James Corporation Canadian
Stock Purchase Plan Annual Report on Form 11-K for the year
ended December 31, 1997)
23 Consent of Independent Accountants - filed herewith 12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Employee Benefits Committee of
Fort James Corporation:
In our opinion, the accompanying statements of financial condition and the
related statements of income and changes in plan equity present fairly, in all
material respects, the financial condition of the Fort James Corporation
Canadian Employees Stock Purchase Plan (the "Plan") at December 31, 1999 and
1998, and the income and changes in plan equity for each of the three years
ended December 31, 1999 in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
March 9, 2000
<PAGE>
FORT JAMES CORPORATION
CANADIAN EMPLOYEES STOCK PURCHASE PLAN
STATEMENTS OF FINANCIAL CONDITION
as of December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
- -------------------------------------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C>
Cash $72,791 $112,190
Contributions receivable:
Employer:
Basic 27,218 23,451
Additional 21,992 17,465
Employee 54,374 46,049
Investment in common stock, at market value:
Fort James (historical cost: 1999-$2,283,108 and 1998-$1,915,380) 1,776,610 2,175,120
Crown Vantage Inc. (historical cost: 1999-$27,909 and 1998-$36,850) 2,327 3,737
- -------------------------------------------------------------------------------------------------------------------------
Total assets $1,955,312 $2,378,012
=========================================================================================================================
PLAN EQUITY $1,955,312 $2,378,012
=========================================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
FORT JAMES CORPORATION
CANADIAN EMPLOYEES STOCK PURCHASE PLAN
STATEMENTS OF INCOME AND CHANGES IN PLAN EQUITY
for the years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------
ADDITIONS:
Investment income:
<S> <C> <C> <C>
Cash dividends on Common Stock $ 33,782 $ 30,463 $ 32,879
Realized gain on sale of investments 24,557 7,057 29,274
Interest on bank deposits 144 379 38
- --------------------------------------------------------------------------------------------------------------------
Total investment income 58,483 37,899 62,191
- --------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) in fair value of investments (758,707) (147,663) 63,620
- --------------------------------------------------------------------------------------------------------------------
Contributions and deposits:
Deposits by participating employees 728,661 645,737 635,794
Contributions by employer:
Basic 367,084 324,268 326,212
Additional 21,696 18,119 16,856
Administrative costs 17,244 17,739 26,113
Loss funded by Trustee - - 34,046
- --------------------------------------------------------------------------------------------------------------------
Total contributions and deposits 1,134,685 1,005,863 1,039,021
- --------------------------------------------------------------------------------------------------------------------
Total additions 434,461 896,099 1,164,832
- --------------------------------------------------------------------------------------------------------------------
DEDUCTIONS:
Withdrawals and expenditures:
Distributions to participants (855,622) (844,035) (1,023,473)
Administrative costs (17,244) (17,739) (26,113)
- --------------------------------------------------------------------------------------------------------------------
Total withdrawals and expenditures (872,866) (861,774) (1,049,586)
Foreign currency remeasurement gain (loss) 15,705 (22,345) (7,882)
- --------------------------------------------------------------------------------------------------------------------
Total deductions (857,161) (884,119) (1,057,468)
- --------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in plan equity (422,700) 11,980 107,364
PLAN EQUITY:
Beginning of year 2,378,012 2,366,032 2,258,668
- --------------------------------------------------------------------------------------------------------------------
End of year $ 1,955,312 $ 2,378,012 $ 2,366,032
====================================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
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, 1999, the
Participating Companies included Fort James Marathon, Ltd. ("Marathon") and
Fort James Canada, Inc. ("FJ Canada").
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, $0.10 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 $27.38
and $40.00 on December 31, 1999 and December 31, 1998, respectively. The
closing market value per share of the CV Common Stock was $2.06 and $2.25
on December 31, 1999 and December 31, 1998, 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 is
determined on an average-cost basis. The assets of the Plan are held by
Canada Trust (the "Trustee') under a Trust Agreement dated August 23, 1989.
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.
<PAGE>
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 three years
ended December 31, 1999. Foreign currency remeasurement gains and losses
are included in the net (decrease) increase in Plan equity.
Withdrawals
Participants may elect to either withdraw whole shares of common stock or
have their shares sold and have the net cash proceeds distributed to them.
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 Participants'
accounts in an amount equal to the appreciation in FJ Common Stock price
for funds that were not invested by the Trustee in a timely manner.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reported periods. Actual results may differ from those
estimates.
Risks and Uncertainties
The Plan's investments are exposed to market risk. Due to the degree of
risk and uncertainty associated with the market value of investment
securities, it is at least reasonably possible that near term changes in
the market value of securities held by the Plan could materially effect
participants' account balances and the amounts reported in the financial
statements.
<PAGE>
3. Description of 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 the
inclusion of an investment in CV Common Stock.
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
Contributionsas 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 also make "Additional Employer Contributions."
The additional Employer Contributions are made on or before March 31 for
each Participant who was employed by the Participating Companies as of the
preceding December 31, and who had not withdrawn any common stock from his
Restricted Account (hereinafter defined) during either of the two
immediately preceding calendar years. The Additional Employer Contribution
is equal to 10% of the Participant's aggregate Basic Employer Contributions
made during the two 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.
Each Participant is fully vested in all contributions and any earnings at
all times. The Plan had approximately 501 Participants as of December 31,
1999, and 469 Participants as of December 31, 1998.
<PAGE>
4. Contributions to the Plan
Employee and employer contributions for the years ended December 31, 1999,
1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------------------------------------------------------
Employee Employer Employee Employer Employee Employer
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Marathon $497,282 $272,685 $433,272 $244,386 $471,740 $267,973
FJ Canada 231,379 133,339 212,465 115,740 164,054 101,208
- ---------------------------------------------------------------------------------------------------------------------
$728,661 $406,024 $645,737 $360,126 $635,794 $369,181
=====================================================================================================================
</TABLE>
5. Investment in common stock
The unrealized appreciation or depreciation of investment in common stock
as of December 31, 1999, 1998 and 1997 and the change in such amount during
each period were as follows:
<TABLE>
<CAPTION>
Unrealized
Market Appreciation
Value Cost (Depreciation)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1996 $ 1,993,696 $ 1,683,026 $ 310,670
Change for the year ended
December 31, 1997 278,741 215,121 63,620
- ---------------------------------------------------------------------------------------------------
December 31, 1997 2,272,437 1,898,147 374,290
Change for year ended
December 31, 1998 (93,580) 54,083 (147,663)
- ---------------------------------------------------------------------------------------------------
December 31, 1998 2,178,857 1,952,230 226,627
Change for year ended
December 31, 1999 (399,920) 358,787 (758,707)
- ---------------------------------------------------------------------------------------------------
December 31, 1999 $ 1,778,937 $ 2,311,017 $ (532,080)
===================================================================================================
</TABLE>
The Plan held 64,899 shares and 54,378 shares of FJ Common Stock on
December 31, 1999 and 1998, respectively. In addition, the Plan held 1,128
shares and 1,661 shares of CV Common Stock on December 31, 1999 and 1998,
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. During 1997, the Trustee
terminated its withholding of such taxes. All U.S. taxes on cash dividends
are now paid directly by the Participants.
<PAGE>
7. Subsequent Event
On January 31, 2000, Fort James sold Marathon to a joint venture between
Tembec Inc. and Kruger Inc. As of January 22, 2000, Marathon Participants
were no longer able to contribute to the Plan. Effected Participants may
elect to receive a distribution equal to the amount of their account
balance either in cash or common stock through March 22, 2000. If a
Participant does not make an election by such date, the distribution will
be in cash.
<PAGE>
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 26, 2000 /s/ Clifford A. Cutchins, IV
- ------------------- ----------------------------------------------
Date Committee Member - Clifford A. Cutchins, IV
March 26, 2000 /s/ Daniel J. Girvan
- ------------------- ----------------------------------------------
Date Committee Member - Daniel J. Girvan
March 26, 2000 /s/ Ernst A. Haberli
- ------------------- ----------------------------------------------
Date Committee Member - Ernst A. Haberli
March 26, 2000 /s/ Jane R. Lateer
- ------------------- ----------------------------------------------
Date Committee Member - Jane R. Lateer
- ------------------- ----------------------------------------------
Date Committee Member - R. Michael Lempke
March 26, 2000 /s/ Joseph W. McGarr
- ------------------- ----------------------------------------------
Date Committee Member - Joseph W. McGarr
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 March 9, 2000, on our audits of the financial statements of the Fort
James Corporation Canadian Employees Stock Purchase Plan as of December 31,
1999 and 1998, and for each of the three years ended December 31, 1999,
which report is included in this Annual Report on Form 11-K.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
March 24, 2000
